UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 16, 2020

 

 

GOLDMAN SACHS BDC, INC.

(Exact name of registrant as specified in charter)

 

 

 

Delaware   814-00998   46-2176593

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(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

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.001 per

share

  GSBD   The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

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.  ☐

 

 

 


Item 8.01 – Other Events.

As previously disclosed, on December 9, 2019, Goldman Sachs BDC, Inc., a Delaware Corporation (“GSBD”), entered into the Agreement and Plan of Merger (the “Original Merger Agreement”), with Goldman Sachs Middle Market Lending Corp., a Delaware corporation (“MMLC”), Evergreen Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”) and Goldman Sachs Asset Management, L.P., a Delaware limited partnership and investment adviser to each of GSBD and MMLC (“GSAM,” and together with GSBD, MMLC and Merger Sub, the “Parties”). As previously disclosed on June 11, 2020, the Parties amended and restated the Original Merger Agreement in its entirety (as amended and restated, the “Amended and Restated Merger Agreement”). Pursuant to and subject to the terms and conditions of the Amended and Restated Merger Agreement, Merger Sub will merge with and into MMLC, with MMLC continuing as the surviving company and as a wholly-owned subsidiary of GSBD (the “Initial Merger”) and, immediately thereafter, MMLC will merge with and into GSBD, with GSBD continuing as the surviving company (the “Second Merger” and, together with the Initial Merger, the “Merger”).

Filed with this Current Report on Form 8-K as Exhibit 99.1 is “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Goldman Sachs Middle Market Lending Corp.” for the quarter ended June 30, 2020. Exhibit 99.1 is incorporated herein by reference.

Filed with this Current Report on Form 8-K as Exhibit 99.2 are the unaudited consolidated financial statements of MMLC for the periods described in Item 9.01(a) below and the notes related thereto.

Filed with this Current Report on Form 8-K as Exhibit 99.3 are the unaudited pro forma condensed consolidated financial statements for the periods described in Item 9.01(b) below and the notes related thereto.

Item 9.01 – Financial Statements and Exhibits.

(a) Financial statements.

The historical unaudited consolidated financial statements of MMLC as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019, are filed herewith as Exhibit 99.2 and incorporated herein by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed consolidated financial statements of GSBD, giving effect to the Merger, as of and for the six months ended June 30, 2020 and for the year ended December 31, 2019, are filed herewith as Exhibit 99.3 and incorporated herein by reference.

(d) Exhibits.

 

Exhibit
Number
  

Description

99.1    Management’s Discussion and Analysis of Financial Condition and Results of Operations of Goldman Sachs Middle Market Lending Corp. for the quarter ended June 30, 2020.
99.2    Historical unaudited consolidated financial statements of Goldman Sachs Middle Market Lending Corp. as of June 30, 2020 and December 31, 2019 and for the three and six months ended June  30, 2020 and 2019.
99.3   

Unaudited pro forma condensed consolidated financial statements of Goldman Sachs BDC, Inc., giving effect to the Merger, as of and for the six months ended June 30, 2020 and for the year ended December 31, 2019.


Forward-Looking Statements

This Current Report on Form 8-K may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this Current Report on Form 8-K may constitute forward-looking statements and are not guarantees of future performance or results of GSBD, MMLC, or, following the Merger, the combined company and involve a number of risks and uncertainties. Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings made by GSBD and MMLC with the Securities and Exchange Commission (“SEC”), including those contained in the joint proxy statement and prospectus that forms part of a registration statement on Form N-14 filed with the SEC on August 4, 2020. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include: the ability of the parties to consummate the Merger on the expected timeline, or at all, failure of GSBD or MMLC to obtain the requisite stockholder approval for the Merger, the ability to realize the anticipated benefits of the Merger, effects of disruption on the business of GSBD and MMLC from the proposed Merger, the effect that the announcement or consummation of the Merger may have on the trading price of GSBD’s common stock on New York Stock Exchange; the combined company’s plans, expectations, objectives and intentions as a result of the Merger, any decision by MMLC to pursue continued operations, any termination of the Amended and Restated Merger Agreement, future operating results of GSBD or MMLC, the business prospects of GSBD and MMLC and the prospects of their portfolio companies, actual and potential conflicts of interests with GSAM and other affiliates of GSAM, general economic and political trends and other factors, the dependence of GSBD’s and MMLC’s future success on the general economy and its effect on the industries in which they invest; and future changes in laws or regulations and interpretations thereof. Neither GSBD nor MMLC undertakes any duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this Current Report on Form 8-K.

 


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 hereunto duly authorized.

 

   

GOLDMAN SACHS BDC, INC.

(Registrant)

Date: September 16, 2020     By:  

/s/ Jonathan Lamm                                                     

      Name: Jonathan Lamm
      Title: Chief Financial Officer and Treasurer

Exhibit 99.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GOLDMAN SACHS MIDDLE MARKET LENDING CORP.

The following discussion and other parts of the Current Report on Form 8-K into which this exhibit is incorporated by reference contain forward-looking information that involves risks and uncertainties. References to “we,” “us,” “our,” and the “Company,” mean Goldman Sachs Middle Market Lending Corp., 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 the Current Report on Form 8-K into which this exhibit is incorporated by reference. Our actual results could differ materially from those anticipated by such forward-looking information due to factors discussed under “Forward-Looking Statements” included in the Current Report on Form 8-K into which this exhibit is incorporated by reference.

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, 2017. From our commencement of operations on January 11, 2017 through June 30, 2020, we have originated $2.32 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 the “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 middle-market corporate credit obligations and related instruments; including other income-producing assets. 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 $125 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. We expect to invest primarily in U.S. middle-market companies, which we believe are underserved by traditional providers of capital such as banks and the public debt markets. 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. In addition, as a result of fluctuations in the value of one asset relative to another asset, 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. Investors will be notified at least 60 days prior to any change to our 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

 

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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 “Risk Factors–Risks Relating to MMLC’s Business and Structure–MMLC operates in a highly competitive market for investment opportunities” and “Business of Goldman Sachs Middle Market Lending Corp.–Competitive Advantages” in GS BDC’s joint proxy statement and prospectus that forms a part of the registration statement on Form N-14, filed with the SEC (as defined below) on August 4, 2020 (the “Form N-14”).

Pending Merger with GS BDC

On December 9, 2019, we entered into an Agreement and Plan of Merger (the “Original Merger Agreement”) with Goldman Sachs BDC, Inc., a Delaware corporation (“GS BDC”), Evergreen Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of GS BDC (“Merger Sub”), and GSAM, a Delaware limited partnership and investment adviser to each of the Company and GS BDC (together with us, GS BDC and Merger Sub, the “Parties”). Due to the volatility of the market price of GS BDC’s common stock (“GS BDC Common Stock”) precipitated by the COVID-19 pandemic, it became unclear whether a closing condition in the Original Merger Agreement that required our stockholders to receive shares of GS BDC Common Stock that have a market value in excess of our net asset value (“NAV”) would be satisfied. As a result, on June 11, 2020, the Parties amended and restated the Original Merger Agreement in its entirety (as amended and restated, the “Amended and Restated Merger Agreement”) to, among other things, change the consideration to be paid to our stockholders from 0.9939 shares of GS BDC Common Stock for each share of our common stock under the Original Merger Agreement to NAV for NAV (i.e., a number of shares of GS BDC Common Stock with a NAV equal to the NAV per share of our common stock (such number of shares of GS BDC Common Stock, the “Exchange Ratio”), in each case determined no earlier than 48 hours (excluding Sundays and holidays) prior to the effective time of the First Merger (as defined below)) (the “Merger Consideration”).

The Amended and Restated Merger Agreement provides that, on the terms and subject to the conditions set forth in the Amended and Restated Merger Agreement, Merger Sub will merge with and into us, and we will continue as the surviving company and, immediately thereafter, we will merge with and into GS BDC, with GS BDC continuing as the surviving company. Consummation of the Merger, which is currently anticipated to occur during the fourth quarter of calendar year 2020, is subject to certain closing conditions, including (a) approval by GS BDC’s stockholders of each of (i) the Amended and Restated Merger Agreement, (ii) the Amended and Restated GS BDC Charter, and (iii) the issuance of shares of GS BDC Common Stock pursuant to the Amended and Restated Merger Agreement and (b) approval by our stockholders of each of (i) the Amended and Restated Merger Agreement and (ii) the Amended and Restated GS BDC Charter. Solely in the event that the Merger is consummated, GSAM will reimburse each of us and GS BDC, in each case in an amount of up to $4.00 million, for all fees and expenses incurred and payable by us or GS BDC, in connection with or related to the Merger (including all documented fees and expenses of counsel, accountants, experts and consultants to us or our Special Committee, on the one hand, or GS BDC or its Special Committee, on the other hand). In addition, solely in the event that the Merger is consummated, but prior to the closing, the Board of Directors will declare a distribution of $75.00 million to our stockholders relating to the pre-Closing period, subject to our compliance with all applicable regulatory requirements and covenants contained in debt agreements to which we are party or subject (the “MMLC Distribution”).

For further information, see Note 12 “Pending Merger with GS BDC” to our consolidated financial statements included in GS BDC’s Form N-14.

Impact of COVID-19 Pandemic

Governments around the world remain highly focused on mitigating the risk of further spread of COVID-19 and continue to manage their response to the crisis, which has included measures such as quarantines, travel restrictions and business curtailments. COVID-19 has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, our business, financial condition, liquidity and our portfolio companies’ results of operations and by extension our operating results. The extent to which the COVID-19 pandemic will continue to negatively 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 The largest five industries in our investment portfolio as of June 30, 2020 are Health Care Technology, Interactive Media & Services, Software, Health Care Providers & Services, and IT Services. As of June 30, 2020, 3.9% of our investment portfolio at fair value is in Hotels, Restaurants and Leisure, Textiles, Apparel and Luxury Goods, Oil, Gas and Consumable Fuels, Airlines, and Multi-line and Specialty Retail industries, industries which may be significantly adversely impacted by COVID-19, however economic indicators generally

 

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improved as the quarter progressed, following significant declines in the first quarter, as businesses began to reopen 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. 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 activated and has continued to execute on its business continuity planning (the “BCP”) strategy. 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 vast majority of its employees continue to work remotely. Goldman Sachs has been focused on establishing policies and protocols that will enable a phased return to office, taking into account the readiness of people, communities and facilities. 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 “Risk Factors” in GS BDC’s Form N-14.

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 U.S. 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”) interest. 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, GS PMMC, 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 our 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. We bear all other expenses of our operations and transactions in accordance with our investment management agreement (the “Investment Management 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 stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of the shares;

 

 

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

 

 

the fees and expenses of our independent directors;

 

 

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

 

 

costs of holding stockholders meetings;

 

 

listing fees, if any;

 

 

the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by our 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.

 

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

Leverage

We expect from time to time to borrow funds for a variety of purposes, subject to the limitations of the Investment Company Act, including to bridge fundings for investments in advance of drawdowns, as part of our investment strategy, to meet other short-term liquidity needs, including to pay the Management Fee, and to facilitate our hedging activities. Sources of leverage include the issuance of senior securities (including preferred stock) and other credit facilities (secured by Investments and/or pledges of Undrawn Commitments). We have entered into a revolving credit facility with Truist Bank (formerly known as SunTrust Bank), as administrative agent (the “Truist Revolving Credit Facility”), which 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 stockholders. 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). 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 us, an offer to repurchase shares held by the BDC’s stockholders as of the date the requisite approval is obtained. Under the legislation, 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  
     June 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

   $ 1,335.59      $ 1,288.22        76.9   $ 1,272.05      $ 1,266.49        75.2

First Lien/Last-Out Unitranche

     100.70        99.42        5.9       100.83        100.80        6.0  

Second Lien/Senior Secured Debt

     299.30        259.52        15.5       311.93        294.16        17.5  

Preferred Stock

     7.20        14.38        0.9       7.20        10.14        0.6  

Common Stock

     10.38        14.23        0.8       10.38        11.57        0.7  

Warrants

     1.17        —          —         —          —          —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total Investments

   $ 1,754.34      $ 1,675.77        100.0   $ 1,702.39      $ 1,683.16        100.0
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

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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  
     June 30, 2020     December 31, 2019  
     Amortized
Cost
    Fair Value     Amortized
Cost
    Fair Value  

Weighted Average Yield(1)

        

First Lien/Senior Secured Debt(2)

     7.9     8.9     8.7     8.7

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

     9.2       10.0       10.1       10.1  

Second Lien/Senior Secured Debt(2)

     9.4       12.3       10.7       11.8  

Preferred Stock(4)

     —         —         —         —    

Common Stock(4)

     —         —         —         —    

Warrants(4)

     —         —         —         —    

Total Portfolio

     8.1     9.3     9.0     9.2

 

(1) 

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

(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. This calculation excludes exit fees that are receivable upon repayment of certain loan investments.

