UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM  10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-00821
BUSINESS DEVELOPMENT CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in its Charter)

Maryland
 
27-2614444
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
9 West 57th Street, 49th Floor, Suite 4920
New York, New York
 
10019
(Address of Principal Executive Office)
 
(Zip Code)

(212) 588-6770
(Registrant’s Telephone Number, Including Area Code)
 
Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o No o

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  (check one):
Large accelerated filer o
 
Accelerated filer o
 
 
 
Non-accelerated filer x
 
Smaller reporting company o
 
 
 
 
 
Emerging growth company o
(Do not check if a smaller reporting 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. o



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Yes o No x

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of August 9, 2017 was 178,138,925.









BUSINESS DEVELOPMENT CORPORATION OF AMERICA
FORM  10-Q FOR THE SIX MONTHS ENDED JUNE 30, 2017

TABLE OF CONTENTS
 
 
 
Page
PART I - FINANCIAL INFORMATION
  
PART II - OTHER INFORMATION
 



PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS DEVELOPMENT CORPORATION OF AMERICA
 
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollars in thousands except share and per share data)
 
June 30,
 
December 31,
 
2017
 
2016
ASSETS
(Unaudited)
 
 
Investments, at fair value:
 
 
 
Control Investments, at fair value (amortized cost of $269,050 and $271,711, respectively)
$
247,387

 
$
254,638

Affiliate Investments, at fair value (amortized cost of $359,233 and $383,894, respectively)
325,066

 
354,238

Non-affiliate Investments, at fair value (amortized cost of $1,918,958 and $1,859,933, respectively)
1,869,846

 
1,785,207

Investments, at fair value (amortized cost of $2,547,241 and $2,515,538, respectively)
2,442,299

 
2,394,083

Cash and cash equivalents
142,698

 
189,270

Interest and dividends receivable
26,838

 
28,608

Receivable for unsettled trades
26,757

 
4,293

Prepaid expenses and other assets
571

 
52

Total assets
$
2,639,163

 
$
2,616,306

 
 
 
 
LIABILITIES
 

 
 

Debt (net of deferred financing costs of $8,470 and $5,013, respectively)
$
1,000,188

 
$
910,484

Stockholder distributions payable
12,877

 
13,516

Management fees payable
9,691

 
9,571

Incentive fee on income payable
4,948

 
3,137

Accounts payable and accrued expenses
11,650

 
8,454

Payable for unsettled trades
77,660

 
74,020

Interest and debt fees payable
6,061

 
9,606

Payable for common stock repurchases
15

 
57,651

Directors' fees payable
68

 
133

Total liabilities
1,123,158

 
1,086,572

Commitments and contingencies (Note 6)
 
 
 
 
 
 
 
NET ASSETS
 
 
 
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding
$
—

 
$
—

Common stock, $.001 par value, 450,000,000 shares authorized, 180,493,481 and 177,120,791 shares issued and outstanding, respectively
180

 
177

Additional paid in capital
1,758,827

 
1,729,865

Accumulated under distributed net investment income
25,319

 
48,944

Accumulated over distributed net realized gains
(164,144
)
 
(129,161
)
Net unrealized depreciation, net of deferred taxes
(107,308
)
 
(122,912
)
Total net assets attributable to Business Development Corporation of America
1,512,874

 
1,526,913

Net assets attributable to non-controlling interest
3,131

 
2,821

Total net assets
1,516,005

 
1,529,734

 
 
 
 
Total liabilities and net assets
$
2,639,163

 
$
2,616,306

 
 
 
 
Net asset value per share attributable to Business Development Corporation of America
$
8.38

 
$
8.62




The accompanying notes are an integral part of these consolidated financial statements.

1
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)


 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Investment income:
 
 
 
 
 
 
 
 
Interest from investments
 
 
 
 
 
 
 
 
Control investments
 
$
6,168

 
$
7,696

 
$
12,321

 
$
14,603

Affiliate investments
 
6,936

 
8,955

 
15,516

 
17,405

Non-affiliate investments
 
38,074

 
38,621

 
76,969

 
77,784

Total interest from investments
 
51,178

 
55,272

 
104,806

 
109,792

Interest from cash and cash equivalents
 
120

 
57

 
190

 
99

Total interest income
 
51,298

 
55,329

 
104,996

 
109,891

Other income
 
4,963

 
2,244

 
7,936

 
4,600

Total investment income
 
56,261

 
57,573

 
112,932

 
114,491

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 

 
 

 
 

 
 

Management fees
 
9,691

 
9,593

 
19,229

 
19,006

Incentive fee on income
 
4,948

 
6,878

 
11,314

 
6,878

Interest and debt fees
 
10,810

 
9,440

 
20,660

 
18,775

Professional fees
 
1,344

 
1,460

 
2,824

 
2,780

Other general and administrative
 
1,720

 
2,133

 
3,346

 
5,014

Administrative services
 
203

 
203

 
406

 
453

Insurance
 
2

 
55

 
8

 
110

Directors' fees
 
214

 
148

 
409

 
274

Total expenses
 
28,932

 
29,910

 
58,196

 
53,290

 
 
 
 
 
 
 
 
 
Income tax expense, including excise tax
 
635

 
—

 
1,270

 
—

 
 
 
 
 
 
 
 
 
Net investment loss attributable to non-controlling interests
 
4

 
4

 
6

 
11

 
 
 
 
 
 
 
 
 
Net investment income
 
26,690

 
27,659

 
53,460

 
61,190

 
 
 
 
 
 
 
 
 
Realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
 
 
Net realized gain (loss) from investments
 
 
 
 
 
 
 
 
   Control investments
 
—

 
—

 
—

 
—

   Affiliate investments
 
(18,192
)
 
—

 
(17,221
)
 
180

   Non-affiliate investments
 
(6,020
)
 
1,207

 
(17,762
)
 
2,224

Total net realized gain (loss) from investments
 
(24,212
)
 
1,207

 
(34,983
)
 
2,404

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
 
 
 
 
 
 
 
   Control investments
 
755

 
(8,498
)
 
(5,196
)
 
(1,995
)
   Affiliate investments
 
12,852

 
24,066

 
12,014

 
15,878

   Non-affiliate investments
 
(1,275
)
 
(10,171
)
 
9,090

 
(22,929
)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
12,332

 
5,397

 
15,908

 
(9,046
)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests
 
(96
)
 
684

 
(304
)
 
684


The accompanying notes are an integral part of these consolidated financial statements.

2
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)


 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Net realized and unrealized gain (loss) on investments
 
(11,976
)
 
7,288

 
(19,379
)
 
(5,958
)
 
 
 
 
 
 
 
 
 
Net increase in net assets resulting from operations
 
$
14,714

 
$
34,947

 
$
34,081

 
$
55,232

 
 
 
 
 
 
 
 
 
Per share information - basic and diluted
 
 
 
 
 
 
 
 
Net investment income
 
$
0.15

 
$
0.15

 
$
0.30

 
$
0.34

Net increase in net assets resulting from operations
 
$
0.08

 
$
0.20

 
$
0.19

 
$
0.31

Weighted average shares outstanding
 
179,880,734

 
178,671,810

 
179,052,951

 
178,874,087




The accompanying notes are an integral part of these consolidated financial statements.

3

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(dollars in thousands except share and per share data)
(Unaudited)

 
For the Six Months Ended June 30,
 
2017
 
2016
Operations:
 
 
 
Net investment income
$
53,460

 
$
61,190

Net realized gain (loss) from investments
(34,983
)
 
2,404

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
15,908

 
(9,046
)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests
(304
)
 
684

Net increase in net assets from operations
34,081

 
55,232

Stockholder distributions:
 

 
 

Distributions
(77,086
)
 
(77,217
)
Net decrease in net assets from stockholder distributions
(77,086
)
 
(77,217
)
Capital share transactions:
 

 
 

Reinvestment of stockholder distributions
29,834

 
26,876

Repurchases of common stock
(868
)
 
(28,196
)
Net increase (decrease) in net assets from capital share transactions
28,966

 
(1,320
)
Total decrease in net assets, before non-controlling interest
(14,039
)
 
(23,305
)
Increase (decrease) in non-controlling interest
310

 
(675
)
Total decrease in net assets
(13,729
)
 
(23,980
)
Net assets at beginning of period
1,529,734

 
1,610,485

Net assets at end of period
$
1,516,005

 
$
1,586,505

 
 
 
 
Net asset value per common share attributable to Business Development Corporation of America
$
8.38

 
$
8.84

Common shares outstanding at end of period
180,493,481

 
179,089,123

 
 
 
 
Accumulated under (over) distributed net investment income
$
25,319

 
$
(7,656
)
Accumulated over distributed net realized gains
$
(164,144
)
 
$
(1,001
)


The accompanying notes are an integral part of these consolidated financial statements.

4
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)

 
For the Six Months Ended June 30,
 
2017
 
2016
Operating activities:
 
 
 
Net increase in net assets resulting from operations
$
34,081

 
$
55,232

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

Payment-in-kind interest income
(3,564
)
 
(9,984
)
Net accretion of discount on investments
(4,136
)
 
(3,593
)
Amortization of deferred financing costs
1,132

 
1,733

Amortization of discount on unsecured notes
156

 
157

Sales and repayments of investments
481,737

 
327,976

Purchases of investments
(540,723
)
 
(325,286
)
Net realized (gain) loss from investments
34,983

 
(2,404
)
Net unrealized (appreciation) depreciation on investments, gross of deferred taxes
(16,513
)
 
7,236

(Increase) decrease in operating assets:
 
 
 

Interest and dividends receivable
1,770

 
720

Prepaid expenses and other assets
(519
)
 
1,445

Receivable for unsettled trades
(22,464
)
 
(7,605
)
Increase (decrease) in operating liabilities:
 
 
 

Payable for unsettled trades
3,640

 
46,588

Management and incentive fees payable
1,931

 
6,708

Interest and debt fees payable
(3,545
)
 
2,093

Accounts payable and accrued expenses
3,196

 
3,616

Directors' fees payable
(65
)
 
6

Net cash provided by (used in) operating activities
(28,903
)
 
104,638

 
 
 
 
Financing activities:
 

 
 

Repurchases of common stock
(868
)
 
(28,196
)
Proceeds from debt
93,004

 
135,513

Payments on debt
—

 
(60,000
)
Payments for common stock repurchases
(57,636
)
 
(924
)
Payments of financing costs
(4,588
)
 
(250
)
Proceeds from affiliate
—

 
(10
)
Stockholder distributions
(47,891
)
 
(50,813
)
Increase in non-controlling interest
310

 
(675
)
Net cash used in financing activities
(17,669
)
 
(5,355
)
 
 
 
 
Net increase (decrease) in cash and cash equivalents
(46,572
)
 
99,283

Cash and cash equivalents, beginning of period
189,270

 
150,412

Cash and cash equivalents, end of period
$
142,698

 
$
249,695

Supplemental information:
 

 
 

Interest paid during the period
$
22,638

 
$
14,669

Taxes, including excise tax, paid during the period
$
21

 
$
145

Distributions reinvested
$
29,834

 
$
26,876


The accompanying notes are an integral part of these consolidated financial statements.

5
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured First Lien
Debt - 111.4% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Abaco Systems Holding Corp. (i)
 
Business Services
 
L+6.00% (7.16%), 12/7/2021
 
$
23,819

 
$
23,391

 
$
23,597

 
1.6
%
Ability Networks Inc. (j)
 
Health Care Providers & Services
 
L+5.00% (6.30%), 5/14/2021
 
13,642

 
13,571

 
13,642

 
0.9
%
Adams Publishing Group, LLC (f) (i)
 
Media
 
L+7.00% (8.30%), 11/3/2020
 
18,037

 
17,852

 
18,037

 
1.2
%
Aleris International, Inc. (x)
 
Metals & Mining
 
9.50%, 4/1/2021
 
2,882

 
3,068

 
2,971

 
0.2
%
Alvogen Pharma US, Inc. (j)
 
Health Care
 
L+5.00% (6.23%), 4/2/2022
 
14,469

 
14,346

 
14,346

 
1.0
%
Amports, Inc. (m)
 
Transportation Infrastructure
 
L+5.00% (6.30%), 5/19/2020
 
14,876

 
14,823

 
14,728

 
1.0
%
Amteck, LLC (f) (i)
 
Commercial Services & Supplies
 
L+7.50% (8.80%), 7/2/2020
 
22,313

 
22,080

 
21,866

 
1.4
%
Answers Corporation (p) (t)
 
Technology
 
L+5.00% (6.23%), 4/15/2021
 
3,022

 
2,950

 
2,991

 
0.2
%
AP Gaming I, LLC (i) (j)
 
Gaming/Lodging
 
L+5.50% (6.59%), 2/15/2024
 
29,500

 
29,427

 
29,697

 
2.0
%
APCO Holdings (i)
 
Diversified Consumer Services
 
L+6.00% (7.23%), 1/29/2022
 
8,611

 
8,400

 
8,439

 
0.6
%
Applied Merchant Systems West Coast, Inc. (m)
 
Diversified Financial Services
 
L+11.50% (12.65%), 10/26/2020
 
19,109

 
18,849

 
18,345

 
1.2
%
Applied Merchant Systems West Coast, Inc. (m)
 
Diversified Financial Services
 
L+11.50% (12.69%), 10/26/2020
 
6,500

 
6,412

 
6,240

 
0.4
%
Ascensus, Inc. (j)
 
Technology
 
L+4.00% (5.30%), 12/3/2022
 
19,736

 
18,895

 
19,736

 
1.3
%
Avaya, Inc. Term Loan B-3 (j) (t)
 
Communications Equipment
 
L+4.50% (5.67%), 10/26/2017
 
9,685

 
8,784

 
7,698

 
0.5
%
Avaya, Inc. Term Loan B-6 (j) (t)
 
Communications Equipment
 
L+5.50% (6.67%), 3/31/2018
 
8,457

 
8,461

 
6,766

 
0.5
%
Avaya, Inc. Term Loan B-7 (i) (j) (t)
 
Communications Equipment
 
L+5.25% (6.42%), 5/29/2020
 
9,793

 
9,725

 
7,815

 
0.5
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 3/9/2018
 
7,720

 
7,542

 
—

 
—
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 11/15/2017
 
2,550

 
2,550

 
—

 
—
%
BCP Raptor, LLC (j)
 
Energy Equipment & Services
 
L+4.25% (5.47%), 6/24/2024
 
20,086

 
19,885

 
19,835

 
1.3
%
BDS Solutions Group, LLC (i) (m)
 
Business Services
 
L+8.75% (10.05%), 6/1/2021
 
36,830

 
36,176

 
36,830

 
2.4
%
BDS Solutions Group, LLC (i) (m)
 
Business Services
 
L+8.75% (10.05%), 6/1/2021
 
500

 
489

 
500

 
—
%
Berner Food & Beverage LLC (f) (i)
 
Food Products
 
L+7.00% (8.30%), 3/16/2022
 
18,853

 
18,498

 
18,476

 
1.2
%
Blount International, Inc. (j)
 
Electronic Equipment, Instruments & Components
 
L+5.00% (6.22%), 4/12/2023
 
12,406

 
12,094

 
12,406

 
0.8
%
Broder Bros, Co. (m)
 
Distributors
 
L+5.75% (7.00%), 6/3/2021
 
6,764

 
6,667

 
6,763

 
0.5
%
Broder Bros, Co. (m)
 
Distributors
 
L+12.25% (13.50%), 6/3/2021
 
7,009

 
6,909

 
7,009

 
0.5
%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)
 
Food Products
 
L+12.50% (13.80%), 4/28/2019
 
17,055

 
16,406

 
3,411

 
0.2
%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)
 
Food Products
 
L+12.50% (13.80%), 4/28/2019
 
39,415

 
33,647

 
7,883

 
0.5
%

The accompanying notes are an integral part of these consolidated financial statements.

