Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55660

 

Goldman Sachs Private Middle Market Credit LLC

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

 

Delaware

81-3233378

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

 

200 West Street, New York, New York

10282

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (212) 902-0300

 

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

Not Applicable

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange

on which registered

None

 

None

 

None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer:

Accelerated filer:

Non-accelerated filer:

Smaller reporting company:

Emerging growth company:

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES NO

 

The number of the registrant’s limited liability company common units outstanding as of November 5, 2020 was 10,687,877.

 

 


Table of Contents

 

GOLDMAN SACHS PRIVATE MIDDLE MARKET CREDIT LLC

 

 

 

 

 

 

 

 

 

 

  

INDEX

 

PAGE

 

 

Cautionary Statement Regarding Forward-Looking Statements

 

3

PART I

  

FINANCIAL INFORMATION

  

4

ITEM 1.

  

Financial Statements

  

4

 

  

Consolidated Statements of Financial Condition as of September 30, 2020 (Unaudited) and December 31, 2019

  

4

 

  

Consolidated Statements of Operations for the three and nine months ended September 30, 2020 (Unaudited) and 2019 (Unaudited)

  

5

 

  

Consolidated Statements of Changes in Members’ Capital for the three and nine months ended September 30, 2020 (Unaudited) and 2019 (Unaudited)

  

6

 

  

Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 (Unaudited) and 2019 (Unaudited)

  

7

 

  

Consolidated Schedules of Investments as of September 30, 2020 (Unaudited) and December 31, 2019

  

8

 

  

Notes to the Consolidated Financial Statements (Unaudited)

  

18

ITEM 2.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

35

ITEM 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

49

ITEM 4.

  

Controls and Procedures

  

50

 

 

 

PART II

  

OTHER INFORMATION

  

50

ITEM 1.

  

Legal Proceedings

  

50

ITEM 1A.

  

Risk Factors

  

50

ITEM 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

53

ITEM 3.

  

Defaults Upon Senior Securities

  

53

ITEM 4.

  

Mine Safety Disclosures

  

53

ITEM 5.

  

Other Information

  

53

ITEM 6.

  

Exhibits

  

53

 

 

SIGNATURES

  

55

 

 

 

 

2


Table of Contents

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “target,” “estimate,” “intend,” “continue” or “believe” or the negatives of, or other variations on, these terms or comparable terminology. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. Our forward-looking statements include information in this report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company (“BDC”) and the expected performance of, and the yield on, our portfolio companies. There may be events in the future, however, that we are not able to predict accurately or control. The factors listed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2019 and our quarterly report on Form 10-Q for the quarter ended June 30, 2020, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ, from our forward-looking statements may emerge from time to time, and it is not possible for us to predict all of them. 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 U.S. Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Under Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in periodic reports we file under the Exchange Act, such as this quarterly report on Form 10-Q.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements:

 

our future operating results;

 

the impact of the novel coronavirus (“COVID-19”) pandemic on our business and our portfolio companies, including our and their ability to access capital and liquidity;

 

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effect of the current COVID-19 pandemic;

 

uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China, including the effect of the current COVID-19 pandemic;

 

our business prospects and the prospects of our portfolio companies;

 

the impact of investments that we expect to make;

 

the impact of increased competition;

 

our contractual arrangements and relationships with third parties;

 

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

the ability of our current and prospective portfolio companies to achieve their objectives;

 

the relative and absolute performance of Goldman Sachs Asset Management, L.P., the investment adviser (the “Investment Adviser”) of the Company;

 

the use of borrowed money to finance a portion of our investments;

 

our ability to make distributions;

 

the adequacy of our cash resources and working capital;

 

changes in interest rates, including the decommissioning of London InterBank Offered Rate (“LIBOR”);

 

the timing of cash flows, if any, from the operations of our portfolio companies;

 

the impact of future acquisitions and divestitures;

 

the effect of changes in tax laws and regulations and interpretations thereof;

 

our ability to maintain our status as a BDC and a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”);

 

actual and potential conflicts of interest with the Investment Adviser and its affiliates;

 

the ability of the Investment Adviser to attract and retain highly talented professionals;

 

the impact on our business from new or amended legislation or regulations;

 

the availability of credit and/or our ability to access the equity and capital markets; and

 

currency fluctuations, particularly to the extent that we receive payments denominated in currency other than U.S. dollars.

 

3


Table of Contents

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Financial Condition

(in thousands, except unit and per unit amounts)

 

 

 

September 30, 2020 (Unaudited)

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Investments, at fair value

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments (cost of $1,323,338 and $1,389,030)

 

$

1,263,774

 

 

$

1,358,034

 

Non-controlled affiliated investments (cost of $38,388 and $38,303)

 

 

43,921

 

 

 

42,477

 

Investments in affiliated money market fund (cost of $88,821 and $22,297)

 

 

88,821

 

 

 

22,297

 

Cash

 

 

24,563

 

 

 

17,681

 

Receivable for investments sold

 

 

466

 

 

 

112

 

Interest and dividends receivable

 

 

10,364

 

 

 

6,199

 

Deferred financing costs

 

 

4,063

 

 

 

3,113

 

Unrealized appreciation on foreign currency forward contracts

 

 

 

 

 

45

 

Other assets

 

 

259

 

 

 

123

 

Total assets

 

$

1,436,231

 

 

$

1,450,081

 

Liabilities

 

 

 

 

 

 

 

 

Debt

 

$

468,571

 

 

$

511,988

 

Interest and other debt expenses payable

 

 

4,660

 

 

 

7,283

 

Management fees payable

 

 

3,489

 

 

 

3,395

 

Incentive fees payable

 

 

31,769

 

 

 

26,747

 

Distribution payable

 

 

 

 

 

20,368

 

Unrealized depreciation on foreign currency forward contracts

 

 

108

 

 

 

 

Directors’ fees payable

 

 

61

 

 

 

 

Accrued expenses and other liabilities

 

 

2,084

 

 

 

2,167

 

Total liabilities

 

$

510,742

 

 

$

571,948

 

Commitments and Contingencies (Note 8)

 

 

 

 

 

 

 

 

Members’ Capital

 

 

 

 

 

 

 

 

Preferred units (0 units issued and outstanding)

 

$

 

 

$

 

Common units (10,687,877 and 10,185,396 units issued and outstanding as of September 30, 2020 and December 31, 2019)

 

 

984,924

 

 

 

966,027

 

Distributable earnings

 

 

(59,435

)

 

 

(87,894

)

TOTAL MEMBERS’ CAPITAL

 

$

925,489

 

 

$

878,133

 

TOTAL LIABILITIES AND MEMBERS’ CAPITAL

 

$

1,436,231

 

 

$

1,450,081

 

Net asset value per unit

 

$

86.59

 

 

$

86.21

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

4


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Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Operations

(in thousands, except unit and per unit amounts)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

Investment Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

29,969

 

 

$

36,948

 

 

$

92,521

 

 

$

113,375

 

Other income

 

 

880

 

 

 

516

 

 

 

1,372

 

 

 

1,615

 

From non-controlled affiliated investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

596

 

 

 

692

 

 

 

1,837

 

 

 

2,101

 

Dividend income

 

 

36

 

 

 

167

 

 

 

162

 

 

 

418

 

Other income

 

 

6

 

 

 

8

 

 

 

70

 

 

 

21

 

Total investment income

 

$

31,487

 

 

$

38,331

 

 

$

95,962

 

 

$

117,530

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other debt expenses

 

$

4,996

 

 

$

8,580

 

 

$

19,793

 

 

$

26,460

 

Management fees

 

 

3,489

 

 

 

3,514

 

 

 

10,186

 

 

 

10,203

 

Incentive fees

 

 

18,908

 

 

 

2,100

 

 

 

5,022

 

 

 

6,755

 

Professional fees

 

 

338

 

 

 

334

 

 

 

1,002

 

 

 

1,115

 

Directors’ fees

 

 

62

 

 

 

95

 

 

 

185

 

 

 

277

 

Other general and administrative expenses

 

 

490

 

 

 

557

 

 

 

1,457

 

 

 

1,588

 

Total expenses

 

$

28,283

 

 

$

15,180

 

 

$

37,645

 

 

$

46,398

 

NET INVESTMENT INCOME BEFORE TAXES

 

$

3,204

 

 

$

23,151

 

 

$

58,317

 

 

$

71,132

 

Excise tax

 

$

 

 

$

(37

)

 

$

 

 

$

 

NET INVESTMENT INCOME AFTER TAXES

 

$

3,204

 

 

$

23,188

 

 

$

58,317

 

 

$

71,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments

 

$

 

 

$

(9

)

 

$

1

 

 

$

(21,846

)

Foreign currency forward contracts

 

 

35

 

 

 

46

 

 

 

131

 

 

 

56

 

Foreign currency transactions

 

 

36

 

 

 

(11

)

 

 

11

 

 

 

17

 

Net change in unrealized appreciation (depreciation) from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments

 

 

22,001

 

 

 

(9,313

)

 

 

(28,568

)

 

 

(13,242

)

Non-controlled affiliated investments

 

 

409

 

 

 

508

 

 

 

1,359

 

 

 

2,140

 

Foreign currency forward contracts

 

 

(148

)

 

 

69

 

 

 

(153

)

 

 

109

 

Foreign currency translations

 

 

(2,473

)

 

 

2,359

 

 

 

(2,552

)

 

 

2,804

 

Net realized and unrealized gains (losses)

 

$

19,860

 

 

$

(6,351

)

 

$

(29,771

)

 

$

(29,962

)

(Provision) benefit for taxes on realized gain/loss on investments

 

$

 

 

$

 

 

$

 

 

$

182

 

(Provision) benefit for taxes on unrealized appreciation/depreciation on investments

 

 

(94

)

 

 

(151

)

 

 

(87

)

 

 

(622

)

NET INCREASE IN MEMBERS’ CAPITAL FROM OPERATIONS

 

$

22,970

 

 

$

16,686

 

 

$

28,459

 

 

$

40,730

 

Weighted average units outstanding

 

 

10,687,877

 

 

 

10,134,067

 

 

 

10,530,164

 

 

 

9,626,310

 

Net investment income per unit (basic and diluted)

 

$

0.30

 

 

$

2.29

 

 

$

5.54

 

 

$

7.39

 

Earnings per unit (basic and diluted)

 

$

2.15

 

 

$

1.65

 

 

$

2.70

 

 

$

4.23

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

5


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Changes in Members’ Capital

(in thousands, except unit and per unit amounts)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Members’ Capital at beginning of period

 

$

927,519

 

 

$

940,703

 

 

$

878,133

 

 

$

807,461

 

Increase in Members’ Capital from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

3,204

 

 

$

23,188

 

 

$

58,317

 

 

$

71,132

 

Net realized gain (loss)

 

 

71

 

 

 

26

 

 

 

143

 

 

 

(21,773

)

Net change in unrealized appreciation (depreciation)

 

 

19,789

 

 

 

(6,377

)

 

 

(29,914

)

 

 

(8,189

)

(Provision) benefit for taxes on realized gain/loss on investments

 

 

 

 

 

 

 

 

 

 

 

182

 

(Provision) benefit for unrealized appreciation/depreciation on investments

 

 

(94

)

 

 

(151

)

 

 

(87

)

 

 

(622

)

Net increase in Members’ Capital from operations

 

$

22,970

 

 

$

16,686

 

 

$

28,459

 

 

$

40,730

 

Distributions to Unitholders from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return of capital

 

$

(25,000

)

 

$

 

 

$

(25,000

)

 

$

 

Distributable earnings

 

$

 

 

$

(33,311

)

 

$

 

 

$

(77,753

)

Total distributions to Unitholders

 

$

(25,000

)

 

$

(33,311

)

 

$

(25,000

)

 

$

(77,753

)

Capital transactions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of units

 

$

 

 

$

5,487

 

 

$

43,897

 

 

$

159,127

 

Net increase in Members’ Capital from capital transactions

 

$

 

 

$

5,487

 

 

$

43,897

 

 

$

159,127

 

TOTAL INCREASE (DECREASE) IN MEMBERS’ CAPITAL

 

$

(2,030

)

 

$

(11,138

)

 

$

47,356

 

 

$

122,104

 

Members’ Capital at end of period

 

$

925,489

 

 

$

929,565

 

 

$

925,489

 

 

$

929,565

 

Distributions declared per unit

 

$

2.34

 

 

$

3.27

 

 

$

2.34

 

 

$

7.77

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

6


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Statements of Cash Flows

(in thousands, except unit and per unit amounts)

(Unaudited)

 

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net increase in Members’ Capital from operations:

 

$

28,459

 

 

$

40,730

 

Adjustments to reconcile net increase in Members’ Capital from operations to net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(34,463

)

 

 

(321,935

)

Payment-in-kind interest capitalized

 

 

(2,211

)

 

 

(1,147

)

Investments in affiliated money market fund, net

 

 

(66,524

)

 

 

(20,274

)

Proceeds from sales of investments and principal repayments

 

 

106,959

 

 

 

224,983

 

Net realized (gain) loss

 

 

4

 

 

 

21,854

 

Net change in unrealized (appreciation) depreciation on investments

 

 

27,209

 

 

 

11,102

 

Net change in unrealized (appreciation) depreciation on foreign currency forward contracts and transactions

 

 

126

 

 

 

(61

)

Amortization of premium and accretion of discount, net

 

 

(4,682

)

 

 

(6,771

)

Amortization of deferred financing costs

 

 

1,107

 

 

 

1,359

 

(Increase) decrease in receivable for investments sold

 

 

(354

)

 

 

7

 

(Increase) decrease in receivable for common units sold

 

 

 

 

 

(6

)

(Increase) decrease in interest and dividends receivable

 

 

(4,165

)

 

 

743

 

(Increase) decrease in other assets

 

 

(136

)

 

 

65

 

Increase (decrease) in interest and other debt expenses payable

 

 

(2,623

)

 

 

1,517

 

Increase (decrease) in management fees payable

 

 

94

 

 

 

604

 

Increase (decrease) in incentive fees payable

 

 

5,022

 

 

 

6,755

 

Increase (decrease) in directors’ fees payable

 

 

61

 

 

 

88

 

Increase (decrease) in accrued expenses and other liabilities

 

 

(83

)

 

 

(391

)

Net cash provided by (used for) operating activities

 

$

53,800

 

 

$

(40,778

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common units

 

$

43,897

 

 

$

159,127

 

Distributions paid

 

 

(45,368

)

 

 

(69,942

)

Financing costs paid

 

 

(2,057

)

 

 

(950

)

Borrowings on debt

 

 

2,583

 

 

 

130,710

 

Repayments of debt

 

 

(46,000

)

 

 

(155,250

)

Net cash provided by (used for) financing activities

 

$

(46,945

)

 

$

63,695

 

Net increase (decrease) in cash

 

 

6,855

 

 

 

22,917

 

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

27

 

 

 

(48

)

Cash, beginning of period

 

 

17,681

 

 

 

25,548

 

Cash, end of period

 

$

24,563

 

 

$

48,417

 

Supplemental and non-cash activities

 

 

 

 

 

 

 

 

Interest expense paid

 

$

19,869

 

 

$

23,069

 

Accrued but unpaid deferred financing and debt issuance costs

 

$

 

 

$

14

 

Accrued but unpaid distributions

 

$

 

 

$

33,311

 

Exchange of investments

 

$

13,769

 

 

$

15,844

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

7


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of September 30, 2020

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Investment

 

Industry

 

Interest

Rate (+)

 

 

Reference Rate

and Spread (+)

 

Maturity

 

Par

Amount/

Shares

(++)

 

 

Cost

 

 

Fair

Value

 

Investments at Fair Value  - 141.29% #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Lien/Senior Secured Debt - 86.72%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accuity Delivery Systems, LLC^ (1) (2) (3)

 

Health Care Providers & Services

 

8.00%

 

 

L + 7.00%; 1.00% Floor

 

06/13/2023

 

$

15,350

 

 

$

15,076

 

 

$

15,734

 

Associations, Inc.(1) (2) (3)

 

Real Estate Management & Development

 

8.00%

 

 

L + 7.00% (incl. 3.00% PIK); 1.00% Floor

 

07/30/2024

 

 

20,933

 

 

 

20,761

 

 

 

20,095

 

Associations, Inc.(1) (2) (3) (4)

 

Real Estate Management & Development

 

8.23%

 

 

L + 7.00% (incl. 3.00% PIK); 1.00% Floor

 

07/30/2024

 

 

4,582

 

 

 

4,479

 

 

 

4,332

 

Associations, Inc.(1) (2) (3)

 

Real Estate Management & Development

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

07/30/2024

 

 

886

 

 

 

879

 

 

 

851

 

Brillio, LLC(1) (2) (3)

 

IT Services

 

5.75%

 

 

L + 4.75%; 1.00% Floor

 

02/06/2025

 

 

6,903

 

 

 

6,850

 

 

 

6,747

 

Brillio, LLC(1) (3) (4)

 

IT Services

 

5.75%

 

 

L + 4.75%; 1.00% Floor

 

02/06/2025

 

 

2,330

 

 

 

1,165

 

 

 

1,113

 

Businessolver.com, Inc.(1) (2) (3)

 

Health Care Technology

 

8.50%

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

31,875

 

 

 

31,504

 

 

 

31,078

 

Businessolver.com, Inc.(1) (2) (3)

 

Health Care Technology

 

8.50%

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

4,781

 

 

 

4,721

 

 

 

4,662

 

Businessolver.com, Inc.(1) (2) (3) (4)

 

Health Care Technology

 

 

 

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

3,984

 

 

 

(43

)

 

 

(100

)

Collaborative Imaging, LLC (dba Texas Radiology Associates)^^^ (1) (2) (3)

 

Health Care Providers & Services

 

7.50%

 

 

L + 6.50%; 1.00% Floor

 

03/28/2025

 

 

13,400

 

 

 

13,258

 

 

 

12,998

 

CorePower Yoga LLC(1) (2)

 

Diversified Consumer Services

 

7.00%

 

 

L + 6.00% (incl. 1.25% PIK); 1.00% Floor

 

05/14/2025

 

 

15,268

 

 

 

15,071

 

 

 

12,978

 

CorePower Yoga LLC(1) (2) (4)

 

Diversified Consumer Services

 

7.00%

 

 

L + 6.00% (incl. 1.25% PIK); 1.00% Floor

 

05/14/2025

 

 

1,070

 

 

 

201

 

 

 

54

 

Datacor Holdings, Inc.(2) (3)

 

Chemicals

 

9.50%

 

 

 

 

08/12/2022

 

 

13,693

 

 

 

13,590

 

 

 

13,488

 

Datacor Holdings, Inc.(3)

 

Chemicals

 

9.50%

 

 

 

 

08/12/2022

 

 

1,200

 

 

 

1,184

 

 

 

1,182

 

Datacor Holdings, Inc.(3) (4)

 

Chemicals

 

9.50%

 

 

 

 

08/12/2022

 

 

1,600

 

 

 

784

 

 

 

776

 

DDS USA Holding, Inc.(1) (2) (3)

 

Health Care Equipment & Supplies

 

6.75%

 

 

L + 5.75%; 1.00% Floor

 

06/30/2022

 

 

5,687

 

 

 

5,673

 

 

 

5,630

 

DDS USA Holding, Inc.(1) (2) (3)

 

Health Care Equipment & Supplies

 

6.75%

 

 

L + 5.75%; 1.00% Floor

 

06/30/2022

 

 

5,375

 

 

 

5,361

 

 

 

5,321

 

DDS USA Holding, Inc.(1) (2) (3) (4)

 

Health Care Equipment & Supplies

 

6.75%

 

 

L + 5.75%; 1.00% Floor

 

06/30/2022

 

 

1,625

 

 

 

809

 

 

 

796

 

Diligent Corporation(1) (2)

 

Professional Services

 

7.25%

 

 

L + 6.25%; 1.00% Floor

 

08/04/2025

 

24,018

 

 

 

27,422

 

 

 

27,456

 

Diligent Corporation(1)

 

Professional Services

 

7.25%

 

 

L + 6.25%; 1.00% Floor

 

08/04/2025

 

 

15,518

 

 

 

15,306

 

 

 

15,130

 

Diligent Corporation(1) (2) (4)

 

Professional Services

 

 

 

 

 

L + 6.25%; 1.00% Floor

 

08/04/2025

 

 

1,900

 

 

 

(36

)

 

 

(47

)

DocuTAP, Inc.(1) (2) (3)

 

Health Care Technology

 

6.50%

 

 

L + 5.50%; 1.00% Floor

 

05/12/2025

 

 

36,935

 

 

 

36,191

 

 

 

35,919

 

Empirix, Inc.(1) (2) (3)

 

Diversified Telecommunication Services

 

7.25%

 

 

L + 6.25%; 1.00% Floor

 

09/25/2024

 

 

33,129

 

 

 

32,714

 

 

 

32,135

 

Empirix, Inc.(1) (2) (3) (4)

 

Diversified Telecommunication Services

 

 

 

 

 

L + 6.25%; 1.00% Floor

 

09/25/2023

 

 

1,900

 

 

 

(20

)

 

 

(57

)

Fenergo Finance 3 Limited(1) (2) (3) (5)

 

Diversified Financial Services

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

09/05/2024

 

26,900

 

 

 

30,876

 

 

 

31,145

 

Fenergo Finance 3 Limited(1) (2) (3) (4) (5)

 

Diversified Financial Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

09/05/2024

 

 

1,785

 

 

 

(21

)

 

 

(22

)

Fenergo Finance 3 Limited(1) (2) (3) (4) (5)

 

Diversified Financial Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

09/05/2024

 

2,300

 

 

 

(31

)

 

 

(34

)

FWR Holding Corporation (dba First Watch Restaurants)(2) (3) (4)

 

Hotels, Restaurants & Leisure

 

 

 

 

 

L + 7.00% (incl. 1.50% PIK); 1.00% Floor

 

08/21/2023

 

 

67

 

 

 

 

 

 

(2

)

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

8.00%

 

 

L + 7.00% (incl. 1.50% PIK); 1.00% Floor

 

08/21/2023

 

 

13,234

 

 

 

13,056

 

 

 

12,770

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

8.00%

 

 

L + 7.00% (incl. 1.50% PIK); 1.00% Floor

 

08/21/2023

 

 

2,644

 

 

 

2,610

 

 

 

2,552

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

8.00%

 

 

L + 7.00% (incl. 1.50% PIK); 1.00% Floor

 

08/21/2023

 

 

1,672

 

 

 

1,650

 

 

 

1,613

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3) (4)

 

Hotels, Restaurants & Leisure

 

 

 

 

 

L + 7.00% (incl. 1.50% PIK); 1.00% Floor

 

08/21/2023

 

 

1,764

 

 

 

(22

)

 

 

(62

)

Gastro Health Holdco, LLC(1) (2) (3)

 

Health Care Providers & Services

 

7.02%

 

 

L + 6.00%; 1.00% Floor

 

09/04/2024

 

 

15,048

 

 

 

14,836

 

 

 

14,409

 

Gastro Health Holdco, LLC(1) (2) (3)

 

Health Care Providers & Services

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

09/04/2024

 

 

7,618

 

 

 

7,508

 

 

 

7,294

 

Gastro Health Holdco, LLC(1) (3)

 

Health Care Providers & Services

 

7.01%

 

 

L + 6.00%; 1.00% Floor

 

09/04/2024

 

 

7,306

 

 

 

7,216

 

 

 

6,996

 

Gastro Health Holdco, LLC(1) (2) (3) (4)

 

Health Care Providers & Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

09/04/2023

 

 

3,100

 

 

 

(37

)

 

 

(132

)

Gastro Health Holdco, LLC(1) (3) (4)

 

Health Care Providers & Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

09/04/2024

 

 

7,700

 

 

 

(54

)

 

 

(327

)

GlobalTranz Enterprises, Inc.(1) (2)

 

Road & Rail

 

5.16%

 

 

L + 5.00%

 

05/15/2026

 

 

12,043

 

 

 

11,840

 

 

 

10,146

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

8


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of September 30, 2020 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Investment

 

Industry

 

Interest

Rate (+)

 

 

Reference Rate

and Spread (+)

 

Maturity

 

Par

Amount/

Shares

(++)

 

 

Cost

 

 

Fair

Value

 

Hygiena Borrower LLC(2)

 

Life Sciences Tools & Services

 

5.00%

 

 

L + 4.00%; 1.00% Floor

 

08/26/2022

 

$

5,426

 

 

$

5,387

 

 

$

5,318

 

Hygiena Borrower LLC(2) (4)

 

Life Sciences Tools & Services

 

 

 

 

 

L + 4.00%; 1.00% Floor

 

08/26/2022

 

 

580

 

 

 

(4

)

 

 

(12

)

iCIMS, Inc.(1) (2) (3)

 

Software

 

7.50%

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

45,158

 

 

 

44,516

 

 

 

44,368

 

iCIMS, Inc.(1) (3)

 

Software

 

7.50%

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

8,317

 

 

 

8,185

 

 

 

8,171

 

iCIMS, Inc.(1) (3) (4)

 

Software

 

 

 

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

2,822

 

 

 

(37

)

 

 

(49

)

Integral Ad Science, Inc.(1) (2) (3)

 

Interactive Media & Services

 

8.25%

 

 

L + 7.25% (incl. 1.25% PIK); 1.00% Floor

 

07/19/2024

 

 

39,109

 

 

 

38,580

 

 

 

 

37,643

 

Integral Ad Science, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

07/19/2023

 

 

2,741

 

 

 

(31

)

 

 

(103

)

Internet Truckstop Group, LLC (dba Truckstop)(1) (2) (3)

 

Transportation Infrastructure

 

6.50%

 

 

L + 5.50%; 1.00% Floor

 

04/02/2025

 

 

34,069

 

 

 

33,398

 

 

 

33,387

 

Internet Truckstop Group, LLC (dba Truckstop)(1) (2) (3) (4)

 

Transportation Infrastructure

 

 

 

 

 

L + 5.50%; 1.00% Floor

 

04/02/2025

 

 

2,800

 

 

 

(53

)

 

 

(56

)

Lithium Technologies, Inc.(1) (2) (3)

 

Interactive Media & Services

 

9.00%

 

 

L + 8.00%; 1.00% Floor

 

10/03/2022

 

 

58,727

 

 

 

58,053

 

 

 

56,231

 

Lithium Technologies, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

9.21%

 

 

L + 8.00%; 1.00% Floor

 

10/03/2022

 

 

4,046

 

 

 

633

 

 

 

502

 

Mailgun Technologies, Inc.(1) (2) (3)

 

Interactive Media & Services

 

6.00%

 

 

L + 5.00%; 1.00% Floor

 

03/26/2025

 

 

20,075

 

 

 

19,758

 

 

 

20,075

 

Mailgun Technologies, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

 

 

 

 

L + 5.00%; 1.00% Floor

 

03/26/2025

 

 

2,370

 

 

 

1

 

 

 

 

MMIT Holdings, LLC (dba Managed Markets Insight & Technology)(1) (2) (3)

 

Health Care Technology

 

6.50%

 

 

L + 5.50%; 1.00% Floor

 

11/15/2024

 

 

31,081

 

 

 

30,608

 

 

 

 

30,614

 

MMIT Holdings, LLC (dba Managed Markets Insight & Technology)(1) (3) (4)

 

Health Care Technology

 

6.50%

 

 

L + 5.50%; 1.00% Floor

 

11/15/2024

 

 

4,788

 

 

 

2,805

 

 

 

 

2,801

 