(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 June 30, 2020, the total portfolio weighted average yield measured at amortized cost and fair value was 8.2% and 9.3%, as compared to 9.0% and 9.2%, at December 31, 2019. 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.

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  
     June 30,
2020
    December 31,
2019
 

Number of portfolio companies

        83          81  

Percentage of performing debt bearing a floating rate(1)

        99.4        100.0

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

        0.6        —  

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

        5.7x          5.9x  

Weighted average interest coverage(3)

        2.6x          2.3x  

Median EBITDA(3)

   $          36.76 million     $          40.25 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.

 

6


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 June 30, 2020 and December 31, 2019, investments where net debt to EBITDA may not be the appropriate measure of credit risk represented 33.99% and 30.4%, 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 the financial trends of each portfolio company on an ongoing basis 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 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.

 

7


Our Investment Adviser grades the investments in our portfolio at least quarterly and it is possible that the grade of a portfolio investment may be reduced or increased over time. For investments graded 3 or 4, our 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  
     June 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

   $ —          —     $ 17.83        1.0

Grade 2

     1,469.69        87.7       1,643.87        97.7  

Grade 3

     206.09        12.3       21.46        1.3  

Grade 4

     —          —         —          —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Investments

   $ 1,675.78        100.0   $ 1,683.16        100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

The decrease in investments with a grade 1 investment performance rating as of June 30, 2020 compared to December 31, 2019 was primarily due to the repayment of investments with an aggregate fair value of $17.83 million. The increase in investments with a grade 3 investment performance rating as of June 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 improved as the quarter progressed, following significant declines in the first quarter, as businesses began to reopen 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  
     June 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

   $ 1,742.49        99.3   $ 1,702.39        100.0

Non-accrual

     11.85        0.7     —          —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Total Investments

   $ 1,754.34        100.0   $ 1,702.39        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.

 

8


The following table shows our investment activity by investment type:

 

     For the Three Months Ended  
     June 30,
2020
    June 30,
2019
 
     ($ in millions)  

New investments committed at cost:

    

Gross originations

   $ 0.57     $ 179.11  

Less: Syndications(1)

     —         —    
  

 

 

   

 

 

 

Net amount of new investments committed at cost:

   $ 0.57     $ 179.11  

Amount of investments committed at cost(2):

    

First Lien/Senior Secured Debt

   $ 0.57     $ 171.60  

Second Lien/Senior Secured Debt

     —         7.51  
  

 

 

   

 

 

 

Total

   $ 0.57     $ 179.11  
  

 

 

   

 

 

 

Proceeds from investments sold or repaid(9):

    

First Lien/Senior Secured Debt

   $ 5.86     $ 85.87  

First Lien/Last-Out Unitranche

     0.28       0.11  

Second Lien/Senior Secured Debt

     14.60       0.09  
  

 

 

   

 

 

 

Total

   $ 20.74     $ 86.07  
  

 

 

   

 

 

 

Net increase (decrease) in portfolio

   $ (20.17   $ 93.04  
  

 

 

   

 

 

 

Number of new portfolio companies with new investment commitments(3)

     1       5  

Total new investment commitment amount in new portfolio companies(3)

   $ 0.47     $ 140.19  

Average new investment commitment amount in new portfolio companies(3)

   $ 0.47     $ 28.04  

Number of existing portfolio companies with new investment commitments(3)

     1       7  

Total new investment commitment amount in existing portfolio companies(3)

   $ 0.10     $ 38.92  

Weighted average remaining term for new investment commitments (in years)(3)(4)

     6.3       6.0  

Percentage of new debt investment commitments at floating interest rates(3)(10)

     100.0     100.0

Percentage of new debt investment commitments at fixed interest rates(3)(10)

     —       —  

Weighted average yield on new debt and income producing investment commitments(2)(3)(5)

     9.1     9.1

Weighted average yield on new investment commitments(2)(3)(6)

     9.1     9.1

Weighted average yield on debt and income producing investments sold or paid down(7)(9)

     9.2     10.0

Weighted average yield on investments sold or paid down(8)(9)

     9.2     10.0

 

(1) 

Only includes syndications, if any, that occurred at the initial close of the investment.

(2) 

Net of capitalized fees, expenses and original issue discount (“OID”) that occurred at the initial close of the investment.

(3) 

May include positions originated during the period but not held at the reporting date.

(4) 

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

(5) 

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.

(6) 

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.

(7) 

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.

(8) 

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.

(9) 

Excludes unfunded commitments that may have expired or otherwise been terminated without receipt of cash proceeds or other consideration.

(10) 

Computed based on amount of investments committed at cost.

 

9


RESULTS OF OPERATIONS

Our operating results were as follows:

 

     For the Three Months Ended      For the Six Months Ended  
     June 30,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 
     ($ in millions)  

Total investment income

   $ 37.97      $ 35.78      $ 77.69      $ 66.29  

Net expenses

     11.79        15.28        24.68        30.00  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income before taxes

     26.18        20.50        53.01        36.29  

Income tax expense (benefit), including excise tax

     —          0.01        —          —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Net investment income after taxes

     26.18        20.49        53.01        36.29  

Net realized gain (loss) on investments

     —          (10.56      0.22        (10.56

Net realized gain (loss) on foreign currency transactions

     0.04        0.04        0.08        0.05  

Net unrealized appreciation (depreciation) on investments

     32.61        6.66        (59.33      (2.65

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

     (1.07      (0.79      (0.08      0.46  

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

     (0.09      (0.24      0.02        (0.34
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 57.67      $ 15.60      $ (6.08    $ 23.25  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net increase (decrease) in net assets resulting 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 Six Months Ended  
     June 30,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 
     ($ in millions)  

Interest

   $ 37.59      $ 35.17      $ 76.95      $ 65.22  

Dividend income

     0.05        0.06        0.06        0.09  

Other income

     0.33        0.55        0.68        0.98  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income

   $ 37.97      $ 35.78      $ 77.69      $ 66.29  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest

Interest income from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, increased from $35.17 million for the three months ended June 30, 2019 to $37.59 million for the three months ended June 30, 2020, primarily due to an increase in recurring interest income, which resulted primarily from an increase in the size of our portfolio. The amortized cost of the portfolio increased from $1,415.35 million as of June 30, 2019 to $1,872.12 million as of June 30, 2020. Included in interest for the three months ended June 30, 2020 and 2019 is $0.15 million and $1.14 million, in prepayment premiums and $0.31 million and $1.11 million, in accelerated accretion of upfront loan origination fees and unamortized discounts.

Interest income from investments, which includes prepayment premiums and accelerated accretion of upfront loan origination fees and unamortized discounts, increased from $65.22 million for the six months ended June 30, 2019 to $76.95 million for the six months ended June 30, 2020, primarily due to an increase in recurring interest income, which resulted primarily from an increase in the size of our portfolio. The amortized cost of the portfolio increased from $1,415.35 million as of June 30, 2019 to $1,872.12 million as of June 30, 2020.Included in interest for the six months ended June 30, 2020 and 2019 is $0.15 million and $1.21 million, respectively, in prepayment premiums and $0.89 million and $1.23 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 six months ended June 30, 2020 remained relatively consistent as compared to the three and six months ended June 30, 2019.

 

10


Expenses

 

     For the Three Months Ended      For the Six Months Ended  
     June 30,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 
     ($ in millions)  

Interest and other debt expenses

   $ 6.15      $ 5.06      $ 13.60      $ 9.47  

Management fees

     3.52        3.43        7.03        6.66  

Incentive fees

     —          5.37        —          11.34  

Professional fees

     1.08        0.45        2.02        0.74  

Administration, custodian and transfer agent fees

     0.59        0.55        1.16        1.07  

Directors’ fees

     0.11        0.11        0.21        0.21  

Other expenses

     0.34        0.31        0.66        0.51  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

   $ 11.79      $ 15.28      $ 24.68      $ 30.00  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest and other debt expenses

Interest and other debt expenses increased from $5.06 million for the three months ended June 30, 2019 to $6.15 million for the three months ended June 30, 2020. This was primarily due to an increase in the average aggregate daily borrowings from $408.02 million to $839.79 million, partially offset by a decrease in the weighted average interest rate for the Truist Revolving Credit Facility from 4.46% to 2.77%.

Interest and other debt expenses increased from $9.47 million for the six months ended June 30, 2019 to $13.60 million for the six months ended June 30, 2020. This was primarily due to an increase in the average aggregate daily borrowings from $381.66 million to $786.44 million, partially offset by a decrease in the weighted average interest rate for the Truist Revolving Credit Facility from 4.44% to 3.26%.

Management Fees and Incentive Fees

Management Fees for the three and six months ended June 30, 2020 remained relatively consistent as compared to the three and six months ended June 30, 2019. The accrual for Incentive Fees based on income decreased from $5.37 million and $11.34 million for the three and six months ended June 30, 2019 to $0.00 for both the three and six months ended June 30, 2020 as a result of an increase in accumulated unrealized depreciation in our portfolio.

Professional fees and other general and administrative expenses

Professional fees increased from $0.45 million and $0.74 million for the three and six months ended June 30, 2019 to $1.08 million and $2.02 million for the three and six months ended June 30, 2020 primarily driven by expenses incurred from our pending Merger with GS BDC. Other general and administrative expenses for the three and six months ended June 30, 2020 remained relatively consistent as compared to the three and six months ended June 30, 2019.

Net Realized Gains (Losses) and Net 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 Six Months Ended  
     June 30,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 
     (in millions)  

Country Fresh Holding Company Inc.

   $ —        $ (10.55    $ —        $ (10.55

Gastro Health Holdco, LLC

     —          —          0.12        —    

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)

     —          —          0.10        —    

Other, net

     —          (0.01      —          (0.01
  

 

 

    

 

 

    

 

 

    

 

 

 

Net realized gain (loss)

   $ (0.00    $ (10.56    $ 0.22      $ (10.56
  

 

 

    

 

 

    

 

 

    

 

 

 

 

11


For the three and six months ended June 30, 2019, net realized losses were primarily driven by our investment in Country Fresh Holding Inc. whereby, in April 2019, we exchanged our second lien debt for common equity, which resulted in a realized loss of $10.55 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 Six Months Ended  
     June 30,
2020
     June 30,
2019
     June 30,
2020
     June 30,
2019
 
     ($ in millions)  

Unrealized appreciation

   $ 45.71      $ 15.84      $ 14.70      $ 7.84  

Unrealized depreciation

     (13.10      (9.18      (74.03      (10.49
  

 

 

    

 

 

    

 

 

    

 

 

 

Net change in unrealized appreciation (depreciation) on investments

   $ 32.61      $ 6.66      $ (59.33    $ (2.65
  

 

 

    

 

 

    

 

 

    

 

 

 

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

 

     For the Three
Months Ended
June 30, 2020
     For the Six
Months Ended
June 30, 2020
 
     ($ in millions)  

Portfolio Company:

     

Zep Inc.

   $ 7.60      $ 4.53  

Wine.com, LLC

     3.40        3.04  

Odyssey Logistics & Technology Corporation

     2.83        (4.43

Empirix, Inc.

     2.14        1.46  

Wrike, Inc.

     2.00        3.31  

CST Buyer Company (dba Intoxalock)

     0.58        (2.35

HS4 AcquisitionCo, Inc. (dba HotSchedules & Fourth)

     0.55        (2.63

Accuity Delivery Systems, LLC

     0.43        1.56  

Convene 237 Park Avenue, LLC (dba Convene)

     (0.03      (5.23

BJH Holdings III Corp. (dba Jack’s Family Restaurants)

     (0.30      (0.64

Apptio, Inc.

     (0.41      (0.94

ConnectWise, LLC

     (0.42      (0.57

SF Home Décor, LLC (dba SureFit Home Décor)

     (0.45      (1.51

Chase Industries, Inc. (dba Senneca Holdings)

     (9.66      (11.81

Other, net (1)

     24.35        (43.12
  

 

 

    

 

 

 

Total

   $ 32.61      $ (59.33
  

 

 

    

 

 

 

 

(1)

For the three and six months ended June 30, 2020, other, net includes gross unrealized appreciation of $26.18 million and $0.80 million, respectively, and gross unrealized depreciation of $(0.66) million and $(42.75) million, respectively.