6
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Catapult Learning, LLC (i) (m)
 
Diversified Consumer Services
 
L+6.50% (7.67%), 7/16/2020
 
$
27,500

 
$
27,164

 
$
26,400

 
1.7
%
CCW, LLC (f) (i)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.25%), 3/21/2021
 
24,375

 
24,103

 
24,253

 
1.6
%
Central Security Group, Inc. (i) (j)
 
Commercial Services & Supplies
 
L+5.63% (6.85%), 10/6/2020
 
25,424

 
25,118

 
25,424

 
1.7
%
Chicken Soup for the Soul Publishing, LLC (i)
 
Media
 
L+6.25% (7.50%), 1/8/2019
 
27,686

 
27,580

 
25,886

 
1.7
%
Clover Technologies Group, LLC (j)
 
Commercial Services & Supplies
 
L+4.50% (5.71%), 5/8/2020
 
13,620

 
13,556

 
13,075

 
0.9
%
Contura Energy Inc. (j)
 
Energy Equipment & Services
 
L+5.00% (6.23%), 3/18/2024
 
7,724

 
7,649

 
7,649

 
0.5
%
ConvergeOne Holdings Corp. (j)
 
Technology
 
L+4.75% (5.97%), 6/20/2024
 
16,558

 
16,393

 
16,434

 
1.1
%
Covenant Surgical Partners, Inc. (x)
 
Health Care
 
8.75%, 8/1/2019
 
392

 
381

 
385

 
—
%
Covenant Surgical Partners, Inc. (x)
 
Health Care
 
8.75%, 8/1/2019
 
10,000

 
9,552

 
9,591

 
0.6
%
Cvent, Inc. (j)
 
Internet Software & Services
 
L+5.00% (6.30%), 11/29/2023
 
9,975

 
9,875

 
9,975

 
0.7
%
Danish CRJ LTD. (a) (p)
 
Aerospace & Defense
 
13.50%, 12/23/2028
 
20

 
—

 
20

 
—
%
DigiCert, Inc (j)
 
Internet Software & Services
 
L+5.00% (6.30%), 10/21/2021
 
10,800

 
10,565

 
10,800

 
0.7
%
Eagle Rx, LLC (i)
 
Health Care Providers & Services
 
L+4.00% (5.30%), 8/15/2019
 
14,450

 
14,419

 
14,450

 
1.0
%
ECI Acquisition Holdings, Inc. (i)
 
Internet Software & Services
 
L+6.25% (7.55%), 3/11/2019
 
12,443

 
12,422

 
12,256

 
0.8
%
ERG Holding Company (i) (m)
 
Health Care Providers & Services
 
L+6.75% (8.05%), 4/4/2019
 
34,300

 
33,948

 
33,785

 
2.2
%
Everi Payments, Inc. (j)
 
Hotels, Restaurants & Leisure
 
L+4.50% (5.75%), 5/9/2024
 
10,708

 
10,691

 
10,762

 
0.7
%
Excelitas Technologies Corp. (j)
 
Electronic Equipment, Instruments & Components
 
L+5.00% (6.30%), 11/2/2020
 
13,642

 
13,601

 
13,607

 
0.9
%
Genesys Telecommunications Laboratories, Inc. (j)
 
Diversified Telecommunication Services
 
L+4.00% (5.30%), 12/1/2023
 
24,875

 
24,531

 
24,931

 
1.6
%
Greenwave Holdings, Inc. (l)
 
Internet Software & Services
 
13.00%, 7/8/2019
 
15,932

 
15,846

 
16,250

 
1.1
%
GTCR Valor Companies, Inc. (j)
 
Software
 
L+6.00% (7.30%), 6/16/2023
 
24,750

 
23,904

 
24,855

 
1.6
%
HC Group Holdings III, Inc. (j)
 
Health Care
 
L+5.00% (6.23%), 4/7/2022
 
14,857

 
14,616

 
14,833

 
1.0
%
Hexion Inc. (x)
 
Chemicals
 
10.38%, 2/1/2022
 
920

 
920

 
908

 
0.1
%
Icynene US Acquisition Corp. (f) (i) (m)
 
Building Products
 
L+6.25% (7.42%), 11/4/2020
 
20,352

 
20,124

 
20,047

 
1.3
%
ILC Dover LP (i) (l)
 
Aerospace & Defense
 
L+9.00% (10.23%), 3/20/2020
 
14,056

 
14,025

 
12,088

 
0.8
%
Indivior Finance S.A.R.L. (j)
 
Health Care
 
L+6.00% (7.17%), 12/19/2019
 
8,091

 
8,091

 
8,091

 
0.5
%
InMotion Entertainment Group, LLC (f) (i)
 
Specialty Retail
 
L+7.75% (9.05%), 10/1/2018
 
14,059

 
13,968

 
14,059

 
0.9
%
Internap Corporation (m)
 
Communications Equipment
 
L+7.00% (8.09%), 4/6/2022
 
8,249

 
8,130

 
8,125

 
0.5
%

The accompanying notes are an integral part of these consolidated financial statements.

7
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
IPC Corp. (j)
 
Diversified Telecommunication Services
 
L+4.50% (5.67%), 8/6/2021
 
$
9,140

 
$
9,010

 
$
8,591

 
0.6
%
Jackson Hewitt, Inc. (j)
 
Diversified Consumer Services
 
L+7.00% (8.17%), 7/30/2020
 
6,720

 
6,631

 
6,451

 
0.4
%
K2 Pure Solutions NoCal, L.P. (i)
 
Chemicals
 
L+6.00% (7.23%), 2/19/2021
 
6,500

 
6,452

 
6,500

 
0.4
%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
149,531

 
149,531

 
149,531

 
9.9
%
Kissner Milling Co. Ltd. (x)
 
Chemicals
 
8.38%, 12/1/2022
 
21,199

 
21,558

 
21,994

 
1.5
%
LenderLive Services, LLC
 
Business Services
 
L+12.00% (13.17%), 8/11/2020
 
10,000

 
9,844

 
9,700

 
0.6
%
Lightsquared LP (l)
 
Diversified Telecommunications Services
 
L+8.75% (9.97%), 6/15/2020
 
10,760

 
9,962

 
10,430

 
0.7
%
Lionbridge Technologies, Inc. (i)
 
Business Services
 
L+5.50% (6.73%), 2/6/2024
 
13,833

 
13,767

 
13,764

 
0.9
%
MCS Acquisition Corp. (j)
 
Professional Services
 
L+4.75% (5.96%), 5/18/2024
 
12,600

 
12,538

 
12,537

 
0.8
%
Medical Depot Holdings, Inc. (i)
 
Health Care
 
L+5.50% (6.80%), 1/3/2023
 
20,025

 
18,358

 
18,334

 
1.2
%
Metal Services LLC (j)
 
Metals & Mining
 
L+7.50% (8.80%), 6/30/2019
 
10,861

 
10,755

 
10,861

 
0.7
%
Midwest Can Company, LLC (f) (i)
 
Energy Equipment & Services
 
L+6.75% (7.80%), 1/26/2022
 
5,092

 
5,011

 
5,003

 
0.3
%
MMM Holdings, LLC (j) (l)
 
Health Care
 
L+8.75% (10.25%), 6/28/2019
 
7,028

 
7,027

 
6,888

 
0.5
%
Monitronics International, Inc. (j)
 
Diversified Consumer Services
 
L+5.50% (6.80%), 9/30/2022
 
2,978

 
2,964

 
3,002

 
0.2
%
Montreign Operating Company, LLC (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.48%), 1/24/2023
 
27,161

 
26,691

 
27,511

 
1.8
%
Mood Media Corporation (m)
 
Business Services
 
L+7.25% (8.54%), 6/28/2022
 
14,124

 
13,815

 
13,842

 
0.9
%
Motion Recruitment Partners, LLC (f) (i)
 
Professional Services
 
L+6.00% (7.30%), 2/13/2020
 
17,444

 
17,227

 
17,444

 
1.2
%
Motorsports Aftermarket Group, Inc.
 
Auto Components
 
L+4.00% (5.42%), 5/14/2021
 
26,146

 
24,913

 
11,504

 
0.8
%
MSO of Puerto Rico, LLC (j) (l)
 
Health Care
 
L+8.75% (10.25%), 6/28/2019
 
5,110

 
5,108

 
5,007

 
0.3
%
Murray Energy Holdings Co. (j)
 
Energy Equipment & Services
 
L+7.25% (8.55%), 4/16/2020
 
14,723

 
14,045

 
14,355

 
0.9
%
MWI Holdings, Inc. (j)
 
Machinery
 
L+5.50% (6.80%), 6/28/2020
 
9,900

 
9,825

 
9,900

 
0.7
%
National Technical Systems, Inc. (i)
 
Professional Services
 
L+6.00% (7.05%), 6/12/2021
 
16,469

 
16,362

 
15,646

 
1.0
%
New Star Metals Inc. (d) (l) (m)
 
Business Services
 
L+9.50% (11.00%), 12/22/2021
 
24,510

 
24,036

 
24,039

 
1.6
%
NexSteppe Inc. (l) (t)
 
Chemicals
 
18.00%, 3/30/2018
 
10,691

 
10,457

 
4,597

 
0.3
%
Noosa Acquirer, Inc. (i) (m)
 
Food Products
 
L+5.25% (6.55%), 11/21/2020
 
25,000

 
24,788

 
25,000

 
1.6
%
NTM Acquisition Corp. (i)
 
Media
 
L+6.25% (7.55%), 6/7/2022
 
19,175

 
18,957

 
19,079

 
1.3
%
Orchid Underwriters Agency, LLC (f) (i)
 
Insurance Broker
 
L+5.00% (6.16%), 3/17/2022
 
19,950

 
19,762

 
19,950

 
1.3
%
ORG Chemical Holdings, LLC (i) (m)
 
Chemicals
 
L+5.75% (7.05%), 6/30/2022
 
27,962

 
27,403

 
27,403

 
1.8
%

The accompanying notes are an integral part of these consolidated financial statements.

8
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Otter Box Holdings, Inc. (j)
 
Electronic Equipment, Instruments & Components
 
L+4.75% (5.98%), 6/3/2020
 
$
13,604

 
$
13,442

 
$
13,468

 
0.9
%
Peabody Energy Corp. (j)
 
Metals & Mining
 
L+4.50% (5.73%), 3/31/2022
 
5,541

 
5,527

 
5,529

 
0.4
%
PeopLease Holdings, LLC (i)
 
Commercial Services & Supplies
 
L+9.00% (10.30%), 2/26/2021
 
20,000

 
19,852

 
18,500

 
1.2
%
PetVet Care Centers, LLC (f) (i)
 
Business Services
 
L+6.00% (7.22%), 6/8/2023
 
19,552

 
19,379

 
19,357

 
1.3
%
PetVet Care Centers, LLC (f) (i)
 
Business Services
 
L+6.00% (7.22%), 6/8/2023
 
92

 
92

 
91

 
—
%
PGX Holdings, Inc. (j)
 
Transportation Infrastructure
 
L+5.25% (6.48%), 9/29/2020
 
12,990

 
12,932

 
12,991

 
0.9
%
Premier Dental Services, Inc. (i) (j)
 
Health Care
 
L+6.50% (7.55%), 6/30/2023
 
28,846

 
28,557

 
28,629

 
1.9
%
Premier Global Services, Inc. (j)
 
Diversified Telecommunication Services
 
L+6.50% (7.59%), 12/8/2021
 
9,614

 
9,309

 
9,560

 
0.6
%
Pre-Paid Legal Services, Inc. (j)
 
Diversified Consumer Services
 
L+5.25% (6.50%), 7/1/2019
 
12,130

 
12,150

 
12,130

 
0.8
%
Pride Plating, Inc. (i)
 
Aerospace & Defense
 
L+5.50% (6.80%), 6/13/2019
 
8,612

 
8,568

 
8,440

 
0.6
%
PSKW, LLC (i)
 
Health Care Providers & Services
 
L+4.25% (5.55%), 11/25/2021
 
1,575

 
1,563

 
1,575

 
0.1
%
PSKW, LLC (m)
 
Health Care Providers & Services
 
L+8.29% (9.59%), 11/25/2021
 
17,750

 
17,489

 
17,750

 
1.2
%
PT Network, LLC (f) (i)
 
Health Care
 
L+6.50% (7.72%), 11/30/2021
 
17,020

 
16,870

 
17,016

 
1.1
%
PT Network, LLC (f)
 
Health Care
 
L+6.50% (7.72%), 11/30/2021
 
1,555

 
1,555

 
1,554

 
0.1
%
Pure Barre, LLC (f) (i) (m)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.23%), 6/11/2020
 
26,399

 
26,126

 
26,135

 
1.7
%
Pure Barre, LLC (f)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.23%), 6/11/2020
 
200

 
200

 
198

 
—
%
Resco Products, Inc. (i)
 
Metals & Mining
 
L+6.25% (7.48%), 3/7/2020
 
10,000

 
10,000

 
9,750

 
0.6
%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)
 