Netvoyage Corporation (dba NetDocuments)(1) (2) (3)

 

Software

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

03/22/2024

 

 

13,487

 

 

 

13,333

 

 

 

13,048

 

Netvoyage Corporation (dba NetDocuments)(1) (2) (3)

 

Software

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

03/22/2024

 

 

886

 

 

 

873

 

 

 

857

 

Netvoyage Corporation (dba NetDocuments)(1) (2) (3) (4)

 

Software

 

 

 

 

 

L + 7.75%; 1.00% Floor

 

03/24/2022

 

 

1,044

 

 

 

(6

)

 

 

(34

)

Picture Head Midco LLC(1) (2) (3)

 

Entertainment

 

8.25%

 

 

L + 7.25% (incl. 0.50% PIK); 1.00% Floor

 

08/31/2023

 

 

29,119

 

 

 

28,628

 

 

 

 

26,498

 

Power Stop, LLC(1) (2)

 

Auto Components

 

4.65%

 

 

L + 4.50%

 

10/19/2025

 

 

11,299

 

 

 

11,277

 

 

 

10,734

 

SF Home Décor, LLC (dba SureFit Home Décor)(1) (2) (3)

 

Household Products

 

10.75%

 

 

L + 9.75%; 1.00% Floor

 

07/13/2022

 

 

27,524

 

 

 

27,084

 

 

 

24,841

 

Shopatron, LLC (dba Kibo)(1) (3)

 

Internet & Direct Marketing Retail

 

9.00%

 

 

L + 8.00%; 1.00% Floor

 

12/18/2020

 

 

9,295

 

 

 

9,259

 

 

 

9,225

 

Shopatron, LLC (dba Kibo)(1) (3) (6)

 

Internet & Direct Marketing Retail

 

9.00%

 

 

L + 8.00%; 1.00% Floor

 

12/18/2020

 

 

2,865

 

 

 

2,871

 

 

 

2,857

 

SPay, Inc. (dba Stack Sports)(1) (2) (3)

 

Interactive Media & Services

 

8.75%

 

 

L + 7.75% (incl. 2.00% PIK); 1.00% Floor

 

06/17/2024

 

 

15,971

 

 

 

15,763

 

 

 

 

14,054

 

SPay, Inc. (dba Stack Sports)(1) (2) (3)

 

Interactive Media & Services

 

8.84%

 

 

L + 7.75% (incl. 2.00% PIK); 1.00% Floor

 

06/17/2024

 

 

1,168

 

 

 

1,153

 

 

 

 

1,028

 

SPay, Inc. (dba Stack Sports)(1) (2) (3)

 

Interactive Media & Services

 

8.97%

 

 

L + 7.75% (incl. 2.00% PIK); 1.00% Floor

 

06/17/2024

 

 

582

 

 

 

579

 

 

 

 

513

 

Viant Medical Holdings, Inc.(1) (2)

 

Health Care Equipment & Supplies

 

7.25%

 

 

L + 6.25%; 1.00% Floor

 

07/02/2025

 

 

19,460

 

 

 

19,173

 

 

 

18,487

 

VRC Companies, LLC (dba Vital Records Control)(2) (3)

 

Commercial Services & Supplies

 

7.50%

 

 

L + 6.50%; 1.00% Floor

 

03/31/2023

 

 

10,523

 

 

 

10,460

 

 

 

10,444

 

VRC Companies, LLC (dba Vital Records Control)(2) (3) (4)

 

Commercial Services & Supplies

 

 

 

 

 

L + 6.50%; 1.00% Floor

 

03/31/2022

 

 

264

 

 

 

(1

)

 

 

 

(2)

 

Wine.com, LLC(1) (2) (3)

 

Beverages

 

8.00%

 

 

L + 7.00%; 1.00% Floor

 

11/14/2024

 

 

9,600

 

 

 

9,458

 

 

 

9,576

 

Wrike, Inc.(1) (2) (3)

 

Professional Services

 

7.75%

 

 

L + 6.75%; 1.00% Floor

 

12/31/2024

 

 

34,190

 

 

 

33,651

 

 

 

34,191

 

Wrike, Inc.(1) (2) (3) (4)

 

Professional Services

 

 

 

 

 

L + 6.75%; 1.00% Floor

 

12/31/2024

 

 

2,400

 

 

 

(34

)

 

 

 

Xactly Corporation(1) (2) (3)

 

IT Services

 

8.25%

 

 

L + 7.25%; 1.00% Floor

 

07/29/2022

 

 

40,879

 

 

 

40,505

 

 

 

40,163

 

Xactly Corporation(1) (2) (3) (4)

 

IT Services

 

 

 

 

 

L + 7.25%; 1.00% Floor

 

07/29/2022

 

 

2,554

 

 

 

(19

)

 

 

(45

)

Yasso, Inc.(1) (2) (3)

 

Food Products

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

03/23/2022

 

 

12,683

 

 

 

12,596

 

 

 

12,683

 

Total 1st Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

820,729

 

 

 

802,625

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

9


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of September 30, 2020 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Investment

 

Industry

 

Interest

Rate (+)

 

 

Reference Rate

and Spread (+)

 

Maturity

 

Par

Amount/

Shares

(++)

 

 

Cost

 

 

Fair

Value

 

1st Lien/Last-Out Unitranche (7) - 13.41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doxim, Inc.(1) (2) (3)

 

Diversified Financial Services

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

02/28/2024

 

$

30,800

 

 

$

30,170

 

 

$

30,030

 

Doxim, Inc.(1) (2) (3)

 

Diversified Financial Services

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

02/28/2024

 

 

23,822

 

 

 

23,347

 

 

 

23,227

 

RugsUSA, LLC(1) (2) (3)

 

Household Products

 

7.00%

 

 

L + 6.00%; 1.00% Floor

 

04/30/2023

 

 

8,813

 

 

 

8,763

 

 

 

8,769

 

Smarsh, Inc.(1) (2) (3)

 

Interactive Media & Services

 

8.88%

 

 

L + 7.88%; 1.00% Floor

 

03/31/2021

 

 

55,214

 

 

 

55,039

 

 

 

54,662

 

Vantage Mobility International, LLC(2) (3)

 

Health Care Equipment & Supplies

 

7.00%

 

 

L + 6.00% PIK; 1.00% Floor

 

06/30/2023

 

 

12,007

 

 

 

12,007

 

 

 

7,444

 

Total 1st Lien/Last-Out Unitranche

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

129,326

 

 

 

124,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Lien/Senior Secured Debt - 36.92%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Dental Partners, Inc.(1) (2) (3)

 

Health Care Providers & Services

 

9.50%

 

 

L + 8.50%; 1.00% Floor

 

09/25/2023

 

$

9,180

 

 

$

9,057

 

 

$

8,446

 

Chase Industries, Inc. (dba Senneca Holdings)(1) (2) (3) (8)

 

Building Products

 

 

 

 

 

11.00% PIK

 

05/11/2026

 

 

12,850

 

 

 

12,529

 

 

 

 

Chase Industries, Inc. (dba Senneca Holdings)(1) (2) (3)

 

Building Products

 

10.00% PIK

 

 

10.00% PIK

 

11/11/2025

 

 

12,850

 

 

 

11,369

 

 

 

10,505

 

ERC Finance, LLC (dba Eating Recovery Center)(1) (2) (3)

 

Health Care Providers & Services

 

9.22%

 

 

L + 8.22%; 1.00% Floor

 

09/22/2025

 

 

29,800

 

 

 

29,324

 

 

 

28,757

 

Genesis Acquisition Co. (dba ProCare Software)(1) (2) (3)

 

Diversified Financial Services

 

7.80%

 

 

L + 7.50%

 

07/31/2025

 

 

10,500

 

 

 

10,301

 

 

 

9,502

 

Genesis Acquisition Co. (dba ProCare Software)(1) (2) (3)

 

Diversified Financial Services

 

7.80%

 

 

L + 7.50%

 

07/31/2025

 

 

2,700

 

 

 

2,643

 

 

 

2,443

 

Hygiena Borrower LLC(2) (3)

 

Life Sciences Tools & Services

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

08/26/2023

 

 

2,810

 

 

 

2,775

 

 

 

2,712

 

Hygiena Borrower LLC(2) (3)

 

Life Sciences Tools & Services

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

08/26/2023

 

 

147

 

 

 

145

 

 

 

142

 

ICP Industrial, Inc.(1) (2) (3)

 

Chemicals

 

9.25%

 

 

L + 8.25%; 1.00% Floor

 

05/03/2024

 

 

30,700

 

 

 

30,219

 

 

 

29,625

 

Intelligent Medical Objects, Inc.(1) (2) (3)

 

Health Care Technology

 

9.50%

 

 

L + 8.50%; 1.00% Floor

 

12/22/2024

 

 

23,100

 

 

 

22,693

 

 

 

22,465

 

Market Track, LLC(1) (2) (3)

 

Media

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

06/05/2025

 

 

32,800

 

 

 

32,136

 

 

 

31,324

 

National Spine and Pain Centers, LLC(1) (2) (3)

 

Health Care Providers & Services

 

9.25%

 

 

L + 8.25%; 1.00% Floor

 

12/02/2024

 

 

28,500

 

 

 

27,948

 

 

 

27,289

 

Odyssey Logistics & Technology Corporation(1) (2)

 

Road & Rail

 

9.00%

 

 

L + 8.00%; 1.00% Floor

 

10/12/2025

 

 

28,152

 

 

 

27,692

 

 

 

23,366

 

Recipe Acquisition Corp. (dba Roland Foods)(2) (3)

 

Food Products

 

10.00%

 

 

L + 9.00%; 1.00% Floor

 

12/01/2022

 

 

20,000

 

 

 

19,712

 

 

 

19,250

 

SMB Shipping Logistics, LLC (dba Worldwide Express)(1) (2) (3)

 

Air Freight & Logistics

 

9.00%

 

 

L + 8.00%; 1.00% Floor

 

02/03/2025

 

 

33,333

 

 

 

32,939

 

 

 

 

31,250

 

Spectrum Plastics Group, Inc.(1) (2)

 

Containers & Packaging

 

8.00%

 

 

L + 7.00%; 1.00% Floor

 

01/31/2026

 

 

9,975

 

 

 

9,938

 

 

 

8,199

 

USRP Holdings, Inc. (dba U.S. Retirement Partners)(1) (2) (3)

 

Insurance

 

9.75%

 

 

L + 8.75%; 1.00% Floor

 

09/29/2025

 

 

10,300

 

 

 

10,204

 

 

 

 

9,733

 

USRP Holdings, Inc. (dba U.S. Retirement Partners)(1) (2) (3)

 

Insurance

 

9.83%

 

 

L + 8.75%; 1.00% Floor

 

09/29/2025

 

 

1,716

 

 

 

1,701

 

 

 

 

1,622

 

Xcellence, Inc. (dba Xact Data Discovery)(1) (2) (3)

 

IT Services

 

9.75%

 

 

L + 8.75%; 1.00% Floor

 

06/22/2024

 

 

27,900

 

 

 

27,410

 

 

 

26,575

 

YI, LLC (dba Young Innovations)(1) (2) (3)

 

Health Care Equipment & Supplies

 

8.75%

 

 

L + 7.75%; 1.00% Floor

 

11/07/2025

 

 

22,903

 

 

 

22,407

 

 

 

20,613

 

Zep Inc.(1) (2)

 

Chemicals

 

9.25%

 

 

L + 8.25%; 1.00% Floor

 

08/11/2025

 

 

35,700

 

 

 

35,072

 

 

 

27,891

 

Total 2nd Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

378,214

 

 

 

341,709

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Debt - 0.51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recipe Acquisition Corp. (dba Roland Foods)(3)

 

Food Products

 

13.25% PIK

 

 

13.25% PIK

 

12/21/2022

 

$

4,938

 

 

$

4,907

 

 

$

4,679

 

Total Unsecured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,907

 

 

 

4,679

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

10


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of September 30, 2020 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

Investment

 

Industry

 

Interest

Rate (+)

 

Par

Amount/

Shares (++)

 

 

Cost

 

 

Fair Value

 

Preferred Stock - 2.03%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accuity Delivery Systems, LLC^ (1) (3) (9) (10)

 

Health Care Providers & Services

 

 

 

 

145,695

 

 

$

4,800

 

 

$

9,470

 

Recipe Acquisition Corp. (dba Roland Foods)(3) (9) (10)

 

Food Products

 

11.00% PIK

 

 

1,600

 

 

 

1,496

 

 

 

2,152

 

Vantage Mobility International, LLC(3) (9) (10)

 

Health Care Equipment & Supplies

 

 

 

 

11,486,738

 

 

 

6,010

 

 

 

 

Wine.com, LLC(1) (3) (9) (10)

 

Beverages

 

 

 

 

337,425

 

 

 

2,900

 

 

 

7,150

 

Total Preferred Stock

 

 

 

 

 

 

 

 

 

 

15,206

 

 

 

18,772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock - 1.70%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B^^^ (1) (3) (10)

 

Health Care Providers & Services

 

 

 

 

 

12,370

 

 

 

$

 

1,668

 

 

 

$

 

1,971

 

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Performance Units^^^ (1) (3) (5) (9) (10)

 

Health Care Providers & Services

 

 

 

 

 

11,675

 

 

 

 

232

 

 

 

 

395

 

Country Fresh Holding Company Inc.(1) (3) (9) (10)

 

Food Products

 

 

 

 

986

 

 

 

1,232

 

 

 

61

 

Elah Holdings, Inc.^ (1) (3) (9) (10)

 

Capital Markets

 

 

 

 

69,386

 

 

 

3,354

 

 

 

3,353

 

National Spine and Pain Centers, LLC(1) (3) (9) (10)

 

Health Care Providers & Services

 

 

 

 

900

 

 

 

900

 

 

 

536

 

Vantage Mobility International, LLC(3) (9) (10)

 

Health Care Equipment & Supplies

 

 

 

 

5,371,684

 

 

 

 

 

 

 

Wrike, Inc.(1) (3) (9) (10)

 

Professional Services

 

 

 

 

5,247,296

 

 

 

3,260

 

 

 

8,501

 

Yasso, Inc.(1) (3) (9) (10)

 

Food Products

 

 

 

 

1,360

 

 

 

1,360

 

 

 

938

 

Total Common Stock

 

 

 

 

 

 

 

 

 

 

12,006

 

 

 

15,755

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants - 0.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KDOR Holdings Inc. (dba Senneca Holdings)(1) (3) (10)

 

Building Products

 

 

 

 

1,487

 

 

$

1,096

 

 

$

 

KDOR Holdings Inc. (dba Senneca Holdings)(1) (3) (10)

 

Building Products

 

 

 

155

 

 

 

115

 

 

 

 

KDOR Holdings Inc. (dba Senneca Holdings)(1) (3) (10)

 

Building Products

 

 

 

31

 

 

 

23

 

 

 

 

Recipe Acquisition Corp. (dba Roland Foods)(3) (10)

 

Food Products

 

 

 

44

 

 

 

104

 

 

 

23

 

Total Warrants

 

 

 

 

 

 

 

 

 

 

1,338

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Affiliated Money Market Fund - 9.60%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs Financial Square Government Fund - Institutional Shares^^^(11)

 

 

 

 

 

 

 

88,821,174

 

 

 

$

 

88,821

 

 

 

$

 

88,821

 

Total Investments in Affiliated Money Market Fund

 

 

 

 

 

 

 

 

 

 

88,821

 

 

 

88,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 150.89%

 

 

 

 

 

 

 

 

 

$

1,450,547

 

 

$

1,396,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS - (50.89%)

 

 

 

 

 

 

 

 

 

 

 

$

(471,027

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS - 100.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

$

925,489

 

 

(+)

Represents the actual interest rate for partially or fully funded debt in effect as of the reporting date. Variable rate loans bear interest at a rate that may be determined by the larger of the floor or the reference to either LIBOR ("L") or alternate base rate (commonly based on the Prime Rate ("P")), at the borrower's option, which reset periodically based on the terms of the credit agreement. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, 1 month or 1 week L rates. As of September 30, 2020, rates for the 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L are 0.36%, 0.26%, 0.23%, 0.19%, 0.15% and 0.10%, respectively. As of September 30, 2020, P was 3.25%. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at September 30, 2020.

(++)

The total par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments. Par amount is denominated in U.S. Dollars ("$") unless otherwise noted, Euro ("€").

#

Percentages are based on net assets.

^

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, 5% or more of the portfolio company's outstanding voting securities. See Note 3 “Significant Agreements and Related Party Transactions”.

^^^

The portfolio company is otherwise deemed to be an “affiliated person” of the Company. See Note 3 "Significant Agreements and Related Party Transactions".

(1)

Represent co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Significant Agreements and Related Party Transactions”.

(2)

All, or a portion of, the assets are pledged as collateral for the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”). See Note 6 “Debt”.

(3)

The fair value of the investment was determined using significant unobservable inputs. See Note 5 “Fair Value Measurement”.

(4)

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value, if applicable, is the result of the capitalized discount on the loan. See Note 8 "Commitments and Contingencies".

The accompanying notes are part of these unaudited consolidated financial statements.

11


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of September 30, 2020 (continued)

(in thousands, except unit and per unit amounts)

(Unaudited)

 

(5)

The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2020 the aggregate fair value of these securities is $31,484 or 2.19% of the Company's total assets.

(6)

The investment includes an exit fee that is receivable upon repayment of the loan. See Note 2 "Significant Accounting Policies".

(7)

In exchange for the greater risk of loss, the “last-out” portion of the Company's unitranche loan investment generally earns a higher interest rate than the “first-out” portions. The “first-out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last-out” portion that the Company would continue to hold.

(8)

The investment is on non-accrual status as of September 30, 2020.

(9)

Non-income producing security.

(10)

Securities exempt from registration under the Securities Act and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2020, the aggregate fair value of these securities is $34,550 or 3.73% of the Company's net assets. The acquisition dates of the restricted securities are as follows:

 

Investment

 

Acquisition Date

Accuity Delivery Systems, LLC - Preferred Stock

 

06/13/2018

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B - Common Stock

 

03/30/2018

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Performance Units - Common Stock

 

03/30/2018

Country Fresh Holding Company Inc. - Common Stock

 

04/29/2019

Elah Holdings, Inc. - Common Stock

 

05/09/2018

KDOR Holdings Inc. (dba Senneca Holdings) - Warrants

 

05/29/2020

KDOR Holdings Inc. (dba Senneca Holdings) - Warrants

 

05/29/2020

KDOR Holdings Inc. (dba Senneca Holdings) - Warrants

 

06/22/2020

National Spine and Pain Centers, LLC - Common Stock

 

06/02/2017

Recipe Acquisition Corp. (dba Roland Foods) - Preferred Stock

 

12/22/2016

Recipe Acquisition Corp. (dba Roland Foods) - Warrants

 

12/22/2016

Vantage Mobility International, LLC - Common Stock

 

05/23/2019

Vantage Mobility International, LLC - Preferred Stock

 

05/23/2019

Wine.com, LLC - Preferred Stock

 

11/14/2018

Wrike, Inc. - Common Stock

 

12/31/2018

Yasso, Inc. - Common Stock

 

03/23/2017

 

(11)

The annualized seven-day yield as of September 30, 2020 is 0.00%.

 

ADDITIONAL INFORMATION

 

Foreign currency forward contracts

 

Counterparty

 

Currency Purchased

 

Currency Sold

 

Settlement

 

Unrealized Appreciation

(Depreciation)

 

Bank of America, N.A.

 

USD 589

 

EUR 526

 

10/05/2020

 

$

(27

)

Bank of America, N.A.

 

USD 575

 

EUR 510

 

01/05/2021

 

 

(25

)

Bank of America, N.A.

 

USD 563

 

EUR 498

 

04/06/2021

 

 

(23

)

Bank of America, N.A.

 

USD 560

 

EUR 492

 

07/06/2021

 

 

(21

)

Bank of America, N.A.

 

USD 327

 

EUR 287

 

10/05/2021

 

 

(12

)

 

 

 

 

 

 

 

 

$

(108

)

 

Currency Abbreviations:

EUR - Euro

USD - U.S. Dollar

The accompanying notes are part of these unaudited consolidated financial statements.

12


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2019

(in thousands, except unit and per unit amounts)

 

Investment

 

Industry

 

Interest

Rate (+)

 

 

Reference Rate

and Spread (+)

 

Maturity

 

Par

Amount/

Shares

(++)

 

 

Cost

 

 

Fair

Value

 

Investments at Fair Value  - 159.49% #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Lien/Senior Secured Debt  - 99.08%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accuity Delivery Systems, LLC^ (1) (2) (3)

 

Health Care Providers & Services

 

8.75%

 

 

L + 7.00%; 1.00% Floor

 

06/13/2023

 

$

15,350

 

 

$

15,010

 

 

$

15,235

 

Associations, Inc.(1) (2) (3)

 

Real Estate Management & Development

 

9.09%

 

 

L + 7.00% (incl. 3.00% PIK); 1.00% Floor

 

07/30/2024

 

 

20,462

 

 

 

20,260

 

 

 

20,257

 

Associations, Inc.(1) (2) (3) (4)

 

Real Estate Management & Development

 

9.09%

 

 

L + 7.00% (incl. 3.00% PIK); 1.00% Floor

 

07/30/2024

 

 

4,503

 

 

 

3,082

 

 

 

3,080

 

Associations, Inc.(1) (2) (3) (4)

 

Real Estate Management & Development

 

 

 

 

L + 4.00%; 1.00% Floor

 

07/30/2024

 

 

886

 

 

 

(9

)

 

 

(9

)

Brillio, LLC(1) (2) (3)

 

IT Services

 

6.55%

 

 

L + 4.75%; 1.00% Floor

 

02/06/2025

 

 

6,955

 

 

 

6,894

 

 

 

6,885

 

Brillio, LLC(1) (3) (4)

 

IT Services

 

 

 

 

L + 4.75%; 1.00% Floor

 

02/06/2025

 

 

2,330

 

 

 

 

 

 

(23

)

Businessolver.com, Inc.(1) (2) (3)

 

Health Care Technology

 

9.41%

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

31,875

 

 

 

31,413

 

 

 

31,317

 

Businessolver.com, Inc.(1) (2) (3)

 

Health Care Technology

 

9.41%

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

4,781

 

 

 

4,706

 

 

 

4,698

 

Businessolver.com, Inc.(1) (2) (3) (4)

 

Health Care Technology

 

9.98%

 

 

L + 7.50%; 1.00% Floor

 

05/15/2023

 

 

3,984

 

 

 

1,539

 

 

 

1,524

 

Collaborative Imaging, LLC (dba Texas Radiology Associates)^^^ (1) (2) (3)

 

Health Care Providers & Services

 

8.30%

 

 

L + 6.50%; 1.00% Floor

 

03/28/2025

 

 

13,400

 

 

 

13,239

 

 

 

13,166

 

CorePower Yoga LLC(1) (2)

 

Diversified Consumer Services

 

6.44%

 

 

L + 4.50%

 

05/14/2025

 

 

13,136

 

 

 

12,955

 

 

 

12,938

 

CorePower Yoga LLC(1) (2) (4)

 

Diversified Consumer Services

 

 

 

 

L + 4.75%

 

05/14/2025

 

 

1,070

 

 

 

(14

)

 

 

(16

)

CorePower Yoga LLC(1) (2) (4)

 

Diversified Consumer Services

 

 

 

 

L + 4.50%

 

05/14/2025

 

 

2,854

 

 

 

(39

)

 

 

(43

)

Datacor Holdings, Inc.(2) (3)

 

Chemicals

 

9.50%

 

 

 

 

08/12/2022

 

 

13,693

 

 

 

13,554

 

 

 

13,557

 

Datacor Holdings, Inc.(3) (4)

 

Chemicals

 

9.50%

 

 

 

 

08/12/2022

 

 

2,000

 

 

 

1,178

 

 

 

1,180

 

DDS USA Holding, Inc.(1) (2) (3)

 

Health Care Equipment & Supplies

 

7.22%

 

 

L + 5.25%; 1.00% Floor

 

06/30/2022

 

 

5,731

 

 

 

5,710

 

 

 

5,702

 

DDS USA Holding, Inc.(1) (2) (3)

 

Health Care Equipment & Supplies

 

7.22%

 

 

L + 5.25%; 1.00% Floor

 

06/30/2022

 

 

5,420

 

 

 

5,401

 

 

 

5,393

 

DDS USA Holding, Inc.(1) (2) (3) (4)

 

Health Care Equipment & Supplies

 

9.00%

 

 

P + 4.25%; 1.00% Floor

 

06/30/2022

 

 

1,625

 

 

 

157

 

 

 

154

 

Diligent Corporation(1) (2) (3)

 

Professional Services

 

7.42%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

24,201

 

 

 

27,770

 

 

 

26,875

 

Diligent Corporation(1) (2) (3)

 

Professional Services

 

7.58%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

5,788

 

 

 

5,738

 

 

 

5,730

 

Diligent Corporation(1) (2) (3)

 

Professional Services

 

7.42%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

2,229

 

 

 

2,209

 

 

 

2,207

 

Diligent Corporation(1) (2) (3) (4)

 

Professional Services

 

7.48%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

1,900

 

 

 

1,642

 

 

 

1,653

 

Diligent Corporation(1) (2) (3)

 

Professional Services

 

7.56%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

767

 

 

 

759

 

 

 

759

 

Diligent Corporation(1) (2) (3)

 

Professional Services

 

7.42%

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

371

 

 

 

367

 

 

 

367

 

Diligent Corporation(1) (2) (3) (4)

 

Professional Services

 

 

 

 

L + 5.50%; 1.00% Floor

 

04/14/2022

 

 

6,448

 

 

 

(56

)

 

 

(64

)

DiscoverOrg, LLC(1) (2)

 

Software

 

6.30%

 

 

L + 4.50%

 

02/02/2026

 

 

24,912

 

 

 

24,688

 

 

 

24,974

 

DocuTAP, Inc.(1) (2) (3)

 

Health Care Technology

 

7.30%

 

 

L + 5.50%; 1.00% Floor

 

05/12/2025

 

 

37,214

 

 

 

36,364

 

 

 

37,214

 

Empirix, Inc.(1) (2) (3)

 

Diversified Telecommunication Services

 

8.20%

 

 

L + 6.25%; 1.00% Floor

 

09/25/2024

 

 

33,374

 

 

 

32,890

 

 

 

30,036

 

Empirix, Inc.(1) (2) (3) (4)

 

Diversified Telecommunication Services

 

 

 

 

L + 6.25%; 1.00% Floor

 

09/25/2023

 

 

1,900

 

 

 

(25

)

 

 

(190

)

Fenergo Finance 3 Limited(1) (2) (3) (5)

 

Diversified Financial Services

 

8.31%

 

 

L + 6.25%; 1.00% Floor

 

09/05/2024

 

26,900

 

 

 

30,816

 

 

 

29,947

 

Fenergo Finance 3 Limited(1) (2) (3) (4) (5)

 

Diversified Financial Services

 

 

 

 

L + 6.25%; 1.00% Floor

 

09/05/2024

 

 

1,785

 

 

 

(24

)

 

 

(13

)

Fenergo Finance 3 Limited(1) (2) (3) (4) (5)

 

Diversified Financial Services

 

 

 

 

L + 6.25%; 1.00% Floor

 

09/05/2024

 

2,300

 

 

 

(37

)

 

 

(19

)

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

7.29%

 

 

L + 5.50%; 1.00% Floor

 