Net change in unrealized appreciation (depreciation) in our investments for the three and six months ended June 30, 2020 continued to be impacted by the COVID-19 pandemic, however economic indicators generally improved as the quarter progressed, following significant declines in the first quarter, as businesses began to reopen 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 depreciation was driven by the unrealized depreciation in one of the investments in Chase Industries, Inc., which was placed on non-accrual status due to its capital condition.

 

12


Valuations of investments are more difficult to determine when a severe economic shock occurs. Recent market conditions, characterized by dislocations of asset prices, higher volatility and reduced price transparency have made it more challenging to determine the fair value of some of our investments. Valuation under the current circumstances has required greater use of judgment. For further information about fair value measurements, see Note 5 “Fair Value Measurement” to our consolidated financial statements included in the Current Report on Form 8-K into which this exhibit is incorporated by reference.

 

     For the Three
Months Ended
June 30, 2019
     For the Six
Months Ended
June 30, 2019
 
     ($ in millions)  

Portfolio Company:

     

Country Fresh Holding Company Inc.

   $ 10.40        1.79  

Fenergo Finance 3 Limited

     0.72        0.06  

Wrike, Inc.

     0.60        1.06  

DocuTAP, Inc.

     0.51        0.51  

Accuity Delivery Systems, LLC

     0.43        0.97  

Other, net(1)

     1.96        0.89  

Continuum Managed Services LLC - Class B

     0.37        0.89  

SPay, Inc.

     (0.02      (0.28

Viant Medical Holdings, Inc.

     (0.21      0.14  

GlobalTranz Enterprises LLC

     (0.26      (0.26

Empirix, Inc.

     (0.77      (0.79

Datto, Inc.

     (0.85      (0.48

Zep Inc.

     (6.22      (7.15
  

 

 

    

 

 

 

Total

   $ 6.66      $ (2.65
  

 

 

    

 

 

 

 

(1)

For the three and six months ended June 30, 2019, other, net includes gross unrealized appreciation of $2.82 million and $2.43 million, respectively, and gross unrealized depreciation of $(0.86) million and $(1.54) million, respectively.

Net change in unrealized appreciation (depreciation) in our investments for the three and six months ended June 30, 2019 was primarily driven by the reversal of unrealized depreciation in connection with the aforementioned exchange of Country Fresh Holding Company, Inc., partially offset 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 stockholders 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 stockholders, we may enter into credit facilities in addition to our existing 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 June 30, 2020 and December 31, 2019, our asset coverage ratio based on the aggregate amount outstanding of our senior securities was 216% and 228%. 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 June 30, 2020, we had cash of approximately $18.46 million, an increase of $5.06 million from December 31, 2019. In addition, as of June 30, 2020, we had an investment in a money market fund managed by an affiliate of Group Inc. of $117.79 million. Cash used by operating activities for the six months ended June 30, 2020 was approximately $122.78 million, primarily driven by net purchases of investments of $47.13 million, net purchases of investments in the

 

13


affiliated money market fund of $117.79 million, a decrease in net assets resulting from operations of $6.08 million, offset by other operating activities of $48.22 million. Cash provided by financing activities for the six months ended June 30, 2020 was approximately $127.84 million, primarily driven by proceeds from the issuance of common stock of $61.81 million, net borrowings on debt of $110.89 million, offset by distributions paid of $44.43 million.

As of June 30, 2019, we had cash of approximately $11.02 million. Cash used by operating activities for the six months ended June 30, 2019 was approximately $273.95 million, primarily driven by net purchases of investments of $309.02 million, an increase in net assets resulting from operations of $23.25 million and proceeds from other operating activities of $11.82 million. Cash provided by financing activities for the six months ended June 30, 2019 was approximately $269.96 million, primarily driven by proceeds from the issuance of common stock of $124.16 million and net borrowings on debt of $180.63 million, partially offset by distributions paid of $34.68 million and other financing activities of $0.15 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:

 

     June 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 Stock

   $ 1,034.65      $ —          100   $ 1,034.99      $ 62.15        94

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

 

Share Issue Date

   Shares Issued      Proceeds
Received
($ in millions)
 

For the Six Months Ended June 30, 2020

     

February 24, 2020

     3,282,464      $ 61.81  
  

 

 

    

 

 

 

Total capital drawdowns

     3,282,464      $ 61.81  
  

 

 

    

 

 

 

For the Six Months Ended June 30, 2019

     

March 25, 2019

     4,286,182      $ 82.61  

June 27, 2019

     2,179,196        41.55  
  

 

 

    

 

 

 

Total capital drawdowns

     6,465,378      $ 124.16  
  

 

 

    

 

 

 

Contractual Obligations

We have entered into certain contracts under which we have future commitments. Payments under the Investment Management 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 Management 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 June 30, 2020:

 

     Payments Due by Period ($ in millions)  
     Total      Less Than
1 Year
     1 – 3
Years
     3 – 5
Years
     More Than
5 Years
 

Truist Revolving Credit Facility

   $ 787.00      $ —        $ 787.00      $ —        $ —    

Truist Revolving Credit Facility

   47.95      —        47.95      —        —    

 

14


Euro (“€”)

Truist Revolving Credit Facility

On September 11, 2017, we entered into the Truist Revolving Credit Facility, a multicurrency facility, with various lenders. Truist Bank serves as administrative agent and Bank of America, N.A. serves as syndication agent. We amended the Truist Revolving Credit Facility on September 17, 2018, July 10, 2019, and February 25, 2020.

Total commitments under the Truist Revolving Credit Facility are $850.00 million. The accordion feature of the Truist Revolving Credit Facility allows us, subject to the satisfaction of various conditions, to bring total commitments under the Truist Revolving Credit Facility to $900.00 million.

Borrowings under the Truist Revolving Credit Facility, including amounts drawn in respect of letters of credit, bear interest (at our election) of either the Adjusted LIBO Rate (as defined in the Truist Revolving Credit Facility) plus the Applicable Margin (as defined in the Truist Revolving Credit Facility) or the Applicable Margin plus the higher of the Prime Rate (as defined in the Truist Revolving Credit Facility), Federal Funds Effective Rate (as provided for in the Truist Revolving Credit Facility) plus 0.5% or overnight London InterBank Offered Rate (“LIBOR”) plus 1.0%. Interest is payable quarterly in arrears or as defined in the Truist Revolving Credit Facility. We pay a fee of 0.375% per annum on committed but undrawn amounts under the Truist Revolving Credit Facility, payable quarterly in arrears. Any amounts borrowed under the Truist Revolving Credit Facility will mature, and all accrued and unpaid interest will be due and payable, on September 13, 2021.

The Truist Revolving Credit Facility may be guaranteed by certain of our subsidiaries that are formed or acquired by us in the future (collectively, the “Guarantors”). Proceeds from borrowings may be used for general corporate purposes, including the funding of portfolio investments.

Our obligations to the lenders under the Truist Revolving Credit Facility are secured by a first priority security interest in substantially all of our portfolio of investments and cash, with certain exceptions. The Truist Revolving Credit Facility contains certain customary covenants, including: (i) maintaining a minimum shareholder’s equity, (ii) maintaining an asset coverage ratio of at least 2 to 1, (iii) maintaining a minimum liquidity test of at least 15% of the “covered debt amount” during any period when the “adjusted covered debt balance” is greater than 85% of the “adjusted borrowing base,” as such quoted terms are defined in the Truist Revolving Credit Facility and (iv) restrictions on industry concentrations in our investment portfolio. We are in compliance with these covenants.

The Truist Revolving Credit Facility also includes customary representations and warranties, conditions precedent to funding of draws and events of default (including a change in control event of default trigger).

For further details, see Note 6 “Debt – Truist Revolving Credit Facility” to our consolidated financial statements included in the Current Report on Form 8-K into which this exhibit is incorporated by reference.

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.

 

15


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 June 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  
     June 30,
2020
     December 31,
2019
 
     (in millions)  

Unfunded Commitments

     

First Lien/Senior Secured Debt

   $ 87.43      $ 124.08  

First Lien/Last-Out Unitranche

     —          —    

Second Lien/Senior Secured Debt

     —          4.15  
  

 

 

    

 

 

 

Total

   $ 87.43      $ 128.23  
  

 

 

    

 

 

 

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

 

     June 30, 2020  
     Capital
Commitments
($ in millions)
     Unfunded
Capital
Commitments
($ in millions)
     % of Capital
Commitments
Funded
 

Common Stock

   $ 1,034.65      $ —          100

RECENT DEVELOPMENTS

We generally expect to pay quarterly distributions to our stockholders out of assets legally available for distribution. For the quarter ending September 30, 2020, we did not declare a distribution, reflecting our desire to increase our net equity capital position. For a description of our distribution policy, see Note 2 “Significant Accounting Policies – Distributions” to our consolidated financial statements included in the Current Report on Form 8-K into which this exhibit is incorporated by reference. For a discussion of the MMLC Distribution, see “Overview – Pending Merger with GS BDC”.

On July 13, 2020, GS BDC filed an amended registration statement on Form N-14, which included a joint proxy statement of us and GS BDC and a prospectus of GS BDC. The registration statement on Form N-14 was declared effective by the SEC on July 31, 2020. On August 4, 2020, GS BDC filed its final joint proxy statement/prospectus on Form 497, which was mailed on August 11, 2020 to GS BDC’s stockholders of record as of August 3, 2020. Special meetings for each of ours and GS BDC’s stockholders are scheduled for October 2, 2020 to vote on the matters described in the joint proxy statement/prospectus as required by the Merger Agreement.

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 the Current Report on Form 8-K into which this exhibit is incorporated by reference. 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.

 

16

Exhibit 99.2

GOLDMAN SACHS MIDDLE MARKET LENDING CORP.

 

INDEX

   PAGE  
FINANCIAL INFORMATION   

Financial Statements

  

Consolidated Statements of Assets and Liabilities as of June 30, 2020 (Unaudited) and December 31, 2019

     1  

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

     2  

Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2020 (Unaudited) and 2019 (Unaudited)

     3  

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

     4  

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

     5  

Notes to the Consolidated Financial Statements (Unaudited)

     17  


FINANCIAL INFORMATION

Goldman Sachs Middle Market Lending Corp.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share amounts)

 

     June 30, 2020
(Unaudited)
    December 31,
2019
 

Assets

    

Investments, at fair value

    

Non-controlled/non-affiliated investments (cost of $1,708,569 and $1,656,685)

   $ 1,625,388     $ 1,633,562  

Non-controlled affiliated investments (cost of $45,766 and $45,702)

     50,390       49,598  

Investments in affiliated money market fund (cost of $117,788 and $-)

     117,788       —    

Cash

     18,463       13,393  

Receivable for investments sold

     200       41  

Interest and dividends receivable

     10,416       7,022  

Deferred financing costs

     2,335       2,617  

Unrealized appreciation on foreign currency forward contracts

     45       46  

Other assets

     227       96  
  

 

 

   

 

 

 

Total assets

   $ 1,825,252     $ 1,706,375  
  

 

 

   

 

 

 

Liabilities

    

Debt

   $ 840,872     $ 729,986  

Interest and other debt expenses payable

     453       713  

Management fees payable

     3,524       3,520  

Incentive fees payable

     —         3,419  

Distribution payable

     —         21,272  

Directors’ fees payable

     97       —    

Accrued expenses and other liabilities

     2,941       2,676  
  

 

 

   

 

 

 

Total liabilities

   $ 847,887     $ 761,586  
  

 

 

   

 

 

 

Commitments and Contingencies (Note 8)

    

Net Assets

    

Preferred stock, par value $0.001 per share (1,000,000 shares authorized, no shares issued and outstanding)

   $ —       $ —    

Common stock, par value $0.001 per share (200,000,000 shares authorized, 53,844,947 and 50,562,483 shares issued and outstanding as of June 30, 2020 and December 31, 2019)

     54       51  

Paid-in capital in excess of par

     1,034,279       972,476  

Distributable earnings

     (56,968     (27,738
  

 

 

   

 

 

 

TOTAL NET ASSETS

   $ 977,365     $ 944,789  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND NET ASSETS

   $ 1,825,252     $ 1,706,375  
  

 

 

   

 

 

 

Net asset value per share

   $ 18.15     $ 18.69  

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

 

1


Goldman Sachs Middle Market Lending Corp.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

     For the Three Months Ended     For the Six Months Ended  
     June 30,
2020
    June 30,
2019
    June 30,
2020
    June 30,
2019
 

Investment Income:

        

From non-controlled/non-affiliated investments:

        