Diversified Consumer Services
 
L+6.50% (7.75%), 2/25/2020
 
21,129

 
20,904

 
21,129

 
1.4
%
Sage Automotive Holdings, Inc. (j)
 
Auto Components
 
L+5.00% (6.23%), 11/8/2022
 
14,925

 
14,790

 
14,925

 
1.0
%
SHO Holding II Corporation (j)
 
Specialty Retail
 
L+5.00% (6.23%), 10/27/2022
 
11,820

 
11,728

 
11,761

 
0.8
%
Skillsoft Corp. (j)
 
Technology
 
L+4.75% (5.98%), 4/28/2021
 
7,536

 
7,140

 
7,112

 
0.5
%
Squan Holding Corp. (p)
 
Diversified Telecommunication Services
 
L+4.00% (5.30%), 10/10/2019
 
10,315

 
7,339

 
6,808

 
0.4
%
STG-Fairway Acquisitions, Inc. (j)
 
Professional Services
 
L+5.25% (6.55%), 6/30/2022
 
13,359

 
13,213

 
12,758

 
0.8
%
SunGard Availability Services Capital, Inc. (j)
 
IT Services
 
L+5.00% (6.23%), 3/31/2019
 
8,741

 
8,709

 
8,566

 
0.6
%
Tax Defense Network, LLC (f) (i) (l) (m) (t)
 
Diversified Consumer Services
 
L+12.50% (13.80%), 8/28/2019
 
26,799

 
26,532

 
15,417

 
1.0
%
Tillamook Country Smoker, LLC (f) (i)
 
Food Products
 
L+5.75% (6.97%), 5/19/2022
 
10,244

 
10,094

 
10,090

 
0.7
%
Tillamook Country Smoker, LLC (f) (i)
 
Food Products
 
L+5.75% (6.97%), 5/19/2022
 
135

 
135

 
133

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

9
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Trilogy International Partners, LLC  (x)
 
Diversified Telecommunication Services
 
8.88%, 5/1/2022
 
$
14,875

 
$
14,803

 
$
15,489

 
1.0
%
Trojan Battery Company, LLC (j)
 
Auto Components
 
L+4.75% (5.99%), 6/12/2021
 
10,532

 
10,471

 
10,453

 
0.7
%
Turning Tech LLC (i)
 
Software
 
L+10.75% (12.05%), 6/30/2020
 
24,226

 
23,971

 
20,593

 
1.4
%
Twenty Eighty, Inc. (l) (p)
 
Media
 
8.00%, 3/31/2020
 
6,074

 
4,041

 
3,948

 
0.3
%
Twenty Eighty, Inc. (l) (p)
 
Media
 
L+8.00% (9.12%), 3/31/2020
 
2,845

 
2,285

 
2,703

 
0.2
%
Twenty Eighty, Inc. (l) (p)
 
Media
 
9.00%, 3/31/2020
 
5,506

 
3,673

 
3,029

 
0.2
%
United Central Industrial Supply Company, LLC (i) (j)
 
Commercial Services & Supplies
 
L+7.25% (8.50%), 10/9/2018
 
8,549

 
8,513

 
7,438

 
0.5
%
VCVH Holding Corp. (j)
 
Health Care
 
L+5.00% (6.30%), 6/1/2023
 
12,870

 
12,761

 
12,831

 
0.8
%
Veritas US Inc. (j)
 
Technology
 
L+4.50% (5.80%), 1/27/2023
 
25,131

 
25,206

 
25,206

 
1.7
%
VetCor Professional Practices LLC (f) (i)
 
Diversified Consumer Services
 
L+6.25% (7.55%), 4/20/2021
 
4,934

 
4,896

 
4,835

 
0.3
%
VetCor Professional Practices LLC (f) (i)
 
Diversified Consumer Services
 
L+6.25% (7.55%), 4/20/2021
 
634

 
634

 
621

 
—
%
VetCor Professional Practices LLC (f) (i)
 
Diversified Consumer Services
 
L+6.25% (7.55%), 4/20/2021
 
9,800

 
9,737

 
9,604

 
0.6
%
Xplornet Communications, Inc. (a) (j)
 
Diversified Telecommunication Services
 
L+6.00% (7.30%), 9/9/2021
 
12,338

 
12,258

 
12,461

 
0.8
%
Sub Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
$
1,777,310

 
$
1,688,412

 
111.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Second Lien Debt - 18.8% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Anchor Glass Container Corporation (m)
 
Containers & Packaging
 
L+7.75% (8.81%), 12/7/2024
 
$
20,000

 
$
19,814

 
$
20,242

 
1.3
%
Answers Corporation (p) (t)
 
Technology
 
L+5.00% (6.23%), 9/15/2021
 
4,699

 
4,028

 
4,558

 
0.3
%
Appriss Holdings, Inc. (m)
 
IT Services
 
L+9.25% (10.55%), 5/21/2021
 
13,985

 
13,856

 
13,705

 
0.9
%
Asurion LLC (j)
 
IT Services
 
L+7.50% (8.73%), 3/3/2021
 
10,000

 
9,401

 
10,038

 
0.7
%
Boston Market Corporation (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.55%), 12/16/2018
 
24,226

 
24,111

 
24,226

 
1.6
%
BrandMuscle Holdings Inc. (m)
 
Internet Software & Services
 
L+8.50% (9.65%), 6/1/2022
 
24,500

 
24,128

 
24,500

 
1.6
%
Cayan Holdings (m)
 
IT Services
 
L+8.50% (9.80%), 3/24/2022
 
20,000

 
19,609

 
20,000

 
1.3
%
CDS U.S. Intermediate Holdings, Inc. (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.55%), 7/8/2023
 
7,927

 
7,798

 
7,967

 
0.5
%
CIG Financial, LLC (a) (f) (m)
 
Consumer Finance
 
10.50%, 6/30/2019
 
13,000

 
12,948

 
12,415

 
0.8
%
CIG Financial, LLC (a) (f)
 
Consumer Finance
 
10.50%, 6/30/2019
 
1,000

 
1,000

 
955

 
0.1
%
CREDITCORP (x)
 
Consumer Finance
 
12.00%, 7/15/2018
 
13,250

 
13,227

 
11,412

 
0.8
%
Epic Health Services, Inc. (m)
 
Health Care Providers & Services
 
L+8.00% (9.23%), 3/17/2025
 
15,000

 
14,781

 
14,780

 
1.0
%
Hertz Corp. (x)
 
Automobiles
 
7.63%, 6/1/2022
 
21,165

 
21,165

 
21,112

 
1.4
%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)
 
Hotels, Restaurants & Leisure
 
L+8.75% (10.05%), 2/10/2021
 
19,900

 
19,661

 
19,801

 
1.3
%

The accompanying notes are an integral part of these consolidated financial statements.

10
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
J. C. Bromac Corporation (dba EagleRider, Inc.) (f)
 
Hotels, Restaurants & Leisure
 
L+8.75% (10.05%), 2/10/2021
 
$
4,484

 
$
4,484

 
$
4,461

 
0.3
%
NCP Finance Limited Partnership (j)
 
Consumer Finance
 
L+9.75% (11.00%), 10/1/2018
 
12,073

 
12,048

 
11,409

 
0.8
%
Rx30 HoldCo, Inc. (m)
 
Health Care Technology
 
L+9.00% (10.15%), 6/15/2022
 
11,500

 
11,337

 
11,500

 
0.8
%
Schulman Associates Institutional Review Board, Inc. (m)
 
Life Sciences Tools & Services
 
L+8.00% (9.15%), 6/3/2021
 
17,000

 
16,794

 
17,000

 
1.1
%
TierPoint, LLC (m)
 
Technology
 
L+7.25% (8.48%), 5/5/2025
 
5,334

 
5,282

 
5,281

 
0.3
%
U.S. Auto (m)
 
Diversified Consumer Services
 
L+11.75% (12.81%), 6/8/2020
 
30,000

 
29,684

 
29,400

 
1.9
%
Sub Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
$
285,156

 
$
284,762

 
18.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Subordinated Debt - 4.9% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Gold, Inc. (m)
 
Textiles, Apparel & Luxury Goods
 
10.00%, 6/30/2019
 
$
7,003

 
$
6,984

 
$
5,953

 
0.4
%
Park Ave RE Holdings, LLC (d) (l) (o)
 
Real Estate Management & Development
 
L+8.00% (13.00%), 12/29/2017
 
37,192

 
37,192

 
37,192

 
2.4
%
Steel City Media (l)
 
Media
 
16.00%, 3/29/2020
 
22,207

 
21,969

 
20,874

 
1.4
%
Xplornet Communications, Inc. (a) (j)
 
 
 
9.63%, 6/1/2022
 
10,000

 
10,000

 
10,375

 
0.7
%
Zimbra, Inc. (t)
 
Software
 
12.00%, 7/10/2018
 
287

 
287

 
468

 
—
%
Sub Total Subordinated Debt
 
 
 
 
 
 
 
$
76,432

 
$
74,862

 
4.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - 12.4% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - Debt Investment
 
 
 
 
 
 
 
 
 
 
 
 
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)
 
Diversified Investment Vehicles
 
L+7.50% (8.66%), 1/19/2027
 
$
10,728

 
$
9,181

 
$
8,612

 
0.6
%
Collateralized Securities - Equity Investment (n)
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
2.08%, 4/16/2026
 
$
40,250

 
$
17,487

 
$
14,493

 
1.0
%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.00%, 1/16/2026
 
31,000

 
9,362

 
6,157

 
0.4
%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.00%, 7/18/2026
 
35,250

 
12,588

 
9,045

 
0.6
%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
11.51%, 1/19/2027
 
31,575

 
21,113

 
16,853

 
1.1
%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.00%, 1/15/2027
 
35,057

 
17,832

 
11,607

 
0.8
%
MidOcean Credit CLO II, LLC Income Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
8.58%, 1/29/2025
 
37,600

 
21,820

 
19,624

 
1.3
%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
9.31%, 7/21/2026
 
40,250

 
22,145

 
20,177

 
1.3
%

The accompanying notes are an integral part of these consolidated financial statements.

11
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
MidOcean Credit CLO IV, LLC Income Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
10.81%, 4/15/2027
 
$
21,500

 
$
14,316

 
$
12,727

 
0.7
%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
21.75%, 7/25/2025
 
31,603

 
22,825

 
26,141

 
1.7
%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
9.86%, 3/20/2025
 
38,000

 
16,617

 
15,589

 
1.0
%
Related Fee Agreements (a) (s)
 
Diversified Investment Vehicles
 
 
 
—

 
8,750

 
6,878

 
0.5
%
Silver Spring CLO, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.00%, 10/16/2026
 
31,500

 
16,296

 
11,403

 
0.8
%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.79%, 5/1/2026
 
36,000

 
13,757

 
8,985

 
0.6
%
Sub Total Collateralized Securities
 
 
 
 
 
 
 
$
224,089

 
$
188,291

 
12.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity/Other - 13.6% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Answers Corporation (e) (p)
 
Technology
 

 
909

 
$
11,361

 
$
13,873

 
0.9
%
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)
 
Software
 
Expire 3/9/2025
 
306,122

 
—

 
—

 
—
%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)
 
Software
 
 
 
2,000,000

 
2,000

 
—

 
—
%
California Resources Corp. - Preferred Equity (u)
 
Metals & Mining
 
9.00%
 
15,025,000

 
14,724

 
14,725

 
1.0
%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)
 
Food Products
 
 
 
6,023

 
1,630

 
—

 
—
%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)
 
Food Products
 
 
 
24,656

 
—

 
—

 
—
%
Danish CRJ LTD. (a) (e) (p) (r)
 
Aerospace & Defense
 
 
 
5,002

 
1

 
254

 
—
%
Evolution Research Group - Preferred Equity (e)
 
Health Care Providers & Services
 
8.00%
 
500,000

 
500

 
624

 
—
%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)
 
Internet Software & Services
 
Expire 8/16/2025
 
172,414

 
—

 
284

 
—
%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
137

 
—

 
10,826

 
0.7
%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
3,250,000

 
2,838

 
3,250

 
0.2
%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)
 
Aerospace & Defense
 
13.00%
 
4,413,472

 
4,161

 
4,413

 
0.3
%
Mood Media Corporation - Warrants (e)
 
Business Services
 

 
121

 
27

 
119

 
—
%
New Star Metals Inc. - Warrants (e)
 
Business Services
 
Expire 12/22/2036
 
133,074

 
151

 
156

 
—
%
NexSteppe Inc. - Series C Preferred Stock Warrant (e)
 
Chemicals
 
Expire 3/9/2025
 
176,585

 
500

 
—

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

12
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (y)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
NMFC Senior Loan Program I, LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
50,000

 
$
50,000

 
$
50,369

 
3.3
%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
113

 
703

 
0.1
%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
—

 
12

 
—
%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)
 
Real Estate Management & Development
 
 
 
1,000

 
—

 
7,236

 
0.5
%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)
 
Real Estate Management & Development
 
8.00%
 
47,290

 
23,645

 
23,645

 
1.6
%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)
 
Diversified Investment Vehicles
 
 
 
$
7,262

 
7,262

 
7,225

 
0.5
%
South Grand MM CLO I, LLC (a) (f) (p)
 
Diversified Investment Vehicles
 
 
 
$
29,524

 
29,095

 
28,491

 
1.9
%
Squan Holding Corp. - Class A Common Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
180,835

 
—

 
—

 
—
%
Squan Holding Corp. - Series A Preferred Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
8,962

 
—

 
—

 
—
%
Tax Defense Network, LLC (e)
 
Diversified Consumer Services
 
 
 
425

 
425

 
—

 
—
%
Tennenbaum Waterman Fund, L.P. (a)
 
Diversified Investment Vehicles
 
 
 
$
10,000

 
10,000

 
10,712

 
0.7
%
TCG BDC, Inc. - Common Stock (fka Carlyle GMS Finance, Inc.) (a)
 
Diversified Investment Vehicles
 
 
 
404,899

 
7,765

 
7,292

 
0.5
%
The SAVO Group, Ltd. - Warrants (e)
 
Internet Software & Services
 
Expire 3/23/2023
 
138,000

 
—

 
—

 
—
%
THL Credit Greenway Fund II LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
13,806

 
13,806

 
13,043

 
0.9
%
Twentyeighty, Inc. - Class A Common Equity (e)
 
Media
 
 
 
54,586

 
—

 
—

 
—
%
U.S. Auto - Series A Common Units (e) (u)
 
Diversified Consumer Services
 
 
 
10,000

 
10

 
—

 
—
%
U.S. Auto - Series A Preferred Units (e) (u)
 
Diversified Consumer Services
 
 
 
490

 
490

 
406

 
—
%
World Business Lenders, LLC (e)
 
Consumer Finance
 
 
 
3,750,000

 
3,750

 
3,759

 
0.2
%
Xplornet Communications, Inc. - Warrants (a) (e)
 
Diversified Telecommunication Services
 
Expire 10/25/2023
 
10,284

 
—

 
4,344

 
0.3
%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)
 
Software
 
Expire 7/11/2023
 
1,000,000

 
—

 
211

 
—
%
Sub Total Equity/Other
 
 
 
 
 
 
 
$
184,254

 
$
205,972

 
13.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS - 161.1% (b)
 
 
 
 
 
 
 
$
2,547,241

 
$
2,442,299

 
161.1
%
_____________
(a)
All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the Investment Company Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, we may not require any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.5% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)
Percentages are based on net assets of $ 1,516,005 as of June 30, 2017 .