08/21/2023

 

 

13,364

 

 

 

13,143

 

 

 

13,230

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

7.29%

 

 

L + 5.50%; 1.00% Floor

 

08/21/2023

 

 

2,670

 

 

 

2,627

 

 

 

2,643

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3)

 

Hotels, Restaurants & Leisure

 

7.29%

 

 

L + 5.50%; 1.00% Floor

 

08/21/2023

 

 

1,688

 

 

 

1,661

 

 

 

1,671

 

FWR Holding Corporation (dba First Watch Restaurants)(2) (3) (4)

 

Hotels, Restaurants & Leisure

 

7.29%

 

 

L + 5.50%; 1.00% Floor

 

08/21/2023

 

 

1,764

 

 

 

1,471

 

 

 

1,482

 

Gastro Health Holdco, LLC(1) (2) (3)

 

Health Care Providers & Services

 

7.45%

 

 

L + 5.50%; 1.00% Floor

 

09/04/2024

 

 

15,152

 

 

 

14,904

 

 

 

14,925

 

Gastro Health Holdco, LLC(1) (2) (3)

 

Health Care Providers & Services

 

7.43%

 

 

L + 5.50%; 1.00% Floor

 

09/04/2024

 

 

7,669

 

 

 

7,540

 

 

 

7,554

 

Gastro Health Holdco, LLC(1) (3) (4)

 

Health Care Providers & Services

 

7.40%

 

 

L + 5.50%; 1.00% Floor

 

09/04/2024

 

 

7,356

 

 

 

6,121

 

 

 

6,108

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

13


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

 

Investment

 

Industry

 

Interest Rate (+)

 

 

Reference Rate and

Spread (+)

 

Maturity

 

Par

Amount/Shares

(++)

 

 

Cost

 

 

Fair

Value

 

Gastro Health Holdco, LLC(1) (2) (3) (4)

 

Health Care Providers & Services

 

 

 

 

 

L + 5.50%; 1.00% Floor

 

09/04/2023

 

$

3,100

 

 

$

(46

)

 

$

(46

)

Gastro Health Holdco, LLC(1) (3) (4)

 

Health Care Providers & Services

 

 

 

 

 

L + 5.50%; 1.00% Floor

 

09/04/2024

 

 

7,700

 

 

 

(63

)

 

 

(116

)

GlobalTranz Enterprises, Inc.(1) (2)

 

Road & Rail

 

6.79%

 

 

L + 5.00%

 

05/15/2026

 

 

12,134

 

 

 

11,907

 

 

 

11,042

 

GlobalTranz Enterprises, Inc.(1)(2) (4)

 

Road & Rail

 

 

 

 

 

L + 5.00%

 

05/15/2026

 

 

3,147

 

 

 

 

 

 

(283

)

Granicus, Inc.(1) (2)

 

Software

 

6.69%

 

 

L + 4.75%; 1.00% Floor

 

09/07/2022

 

 

15,512

 

 

 

15,386

 

 

 

15,357

 

Hygiena Borrower LLC(2)

 

Life Sciences Tools & Services

 

5.94%

 

 

L + 4.00%; 1.00% Floor

 

08/26/2022

 

 

5,630

 

 

 

5,573

 

 

 

5,517

 

Hygiena Borrower LLC(2) (4)

 

Life Sciences Tools & Services

 

 

 

 

 

L + 4.00%; 1.00% Floor

 

08/26/2022

 

 

580

 

 

 

(6

)

 

 

(12

)

Hygiena Borrower LLC(2) (4)

 

Life Sciences Tools & Services

 

 

 

 

 

L + 4.00%; 1.00% Floor

 

08/26/2022

 

 

863

 

 

 

(4

)

 

 

(17

)

iCIMS, Inc.(1) (2) (3)

 

Software

 

8.29%

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

45,158

 

 

 

44,414

 

 

 

44,367

 

iCIMS, Inc.(1) (3)

 

Software

 

8.29%

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

8,317

 

 

 

8,164

 

 

 

8,171

 

iCIMS, Inc.(1) (3) (4)

 

Software

 

 

 

 

 

L + 6.50%; 1.00% Floor

 

09/12/2024

 

 

2,822

 

 

 

(44

)

 

 

(49

)

Integral Ad Science, Inc.(1) (2) (3)

 

Interactive Media & Services

 

9.05%

 

 

L + 7.25% (incl. 1.25% PIK); 1.00% Floor

 

07/19/2024

 

 

38,740

 

 

 

38,121

 

 

 

38,158

 

Integral Ad Science, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

 

 

 

 

L + 6.00%; 1.00% Floor

 

07/19/2023

 

 

2,741

 

 

 

(39

)

 

 

(41

)

Internet Truckstop Group, LLC (dba Truckstop)(1) (2) (3)

 

Transportation Infrastructure

 

6.95%

 

 

L + 5.00%; 1.00% Floor

 

04/02/2025

 

 

34,328

 

 

 

33,558

 

 

 

33,813

 

Internet Truckstop Group, LLC (dba Truckstop)(1) (2) (3) (4)

 

Transportation Infrastructure

 

 

 

 

 

L + 5.00%; 1.00% Floor

 

04/02/2025

 

 

2,800

 

 

 

(61

)

 

 

(42

)

Lithium Technologies, Inc.(1) (2) (3)

 

Interactive Media & Services

 

10.04%

 

 

L + 8.00%; 1.00% Floor

 

10/03/2022

 

 

58,727

 

 

 

57,833

 

 

 

57,846

 

Lithium Technologies, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

 

 

 

 

L + 8.00%; 1.00% Floor

 

10/03/2022

 

 

4,046

 

 

 

(56

)

 

 

(61

)

Mailgun Technologies, Inc.(1) (2) (3)

 

Interactive Media & Services

 

6.95%

 

 

L + 5.00%; 1.00% Floor

 

03/26/2025

 

 

20,227

 

 

 

19,864

 

 

 

19,873

 

Mailgun Technologies, Inc.(1) (2) (3) (4)

 

Interactive Media & Services

 

 

 

 

 

L + 5.00%; 1.00% Floor

 

03/26/2025

 

 

2,370

 

 

 

1

 

 

 

(41

)

Midwest Transport, Inc.(1) (2) (3)

 

Road & Rail

 

9.06%

 

 

L + 7.00%; 1.00% Floor

 

10/02/2023

 

 

18,000

 

 

 

17,858

 

 

 

17,820

 

MMIT Holdings, LLC (dba Managed Markets Insight & Technology)(1) (2) (3)

 

Health Care Technology

 

7.43%

 

 

L + 5.50%; 1.00% Floor

 

11/15/2024

 

 

31,318

 

 

 

30,769

 

 

 

30,769

 

MMIT Holdings, LLC (dba Managed Markets Insight & Technology)(1) (3) (4)

 

Health Care Technology

 

7.44%

 

 

L + 5.50%; 1.00% Floor

 

11/15/2024

 

 

4,788

 

 

 

1,262

 

 

 

1,257

 

Netvoyage Corporation (dba NetDocuments)(1) (2) (3)

 

Software

 

9.55%

 

 

L + 7.75%; 1.00% Floor

 

03/22/2024

 

 

13,590

 

 

 

13,409

 

 

 

13,420

 

Netvoyage Corporation (dba NetDocuments)(1) (2) (3) (4)

 

Software

 

 

 

 

 

L + 7.75%; 1.00% Floor

 

03/24/2022

 

 

1,044

 

 

 

(9

)

 

 

(13

)

Pathway Vet Alliance LLC(1) (2) (3)

 

Health Care Providers & Services

 

6.30%

 

 

L + 4.50%

 

12/20/2024

 

 

7,375

 

 

 

7,311

 

 

 

7,302

 

Pathway Vet Alliance LLC(1) (2) (3)

 

Health Care Providers & Services

 

6.30%

 

 

L + 4.50%

 

12/20/2024

 

 

2,607

 

 

 

2,583

 

 

 

2,581

 

Picture Head Midco LLC(1) (2) (3)

 

Entertainment

 

8.55%

 

 

L + 6.75%; 1.00% Floor

 

08/31/2023

 

 

29,119

 

 

 

28,639

 

 

 

28,682

 

Power Stop, LLC(1) (2)

 

Auto Components

 

6.44%

 

 

L + 4.50%

 

10/19/2025

 

 

11,385

 

 

 

11,360

 

 

 

11,271

 

SF Home Décor, LLC (dba SureFit Home Décor)(1) (2) (3)

 

Household Products

 

11.70%

 

 

L + 9.75%; 1.00% Floor

 

07/13/2022

 

 

28,045

 

 

 

27,429

 

 

 

26,993

 

Shopatron, LLC (dba Kibo)(1) (3)

 

Internet & Direct Marketing Retail

 

9.95%

 

 

L + 8.00%; 1.00% Floor

 

12/18/2020

 

 

9,366

 

 

 

9,207

 

 

 

9,225

 

Shopatron, LLC (dba Kibo)(1) (3)(10)

 

Internet & Direct Marketing Retail

 

9.95%

 

 

L + 8.00%; 1.00% Floor

 

12/18/2020

 

 

2,887

 

 

 

2,858

 

 

 

2,844

 

SPay, Inc. (dba Stack Sports)(1) (2) (3)

 

Interactive Media & Services

 

7.55%

 

 

L + 5.75%; 1.00% Floor

 

06/17/2024

 

 

15,548

 

 

 

15,304

 

 

 

15,042

 

SPay, Inc. (dba Stack Sports)(1) (2) (3) (4)

 

Interactive Media & Services

 

7.52%

 

 

L + 5.75%; 1.00% Floor

 

06/17/2024

 

 

1,730

 

 

 

1,127

 

 

 

1,097

 

SPay, Inc. (dba Stack Sports)(1) (2) (3)

 

Interactive Media & Services

 

7.76%

 

 

L + 5.75%; 1.00% Floor

 

06/17/2024

 

 

575

 

 

 

571

 

 

 

557

 

Viant Medical Holdings, Inc.(1) (2)

 

Health Care Equipment & Supplies

 

8.16%

 

 

L + 6.25%; 1.00% Floor

 

07/02/2025

 

 

19,608

 

 

 

19,281

 

 

 

19,412

 

VRC Companies, LLC (dba Vital Records Control)(2) (3)

 

Commercial Services & Supplies

 

8.30%

 

 

L + 6.50%; 1.00% Floor

 

03/31/2023

 

 

10,602

 

 

 

10,522

 

 

 

10,522

 

VRC Companies, LLC (dba Vital Records Control)(2) (3)(4)

 

Commercial Services & Supplies

 

8.60%

 

 

L + 6.50%; 1.00% Floor

 

03/31/2022

 

 

264

 

 

 

144

 

 

 

144

 

Wine.com, LLC(1) (2) (3)

 

Beverages

 

8.93%

 

 

L + 7.00%; 1.00% Floor

 

11/14/2024

 

 

9,600

 

 

 

9,437

 

 

 

9,408

 

Wrike, Inc.(1) (2) (3)

 

Professional Services

 

8.55%

 

 

L + 6.75%; 1.00% Floor

 

12/31/2024

 

 

34,190

 

 

 

33,573

 

 

 

33,507

 

Wrike, Inc.(1) (2) (3) (4)

 

Professional Services

 

 

 

 

 

L + 6.75%; 1.00% Floor

 

12/31/2024

 

 

2,400

 

 

 

(40

)

 

 

(48

)

Xactly Corporation(1) (2) (3)

 

IT Services

 

9.05%

 

 

L + 7.25%; 1.00% Floor

 

07/29/2022

 

 

40,879

 

 

 

40,366

 

 

 

40,368

 

Xactly Corporation(1) (2) (3) (4)

 

IT Services

 

 

 

 

 

L + 7.25%; 1.00% Floor

 

07/29/2022

 

 

2,554

 

 

 

(27

)

 

 

(32

)

Yasso, Inc.(1) (2) (3)

 

Food Products

 

9.55%

 

 

L + 7.75%; 1.00% Floor

 

03/23/2022

 

 

12,792

 

 

 

12,664

 

 

 

12,376

 

Total 1st Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

875,704

 

 

 

870,024

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

14


Table of Contents

 

Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

 

Investment

 

Industry

 

Interest

Rate (+)

 

 

Reference Rate

and Spread (+)

 

Maturity

 

 

Par

Amount/

Shares (++)

 

 

 

Cost

 

 

 

Fair

Value

 

1st Lien/Last-Out Unitranche(6) - 14.49%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doxim, Inc.(1) (2) (3)

 

Diversified Financial Services

 

7.94%

 

 

L + 6.00%; 1.00% Floor

 

02/28/2024

 

$

30,800

 

 

$

30,051

 

 

$

30,030

 

Doxim, Inc.(1) (2) (3)

 

Diversified Financial Services

 

7.90%

 

 

L + 6.00%; 1.00% Floor

 

02/28/2024

 

 

23,822

 

 

 

23,258

 

 

 

23,227

 

RugsUSA, LLC(1) (2) (3)

 

Household Products

 

8.45%

 

 

L + 6.50%; 1.00% Floor

 

04/30/2023

 

 

8,830

 

 

 

8,767

 

 

 

8,764

 

Smarsh, Inc.(1) (2) (3)

 

Interactive Media & Services

 

9.68%

 

 

L + 7.88%; 1.00% Floor

 

03/31/2021

 

 

56,070

 

 

 

55,638

 

 

 

55,650

 

Vantage Mobility International, LLC(2) (3)

 

Health Care Equipment & Supplies

 

7.80%

 

 

L + 6.00% PIK; 1.00% Floor

 

06/30/2023

 

 

10,549

 

 

 

10,550

 

 

 

9,600

 

Vantage Mobility International, LLC(2) (3) (4)

 

Health Care Equipment & Supplies

 

 

 

 

L + 6.00% PIK; 1.00% Floor

 

06/30/2023

 

 

717

 

 

 

 

 

 

(65

)

Total 1st Lien/Last-Out Unitranche

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

128,264

 

 

 

127,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2nd Lien/Senior Secured Debt  - 42.09%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Dental Partners, Inc.(1) (2) (3)

 

Health Care Providers & Services

 

10.44%

 

 

L + 8.50%; 1.00% Floor

 

09/25/2023

 

$

9,180

 

 

$

9,031

 

 

$

9,019

 

Chase Industries, Inc. (dba Senneca Holdings)(1)(2)(3)

 

Building Products

 

11.55%

 

 

L + 9.50% (incl. 3.00% PIK); 1.00% Floor

 

05/11/2026

 

 

25,700

 

 

 

25,040

 

 

 

24,094

 

DiscoverOrg, LLC(1) (2)

 

Software

 

10.19%

 

 

L + 8.50%

 

02/01/2027

 

 

15,400

 

 

 

15,186

 

 

 

15,400

 

ERC Finance, LLC (dba Eating Recovery Center)(1) (2) (3)

 

Health Care Providers & Services

 

10.02%

 

 

L + 8.22%; 1.00% Floor

 

09/22/2025

 

 

29,800

 

 

 

29,270

 

 

 

29,278

 

Genesis Acquisition Co. (dba ProCare Software)(1) (2) (3)

 

Diversified Financial Services

 

9.60%

 

 

L + 7.50%

 

07/31/2025

 

 

10,500

 

 

 

10,277

 

 

 

10,238

 

Genesis Acquisition Co. (dba ProCare Software)(1) (2) (3) (4)

 

Diversified Financial Services

 

 

 

 

L + 7.50%

 

07/31/2025

 

 

2,700

 

 

 

(27

)

 

 

(68

)

Hygiena Borrower LLC(2) (3)

 

Life Sciences Tools & Services

 

9.69%

 

 

L + 7.75%; 1.00% Floor

 

08/26/2023

 

 

2,810

 

 

 

2,767

 

 

 

2,761

 

Hygiena Borrower LLC(2) (3) (4)

 

Life Sciences Tools & Services

 

9.69%

 

 

L + 7.75%; 1.00% Floor

 

08/26/2023

 

 

1,030

 

 

 

139

 

 

 

129

 

ICP Industrial, Inc.(1) (2) (3)

 

Chemicals

 

10.04%

 

 

L + 8.25%; 1.00% Floor

 

05/03/2024

 

 

30,700

 

 

 

30,137

 

 

 

30,086

 

Intelligent Medical Objects, Inc.(1) (2) (3)

 

Health Care Technology

 

10.81%

 

 

L + 8.50%; 1.00% Floor

 

12/22/2024

 

 

23,100

 

 

 

22,637

 

 

 

22,638

 

Market Track, LLC(1) (2) (3)

 

Media

 

9.68%

 

 

L + 7.75%; 1.00% Floor

 

06/05/2025

 

 

32,800

 

 

 

32,054

 

 

 

31,570

 

National Spine and Pain Centers, LLC(1) (2) (3)

 

Health Care Providers & Services

 

10.05%

 

 

L + 8.25%; 1.00% Floor

 

12/02/2024

 

 

28,500

 

 

 

27,870

 

 

 

27,431

 

Odyssey Logistics & Technology Corporation(1) (2)

 

Road & Rail

 

9.80%

 

 

L + 8.00%; 1.00% Floor

 

10/12/2025

 

 

28,152

 

 

 

27,639

 

 

 

27,167

 

Recipe Acquisition Corp. (dba Roland Foods)(2) (3)

 

Food Products

 

9.94%

 

 

L + 8.00%; 1.00% Floor

 

12/01/2022

 

 

20,000

 

 

 

19,749

 

 

 

19,750

 

SMB Shipping Logistics, LLC (dba Worldwide Express)(1) (2) (3)

 

Air Freight & Logistics

 

9.90%

 

 

L + 8.00%; 1.00% Floor

 

02/03/2025

 

 

33,333

 

 

 

32,885

 

 

 

32,750

 

Spectrum Plastics Group, Inc.(1) (2)

 

Containers & Packaging

 

8.80%

 

 

L + 7.00%; 1.00% Floor

 

01/31/2026

 

 

9,975

 

 

 

9,934

 

 

 

7,864

 

USRP Holdings, Inc. (dba U.S. Retirement Partners)(1) (2) (3)

 

Insurance

 

10.68%

 

 

L + 8.75%; 1.00% Floor

 

09/29/2025

 

 

10,300

 

 

 

10,193

 

 

 

10,197

 

USRP Holdings, Inc. (dba U.S. Retirement Partners)(1) (2) (3) (4)

 

Insurance

 

10.72%

 

 

L + 8.75%; 1.00% Floor

 

09/29/2025

 

 

2,600

 

 

 

1,690

 

 

 

1,690

 

Xcellence, Inc. (dba Xact Data Discovery)(1) (2)(3)

 

IT Services

 

10.70%

 

 

L + 8.75%; 1.00% Floor

 

06/22/2024

 

 

27,900

 

 

 

27,331

 

 

 

27,482

 

YI, LLC (dba Young Innovations)(1) (2) (3)

 

Health Care Equipment & Supplies

 

9.69%

 

 

L + 7.75%; 1.00% Floor

 

11/07/2025

 

 

22,903

 

 

 

22,351

 

 

 

22,330

 

Zep Inc.(1) (2)

 

Chemicals

 

10.19%

 

 

L + 8.25%; 1.00% Floor

 

08/11/2025

 

 

35,700

 

 

 

34,998

 

 

 

17,850

 

Total 2nd Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

391,151

 

 

 

369,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured Debt  - 0.55%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recipe Acquisition Corp. (dba Roland Foods)(3)

 

Food Products

 

13.25% PIK

 

 

 

 

12/21/2022

 

$

4,938

 

 

$

4,898

 

 

$

4,877

 

Total Unsecured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,898

 

 

 

4,877

 

 

 

The accompanying notes are part of these unaudited consolidated financial statements.

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Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

 

Investment

 

Industry

 

Interest Rate

 

Par

Amount/

Shares (++)

 

 

Cost

 

 

Fair Value

 

Preferred Stock  - 1.82%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accuity Delivery Systems, LLC^ (1) (3) (7) (8)

 

Health Care Providers & Services

 

 

 

 

145,695

 

 

$

4,800

 

 

$

7,680

 

Recipe Acquisition Corp. (dba Roland Foods)(3) (7) (8)

 

Food Products

 

11.00% PIK

 

 

1,600

 

 

 

1,496

 

 

 

2,133

 

Vantage Mobility International, LLC(3) (7) (8)

 

Health Care Equipment & Supplies

 

 

 

 

11,486,738

 

 

 

6,010

 

 

 

2,986

 

Wine.com, LLC(1) (3) (7) (8)

 

Beverages

 

 

 

 

337,425

 

 

 

2,900

 

 

 

3,155

 

Total Preferred Stock

 

 

 

 

 

 

 

 

 

 

15,206

 

 

 

15,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock  - 1.45%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B^^^ (1) (3) (8)

 

Health Care Providers & Services

 

 

 

 

12,370

 

 

$

1,668

 

 

$

2,363

 

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Performance Units^^^ (1) (3) (5) (7) (8)

 

Health Care Providers & Services

 

 

 

 

11,675

 

 

 

232

 

 

 

679

 

Country Fresh Holding Company Inc.(1) (3) (7) (8)

 

Food Products

 

 

 

 

986

 

 

 

1,232

 

 

 

854

 

Elah Holdings, Inc.^ (1) (3) (7) (8)

 

Capital Markets

 

 

 

 

69,386

 

 

 

3,354

 

 

 

3,354

 

National Spine and Pain Centers, LLC(1) (3) (7) (8)

 

Health Care Providers & Services

 

 

 

 

900

 

 

 

900

 

 

 

180

 

Vantage Mobility International, LLC(3) (7) (8)

 

Health Care Equipment & Supplies

 

 

 

 

5,371,684

 

 

 

 

 

 

 

Wrike, Inc.(1) (3) (7) (8)

 

Professional Services

 

 

 

 

5,247,296

 

 

 

3,260

 

 

 

4,523

 

Yasso, Inc.(1) (3) (7) (8)

 

Food Products

 

 

 

 

1,360

 

 

 

1,360

 

 

 

746

 

        Total Common Stock

 

 

 

 

 

 

 

 

 

 

12,006

 

 

 

12,699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment

 

Industry

 

 

 

Units

 

 

Cost

 

 

Fair Value

 

Warrants  - 0.01%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recipe Acquisition Corp. (dba Roland Foods)(3) (8)

 

Food Products

 

 

 

 

44

 

 

$

104

 

 

$

95

 

        Total Warrants

 

 

 

 

 

 

 

 

 

 

104

 

 

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yield

 

Shares

 

 

Cost

 

 

Fair Value

 

Investments in Affiliated Money Market Fund -2.54%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs Financial Square Government Fund - Institutional Shares^^^

 

1.50%(9)

 

 

22,296,900

 

 

$

22,297

 

 

$

22,297

 

        Total Investments in Affiliated Money Market Fund

 

 

 

 

 

 

 

 

 

 

22,297

 

 

 

22,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 162.03%

 

 

 

 

 

 

 

 

 

$

1,449,630

 

 

$

1,422,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS - (62.03%)

 

 

 

 

 

 

 

 

 

 

 

$

(544,675

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS - 100.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

$

878,133

 

 

(+)

Represents the actual interest rate for partially or fully funded debt in effect as of the reporting date. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR ("L") or alternate base rate (commonly based on the Prime Rate ("P")), at the borrower's option, which reset periodically based on the terms of the credit agreement. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, 1 month or 1 week L rates. As of December 31, 2019, rates for the 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L are 2.00%, 1.91%, 1.91%, 1.83%, 1.76% and 1.63%. As of December 31, 2019, P was 4.75%. For investments with multiple reference rates or alternate base rates, the interest rate shown is the weighted average interest rate in effect at December 31, 2019.

(++)

The total par amount is presented for debt investments, while the number of shares or units owned is presented for equity investments. Par amount is denominated in U.S. Dollars ("$") unless otherwise noted, Euro ("€").

#

Percentages are based on net assets.

^

As defined in the Investment Company Act of 1940, the investment is deemed to be an “affiliated person” of the Company because the Company owns, either directly or indirectly, 5% or more of the portfolio company's outstanding voting securities. See Note 3 “Significant Agreements and Related Party Transactions”.

^^^

The portfolio company is otherwise deemed to be an “affiliated person” of the Company under the Investment Company Act of 1940. See Note 3 "Significant Agreements and Related Party Transactions".

(1)

Represent co-investments made with the Company’s affiliates in accordance with the terms of the exemptive relief that the Company received from the U.S. Securities and Exchange Commission. See Note 3 “Significant Agreements and Related Party Transactions”.

(2)

All, or a portion of, the assets are pledged as collateral for the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”). See Note 6 “Debt”.

(3)

The fair value of the investment was determined using significant unobservable inputs. See Note 5 “Fair Value Measurement”.

(4)

Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. The negative cost, if applicable, is the result of the capitalized discount being greater than the principal amount outstanding on the loan. The negative fair value, if applicable, is the result of the capitalized discount on the loan. See Note 8 "Commitments and Contingencies".

 

The accompanying notes are part of these unaudited consolidated financial statements.

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Goldman Sachs Private Middle Market Credit LLC

Consolidated Schedule of Investments as of December 31, 2019 (continued)

(in thousands, except unit and per unit amounts)

 

(5)

The investment is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940. The Company may not acquire any non-qualifying asset unless, at the time of acquisition, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2019, the aggregate fair value of these securities is $30,594 or 2.11% of the Company's total assets.

(6)

In exchange for the greater risk of loss, the “last-out” portion of the Company's unitranche loan investment generally earns a higher interest rate than the “first-out” portions. The “first-out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last-out” portion that the Company would continue to hold.

(7)

Non-income producing security.

(8)

Securities exempt from registration under the Securities Act and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2019, the aggregate fair value of these securities is $28,748 or 3.27% of the Company's net assets. The acquisition dates of the restricted securities are as follows:

 

Investment

 

Acquisition Date

Accuity Delivery Systems, LLC - Preferred Stock

 

06/13/2018

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B - Common Stock

 

03/30/2018

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Performance Units - Common Stock

 

03/30/2018

Country Fresh Holding Company Inc. - Common Stock

 

04/29/2019

Elah Holdings, Inc. - Common Stock

 

05/09/2018

National Spine and Pain Centers, LLC - Common Stock

 

06/02/2017

Recipe Acquisition Corp. (dba Roland Foods) - Preferred Stock

 

12/22/2016

Recipe Acquisition Corp. (dba Roland Foods) - Warrants

 

12/22/2016

Vantage Mobility International, LLC - Common Stock

 

05/23/2019

Vantage Mobility International, LLC - Preferred Stock

 

05/23/2019

Wine.com, LLC - Preferred Stock

 

11/14/2018

Wrike, Inc. - Common Stock

 

12/31/2018

Yasso, Inc. - Common Stock

 

03/23/2017

 

(9)

The rate shown is the annualized seven-day yield as of December 31, 2019.

(10)

The investment includes an exit fee that is receivable upon repayment of the loan. See Note 2 “Significant Accounting Policies”.

 

ADDITIONAL INFORMATION

 

Foreign currency forward contracts

 

Counterparty

 

Currency Purchased

 

Currency Sold

 

Settlement

 

Unrealized Appreciation

(Depreciation)

Bank of America, N.A.

 

USD 472

 

EUR 390

 

01/06/2020

 

$

34

Bank of America, N.A.

 

USD 177

 

EUR 160

 

01/06/2020

 

 

(3)

Bank of America, N.A.

 

USD 479

 

EUR 393

 

04/06/2020

 

 

36

Bank of America, N.A.