Interest income

   $ 36,820     $ 34,509     $ 75,386     $ 63,884  

Other income

     277       545       608       967  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income from non-controlled/non-affiliated investments

     37,097       35,054       75,994       64,851  

From non-controlled affiliated investments:

        

Interest income

     765       665       1,568       1,332  

Dividend income

     51       55       58       91  

Other income

     59       6       66       13  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income from non-controlled affiliated investments

     875       726       1,692       1,436  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

   $ 37,972     $ 35,780     $ 77,686     $ 66,287  
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Interest and other debt expenses

   $ 6,154     $ 5,057     $ 13,600     $ 9,468  

Management fees

     3,524       3,429       7,025       6,656  

Incentive fees

     —         5,372       —         11,340  

Professional fees

     1,080       452       2,017       735  

Administration, custodian and transfer agent fees

     586       552       1,165       1,070  

Directors’ fees

     107       108       213       213  

Other expenses

     343       310       660       514  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

   $ 11,794     $ 15,280     $ 24,680     $ 29,996  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INVESTMENT INCOME BEFORE TAXES

   $ 26,178     $ 20,500     $ 53,006     $ 36,291  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense (benefit), including excise tax

   $ —       $ 6     $ —       $ (1
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INVESTMENT INCOME AFTER TAXES

   $ 26,178     $ 20,494     $ 53,006     $ 36,292  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses):

        

Net realized gain (loss) from:

        

Non-controlled/non-affiliated investments

   $ —       $ (10,559   $ 226     $ (10,561

Foreign currency forward contracts

     72       —         110       12  

Foreign currency transactions

     (31     35       (27     38  

Net change in unrealized appreciation (depreciation) from:

        

Non-controlled/non-affiliated investments

     32,199       5,532       (60,058     (4,188

Non-controlled affiliated investments

     411       1,123       728       1,537  

Foreign currency forward contracts

     (111     (63     (1     45  

Foreign currency translations

     (956     (726     (77     417  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gains (losses)

   $ 31,584     $ (4,658   $ (59,099   $ (12,700
  

 

 

   

 

 

   

 

 

   

 

 

 

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

   $ —       $ 100     $ —       $ 100  

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

     (91     (340     16       (443
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

   $ 57,671     $ 15,596     $ (6,077   $ 23,249  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

     53,844,947       47,386,851       52,871,029       45,373,734  

Net investment income per share (basic and diluted)

   $ 0.49     $ 0.43     $ 1.00     $ 0.80  

Earnings (loss) per share (basic and diluted)

   $ 1.07     $ 0.33     $ (0.11   $ 0.51  

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

 

2


Goldman Sachs Middle Market Lending Corp.

Consolidated Statements of Changes in Net Assets

(in thousands, except share and per share amounts)

(Unaudited)

 

     For the Three Months
Ended
    For the Six Months
Ended
 
     June 30,
2020
    June 30,
2019
    June 30,
2020
    June 30,
2019
 

Net assets at beginning of period

   $ 919,694     $ 891,925     $ 944,789     $ 820,154  

Increase (decrease) in net assets resulting from operations:

        

Net investment income

   $ 26,178     $ 20,494     $ 53,006     $ 36,292  

Net realized gain (loss)

     41       (10,524     309       (10,511

Net change in unrealized appreciation (depreciation)

     31,543       5,866       (59,408     (2,189

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

     —         100       —         100  

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

     (91     (340     16       (443
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ 57,671     $ 15,596     $ (6,077   $ 23,249  
  

 

 

   

 

 

   

 

 

   

 

 

 

Distributions to stockholders from:

        

Distributable earnings

   $ —       $ (20,335   $ (23,153   $ (38,827
  

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions to stockholders

   $ —       $ (20,335   $ (23,153   $ (38,827
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital transactions:

        

Issuance of common shares

   $ —       $ 41,545     $ 61,806     $ 124,155  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from capital transactions

   $ —       $ 41,545     $ 61,806     $ 124,155  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL INCREASE (DECREASE) IN NET ASSETS

   $ 57,671     $ 36,806     $ 32,576     $ 108,577  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net assets at end of period

   $ 977,365     $ 928,731     $ 977,365     $ 928,731  
  

 

 

   

 

 

   

 

 

   

 

 

 

Distributions declared per share

   $ —       $ 0.43     $ 0.43     $ 0.86  

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

 

3


Goldman Sachs Middle Market Lending Corp.

Consolidated Statements of Cash Flows

(in thousands, except share and per share amounts)

(Unaudited)

 

     For the Six Months Ended  
     June 30,
2020
    June 30,
2019
 

Cash flows from operating activities:

    

Net increase (decrease) in net assets resulting from operations:

   $ (6,077   $ 23,249  

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used for) operating activities:

    

Purchases of investments

     (145,375     (418,208

Payment-in-kind interest capitalized

     (771     (537

Investments in affiliated money market fund, net

     (117,788     —    

Proceeds from sales of investments and principal repayments

     98,245       109,193  

Net realized (gain) loss

     (220     10,561  

Net change in unrealized (appreciation) depreciation on investments

     59,330       2,651  

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

     (8     (47

Amortization of premium and accretion of discount, net

     (3,827     (3,302

Amortization of deferred financing costs

     712       600  

Change in operating assets and liabilities:

    

(Increase) decrease in receivable for investments sold

     (159     66  

(Increase) decrease in interest and dividends receivable

     (3,394     (739

(Increase) decrease in other assets

     (131     157  

Increase (decrease) in interest and other debt expenses payable

     (260     (42

Increase (decrease) in management fees payable

     4       530  

Increase (decrease) in incentive fees payable

     (3,419     1,860  

Increase (decrease) in directors’ fees payable

     97       103  

Increase (decrease) in accrued expenses and other liabilities

     265       (48
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities

   $ (122,776   $ (273,953
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock

   $ 61,806     $ 124,155  

Distributions paid

     (44,425     (34,682

Financing costs paid

     (430     (148

Borrowings on debt

     238,086       377,785  

Repayments of debt

     (127,200     (197,150
  

 

 

   

 

 

 

Net cash provided by (used for) financing activities

   $ 127,837     $ 269,960  
  

 

 

   

 

 

 

Net increase (decrease) in cash

     5,061       (3,993

Effect of foreign exchange rate changes on cash and cash equivalents

     9       2  

Cash, beginning of period

     13,393       15,010  
  

 

 

   

 

 

 

Cash, end of period

   $ 18,463     $ 11,019  
  

 

 

   

 

 

 

Supplemental and non-cash activities

    

Interest expense paid

   $ 12,859     $ 8,413  

Accrued but unpaid excise tax expense

   $ —       $ 8  

Accrued but unpaid distributions

   $ —       $ 20,335  

Exchange of investments

   $ 11,852     $ 1,054  

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

 

4


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of June 30, 2020

(in thousands, except share and per share amounts)

(Unaudited)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate

and Spread (+)

  Maturity     Par Amount/
Shares (++)
    Cost     Fair
Value
 

1st Lien/Senior Secured Debt - 131.81% #

           

3SI Security Systems, Inc.(1)

  Commercial Services & Supplies     6.75   L + 5.75%; 1.00% Floor     06/16/2023     $ 2,238     $ 2,218     $ 2,171  

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

  Health Care Providers & Services     8.32   L + 7.00%; 1.00% Floor     06/13/2023       14,480       14,200       14,625  

Acquia, Inc.(1) (2)

  Software     8.00   L + 7.00%; 1.00% Floor     10/31/2025       18,197       17,865       17,606  

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

  Software     L + 7.00%; 1.00% Floor     10/31/2025       1,946       (35     (63

Apptio, Inc.(2)

  IT Services     8.25   L + 7.25%; 1.00% Floor     01/10/2025       46,452       45,701       44,826  

Apptio, Inc.(2) (3)

  IT Services     L + 7.25%; 1.00% Floor     01/10/2025       3,160       (48     (111

Associations, Inc.(1) (2)

  Real Estate Management & Development     8.46   L + 7.00% (incl. 3.00% PIK); 1.00% Floor     07/30/2024       19,596       19,424       18,812  

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

  Real Estate Management & Development     8.46   L + 7.00% (incl. 3.00% PIK); 1.00% Floor     07/30/2024       4,291       3,042       2,907  

Associations, Inc.(1) (2)

  Real Estate Management & Development     7.46   L + 6.00%; 1.00% Floor     07/30/2024       836       829       802  

Axiom Software(2) (3)

  Health Care Technology         07/31/2027       419       —         —    

Axiom Software(2) (3)

  Health Care Technology         07/31/2026       66       —         —    

BJH Holdings III Corp. (dba Jack’s Family Restaurants)(2)

  Hotels, Restaurants & Leisure     6.75   L + 5.75%; 1.00% Floor     08/19/2025       9,051       8,971       8,327  

Brillio, LLC(1) (2)

  IT Services     5.75   L + 4.75%; 1.00% Floor     02/06/2025       6,534       6,481       6,305  

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

  IT Services     5.75   L + 4.75%; 1.00% Floor     02/06/2025       2,200       1,100       1,023  

Bullhorn, Inc.(1) (2)

  Professional Services     6.57   L + 5.50%; 1.00% Floor     10/01/2025       16,029       15,813       15,548  

Bullhorn, Inc.(1) (2)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     10/01/2025       799       788       775  

Bullhorn, Inc.(1) (2)

  Professional Services     6.57   L + 5.50%; 1.00% Floor     10/01/2025       265       261       257  

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

  Professional Services     6.57   L + 5.50%; 1.00% Floor     10/01/2025       1,065       185       167  

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

  Health Care Technology     8.50   L + 7.50%; 1.00% Floor     05/15/2023       30,076       29,697       28,948  

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

  Health Care Technology     8.50   L + 7.50%; 1.00% Floor     05/15/2023       4,511       4,450       4,342  

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

  Health Care Technology     L + 7.50%; 1.00% Floor     05/15/2023       3,760       (44     (141

CFS Management, LLC (dba Center for Sight Management)(1) (2)

  Health Care Providers & Services     7.34   L + 5.75%; 1.00% Floor     07/01/2024       6,957       6,899       6,609  

CFS Management, LLC (dba Center for Sight Management)(1) (2) (3)

  Health Care Providers & Services     L + 5.75%; 1.00% Floor     07/01/2024       2,067       (17     (103

Chronicle Bidco Inc. (dba Lexitas)(1) (2)

  Professional Services     6.75   L + 5.75%; 1.00% Floor     11/14/2025       10,249       10,061       9,915  

Chronicle Bidco Inc. (dba Lexitas)(1) (2) (3)

  Professional Services     6.75   L + 5.75%; 1.00% Floor     11/14/2025       4,318       2,265       2,186  

Chronicle Bidco Inc. (dba Lexitas)(1) (2) (3)

  Professional Services     L + 5.75%; 1.00% Floor     11/14/2025       1,300       (23     (42

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

  Health Care Providers & Services     7.50   L + 6.50%; 1.00% Floor     03/28/2025       12,700       12,559       12,287  

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

  Health Care Providers & Services     7.50   L + 6.50%; 1.00% Floor     03/28/2025       9,673       9,544       9,359  

ConnectWise, LLC(1) (2)

  IT Services     7.07   L + 6.00%; 1.00% Floor     02/28/2025       19,856       19,497       19,112  

ConnectWise, LLC(1) (2) (3)

  IT Services     L + 6.00%; 1.00% Floor     02/28/2025       1,524       (27     (57

Convene 237 Park Avenue, LLC (dba Convene)(1) (2)

  Real Estate Management & Development     9.09   L + 7.50%; 1.50% Floor     08/30/2024       31,000       30,465       26,350  

Convene 237 Park Avenue, LLC (dba Convene)(1) (2)

  Real Estate Management & Development     9.13   L + 7.50%; 1.50% Floor     08/30/2024       9,120       8,999       7,752  

CorePower Yoga LLC(2)

  Diversified Consumer Services     5.61   L + 4.75%     05/14/2025       14,771       14,585       13,293  

CorePower Yoga LLC(2) (3)

  Diversified Consumer Services     L + 4.75%     05/14/2025       236       (3     (24

CorePower Yoga LLC(2) (3)

  Diversified Consumer Services     L + 4.75%     05/14/2025       1,010       (12     (101

CST Buyer Company (dba Intoxalock)(2)

  Diversified Consumer Services     6.32   L + 5.25%; 1.00% Floor     10/03/2025       18,124       17,915       15,949  

CST Buyer Company (dba Intoxalock)(2) (3)

  Diversified Consumer Services     6.32   L + 5.25%; 1.00% Floor     10/03/2025       1,294       761       621  