The accompanying notes are an integral part of these consolidated financial statements.

13
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)


(c)
The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the consolidated financial statements).
(d)
As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).
(e)
Non-income producing at June 30, 2017 .
(f) The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of June 30, 2017 are comprised of the following:
Portfolio Company Name
 
Investment Type
 
Commitment Type
 
Original Commitment
 
Remaining Commitment
Adams Publishing Group, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
$
4,432

 
$
4,432

Amteck, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
5,000

 
5,000

Berner Food & Beverage LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,693

 
2,693

CCW, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

CIG Financial, LLC
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
4,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Revolver term loan
 
5,000

 
5,000

InMotion Entertainment Group, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,200

 
1,843

J. C. Bromac Corporation (dba EagleRider, Inc.)
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
516

Midwest Can Company, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
828

 
828

Midwest Can Company, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
1,035

 
883

Motion Recruitment Partners, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,000

 
2,000

Orchid Underwriters Agency, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,200

 
2,200

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
Equity capital commitment
 
10,800

 
538

PetVet Care Centers, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
6,704

 
6,704

PetVet Care Centers, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
1,676

 
1,584

PT Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
6,579

 
5,024

PT Network, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
1,316

 
1,316

Pure Barre, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,500

 
2,300

RVNB Holdings, Inc. (dba All My Sons Moving & Storage)
 
Senior Secured First Lien Debt
 
Revolver term loan
 
852

 
852

South Grand MM CLO I, LLC
 
Equity/Other
 
Equity capital commitment
 
35,000

 
5,477

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
1,000

Tillamook Country Smoker, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,696

 
2,561

VetCor Professional Practices LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,574

 
1,940

Total
 
 
 
 
 
$
119,085

 
$
66,691


(g)
The investment is subject to a three year lock-up restriction on withdrawals in year 4.
(h)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
(i)
The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)
The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(k)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.






The accompanying notes are an integral part of these consolidated financial statements.

14
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)


(l) For the three months ended June 30, 2017 , the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in Rate
 
PIK Earned for the three months ended June 30, 2017
Basho Technologies, Inc.
 
Senior Secured First Lien Debt
 
17.00
%
 
—
%
 
17.00
%
 
$
—

Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)
 
Senior Secured First Lien Debt
 
—
%
 
13.80
%
 
13.80
%
 
—

Greenwave Holdings, Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
3.00
%
 
13.00
%
 
120

ILC Dover LP
 
Senior Secured First Lien Debt
 
8.23
%
 
2.00
%
 
10.23
%
 
71

Kahala Ireland OpCo Designated Activity Company
 
Senior Secured First Lien Debt
 
—
%
 
13.00
%
 
13.00
%
 
62

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Lightsquared LP
 
Senior Secured First Lien Debt
 
—
%
 
9.97
%
 
9.97
%
 
264

MMM Holdings, LLC
 
Senior Secured First Lien Debt
 
10.25
%
 
—
%
 
10.25
%
 
—

MSO of Puerto Rico, LLC
 
Senior Secured First Lien Debt
 
10.25
%
 
—
%
 
10.25
%
 
—

New Star Metals Inc.
 
Senior Secured First Lien Debt
 
11.00
%
 
—
%
 
11.00
%
 
(180
)
NexSteppe Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
8.00
%
 
18.00
%
 
—

Park Ave RE Holdings, LLC
 
Subordinated Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Steel City Media
 
Subordinated Debt
 
8.00
%
 
8.00
%
 
16.00
%
 
437

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
9.80
%
 
4.00
%
 
13.80
%
 
—

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
4.62
%
 
4.50
%
 
9.12
%
 
22

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
1.00
%
 
7.00
%
 
8.00
%
 
106

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
0.25
%
 
8.75
%
 
9.00
%
 
119

Xplornet Communications, Inc.
 
Subordinated Debt
 
—
%
 
13.00
%
 
13.00
%
 
946

Total
 
 
 
 
 
 
 
 
 
$
1,967


(m)
The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(n)
For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (v) for a further description of an equity investment in a Collateralized Security.
(o)
The provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when we own 25% or less of the portfolio company's voting securities and "controlled" when we own more than 25% of the portfolio company's voting securities.
(p)
The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when we own less than 5% of a portfolio company's voting securities and "affiliated" when we own 5% or more of a portfolio company's voting securities.
(q)
Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled investments.
(r)
The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)
Related Fee Agreements consist of one investment with a fair value of $0.5 million that is classified as a Non-affiliated Investment and five investments with a total fair value of $6.3 million that are classified as Affiliated Investments.
(t)
The investment is on non-accrual status as of June 30, 2017 .
(u)
Investments are held in the taxable wholly-owned, consolidated subsidiary, 54 th Street Equity Holdings, Inc.
(v)
The Collateralized Securities - debt investments and equity investments are considered equity positions in the Collateralized Loan Obligation funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(w)
The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.
(x)
The Company's investment or a portion thereof is pledged as collateral under the JPMC PB Account. Individual investments can be divided into parts which are pledged to separate credit facilities.
(y)
The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate ("LIBOR" or "L") or Prime ("P") and which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at June 30, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.

The accompanying notes are an integral part of these consolidated financial statements.

15
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


June 30, 2017
(Unaudited)


The following table shows the portfolio composition by industry grouping based on fair value at June 30, 2017 :

 
At June 30, 2017
 
Investments at
Fair Value
 
Percentage of
Total Portfolio
Diversified Investment Vehicles
$
305,423

 
12.5
%
Aerospace & Defense
188,822

 
7.7

Hotels, Restaurants & Leisure
145,314

 
5.9

Business Services
141,995

 
5.8

Diversified Consumer Services
137,834

 
5.7

Health Care
137,505

 
5.6

Diversified Telecommunication Services
102,989

 
4.2

Health Care Providers & Services
96,606

 
4.0

Technology
95,191

 
3.9

Media
93,556

 
3.8

Commercial Services & Supplies
86,303

 
3.5

Internet Software & Services
74,065

 
3.0

Real Estate Management & Development
68,073

 
2.8

Food Products
64,993

 
2.7

Chemicals
61,402

 
2.5

Professional Services
58,385

 
2.4

IT Services
52,309

 
2.2

Energy Equipment & Services
46,842

 
1.9

Software
46,127

 
1.9

Metals & Mining
43,836

 
1.8

Consumer Finance
39,950

 
1.7

Electronic Equipment, Instruments & Components
39,481

 
1.6

Auto Components
36,882

 
1.5

Communications Equipment
30,404

 
1.3

Gaming/Lodging
29,697

 
1.2

Transportation Infrastructure
27,719

 
1.1

Specialty Retail
25,820

 
1.1

Diversified Financial Services
24,585

 
1.0

Automobiles
21,112

 
0.9

Insurance
20,665

 
0.8

Containers & Packaging
20,242

 
0.8

Building Products
20,047

 
0.8

Life Sciences Tools & Services
17,000

 
0.7

Distributors
13,772

 
0.6

Health Care Technology
11,500

 
0.5

Machinery
9,900

 
0.4

Textiles, Apparel & Luxury Goods
5,953

 
0.2

Total
$
2,442,299

 
100.0
%


The accompanying notes are an integral part of these consolidated financial statements.

16
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured First Lien
Debt - 106.6% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Abaco Systems Holding Corp. (i)
 
Business Services
 
L+6.00% (7.00%), 12/7/2021
 
$
23,940

 
$
23,462

 
$
23,461

 
1.5
%
Ability Networks Inc. (j)
 
Health Care Providers & Services
 
L+5.00% (6.00%), 5/14/2021
 
13,712

 
13,631

 
13,712

 
0.9
%
Adams Publishing Group, LLC (i)
 
Media
 
P+4.25% (8.00%), 11/3/2020
 
15,178

 
14,904

 
15,178

 
1.0
%
Affinion Group, Inc. (j)
 
Business Services
 
L+5.25% (6.75%), 4/30/2018
 
9,974

 
9,827

 
9,910

 
0.6
%
Amports, Inc. (m)
 
Transportation Infrastructure
 
L+8.14% (9.14%), 5/19/2020
 
15,000

 
14,936

 
14,775

 
1.0
%
Amteck, LLC (f) (i)
 
Commercial Services & Supplies
 
L+8.50% (9.50%), 7/2/2020
 
23,438

 
23,063

 
22,852

 
1.5
%
Answers Corporation (i) (j) (t)
 
Internet Software & Services
 
P+6.25% (10.00%), 10/3/2021
 
34,475

 
33,589

 
17,065

 
1.1
%
AP Gaming I, LLC (i) (j)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 12/20/2020
 
30,353

 
30,148

 
30,150

 
2.0
%
APCO Holdings (i)
 
Diversified Consumer Services
 
L+6.00% (7.00%), 1/29/2022
 
8,868

 
8,632

 
8,646

 
0.6
%
Applied Merchant Systems West Coast, Inc. (m)
 
Diversified Financial Services
 
L+11.50% (12.50%), 10/26/2020
 
26,122

 
25,714

 
25,599

 
1.7
%
Ascensus, Inc. (j)
 
IT Services
 
L+4.50% (5.50%), 12/3/2022
 
17,831

 
16,915

 
17,786

 
1.2
%
Asurion LLC (j)
 
IT Services
 
L+3.75% (4.75%), 11/3/2023
 
249

 
248

 
253

 
—
%
Avaya, Inc. Term Loan B-3 (j)
 
Communications Equipment
 
L+4.50% (5.39%), 10/26/2017
 
9,685

 
8,784

 
8,384

 
0.5
%
Avaya, Inc. Term Loan B-6 (j)
 
Communications Equipment
 
L+5.50% (6.50%), 3/31/2018
 
8,457

 
8,461

 
7,353

 
0.5
%
Avaya, Inc. Term Loan B-7 (i) (j)
 
Communications Equipment
 
L+5.25% (6.25%), 5/29/2020
 
9,793

 
9,725

 
8,489

 
0.5
%
AxleTech International, LLC (i)
 
Machinery
 
L+6.50% (7.50%), 1/5/2021
 
19,600

 
19,467

 
18,914

 
1.2
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 3/9/2018
 
10,595

 
10,294

 
3,814

 
0.2
%
Basho Technologies, Inc. (d) (t)
 
Software
 
17.00%, 3/31/2017
 
2,550

 
2,550

 
918

 
0.1
%
BDS Solutions Group, LLC (f) (i) (m)
 
Business Services
 
L+8.75% (9.59%), 6/1/2021
 
36,830

 
36,094

 
36,830

 
2.4
%
Blount International, Inc. (j)
 
Machinery
 
L+6.25% (7.25%), 4/12/2023
 
12,469

 
12,128

 
12,578

 
0.8
%
Broder Bros, Co. (m)
 
Distributors
 
L+5.75% (7.00%), 6/3/2021
 
7,275

 
7,158

 
7,275

 
0.5
%
Broder Bros, Co. (m)
 
Distributors
 
L+12.25% (13.50%), 6/3/2021
 
7,350

 
7,232

 
7,350

 
0.5
%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)
 
Food Products
 
L+12.50% (13.50%), 4/28/2019
 
56,470

 
50,053

 
19,708

 
1.3
%
Catapult Learning, LLC (i) (m)
 
Diversified Consumer Services
 
L+7.99% (8.99%), 7/16/2020
 
27,500

 
27,109

 
26,537

 
1.7
%
CCW, LLC (f) (i)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 3/21/2021
 
24,625

 
24,268

 
24,379

 
1.6
%
Central Security Group, Inc. (i) (j)
 
Commercial Services & Supplies
 
L+5.63% (6.63%), 10/6/2020
 
25,554

 
25,200

 
25,458

 
1.7
%
CH Hold Corp. (f) (i)
 
Diversified Consumer Services
 
L+5.25% (6.25%), 11/20/2019
 
16,572

 
16,434

 
16,531

 
1.1
%
Chicken Soup for the Soul Publishing, LLC (i)
 
Media
 
L+6.25% (7.50%), 1/8/2019
 
28,543

 
28,331

 
27,116

 
1.8
%

The accompanying notes are an integral part of these consolidated financial statements.

17
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Clover Technologies Group, LLC (j)
 
Commercial Services & Supplies
 
P+3.50% (7.25%), 5/8/2020
 
$
14,012

 
$
13,935

 
$
13,265

 
0.9
%
Contura Energy Inc.
 