 

USD 271

 

EUR 244

 

04/06/2020

 

 

(4)

Bank of America, N.A.

 

USD 254

 

EUR 228

 

07/06/2020

 

 

(4)

Bank of America, N.A.

 

USD 480

 

EUR 390

 

07/06/2020

 

 

37

Bank of America, N.A.

 

USD 589

 

EUR 526

 

10/05/2020

 

 

(11)

Bank of America, N.A.

 

USD 575

 

EUR 510

 

01/05/2021

 

 

(11)

Bank of America, N.A.

 

USD 563

 

EUR 498

 

04/06/2021

 

 

(11)

Bank of America, N.A.

 

USD 560

 

EUR 492

 

07/06/2021

 

 

(11)

Bank of America, N.A.

 

USD 327

 

EUR 287

 

10/05/2021

 

 

(7)

 

 

 

 

 

 

 

 

$

45

 

 

 

 

 

 

Currency Abbreviations:

EUR - Euro

USD - U.S. Dollar

 

The accompanying notes are part of these unaudited consolidated financial statements.

 

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Goldman Sachs Private Middle Market Credit LLC

Notes to the Consolidated Financial Statements

(in thousands, except unit and per unit amounts)

(Unaudited)

1.

ORGANIZATION

Goldman Sachs Private Middle Market Credit LLC (the “Company”, which term refers to either Goldman Sachs Private Middle Market Credit LLC or Goldman Sachs Private Middle Market Credit LLC together with its consolidated subsidiaries, as the context may require), initially established on December 23, 2015 as Private Middle Market Credit LP, a Delaware limited partnership, converted to a Delaware limited liability company on April 4, 2016 and commenced investment operations on July 1, 2016. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2016.

The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien debt, unitranche loans, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

Goldman Sachs Asset Management, L.P. (“GSAM”), a Delaware limited partnership and an affiliate of Goldman Sachs & Co. LLC (including its predecessors, “GS & Co.”), is the investment adviser (the “Investment Adviser”) of the Company. The term “Goldman Sachs” refers to The Goldman Sachs Group, Inc. (“Group Inc.”), together with GS & Co., GSAM and its other subsidiaries.

On May 6, 2016 (the “Initial Closing Date”), the Company began accepting subscription agreements (“Subscription Agreements”) from investors acquiring common units of the Company’s limited liability company interests (“Units”) in the Company’s private offering. Under the terms of the Subscription Agreements, investors are required to make capital contributions up to the undrawn amount of their capital commitment to purchase Units each time the Company delivers a drawdown notice. On November 1, 2016, the Company’s board of directors (the “Board of Directors” or the “Board”) approved an amended and restated limited liability company agreement and approved an extension of the final date on which the Company would accept Subscription Agreements to May 5, 2017.

The investment period commenced on the Initial Closing Date and continued through May 5, 2019. Following the end of the investment period, the Company has the right to issue drawdowns only (i) to pay, and/or establish reserves for, actual or anticipated Company expenses, liabilities, including the payment or repayment of indebtedness for borrowed money (including through the issuance of notes and other evidence of indebtedness), other indebtedness, financings or extensions of credit, or other obligations, contingent or otherwise, including the Management Fee (as defined below), whether incurred before or after the end of the investment period, (ii) to fulfill investment commitments made or approved by the investment committee of GSAM’s Private Credit Group (“the Investment Committee”) prior to the expiration of the investment period, (iii) to engage in hedging transactions or (iv) to make additional investments in existing portfolio companies (including transactions to hedge interest rate or currency risks related to such additional investment).

The term of the Company is until May 5, 2024, subject to the Board of Directors’ right to liquidate the Company at any time and to extend the term of the Company for up to two successive one-year periods. Upon the request of the Board of Directors and the approval of a majority-in-interest of the Unitholders, the term of the Company may be further extended.

The Company has formed certain wholly owned subsidiaries, which are structured as Delaware limited liability companies, to hold certain investments, including equity or equity-like investments in portfolio companies and corporate debt of portfolio companies.

2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s functional currency is U.S. dollars (“USD”) and these consolidated financial statements have been prepared in that currency. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to Regulation S-X. This requires the Company to make certain estimates and assumptions that may affect the amounts reported in the consolidated financial statements and accompanying notes. These consolidated financial statements reflect normal and recurring adjustments that in the opinion of the Company are necessary for the fair statement of the results for the periods presented. Actual results may differ from the estimates and assumptions included in the consolidated financial statements.

Certain financial information that is included in annual consolidated financial statements, including certain financial statement disclosures, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes related thereto for the year ended December 31, 2019, included in the Company’s annual report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 20, 2020. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year, any other interim period or any future year or period.

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Table of Contents

 

Certain prior period information has been reclassified to conform to the current period presentation. The reclassification has no effect on the Company’s consolidated financial position or the consolidated results of operations as previously reported.

As an investment company, the Company applies the accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”) issued by the Financial Accounting Standards Board (“FASB”).

Basis of Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the financial position and results of operations of its wholly owned subsidiaries, PMMC Blocker I, LLC (formerly known as My-On PMMC Blocker, LLC), PMMC Blocker II, LLC, PMMC Wine I, LLC and Goldman Sachs Private Middle Market Credit SPV LLC (“SPV”). All significant intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

The Company records its investment transactions on a trade date basis, which is the date when the Company assumes the risks for gains and losses related to that instrument. Realized gains and losses are based on the specific identification method.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums to par value on investments purchased are accreted and amortized, respectively, into interest income over the life of the respective investment using the effective interest method. Loan origination fees, original issue discount (“OID”) and market discounts or premiums are capitalized and amortized into interest income using the effective interest method or straight-line method, as applicable. Exit fees that are receivable upon repayment of a loan or debt security are amortized into interest income over the life of the respective investment. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income, for which the Company has earned the following:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

Prepayment premiums

 

$

701

 

 

$

 

 

$

855

 

 

$

1,686

 

Accelerated amortization of upfront loan origination fees and unamortized discounts

 

$

240

 

 

$

544

 

 

$

815

 

 

$

3,089

 

 

Fees received from portfolio companies (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) are paid to the Company, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, the Company only receives its allocable portion of such fees when invested in the same portfolio company as another account managed by the Investment Adviser.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the principal amount or shares (if equity) of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity or upon the investment being called by the issuer. PIK is recorded as interest or dividend income, as applicable. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively.

Certain structuring fees, amendment fees, syndication fees and commitment fees are recorded as other income when earned. Administrative agent fees received by the Company are recorded as other income when the services are rendered over time.

Non-Accrual Investments

Investments are placed on non-accrual status when it is probable that principal, interest or dividends will not be collected according to contractual terms. Accrued interest or dividends generally are reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual investments are restored to accrual status when past due principal and interest or dividends are paid and, in management’s judgment, principal and interest or dividend payments are likely to remain current. The Company may make exceptions to this treatment if an investment has sufficient collateral value and is in the process of collection. As of September 30, 2020, the Company had an investment held in one portfolio company on non-accrual status, which represented 0.9% and 0.0% of the total investments (excluding an investment in a money market fund, if any, managed by an affiliate of Group Inc.) at amortized cost and at fair value, respectively. As of December 31, 2019, the Company did not have any investments on non-accrual status.

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Table of Contents

 

Investments

The Company carries its investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), issued by the FASB, which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations or alternative price sources. In the absence of quoted market prices, broker or dealer quotations or alternative price sources, investments are measured at fair value as determined by the Board of Directors within the meaning of the Investment Company Act.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. See Note 5 “Fair Value Measurement.”

The Company generally invests in illiquid securities, including debt and equity investments, of middle-market companies. The Board of Directors has delegated to the Investment Adviser day-to-day responsibility for implementing and maintaining internal controls and procedures related to the valuation of the Company’s portfolio investments. Under valuation procedures adopted by the Board of Directors, market quotations are generally used to assess the value of the investments for which market quotations are readily available. The Investment Adviser obtains these market quotations from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available; otherwise from a principal market maker or a primary market dealer. To assess the continuing appropriateness of pricing sources and methodologies, the Investment Adviser regularly performs price verification procedures and issues challenges as necessary to independent pricing services or brokers, and any differences are reviewed in accordance with the valuation procedures. If the Board of Directors or Investment Adviser has a bona fide reason to believe any such market quotation does not reflect the fair value of an investment, it may independently value such investment in accordance with valuation procedures for investments for which market quotations are not readily available.

With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by the Board of Directors contemplate a multi-step valuation process each quarter, as described below:

 

(1)

The quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Investment Adviser responsible for the portfolio investment;

 

(2)

The Board of Directors also engages independent valuation firms (the “Independent Valuation Advisors”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Advisors independently value such investments using quantitative and qualitative information provided by the investment professionals of the Investment Adviser and the portfolio companies as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Advisors also provide analyses to support their valuation methodology and calculations. The Independent Valuation Advisors provide an opinion on a final range of values on such investments to the Board of Directors or the Audit Committee. The Independent Valuation Advisors define fair value in accordance with ASC 820 and utilize valuation approaches including the market approach, the income approach or both. A portion of the portfolio is reviewed on a quarterly basis, and all investments in the portfolio for which market quotations are not readily available, or are readily available, but deemed not reflective of the fair value of an investment, are reviewed at least annually by an Independent Valuation Advisor;

 

(3)

The Independent Valuation Advisors’ preliminary valuations are reviewed by the Investment Adviser and the Valuation Oversight Group (“VOG”), a team that is part of the Controllers Department within the Finance Division of Goldman Sachs. The Independent Valuation Advisors’ valuation ranges are compared to the Investment Adviser’s valuations to ensure the Investment Adviser’s valuations are reasonable. VOG presents the valuations to the Private Investment Valuation and Side Pocket Working Group of the Investment Management Division Valuation Committee, which is comprised of representatives from GSAM who are independent of the investment decision making process;

 

(4)

The Investment Management Division Valuation Committee ratifies fair valuations and makes recommendations to the Audit Committee of the Board of Directors;

 

(5)

The Audit Committee of the Board of Directors reviews valuation information provided by the Investment Management Division Valuation Committee, the Investment Adviser and the Independent Valuation Advisors. The Audit Committee then assesses such valuation recommendations; and

 

(6)

The Board of Directors discusses the valuations and, within the meaning of the Investment Company Act, determines the fair value of the investments in good faith, based on the inputs of the Investment Adviser, the Independent Valuation Advisors and the Audit Committee.

Money Market Funds

Investments in money market funds are valued at net asset value (“NAV”) per share. See Note 3 “Significant Agreements and Related Party Transactions.”

Cash

Cash consists of deposits held at a custodian bank. As of September 30, 2020 and December 31, 2019, the Company held an aggregate cash balance of $24,563 and $17,681. Foreign currency of $1,116 and $1,184 (acquisition cost of $1,077 and $1,172) is included in cash as of September 30, 2020 and December 31, 2019.

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Foreign Currency Translation

Amounts denominated in foreign currencies are translated into USD on the following basis: (i) investments and other assets and liabilities denominated in foreign currencies are translated into USD based upon currency exchange rates effective on the last business day of the period; and (ii) purchases and sales of investments, borrowings and repayments of such borrowings, income, and expenses denominated in foreign currencies are translated into USD based upon currency exchange rates prevailing on the transaction dates.

The Company does not isolate the portion of the results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held. Such fluctuations are included within the net realized and unrealized gains or losses on investments. Fluctuations arising from the translation of non-investment assets and liabilities are included with the net change in unrealized gains (losses) on foreign currency translations on the Consolidated Statements of Operations.

Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Derivatives

The Company may enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at a pre-determined price at a future date. Forward foreign currency contracts are marked-to-market at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts are recorded on the Consolidated Statements of Financial Condition by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Notional amounts of foreign currency forward contract assets and liabilities are presented separately on the Consolidated Schedules of Investments. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date.

The Company does not utilize hedge accounting and as such, the Company recognizes its derivatives at fair value with changes in the net unrealized appreciation (depreciation) on foreign currency forward contracts recorded on the Consolidated Statements of Operations.

Income Taxes

The Company recognizes tax positions in its consolidated financial statements only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized upon settlement. The Company reports any interest expense related to income tax matters in income tax expense, and any income tax penalties under expenses in the Consolidated Statements of Operations.

The Company’s tax positions have been reviewed based on applicable statutes of limitation for tax assessments, which may vary by jurisdiction, and based on such review, the Company has concluded that no additional provision for income tax is required in the consolidated financial statements. The Company is subject to potential examination by certain taxing authorities in various jurisdictions. The Company’s tax positions are subject to ongoing interpretation of laws and regulations by taxing authorities.

The Company has elected to be treated as a RIC commencing with its taxable year ended December 31, 2016. So long as the Company maintains its status as a RIC, it will generally not be required to pay corporate-level U.S. federal income tax on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. As a result, any U.S. federal income tax liability related to income earned and distributed by the Company represents obligations of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

To maintain its tax treatment as a RIC, the Company must meet specified source-of-income and asset diversification requirements and timely distribute to its Unitholders for each taxable year at least 90% of its investment company taxable income (generally, its net ordinary income plus the excess of its realized net short-term capital gains over realized net long-term capital losses, determined without regard to the dividends paid deduction). In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to Unitholders. The Company will accrue excise tax on estimated undistributed taxable income as required.

Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state corporate level income taxes. Income tax expense, if any, is included under the income category for which it applies in the Consolidated Statements of Operations.

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Distributions

Distributions from net investment income and net realized capital gains are determined in accordance with U.S. federal income tax regulations, which may differ from those amounts determined in accordance with GAAP. The Company may pay distributions in excess of its taxable net investment income. This excess would be a tax-free return of capital in the period and reduce the Unitholder’s tax basis in its Units. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent they are charged or credited to common Units or distributable earnings, as appropriate, in the period that the differences arise. Temporary and permanent differences are primarily attributable to differences in the tax treatment of certain loans and the tax characterization of income and non-deductible expenses. These differences are generally determined in conjunction with the preparation of the Company’s annual RIC tax return. Distributions to common Unitholders are recorded on the ex-dividend date. The amount to be paid out as a distribution is determined by the Board of Directors each quarter and is generally based upon the earnings estimated by the Investment Adviser. The Company may pay distributions to its Unitholders in a year in excess of its net ordinary income and capital gains for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes. The Company intends to timely distribute to its Unitholders substantially all of its annual taxable income for each year, except that the Company may retain certain net capital gains for reinvestment and may carry forward taxable income for distribution in the following year and pay any applicable tax. The specific tax characteristics of the Company’s distributions will be reported to Unitholders after the end of the calendar year. All distributions will be subject to available funds, and no assurance can be given that the Company will be able to declare such distributions in future periods.

Deferred Financing Costs

Deferred financing costs consist of fees and expenses paid in connection with the closing of, and amendments to, the revolving credit facility with JPMorgan Chase Bank, National Association (the “JPM Revolving Credit Facility”) and the revolving credit facility between the Company and Bank of America, N.A. (the “BoA Revolving Credit Facility” and together with the JPM Revolving Credit Facility, the “Revolving Credit Facilities”). These costs are amortized using the straight-line method over the respective term of the JPM Revolving Credit Facility. Deferred financing costs related to the Revolving Credit Facilities are presented separately as an asset on the Company’s Consolidated Statements of Financial Condition.

New Accounting Pronouncements

In March 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional exceptions for applying GAAP to contract modifications, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The Company adopted this ASU in June 2020 and this adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2020, the SEC adopted the final rule under SEC release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amending certain disclosure requirements applicable to acquisitions and dispositions of businesses, including real estate operations and investment companies. The final rule is effective on January 1, 2021. Voluntary early adoption is permitted immediately, provided that the new rules are applied in their entirety from the date of early adoption. The Company is currently evaluating the impact of adopting the final rule on its consolidated financial statements.

3.

SIGNIFICANT AGREEMENTS AND RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

The Company entered into an investment advisory agreement effective as of April 11, 2016 (the “Investment Advisory Agreement”) with the Investment Adviser, pursuant to which the Investment Adviser manages the Company’s investment program and related activities.

Management Fee

The Company pays the Investment Adviser a management fee (the “Management Fee”), payable quarterly in arrears, equal to 0.375% (i.e., an annual rate of 1.50%) of the average NAV of the Company (including un-invested cash and cash equivalents) at the end of the then-current quarter and the prior calendar quarter (and, in the case of the Company’s first quarter, the NAV as of such quarter-end). The Management Fee for any partial quarter will be appropriately prorated.

For the three and nine months ended September 30, 2020, Management Fees amounted to $3,489 and $10,186. As of September 30, 2020, $3,489 remained payable. For the three and nine months ended September 30, 2019, Management Fees amounted to $3,514 and $10,203.

Incentive Fee

Pursuant to the Investment Advisory Agreement, the Company pays to the Investment Adviser an Incentive Fee (the “Incentive Fee”) as follows:

 

a)

First, no Incentive Fee is payable to the Investment Adviser until the Company has made cumulative distributions pursuant to this clause (a) equal to aggregate Contributed Capital (as defined below);

 

b)

Second, no Incentive Fee is payable to the Investment Adviser until the Company has made cumulative distributions pursuant to this clause (b) equal to a 7% return per annum, compounded annually, on aggregate unreturned Contributed Capital, from the date each capital contribution is made through the date such capital has been returned;

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c)

Third, subject to clauses (a) and (b), the Investment Adviser is entitled to an Incentive Fee equal to 100% of all amounts designated by the Company as proceeds intended for distribution and Incentive Fee payments, until such time as the cumulative Incentive Fee paid to the Investment Adviser pursuant to this clause (c) is equal to 15% of the amount by which the sum of (i) cumulative distributions to Unitholders pursuant to clauses (a) and (b) above and (ii) the cumulative Incentive Fee previously paid to the Investment Adviser pursuant to this clause exceeds Contributed Capital; and

 

d)

Fourth, at any time that clause (c) has been satisfied, the Investment Adviser is entitled to an Incentive Fee equal to 15% of all amounts designated by the Company as proceeds intended for distribution and Incentive Fee payments.

The Incentive Fee is calculated on a cumulative basis and the amount of the Incentive Fee payable prior to a proposed distribution will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the Unitholders. The Incentive Fee is a fee owed by the Company to the Investment Adviser and is not paid out of distributions made to Unitholders.

In no event will an amount be paid with respect to the Incentive Fee to the extent it would cause the aggregate amount of the Company’s capital gains paid in respect of the Incentive Fee to exceed 20% of the Company’s realized capital gains computed net of all realized capital losses and unrealized capital depreciation, in each case determined on a cumulative basis from inception of the Company through the date of the proposed payment (the “Incentive Fee Cap”).

“Contributed Capital” is the aggregate amount of capital contributions that have been made by all Unitholders in respect of their Units to the Company. All distributions (or deemed distributions), including investment income (i.e. proceeds received in respect of interest payments, dividends and fees) and proceeds attributable to the repayment or disposition of any Investment, to Unitholders will be considered a return of Contributed Capital. Unreturned Contributed Capital equals aggregate Contributed Capital minus cumulative distributions, but is never less than zero.

The term “proceeds intended for distribution and Incentive Fee payments” includes proceeds from the full or partial realization of the Company’s Investments and income from investing activities and may include return of capital, ordinary income and capital gains.

If, at the termination of the Company, the Investment Adviser has received aggregate payments of Incentive Fees in excess of the amount the Investment Adviser would have received had the Incentive Fees been determined upon such termination, then the Investment Adviser will reimburse the Company for the difference between the amount of Incentive Fees actually received and the amount determined at termination (the “Investment Adviser Reimbursement Obligation”). However, the Investment Adviser will not be required to reimburse the Company an amount greater than the aggregate Incentive Fees paid to the Investment Adviser, reduced by the excess (if any) of (a) the aggregate federal, state and local income tax liability the Investment Adviser incurred in connection with the payment of such Incentive Fees (assuming the highest marginal applicable federal and New York city and state income tax rates applied to such payments), over (b) an amount equal to the U.S. federal and state tax benefits available to the Investment Adviser by virtue of the payment made by the Investment Adviser pursuant to its Investment Adviser Reimbursement Obligation (assuming that, to the extent such payments are deductible by the Investment Adviser, the benefit of such deductions will be computed using the then highest marginal applicable federal and New York city and state income tax rates).

If the Investment Advisory Agreement is terminated prior to the termination of the Company (other than the Investment Adviser voluntarily terminating the agreement), the Company will pay to the Investment Adviser a final Incentive Fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Investment Advisory Agreement is terminated and will equal the amount of Incentive Fee that would be payable to the Investment Adviser if (a) all Investments were liquidated for their current value (but without taking into account any unrealized appreciation of any Investment), and any unamortized deferred Investment-related fees would be deemed accelerated, (b) the proceeds from such liquidation were used to pay all of the Company’s outstanding liabilities, and (c) the remainder was distributed to Unitholders and paid as Incentive Fee in accordance with the Incentive Fee waterfall described above for determining the amount of the Incentive Fee, subject to the Incentive Fee Cap. The Company will make the Final Incentive Fee Payment in cash on or immediately following the date the Investment Advisory Agreement is so terminated. The Investment Adviser Reimbursement Obligation will be determined as of the date of the termination of the Investment Advisory Agreement for purposes of the Final Incentive Fee Payment.

For the three and nine months ended September 30, 2020, the Company accrued unvested Incentive Fees of $18,908 and $5,022. As of September 30, 2020, $31,769 was payable in accordance with the terms of the Investment Advisory Agreement. For the three and nine months ended September 30, 2019, the Company accrued unvested Incentive Fees of $2,100 and $6,755.

Expense Limitation

Pursuant to the Investment Advisory Agreement, Company expenses borne by the Company in the ordinary course on an annual basis (excluding Management Fee, Incentive Fee, organizational and start-up expenses and leverage-related expenses) will not exceed an amount equal to 0.5% of the aggregate amount of commitments to the Company by holders of its common Units; provided, however, that expenses incurred outside of the ordinary course, including litigation and similar expenses, are not subject to such cap. For the three and nine months ended September 30, 2020 and 2019, there have been no reimbursements from the Investment Adviser pursuant to this provision.

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Administration and Custodian Fees

The Company has entered into an administration agreement with State Street Bank and Trust Company (the “Administrator”) under which the Administrator provides various accounting and administrative services to the Company. The Company pays the Administrator fees for its services as it determines are commercially reasonable in its sole discretion. The Company also reimburses the Administrator for all reasonable expenses. To the extent that the Administrator outsources any of its functions, the Administrator pays any compensation associated with such functions. The Administrator also serves as the Company’s custodian (the “Custodian”).

For the three and nine months ended September 30, 2020, the Company incurred expenses for services provided by the Administrator and the Custodian of $268 and $798. As of September 30, 2020, $182 remained payable. For the three and nine months ended September 30, 2019, the Company incurred expenses for services provided by the Administrator and the Custodian of $303 and $864.

Transfer Agent Fees

State Street Bank and Trust Company serves as the Company’s transfer agent (“Transfer Agent”), registrar and disbursing agent. For the three and nine months ended September 30, 2020, the Company incurred expenses for services provided by the Transfer Agent of $16 and $62. As of September 30, 2020, $44 remained payable. For the three and nine months ended September 30, 2019, the Company incurred expenses for services provided by the Transfer Agent of $34 and $106.

Affiliates

The table below presents the Company’s affiliated investments: 

 

 

 

Beginning

Fair Value

Balance

 

 

Gross

Additions(2)

 

 

Gross

Reductions(3)

 

 

Net

Realized

Gain

(Loss)

 

 

Net Change

in

Unrealized

Appreciation

(Depreciation)

 

 

Ending

Fair

Value

Balance

 

 

Dividend,

Interest

and Other

Income

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs Financial Square Government Fund(1)

 

$

22,297

 

 

$

452,179

 

 

$

(385,655

)

 

$

 

 

$

 

 

$

88,821

 

 

$

142

 

Accuity Delivery Systems, LLC

 

 

22,915

 

 

 

66

 

 

 

 

 

 

 

 

 

2,223

 

 

 

25,204

 

 

 

1,102

 

Collaborative Imaging, LLC (dba Texas Radiology Associates)

 

 

16,208

 

 

 

19

 

 

 

 

 

 

 

 

 

(863

)

 

 

15,364

 

 

 

825

 

Elah Holdings, Inc.

 

 

3,354

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

3,353

 

 

 

 

Total Non-Controlled Affiliates

 

$

64,774

 

 

$

452,264

 

 

$

(385,655

)

 

$

 

 

$

1,359

 

 

$

132,742

 

 

$

2,069

 

 

For the Year Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goldman Sachs Financial Square Government Fund(1)

 

$

 

 

$

1,104,839

 

 

$

(1,082,542

)

 

$

 

 

$

 

 

$

22,297

 

 

$

456

 

Accuity Delivery Systems, LLC

 

 

20,688

 

 

 

80

 

 

 

 

 

 

 

 

 

2,147

 

 

 

22,915

 

 

 

1,568

 

Collaborative Imaging, LLC (dba Texas Radiology Associates)

 

 

15,400

 

 

 

24

 

 

 

 

 

 

 

 

 

784

 

 

 

16,208

 

 

 

1,384

 

Elah Holdings, Inc.

 

 

3,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,354

 

 

 

 

Total Non-Controlled Affiliates

 

$

39,442

 

 

$

1,104,943

 

 

$

(1,082,542

)

 

$

 

 

$

2,931

 

 

$

64,774

 

 

$

3,408

 

 

(1) 

Fund advised by an affiliate of Goldman Sachs.

(2) 

Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

(3) 

Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

 

Due To Affiliates

 

The Investment Adviser pays certain general and administrative expenses on behalf of the Company in the ordinary course of business. As of September 30, 2020 and December 31, 2019, there were $79 and $168 included within Accrued expenses and other liabilities paid by the Investment Adviser and its affiliates on behalf of the Company.

 

Co-investment Activity

 

In certain circumstances, negotiated co-investments by the Company and other funds managed by the Investment Adviser may be made only pursuant to an order from the SEC permitting the Company to do so. On January 4, 2017, the SEC granted exemptive relief (“Exemptive Relief”) that permits the Company to co-invest with Goldman Sachs BDC, Inc. (“GS BDC”), Goldman Sachs Middle Market Lending Corp. (“GS MMLC,” which merged with GS BDC on October 12, 2020), Goldman Sachs Private Middle Market Credit II LLC (“GS PMMC II”) and certain other funds that may be managed by GSAM, including the GSAM Credit Alternatives Team, after the date of the exemptive order, subject to certain  conditions including that co-investments are made in a manner consistent with the Company’s investment objectives, positions, policies, strategies and restrictions, as well as regulatory requirements and pursuant to the conditions required by the Exemptive Relief, and are allocated fairly among participants. The GSAM Credit Alternatives Team is comprised of investment professionals dedicated to the Company’s investment strategy and other funds that share a similar investment strategy with the Company, who are responsible for identifying investment opportunities, conducting research and due diligence on prospective investments, negotiating and

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structuring the Company’s investments and monitoring and servicing the Company’s investments, together with investment professionals who are primarily focused on investment strategies in syndicated, liquid credit. Under the terms of the Exemptive Relief, a “required majority” (as defined in Section 57(o) of the Investment Company Act) of the Company’s independent directors must make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to the Company and the Company’s stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the then-current investment objectives and strategies of the Company. As a result of the Exemptive Relief, there could be significant overlap in the Company’s investment portfolio and the investment portfolios of GS BDC, GS PMMC II and/or other funds established by the GSAM Credit Alternatives Team that could avail themselves of the Exemptive Relief.

4.