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

  Health Care Equipment & Supplies     6.25   L + 5.25%; 1.00% Floor     06/30/2022       5,377       5,362       5,216  

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

  Health Care Equipment & Supplies     6.25   L + 5.25%; 1.00% Floor     06/30/2022       5,083       5,069       4,931  

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

  Health Care Equipment & Supplies     6.25   L + 5.25%; 1.00% Floor     06/30/2022       1,533       1,529       1,487  

Diligent Corporation(1) (2)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     04/14/2022     22,707       26,105       25,320  

Diligent Corporation(1) (2)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     04/14/2022       5,433       5,396       5,392  

Diligent Corporation(1) (2)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     04/14/2022       2,092       2,078       2,077  

Diligent Corporation(1) (2) (3)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     04/14/2022       1,800       1,561       1,571  

Diligent Corporation(1) (2)

  Professional Services     6.57   L + 5.50%; 1.00% Floor     04/14/2022       723       717       717  

Diligent Corporation(1) (2)

  Professional Services     6.50   L + 5.50%; 1.00% Floor     04/14/2022       350       347       347  

Diligent Corporation(1) (2) (3)

  Professional Services     L + 5.50%; 1.00% Floor     04/14/2022       6,083       (42     (46

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

 

5


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of June 30, 2020

(in thousands, except share and per share amounts)

(Unaudited)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate

and Spread (+)

  Maturity     Par Amount/
Shares (++)
    Cost     Fair
Value
 

DocuTAP, Inc.(1) (2)

  Health Care Technology     6.50   L + 5.50%; 1.00% Floor     05/12/2025     $ 34,890     $ 34,156     $ 33,843  

E2open, LLC(1) (2)

  Software     6.75   L + 5.75%; 1.00% Floor     11/26/2024       24,118       23,914       23,394  

Elemica Parent, Inc.(1) (2)

  Chemicals     5.81   L + 5.50%     09/18/2025       4,236       4,142       3,929  

Elemica Parent, Inc.(1) (2) (3)

  Chemicals     5.98   L + 5.50%     09/18/2025       550       391       363  

Elemica Parent, Inc.(1) (2) (3)

  Chemicals     L + 5.50%     09/18/2025       830       (9     (60

Empirix, Inc.(1) (2)

  Diversified Telecommunication Services     7.25   L + 6.25%; 1.00% Floor     09/25/2024       31,338       30,924       29,615  

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

  Diversified Telecommunication Services     L + 6.25%; 1.00% Floor     09/25/2023       1,800       (21     (99

Eptam Plastics, Ltd.(1) (2)

  Health Care Equipment & Supplies     6.50   L + 5.50%; 1.00% Floor     12/06/2025       6,347       6,259       6,156  

Eptam Plastics, Ltd.(1) (2)

  Health Care Equipment & Supplies     6.50   L + 5.50%; 1.00% Floor     12/06/2025       1,354       1,335       1,313  

Eptam Plastics, Ltd.(1) (2) (3)

  Health Care Equipment & Supplies     L + 5.50%; 1.00% Floor     12/06/2025       2,708       (18     (81

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

  Diversified Financial Services     7.00   L + 6.00%; 1.00% Floor     09/05/2024     25,300       29,019       27,927  

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

  Diversified Financial Services     L + 6.00%; 1.00% Floor     09/05/2024       1,683       (21     (29

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

  Diversified Financial Services     L + 6.00%; 1.00% Floor     09/05/2024     2,200       (32     (43

FWR Holding Corporation (dba First Watch Restaurants)(1) (3)

  Hotels, Restaurants & Leisure     L + 5.50%; 1.00% Floor     08/21/2023       96       —         (5

FWR Holding Corporation (dba First Watch Restaurants) (1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       4,007       3,978       3,797  

FWR Holding Corporation (dba First Watch Restaurants) (1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       3,013       2,991       2,855  

FWR Holding Corporation (dba First Watch Restaurants) (1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       2,998       2,976       2,840  

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       11,306       11,142       10,713  

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       2,259       2,227       2,141  

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     6.50   L + 5.50%; 1.00% Floor     08/21/2023       1,428       1,408       1,353  

FWR Holding Corporation (dba First Watch Restaurants)(1) (3)

  Hotels, Restaurants & Leisure     7.10   L + 5.50%; 1.00% Floor     08/21/2023       1,506       770       712  

Gastro Health Holdco, LLC(1) (2)

  Health Care Providers & Services     7.05   L + 6.00%; 1.00% Floor     09/04/2024       13,830       13,624       13,139  

Gastro Health Holdco, LLC(1) (2)

  Health Care Providers & Services     7.00   L + 6.00%; 1.00% Floor     09/04/2024       7,141       7,032       6,784  

Gastro Health Holdco, LLC(1) (2)

  Health Care Providers & Services     7.01   L + 6.00%; 1.00% Floor     09/04/2024       6,903       6,813       6,558  

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

  Health Care Providers & Services     L + 6.00%; 1.00% Floor     09/04/2023       2,900       (37     (145

GlobalTranz Enterprises, Inc.(2)

  Road & Rail     5.18   L + 5.00%     05/15/2026       11,387       11,188       8,768  

Governmentjobs.com, Inc. (dba NeoGov)(1) (2)

  Software     7.50   L + 6.50%; 1.00% Floor     02/05/2026       29,153       28,601       28,570  

Governmentjobs.com, Inc. (dba NeoGov)(1) (2) (3)

  Software     7.50   L + 6.50%; 1.00% Floor     02/05/2026       3,887       219       214  

Granicus, Inc.(1) (2)

  Software     5.75   L + 4.75%; 1.00% Floor     09/07/2022       14,489       14,392       14,417  

HS4 AcquisitionCo, Inc. (dba HotSchedules & Fourth)(1) (2)

  Hotels, Restaurants & Leisure     7.75   L + 6.75%; 1.00% Floor     07/09/2025       34,501       34,053       31,568  

HS4 AcquisitionCo, Inc. (dba HotSchedules & Fourth)(1) (2) (3)

  Hotels, Restaurants & Leisure     7.75   L + 6.75%; 1.00% Floor     07/09/2025       2,805       876       673  

Hygiena Borrower LLC

  Life Sciences Tools & Services     5.02   L + 4.00%; 1.00% Floor     08/26/2022       5,221       5,178       4,960  

Hygiena Borrower LLC(3)

  Life Sciences Tools & Services     L + 4.00%; 1.00% Floor     08/26/2022       550       (4     (28

iCIMS, Inc.(2)

  Software     7.50   L + 6.50%; 1.00% Floor     09/12/2024       42,594       41,956       40,997  

iCIMS, Inc.(2)

  Software     7.50   L + 6.50%; 1.00% Floor     09/12/2024       7,844       7,714       7,550  

iCIMS, Inc.(2) (3)

  Software     L + 6.50%; 1.00% Floor     09/12/2024       2,662       (38     (100

Instructure Holdings(1) (2)

  Diversified Consumer Services     8.00   L + 7.00%; 1.00% Floor     03/24/2026       38,688       38,222       38,205  

Instructure Holdings(1) (2) (3)

  Diversified Consumer Services         L + 7.00%; 1.00% Floor     03/24/2026       3,000       (36     (38

 

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

6


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of June 30, 2020

(in thousands, except share and per share amounts)

(Unaudited)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate

and Spread (+)

  Maturity     Par Amount/
Shares (++)
    Cost     Fair
Value
 

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

  Interactive Media & Services     8.25   L + 7.25% (incl. 1.25% PIK); 1.00% Floor     07/19/2024     $ 36,785     $ 36,257     $ 35,314  

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

  Interactive Media & Services     L + 6.00%; 1.00% Floor     07/19/2023       2,586       (32     (103

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

  Transportation Infrastructure     6.50   L + 5.50%; 1.00% Floor     04/02/2025       32,215       31,550       31,168  

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

  Transportation Infrastructure     L + 5.50%; 1.00% Floor     04/02/2025       2,600       (52     (85

Lithium Technologies, Inc.(1) (2)

  Interactive Media & Services     9.00   L + 8.00%; 1.00% Floor     10/03/2022       50,047       49,409       47,670  

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

  Interactive Media & Services     9.21   L + 8.00%; 1.00% Floor     10/03/2022       3,448       1,684       1,560  

Mailgun Technologies, Inc.(1) (2)

  Interactive Media & Services     6.58   L + 5.50%; 1.00% Floor     03/26/2025       23,054       22,668       22,247  

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

  Interactive Media & Services     L + 5.50%; 1.00% Floor     03/26/2025       1,448             (51

Midwest Transport, Inc.(1) (2)

  Road & Rail     8.07   L + 7.00%; 1.00% Floor     10/02/2023       16,516       16,401       16,475  

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

  Health Care Technology     6.50   L + 5.50%; 1.00% Floor     11/15/2024       29,582       29,109       28,990  

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       4,525       3,733       3,711  

MRI Software LLC

  Real Estate Management & Development     6.57   L + 5.50%; 1.00% Floor     02/10/2026       13,608       13,484       12,928  

MRI Software LLC(3)

  Real Estate Management & Development     L + 5.50%; 1.00% Floor     02/10/2026       990       (9     (50

MRI Software LLC(3)

  Real Estate Management & Development     L + 5.50%; 1.00% Floor     02/10/2026       1,020       (10     (51

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

  Software     8.83   L + 7.75%; 1.00% Floor     03/22/2024       7,897       7,802       7,601  

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

  Software     8.83   L + 7.75%; 1.00% Floor     03/22/2024       5,955       5,851       5,732  

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

  Software     8.83   L + 7.75%; 1.00% Floor     03/24/2022       882       867       849  

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

  Software     L + 7.75%; 1.00% Floor     03/24/2022       610       (4     (23

Picture Head Midco LLC(1) (2)

  Entertainment     7.75   L + 6.75%; 1.00% Floor     08/31/2023       27,467       27,068       24,857  

PlanSource Holdings, Inc.(1) (2)

  Health Care Technology     7.95   L + 6.25%; 1.00% Floor     04/22/2025       33,940       33,371       32,667  

PlanSource Holdings, Inc.(1) (2) (3)

  Health Care Technology     L + 6.25%; 1.00% Floor     04/22/2025       4,681       (75     (176

Power Stop, LLC(2)

  Auto Components     4.93   L + 4.75%     10/19/2025       10,737       10,715       9,663  

Premier Imaging, LLC (dba Lucid Health)(1) (2)

  Health Care Providers & Services     6.75   L + 5.75%; 1.00% Floor     01/02/2025       17,170       16,938       16,355  

PT Intermediate Holdings III, LLC (dba Parts Town)(2)

  Trading Companies & Distributors     6.50   L + 5.50%; 1.00% Floor     10/15/2025       17,233       17,155       15,338  

Riverpoint Medical, LLC(1) (2)

  Health Care Equipment & Supplies     5.75   L + 4.75%; 1.00% Floor     06/21/2025       13,338       13,281       12,471  

Riverpoint Medical, LLC(1) (2) (3)

  Health Care Equipment & Supplies     L + 4.75%; 1.00% Floor     06/21/2025       2,450       (10     (159

Selectquote, Inc.(2)

  Insurance     7.01   L + 6.00%; 1.00% Floor     11/05/2024       12,082       11,868       12,082  

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

  Household Products     10.75   L + 9.75%; 1.00% Floor     07/13/2022       23,625       23,199       21,322  

Shopatron, LLC (dba Kibo)(1) (2)

  Internet & Direct Marketing Retail     9.08   L + 8.00%; 1.00% Floor     12/18/2020       8,902       8,827       8,768  

Shopatron, LLC (dba Kibo)(1) (2) (5)

  Internet & Direct Marketing Retail     9.08   L + 8.00%; 1.00% Floor     12/18/2020       2,744       2,738       2,702  

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

  Interactive Media & Services     8.82   L + 7.75% (incl. 2.00% PIK); 1.00% Floor     06/17/2024       14,914       14,706       13,124  

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

  Interactive Media & Services     8.84   L + 7.75% (incl. 2.00% PIK); 1.00% Floor     06/17/2024       1,087       1,072       956  

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

  Interactive Media & Services     8.97   L + 7.75% (incl. 2.00% PIK); 1.00% Floor     06/17/2024       543       540       478  

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)(1) (2)

  Health Care Providers & Services     6.50   L + 5.50%; 1.00% Floor     08/15/2025       15,854       15,645       15,022  

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)(1) (2) (3)

  Health Care Providers & Services     L + 5.50%; 1.00% Floor     08/15/2025       2,707       (35     (142

Viant Medical Holdings, Inc.(2)