Energy Equipment & Services
 
10.00%, 8/1/2021
 
10,000

 
10,534

 
10,650

 
0.7
%
ConvergeOne Holdings Corp. (j)
 
Diversified Consumer Services
 
L+5.38% (6.38%), 6/17/2020
 
16,601

 
16,470

 
16,518

 
1.1
%
Covenant Surgical Partners
 
Health Care
 
(8.75%), 8/1/2019
 
10,000

 
9,457

 
9,675

 
0.6
%
Cvent, Inc. (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 11/29/2023
 
10,000

 
9,900

 
10,075

 
0.7
%
Danish CRJ LTD. (a) (p)
 
Aerospace & Defense
 
13.50%
 
20

 
7

 
20

 
—
%
DigiCert, Inc (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 10/21/2021
 
10,890

 
10,627

 
10,836

 
0.7
%
Doskocil Manufacturing Company, Inc. (m)
 
Household Durables
 
L+8.40% (9.40%), 11/10/2020
 
15,000

 
14,797

 
15,000

 
1.0
%
Eagle Rx, LLC (i)
 
Health Care Providers & Services
 
L+6.00% (7.00%), 8/15/2019
 
14,533

 
14,495

 
14,533

 
1.0
%
ECI Acquisition Holdings, Inc. (i)
 
Internet Software & Services
 
L+6.25% (7.25%), 3/11/2019
 
12,775

 
12,738

 
12,584

 
0.8
%
Emergency Communications Network, LLC (m)
 
Internet Software & Services
 
L+10.08% (11.33%), 6/12/2021
 
19,750

 
19,530

 
19,552

 
1.3
%
ERG Holding Company (i) (m)
 
Health Care Providers & Services
 
L+6.75% (8.00%), 4/4/2019
 
34,650

 
34,194

 
34,130

 
2.2
%
Excelitas Technologies Corp. (j)
 
Electronic Equipment, Instruments & Components
 
L+5.00% (6.00%), 11/2/2020
 
13,761

 
13,714

 
13,451

 
0.9
%
Genesys Telecommunications Laboratories, Inc. (j)
 
Diversified Telecommunication Services
 
L+5.25% (6.25%), 12/1/2023
 
25,000

 
24,628

 
25,422

 
1.7
%
Greenwave Holdings, Inc. (l)
 
Internet Software & Services
 
13.00%, 7/8/2019
 
15,693

 
15,543

 
15,693

 
1.0
%
GTCR Valor Companies, Inc. (j)
 
Software
 
L+6.00% (7.00%), 6/16/2023
 
24,875

 
23,956

 
24,587

 
1.6
%
HC Group Holdings III, Inc. (j)
 
Health Care
 
L+5.00% (6.00%), 4/7/2022
 
14,932

 
14,665

 
14,298

 
0.9
%
Icynene US Acquisition Corp. (f) (i) (m)
 
Building Products
 
L+6.25% (7.25%), 11/4/2020
 
21,286

 
21,012

 
21,286

 
1.4
%
Icynene US Acquisition Corp. (f)
 
Building Products
 
L+6.25% (7.25%), 11/4/2019
 
1,000

 
1,000

 
1,000

 
0.1
%
ILC Dover LP (i) (l)
 
Aerospace & Defense
 
L+9.00% (10.00%), 3/20/2020
 
14,101

 
14,064

 
11,986

 
0.8
%
Indivior Finance S.A.R.L. (j)
 
Health Care
 
L+6.00% (7.00%), 12/19/2019
 
9,244

 
9,244

 
9,279

 
0.6
%
InMotion Entertainment Group, LLC (f) (i)
 
Specialty Retail
 
L+7.75% (9.00%), 10/1/2018
 
14,450

 
14,328

 
14,450

 
0.9
%
IPC Corp. (j)
 
Diversified Telecommunication Services
 
L+4.50% (5.50%), 8/6/2021
 
9,187

 
9,040

 
8,796

 
0.6
%
Jackson Hewitt, Inc. (j)
 
Diversified Consumer Services
 
L+7.00% (8.00%), 7/30/2020
 
6,860

 
6,810

 
6,577

 
0.4
%
K2 Pure Solutions NoCal, L.P. (i)
 
Chemicals
 
L+6.00% (7.00%), 8/19/2019
 
6,500

 
6,442

 
6,500

 
0.4
%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
149,409

 
149,409

 
149,409

 
9.8
%
Kahala US OpCo LLC (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
2,690

 
2,690

 
2,690

 
0.2
%

The accompanying notes are an integral part of these consolidated financial statements.

18
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Kissner HLD
 
Chemicals
 
8.38%, 12/1/2022
 
$
9,960

 
$
9,942

 
$
10,060

 
0.7
%
Land Holdings I, LLC (m)
 
Hotels, Restaurants & Leisure
 
12.00%, 6/26/2019
 
14,250

 
14,108

 
14,250

 
0.9
%
LenderLive Services, LLC
 
Business Services
 
L+12.00% (12.69%), 8/11/2020
 
10,000

 
9,819

 
9,800

 
0.6
%
Lightsquared LP (l)
 
Diversified Telecommunications Services
 
L+8.75% (9.75%), 6/15/2020
 
10,246

 
9,371

 
9,529

 
0.6
%
MCS AMS Sub-Holdings LLC (j)
 
Real Estate Management & Development
 
L+6.50% (7.50%), 10/15/2019
 
11,906

 
11,701

 
11,073

 
0.7
%
Medical Depot Holdings, Inc. (i)
 
Health Care
 
L+5.50% (6.50%), 1/3/2023
 
20,278

 
18,453

 
18,504

 
1.2
%
Metal Services LLC (j)
 
Metals & Mining
 
L+7.50% (8.50%), 6/30/2019
 
10,917

 
10,783

 
10,944

 
0.7
%
MMM Holdings, LLC (j) (l)
 
Health Care
 
L+8.25% (9.75%), 6/28/2019
 
7,153

 
7,072

 
6,938

 
0.5
%
Monitronics International, Inc. (j)
 
Diversified Consumer Services
 
L+5.50% (6.50%), 9/30/2022
 
2,993

 
2,978

 
3,018

 
0.2
%
Montreign Operating Company, LLC (m)
 
Hotels, Restaurants, & Leisure
 
L+8.25% (9.25%), 1/24/2023
 
25,000

 
24,500

 
25,187

 
1.6
%
Motion Recruitment Partners, LLC (f) (i)
 
Professional Services
 
L+6.00% (7.00%), 2/13/2020
 
18,000

 
17,733

 
18,000

 
1.2
%
Motorsports Aftermarket Group, Inc. (i) (j)
 
Auto Components
 
L+4.00% (5.00%), 5/14/2021
 
26,309

 
24,914

 
12,716

 
0.8
%
MSO of Puerto Rico, LLC (j) (l)
 
Health Care
 
L+8.25% (9.75%), 6/28/2019
 
5,200

 
5,142

 
5,044

 
0.3
%
Murray Energy Holdings Co.
 
Energy Equipment & Services
 
L+7.25% (8.25%), 4/16/2020
 
9,974

 
9,222

 
9,506

 
0.6
%
MWI Holdings, Inc. (j)
 
Machinery
 
L+5.50% (6.50%), 6/28/2020
 
9,950

 
9,862

 
9,950

 
0.6
%
National Technical Systems, Inc. (f) (i)
 
Professional Services
 
L+6.25% (7.25%), 6/12/2021
 
19,326

 
19,072

 
18,359

 
1.2
%
New Star Metals Inc. (l)
 
Business Services
 
L+9.50% (11.00%), 12/22/2021
 
32,707

 
32,020

 
32,023

 
2.1
%
NexSteppe Inc. (l)
 
Chemicals
 
15.00%, 3/30/2018
 
10,741

 
10,444

 
8,056

 
0.5
%
Noosa Acquirer, Inc. (i) (m)
 
Food Products
 
L+5.25% (6.25%), 11/21/2020
 
25,000

 
24,756

 
25,000

 
1.6
%
North Atlantic Trading Company, Inc. (i) (j)
 
Food Products
 
P+5.50% (9.25%), 1/13/2020
 
17,331

 
17,304

 
17,158

 
1.1
%
NTM Acquisition Corp. (i)
 
Media
 
L+6.25% (7.25%), 6/7/2022
 
12,431

 
12,260

 
12,245

 
0.8
%
Orchid Underwriters Agency, LLC (f) (m)
 
Insurance Broker
 
10.00%, 11/6/2019
 
13,955

 
13,806

 
13,955

 
0.9
%
Otter Box Holdings, Inc. (j)
 
Electronic Equipment, Instruments & Components
 
L+4.75% (5.75%), 6/3/2020
 
14,797

 
14,591

 
14,612

 
1.0
%
PeopLease Holdings, LLC (i)
 
Commercial Services & Supplies
 
L+9.00% (10.00%), 2/26/2021
 
20,000

 
19,832

 
20,000

 
1.3
%
PGX Holdings, Inc. (j)
 
Transportation Infrastructure
 
L+5.25% (6.25%), 9/29/2020
 
13,172

 
13,071

 
13,148

 
0.9
%
Plaskolite, LLC (j)
 
Chemicals
 
L+4.75% (5.75%), 11/3/2022
 
8,693

 
8,623

 
8,693

 
0.6
%
Premier Dental Services, Inc. (i) (j)
 
Health Care Providers & Services
 
L+6.50% (7.50%), 11/1/2018
 
22,488

 
22,440

 
22,319

 
1.5
%

The accompanying notes are an integral part of these consolidated financial statements.

19
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Premier Global Services, Inc. (j)
 
Diversified Telecommunication Services
 
L+6.50% (7.50%), 12/8/2021
 
$
9,871

 
$
9,528

 
$
9,606

 
0.6
%
Pre-Paid Legal Services, Inc. (j)
 
Diversified Consumer Services
 
L+5.25% (6.50%), 7/1/2019
 
13,009

 
13,006

 
13,021

 
0.9
%
Pride Plating, Inc. (i)
 
Aerospace & Defense
 
L+5.50% (6.50%), 6/13/2019
 
7,188

 
7,153

 
6,864

 
0.4
%
PSKW, LLC (i)
 
Health Care Providers & Services
 
L+4.25% (5.25%), 11/25/2021
 
2,025

 
2,008

 
2,005

 
0.1
%
PSKW, LLC (m)
 
Health Care Providers & Services
 
L+8.39% (9.39%), 11/25/2021
 
17,750

 
17,460

 
17,217

 
1.1
%
PT Network, LLC (f) (i)
 
Health Care
 
L+6.50% (7.50%), 11/30/2021
 
17,105

 
16,858

 
16,934

 
1.1
%
Pure Barre, LLC (f) (i) (m)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 6/11/2020
 
27,823

 
27,444

 
27,545

 
1.8
%
Resco Products, Inc. (i)
 
Metals & Mining
 
P+4.75% (8.50%), 3/31/2017
 
10,000

 
10,000

 
9,200

 
0.6
%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)
 
Diversified Consumer Services
 
L+6.50% (7.50%), 2/25/2020
 
21,733

 
21,449

 
21,733

 
1.4
%
Sage Automotive Holdings, Inc. (j)
 
Auto Components
 
L+5.00% (6.00%), 10/8/2020
 
15,000

 
14,851

 
14,850

 
1.0
%
SHO Holding II Corporation (j)
 
Specialty Retail
 
L+5.00% (6.00%), 10/27/2022
 
11,880

 
11,779

 
11,821

 
0.8
%
Squan Holding Corp.
 
Diversified Telecommunication Services
 
L+4.00% (5.00%), 10/10/2019
 
10,455

 
6,903

 
6,895

 
0.5
%
STG-Fairway Acquisitions, Inc. (j)
 
Professional Services
 
L+5.25% (6.25%), 6/30/2022
 
13,359

 
13,199

 
13,042

 
0.9
%
Stratose Intermediate Holdings II, LLC (j)
 
Health Care Providers & Services
 
L+5.00% (6.00%), 1/26/2022
 
9,900

 
9,816

 
9,937

 
0.6
%
SunGard Availability Services Capital, Inc. (j)
 
IT Services
 
L+5.00% (6.00%), 3/31/2019
 
8,741

 
8,700

 
8,443

 
0.6
%
Tax Defense Network, LLC (f) (i) (m)
 
Diversified Consumer Services
 
L+10.50% (11.50%), 8/28/2019
 
26,650

 
26,354

 
18,388

 
1.2
%
Total Outdoor Holdings Corp.
 
Media
 
L+11.00% (12.00%), 8/28/2019
 
12,900

 
12,762

 
12,900

 
0.8
%
Trojan Battery Company, LLC (j)
 
Auto Components
 
P+3.75% (7.50%), 6/12/2021
 
10,586

 
10,517

 
10,507

 
0.7
%
Turning Tech LLC (f) (i)
 
Software
 
L+10.75% (11.59%), 6/30/2020
 
24,976

 
24,668

 
24,102

 
1.6
%
Twenty Eighty, Inc. (j) (m)
 
Media
 
P+5.00% (8.75%), 9/30/2019
 
21,926

 
20,989

 
7,975

 
0.5
%
United Central Industrial Supply Company, LLC (i) (j)
 
Commercial Services & Supplies
 
L+7.25% (8.50%), 10/9/2018
 
8,640

 
8,590

 
6,890

 
0.5
%
VCVH Holding Corp. (j)
 
Health Care
 
L+5.00% (6.00%), 6/1/2023
 
12,935

 
12,816

 
12,854

 
0.8
%
VetCor Professional Practices LLC (i)
 
Diversified Consumer Services
 
L+6.25% (7.25%), 4/20/2021
 
14,808

 
14,696

 
14,512

 
0.9
%
Xplornet Communications, Inc. (a) (j)
 
Diversified Telecommunication Services
 
L+6.00% (7.00%), 7/25/2020
 
9,975

 
9,882

 
10,050

 
0.7
%
Sub Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
$
1,726,833

 
$
1,630,661

 
106.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Second Lien Debt - 17.1% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Anchor Glass Container Corporation
 
Containers & Packaging
 
L+7.75% (8.75%), 12/7/2024
 
$
20,000

 
$
19,801

 
$
20,325

 
1.3
%

The accompanying notes are an integral part of these consolidated financial statements.