INVESTMENTS

The Company’s investments (excluding an investment in a money market fund, if any, managed by an affiliate of Group Inc.) consisted of the following:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Investment Type

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

1st Lien/Senior Secured Debt

 

$

820,729

 

 

$

802,625

 

 

$

875,704

 

 

$

870,024

 

1st Lien/Last-Out Unitranche

 

 

129,326

 

 

 

124,132

 

 

 

128,264

 

 

 

127,206

 

2nd Lien/Senior Secured Debt

 

 

378,214

 

 

 

341,709

 

 

 

391,151

 

 

 

369,656

 

Unsecured Debt

 

 

4,907

 

 

 

4,679

 

 

 

4,898

 

 

 

4,877

 

Preferred Stock

 

 

15,206

 

 

 

18,772

 

 

 

15,206

 

 

 

15,954

 

Common Stock

 

 

12,006

 

 

 

15,755

 

 

 

12,006

 

 

 

12,699

 

Warrants

 

 

1,338

 

 

 

23

 

 

 

104

 

 

 

95

 

Total Investments

 

$

1,361,726

 

 

$

1,307,695

 

 

$

1,427,333

 

 

$

1,400,511

 

 

The industry composition of the Company’s investments at fair value and net assets was as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Industry

 

Fair Value

 

 

Net Assets

 

 

Fair Value

 

 

Net Assets

 

Interactive Media & Services

 

 

14.1

%

 

 

19.9

%

 

 

13.4

%

 

 

21.4

%

Health Care Providers & Services

 

 

10.2

 

 

 

14.5

 

 

 

10.2

 

 

 

16.3

 

Health Care Technology

 

 

9.7

 

 

 

13.8

 

 

 

9.2

 

 

 

14.7

 

Diversified Financial Services

 

 

7.4

 

 

 

10.4

 

 

 

6.7

 

 

 

10.6

 

Professional Services

 

 

6.5

 

 

 

9.2

 

 

 

5.4

 

 

 

8.6

 

IT Services

 

 

5.7

 

 

 

8.0

 

 

 

5.3

 

 

 

8.5

 

Chemicals

 

 

5.6

 

 

 

7.9

 

 

 

4.5

 

 

 

7.1

 

Software

 

 

5.1

 

 

 

7.2

 

 

 

8.7

 

 

 

13.9

 

Health Care Equipment & Supplies

 

 

4.5

 

 

 

6.3

 

 

 

4.7

 

 

 

7.5

 

Food Products

 

 

3.0

 

 

 

4.3

 

 

 

2.9

 

 

 

4.6

 

Household Products

 

 

2.6

 

 

 

3.6

 

 

 

2.6

 

 

 

4.1

 

Road & Rail

 

 

2.6

 

 

 

3.6

 

 

 

4.0

 

 

 

6.3

 

Transportation Infrastructure

 

 

2.5

 

 

 

3.6

 

 

 

2.4

 

 

 

3.8

 

Diversified Telecommunication Services

 

 

2.5

 

 

 

3.5

 

 

 

2.1

 

 

 

3.4

 

Media

 

 

2.4

 

 

 

3.4

 

 

 

2.2

 

 

 

3.6

 

Air Freight & Logistics

 

 

2.4

 

 

 

3.4

 

 

 

2.3

 

 

 

3.7

 

Entertainment

 

 

2.0

 

 

 

2.9

 

 

 

2.0

 

 

 

3.3

 

Real Estate Management & Development

 

 

1.9

 

 

 

2.7

 

 

 

1.7

 

 

 

2.7

 

Hotels, Restaurants & Leisure

 

 

1.3

 

 

 

1.8

 

 

 

1.4

 

 

 

2.2

 

Beverages

 

 

1.3

 

 

 

1.8

 

 

 

0.9

 

 

 

1.4

 

Diversified Consumer Services

 

 

1.0

 

 

 

1.4

 

 

 

0.9

 

 

 

1.5

 

Internet & Direct Marketing Retail

 

 

0.9

 

 

 

1.3

 

 

 

0.9

 

 

 

1.4

 

Insurance

 

 

0.9

 

 

 

1.2

 

 

 

0.9

 

 

 

1.4

 

Auto Components

 

 

0.8

 

 

 

1.2

 

 

 

0.8

 

 

 

1.3

 

Building Products

 

 

0.8

 

 

 

1.1

 

 

 

1.7

 

 

 

2.7

 

Commercial Services & Supplies

 

 

0.8

 

 

 

1.1

 

 

 

0.8

 

 

 

1.2

 

Containers & Packaging

 

 

0.6

 

 

 

0.9

 

 

 

0.6

 

 

 

0.9

 

Life Sciences Tools & Services

 

 

0.6

 

 

 

0.9

 

 

 

0.6

 

 

 

1.0

 

Capital Markets

 

 

0.3

 

 

 

0.4

 

 

 

0.2

 

 

 

0.4

 

Total

 

 

100.0

%

 

 

141.3

%

 

 

100.0

%

 

 

159.5

%

 

The geographic composition of the Company’s investments at fair value was as follows:

 

Geographic

 

September 30, 2020

 

 

December 31, 2019

 

United States

 

 

97.6

%

 

 

97.9

%

Ireland

 

 

2.4

 

 

 

2.1

 

Total

 

 

100.0

%

 

 

100.0

%

 

25


Table of Contents

 

5.

FAIR VALUE MEASUREMENT

The fair value of a financial instrument is the amount that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., the exit price).

The fair value hierarchy under ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities. The three levels of the fair value hierarchy are as follows:

Basis of Fair Value Measurement

Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2 – Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level 3 – Inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Note 2 “Significant Accounting Policies” should be read in conjunction with the information outlined below.

The table below presents the valuation techniques and the nature of significant inputs generally used in determining the fair value of Level 2 and Level 3 Instruments.

 

Level 2 Instruments

Valuation Techniques and Significant Inputs

Equity and Fixed Income

The types of instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency include commercial paper, most government agency obligations, most corporate debt securities, certain mortgage-backed securities, certain bank loans, less liquid publicly listed equities, certain state and municipal obligations, certain money market instruments and certain loan commitments.

Valuations of Level 2 Equity and Fixed Income instruments can be verified to quoted prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Consideration is given to the nature of the quotations (e.g. indicative or firm) and the relationship of recent market activity to the prices provided from alternative pricing sources.

Derivative Contracts

OTC derivatives (both centrally cleared and bilateral) are valued using market transactions and other market evidence whenever possible, including market-based inputs to models, calibration to market-clearing transactions, broker or dealer quotations, or other alternative pricing sources with reasonable levels of price transparency. Where models are used, the selection of a particular model to value an OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument, as well as the availability of pricing information in the market. The Company generally uses similar models to value similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit curves, measures of volatility, voluntary and involuntary prepayment rates, loss severity rates and correlations of such inputs. For OTC derivatives that trade in liquid markets, model inputs can generally be verified and model selection does not involve significant management judgment. OTC derivatives are classified within Level 2 of the fair value hierarchy when significant inputs are corroborated by market evidence.

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Table of Contents

 

 

Level 3 Instruments

Valuation Techniques and Significant Inputs

Bank Loans, Corporate Debt, and Other Debt Obligations

Valuations are generally based on discounted cash flow techniques, for which the significant inputs are the amount and timing of expected future cash flows, market yields and recovery assumptions. The significant inputs are generally determined based on relative value analyses, which incorporate comparisons both to credit default swaps that reference the same underlying credit risk and to other debt instruments for the same issuer for which observable prices or broker quotes are available. Other valuation methodologies are used as appropriate including market comparables, transactions in similar instruments and recovery/liquidation analysis.

Equity

Recent third-party investments or pending transactions are considered to be the best evidence for any change in fair value. When these are not available, the following valuation methodologies are used, as appropriate and available (i) Transactions in similar instruments; (ii) Discounted cash flow techniques; (iii) Third party appraisals; and (iv) Industry multiples and public comparables.

 

Evidence includes recent or pending reorganizations (for example, merger proposals, tender offers and debt restructurings) and significant changes in financial metrics, including (i) Current financial performance as compared to projected performance; (ii) Capitalization rates and multiples; and (iii) Market yields implied by transactions of similar or related assets.

 

The tables below present the ranges of significant unobservable inputs used to value the Company’s Level 3 assets and liabilities as of September 30, 2020 and December 31, 2019. These ranges represent the significant unobservable inputs that were used in the valuation of each type of instrument, but they do not represent a range of values for any one instrument. For example, the lowest yield in 1st Lien/Senior Secured Debt is appropriate for valuing that specific debt investment, but may not be appropriate for valuing any other debt investments in this asset class. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 assets and liabilities.

 

Level 3 Instruments

 

Fair Value(1)(2)

 

 

Valuation Techniques(3)

 

Significant Unobservable Inputs

 

Range(4) of Significant Unobservable Inputs

 

Weighted Average(5)

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Bank Loans, Corporate Debt, and Other Debt Obligations

1st Lien/Senior Secured

$

 

702,381

 

 

Discounted cash flows

 

Discount Rate

 

6.0% - 17.3%

 

9.0%

1st Lien/Last-Out Unitranche

 

 

124,132

 

 

Discounted cash flows

 

Discount Rate

 

7.3% - 25.2%

 

10.6%

2nd Lien/Senior Secured

 

 

271,748

 

 

Discounted cash flows

 

Discount Rate

 

10.0% - 12.8%

 

10.7%

 

 

 

10,505

 

 

Comparable multiples

 

EV/EBITDA(6)

 

7.4x - 25.1x

 

10.4x

Unsecured Debt

 

 

4,679

 

 

Discounted cash flows

 

Discount Rate

 

2.7% - 6.8%

 

16.0%

Equity

Preferred Stock

$

 

11,622

 

 

Comparable multiples

 

EV/EBITDA(6)

 

12.3x - 18.7x

 

17.5x

 

 

 

7,150

 

 

Comparable multiples

 

EV/Revenue

 

1.7x - 4.4x

 

1.3x

Common Stock

 

 

5,719

 

 

Discounted cash flows

 

Discount Rate

 

13.1% - 31.5%

 

24.6%

 

 

 

1,239

 

 

Comparable multiples

 

EV/EBITDA(6)

 

10.0x - 10.1x

 

10.0x

 

 

 

8,797

 

 

Comparable multiples

 

EV/Revenue

 

0.3x - 12.5x

 

12.1x

Warrants

 

 

23

 

 

Comparable multiples

 

EV/EBITDA(6)

 

10.6x - 21.8x

 

12.3x

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank Loans, Corporate Debt, and Other Debt Obligations

 

1st Lien/Senior Secured

$

 

769,884

 

 

Discounted cash flows

 

Discount Rate

 

6.5% - 13.3%

 

8.9%

 

1st Lien/Last-Out Unitranche

 

 

127,206

 

 

Discounted cash flows

 

Discount Rate

 

8.5% - 10.7%

 

9.9%

 

2nd Lien/Senior Secured

 

 

301,375

 

 

Discounted cash flows

 

Discount Rate

 

9.9% - 12.4%

 

10.7%

 

Unsecured Debt

 

 

4,877

 

 

Discounted cash flows

 

Discount Rate

 

3.8% - 5.2%

 

13.7%

 

Equity

 

Preferred Stock

$

 

3,155

 

 

Comparable multiples

 

EV/Revenue

 

1.0x - 3.2x

 

1.3x

 

 

 

 

12,799

 

 

Comparable multiples

 

EV/EBITDA(6)

 

7.8x - 19.0x

 

15.3x

 

Common Stock

 

 

6,396

 

 

Discounted cash flows

 

Discount Rate

 

13.9% - 31.0%

 

23.9%

 

 

 

 

4,709

 

 

Comparable multiples

 

EV/Revenue

 

2.3x - 9.7x

 

9.4x

 

 

 

 

1,594

 

 

Comparable multiples

 

EV/EBITDA(6)

 

8.5x - 12.7x

 

10.0x

 

Warrants

 

 

95

 

 

Comparable multiples

 

EV/EBITDA(6)

 

10.7x - 19.9x

 

12.4x

 

 

(1) 

Included within Level 3 assets of $1,227,359 is an amount of $79,364 for which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions). The income approach was used in the determination of fair value for $1,102,940 or 92.5% of Level 3 bank loans, corporate debt, and other debt obligations.

(2)

Included within Level 3 assets of $1,287,719 is an amount of $55,629 for which the Investment Adviser did not develop the unobservable inputs (examples include single source broker quotations, third party pricing, and prior transactions). The income approach was used in the determination of fair value for $1,203,342 or 95.6% of Level 3 bank loans, corporate debt, and other debt obligations.

(3) 

The fair value of any one instrument may be determined using multiple valuation techniques. For example, market comparable and discounted cash flows may be used together to determine fair value. Therefore, the Level 3 balance encompasses both of these techniques.

(4) 

The range for an asset category consisting of a single investment represents the relevant market data considered in determining the fair value of the investment.

(5) 

Weighted average for an asset category consisting of multiple investments is calculated by weighting the significant unobservable input by the relative fair value of the investment. Weighted average for an asset category consisting of a single investment represents the significant unobservable input used in the fair value of the investment.

(6) 

Enterprise value of portfolio company as a multiple of earnings before interest, taxes, depreciation and amortization (“EBITDA”).

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Table of Contents

 

As noted above, the income and market approaches were used in the determination of fair value of certain Level 3 assets as of September 30, 2020 and December 31, 2019. The significant unobservable inputs used in the income approach are the discount rate or market yield used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. An increase in the discount rate or market yield would result in a decrease in the fair value. Included in the consideration and selection of discount rates or market yields is risk of default, rating of the investment, call provisions and comparable company investments. The significant unobservable inputs used in the market approach are based on market comparable transactions and market multiples of publicly traded comparable companies. Increases or decreases in market comparable transactions or market multiples would result in an increase or decrease, in the fair value.

The following is a summary of the Company’s assets categorized within the fair value hierarchy:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Assets

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

1st Lien/Senior Secured Debt

 

$

 

 

$

20,880

 

 

$

781,745

 

 

$

802,625

 

 

$

 

 

$

62,361

 

 

$

807,663

 

 

$

870,024

 

1st Lien/Last-Out Unitranche

 

 

 

 

 

 

 

 

124,132

 

 

 

124,132

 

 

 

 

 

 

 

 

 

127,206

 

 

 

127,206

 

2nd Lien/Senior Secured Debt

 

 

 

 

 

59,456

 

 

 

282,253

 

 

 

341,709

 

 

 

 

 

 

50,431

 

 

 

319,225

 

 

 

369,656

 

Unsecured Debt

 

 

 

 

 

 

 

 

4,679

 

 

 

4,679

 

 

 

 

 

 

 

 

 

4,877

 

 

 

4,877

 

Preferred Stock

 

 

 

 

 

 

 

 

18,772

 

 

 

18,772

 

 

 

 

 

 

 

 

 

15,954

 

 

 

15,954

 

Common Stock

 

 

 

 

 

 

 

 

15,755

 

 

 

15,755

 

 

 

 

 

 

 

 

 

12,699

 

 

 

12,699

 

Warrants

 

 

 

 

 

 

 

 

23

 

 

 

23

 

 

 

 

 

 

 

 

 

95

 

 

 

95

 

Affiliated Money Market Fund

 

 

88,821

 

 

 

 

 

 

 

 

 

88,821

 

 

 

22,297

 

 

 

 

 

 

 

 

 

22,297

 

Total assets

 

$

88,821

 

 

$

80,336

 

 

$

1,227,359

 

 

$

1,396,516

 

 

$

22,297

 

 

$

112,792

 

 

$

1,287,719

 

 

$

1,422,808

 

Foreign currency forward contracts - asset (liability)(1)

 

$

 

 

$

(108

)

 

$

 

 

$

(108

)

 

$

 

 

$

45

 

 

$

 

 

$

45

 

 

(1)

Amounts represent the unrealized appreciation (depreciation) on the foreign currency forward contracts.

The below table presents a summary of changes in fair value of Level 3 assets by investment type:

 

 

 

Beginning

Balance

 

 

Purchases(1)

 

 

Net

Realized

Gain (Loss)

 

 

Net Change

in

Unrealized

Appreciation

(Depreciation)

 

 

Sales and

Settlements(1)

 

 

Net

Amortization

of Premium/

Discount

 

 

Transfers

In(2)

 

 

Transfers

Out(3)

 

 

Ending

Balance

 

 

Net Change

in

Unrealized

Appreciation

(Depreciation)

for assets

still held

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Lien/Senior Secured Debt

 

$

807,663

 

 

$

32,653

 

 

$

(5

)

 

$

(11,167

)

 

$

(50,083

)

 

$

2,684

 

 

$

 

 

$

 

 

$

781,745

 

 

$

(11,229

)

1st Lien/Last-Out Unitranche

 

 

127,206

 

 

 

1,458

 

 

 

 

 

 

(4,136

)

 

 

(873

)

 

 

477

 

 

 

 

 

 

 

 

 

124,132

 

 

 

(4,201

)

2nd Lien/Senior Secured Debt

 

 

319,225

 

 

 

13,868

 

 

 

 

 

 

(21,242

)

 

 

(12,535

)

 

 

787

 

 

 

 

 

 

(17,850

)

 

 

282,253

 

 

 

(21,242

)

Unsecured Debt

 

 

4,877

 

 

 

 

 

 

 

 

 

(207

)

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

4,679

 

 

 

(207

)

Preferred Stock

 

 

15,954

 

 

 

 

 

 

 

 

 

2,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,772

 

 

 

2,818

 

Common Stock

 

 

12,699

 

 

 

 

 

 

 

 

 

3,056

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,755

 

 

 

3,056

 

Warrants

 

 

95

 

 

 

2,467

 

 

 

 

 

 

(1,305

)

 

 

(1,234

)

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

(1,305

)

Total assets

 

$

1,287,719

 

 

$

50,446

 

 

$

(5

)

 

$

(32,183

)

 

$

(64,725

)

 

$

3,957

 

 

$

 

 

$

(17,850

)

 

$

1,227,359

 

 

$

(32,310

)

For the Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Lien/Senior Secured Debt

 

$

741,446

 

 

$

231,404

 

 

$

(22

)

 

$

(2,885

)

 

$

(122,167

)

 

$

3,750

 

 

$

 

 

$

 

 

$

851,526

 

 

$

(2,415

)

1st Lien/Last-Out Unitranche

 

 

163,253

 

 

 

21,350

 

 

 

(10,236

)

 

 

1,201

 

 

 

(49,540

)

 

 

1,214

 

 

 

 

 

 

 

 

 

127,242

 

 

 

1,166

 

2nd Lien/Senior Secured Debt

 

 

406,928

 

 

 

25,984

 

 

 

(12,341

)

 

 

1,489

 

 

 

(66,234

)

 

 

1,630

 

 

 

 

 

 

(21,772

)

 

 

335,684

 

 

 

(836

)

Unsecured Debt

 

 

4,295

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

4,306

 

 

 

3

 

Preferred Stock

 

 

12,159

 

 

 

6,010

 

 

 

750

 

 

 

(1,284

)

 

 

(1,750

)

 

 

 

 

 

 

 

 

 

 

 

15,885

 

 

 

(814

)

Common Stock

 

 

11,285

 

 

 

1,232

 

 

 

 

 

 

3,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,149

 

 

 

3,632

 

Warrants

 

 

130

 

 

 

 

 

 

 

 

 

(43

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

87

 

 

 

(43

)

Total assets

 

$

1,339,496

 

 

$

285,980

 

 

$

(21,849

)

 

$

2,113

 

 

$

(239,691

)

 

$

6,602

 

 

$

 

 

$

(21,772

)

 

$

1,350,879

 

 

$

693

 

 

(1)

Purchases may include PIK and securities received in corporate actions and restructurings. Sales and Settlements may include securities delivered in corporate actions and restructuring of investments.

(2)

Transfers in were primarily due to decreased price transparency.

(3)

Transfers out were primarily due to increased price transparency.

 

 

Debt Not Carried at Fair Value

The fair value of the Company’s debt, which would have been categorized as Level 3 within the fair value hierarchy as of September 30, 2020 and December 31, 2019, approximates its carrying value because the JPM Revolving Credit Facility has variable interest based on selected short term rates.

28


Table of Contents

 

6.

DEBT

In accordance with the Investment Company Act, with certain exceptions, the Company is currently allowed to borrow amounts such that its asset coverage ratio, as defined in the Investment Company Act, is at least 200% after such borrowing (or 150% if certain requirements are met). As of September 30, 2020 and December 31, 2019, the Company’s asset coverage ratio based on the aggregate amount outstanding of senior securities (which includes the Revolving Credit Facilities) was 296% and 270%.

The Company’s outstanding debt was as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Aggregate

Borrowing

Amount

Committed

 

 

Amount

Available

 

 

Carrying

Value

 

 

Aggregate

Borrowing

Amount

Committed

 

 

Amount

Available

 

 

Carrying

Value

 

JPM Revolving Credit Facility(1)

 

$

514,250

 

 

$

46,000

 

 

$

468,571

 

 

$

605,000

 

 

$

90,750

 

 

$

511,988

 

 

(1) 

The Company may borrow amounts in USD or certain other permitted currencies. Debt outstanding denominated in currencies other than USD has been converted to USD using the applicable foreign currency exchange rate as of the applicable reporting date. As of September 30, 2020, the Company had outstanding borrowings denominated in USD of $408,893 and in Euros (EUR) of 50,900. As of December 31, 2019, the Company had outstanding borrowings denominated in USD of $454,893 and in EUR of 50,900.

The combined weighted average interest rates of the aggregate borrowings outstanding for the nine months ended September 30, 2020 and for the year ended December 31, 2019 were 4.67% and 5.73%.

 

JPM Revolving Credit Facility

On November 21, 2017, SPV entered into the JPM Revolving Credit Facility. JPMorgan Chase Bank, National Association (“JPM”) serves as administrative agent, State Street Bank and Trust Company serves as collateral agent, collateral administrator, bank and securities intermediary and the Company serves as portfolio manager under the JPM Revolving Credit Facility. State Street Bank and Trust Company also acts as the Company’s transfer agent, disbursing agent, custodian and administrator as well as SPV’s custodian. The Company amended the JPM Revolving Credit Facility on August 17, 2018, December 10, 2018, February 22, 2019, April 3, 2020 and August 26, 2020.

Borrowings under the JPM Revolving Credit Facility bear interest (at SPV’s election) at a per annum rate equal to either (x) the three-month LIBOR (or other listed offered rate, depending upon the currency of borrowing) in effect or (y) a rate per annum equal to the greater of (i) the prime rate of JPM in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 0.50%; and, with respect to advances denominated in a currency other than USD, the annual rate of interest is the reference rate then in effect for determining interest rates on commercial loans made in the applicable jurisdiction of such currency, in all cases, plus the applicable margin. The applicable margin is 3.25% per annum. SPV initially paid a commitment fee of 1.00% per annum (or 0.50% per annum during the first nine months from the date the JPM Revolving Credit Facility was entered into) on the average daily unused amount of the financing commitments until the third anniversary of the JPM Revolving Credit Facility.

The JPM Revolving Credit Facility is a multicurrency facility. As of September 30, 2020, the total commitments under the JPM Revolving Credit Facility were $514,250. The JPM Revolving Credit Facility also has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments under the JPM Revolving Credit Facility to $750,000. All amounts outstanding under the JPM Revolving Credit Facility must be repaid by the sixth anniversary of the JPM Revolving Credit Facility, subject to a six month extension of the maturity date with the consent of the administrative agent at such time.

SPV’s obligations to the lenders under the JPM Revolving Credit Facility are secured by a first priority security interest in all of SPV’s portfolio of investments and cash. The obligations of SPV under the JPM Revolving Credit Facility are non-recourse to the Company, and the Company’s exposure under the JPM Revolving Credit Facility is limited to the value of the Company’s investment in SPV.

In connection with the JPM Revolving Credit Facility, SPV has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of SPV occurs or if the Company is no longer the portfolio manager of SPV. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the JPM Revolving Credit Facility immediately due and payable.

Costs of $8,134 were incurred in connection with obtaining and amending the JPM Revolving Credit Facility, which have been recorded as deferred financing costs on the Consolidated Statements of Financial Condition and are being amortized over the life of the JPM Revolving Credit Facility using the straight-line method. As of September 30, 2020 and December 31, 2019, outstanding deferred financing costs were $4,063 and $3,113.

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The below table presents the summary information of the JPM Revolving Credit Facility:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

Borrowing interest expense

 

$

4,484

 

 

$

7,859

 

 

$

17,340

 

 

$

23,344

 

Facility fees

 

 

168

 

 

 

305

 

 

 

1,346

 

 

 

640

 

Amortization of financing costs

 

 

344

 

 

 

416

 

 

 

1,107

 

 

 

1,196

 

Total

 

$

4,996

 

 

$

8,580

 

 

$

19,793

 

 

$

25,180

 

Weighted average interest rate

 

 

3.81

%

 

 

5.66

%

 

 

4.67

%

 

 

5.86

%

Average outstanding balance

 

$

468,387

 

 

$

551,023

 

 

$

495,840

 

 

$

532,429

 

 

BoA Revolving Credit Facility

The Company entered into the BoA Revolving Credit Facility on July 18, 2016 with Bank of America, N.A. as administrative agent, lead arranger, letter of credit issuer and lender. The Company amended the BoA Revolving Credit Facility on March 3, 2017, July 16, 2018 and August 1, 2018.

On May 31, 2019, the BoA Revolving Credit Facility matured and the Company has repaid in full all indebtedness, liabilities and other obligations thereof. In connection with the maturity of the BoA Revolving Credit Facility, all liens on collateral were released.

Costs of $2,383 were incurred in connection with obtaining and amending the BoA Revolving Credit Facility, which were recorded as deferred financing costs on the Consolidated Statements of Financial Condition and were amortized over the life of the BoA Revolving Credit Facility using the straight-line method until maturity.

The below table presents the summary information of the BoA Revolving Credit Facility:

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

September 30,

2019

 

September 30,

2020

 

September 30,

2019

 

Borrowing interest expense

 

N/A

 

N/A

 

N/A

 

$

1,089

 

Facility fees

 

N/A

 

N/A

 

N/A

 

 

26

 

Amortization of financing costs

 

N/A

 

N/A

 

N/A

 

 

165

 

Total

 

N/A

 

N/A

 

N/A

 

$

1,280

 

Weighted average interest rate

 

N/A

 

N/A

 

N/A

 

 

5.07

%

Average outstanding balance

 

N/A

 

N/A

 

N/A

 

$

28,718

 

 

7.

DERIVATIVES

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies.

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or a similar agreement with its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Company and a counterparty that governs OTC derivatives, including foreign currency forward contracts, and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.

For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Company and cash collateral received from the counterparty, if any, is included in the Consolidated Statements of Financial Condition as due to/due from broker. The Company minimizes counterparty credit risk by only entering into agreements with counterparties that they believe to be in good standing and by monitoring the financial stability of those counterparties.

For the three and nine months ended September 30, 2020, the Company’s average USD notional exposure to foreign currency forward contracts were $2,798 and $3,494. For the three and nine months ended September 30, 2019, the Company’s average USD notional exposure to foreign currency forward contracts were $2,574 and $3,336.

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The Company’s net exposure to foreign currency forward contracts by counterparty that are subject to ISDA Master Agreements or similar agreements presented on the Consolidated Statements of Financial Condition was as follows:

 

 

 

Gross Amount of

Assets

 

 

Gross Amount of

(Liabilities)

 

 

Net Amount of Assets or

(Liabilities)

 

 

Collateral (Received)

Pledged (1)

 

 

Net Amounts (2)

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of America, N.A.