  Health Care Equipment & Supplies     7.25   L + 6.25%; 1.00% Floor     07/02/2025       19,021       18,728       17,500  

Villa Bidco Inc (dba Authority Brands)(1) (2)

  Diversified Consumer Services     6.75   L + 5.75%; 1.00% Floor     03/21/2025       16,133       15,788       15,770  

Villa Bidco Inc (dba Authority Brands)(1) (2) (3)

  Diversified Consumer Services     8.00   P + 4.75%     03/21/2025       1,297       330       329  

 

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

7


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of June 30, 2020

(in thousands, except share and per share amounts)

(Unaudited)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate

and Spread (+)

  Maturity     Par Amount/
Shares (++)
    Cost     Fair
Value
 

VRC Companies, LLC (dba Vital Records Control)(1)

  Commercial Services & Supplies     7.50   L + 6.50%; 1.00% Floor     03/31/2023     $ 9,951     $ 9,887     $ 9,876  

VRC Companies, LLC (dba Vital Records Control)(1) (3)

  Commercial Services & Supplies     L + 6.50%; 1.00% Floor     03/31/2022       249       (1     (2

WebPT, Inc.(1) (2)

  Health Care Technology     7.75   L + 6.75%; 1.00% Floor     08/28/2024       14,933       14,677       14,299  

WebPT, Inc.(1) (2)

  Health Care Technology     7.75   L + 6.75%; 1.00% Floor     08/28/2024       1,556       1,529       1,489  

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

  Health Care Technology     L + 6.75%; 1.00% Floor     08/28/2024       1,867       (16     (79

Wine.com, LLC(1) (2)

  Beverages     8.00   L + 7.00%; 1.00% Floor     11/14/2024       9,000       8,860       8,978  

Wolfpack IP Co. (dba Lone Wolf Technologies)(1) (2) (4)

  Real Estate Management & Development     7.50   L + 6.50%; 1.00% Floor     06/13/2025       47,220       46,410       46,275  

Wolfpack IP Co. (dba Lone Wolf Technologies)(1) (2) (3) (4)

  Real Estate Management & Development     L + 6.50%; 1.00% Floor     06/13/2025       4,722       (78     (94

WorkForce Software, LLC(1) (2)

  Software     7.50   L + 6.50%; 1.00% Floor     07/31/2025       12,764       12,541       12,062  

WorkForce Software, LLC(1) (2) (3)

  Software     L + 6.50%; 1.00% Floor     07/31/2025       1,123       (19     (62

Wrike, Inc.(2)

  Professional Services     7.83   L + 6.75%; 1.00% Floor     12/31/2024       32,260       31,719       31,292  

Wrike, Inc.(2) (3)

  Professional Services     L + 6.75%; 1.00% Floor     12/31/2024       2,300       (35     (69

Xactly Corporation(1) (2)

  IT Services     8.25   L + 7.25%; 1.00% Floor     07/29/2022       34,852       34,493       34,155  

Xactly Corporation(1) (2) (3)

  IT Services     L + 7.25%; 1.00% Floor     07/29/2022       2,177       (18     (44

Yasso, Inc.(1) (2)

  Food Products     8.82   L + 7.75%; 1.00% Floor     03/23/2022       7,369       7,310       7,369  
           

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

            1,335,588       1,288,224  

1st Lien/Last-Out Unitranche (6) - 10.17%

           

Doxim, Inc.(1) (2)

  Diversified Financial Services     7.00   L + 6.00%; 1.00% Floor     02/28/2024       27,300       26,705       26,276  

Doxim, Inc.(1) (2)

  Diversified Financial Services     7.00   L + 6.00%; 1.00% Floor     02/28/2024       22,376       21,901       21,537  

RugsUSA, LLC(1) (2)

  Household Products     7.50   L + 6.50%; 1.00% Floor     04/30/2023       8,330       8,279       8,122  

Smarsh, Inc.(1) (2)

  Interactive Media & Services     8.88   L + 7.88%; 1.00% Floor     03/31/2021       44,033       43,819       43,482  
           

 

 

   

 

 

 

Total 1st Lien/Last-Out Unitranche

            100,704       99,417  

2nd Lien/Senior Secured Debt - 26.55%

           

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

  Health Care Providers & Services     9.50   L + 8.50%; 1.00% Floor     09/25/2023       5,333       5,256       4,799  

Chase Industries, Inc. (dba Senneca Holdings)(1) (2) (7)

  Building Products     11.00% PIK     05/11/2026       12,150       11,847        

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

  Building Products    
10.00

PIK 
  10.00% PIK     11/11/2025       12,150       10,702       9,842  

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

  Health Care Providers & Services     9.22   L + 8.22%; 1.00% Floor     09/22/2025       25,400       24,978       24,511  

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

  Diversified Financial Services     8.95   L + 7.50%     07/31/2025       10,000       9,803       9,025  

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

  Diversified Financial Services     7.67   L + 7.50%     07/31/2025       2,500       2,445       2,256  

Hygiena Borrower LLC(1)

  Life Sciences Tools & Services     8.75   L + 7.75%; 1.00% Floor     08/26/2023       2,650       2,615       2,531  

Hygiena Borrower LLC(1)

  Life Sciences Tools & Services     8.75   L + 7.75%; 1.00% Floor     08/26/2023       139       137       133  

ICP Industrial, Inc.(1) (2)

  Chemicals     9.25   L + 8.25%; 1.00% Floor     05/03/2024       28,900       28,420       27,816  

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

  Health Care Technology     9.50   L + 8.50%; 1.00% Floor     12/22/2024       21,900       21,495       21,024  

Market Track, LLC(1) (2)

  Media     8.75   L + 7.75%; 1.00% Floor     06/05/2025       20,000       19,578       18,700  

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

  Health Care Providers & Services     9.25   L + 8.25%; 1.00% Floor     12/02/2024       17,400       17,047       16,182  

Odyssey Logistics & Technology Corporation(2)

  Road & Rail     9.07   L + 8.00%; 1.00% Floor     10/12/2025       26,626       26,174       21,301  

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

  Air Freight & Logistics     9.00   L + 8.00%; 1.00% Floor     02/03/2025       25,000       24,690       23,250  

Spectrum Plastics Group, Inc.(2)

  Containers & Packaging     8.07   L + 7.00%     01/31/2026       6,278       6,254       4,708  

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

  Insurance     9.75   L + 8.75%; 1.00% Floor     09/29/2025       9,700       9,606       9,021  

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

  Insurance     9.83   L + 8.75%; 1.00% Floor     09/29/2025       1,584       1,569       1,473  

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

  IT Services     9.75   L + 8.75%; 1.00% Floor     06/22/2024       26,100       25,616       24,273  

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

  Health Care Equipment & Supplies     8.82   L + 7.75%; 1.00% Floor     11/07/2025       21,608       21,122       18,853  

Zep Inc.(2)

  Chemicals     9.32   L + 8.25%; 1.00% Floor     08/11/2025       30,500       29,942       19,825  
           

 

 

   

 

 

 

Total 2nd Lien/Senior Secured Debt

            299,296       259,523  

 

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

8


Investment*

  

Industry

   Par Amount/
Shares (++)
     Cost      Fair
Value
 

Preferred Stock* - 1.47%

 

Accuity Delivery Systems, LLC^ (1) (2) (8) (9)

   Health Care Providers & Services      136,589      $ 4,500      $ 8,550  

Wine.com, LLC(1) (2) (8) (9)

   Beverages      314,154        2,700        5,831  
        

 

 

    

 

 

 

Total Preferred Stock

 

     7,200        14,381  

Common Stock* - 1.46%

           

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Class B^^^ (1) (2) (9)

   Health Care Providers & Services      11,719        1,580        2,007  

Collaborative Imaging Holdco, LLC (dba Texas Radiology Associates) - Performance Units^^^ (1) (2) (4) (8) (9)

   Health Care Providers & Services      11,060        220        399  

Country Fresh Holding Company Inc.(1) (2) (8) (9)

   Food Products      843        1,053        191  

Elah Holdings, Inc.^ (1) (2) (8) (9)

   Capital Markets      65,436        3,163        3,163  

National Spine and Pain Centers, LLC(1) (2) (8) (9)

   Health Care Providers & Services      500        500        25  

Wrike, Inc.(1) (2) (8) (9)

   Professional Services      4,949,520        3,075        7,969  

Yasso, Inc.(1) (2) (8) (9)

   Food Products      790        790        479  
        

 

 

    

 

 

 

Total Common Stock

        10,381        14,233  

Warrants - 0.00%

           

KDOR Holdings Inc. (dba Senneca Holdings)(1) (2) (9)

   Building Products      1,406      $ 1,036      $ —    

KDOR Holdings Inc. (dba Senneca Holdings)(1) (2) (9)

   Building Products      176        130        —    
        

 

 

    

 

 

 

Total Warrants

        1,166        —    

 

     Yield     Shares      Cost      Fair
Value
 

Investments in Affiliated Money Market Fund* - 12.05%

          

Goldman Sachs Financial Square Government Fund - Institutional Shares^^^ (10)

     0.15     117,787,817        117,788        117,788  
       

 

 

    

 

 

 

Total Investments in Affiliated Money Market Fund

          117,788        117,788  
       

 

 

    

 

 

 

TOTAL INVESTMENTS - 183.51%

        $ 1,872,123      $ 1,793,566  
       

 

 

    

 

 

 

LIABILITIES IN EXCESS OF OTHER ASSETS - (83.51%)

           $ (816,201

NET ASSETS - 100.00%

 

        $ 977,365  

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

 

9


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of June 30, 2020

(in thousands, except share and per share amounts)

(Unaudited)

 

*

Assets are pledged as collateral for the Truist Revolving Credit Facility. See Note 6 “Debt”.

#

Percentages are based on net assets.

(+)

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 June 30, 2020, rates for the 12 month, 6 month, 3 month, 2 month, 1 month and 1 week L are 0.55%, 0.37%, 0.30%, 0.23%, 0.16% and 0.10%, respectively. As of June 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 June 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 (“€”).

^

As defined in the Investment Company Act of 1940, the portfolio company 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)

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

(2)

Represent co-investments made with certain funds managed by the Investment Adviser 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”.

(3)

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”.

(4)

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 June 30, 2020 the aggregate fair value of these securities is $74,435 or 4.08% of the Company’s total assets.

(5)

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

(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)

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

(8)

Non-income producing security.

(9)

Securities exempt from registration under the Securities Act of 1933 (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of June 30, 2020, the aggregate fair value of these securities is $28,614 or 2.93% 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  

National Spine and Pain Centers, LLC - Common Stock

     06/02/2017  

Wine.com, LLC - Preferred Stock

     11/14/2018  

Wrike, Inc. - Common Stock

     12/31/2018  

Yasso, Inc. - Common Stock

     03/23/2017  

 

(10)

The rate shown is the annualized seven-day yield as of June 30, 2020.

PIK – Payment-In-Kind

ADDITIONAL INFORMATION

Foreign currency forward contracts

 

Counterparty

   Currency Purchased      Currency Sold      Settlement      Unrealized
Appreciation

(Depreciation)
 

Bank of America, N.A.

   USD 549      EUR 446        07/06/2020      $ 48  

Bank of America, N.A.

   USD 321      EUR 288        07/06/2020        (2

Bank of America, N.A.

   USD 729      EUR 650        10/05/2020        (4

Bank of America, N.A.

   USD 716      EUR 635        01/05/2021        (1

Bank of America, N.A.

   USD 702      EUR 620        04/06/2021        —    

Bank of America, N.A.

   USD 701      EUR 617        07/06/2021        2  

Bank of America, N.A.

   USD 400      EUR 350        10/05/2021        2  
           

 

 

 
            $ 45  
           

 

 

 

 

Currency Abbreviations:
EUR - Euro
USD - U.S. Dollar

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

 

10


Goldman Sachs Middle Market Lending Corp.