20
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Appriss Holdings, Inc. (m)
 
IT Services
 
L+9.25% (10.25%), 5/21/2021
 
$
13,985

 
$
13,839

 
$
13,775

 
0.9
%
Asurion LLC (j)
 
IT Services
 
L+7.50% (8.50%), 3/3/2021
 
10,000

 
9,320

 
10,156

 
0.7
%
Boston Market Corporation (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 12/16/2018
 
24,351

 
24,196

 
24,107

 
1.6
%
BrandMuscle Holdings Inc. (m)
 
Internet Software & Services
 
L+8.50% (9.50%), 6/1/2022
 
24,500

 
24,091

 
24,500

 
1.6
%
Cayan Holdings (m)
 
IT Services
 
L+8.50% (9.50%), 3/24/2022
 
20,000

 
19,579

 
19,600

 
1.3
%
CDS U.S. Intermediate Holdings, Inc. (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 7/8/2023
 
4,800

 
4,680

 
4,668

 
0.3
%
CIG Financial, LLC (a) (f) (m)
 
Consumer Finance
 
10.50%, 6/30/2019
 
13,000

 
12,935

 
12,415

 
0.8
%
CREDITCORP
 
Consumer Finance
 
12.00%, 7/15/2018
 
13,250

 
13,217

 
10,401

 
0.7
%
Epic Health Services, Inc. (m)
 
Health Care Providers & Services
 
L+9.25% (10.25%), 8/17/2021
 
15,933

 
15,703

 
15,933

 
1.0
%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)
 
Hotels, Restaurants & Leisure
 
L+8.75% (9.59%), 2/10/2021
 
6,950

 
6,887

 
6,776

 
0.4
%
Linc Energy Finance USA, Inc. (t)
 
Oil, Gas & Consumable Fuels
 
12.50%, 10/31/2017
 
9,000

 
8,914

 
—

 
—
%
NCP Finance Limited Partnership (j)
 
Consumer Finance
 
L+9.75% (11.00%), 10/1/2018
 
12,145

 
12,109

 
11,386

 
0.7
%
Rx30 HoldCo, Inc. (m)
 
Health Care Technology
 
L+9.00% (10.00%), 6/15/2022
 
11,500

 
11,320

 
11,500

 
0.8
%
Schulman Associates Institutional Review Board, Inc. (m)
 
Life Sciences Tools & Services
 
L+8.00% (9.00%), 6/3/2021
 
17,000

 
16,768

 
16,745

 
1.1
%
Stratose Intermediate Holdings II, LLC (m)
 
Health Care Providers & Services
 
L+9.50% (10.50%), 7/26/2022
 
30,000

 
29,593

 
30,000

 
2.0
%
U.S. Auto (m)
 
Diversified Consumer Services
 
L+11.75% (12.75%), 6/8/2020
 
30,000

 
29,561

 
29,700

 
1.9
%
Sub Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
$
272,513

 
$
261,987

 
17.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Subordinated Debt - 5.3% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Gold, Inc. (m)
 
Textiles, Apparel & Luxury Goods
 
10.00%, 6/30/2019
 
$
7,003

 
$
6,924

 
$
5,953

 
0.4
%
Park Ave RE Holdings, LLC (d) (l) (o)
 
Real Estate Management & Development
 
L+8.00% (13.00%), 12/29/2017
 
37,192

 
37,192

 
37,192

 
2.4
%
Steel City Media (l)
 
Media
 
16.00%, 3/29/2020
 
21,418

 
21,146

 
20,561

 
1.4
%
Xplornet Communications, Inc. (a) (l)
 
Diversified Telecommunication Services
 
13.00%, 10/25/2020
 
14,591

 
14,591

 
15,102

 
1.0
%
Zimbra, Inc. (t)
 
Software
 
12.00%, 7/10/2018
 
1,203

 
1,203

 
1,732

 
0.1
%
Sub Total Subordinated Debt
 
 
 
 
 
 
 
$
81,056

 
$
80,540

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - 16.3% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - Debt Investment
 
 
 
 
 
 
 
 
 
 
 
 
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)
 
Diversified Investment Vehicles
 
L+7.50% (8.38%), 1/19/2027
 
$
10,728

 
$
9,100

 
$
8,455

 
0.5
%
Collateralized Securities - Equity Investment
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
7.71%, 4/16/2026
 
$
40,250

 
$
20,331

 
$
16,772

 
1.1
%

The accompanying notes are an integral part of these consolidated financial statements.

21
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.04%, 1/16/2026
 
$
31,000

 
$
10,552

 
$
8,868

 
0.6
%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
4.80%, 7/18/2026
 
35,250

 
13,667

 
11,593

 
0.8
%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
13.83%, 1/19/2027
 
31,575

 
22,079

 
20,579

 
1.3
%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
4.65%, 1/15/2027
 
35,057

 
19,941

 
16,101

 
1.1
%
MidOcean Credit CLO II, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
7.44%, 1/29/2025
 
37,600

 
23,092

 
22,419

 
1.5
%
MidOcean Credit CLO III, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
11.89%, 7/21/2026
 
40,250

 
23,998

 
23,341

 
1.5
%
MidOcean Credit CLO IV, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
13.77%, 4/15/2027
 
21,500

 
15,160

 
15,505

 
1.0
%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
23.61%, 7/25/2025
 
31,603

 
23,795

 
24,491

 
1.6
%
Ocean Trails CLO V, LTD. (a) (p) (v)
 
Diversified Investment Vehicles
 
14.78%, 10/13/2026
 
40,518

 
28,222

 
29,144

 
1.9
%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
13.59%, 3/20/2025
 
38,000

 
19,012

 
17,354

 
1.1
%
Related Fee Agreements (a) (s)
 
Diversified Investment Vehicles
 
 
 
—

 
11,345

 
10,390

 
0.7
%
Silver Spring CLO, Ltd. (a) (p) (v)
 
Diversified Investment Vehicles
 
0.26%, 10/16/2026
 
31,500

 
18,676

 
12,007

 
0.8
%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
6.99%, 5/1/2026
 
36,000

 
15,806

 
12,563

 
0.8
%
Sub Total Collateralized Securities
 
 
 
 
 
 
 
$
274,776

 
$
249,582

 
16.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity/Other - 11.2% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)
 
Software
 
Expire 3/9/2025
 
306,122

 
$
—

 
$
—

 
—
%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)
 
Software
 
 
 
2,040,816

 
2,000

 
—

 
—
%
Capstone Nutrition - Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)
 
Food Products
 
 
 
6,023

 
1,630

 
—

 
—
%
Capstone Nutrition - Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)
 
Food Products
 
 
 
24,656

 
—

 
—

 
—
%
Carlyle GMS Finance, Inc. (a) (f)
 
Diversified Investment Vehicles
 
 
 
$
6,587

 
6,587

 
6,273

 
0.4
%
Danish CRJ LTD. (a) (e) (p) (r)
 
Aerospace & Defense
 
 
 
10,000

 
1

 
407

 
—
%
Evolution Research Group - Preferred Equity (e)
 
Health Care Providers & Services
 
8.00%
 
200

 
500

 
610

 
—
%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)
 
Internet Software & Services
 
Expire 8/16/2025
 
172,414

 
—

 
19

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

22
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
137

 
$
—

 
$
8,180

 
0.5
%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
3,250,000

 
2,900

 
3,250

 
0.2
%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)
 
Aerospace & Defense
 
13.00%
 
4,413,472

 
4,193

 
4,000

 
0.3
%
New Star Metals Inc. (l)
 
Business Services
 
Expire 12/22/2036
 
133,074

 
201

 
201

 
—
%
NexSteppe Inc. - Series C Preferred Stock Warrant (e)
 
Chemicals
 
Expire 3/9/2025
 
185,704

 
500

 
43

 
—
%
NMFC Senior Loan Program I, LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
50,000

 
50,000

 
47,057

 
3.1
%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
500

 
659

 
—
%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
—

 
304

 
—
%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)
 
Real Estate Management & Development
 
 
 
1,000

 
—

 
6,564

 
0.4
%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)
 
Real Estate Management & Development
 
8.00%
 
47,290

 
23,645

 
23,645

 
1.6
%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)
 
Diversified Investment Vehicles
 
 
 
$
9,943

 
9,943

 
9,788

 
0.7
%
South Grand MM CLO I, LLC (a) (f) (p)
 
Diversified Investment Vehicles
 
 
 
$
29,095

 
29,095

 
28,382

 
1.9
%
Squan Holding Corp. - Class A Common Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
180,835

 
—

 
—

 
—
%
Squan Holding Corp. - Series A Preferred Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
8,962

 
—

 
—

 
—
%
Tax Defense Network, LLC (e)
 
Diversified Consumer Services
 
 
 
396

 
425

 
—

 
—
%
Tennenbaum Waterman Fund, L.P. (a)
 
Diversified Investment Vehicles
 
 
 
$
10,000

 
10,000

 
10,169

 
0.7
%
The SAVO Group, Ltd. - Warrants (e)
 
Internet Software & Services
 
Expire 3/23/2023
 
138,000

 
—

 
—

 
—
%
THL Credit Greenway Fund II LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
13,990

 
13,990

 
12,850

 
0.9
%
U.S. Auto - Series A Common Units (e) (u)
 
Diversified Consumer Services
 
 
 
10,000

 
10

 
27

 
—
%
U.S. Auto - Series A Preferred Units (e) (u)
 
Diversified Consumer Services
 
 
 
490

 
490

 
572

 
—
%
World Business Lenders, LLC (e)
 
Consumer Finance
 
 
 
922,669

 
3,750

 
4,441

 
0.3
%
Xplornet Communications, Inc. - Warrants (a) (e)
 
Diversified Telecommunication Services
 
Expire 10/25/2023
 
10,284

 
—

 
3,647

 
0.2
%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)
 
Software
 
Expire 7/11/2023
 
1,000,000

 
—

 
225

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

23
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n) (x)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Sub Total Equity/Other
 
 
 
 
 
 
 
$
160,360

 
$
171,313

 
11.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS - 156.5% (b)
 
 
 
 
 
 
 
$
2,515,538

 
$
2,394,083

 
156.5
%
_____________
(a)
All of the Company's investments, except the investments noted by this footnote, are qualifying assets under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not require any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of our total assets. Qualifying assets represent 77.9% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)
Percentages are based on net assets of $ 1,529,734 as of December 31, 2016 .
(c)
The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the consolidated financial statements).
(d)
As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).
(e)
Non-income producing at December 31, 2016 .
(f) The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of December 31, 2016 are comprised of the following:
Portfolio Company Name
 
Investment Type
 
Commitment Type
 
Original Commitment
 
Remaining Commitment
Amteck, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
$
5,000

 
$
5,000

BDS Solutions Group, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

Carlyle GMS Finance, Inc.
 
Equity/Other
 
Equity capital commitment
 
10,000

 
3,413

CCW, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

CH Hold Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,175

 
706

CIG Financial, LLC
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Revolver term loan
 
5,000

 
4,000

InMotion Entertainment Group, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,200

 
1,843

J. C. Bromac Corporation (dba EagleRider, Inc.)
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Motion Recruitment Partners, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,000

 
2,000

National Technical Systems, Inc.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Orchid Underwriters Agency, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,600

 
5,600

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
Equity capital commitment
 
10,800

 
538

Pure Barre, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
6,579

 
6,579

PT Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
1,316

 
1,316

PT Network, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,500

 
2,500

RVNB Holdings, Inc. (dba All My Sons Moving & Storage)
 
Senior Secured First Lien Debt
 
Revolver term loan
 
852

 
852

South Grand MM CLO I, LLC
 
Equity/Other
 
Equity capital commitment
 
35,000

 
5,476

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
1,000

Turning Tech LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
6,000

 
3,000

Total
 
 
 
 
 
$
126,022

 
$
69,823


(g)
The investment is subject to a three year lock-up restriction on withdrawals in year 4.
(h)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
(i)
The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)
The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.


The accompanying notes are an integral part of these consolidated financial statements.

24
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016


(k)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.
(l) For the year ended December 31, 2016 , the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in Rate
 
PIK Earned for the year ended December 31, 2016
Basho Technologies, Inc.
 
Senior Secured First Lien Debt
 
17.00
%
 
—
%
 
17.00
%
 
$
283

Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)
 
Senior Secured First Lien Debt
 
—
%
 
13.50
%
 
13.50
%
 
807

CPX Interactive Holdings, LP
 
Senior Secured Second Lien Debt
 
11.00
%
 
2.00
%
 
13.00
%
 
315

Greenwave Holdings, Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
3.00
%
 
13.00
%
 
510

ILC Dover LP
 
Senior Secured First Lien Debt
 
8.00
%
 
2.00
%
 
10.00
%
 
132

Kahala Ireland OpCo Designated Activity Company
 
Senior Secured First Lien Debt
 
—
%
 
13.00
%
 
13.00
%
 
5,827

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
13.00
%
 
—
%
 
13.00
%
 
87

Lightsquared LP
 
Senior Secured First Lien Debt
 
—
%
 
9.75
%
 
9.75
%
 
—

MMM Holdings, LLC
 
Senior Secured First Lien Debt
 
9.75
%
 
—
%
 
9.75
%
 
—

MSO of Puerto Rico, LLC
 
Senior Secured First Lien Debt
 
9.75
%
 
—
%
 
9.75
%
 
—

New Star Metals Inc.
 
Senior Secured First Lien Debt
 
9.00
%
 
2.00
%
 
11.00
%
 
—

NexSteppe Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
5.00
%
 
15.00
%
 
509

Park Ave RE Holdings, LLC
 
Subordinated Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Steel City Media
 
Subordinated Debt
 
12.00
%
 
4.00
%
 
16.00
%
 
840

Taqua, LLC
 
Senior Secured First Lien Debt
 
10.50
%
 
3.00
%
 
13.50
%
 
202

The Tennis Channel Holdings, Inc.
 
Senior Secured First Lien Debt
 
6.88
%
 
2.00
%
 
8.88
%
 
85

Visionary Integration Professionals, LLC
 
Subordinated Debt
 
—
%
 
15.00
%
 
15.00
%
 
1,088

Xplornet Communications, Inc.
 
Subordinated Debt
 
—
%
 
13.00
%
 
13.00
%
 
1,727

Total
 
 
 
 
 
 
 
 
 
$
12,412


(m)
The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(n)
For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (v) for a further description of an equity investment in a Collateralized Security.
(o)
The provisions of the 1940 Act classify investments based on the level of control that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally presumed to be "non-controlled" when we own 25% or less of the portfolio company's voting securities and "controlled" when we own more than 25% of the portfolio company's voting securities.
(p)
The provisions of the 1940 Act classify investments further based on the level of ownership that we maintain in a particular portfolio company. As defined in the 1940 Act, a company is generally deemed as "non-affiliated" when we own less than 5% of a portfolio company's voting securities and "affiliated" when we own 5% or more of a portfolio company's voting securities.
(q)
Unless otherwise indicated, all investments in the schedule of investments are non-affiliated, non-controlled investments.
(r)
The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)
Related Fee Agreements consist of one investment with a fair value of $0.7 million that is classified as a Non-affiliated Investment and six investments with a total fair value of $9.6 million that are classified as Affiliated Investments.
(t)
The investment is on non-accrual status as of December 31, 2016 .
(u)
Investments are held in the taxable wholly-owned, consolidated subsidiary, 54 th Street Equity Holdings, Inc.
(v)
The Collateralized Securities - debt investments and equity investments are considered equity positions in the Collateralized Loan Obligation funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(w)
The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.
(x)
The majority of the investments bear interest at a rate that may be determined by reference to LIBOR or Prime and which reset daily, monthly, quarterly or semiannually. For each, the Company has provided the spread over LIBOR or Prime and the current interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable.