 

$

 

 

$

(108

)

 

$

(108

)

 

$

 

 

$

(108

)

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of America, N.A.

 

$

45

 

 

$

 

 

$

45

 

 

$

 

 

$

45

 

 

(1) 

Amount excludes excess cash collateral paid.

(2) 

Net amount represents the net amount due (to) from counterparty in the event of a default based on the contractual setoff rights under the agreement. Net amount excludes any over-collateralized amounts.

The effect of transactions in derivative instruments to the Consolidated Statements of Operations was as follows:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

Net realized gain (loss) on foreign currency forward contracts

 

$

35

 

 

$

46

 

 

$

131

 

 

$

56

 

Net change in unrealized appreciation (depreciation) on foreign currency forward contracts

 

 

(148

)

 

 

69

 

 

 

(153

)

 

 

109

 

Total net realized and unrealized gains (losses) on foreign currency forward contracts

 

$

(113

)

 

$

115

 

 

$

(22

)

 

$

165

 

 

8.

COMMITMENTS AND CONTINGENCIES

Capital Commitments

The Company had aggregate capital commitments and undrawn capital commitments from investors as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Capital

Commitments

 

 

Unfunded

Capital

Commitments

 

 

% of Capital

Commitments

Funded

 

 

Capital

Commitments

 

 

Unfunded

Capital

Commitments

 

 

% of Capital

Commitments

Funded

 

Common Units

 

$

1,097,430

 

 

$

60,359

 

 

 

95

%

 

$

1,097,430

 

 

$

104,256

 

 

 

91

%

 

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Portfolio Company Commitments

The Company may enter into investment commitments to fund investments through signed commitment letters which in certain circumstances may be disclosed by the Company. In many circumstances, borrower acceptance and final terms are subject to transaction-related contingencies. These are disclosed as commitments upon execution of a final agreement. As of September 30, 2020, the Company believed that it had adequate financial resources to satisfy its unfunded commitments. The Company had the following unfunded commitments by investment types:  

 

 

 

 

 

Unfunded Commitment Balances(2)

 

 

Fair Value(3)

 

 

 

Commitment

Expiration

Date(1)

 

September 30, 2020

 

 

December 31, 2019

 

 

September 30, 2020

 

 

December 31, 2019

 

1st Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Datacor Holdings, Inc.

 

12/31/2020

$

 

800

 

$

 

$

 

(12

)

$

 

Brillio, LLC

 

2/6/2021

 

 

1,165

 

 

 

2,330

 

 

 

(26

)

 

 

(23

)

Associations, Inc.

 

7/30/2021

 

 

66

 

 

 

1,378

 

 

 

(3

)

 

 

(14

)

Gastro Health Holdco, LLC

 

9/13/2021

 

 

7,700

 

 

 

7,700

 

 

 

(327

)

 

 

(116

)

FWR Holding Corporation (dba First Watch Restaurants)

 

12/20/2021

 

 

67

 

 

 

 

 

(2

)

 

 

Netvoyage Corporation (dba NetDocuments)

 

3/24/2022

 

 

1,044

 

 

 

1,044

 

 

 

(34

)

 

 

(13

)

VRC Companies, LLC (dba Vital Records Control)

 

3/31/2022

 

 

264

 

 

 

118

 

 

 

(2

)

 

 

(1

)

DDS USA Holding, Inc.

 

6/30/2022

 

 

814

 

 

 

1,463

 

 

 

(8

)

 

 

(7

)

Xactly Corporation

 

7/29/2022

 

 

2,554

 

 

 

2,554

 

 

 

(45

)

 

 

(32

)

Hygiena Borrower LLC

 

8/26/2022

 

 

580

 

 

 

580

 

 

 

(12

)

 

 

(12

)

Lithium Technologies, Inc.

 

10/3/2022

 

 

3,371

 

 

 

4,046

 

 

 

(143

)

 

 

(61

)

Businessolver.com, Inc.

 

5/15/2023

 

 

3,984

 

 

 

2,391

 

 

 

(100

)

 

 

(42

)

Integral Ad Science, Inc.

 

7/19/2023

 

 

2,741

 

 

 

2,741

 

 

 

(103

)

 

 

(41

)

FWR Holding Corporation (dba First Watch Restaurants)

 

8/21/2023

 

 

1,764

 

 

 

265

 

 

 

(62

)

 

 

(3

)

Gastro Health Holdco, LLC

 

9/4/2023

 

 

3,100

 

 

 

3,100

 

 

 

(132

)

 

 

(46

)

Empirix, Inc.

 

9/25/2023

 

 

1,900

 

 

 

1,900

 

 

 

(57

)

 

 

(190

)

Fenergo Finance 3 Limited

 

9/5/2024

 

 

2,698

 

 

 

2,580

 

 

 

(34

)

 

 

(19

)

Fenergo Finance 3 Limited

 

9/5/2024

 

 

1,785

 

 

 

1,785

 

 

 

(22

)

 

 

(13

)

iCIMS, Inc.

 

9/12/2024

 

 

2,822

 

 

 

2,822

 

 

 

(49

)

 

 

(49

)

MMIT Holdings, LLC (dba Managed Markets Insight & Technology)

 

11/15/2024

 

 

1,915

 

 

 

3,447

 

 

 

(29

)

 

 

(60

)

Wrike, Inc.

 

12/31/2024

 

 

2,400

 

 

 

2,400

 

 

 

 

 

(48

)

Mailgun Technologies, Inc.

 

3/26/2025

 

 

2,370

 

 

 

2,370

 

 

 

 

 

(41

)

Internet Truckstop Group, LLC (dba Truckstop)

 

4/2/2025

 

 

2,800

 

 

 

2,800

 

 

 

(56

)

 

 

(42

)

CorePower Yoga LLC

 

5/14/2025

 

 

856

 

 

 

1,070

 

 

 

(128

)

 

 

(16

)

Diligent Corporation

 

8/4/2025

 

 

1,900

 

 

 

228

 

 

 

(47

)

 

 

(2

)

Datacor Holdings, Inc.

 

2/1/2020

 

 

 

 

800

 

 

 

 

 

(8

)

Gastro Health Holdco, LLC

 

4/13/2020

 

 

 

 

1,138

 

 

 

 

 

(17

)

GlobalTranz Enterprises, Inc.

 

5/15/2020

 

 

 

 

3,147

 

 

 

 

 

(283

)

Hygiena Borrower LLC

 

6/29/2020

 

 

 

 

863

 

 

 

 

 

(17

)

Diligent Corporation

 

12/19/2020

 

 

 

 

6,448

 

 

 

 

 

(64

)

CorePower Yoga LLC

 

5/14/2021

 

 

 

 

2,854

 

 

 

 

 

(43

)

SPay, Inc. (dba Stack Sports)

 

6/17/2024

 

 

 

 

577

 

 

 

 

 

(19

)

Associations, Inc.

 

7/30/2024

 

 

 

 

886

 

 

 

 

 

(9

)

Total 1st Lien/Senior Secured Debt

 

 

$

 

51,460

 

$

 

67,825

 

$

 

(1,433

)

$

 

(1,351

)

1st Lien/Last-Out Unitranche

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vantage Mobility International, LLC

 

9/9/2021

$

 

$

 

717

 

$

 

$

 

(65

)

Total 1st Lien/Last-Out Unitranche

 

 

$

 

 

$

 

717

 

$

 

 

$

 

(65

)

2nd Lien/Senior Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USRP Holdings, Inc. (dba U.S. Retirement Partners)

 

3/29/2020

$

 

$

 

884

 

$

 

$

 

(9

)

Hygiena Borrower LLC

 

6/29/2020

 

 

 

 

883

 

 

 

 

 

(15

)

Genesis Acquisition Co. (dba ProCare Software)

 

7/31/2020

 

 

 

 

2,700

 

 

 

 

 

(68

)

Total 2nd Lien/Senior Secured Debt

 

 

$

 

 

$

 

4,467

 

$

 

 

$

 

(92

)

Total

 

 

$

 

51,460

 

$

 

73,009

 

$

 

(1,433

)

$

 

(1,508

)

 

(1) 

Commitments are generally subject to borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. These amounts may remain outstanding until the commitment period of an applicable loan expires, which may be shorter than its maturity.

(2) 

Unfunded commitments denominated in currencies other than USD have been converted to USD using the exchange rate as of the applicable reporting date.

(3) 

The fair value is reflected as investments, at fair value on the Consolidated Statements of Financial Condition.

Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

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9.

MEMBERS’ CAPITAL

Capital Drawdowns

The following table summarizes the total Units issued and proceeds related to capital drawdowns:

 

Unit Issue Date

 

Units Issued

 

 

Proceeds Received

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

March 27, 2020

 

 

502,481

 

 

$

43,897

 

Total capital drawdowns

 

 

502,481

 

 

$

43,897

 

 

For the Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

February 22, 2019

 

 

689,032

 

 

$

65,846

 

March 28, 2019

 

 

455,946

 

 

 

43,897

 

April 29, 2019

 

 

234,200

 

 

 

21,949

 

May 30, 2019

 

 

232,747

 

 

 

21,948

 

September 20, 2019

 

 

58,300

 

 

 

5,487

 

Total capital drawdowns

 

 

1,670,225

 

 

$

159,127

 

 

Distributions

The following table reflects the distributions declared on the Company’s common Units:

 

Date Declared

 

Record Date

 

Payment Date

 

Amount Per Unit

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

August 5, 2020

 

August 6, 2020

 

August 28, 2020

 

 

$2.34(1)

 

 

For the Nine Months Ended September 30, 2019

 

 

 

 

February 20, 2019

 

March 29, 2019

 

April 26, 2019

 

$2.53

May 7, 2019

 

June 28, 2019

 

July 26, 2019

 

$1.97

July 30, 2019

 

September 30, 2019

 

October 25, 2019

 

$3.27

 

(1) 

Return of capital distribution

 

10.EARNINGS PER UNIT

The following information sets forth the computation of basic and diluted earnings per unit:  

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in Members’ Capital from operations

 

$

22,970

 

 

$

16,686

 

 

$

28,459

 

 

$

40,730

 

Weighted average Units outstanding

 

 

10,687,877

 

 

 

10,134,067

 

 

 

10,530,164

 

 

 

9,626,310

 

Basic and diluted earnings per unit

 

$

2.15

 

 

$

1.65

 

 

$

2.70

 

 

$

4.23

 

 

Diluted earnings per unit equal basic earnings per unit because there were no common unit equivalents outstanding during the period presented.

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11.

FINANCIAL HIGHLIGHTS

The below table presents the schedule of financial highlights of the Company:

 

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

Per Unit Data:(1)

 

 

 

 

 

 

 

 

NAV, beginning of period

 

$

86.21

 

 

$

94.83

 

Net investment income (loss)

 

 

5.54

 

 

 

7.39

 

Net realized and unrealized gains (losses)(2)

 

 

(2.81

)

 

 

(3.14

)

Income tax provision, realized and unrealized gains

 

 

(0.01

)

 

 

(0.05

)

Net increase (decrease) in net assets from operations(2)

 

 

2.72

 

 

 

4.20

 

Distributions declared:

 

 

 

 

 

 

 

 

From net investment income

 

 

 

 

 

(7.77

)

From return of capital

 

 

(2.34

)

 

 

 

Total distributions declared

 

 

(2.34

)

 

 

(7.77

)

Total increase (decrease) in net assets

 

 

0.38

 

 

 

(3.57

)

NAV, end of period

 

$

86.59

 

 

$

91.26

 

Units outstanding, end of period

 

 

10,687,877

 

 

 

10,185,396

 

Weighted average units outstanding

 

 

10,530,164

 

 

 

9,626,310

 

Total return based on NAV(3)

 

 

3.16

%

 

 

4.43

%

Ratio/Supplemental Data(4)

 

 

 

 

 

 

 

 

Members’ Capital, end of period

 

$

925,489

 

 

$

929,565

 

Ratio of net expenses to average Members’ Capital

 

 

5.38

%

 

 

6.65

%

Ratio of expenses (without incentive fees and interest and other debt expenses) to Members’ Capital

 

 

1.89

%

 

 

1.95

%

Ratio of interest and other debt expenses to average Members’ Capital

 

 

2.93

%

 

 

3.95

%

Ratio of incentive fees to average Members’ Capital

 

 

0.56

%

 

 

0.75

%

Ratio of total expenses to average Members’ Capital

 

 

5.38

%

 

 

6.65

%

Ratio of net investment income (loss) to average Members’ Capital

 

 

8.84

%

 

 

10.88

%

Average debt outstanding

 

$

495,840

 

 

$

561,147

 

Average debt per unit(5)

 

$

47.09

 

 

$

58.29

 

Portfolio turnover

 

 

4

%

 

 

17

%

 

(1) 

The per unit data was derived by using the weighted average units outstanding during the applicable period, except for distributions declared, which reflects the actual amount of distributions declared per unit for the applicable period.

(2) 

The amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of the distribution.

(3) 

Calculated as the change in NAV per unit during the period plus dividends declared per unit, divided by the beginning NAV per unit.

(4)

Annualized, except for, as applicable, unvested Incentive Fees and certain operating expenses.

(5)

Calculated as average debt outstanding divided by the weighted average units outstanding during the applicable period.

 

12.SUBSEQUENT EVENTS

Subsequent events after the date of the Consolidated Statements of Financial Condition have been evaluated through the date the unaudited consolidated financial statements were issued. Other than the items discussed below, the Company has concluded that there is no impact requiring adjustment or disclosure in the consolidated financial statements.

On October 1, 2020, GSAM, subject to prior authorization by the Board of Directors, declared a $40,000 distribution payable on November 2, 2020 to Unitholders of record as of October 2, 2020.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. References to “we,” “us,” “our,” and the “Company,” mean Goldman Sachs Private Middle Market Credit LLC, unless otherwise specified. The terms “GSAM,” our “Adviser” or our “Investment Adviser” refer to Goldman Sachs Asset Management, L.P., a Delaware limited partnership. The term “Group Inc.” refers to The Goldman Sachs Group, Inc. The term “Goldman Sachs” refers to Group Inc., together with Goldman Sachs & Co. LLC (including its predecessors, “GS & Co.”), GSAM and its other subsidiaries and affiliates. The discussion and analysis contained in this section refers to our financial condition, results of operations and cash flows. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report. Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with this discussion and analysis. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in this report.

OVERVIEW

We are a specialty finance company focused on lending to middle-market companies. We are a closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). In addition, we have elected to be treated, and expect to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2016. From our commencement of investment operations on July 1, 2016 through September 30, 2020, we have originated $2.17 billion in aggregate principal amount of debt and equity investments prior to any subsequent exits and repayments. We seek to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments.

“Unitranche” loans are first lien loans that may extend deeper in a company’s capital structure than traditional first lien debt and may provide for a waterfall of cash flow priority between different lenders in the unitranche loan. In a number of instances, we may find another lender to provide the “first out” portion of such loan and retain the “last out” portion of such loan, in which case, the “first out” portion of the loan would generally receive priority with respect to payment of principal, interest and any other amounts due thereunder over the “last out” portion that we would continue to hold. In exchange for the greater risk of loss, the “last out” portion generally earns a higher interest rate than our “first out” portion. We use the term “mezzanine” to refer to debt that ranks senior only to a borrower’s equity securities and ranks junior in right of payment to all of such borrower’s other indebtedness. We may make multiple investments in the same portfolio company. We expect to invest, under normal circumstances, at least 80% of our net assets (plus any borrowings for investment purposes), directly or indirectly in private middle-market credit obligations and related instruments. We define “credit obligations and related instruments” for this purpose as any fixed-income instrument, including loans to, and bonds and preferred stock of, portfolio companies and other instruments that provide exposure to such fixed-income instruments. “Middle market” is used to refer to companies with between $5 million and $200 million of annual earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) excluding certain one-time and non-recurring items that are outside the operations of these companies. While, as a result of fluctuations in the net asset value (“NAV”) of one asset relative to another asset, private middle-market credit obligations and related instruments may represent less than 80% of our net assets (plus any borrowings for investment purposes) at any time, we may not invest, under normal circumstances, more than 20% of our net assets (plus any borrowings for investment purposes) in securities and other instruments that are not private middle-market credit obligations and related instruments. To the extent we determine to invest indirectly in private middle-market credit obligations and related instruments, we may invest through certain synthetic instruments, including derivatives that have similar economic characteristics to private middle-market credit obligations. For purposes of determining compliance with our 80% policy, each applicable derivative instrument will be valued based upon its market value. We will notify our Unitholders at least 60 days prior to any change to the 80% investment policy described above.

We expect to directly or indirectly invest at least 70% of our total assets in middle-market companies domiciled in the United States. However, we may from time to time invest opportunistically in large U.S. companies, non-U.S. companies, stressed or distressed debt, structured products, private equity or other opportunities, subject to limits imposed by the Investment Company Act.

While our investment program is expected to focus primarily on debt investments, our investments may include equity features, such as a direct investment in the equity or convertible securities of a portfolio company or warrants or options to buy a minority interest in a portfolio company. Any warrants we may receive with debt securities will generally require only a nominal cost to exercise, so as a portfolio company appreciates in value, we may achieve additional investment return from these equity investments. We may structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as puts, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In many cases, we may also obtain registration rights in connection with these equity investments, which may include demand and “piggyback” registration rights.

For a discussion of the competitive landscape we face, please see “Item 1A. Risk Factors—We operate in a highly competitive market for investment opportunities” and “Item 1. Business—Competitive Advantages” in our annual report on Form 10-K for the year ended December 31, 2019.

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Impact of COVID-19 Pandemic

The persistence of the COVID-19 pandemic poses ongoing challenges for the global economy. While economic activity has generally accelerated from earlier in the year when widespread lockdown measures were in place, progress has been uneven across countries and the sustainability of global economic recovery is vulnerable to the risk of a resurgence in infections. Governments and central banks around the world have remained proactive in responding to the crisis through unprecedented accommodative monetary policy and fiscal stimulus. The extent to which the COVID-19 pandemic will continue to affect our business, financial condition, liquidity, our portfolio companies’ results of operations and by extension our operating results will depend on future developments, which are highly uncertain and cannot be predicted.

Our investment portfolio continues to be focused on industries and sectors that are generally expected to be more durable than industries and sectors that are more prone to economic cycles. Given the unprecedented nature of COVID-19 and the difficulty in predicting future government responses and restrictions, the operating environment of our portfolio companies is evolving rapidly.  Business disruption experienced by our portfolio companies may reduce, over time, the amount of interest and dividend income that we receive from our investments companies and may require us to contribute additional capital to such portfolio companies. We may need to restructure our investments in some portfolio companies, which could result in reduced interest payments from or permanent impairments of our investments, and could result in the restructuring of certain of our investments from income paying investments into non-income paying equity investments. Any such decrease in our net investment income would increase the percentage of our cash flows dedicated to our debt obligations and distribution payments to our stockholders. As a result, we may be required to reduce the future amount of distributions to our stockholders. We continue to closely monitor our investment portfolio in order to be positioned to respond appropriately.

In response to the COVID-19 pandemic, Goldman Sachs has continued to successfully execute on its Business Continuity Planning (the “BCP”) strategy since initially activating it in the first quarter of 2020. Goldman Sachs’ priority has been to safeguard its employees and to ensure continuity of business operations. Goldman Sachs has a central team that continues to manage its COVID-19 response, which is led by its chief administrative officer and chief medical officer. As a result of the execution of Goldman Sachs’ BCP, the majority of its employees continue to work remotely. Goldman Sachs has established policies and protocols that will enable a phased return to office, taking into account the readiness of people, communities and facilities. As communities where Goldman Sachs operate began to reopen, Goldman Sachs took the necessary steps to enable employees to start to return to the office in a safe manner. Our systems and infrastructure have continued to support our business operations. We have maintained regular and active communication across senior management, the rest of our private credit group and our board of directors (the “Board of Directors”). Furthermore, we have ongoing dialogues with our vendors to ensure they continue to meet our criteria for business continuity. 

For further information about the risks associated with COVID-19, see “—Item 1A. Risk Factors” in Part II.

KEY COMPONENTS OF OPERATIONS

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the amount of capital we have available to us and the competitive environment for the type of investments we make.

As a BDC, we may not acquire any assets other than “qualifying assets” specified in the Investment Company Act, unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), “eligible portfolio companies” include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

Revenues

We generate revenues in the form of interest income on debt investments and, to a lesser extent, capital gains and distributions, if any, on equity securities that we may acquire in portfolio companies. Some of our investments may provide for deferred interest payments or payment-in-kind (“PIK”) income. The principal amount of the debt investments and any accrued but unpaid interest generally becomes due at the maturity date.

We generate revenues primarily through receipt of interest income from the investments we hold. In addition, we may generate revenue in the form of commitment, origination, structuring, syndication, exit fees or diligence fees, fees for providing managerial assistance and consulting fees. Portfolio company fees (directors’ fees, consulting fees, administrative fees, tax advisory fees and other similar compensation) will be paid to us, unless, to the extent required by applicable law or exemptive relief, if any, therefrom, we receive our allocable portion of such fees when invested in the same portfolio company as other client accounts managed by our Investment Adviser (including GS BDC and GS PMMC II, collectively with other client accounts managed by our Investment Adviser, the “Accounts”), which other Accounts could receive their allocable portion of such fee. We do not expect to receive material fee income as it is not our principal investment strategy. We record contractual prepayment premiums on loans and debt securities as interest income.

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Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Interest and dividend income are presented net of withholding tax, if any.

Expenses

Our primary operating expenses include the payment of the management fee (the “Management Fee”) and the incentive fee (the “Incentive Fee”) to the Investment Adviser, legal and professional fees, interest and other debt expenses and other operating and overhead related expenses. The Management Fee and Incentive Fee compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. Pursuant to an investment advisory agreement with the Investment Adviser (the “Investment Advisory Agreement”), Company expenses borne by us in the ordinary course on an annual basis (excluding Management Fees, Incentive Fees, organizational and start-up expenses and leverage-related expenses) will not exceed an amount equal to 0.5% of the aggregate amount of commitments to us by holders of common units of our limited liability company interests (“Units”); provided, however, that expenses incurred outside of the ordinary course, including litigation and similar expenses, are not subject to such cap. We bear all other expenses of our operations and transactions in accordance with our Investment Advisory Agreement and administration agreement (the “Administration Agreement”), including:

 

our operational expenses;

 

fees and expenses, including travel expenses, incurred by our Investment Adviser or payable to third parties related to our investments, including, among others, professional fees (including the fees and expenses of consultants and experts) and fees and expenses from evaluating, monitoring, researching and performing due diligence on investments and prospective investments;

 

interest, fees and other expenses payable on indebtedness for borrowed money (including through the issuance of notes and other evidence of indebtedness), other indebtedness, financings or extensions of credit, if any, incurred by us;

 

fees and expenses incurred by us in connection with membership in investment company organizations;

 

brokers’ commissions;

 

fees and expenses associated with calculating our net asset value (“NAV”) (including expenses of any independent valuation firm);

 

legal, auditing or accounting expenses;

 

taxes or governmental fees;

 

the fees and expenses of our administrator, transfer agent, or sub-transfer agent;

 

the cost of preparing unit certificates or any other expenses, including clerical expenses of issue or repurchase of our Units;

 

the expenses of and fees for registering or qualifying our Units for sale and of maintaining our registration or qualifying and registering us as a broker or a dealer;

 

the fees and expenses of our directors who are not affiliated with our Investment Adviser;

 

the cost of preparing and distributing reports, proxy statements and notices to our Unitholders, the SEC and other regulatory authorities;

 

costs of holding Unitholder meetings;

 

the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by limited liability company agreement or other organizational documents insofar as they govern agreements with any such custodian;

 

insurance premiums; and

 

costs incurred in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business.

Our Investment Adviser will not be required to pay expenses of activities which are primarily intended to result in sales of Units.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

Leverage

The JPM Revolving Credit Facility allows us to borrow money and lever our investment portfolio, subject to the limitations of the Investment Company Act, with the objective of increasing our yield. This is known as “leverage” and could increase or decrease returns to our Unitholders. The use of leverage involves significant risks. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, equals at least 200% after such borrowing (or 150% if certain requirements are met). As of September 30, 2020 and December 31, 2019, our asset coverage ratio based on the aggregate amount outstanding of our senior securities (which includes the JPM Revolving Credit Facility and the revolving credit facility with Bank of America, N.A., the “BoA Revolving Credit Facility” and together with the JPM Revolving Credit Facility, the “Revolving Credit Facilities")

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was 296% and 270%. The Small Business Credit Availability Act modified the applicable provisions of the Investment Company Act to reduce the required asset coverage ratio applicable to BDCs to 150%, subject to certain approval and disclosure requirements and, in the case of BDCs without common equity listed on a national securities exchange, such as the Company, an offer to repurchase shares held by the BDC’s stockholders as of the date the requisite approval is obtained. As a result, BDCs are able to increase their leverage capacity if shareholders approve a proposal to do so. If a BDC receives shareholder approval, it would be allowed to increase its leverage capacity on the first day after such approval. Alternatively, the legislation allows the majority of the directors who are not “interested persons,” as defined in the Investment Company Act, of the BDC to approve an increase in its leverage capacity, and such approval would become effective after one year. Certain trading practices and investments, such as reverse repurchase agreements, may be considered borrowings or involve leverage and thus may be subject to Investment Company Act restrictions. In accordance with applicable SEC staff guidance and interpretations, when we engage in such transactions, instead of maintaining an asset coverage ratio of at least 200% (or 150% if the above referenced requirements are met), we may segregate or earmark liquid assets, or enter into an offsetting position, in an amount at least equal to our exposure, on a mark-to-market basis, to such transactions (as calculated pursuant to requirements of the SEC). Short-term credits necessary for the settlement of securities transactions and arrangements with respect to securities lending will not be considered borrowings for these purposes. Practices and investments that may involve leverage but are not considered borrowings are not subject to the Investment Company Act’s asset coverage requirement, and we will not otherwise segregate or earmark liquid assets or enter into offsetting positions for such transactions. The amount of leverage that we employ will depend on our Investment Adviser’s and our Board of Directors’ assessment of market conditions and other factors at the time of any proposed borrowing.