Consolidated Schedule of Investments as of December 31, 2019

(in thousands, except share and per share amounts)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate and

Spread (+)

  Maturity     Par
Amount/
Shares (++)
    Cost     Fair
Value
 

1st Lien/Senior Secured Debt - 134.05%#

             

3SI Security Systems, Inc.(1)

  Commercial Services & Supplies     7.65   L + 5.75%; 1.00% Floor     06/16/2023     $ 2,249     $ 2,227     $ 2,227  

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

  Health Care Providers & Services     8.75   L + 7.00%; 1.00% Floor     06/13/2023       14,480       14,159       14,371  

Acquia, Inc.(2)

  Software     8.91   L + 7.00%; 1.00% Floor     10/31/2025       18,197       17,841       17,833  

Acquia, Inc.(2) (3)

  Software     L + 7.00%; 1.00% Floor     10/31/2025       1,946       (38     (39

Apptio, Inc.(1) (2)

  IT Services     8.96   L + 7.25%; 1.00% Floor     01/10/2025       46,452       45,634       45,639  

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

  IT Services     L + 7.25%; 1.00% Floor     01/10/2025       3,160       (53     (55

Associations, Inc.(1) (2)

  Real Estate Management & Development     9.09   L + 7.00% (incl. 3.00% PIK); 1.00% Floor     07/30/2024       19,300       19,110       19,107  

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

 

Real Estate Management &

Development

    9.09   L + 7.00% (incl. 3.00% PIK); 1.00% Floor     07/30/2024       4,247       2,907       2,905  

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

  Real Estate Management & Development     L + 4.00%; 1.00% Floor     07/30/2024       836       (8     (8

BJH Holdings III Corp. (dba Jack’s Family Restaurants)(1) (2)

  Hotels, Restaurants & Leisure     7.55   L + 5.75%; 1.00% Floor     08/19/2025       9,097       9,010       9,006  

Brillio, LLC(1) (2)

  IT Services     6.55   L + 4.75%; 1.00% Floor     02/06/2025       6,567       6,509       6,501  

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

  IT Services     L + 4.75%; 1.00% Floor     02/06/2025       2,200             (22

Bullhorn, Inc.(1) (2)

  Professional Services     7.44   L + 5.50%; 1.00% Floor     10/01/2025       16,109       15,876       15,868  

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

  Professional Services     7.46   L + 5.50%; 1.00% Floor     10/01/2025       1,331       247       246  

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

  Professional Services     L + 5.50%; 1.00% Floor     10/01/2025       799       (11     (12

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

  Health Care Technology     9.41   L + 7.50%; 1.00% Floor     05/15/2023       30,076       29,640       29,550  

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

  Health Care Technology     9.41   L + 7.50%; 1.00% Floor     05/15/2023       4,511       4,441       4,432  

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

  Health Care Technology     9.98   L + 7.50%; 1.00% Floor     05/15/2023       3,760       1,452       1,438  

CFS Management, LLC (dba Center for Sight Management)(1) (2)

  Health Care Providers & Services     7.95   L + 5.75%; 1.00% Floor     07/01/2024       6,992       6,927       6,923  

CFS Management, LLC (dba Center for Sight Management)(1) (2) (3)

  Health Care Providers & Services     L + 5.75%; 1.00% Floor     07/01/2024       2,067       (19     (21

Chronicle Bidco Inc. (dba Lexitas)(2)

  Professional Services     7.66   L + 5.75%; 1.00% Floor     11/14/2025       10,300       10,098       10,094  

Chronicle Bidco Inc. (dba Lexitas)(2) (3)

  Professional Services     L + 5.75%; 1.00% Floor     11/14/2025       1,300       (25     (26

Chronicle Bidco Inc. (dba Lexitas)(2) (3)

  Professional Services     L + 5.75%; 1.00% Floor     11/14/2025       4,330       (42     (43

Clarkson Eyecare, LLC (dba EyeCare Partners)(2)

  Health Care Providers & Services     8.05   L + 6.25%; 1.00% Floor     04/02/2021       10,953       10,776       10,733  

Clarkson Eyecare, LLC (dba EyeCare Partners)(2)

  Health Care Providers & Services     8.05   L + 6.25%; 1.00% Floor     04/02/2021       7,241       7,123       7,097  

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

  Health Care Providers & Services     8.30   L + 6.50%; 1.00% Floor     03/28/2025       12,700       12,547       12,478  

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

  Health Care Providers & Services     8.30   L + 6.50%     03/28/2025       9,673       9,533       9,504  

ConnectWise, LLC(2)

  IT Services     7.94   L + 6.00%; 1.00% Floor     02/28/2025       19,957       19,564       19,707  

ConnectWise, LLC(2) (3)

  IT Services     L + 6.00%; 1.00% Floor     02/28/2025       1,524       (30     (19

Convene 237 Park Avenue, LLC (dba Convene)(1) (2)

  Real Estate Management & Development     9.54   L + 7.50%; 1.50% Floor     08/30/2024       31,000       30,414       30,380  

Convene 237 Park Avenue, LLC (dba Convene)(1) (2) (3)

  Real Estate Management & Development     L + 7.50%; 1.50% Floor     08/30/2024       9,120       (85     (182

CorePower Yoga LLC(2)

  Diversified Consumer Services     6.44   L + 4.50%     05/14/2025       12,389       12,219       12,203  

CorePower Yoga LLC(2) (3)

  Diversified Consumer Services     L + 4.75%     05/14/2025       1,010       (14     (15

CorePower Yoga LLC(2) (3)

  Diversified Consumer Services     L + 4.50%     05/14/2025       2,692       (36     (40

CST Buyer Company (dba Intoxalock)(2)

  Diversified Consumer Services     7.55   L + 5.75%; 1.00% Floor     10/03/2025       18,215       17,989       18,215  

CST Buyer Company (dba Intoxalock)(2) (3)

  Diversified Consumer Services     L + 5.75%; 1.00% Floor     10/03/2025       1,294       (16     —    

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

  Health Care Equipment & Supplies     7.22   L + 5.25%; 1.00% Floor     06/30/2022       5,405       5,386       5,378  

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

  Health Care Equipment & Supplies     7.22   L + 5.25%; 1.00% Floor     06/30/2022       5,112       5,093       5,086  

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

  Health Care Equipment & Supplies     9.00   P + 4.25%; 1.00% Floor     06/30/2022       1,533       148       146  

Diligent Corporation(1) (2)

  Professional Services     7.42   L + 5.50%; 1.00% Floor     04/14/2022     22,822       26,188       25,344  

Diligent Corporation(1) (2)

  Professional Services     7.58   L + 5.50%; 1.00% Floor     04/14/2022       5,460       5,413       5,406  

Diligent Corporation(1) (2)

  Professional Services     7.42   L + 5.50%; 1.00% Floor     04/14/2022       2,103       2,084       2,082  

Diligent Corporation(1) (2) (3)

  Professional Services     7.48   L + 5.50%; 1.00% Floor     04/14/2022       1,800       1,555       1,566  

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

 

11


Goldman Sachs Middle Market Lending Corp.

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

(in thousands, except share and per share amounts)

 

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate and

Spread (+)

  Maturity     Par
Amount/
Shares (++)
    Cost     Fair
Value
 

Diligent Corporation(1) (2)

  Professional Services     7.56   L + 5.50%; 1.00% Floor     04/14/2022     $ 727     $ 719     $ 719  

Diligent Corporation(1) (2)

  Professional Services     7.42   L + 5.50%; 1.00% Floor     04/14/2022       352       348       348  

Diligent Corporation(1) (2) (3)

  Professional Services     L + 5.50%; 1.00% Floor     04/14/2022       6,083       (53     (61

DiscoverOrg, LLC(2)

  Software     6.30   L + 4.50%     02/02/2026       23,522       23,311       23,581  

DocuTAP, Inc.(1) (2)

  Health Care Technology     7.30   L + 5.50%; 1.00% Floor     05/12/2025       35,066       34,265       35,066  

E2open, LLC(1) (2)

  Software     7.66   L + 5.75%; 1.00% Floor     11/26/2024       24,239       24,015       23,997  

Elemica Parent, Inc.(1) (2)

  Chemicals     7.40   L + 5.50%     09/18/2025       4,257       4,155       4,151  

Elemica Parent, Inc.(1) (2) (3)

  Chemicals     7.40   L + 5.50%     09/18/2025       550       171       170  

Elemica Parent, Inc.(1) (2) (3)

  Chemicals     L + 5.50%     09/18/2025       830       (10     (21

Empirix, Inc.(1) (2)

  Diversified Telecommunication Services     8.20   L + 6.25%; 1.00% Floor     09/25/2024       31,492       31,036       28,343  

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

  Diversified Telecommunication Services     L + 6.25%; 1.00% Floor     09/25/2023       1,800       (24     (180

Eptam Plastics, Ltd.(2)

  Health Care Equipment & Supplies     7.30   L + 5.50%; 1.00% Floor     12/06/2025       6,363       6,268       6,267  

Eptam Plastics, Ltd.(2) (3)

  Health Care Equipment & Supplies     7.30   L + 5.50%; 1.00% Floor     12/06/2025       1,354       318       318  

Eptam Plastics, Ltd.(2) (3)

  Health Care Equipment & Supplies     L + 5.50%; 1.00% Floor     12/06/2025       2,708       (20     (20

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

  Diversified Financial Services     8.31   L + 6.25%; 1.00% Floor     09/05/2024     25,300       28,983       28,166  

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

  Diversified Financial Services     L + 6.25%; 1.00% Floor     09/05/2024       1,683       (23     (13

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

  Diversified Financial Services     L + 6.25%; 1.00% Floor     09/05/2024     2,200       (35     (19

FWR Holding Corporation (dba First Watch Restaurants) (1)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       4,043       4,009       4,002  

FWR Holding Corporation (dba First Watch Restaurants) (1)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       3,024       2,999       2,994  

FWR Holding Corporation (dba First Watch Restaurants) (1) (3)

  Hotels, Restaurants & Leisure     L + 5.50%; 1.00% Floor     08/21/2023       3,040       (25     (30

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       11,408       11,219       11,294  

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       2,279       2,243       2,256  

FWR Holding Corporation (dba First Watch Restaurants)(1)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       1,441       1,418       1,427  

FWR Holding Corporation (dba First Watch Restaurants)(1) (3)

  Hotels, Restaurants & Leisure     7.29   L + 5.50%; 1.00% Floor     08/21/2023       1,506       1,256       1,265  

Gastro Health Holdco, LLC(1) (2)

  Health Care Providers & Services     7.45   L + 5.50%; 1.00% Floor     09/04/2024       17,963       17,668       17,693  

Gastro Health Holdco, LLC(1) (2)

  Health Care Providers & Services     7.43   L + 5.50%; 1.00% Floor     09/04/2024       7,171       7,050       7,063  

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

  Health Care Providers & Services     7.40   L + 5.50%; 1.00% Floor     09/04/2024       6,933       5,769       5,757  

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

  Health Care Providers & Services     L + 5.50%; 1.00% Floor     09/04/2023       2,900       (43     (44

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

  Health Care Providers & Services     L + 5.50%; 1.00% Floor     09/04/2024       7,200       (59     (108

GlobalTranz Enterprises, Inc.(2)

  Road & Rail     6.79   L + 5.00%     05/15/2026       11,444       11,230       10,414  

GlobalTranz Enterprises, Inc.(2) (3)

  Road & Rail     L + 5.00%     05/15/2026       2,968       —         (267

Granicus, Inc.(2)

  Software     6.69   L + 4.75%; 1.00% Floor     09/07/2022       14,565       14,446       14,419  

HS4 AcquisitionCo, Inc. (dba HotSchedules & Fourth)(1) (2)

  Hotels, Restaurants & Leisure     8.71   L + 6.75%; 1.00% Floor     07/09/2025       34,501       33,854       33,811  

HS4 AcquisitionCo, Inc. (dba HotSchedules & Fourth)(1) (2) (3)

  Hotels, Restaurants & Leisure     8.54   L + 6.75%; 1.00% Floor     07/09/2025       2,805       369       365  

Hygiena Borrower LLC

  Life Sciences Tools & Services     5.94   L + 4.00%; 1.00% Floor     08/26/2022       5,314       5,261       5,208  

Hygiena Borrower LLC(3)

  Life Sciences Tools & Services     L + 4.00%; 1.00% Floor     08/26/2022       550       (5     (11

Hygiena Borrower LLC(3)

  Life Sciences Tools & Services     L + 4.00%; 1.00% Floor     08/26/2022       814       (4     (16

iCIMS, Inc.(1) (2)

  Software     8.29   L + 6.50%; 1.00% Floor     09/12/2024       42,594       41,893       41,849  

iCIMS, Inc.(1) (2)

  Software     8.29   L + 6.50%; 1.00% Floor     09/12/2024       7,844       7,701       7,707  

 

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

12


Goldman Sachs Middle Market Lending Corp.