The accompanying notes are an integral part of these consolidated financial statements.

25
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016


The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2016:

 
At December 31, 2016
 
Investments at
Fair Value
 
Percentage of
Total Portfolio
Diversified Investment Vehicles
$
364,101

 
15.2
%
Aerospace & Defense
186,806

 
7.8

Diversified Consumer Services
175,780

 
7.3

Health Care Providers & Services
160,396

 
6.7

Hotels, Restaurants & Leisure
157,062

 
6.6

Business Services
112,225

 
4.7

Internet Software & Services
110,324

 
4.6

Media
95,975

 
4.0

Health Care
93,526

 
3.9

Diversified Telecommunication Services
89,047

 
3.7

Commercial Services & Supplies
88,465

 
3.7

Real Estate Management & Development
78,474

 
3.3

IT Services
70,013

 
2.9

Food Products
61,866

 
2.6

Software
55,378

 
2.3

Professional Services
49,401

 
2.1

Machinery
41,442

 
1.7

Consumer Finance
38,643

 
1.6

Auto Components
38,073

 
1.6

Chemicals
33,352

 
1.4

Electronic Equipment, Instruments & Components
28,063

 
1.2

Transportation Infrastructure
27,923

 
1.2

Specialty Retail
26,271

 
1.1

Diversified Financial Services
25,599

 
1.1

Communications Equipment
24,226

 
1.0

Building Products
22,286

 
0.9

Containers & Packaging
20,325

 
0.9

Energy Equipment & Services
20,156

 
0.8

Metals & Mining
20,144

 
0.8

Life Sciences Tools & Services
16,745

 
0.7

Household Durables
15,000

 
0.6

Insurance
14,918

 
0.6

Distributors
14,625

 
0.6

Health Care Technology
11,500

 
0.5

Textiles, Apparel & Luxury Goods
5,953

 
0.3

Oil, Gas & Consumable Fuels
—

 
—

Total
$
2,394,083

 
100.0
%



The accompanying notes are an integral part of these consolidated financial statements.

26
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)


Note 1 — Organization and Basis of Presentation

Business Development Corporation of America (the “Company”) is an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment activities are managed by BDCA Adviser, LLC (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by the Company’s board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, the Company is required to comply with certain regulatory requirements.

The Company’s investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The Company defines middle market companies as those with annual revenues up to $1 billion. The Company also purchases interests in loans through secondary market transactions. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower, which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. The Company may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLOs"). Structurally, CLOs are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. In most cases, companies to whom we provide customized financing solutions will be privately held at the time the Company invests in them.

While the structure of the Company’s investments is likely to vary, we may invest in senior secured debt, senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants, CLOs and other instruments, many of which generate current yields. If the Adviser deems appropriate, the Company may invest in more liquid senior secured and second lien debt securities, some of which may be traded. The Company will make such investments to the extent allowed by the 1940 Act and consistent with its continued qualification as a RIC for federal income tax purposes.

On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. In order to allow for associated processing time needed, the transfer agent for the Company accepted subscriptions in good order dated on or before April 30, 2015 and received no later than June 30, 2015. As of June 30, 2017 , the Company had issued 193.1 million shares of common stock for gross proceeds of $2.1 billion including the shares purchased by affiliates and shares issued under the Company's distribution reinvestment plan (“DRIP”). As of June 30, 2017 , the Company had repurchased a cumulative 12.6 million shares of common stock through its share repurchase program for payments of $ 114.3 million.

The Company intends to co-invest, subject to the conditions included in the exemptive order the Company received from the SEC, with certain of our affiliates. The Company believes that such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.

As a BDC, the Company is generally required to invest at least 70% of our total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. government securities and other high quality debt investments that mature in one year or less.

The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally allows it to incur leverage for up to one half of its total assets). The Company has used, and expects to continue to use, its credit facilities and other borrowings, along with proceeds from the rotation of its portfolio and proceeds from private securities offerings to finance its investment objectives.

27
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

    
Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification ("ASC") Topic 946 - Financial Services - Investment Companies ("ASC 946").

The Company consolidates the following subsidiaries for accounting purposes: BDCA Funding I, LLC (“Funding I”), BDCA 2L Funding I, LLC (“2L Funding I”), BDCA-CB Funding, LLC (“CB Funding”), BDCA Helvetica Funding, Ltd. (“Helvetica Funding”), 54th Street Equity Holdings, Inc. and the Consolidated Holding Companies. All significant intercompany balances and transactions have been eliminated in consolidation. In conjunction with the consolidation of subsidiaries, the Company recognizes non-controlling interests attributable to third party ownership in the following Consolidated Holding Companies: Kahala Aviation Holdings, LLC, Kahala Aviation US, Inc., and Kahala LuxCo.

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2017.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

As provided under Regulation S-X and ASC 946, the Company will generally not consolidate its investment in a company other than a substantially wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's substantially wholly-owned subsidiaries in its consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as follows:

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.


28
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•
Each portfolio company or investment will be valued by the Adviser, with assistance from one or more independent valuation firms engaged by our board of directors or as noted below, with respect to investments in an investment fund;
•
The independent valuation firm(s) conduct independent appraisals and make an independent assessment of the value of each investment; and
•
The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and independent valuation firm (to the extent applicable).

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of the Company's measurement date.

Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.
    
Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “control” is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, any person “who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25% of the voting securities of any company shall be presumed not to control such company”. Consistent with the 1940 Act, “Affiliated Investments” are defined as those investments in companies in which the Company owns between 5% or more of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

Where appropriate, prior period consolidated financial statements may have been reclassified to disclose the Company's Control Investments and Affiliate Investments as defined above. In addition, prior period consolidated financial statements may have been reclassified to present investment industry classifications in a consistent manner with the current year.


29
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market deposit account. Cash and cash equivalents are carried at cost which approximates fair value.

Offering Costs

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12-month period. As of June 30, 2017 and December 31, 2016 , the Company did not incur any offering costs.

Deferred Financing Costs

Financing costs incurred in connection with the Company’s Unsecured Notes and revolving credit facilities with Wells Fargo, Citi, and UBS are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 5 - Borrowings - for details on the Credit Facilities and Unsecured Notes.

Distributions

The Company’s board of directors has authorized, and has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to the Company's cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.

The amount of each such distribution is subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date the Company accepts a subscription for shares of the Company’s common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s board of directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities.
    
The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including advances from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.


30
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Revenue Recognition

Interest Income

Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments.

The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.
Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends

The Company holds debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.

Non-accrual income

Investments may be placed on non-accrual status when principal or interest/dividend payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Accrued interest which may include un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated using the specific identification method. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Income Taxes

The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. Generally, a RIC is exempt from federal income taxes if it distributes to stockholders at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, each year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may

31
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

be subject to federal excise taxes of 4%. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

New Accounting Pronouncements

In December 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2016-19, Technical Corrections and Improvements. As part of this guidance, ASU 2016-19 amends FASB ASC 820 to clarify the difference between a valuation approach and a valuation technique. The amendment also requires an entity to disclose when there has been a change in either or both a valuation approach and/or a valuation technique. ASU 2016-19 is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company has evaluated the impact of ASU 2016-19 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-19 has not had a material impact on its consolidated financial statements.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, which will amend FASB ASC 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact of ASU 2016-18 on its consolidated financial statements and disclosures.

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The application of this guidance does not have a material impact on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230)”, which seeks to reduce diversity in how certain cash payments are presented in the Statement of Cash Flows. Under ASU 2016-15, an entity will need to conform to the presentation as prescribed for eight specific cash flow issues. ASU 2016-15 will be effective for annual and interim reporting periods after December 15, 2017. The application of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606 "Identifying Performance Obligations and Licensing"),” which amends the criteria for revenue recognition where an entity enters into contracts with customers to transfer goods or services or where there is a transfer of non-financial assets. Under ASU 2016-10, an entity should recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2016-10 will be effective for annual and interim reporting periods beginning after December 15, 2017. The Company does not believe that the adoption of ASU 2016-10 will have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company is currently evaluating the impact the adoption of this standard has on its consolidated financial statements and disclosures.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

32
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)


Note 3 — Fair Value of Financial Instruments

Accounting guidance establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

•
Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
•
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
•
Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

All of the Company’s investment portfolio at June 30, 2017 was comprised of debt and equity instruments for which Level 1 inputs, such as quoted prices, were not available. Therefore, at June 30, 2017 , the investments were valued at fair value as determined in good faith using the valuation policy approved by the board of directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at June 30, 2017 may differ materially from values that would have been used had a ready market for the securities existed.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors. Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below.

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company's investments

33
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC Topic 946, as of the Company's measurement date.

For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, the Adviser considers broker quotations and/or comparable trade activity is considered as an input to determining fair value when available. 

As part of the Company's quarterly valuation process, the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.
    
For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings - in the consolidated financial statements included in this report.

The following table presents fair value measurements of investments, by major class, as of June 30, 2017 , according to the fair value hierarchy:
 
Fair Value Measurements
 
Level 1
 
Level 2
 
Level 3
 
Measured at Net Asset Value (1)
 
Total
Senior Secured First Lien Debt
$
—

 
$
173,391

 
$
1,515,021

 
$
—

 
$
1,688,412

Senior Secured Second Lien Debt
—

 
42,562

 
242,200

 
—

 
284,762

Subordinated Debt
—

 
10,375

 
64,487

 
—

 
74,862

Collateralized Securities
—

 
—

 
188,291

 
—

 
188,291

Equity/Other
—

 
7,292

 
88,840

 
109,840

 
205,972

Total
$
—

 
$
233,620

 
$
2,098,839

 
$
109,840

 
$
2,442,299

______________

(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.





34
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

The following table presents fair value measurements of investments, by major class, as of December 31, 2016 , according to the fair value hierarchy:
 
Fair Value Measurements
 
Level 1
 
Level 2
 
Level 3
 
Measured at Net Asset Value (1)
 
Total
Senior Secured First Lien Debt
$
—

 
$
714,562

 
$
916,099

 
$
—

 
$
1,630,661

Senior Secured Second Lien Debt
—

 
56,936

 
205,051

 
—

 
261,987

Subordinated Debt
—

 
—

 
80,540

 
—

 
80,540

Collateralized Securities
—

 
—

 
249,582

 
—

 
249,582

Equity/Other
—

 
—

 
56,794

 
114,519

 
171,313

Total
$
—

 
$
771,498

 
$
1,508,066

 
$
114,519

 
$
2,394,083

______________

(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2017 :
 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Subordinated Debt
 
Collateralized Securities
 
Equity/Other
 
Total
Balance as of December 31, 2016
$
916,099

 
$
205,051

 
$
80,540

 
$
249,582

 
$
56,794

 
$
1,508,066

Net change in unrealized appreciation (depreciation) on investments
(21,719
)
 
469

 
(1,429
)
 
(10,603
)
 
6,463

 
(26,819
)
Purchases and other adjustments to cost
340,327

 
45,827

 
1,854

 
80

 
26,113

 
414,201

Sales and redemptions
(170,514
)
 
(46,105
)
 
(17,463
)
 
(51,717
)
 
(534
)
 
(286,333
)
Net realized gains (losses)
1,290

 
579

 
985

 
949

 
4

 
3,807

Transfers in
449,538

 
36,379

 
—

 
—

 
—

 
485,917

Transfers out
—

 
—

 
—

 
—

 
—

 
—

Balance as of June 30, 2017
$
1,515,021

 
$
242,200

 
$
64,487

 
$
188,291

 
$
88,840

 
$
2,098,839

Net change in unrealized appreciation (depreciation) for the
     period relating to those Level 3
     assets that were still held by
     the Company at the end of the
     period:
 
 
 
 
 
 
 
 
 
 

      Net change in unrealized
      appreciation (depreciation):
$
(21,717
)
 
$
876

 
$
(918
)
 
$
(9,667
)
 
$
6,463

 
$
(24,963
)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the six months ended June 30, 2017 , there were no transfers out of Level 1 to Level 2 and Level 3 to Level 2. For the six months ended June 30, 2017 , thirty seven companies were transferred out of Level 2 to Level 3.
    

35
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Transfers during the period were due to changes in management's assessment of liquidity in the underlying positions.
Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2016 :
 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Subordinated Debt
 
Collateralized Securities
 
Equity/Other
 
Total
Balance as of December 31, 2015
$
1,095,040

 
$
340,563

 
$
92,272

 
$
261,784

 
$
115,112

 
$
1,904,771

Net change in unrealized appreciation (depreciation) on investments
(39,045
)
 
4,506

 
1,120

 
48,557

 
(19,214
)
 
(4,076
)
Purchases and other adjustments to cost
255,985

 
27,416

 
5,813

 
162

 
201

 
289,577

Sales and redemptions
(241,206
)
 
(118,913
)
 
(7,403
)
 
(60,921
)
 
(4,069
)
 
(432,512
)
Net realized gains (losses)
(9,461
)
 
1,538

 
(11,262
)
 
—

 
(6,081
)
 
(25,266
)
Transfers in
4,252

 
—

 
—

 
—

 
—

 
4,252

Transfers out
(149,466
)
 
(50,059
)
 
—

 
—

 
(29,155
)
 
(228,680
)
Balance as of December 31, 2016
$
916,099

 
$
205,051

 
$
80,540

 
$
249,582

 
$
56,794

 
$
1,508,066

Net change in unrealized appreciation (depreciation) for the
period relating to those Level 3
assets that were still held by
the Company at the end of the
period:
 
 
 
 
 
 
 
 
 
 
 
      Net change in unrealized
appreciation (depreciation):
$
(41,722
)
 
$
1,653

 
$
(603
)
 
$
48,557

 
$
(21,841
)
 
$
(13,956
)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the year ended December 31, 2016 , there were no transfers out of Level 1 to Level 2. For the year ended December 31, 2016 , one company was transferred out of Level 2 to Level 3. For the year ended December 31, 2016 , seventeen companies were transferred from Level 3 to Level 2 as the number of observable market quotes increased.
 