PORTFOLIO AND INVESTMENT ACTIVITY

Our portfolio (excluding our investment in a money market fund, if any, managed by an affiliate of Group Inc.) consisted of the following:

 

 

 

As of

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Amortized

Cost

 

 

Fair Value

 

 

Percentage

of Total

Portfolio at

Fair Value

 

 

Amortized

Cost

 

 

Fair

Value

 

 

Percentage

of Total

Portfolio at

Fair Value

 

 

 

($ in millions)

 

 

 

 

 

 

($ in millions)

 

 

 

 

 

First Lien/Senior Secured Debt

 

$

820.73

 

 

$

802.63

 

 

 

61.4

%

 

$

875.70

 

 

$

870.02

 

 

 

62.2

%

First Lien/Last-Out Unitranche

 

 

129.32

 

 

 

124.13

 

 

 

9.5

 

 

 

128.26

 

 

 

127.21

 

 

 

9.1

 

Second Lien/Senior Secured Debt

 

 

378.21

 

 

 

341.71

 

 

 

26.1

 

 

 

391.15

 

 

 

369.65

 

 

 

26.4

 

Unsecured Debt

 

 

4.91

 

 

 

4.68

 

 

 

0.4

 

 

 

4.90

 

 

 

4.88

 

 

 

0.3

 

Preferred Stock

 

 

15.21

 

 

 

18.77

 

 

 

1.4

 

 

 

15.21

 

 

 

15.95

 

 

 

1.1

 

Common Stock

 

 

12.01

 

 

 

15.76

 

 

 

1.2

 

 

 

12.01

 

 

 

12.70

 

 

 

0.9

 

Warrants

 

 

1.34

 

 

 

0.02

 

 

 

0.0

 

 

 

0.10

 

 

 

0.10

 

 

 

0.0

 

Total Investments

 

$

1,361.73

 

 

$

1,307.70

 

 

 

100.0

%

 

$

1,427.33

 

 

$

1,400.51

 

 

 

100.0

%

 

The weighted average yield of our portfolio by asset type (excluding our investment in a money market fund, if any, managed by an affiliate of Group Inc.), at amortized cost and fair value, was as follows:

 

 

 

As of

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Amortized

Cost

 

 

Fair Value

 

 

Amortized

Cost

 

 

Fair Value

 

Weighted Average Yield(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Lien/Senior Secured Debt(2)

 

 

8.2

%

 

 

9.0

%

 

 

8.8

%

 

 

8.9

%

First Lien/Last-Out Unitranche(2)(3)

 

 

9.0

 

 

 

10.9

 

 

 

10.0

 

 

 

10.2

 

Second Lien/Senior Secured Debt(2)

 

 

9.4

 

 

 

11.5

 

 

 

10.6

 

 

 

11.7

 

Unsecured Debt(2)

 

 

13.5

 

 

 

16.1

 

 

 

13.6

 

 

 

13.8

 

Preferred Stock(4)

 

 

 

 

 

 

 

 

Common Stock(4)

 

 

 

 

 

 

 

 

Warrants(4)

 

 

 

 

 

 

 

 

Total Portfolio

 

 

8.4

%

 

 

9.6

%

 

 

9.2

%

 

 

9.6

%

 

(1) 

The weighted average yield of our portfolio does not represent the total return to our Unitholders.

(2) 

Computed based on (a) the annual actual interest rate or yield earned plus amortization of fees and discounts on the performing debt and other income producing investments as of the reporting date, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) at amortized cost or fair value.

(3) 

The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments.

(4) 

Computed based on (a) the stated coupon rate, if any, for each income-producing investment, divided by (b) the total investments (including investments on non-accrual and non-income producing investments) at amortized cost or fair value.

 

As of September 30, 2020, the total portfolio weighted average yield measured at amortized cost and fair value was 8.4% and 9.6%, as compared to 9.2% and 9.6%, at December 31, 2019. Within First Lien/Last-Out Unitranche, the decrease in weighted average yield at amortized cost was primarily driven by the decline in the London InterBank Offered Rate (“LIBOR”). Within Second Lien/Senior Secured Debt, the decrease in weighted average yield at amortized cost was primarily driven by one investment placed on non-accrual status. Within Unsecured Debt, the increase in weighted average yield at fair value was primarily driven by the increased market volatility, economic

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disruption, and wider credit spreads resulting from the recent COVID-19 pandemic. For further discussion of the impact of the COVID-19 pandemic on our portfolio, please see “—Impact of COVID-19 Pandemic.”

The following table presents certain selected information regarding our investment portfolio (excluding our investment in a money market fund, if any, managed by an affiliate of Group Inc.):

 

 

As of

 

 

September 30,

2020

 

December 31,

2019

 

Number of portfolio companies

 

 

56

 

 

 

60

 

Percentage of performing debt bearing a floating rate(1)

 

 

97.6

%

 

 

98.6

%

Percentage of performing debt bearing a fixed rate(1)(2)

 

 

2.4

%

 

 

1.4

%

Weighted average leverage (net debt/EBITDA)(3)

 

6.2x

 

 

6.1x

 

Weighted average interest coverage(3)

 

2.4x

 

 

2.2x

 

Median EBITDA(3)

$

35.0 million

 

$

40.3 million

 

 

(1) 

Measured on a fair value basis. Excludes investments, if any, placed on non-accrual.

 

(2) 

Includes income producing preferred stock investments, if applicable.

(3) 

For a particular portfolio company, we calculate the level of contractual indebtedness net of cash (“net debt”) owed by the portfolio company and compare that amount to measures of cash flow available to service the net debt. To calculate net debt, we include debt that is both senior and pari passu to the tranche of debt owned by us but exclude debt that is legally and contractually subordinated in ranking to the debt owned by us. We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual rights of repayment of the tranche of debt owned by us relative to other senior and junior creditors of a portfolio company. We typically calculate cash flow available for debt service at a portfolio company by taking EBITDA for the trailing twelve month period. Weighted average net debt to EBITDA is weighted based on the fair value of our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

For a particular portfolio company, we also calculate the level of contractual interest expense owed by the portfolio company, and compare that amount to EBITDA (“interest coverage ratio”). We believe this calculation method assists in describing the risk of our portfolio investments, as it takes into consideration contractual interest obligations of the portfolio company. Weighted average interest coverage is weighted based on the fair value of our performing debt investments, excluding investments where interest coverage may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

Median EBITDA is based on our debt investments, excluding investments where net debt to EBITDA may not be the appropriate measure of credit risk, such as cash collateralized loans and investments that are underwritten and covenanted based on recurring revenue.

Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the reported end date. Statistics of the portfolio companies have not been independently verified by us and may reflect a normalized or adjusted amount.

As of September 30, 2020 and December 31, 2019, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 28.8% and 20.7%, of total debt investments at fair value. Portfolio company statistics are derived from the most recently available financial statements of each portfolio company as of the respective reported end date. Portfolio company statistics have not been independently verified by us and may reflect a normalized or adjusted amount.

Our Investment Adviser monitors on an ongoing basis, the financial trends of each portfolio company to determine if it is meeting its respective business plan and to assess the appropriate course of action for each company. Our Investment Adviser has several methods of evaluating and monitoring the performance and fair value of our investments, which may include (i) assessment of success in adhering to the portfolio company’s business plan and compliance with covenants; (ii) periodic or regular contact with portfolio company management and, if appropriate, the financial or strategic sponsor to discuss financial position, requirements and accomplishments; (iii) comparisons to our other portfolio companies in the industry, if any; (iv) attendance at and participation in board meetings or presentations by portfolio companies; and (v) review of monthly and quarterly financial statements and financial projections of portfolio companies.

As part of the monitoring process, our Investment Adviser also employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Investment Adviser grades the credit risk of all investments on a scale of 1 to 4 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (i.e., at the time of origination or acquisition), although it may also take into account in certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors. The grading system for our investments is as follows:

 

Grade 1 investments involve the least amount of risk to our initial cost basis. The trends and risk factors for this investment since origination or acquisition are generally favorable, which may include the performance of the portfolio company or a potential exit;

 

Grade 2 investments involve a level of risk to our initial cost basis that is similar to the risk to our initial cost basis at the time of origination or acquisition. This portfolio company is generally performing as expected and the risk factors to our ability to ultimately recoup the cost of our investment are neutral to favorable. All investments or acquired investments in new portfolio companies are initially assessed a grade of 2; 

 

Grade 3 investments indicate that the risk to our ability to recoup the initial cost basis of such investment has increased materially since origination or acquisition, including as a result of factors such as declining performance and non-compliance with debt covenants; however, payments are generally not more than 120 days past due; and

 

Grade 4 investments indicate that the risk to our ability to recoup the initial cost basis of such investment has substantially increased since origination or acquisition, and the portfolio company likely has materially declining performance. For debt

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investments with an investment grade of 4, in most cases, most or all of the debt covenants are out of compliance and payments are substantially delinquent. For investments graded 4, it is anticipated that we will not recoup our initial cost basis and may realize a substantial loss of our initial cost basis upon exit.

Our Investment Adviser grades the investments in our portfolio at least each quarter and it is possible that the grade of a portfolio investment may be reduced or increased over time. For investments with a grade of 3 or 4, the Investment Adviser enhances its level of scrutiny over the monitoring of such portfolio company. The following table shows the composition of our portfolio (excluding our investment in a money market fund, if any, managed by an affiliate of Group Inc.) on the 1 to 4 grading scale:

 

 

 

As of

 

 

 

September 30, 2020

 

 

December 31, 2019

 

Investment Performance Rating

 

Fair Value

 

 

Percentage of

Total Portfolio

at Fair Value

 

 

Fair Value

 

 

Percentage of

Total Portfolio

at Fair Value

 

 

 

(in  millions)

 

 

 

 

 

 

(in  millions)

 

 

 

 

 

Grade 1

 

$

25.20

 

 

 

1.9

%

 

$

 

 

 

%

Grade 2

 

 

1,099.48

 

 

 

84.1

 

 

 

1,370.03

 

 

 

97.8

 

Grade 3

 

 

183.02

 

 

 

14.0

 

 

 

30.48

 

 

 

2.2

 

Grade 4

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments

 

$

1,307.70

 

 

 

100.0

%

 

$

1,400.51

 

 

 

100.0

%

 

The increase in investments with a grade 3 investment performance rating as of September 30, 2020 compared to December 31, 2019 was primarily driven by increased market volatility, economic disruption, and wider credit spreads resulting from the recent COVID-19 pandemic, however economic indicators generally continued to improve upon the rebound experienced during the second quarter, following significant declines in the first quarter, as businesses continued to navigate governmental mandates and the government continued to maintain liquidity in the capital markets and provide fiscal stimulus to support the economy. Given the unprecedented nature of COVID-19, the operating environment of our portfolio companies is evolving rapidly. For further discussion of the impact of the COVID-19 pandemic on our portfolio, please see “Impact of COVID-19 Pandemic.”

 

The following table shows the amortized cost of our performing and non-accrual investments (excluding our investment in a money market fund, if any, managed by an affiliate of Group Inc.):

 

 

 

As of

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Amortized

Cost

 

 

Percentage of

Total Portfolio

at Amortized

Cost

 

 

Amortized

Cost

 

 

Percentage of

Total Portfolio

at Amortized

Cost

 

 

 

(in  millions)

 

 

 

 

 

 

(in  millions)

 

 

 

 

 

Performing

 

$

1,349.20

 

 

 

99.1

%

 

$

1,427.33

 

 

 

100.0

%

Non-accrual

 

 

12.53

 

 

 

0.9

 

 

 

 

 

 

 

Total Investments

 

$

1,361.73

 

 

 

100.0

%

 

$

1,427.33

 

 

 

100.0

%

 

Investments are placed on non-accrual status when it is probable that principal, interest or dividends will not be collected according to the contractual terms. Accrued interest or dividends generally are reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual investments are restored to accrual status when past due principal and interest or dividends are paid and, in management’s judgment, principal and interest or dividend payments are likely to remain current. We may make exceptions to this treatment if the loan has sufficient collateral value and is in the process of collection.

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Table of Contents

 

The following table shows our investment activity by investment type(1):

 

 

 

For the Three Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

($ in millions)

 

Amount of investments committed at cost:

 

 

 

 

 

 

 

 

First Lien/Senior Secured Debt

 

$

1.58

 

 

$

25.54

 

First Lien/Last-Out Unitranche

 

 

 

 

 

2.65

 

Total

 

$

1.58

 

 

$

28.19

 

Proceeds from investments sold or repaid:

 

 

 

 

 

 

 

 

First Lien/Senior Secured Debt

 

$

34.56

 

 

$

12.06

 

First Lien/Last-Out Unitranche

 

 

0.37

 

 

 

0.14

 

Second Lien/Senior Secured Debt

 

 

 

 

 

25.33

 

Total

 

$

34.93

 

 

$

37.53

 

Net (decrease) in portfolio

 

$

(33.35

)

 

$

(9.34

)

Number of new portfolio companies with new investment commitments

 

 

 

 

 

 

Total new investment commitment amount in new portfolio companies

 

$

 

 

$

 

Average new investment commitment amount in new portfolio companies

 

$

 

 

$

 

Number of existing portfolio companies with new investment commitments

 

 

1

 

 

 

5

 

Total new investment commitment amount in existing portfolio companies

 

$

1.58

 

 

$

28.19

 

Weighted average remaining term for new investment commitments (in years)(2)

 

 

1.9

 

 

 

4.8

 

Percentage of new debt investment commitments at cost for floating interest rates

 

 

0.0

%

 

 

93.0

%

Percentage of new debt investment commitments at cost for fixed interest rates

 

 

100.0

%

 

 

7.0

%

Weighted average yield on new debt and income producing investment commitments(3)

 

 

10.7

%

 

 

8.8

%

Weighted average yield on new investment commitments(4)

 

 

10.7

%

 

 

8.8

%

Weighted average yield on debt and income producing investments sold or repaid(5)

 

 

7.0

%

 

 

10.0

%

Weighted average yield on investments sold or repaid(6)

 

 

7.0

%

 

 

10.0

%

 

(1)

Figures for new investment commitments are shown net of capitalized fees, expenses and original issue discount (“OID”) that occurred at the initial close. Figures for new investment commitments and may also include positions originated during the period but not held at the reporting date. Figures for investments sold or repaid, excludes unfunded commitments that may have expired or otherwise been terminated without receipt of cash proceeds or other consideration.

(2

Calculated as of the end of the relevant period and the maturity date of the individual investments.

(3

Computed based on (a) the annual actual interest rate on new debt and income producing investment commitments, divided by (b) the total new debt and income producing investment commitments. The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes investments that are non-accrual. The annual actual interest rate used is as of the respective quarter end date when the investment activity occurred.

(4

Computed based on (a) the annual actual interest rate on new investment commitments, divided by (b) the total new investment commitments (including investments on non-accrual and non-income producing investments). The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments. The annual actual interest rate used is as of the respective quarter end date when the investment activity occurred.

(5

Computed based on (a) the annual actual interest rate on debt and income producing investments sold or paid down, divided by (b) the total debt and income producing investments sold or paid down. The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments and investments that are non-accrual.

(6

Computed based on (a) the annual actual interest rate on investments sold or paid down, divided by (b) the total investments sold or paid down (including investments on non-accrual and non-income producing investments). The calculation includes incremental yield earned on the “last-out” portion of the unitranche loan investments and excludes prepayment premiums earned on exited investments.

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Table of Contents

 

RESULTS OF OPERATIONS

Our operating results were as follows:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

($ in millions)

 

Total investment income

 

$

31.48

 

 

$

38.33

 

 

$

95.96

 

 

$

117.53

 

Net expenses

 

 

28.28

 

 

 

15.18

 

 

 

37.64

 

 

 

46.40

 

Net investment income before taxes

 

 

3.20

 

 

 

23.15

 

 

 

58.32

 

 

 

71.13

 

Excise tax expense

 

 

 

 

 

(0.04

)

 

 

 

 

 

 

Net investment income after taxes

 

 

3.20

 

 

 

23.19

 

 

 

58.32

 

 

 

71.13

 

Net realized gain (loss) on investments

 

 

 

 

 

(0.01

)

 

 

 

 

 

(21.84

)

Net realized gain (loss) on foreign currency transactions

 

 

0.07

 

 

 

0.04

 

 

 

0.14

 

 

 

0.07

 

Net unrealized appreciation (depreciation) on investments

 

 

22.41

 

 

 

(8.81

)

 

 

(27.21

)

 

 

(11.10

)

Net unrealized appreciation (depreciation) on foreign currency forward contracts and translations

 

 

(2.62

)

 

 

2.43

 

 

 

(2.70

)

 

 

2.91

 

Income tax (provision) benefit, realized and unrealized gain/loss

 

 

(0.09

)

 

 

(0.15

)

 

 

(0.09

)

 

 

(0.44

)

Net increase in Members’ Capital from operations

 

$

22.97

 

 

$

16.69

 

 

$

28.46

 

 

$

40.73

 

 

Net increase in Members’ Capital from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio.

Investment Income

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

($ in millions)

 

Interest

 

$

30.56

 

 

$

37.64

 

 

$

94.36

 

 

$

115.47

 

Dividend income

 

 

0.04

 

 

 

0.17

 

 

 

0.16

 

 

 

0.42

 

Other income

 

 

0.88

 

 

 

0.52

 

 

 

1.44

 

 

 

1.64

 

Total investment income

 

$

31.48

 

 

$

38.33

 

 

$

95.96

 

 

$

117.53

 

 

Interest

Interest from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, decreased from $37.64 million for the three months ended September 30, 2019 to $30.56 million for the three months ended September 30, 2020, primarily due to a decrease in LIBOR and a decrease in the size of our portfolio. The amortized cost of the portfolio decreased from $1,491.05 million as of September 30, 2019 to $1,361.73 million as of September 30, 2020. This decrease was offset by the LIBOR floors we have in a number of our investments. Included in interest for the three months ended September 30, 2020 and 2019 is $0.70 million and $0.00 million, in prepayment premiums and $0.24 million and $0.54 million, in accelerated accretion of upfront loan origination fees and unamortized discounts.

Interest from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, decreased from $115.47 million for the nine months ended September 30, 2019 to $94.36 million for the nine months ended September 30, 2020, primarily due to a decrease in LIBOR and a decrease in the size of our portfolio. The amortized cost of the portfolio decreased from $1,491.05 million as of September 30, 2019 to $1,361.73 million as of September 30, 2020. This decrease was offset by the LIBOR floors we have in a number of our investments. Included in interest for the nine months ended September 30, 2020 and 2019 is $0.86 million and $1.69 million, respectively, in prepayment premiums and $0.82 million and $3.09 million, respectively, in accelerated accretion of upfront loan origination fees and unamortized discounts.

Dividend and other income

Dividend and other income for the three and nine months ended September 30, 2020 remained relatively consistent as compared to the three and nine months ended September 30, 2019.

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Table of Contents

 

Expenses

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

($ in millions)

 

Interest and other debt expenses

 

$

4.99

 

 

$

8.58

 

 

$

19.79

 

 

$

26.46

 

Management fees

 

 

3.49

 

 

 

3.51

 

 

 

10.18

 

 

 

10.20

 

Incentive fees

 

 

18.91

 

 

 

2.10

 

 

 

5.02

 

 

 

6.76

 

Professional fees

 

 

0.34

 

 

 

0.33

 

 

 

1.00

 

 

 

1.11

 

Directors’ fees

 

 

0.06

 

 

 

0.10

 

 

 

0.19

 

 

 

0.28

 

Other general and administrative expenses

 

 

0.49

 

 

 

0.56

 

 

 

1.46

 

 

 

1.59

 

Total expenses

 

$

28.28

 

 

$

15.18

 

 

$

37.64

 

 

$

46.40

 

 

Interest and other debt expenses

Interest and other debt expenses decreased from $8.58 million for the three months ended September 30, 2019 to $4.99 million for the three months ended September 30, 2020. This was primarily due to a decrease in the average aggregate daily borrowings from $551.02 million to $468.39 million, which was driven by a decrease in the size of our portfolio.

Interest and other debt expenses decreased from $26.46 million for the nine months ended September 30, 2019 to $19.79 million for the nine months ended September 30, 2020. This was primarily due to a decrease in the average aggregate daily borrowings from $561.15 million to $495.84 million, which was driven by a decrease in the size of our portfolio.

Management Fees and Incentive Fees

Management Fees for the three and nine months ended September 30, 2020 remained relatively consistent as compared to the three and nine months ended September 30, 2019.

The accrual for Incentive Fees increased from $2.10 million for the three months ended September 30, 2019 to $18.91 million for the three months ended September 30, 2020. This was primarily due to the reversal of change in unrealized depreciation from COVID-19 impacts during the three months ended March 31, 2020.

The accrual for Incentive Fees decreased from $6.76 million for the nine months ended September 30, 2019 to $5.02 million for the nine months ended September 30, 2020. This was primarily due to the increased change in unrealized depreciation on certain portfolio companies.

Professional fees and other general and administrative expenses

Professional fees and other general and administrative expenses for the three and nine months ended September 30, 2020 remained relatively consistent as compared to the three and nine months ended September 30, 2019.

Net Realized Gains (Losses) and Change in Unrealized Appreciation (Depreciation) on Investments

The realized gains and losses on fully exited and partially exited investments in portfolio companies consisted of the following:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

(in millions)

 

Vantage Mobility International, LLC

 

$

 

 

$

 

 

$

 

 

$

(10.24

)

Country Fresh Holding Company Inc.

 

 

 

 

 

 

 

 

 

 

 

(12.34

)

Picture Head Midco LLC

 

 

 

 

 

(0.01

)

 

 

 

 

 

(0.01

)

Other, net

 

 

 

 

 

 

 

 

 

 

 

0.75

 

Net realized gain (loss)

 

$

 

 

$

(0.01

)

 

$

 

 

$

(21.84

)

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Table of Contents

 

 

For the nine months ended September 30, 2019, net realized losses were primarily driven by our investments in two portfolio companies. In May 2019, we exchanged our first lien/last-out unitranche debt in Vantage Mobility International, LLC for first lien/last-out unitranche debt, preferred stock and common stock, which resulted in a realized loss of $10.24 million. In addition, in April 2019, we exchanged our second lien debt in Country Fresh Holding Company Inc. for common stock, which resulted in a realized loss of $12.34 million.

Any changes in fair value are recorded in change in unrealized appreciation (depreciation) on investments. For further details on the valuation process, refer to “Note 2 “Significant Accounting Policies—Investments” in our consolidated financial statements. Net change in unrealized appreciation (depreciation) on investments were as follows:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

 

September 30,

2020

 

 

September 30,

2019

 

 

 

($ in millions)

 

Unrealized appreciation

 

$

23.85

 

 

$

2.51

 

 

$

26.69

 

 

$

10.56

 

Unrealized depreciation

 

 

(1.44

)

 

 

(11.32

)

 

 

(53.90

)

 

 

(21.66

)

Net change in unrealized appreciation (depreciation) on investments

 

$

22.41

 

 

$

(8.81

)

 

$

(27.21

)

 

$

(11.10

)

 

The change in unrealized appreciation (depreciation) on investments consisted of the following:

 

 

 

For the Three

Months Ended

September 30, 2020

 

 

For the Nine

Months Ended

September 30, 2020

 

 

 

($ in millions)

 

Portfolio Company:

 

 

 

 

 

 

 

 

Other, net(1)

 

$

10.71

 

 

$

(23.33

)

Zep Inc.

 

 

4.66

 

 

 

9.97

 

Fenergo Finance 3 Limited

 

 

1.45

 

 

 

1.11

 

National Spine and Pain Centers, LLC

 

 

1.25

 

 

 

0.14

 

Wrike, Inc.

 

 

1.12

 

 

 

4.63

 

iCIMS, Inc.

 

 

1.08

 

 

 

(0.13

)

Wine.com, LLC

 

 

0.88

 

 

 

4.14

 

Empirix, Inc.

 

 

0.86

 

 

 

2.40

 

Odyssey Logistics & Technology Corporation

 

 

0.83

 

 

 

(3.85

)

Accuity Delivery Systems, LLC

 

 

0.56

 

 

 

2.22

 

Picture Head Midco LLC

 

 

0.21

 

 

 

(2.17

)

Chase Industries, Inc. (dba Senneca Holdings)

 

 

0.05

 

 

 

(12.45

)

Midwest Transport, Inc.

 

 

(0.08

)

 

 

0.04

 

Vantage Mobility International, LLC

 

 

(0.10

)

 

 

(6.53

)

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B

 

 

(0.15

)

 

 

(0.39

)

Country Fresh Holding Company Inc.

 

 

(0.16

)

 

 

(0.79

)

CorePower Yoga LLC

 

 

(0.76

)

 

 

(2.22

)

Total

 

$

22.41

 

 

$

(27.21

)

 

(1)

For the three and nine months ended September 30, 2020, other, net includes gross unrealized appreciation of $10.90 million and $2.04 million, respectively, and gross unrealized depreciation of $(0.19) million and $(25.37) million, respectively. 

 

Net change in unrealized appreciation (depreciation) in our investments for the three and nine months ended September 30, 2020 continued to be impacted by the COVID-19 pandemic, however economic indicators generally continued to improve upon the rebound experienced during the second quarter, following significant declines in the first quarter, as businesses continued to navigate governmental mandates and the government continued to maintain liquidity in the capital markets and provide fiscal stimulus to support the economy. Given the unprecedented nature of COVID-19, the operating environment of our portfolio companies is evolving rapidly. For further discussion of the impact of the COVID-19 pandemic on our portfolio, please see “—Impact of COVID-19 Pandemic.” In addition, the net change in unrealized appreciation (depreciation) was primarily driven by the unrealized depreciation in Chase Industries, Inc. (dba Senneca Holdings), which was placed on non-accrual status during the three months ended June 30, 2020 due to financial underperformance and the unrealized depreciation in Vantage Mobility International, LLC, which was due to financial underperformance, partially offset by the unrealized appreciation in Zep Inc., which was due to financial improvement.

 

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Table of Contents

 

 

 

 

For the Three

Months Ended

September 30, 2019

 

 

For the Nine

Months Ended

September 30, 2019

 

 

 

($ in millions)

 

Portfolio Company:

 

 

 

 

 

 

 

 

Accuity Delivery Systems, LLC

 

$

0.50

 

 

$

1.53

 

Continuum Managed Services LLC - Class B

 

 

0.34

 

 

 

1.78

 

DuBois Chemicals, Inc.

 

 

0.29

 

 

 

0.08

 

SPay, Inc.

 

 

0.25

 

 

 

(0.04

)

Bullhorn, Inc.

 

 

0.18

 

 

 

0.17

 

Continuum Managed Services LLC

 

 

(0.06

)

 

 

0.77

 

Country Fresh Holding Company Inc.

 

 

(0.06

)

 

 

2.03

 

Wrike, Inc.

 

 

(0.07

)

 

 

1.05

 

Empirix, Inc.

 

 

(0.28

)

 

 

(1.12

)

Chase Industries, Inc.

 

 

(0.99

)

 

 

(1.03

)

Diligent Corporation

 

 

(1.18

)

 

 

(1.35

)

Other, net(1)

 

 

(1.19

)

 

 

(0.66

)

Fenergo Finance 3 Limited

 

 

(1.39

)

 

 

(1.32

)

Vantage Mobility International, LLC

 

 

(1.50

)

 

 

(0.97

)

Zep Inc.

 

 

(3.65

)

 

 

(12.02

)

Total

 

$

(8.81

)

 

$

(11.10

)

 

(1)

For the three and nine months ended September 30, 2019, other, net includes gross unrealized appreciation of $0.95 million and $3.15 million, respectively, and gross unrealized depreciation of $(2.14) million and $(3.81) million, respectively.

 

Net change in unrealized appreciation (depreciation) in our investments for the three and nine months ended September 30, 2019 was primarily driven by the unrealized depreciation in Zep Inc., which was due to financial underperformance.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The primary use of existing funds and any funds raised in the future is expected to be for our investments in portfolio companies, cash distributions to our Unitholders or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

We expect to generate cash primarily from the net proceeds of any future offerings of securities, drawdowns of capital commitments, future borrowings and cash flows from operations. To the extent we determine that additional capital would allow us to take advantage of additional investment opportunities, if the market for debt financing presents attractively priced debt financing opportunities, or if our Board of Directors otherwise determines that leveraging our portfolio would be in our best interest and the best interests of our Unitholders, we may enter into credit facilities in addition to the JPM Revolving Credit Facility, or issue other senior securities. We would expect any such credit facilities may be secured by certain of our assets and may contain advance rates based upon pledged collateral. The pricing and other terms of any such facilities would depend upon market conditions when we enter into any such facilities as well as the performance of our business, among other factors. As a BDC, with certain limited exceptions, we are only permitted to borrow amounts such that our asset coverage ratio, as defined in the Investment Company Act, is at least 200% after such borrowing (or 150% if certain requirements are met). See “—Key Components of Operations—Leverage.” As of September 30, 2020 and December 31, 2019, our asset coverage ratio based on the aggregate amount outstanding of our senior securities (which includes the JPM Revolving Credit Facility and the revolving credit facility with Bank of America, N.A., the “BoA Revolving Credit Facility” and together with the JPM Revolving Credit Facility, the “Revolving Credit Facilities") was 296% and 270%. We may also refinance or repay any of our indebtedness at any time based on our financial condition and market conditions.