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

(in thousands, except share and per share amounts)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate and

Spread (+)

  Maturity     Par
Amount/
Shares (++)
    Cost     Fair
Value
 

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

  Software     L + 6.50%; 1.00% Floor     09/12/2024     $ 2,662     $ (42   $ (47

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

  Interactive Media & Services     9.05   L + 7.25% (incl. 1.25% PIK); 1.00% Floor     07/19/2024       36,554       35,970       36,005  

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

  Interactive Media & Services     L + 6.00%; 1.00% Floor     07/19/2023       2,586       (37     (39

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

  Transportation Infrastructure     6.95   L + 5.00%; 1.00% Floor     04/02/2025       32,377       31,651       31,892  

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

  Transportation Infrastructure     L + 5.00%; 1.00% Floor     04/02/2025       2,600       (57     (39

Lithium Technologies, Inc.(1) (2)

  Interactive Media & Services     10.04   L + 8.00%; 1.00% Floor     10/03/2022       50,047       49,285       49,296  

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

  Interactive Media & Services     L + 8.00%; 1.00% Floor     10/03/2022       3,448       (48     (52

Mailgun Technologies, Inc.(1) (2)

  Interactive Media & Services     6.95   L + 5.00%; 1.00% Floor     03/26/2025       23,170       22,749       22,765  

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

  Interactive Media & Services     L + 5.00%; 1.00% Floor     03/26/2025       1,448       —         (25

Midwest Transport, Inc.(1) (2)

  Road & Rail     9.06   L + 7.00%; 1.00% Floor     10/02/2023       16,969       16,835       16,799  

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

  Health Care Technology     7.43   L + 5.50%; 1.00% Floor     11/15/2024       29,732       29,211       29,212  

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

  Health Care Technology     7.44   L + 5.50%; 1.00% Floor     11/15/2024       4,525       1,193       1,188  

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

  Software     9.55   L + 7.75%; 1.00% Floor     03/22/2024       5,985       5,869       5,910  

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

  Software     9.55   L + 7.75%; 1.00% Floor     03/22/2024       7,937       7,831       7,838  

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

  Software     L + 7.75%; 1.00% Floor     03/24/2022       610       (5     (8

Pathway Vet Alliance LLC(1) (2)

  Health Care Providers & Services     6.30   L + 4.50%     12/20/2024       6,956       6,896       6,886  

Pathway Vet Alliance LLC(1) (2)

  Health Care Providers & Services     6.30   L + 4.50%     12/20/2024       2,459       2,436       2,434  

Picture Head Midco LLC(1) (2)

  Entertainment     8.55   L + 6.75%; 1.00% Floor     08/31/2023       27,467       27,014       27,055  

PlanSource Holdings, Inc.(1) (2)

  Health Care Technology     8.15   L + 6.25%; 1.00% Floor     04/22/2025       33,940       33,324       33,261  

PlanSource Holdings, Inc.(1) (2) (3)

  Health Care Technology     L + 6.25%; 1.00% Floor     04/22/2025       4,681       (83     (94

Power Stop, LLC(2)

  Auto Components     6.44   L + 4.50%     10/19/2025       10,791       10,768       10,683  

Premier Imaging, LLC (dba Lucid Health)(2)

  Health Care Providers & Services     7.49   L + 5.75%; 1.00% Floor     01/02/2025       17,257       17,001       16,998  

PT Intermediate Holdings III, LLC (dba Parts Town)(2)

  Trading Companies & Distributors     7.44   L + 5.50%; 1.00% Floor     10/15/2025       17,320       17,235       17,233  

Riverpoint Medical, LLC(1) (2)

  Health Care Equipment & Supplies     6.97   L + 5.00%; 1.00% Floor     06/21/2025       13,406       13,343       13,272  

Riverpoint Medical, LLC(1) (2) (3)

  Health Care Equipment & Supplies     L + 5.00%; 1.00% Floor     06/21/2025       2,450       (11     (25

Selectquote, Inc.(2)

  Insurance     7.70   L + 6.00%; 1.00% Floor     11/05/2024       15,800       15,492       15,484  

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

  Household Products     11.70   L + 9.75%; 1.00% Floor     07/13/2022       23,963       23,436       23,064  

Shopatron, LLC (dba Kibo)(1) (2)

  Internet & Direct Marketing Retail     9.95   L + 8.00%; 1.00% Floor     12/18/2020       8,947       8,795       8,812  

Shopatron, LLC (dba Kibo)(1) (2) (8)

  Internet & Direct Marketing Retail     9.95   L + 8.00%; 1.00% Floor     12/18/2020       2,757       2,729       2,716  

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

  Interactive Media & Services     7.55   L + 5.75%; 1.00% Floor     06/17/2024       14,745       14,515       14,266  

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

  Interactive Media & Services     7.52   L + 5.75%; 1.00% Floor     06/17/2024       1,630       1,062       1,034  

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

  Interactive Media & Services     7.76   L + 5.75%; 1.00% Floor     06/17/2024       543       539       526  

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)(1) (2)

  Health Care Providers & Services     7.31   L + 5.25%; 1.00% Floor     08/15/2025       19,578       19,300       19,236  

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)(1) (2) (3)

  Health Care Providers & Services     7.31   L + 5.25%; 1.00% Floor     08/15/2025       2,707       97       88  

The Center for Orthopedic and Research Excellence, Inc. (dba HOPCo)(1) (2) (3)

  Health Care Providers & Services     L + 5.25%; 1.00% Floor     08/15/2025       6,768       (54     (118

Viant Medical Holdings, Inc.(2)

  Health Care Equipment & Supplies     8.16   L + 6.25%; 1.00% Floor     07/02/2025       19,117       18,798       18,926  

VRC Companies, LLC (dba Vital Records Control)(1)

  Commercial Services & Supplies     8.30   L + 6.50%; 1.00% Floor     03/31/2023       10,000       9,925       9,925  

VRC Companies, LLC (dba Vital Records Control)(1) (3)

  Commercial Services & Supplies     8.60   L + 6.50%; 1.00% Floor     03/31/2022       249       136       136  

WebPT, Inc.(1) (2)

  Health Care Technology     8.66   L + 6.75%; 1.00% Floor     08/28/2024       14,933       14,651       14,635  

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

  Health Care Technology     L + 6.75%; 1.00% Floor     08/28/2024       1,556       (29     (31

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

  Health Care Technology         L + 6.75%; 1.00% Floor     08/28/2024       1,867       (17     (37

 

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

13


Goldman Sachs Middle Market Lending Corp.

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

(in thousands, except share and per share amounts)

 

Investment*

 

Industry

  Interest
Rate (+)
   

Reference Rate and

Spread (+)

  Maturity     Par
Amount/
Shares (++)
    Cost     Fair
Value
 

Wine.com, LLC(1) (2)

  Beverages     8.93   L + 7.00%; 1.00% Floor     11/14/2024     $ 9,000     $ 8,847     $ 8,820  

Wolfpack IP Co. (dba Lone Wolf Technologies)(1) (2) (4)

  Real Estate Management & Development     8.29   L + 6.50%; 1.00% Floor     06/13/2025       47,220       46,344       46,275  

Wolfpack IP Co. (dba Lone Wolf Technologies)(1) (2) (3) (4)

  Real Estate Management & Development     L + 6.50%; 1.00% Floor     06/13/2025       4,722       (86     (94

WorkForce Software, LLC(1) (2)

  Software     8.41   L + 6.50%; 1.00% Floor     07/31/2025       12,732       12,491       12,477  

WorkForce Software, LLC(1) (2) (3)

  Software     L + 6.50%; 1.00% Floor     07/31/2025       1,123       (21     (23

Wrike, Inc.(1) (2)

  Professional Services     8.55   L + 6.75%; 1.00% Floor     12/31/2024       32,260       31,670       31,615  

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

  Professional Services     L + 6.75%; 1.00% Floor     12/31/2024       2,300       (38     (46

Xactly Corporation(1) (2)

  IT Services     9.05   L + 7.25%; 1.00% Floor     07/29/2022       34,852       34,415       34,416  

Xactly Corporation(1) (2) (3)

  IT Services     L + 7.25%; 1.00% Floor     07/29/2022       2,177       (23     (27

Yasso, Inc.(1) (2)

  Food Products     9.55   L + 7.75%; 1.00% Floor     03/23/2022       7,411       7,336       7,170  
           

 

 

   

 

 

 

Total 1st Lien/Senior Secured Debt

 

      1,272,044       1,266,486  

1st Lien/Last-Out Unitranche (5) – 10.67%

 

Doxim, Inc.(1) (2)

  Diversified Financial Services     7.94   L + 6.00%; 1.00% Floor     02/28/2024       27,300       26,636       26,618  

Doxim, Inc.(1) (2)

  Diversified Financial Services     7.90   L + 6.00%; 1.00% Floor     02/28/2024       22,376       21,846       21,816  

RugsUSA, LLC(1) (2)

  Household Products     8.45   L + 6.50%; 1.00% Floor     04/30/2023       8,330       8,271       8,268  

Smarsh, Inc.(1) (2)

  Interactive Media & Services     9.68   L + 7.88%; 1.00% Floor     03/31/2021       44,429       44,076       44,095  
           

 

 

   

 

 

 

Total 1st Lien/Last-Out Unitranche

 

    100,829       100,797  

2nd Lien/Senior Secured Debt - 31.14%

 

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

  Health Care Providers & Services     10.44   L + 8.50%; 1.00% Floor     09/25/2023       5,333       5,246       5,239  

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

  Building Products     11.55  

L + 9.50% (incl. 1.50%

PIK); 1.00% Floor

    05/11/2026       24,300       23,676       22,781  

DiscoverOrg, LLC(2)

  Software     10.19   L + 8.50%     02/01/2027       14,600       14,397       14,600  

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

  Health Care Providers & Services     10.02   L + 8.22%; 1.00% Floor     09/22/2025       25,400       24,948       24,955  

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

  Diversified Financial Services     9.60   L + 7.50%     07/31/2025       10,000       9,788       9,750  

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

  Diversified Financial Services     L + 7.50%     07/31/2025       2,500       (25     (63

Hygiena Borrower LLC(1)

  Life Sciences Tools & Services     9.69   L + 7.75%; 1.00% Floor     08/26/2023       2,650       2,610       2,604  

Hygiena Borrower LLC(1) (3)

  Life Sciences Tools & Services     9.69   L + 7.75%; 1.00% Floor     08/26/2023       970       131       122  

ICP Industrial, Inc.(1) (2)

  Chemicals     10.04   L + 8.25%; 1.00% Floor     05/03/2024       28,900       28,369       28,322  

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

  Health Care Technology     10.81   L + 8.50%; 1.00% Floor     12/22/2024       21,900       21,461       21,462  

Market Track, LLC(1) (2)

  Media     9.68   L + 7.75%; 1.00% Floor     06/05/2025       20,000       19,545       19,250  

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

  Health Care Providers & Services     10.05   L + 8.25%; 1.00% Floor     12/02/2024       17,400       17,015       16,748  

Odyssey Logistics & Technology Corporation(2)

  Road & Rail     9.80   L + 8.00%; 1.00% Floor     10/12/2025       26,626       26,141       25,694  

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

  Air Freight & Logistics     9.90   L + 8.00%; 1.00% Floor     02/03/2025       25,000       24,664       24,563  

Spectrum Plastics Group, Inc.(2)

  Containers & Packaging     8.80   L + 7.00%; 1.00% Floor     01/31/2026       6,278       6,252       4,949  

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

  Insurance     10.68   L + 8.75%; 1.00% Floor     09/29/2025       9,700       9,599       9,603  

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

  Insurance     10.72   L + 8.75%; 1.00% Floor     09/29/2025       2,400       1,560       1,560  

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

  IT Services     10.70   L + 8.75%; 1.00% Floor     06/22/2024       26,100       25,568       25,708  

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

  Health Care Equipment & Supplies     9.69   L + 7.75%; 1.00% Floor     11/07/2025       21,608       21,088       21,068  

Zep Inc.(2)

  Chemicals     10.19   L + 8.25%; 1.00% Floor     08/11/2025       30,500       29,900       15,250  
           

 

 

   

 

 

 

Total 2nd Lien/Senior Secured Debt    

 

    311,933       294,165  

 

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

14


Goldman Sachs Middle Market Lending Corp.

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

(in thousands, except share and per share amounts)

 

Investment *

  

Industry

   Interest
Rate
     Par
Amount/
Shares (++)
     Cost      Fair
Value
 

Preferred Stock* – 1.07%

  

Accuity Delivery Systems, LLC^ (1) (2) (6) (7)

   Health Care Providers & Services       $ 136,589      $ 4,500      $ 7,200  

Wine.com, LLC(1) (2) (6) (7)

   Beverages         314,154        2,700        2,937  
           

 

 

    

 

 

 

Total Preferred Stock

           7,200        10,137  

Common Stock* – 1.22%