We may enter into investment commitments through signed commitment letters which may ultimately become investment transactions in the future. We regularly evaluate and carefully consider our unfunded commitments using GSAM’s proprietary risk management framework for the purpose of planning our capital resources and ongoing liquidity, including our financial leverage.

As of September 30, 2020, we had cash of approximately $24.56 million, an increase of $6.88 million from December 31, 2019. In addition, as of September 30, 2020, we had an investment in a money market fund managed by an affiliate of Group Inc. of $66.52 million. Cash provided by operating activities for the nine months ended September 30, 2020 was approximately $53.80 million, primarily driven by net purchases of investments in the affiliated money market fund of $66.52 million, offset by an increase in Members’ Capital from operations of $28.46 million, other operating activities of $19.36 million and net sales of investments of $72.50 million. Cash used by financing activities for the nine months ended September 30, 2020 was approximately $46.95 million, primarily driven by proceeds from the issuance of common Units of $43.90 million, offset by net repayments on debt of $43.42 million, distributions paid of $45.37 million and other financing activities of $2.06 million.

As of September 30, 2019, we had cash of approximately $48.42 million, an increase of $22.87 million from December 31, 2018. In addition, as of September 30, 2019, we had an investment in a money market fund managed by an affiliate of Group Inc. of $20.27 million. Cash used

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Table of Contents

 

by operating activities for the nine months ended September 30, 2019 was approximately $40.78 million, primarily driven by net purchases of investments of $96.96 million, net purchases of investments in the affiliated money market fund of $20.27 million, offset by other operating activities of $35.72 million and an increase in Members’ Capital from operations of $40.73 million. Cash provided by financing activities for the nine months ended September 30, 2019 was approximately $63.70 million, primarily driven by proceeds from the issuance of common Units of $159.13 million, offset by net repayments on debt of $24.54 million, distributions paid of $69.94 million and other financing activities of $0.95 million.

To the extent permissible under the risk retention rules and applicable provisions of the Investment Company Act, we may raise capital by securitizing certain of our investments, including through the formation of one or more collateralized loan obligations or asset based facilities, while retaining all or most of the exposure to the performance of these investments. This would involve contributing a pool of assets to a special purpose entity, and selling debt interests in such entity on a non-recourse or limited-recourse basis to purchasers. We may also pursue other forms of debt financing, including potentially from the Small Business Administration through a future small business investment company subsidiary (subject to regulatory approvals).

We had aggregate capital commitments and undrawn capital commitments from investors as follows:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Capital

Commitments

($ in millions)

 

 

Unfunded

Capital

Commitments

($ in millions)

 

 

% of Capital

Commitments

Funded

 

 

Capital

Commitments

($ in millions)

 

 

Unfunded

Capital

Commitments

($ in millions)

 

 

% of Capital

Commitments

Funded

 

Common Units

 

$

1,097.43

 

 

$

60.36

 

 

 

95

%

 

$

1,097.43

 

 

$

104.26

 

 

 

91

%

 

 

The following table summarizes the total Units issued and proceeds related to capital drawdowns:

 

Unit Issue Date

 

Units Issued

 

 

Proceeds

Received

($ in millions)

 

For the Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

March 27, 2020

 

 

502,481

 

 

$

43.90

 

Total capital drawdowns

 

 

502,481

 

 

$

43.90

 

 

For the Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

February 22, 2019

 

 

689,032

 

 

$

65.84

 

March 28, 2019

 

 

455,946

 

 

 

43.90

 

April 29, 2019

 

 

234,200

 

 

 

21.95

 

May 30, 2019

 

 

232,747

 

 

 

21.95

 

September 20, 2019

 

 

58,300

 

 

 

5.49

 

Total capital drawdowns

 

 

1,670,225

 

 

$

159.13

 

 

Contractual Obligations

We have entered into certain contracts under which we have future commitments. Payments under the Investment Advisory Agreement, pursuant to which GSAM has agreed to serve as our Investment Adviser, are equal to (1) a percentage of our average NAV and (2) an Incentive Fee based on investment performance. Under the Administration Agreement, pursuant to which State Street Bank and Trust Company has agreed to furnish us with the administrative services necessary to conduct our day-to-day operations, we pay our administrator such fees as may be agreed between us and our administrator that we determine are commercially reasonable in our sole discretion. Generally, either party may terminate the Investment Advisory Agreement without penalty on at least 60 days’ written notice to the other party. Either party may terminate the Administration Agreement without penalty upon at least 30 days’ written notice to the other party.

The following table shows our contractual obligations as of September 30, 2020:

 

 

 

Payments Due by Period ($ in millions)

 

 

 

Total

 

 

Less Than

1 Year

 

 

1 – 3

Years

 

 

3 – 5

Years

 

 

More Than

5 Years

 

JPM Revolving Credit Facility

 

$

408.89

 

 

$

 

 

$

 

 

$

408.89

 

 

$

 

JPM Revolving Credit Facility

 

50.90

 

 

 

 

 

 

50.90

 

 

 

 

Euro (“€”)

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JPM Revolving Credit Facility

On November 21, 2017, Goldman Sachs Private Middle Market Credit SPV LLC (“SPV”), our wholly-owned subsidiary, entered into the JPM Revolving Credit Facility. JPMorgan Chase Bank, National Association (“JPM”) serves as administrative agent, State Street Bank and Trust Company serves as collateral agent, collateral administrator, bank and securities intermediary and we serve as portfolio manager under the JPM Revolving Credit Facility. State Street Bank and Trust Company also acts as our transfer agent, disbursing agent, custodian and administrator as well as SPV’s custodian. The Company amended the JPM Revolving Credit Facility on August 17, 2018, December 10, 2018, February 22, 2019, April 3, 2020 and August 26, 2020.

Borrowings under the JPM Revolving Credit Facility bear interest (at SPV’s election) at a per annum rate equal to either (x) the three-month LIBOR (or other listed offered rate, depending upon the currency of borrowing) in effect or (y) a rate per annum equal to the greater of (i) the prime rate of JPM in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 0.50%; and, with respect to advances denominated in a currency other than USD, the annual rate of interest is the reference rate then in effect for determining interest rates on commercial loans made in the applicable jurisdiction of such currency, in all cases, in each case, plus the applicable margin. The applicable margin is 3.25% per annum. SPV initially paid a commitment fee of 1.00% per annum (or 0.50% per annum during the first nine months from the date the JPM Revolving Credit Facility was entered into) on the average daily unused amount of the financing commitments until the third anniversary of the JPM Revolving Credit Facility.

The JPM Revolving Credit Facility is a multicurrency facility. As of September 30, 2020, the total commitments under the JPM Revolving Credit Facility were $514.25 million. The JPM Revolving Credit Facility also has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments under the JPM Revolving Credit Facility to $750.00 million. All amounts outstanding under the JPM Revolving Credit Facility must be repaid by the sixth anniversary of the JPM Revolving Credit Facility, subject to a six month extension of the maturity date with the consent of the administrative agent at such time.

SPV’s obligations to the lenders under the JPM Revolving Credit Facility are secured by a first priority security interest in all of SPV’s portfolio of investments and cash. The obligations of SPV under the JPM Revolving Credit Facility are non-recourse to us, and our exposure under the JPM Revolving Credit Facility is limited to the value of our investment in SPV.

In connection with the JPM Revolving Credit Facility, SPV has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The JPM Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of SPV occurs or if we are no longer the portfolio manager of SPV. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the JPM Revolving Credit Facility immediately due and payable.

HEDGING

Subject to applicable provisions of the Investment Company Act and applicable Commodity Futures Trading Commission (“CFTC”) regulations, we may enter into hedging transactions in a manner consistent with SEC guidance. To the extent that any of our loans are denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of futures, options, swaps and forward contracts. Costs incurred in entering into such contracts or in settling them, if any, will be borne by us. Our Investment Adviser has claimed no-action relief from CFTC registration and regulation as a commodity pool operator pursuant to a CFTC Rule 4.5 with respect to our operations, with the result that we will be limited in our ability to use futures contracts or options on futures contracts or engage in swap transactions. Specifically, CFTC Rule 4.5 imposes strict limitations on using such derivatives other than for hedging purposes, whereby the use of derivatives not used solely for hedging purposes is generally limited to situations where (i) the aggregate initial margin and premiums required to establish such positions does not exceed five percent of the liquidation value of our portfolio, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into; or (ii) the aggregate net notional value of such derivatives does not exceed 100% of the liquidation value of our portfolio. Moreover, we anticipate entering into transactions involving such derivatives to a very limited extent solely for hedging purposes or otherwise within the limitations of CFTC Rule 4.5.

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OFF-BALANCE SHEET ARRANGEMENTS

We may become a party to investment commitments and to financial instruments with off-balance sheet risk in the normal course of our business to fund investments and to meet the financial needs of our portfolio companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of September 30, 2020, we believed that we had adequate financial resources to satisfy our unfunded commitments. Our unfunded commitments to provide funds to portfolio companies were as follows:

 

 

 

As of

 

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

(in millions)

 

Unfunded Commitments

 

 

 

 

 

 

 

 

First Lien/Senior Secured Debt

 

$

51.46

 

 

$

67.82

 

First Lien/Last-Out Unitranche

 

 

 

 

 

0.72

 

Second Lien/Senior Secured Debt

 

 

 

 

 

4.47

 

Total

 

$

51.46

 

 

$

73.01

 

 

As of September 30, 2020, we had aggregate Commitments and undrawn Commitments from investors as follows:

 

 

 

September 30, 2020

 

 

 

Capital

Commitments

($ in millions)

 

 

Unfunded

Capital

Commitments

($ in millions)

 

 

% of Capital

Commitments

Funded

 

Common Units

 

$

1,097.43

 

 

$

60.36

 

 

 

95

%

 

RECENT DEVELOPMENTS

On October 1, 2020, GSAM, subject to prior authorization by the Board of Directors, declared a $40,000 distribution payable on November 2, 2020 to Unitholders of record as of October 2, 2020.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated 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 materially.

For a description of our critical accounting policies, see Note 2 “Significant Accounting Policies” to our consolidated financial statements included in this report. We consider the most significant accounting policies to be those related to our Valuation of Portfolio Investments, Revenue Recognition, Non-Accrual Investments, Distribution Policy and Income Taxes.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to financial market risks, most significantly changes in interest rates. Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we expect to fund a portion of our investments with borrowings, our net investment income is expected to be affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

Uncertainty with respect to the economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below.

As of September 30, 2020 and December 31, 2019, on a fair value basis, approximately 2.4% and 1.4%, of our performing debt investments bore interest at a fixed rate (including income producing preferred stock investments), and approximately 97.6% and 98.6%, of our performing debt investments bore interest at a floating rate. Our borrowings under the JPM Revolving Credit Facility bear interest at a floating rate.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities.

Based on our September 30, 2020 balance sheet, the following table shows the annual impact on net income of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

 

As of September 30, 2020

Basis Point Change

 

Interest

Income

 

 

Interest

Expense

 

 

Net

Income

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Up 300 basis points

 

$

22.85

 

 

$

(13.04

)

 

$

9.81

 

Up 200 basis points

 

 

12.69

 

 

 

(8.69

)

 

 

4.00

 

Up 100 basis points

 

 

2.54

 

 

 

(4.35

)

 

 

(1.81

)

Up 75 basis points

 

 

0.30

 

 

 

(3.26

)

 

 

(2.96

)

Up 50 basis points

 

 

0.20

 

 

 

(2.17

)

 

 

(1.97

)

Up 25 basis points  

 

 

0.10

 

 

 

(1.09

)

 

 

(0.99

)

Down 25 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

Down 50 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

Down 75 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

Down 100 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

Down 200 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

Down 300 basis points

 

 

(0.07

)

 

 

1.02

 

 

 

0.95

 

 

We may, in the future, hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the Investment Company Act, applicable CFTC regulations and in a manner consistent with SEC guidance. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates.

 

 

 

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2020. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors.

An investment in our securities involves a high degree of risk. Except as set forth below, there have been no material changes to the risk factors previously reported under Item 1A. “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 20, 2020. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may materially affect our business, financial condition and/or operating results.

Risks Relating to Our Business and Structure  

Political, social and economic uncertainty, including uncertainty related to the COVID-19 pandemic, creates and exacerbates risks.

Social, political, economic and other conditions and events will occur that create uncertainty and have significant impacts on issuers, industries, governments and other systems, including the financial markets, to which the Company and its investments are exposed. In addition, global economies and financial markets are increasingly interconnected, and political, economic and other conditions and events in one country, region, or financial market may adversely impact issuers in a different country, region or financial market. Furthermore, the occurrence of, among other events, natural or man-made disasters, severe weather or geological events, fires, floods, earthquakes, outbreaks of disease (such as COVID-19, avian influenza or H1N1/09), epidemics, pandemics, malicious acts, cyber-attacks, terrorist acts or the occurrence of climate change, may also adversely impact our performance from time to time. Such events may result in, and have resulted in, closing borders, securities exchange closures, health screenings, healthcare service delays, quarantines, cancellations, supply chain disruptions, lower consumer demand, market volatility and general uncertainty. Such events have adversely impacted and may continue to adversely impact our portfolio companies and markets and economies over the short- and long-term, including in ways that cannot necessarily be foreseen. We have been, and may continue to be negatively impacted if the value of our portfolio company holdings were harmed by such political or economic conditions or events. Moreover, such negative political and economic conditions and events have disrupted and could continue to disrupt the processes necessary for our operations. This has created and may continue to create widespread business continuity issues for us and our portfolio companies and heightened cybersecurity, information security and operational risks as a result of, among other things, remote work arrangements.

For example, in December 2019, COVID-19 emerged in China and has since spread rapidly to other countries, including the United States. This outbreak has led and for an unknown period of time will continue to lead, to disruptions in local, regional, national and global markets and economies affected thereby. The global impact of the outbreak is rapidly evolving, and many countries have reacted by instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues. While several countries, as well as certain states in the United States, have liberalized public health restrictions as to further reopen their economies, recurring COVID-19 outbreaks have led to the re-introduction of such restrictions in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the U.S. and other major markets. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following, among other things: (i) government imposition of various forms of shelter in place orders and the closing of "non-essential" businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as furloughs or lay-offs of employees, (while such measures are hoped to be temporary, their impact may persist or become permanent); (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments, forbearance agreements and waivers of provisions of their credit agreements in order to avoid default, increased defaults by

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such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems in functioning of the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. The COVID-19 outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things. As of the date of this quarterly report on Form 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.  Further, even after the pandemic subsides, the U.S. economy, as well as most other major global economies may continue to experience a recession, and we anticipate our business could be materially and adversely affected by a prolonged recession in the U.S. and other major markets.

Although it is impossible to predict the precise nature and consequences of these events, or of any political or policy decisions and regulatory changes occasioned by emerging events or uncertainty on applicable laws or regulations that impact us, our portfolio companies and our investments, it is clear that these types of events are impacting and will, for at least some time, continue to impact us and our portfolio companies. In many instances, the impact will be adverse and profound. For example, middle market companies in which we may invest are being significantly impacted by these emerging events and the uncertainty caused by these events. The effects of a public health emergency may materially and adversely impact (i) the value and performance of us and our portfolio companies, (ii) the ability of our borrowers to continue to meet loan covenants or repay loans provided by us on a timely basis or at all, which may require us to restructure our investments or write down the value of our investments, (iii) our ability to comply with the covenants and other terms of our debt obligations and to repay such obligations, on a timely basis or at all, (iv) our ability to comply with certain regulatory requirements, such as asset coverage requirements, under the 1940 Act, (v) our ability to maintain our distributions at their current level or to pay them at all or (vi) our ability to source, manage and divest investments and achieve our investment objectives, all of which could result in significant losses to us. We will also be negatively affected if the operations and effectiveness of any of our portfolio companies (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.

Disruptions in the capital markets caused by the COVID-19 pandemic have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity can be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our and our portfolio companies’ operating results and the fair values of our debt and equity investments.

The capital markets are currently in a period of disruption and economic uncertainty. Such market conditions have materially and adversely affected debt and equity capital markets, which have had, and may continue to have, a negative impact on our business and operations.

The U.S. capital markets have experienced extreme disruption following the global outbreak of COVID-19. Such disruptions have been evidenced by volatility in global stock markets as a result of, among other things, uncertainty regarding the COVID-19 pandemic and the fluctuating price of commodities such as oil. Despite actions of the U.S. federal government and foreign governments, these events have contributed to worsening general economic conditions that are materially and adversely impacting broader financial and credit markets and reducing the availability of debt and equity capital for the market as a whole. These conditions could continue for a prolonged period of time or worsen in the future.

Significant changes or volatility in the capital markets have negatively affected, and may continue to negatively affect, the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan to hold an investment to maturity). Our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that may not reflect the full impact of the COVID-19 pandemic measures taken in response thereto. Any public health emergency, including the COVID-19 pandemic or an outbreak of other existing or new epidemic diseases, 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.

Significant changes in the capital markets, such as the disruption in economic activity caused by the COVID-19 pandemic, have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our and our portfolio companies’ operating results and the fair values of our debt and equity investments. Additionally, the recent disruption in economic activity caused by the COVID-19 pandemic has had, and may continue to have, a negative effect on the potential for liquidity events involving our investments. The illiquidity of our investments may make it difficult for us to sell such investments to access capital, if required. As a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them to increase our liquidity. An inability on our part to raise incremental capital, and any required sale of all or a portion of our investments as a result, could have a material adverse effect on our business, financial condition or results of operations.

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Further, current market conditions may make it difficult to raise equity capital, extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital available to us in the future, if available at all, may bear a higher interest rate and may be available only on terms and conditions less favorable than those of our existing debt and such debt may need to be incurred in a rising interest rate environment. If we are unable to raise new debt or refinance our existing debt, then our equity investors will not benefit from the potential for increased returns on equity resulting from leverage, and we may be unable to make new commitments or to fund existing commitments to our portfolio companies. Any inability to extend the maturity of or refinance our existing debt, or to obtain new debt, could have a material adverse effect on our business, financial condition or results of operations.

Global economic, political and market conditions may adversely affect our business, financial condition and results of operations, including our revenue growth and profitability.

The current worldwide financial market situation, as well as various social and political tensions in the United States and around the world, have contributed and may continue to contribute to increased market volatility, may have long-term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide. We monitor developments and seek to manage our investments in a manner consistent with achieving our investment objective, but there can be no assurance that we will be successful in doing so.

In August 2011 and then affirmed in August 2013, Standard & Poor’s Rating Services lowered its long-term sovereign credit rating on the United States from “AAA” to “AA+”. Additionally, in January of 2012, Standard & Poor’s Rating Services lowered its long-term sovereign credit rating for several large European countries. These ratings negatively impacted global markets and economic conditions. Although U.S. lawmakers have taken steps to avoid further downgrades, U.S. budget deficit concerns and similar conditions in Europe, China and elsewhere have increased the possibility of additional credit-rating downgrades and worsening global economic and market conditions. There can be no assurance that current or future governmental measures to mitigate these conditions will be effective. These conditions, government actions and future developments may cause interest rates and borrowing costs to rise, which may adversely affect our ability to access debt financing on favorable terms and may increase the interest costs of our borrowers, hampering their ability to repay us. Continued or future adverse economic conditions could have a material adverse effect on our business, financial condition and results of operations.

In October 2014, the Federal Reserve announced that it was concluding its bond-buying program, or quantitative easing, which was designed to stimulate the economy and expand the Federal Reserve’s holdings of long-term securities, suggesting that key economic indicators, such as the unemployment rate, had showed signs of improvement since the inception of the program. It is possible that, without quantitative easing by the Federal Reserve, these developments, along with the United States government’s credit and deficit concerns and other global economic conditions, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. While the Federal Reserve recently decreased its federal funds target rate in response to the COVID-19 pandemic, if key economic indicators, such as the unemployment rate or inflation, do not progress at a rate consistent with the Federal Reserve’s objectives, the target range for the federal funds rate may increase and cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms and may also increase the costs of our borrowers, hampering their ability to repay us.

Legislation may be adopted that could significantly affect the regulation of U.S. financial markets. Areas subject to potential change, amendment or repeal include the Dodd-Frank Act and the authority of the Federal Reserve and the Financial Stability Oversight Council. These or other regulatory changes could result in greater competition from banks and other lenders with which we compete for lending and other investment opportunities. The United States may also potentially withdraw from or renegotiate various trade agreements and take other actions that would change current trade policies of the United States. We cannot predict which, if any, of these actions will be taken or, if taken, their effect on the financial stability of the United States. Such actions could have a material adverse effect on our business, financial condition and results of operations.

We are exposed to risks associated with changes in interest rates.

Our debt investments may be based on floating rates, such as LIBOR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate. General interest rate fluctuations may have a substantial negative impact on our investments, the value of our securities and our rate of return on invested capital. Currently, most of our floating rate investments are linked to LIBOR and it is unclear how increased regulatory oversight and the future of LIBOR may affect market liquidity and the value of the financial obligations to be held by or issued to us that are linked to LIBOR, or how such changes could affect our investments and transactions and financial condition or results of operations. Central banks and regulators in a number of major jurisdictions (for example, the United States, United Kingdom, European Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements for interbank offered rates (“IBORs”). The U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, has announced that it intends not to compel panel banks to contribute to LIBOR after 2021. The E.U. Benchmarks Regulation imposed conditions under which only compliant benchmarks may be used in new contracts after 2021. To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by the U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. In addition, on March 25, 2020, the FCA reaffirmed the central assumption that firms cannot rely on LIBOR being published after the end of 2021. However, the outbreak of COVID-19 may adversely impact the timing of many firms’ transition planning, and we

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continue to assess the potential impact of the COVID-19 outbreak on our transition plans. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates, whether the COVID-19 outbreak will have further effect on LIBOR transition timelines or plans, or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR or alternative reference rates could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us. In addition, if LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. As such, some or all of these credit agreements may bear a lower interest rate, which would adversely impact our financial condition or results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our JPM Revolving Credit Facility. If we are unable to do so, amounts drawn under the JPM Revolving Credit Facility may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

Because we have borrowed money, and may issue preferred stock to finance investments, our net investment income depends, in part, upon the difference between the rate at which we borrow funds or pay distributions on preferred stock and the rate that our investments yield. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

A reduction in the interest rates on new investments relative to interest rates on current investments could also have an adverse impact on our net interest income. However, an increase in interest rates could decrease the value of any investments we hold which earn fixed interest rates, including subordinated loans, senior and junior secured and unsecured debt securities and loans and high yield bonds, and also could increase our interest expense, thereby decreasing our net income. Also, an increase in interest rates available to investors could make an investment in our common stock less attractive if we are not able to increase our dividend rate, which could reduce the value of our common stock. Further, rising interest rates could adversely affect our performance if such increases cause our borrowing costs to rise at a rate in excess of the rate that our investments yield.

In periods of rising interest rates, to the extent we borrow money subject to a floating interest rate, our cost of funds would increase, which could reduce our net investment income. Further, rising interest rates could also adversely affect our performance if such increases cause our borrowing costs to rise at a rate in excess of the rate that our investments yield. Further, rising interest rates could also adversely affect our performance if we hold investments with floating interest rates, subject to specified minimum interest rates (such as a LIBOR floor), while at the same time engaging in borrowings subject to floating interest rates not subject to such minimums. In such a scenario, rising interest rates may increase our interest expense, even though our interest income from investments is not increasing in a corresponding manner as a result of such minimum interest rates.

If general interest rates rise, there is a risk that the portfolio companies in which we hold floating rate securities will be unable to pay escalating interest amounts, which could result in a default under their loan documents with us. Rising interest rates could also cause portfolio companies to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults. In addition, rising interest rates may increase pressure on us to provide fixed rate loans to our portfolio companies, which could adversely affect our net investment income, as increases in our cost of borrowed funds would not be accompanied by increased interest income from such fixed-rate investments.

A change in the general level of interest rates can be expected to lead to a change in the interest rate we receive on many of our debt investments. Accordingly, a change in the interest rate could make it easier for us to meet or exceed the performance threshold in the Investment Advisory Agreement and may result in a substantial increase in the amount of incentive fees payable to our Investment Adviser with respect to the portion of the Incentive Fee based on income.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Index to Exhibits, which is incorporated herein by reference.

53


Table of Contents

 

INDEX TO EXHIBITS

 

EXHIBIT NO. 

 

EXHIBIT 

 

 

 

3.1

 

Certificate of Formation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-55660), filed on July 13, 2016).

 

 

 

3.2

 

Second Amended and Restated Limited Liability Company Agreement dated November 1, 2016 (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-55660), filed on November 3, 2016).

 

 

 

10.1

 

Fourth Amendment to Loan and Security Agreement, dated as of August 26, 2020, among Goldman Sachs Private Middle Market Credit SPV LLC, as borrower, Goldman Sachs Private Middle Market Credit LLC, as portfolio manager, State Street Bank and Trust Company, in its capacities as collateral agent, collateral administrator, securities intermediary and bank, and JPMorgan Chase Bank, National Association, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-55660), filed on August 28, 2020).

 

 

 

31.1*

 

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

31.2*

 

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

32.1*

 

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

*

Filed herewith.

 

54


Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

GOLDMAN SACHS PRIVATE MIDDLE MARKET CREDIT LLC

 

 

 

 

Date: November 5, 2020

 

 

/s/ Brendan McGovern

 

 

 

Brendan McGovern

 

 

 

Chief Executive Officer and President

 

 

 

(Principal Executive Officer)

 

 

 

 

Date: November 5, 2020

 

 

/s/ Jonathan Lamm

 

 

 

Jonathan Lamm

Chief Financial Officer and Treasurer

(Principal Financial Officer)

 

 

55


pmmc-ex311_6.htm

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brendan McGovern, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Goldman Sachs Private Middle Market Credit LLC;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2020

 

 

/s/ Brendan McGovern

Brendan McGovern

Chief Executive Officer

(Principal Executive Officer)

 


pmmc-ex312_8.htm

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jonathan Lamm, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q of Goldman Sachs Private Middle Market Credit LLC;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2020

 

 

/s/ Jonathan Lamm

Jonathan Lamm

Chief Financial Officer and Treasurer

(Principal Financial Officer)

 


pmmc-ex321_7.htm

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Goldman Sachs Private Middle Market Credit LLC (the “Company”) for the quarter ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Brendan McGovern, as Chief Executive Officer of the Company, and Jonathan Lamm, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date: November 5, 2020

 

/s/ Brendan McGovern

Brendan McGovern

Chief Executive Officer

(Principal Executive Officer)

 

Date: November 5, 2020

 

/s/ Jonathan Lamm

Jonathan Lamm

Chief Financial Officer and Treasurer

(Principal Financial Officer)