The composition of the Company’s investments as of June 30, 2017 , at amortized cost and fair value, were as follows:

 
Investments at
Amortized Cost
 
Investments at
Fair Value
 
Fair Value
Percentage of
Total Portfolio
Senior Secured First Lien Debt
$
1,777,310

 
$
1,688,412

 
69.1
%
Senior Secured Second Lien Debt
285,156

 
284,762

 
11.7

Subordinated Debt
76,432

 
74,862

 
3.1

Collateralized Securities
224,089

 
188,291

 
7.7

Equity/Other
184,254

 
205,972

 
8.4

Total
$
2,547,241

 
$
2,442,299

 
100.0
%





36
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

The composition of the Company’s investments as of December 31, 2016 , at amortized cost and fair value, were as follows:

 
Investments at
Amortized Cost
 
Investments at
Fair Value
 
Fair Value
Percentage of
Total Portfolio
Senior Secured First Lien Debt
$
1,726,833

 
$
1,630,661

 
68.1
%
Senior Secured Second Lien Debt
272,513

 
261,987

 
10.9

Subordinated Debt
81,056

 
80,540

 
3.4

Collateralized Securities
274,776

 
249,582

 
10.4

Equity/Other
160,360

 
171,313

 
7.2

Total
$
2,515,538

 
$
2,394,083

 
100.0
%
    
Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of June 30, 2017 . The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 
 
 
 
Range
 
 
Asset Category
 
Fair Value
 
Primary Valuation Technique
 
Unobservable Inputs
 
Minimum
 
Maximum
 
Weighted Average  (a)
Senior Secured First Lien Debt (b)
 
$
1,281,593

 
Yield Analysis
 
Market Yield
 
5.25
%
 
35.00
%
 
10.08
%
Senior Secured First Lien Debt (c)
 
$
11,294

 
Joint Venture/Merger Strategy
 
EBITDA Multiple
 
5.25x

 
5.75x

 
N/A

Senior Secured Second Lien Debt (d)
 
$
236,918

 
Yield Analysis
 
Market Yield
 
9.94
%
 
15.00
%
 
11.52
%
Subordinated Debt (e)
 
$
64,019

 
Yield Analysis
 
Market Yield
 
13.00
%
 
17.00
%
 
14.51
%
Collateralized Securities
 
$
188,291

 
Discounted Cash Flow
 
Discount Rate
 
12.00
%
 
27.50
%
 
17.43
%
Equity/Other (f)
 
$
38,885

 
Market Multiple Analysis
 
EBITDA Multiple
 
1.60x

 
22.40x

 
11.18x

______________
    
(a)  
Weighted averages are calculated based on fair value of investments.
(b)  
Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $222.1 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near period end.
(c)  
Weighted average not applicable as this asset category contains one investment.
(d)  
The remaining $5.3 million of senior secured second lien debt were valued based on their respective acquisition prices as the investments closed near year end.
(e)  
The remaining $0.5 million of subordinated debt were valued based on a Monte-Carlo simulation.
(f)  
The remaining $49.9 million of equity/other investments consisted of $49.6 million which were valued with consideration of their respective appraisal value, $0.1 million which were valued at their respective acquisition prices as the investment closed in the current period, and $0.2 million which were based on a Monte-Carlo simulation.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

37
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

    
The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2016 . The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 
 
 
 
Range
 
 
Asset Category
 
Fair Value
 
Primary Valuation Technique
 
Unobservable Inputs
 
Minimum
 
Maximum
 
Weighted Average  (a)
Senior Secured First Lien Debt (b)
 
$
823,974

 
Yield Analysis
 
Market Yield
 
6.00
%
 
27.00
%
 
10.88
%
Senior Secured First Lien Debt (c)
 
$
19,708

 
Joint Venture/Merger Strategy
 
EBITDA Multiple
 
6.75x

 
7.50x

 
N/A

Senior Secured Second Lien Debt
 
$
205,051

 
Yield Analysis
 
Market Yield
 
10.60
%
 
13.60
%
 
11.91
%
Subordinated Debt (d)
 
$
78,808

 
Yield Analysis
 
Market Yield
 
12.25
%
 
17.25
%
 
14.11
%
Collateralized Securities
 
$
249,582

 
Discounted Cash Flow
 
Discount Rate
 
7.54
%
 
45.06
%
 
19.84
%
Equity/Other (e)
 
$
10,279

 
Market Multiple Analysis
 
EBITDA Multiple
 
2.40x

 
11.20x

 
7.00x

______________
    
(a)  
Weighted averages are calculated based on fair value of investments.
(b)  
Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $72.4 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near year end.
(c)  
Weighted average not applicable as this asset category contains one investment.
(d)  
The remaining $1.7 million of subordinated debt were valued based on a Monte-Carlo simulation.
(e)  
The remaining $46.5 million of equity/other investments consisted of $46.0 million which were valued with consideration of their respective appraisal value, $0.3 million which were based on a Monte-Carlo simulation, and $0.2 million which were valued at their respective acquisition prices as the investment closed near year end.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

As of June 30, 2017 , the Company had seven portfolio companies, which represented thirteen portfolio investments, on non-accrual status with a total principal amount of $140.2 million, amortized cost of $131.4 million, and fair value of $61.6 million, which represented 5.1%, 5.2% and 2.5% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016 , the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in the consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

Note 4 — Related Party Transactions and Arrangements

Investment Advisory Agreement

Pursuant to the Investment Advisory Agreement and for the investment advisory and management services provided thereunder, the Company pays the Adviser a base management fee and an incentive fee.



38
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Base Management Fee

The base management fee is calculated at an annual rate of 1.5% of the Company’s average gross assets. The base management fee is payable quarterly in arrears. Average gross assets is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. All or any part of the base management fee not taken as to any quarter shall be deferred without interest and may be taken in such other quarter as the Adviser will determine. The base management fee for any partial month or quarter is appropriately pro-rated.

Incentive Fees

The incentive fee consists of two parts. The first part is referred to as the incentive fee on income and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. ). “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The payment of the incentive fee on income shall be subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on the value of our net assets at the end of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature (as described below). The calculation of the incentive fee on income for each quarter is as follows:

•
No incentive fee on income shall be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred Return”) on net assets;
•
100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the preferred return but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) shall be payable to the Adviser. This portion of the Company’s incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in any calendar quarter; and
•
For any quarter in which our Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the incentive fee on income shall equal 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” shall be an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and shall be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee shall equal 20.0% of the Company’s incentive fee capital gains, which shall equal the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, the Company amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as investment adviser to the Company following the closing of the Transaction.


39
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Administration Agreement

In connection with the closing of the Transaction, the Company terminated the previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP provides the Company with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC. The SEC staff has granted the Company exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of its eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and our stockholders and do not involve overreaching in respect of the Company or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.

Transactions with Affiliates
    
In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of the Company’s common stock based on its net asset value per share in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933. On November 7, 2016, the Company issued approximately 1.2 million shares of its common stock to such BSP affiliate.

Offering Costs

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Due (to)/from affiliate

As of June 30, 2017 and December 31, 2016 , there were no amounts due (to)/from affiliate.

Other Affiliated Parties

The Adviser is the investment adviser of BDCA. The Adviser is an affiliate of BSP, an SEC registered investment adviser. The Adviser and BSP are under common control. The Adviser is affiliated and under common control with Providence Equity Capital Markets L.L.C. (“PECM”), an SEC registered investment adviser on the BSP platform. The Adviser is affiliated and under common control with Providence Equity Partners L.L.C. (“PEP”), an SEC registered investment adviser. PEP is a global private equity investment adviser and maintains an information barrier between itself and the Adviser, BSP and PECM. BSP, the Adviser, PECM, and PEP’s respective Form ADV’s are publicly available for review on the SEC Investment Adviser Public Disclosure website.


40
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into a revolving credit facility with Wells Fargo and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”). The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013, September 9, 2013, June 30, 2014, May 29, 2015, November 4, 2015, and May 18, 2017 provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis.

The Wells Fargo Credit Facility is priced at the one-month maturity London Interbank Offered Rate (“LIBOR”), with no LIBOR floor, plus a spread ranging between 1.65% and 2.50% per annum, depending on the composition of the portfolio of loans owned by Funding I for the relevant period. Interest is payable quarterly in arrears. Funding I is subject to a non-usage fee to the extent the aggregate principal amount available under the Wells Fargo Credit Facility has not been borrowed. The non-usage fee per annum is 0.50% for the first 25% of the unused balance and 2.0% for the portion of the unused balance that exceeds 25%.

Borrowings under the Wells Fargo Credit Facility are subject to compliance with a borrowing base, pursuant to which the amount of funds advanced to Funding I varies depending upon the types of loans in Funding I's portfolio. The Wells Fargo Credit Facility may be prepaid in whole or in part, subject to customary breakage costs.

The Wells Fargo Credit Facility contains customary default provisions for facilities of this type pursuant to which Wells Fargo may terminate the rights, obligations, power and authority of the Company, in its capacity as servicer of the portfolio assets under the Wells Fargo Credit Facility, including, but not limited to, non-performance of Wells Fargo Credit Facility obligations, insolvency, defaults of certain financial covenants and other events with respect to the Company that may be adverse to Wells Fargo and the secured parties under the Wells Fargo Credit Facility.

In connection with the Wells Fargo Credit Facility, Funding I has made certain representations and warranties, is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Wells Fargo may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable. During the continuation of an event of default, Funding I must pay interest at a default rate.

Deutsche Bank Credit Facility

On February 21, 2014, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, 2L Funding I, entered into the credit facility with Deutsche Bank (the “Deutsche Bank Credit Facility”) as lender and as administrative agent and U.S. Bank as collateral agent and collateral custodian. The Deutsche Bank Credit Facility was amended on February 19, 2016, and it was terminated in accordance with its terms on June 3, 2016.

The Deutsche Bank Credit Facility provided for borrowings in an aggregate principal amount of up to $60.0 million with a term of 36 months. The Deutsche Bank Credit Facility was priced at LIBOR plus 4.25%, with no LIBOR floor. Prior to its termination, the Deutsche Bank Credit Facility was subject to a minimum utilization of 82.5% of the loan amount thereafter, measured quarterly. If the utilized portion of the loan amount was less than the foregoing thresholds, such shortfalls bore interest at LIBOR plus 4.25%. The Deutsche Bank Credit Facility provided for monthly interest payments for each drawn loan. 2L Funding I paid a structuring fee and incurred certain other customary costs and expenses in connection with obtaining the Deutsche Bank Credit Facility.
    

41
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility with Citi (the “Citi Credit Facility”) as administrative agent and U.S. Bank as collateral agent, account bank and collateral custodian. The Citi Credit Facility, which was subsequently amended on October 14, 2015, provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, subject to the administrative agent’s right to approve the assets acquired by CB Funding and pledged as collateral under the Citi Credit Facility. The Citi Credit Facility was amended on June 22, 2017 to extend the investment period for an additional three months to September 30, 2017. The Citi Credit Facility has a maturity date of June 27, 2018.

The Citi Credit Facility is priced at three month LIBOR, with no LIBOR floor, plus a spread of 1.70% per annum for the first twenty-four months and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.
    
UBS Credit Facility

On April 7, 2015, the Company, through a wholly-owned, special-purpose, bankruptcy-remote subsidiary, Helvetica Funding, entered into a debt financing facility with UBS AG, London Branch (“UBS”), pursuant to which $150.0 million will be made available to the Company to fund investments in new securities and for other general corporate purposes (the “UBS Credit Facility”). The UBS Credit Facility was subsequently amended on July 10, 2015 to increase the amount of debt available to the Company under the facility from $150.0 million to $210.0 million. On June 6, 2016, the UBS credit facility was again amended to increase the amount of debt available from $210.0 million to $232.5 million. In addition, the amended facility increased the applicable spread over a three-month LIBOR from 3.90% to 4.05% per annum for the relevant period and increased the permissible percentage of second lien loans from 60% to 70%. Pricing under the transaction is based on three-month LIBOR plus a spread of 4.05% per annum for the relevant period. The UBS Credit Facility has a maturity date of April 4, 2018.

Unsecured Notes

On August 26, 2015, the Company entered into a Purchase Agreement with the initial purchasers, relating to the Company’s sale of $100.0 million aggregate principal amount of its 6.00% fixed rate senior notes due 2020 to the initial purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the initial purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act (the “Unsecured Notes”). The Company relied upon these exemptions from registration based in part on representations made by the initial purchasers. The Purchase Agreement includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the initial purchasers against certain liabilities under the Securities Act. The Unsecured Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The net proceeds from the sale of the Unsecured Notes was approximately $97.9 million, after deducting initial purchasers’ discounts and commissions of approximately $1.6 million payable by the Company and estimated offering expenses of approximately $0.5 million payable by the Company. The Company used the net proceeds to make investments in accordance with the Company’s investment objectives and for general corporate purposes. 
    
The Unsecured Notes were issued pursuant to the Indenture, dated as of August 31, 2015, between the Company and the Trustee. The Unsecured Notes will mature on September 1, 2020, and may be redeemed in whole or in part at the Company’s option at any time, or from time to time, at the redemption prices set forth in the Indenture. The Unsecured Notes bear interest at a rate of 6.00% per year payable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2016. The Unsecured Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes. The Unsecured Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and

42
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles or similar facilities, including credit facilities held by the Company’s wholly owned, special purpose financing subsidiaries. 

The Indenture contains certain covenants, including covenants requiring the Company to: (i) comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act as in effect immediately prior to the issuance of the Unsecured Notes, whether or not the Company is subject to such provisions; (ii) provide financial information to the holders of the Unsecured Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended; and (iii) maintain total unencumbered assets, as defined in the Indenture, of at least 175% of the aggregate principal amount of all of the Company and the Company’s consolidated subsidiaries’ outstanding unsecured debt determined on a consolidated basis in accordance with U.S. GAAP. These covenants are subject to important limitations and exceptions that are described in the Indenture.

JP Morgan Securities LLC Prime Brokerage Account
On January 20, 2017, the Company entered into a prime brokerage account agreement with JP Morgan Securities LLC (the “JPMC PB Account”). The JPMC PB Account provides a full suite of services around the custody of bonds and equities and also access to leverage, which is dependent on the price, credit quality and diversity of the pool of assets held within the account. The borrowing availability is recalculated daily based on changes to the assets, with margin calls issued in the morning as appropriate. The cost to borrow is 1 week LIBOR + 90 bps and there is no mandatory usage or period wherein the debt needs to be repaid.

As of June 30, 2017 , the Company had borrowings of $ 34.0 million and additional borrowing capacity of $0.9 million under the JPMC PB Account. For the six months ended June 30, 2017 , the Company incurred approximately $0.03 million of interest expense as calculated using the cost of borrow noted above.

The weighted average annualized interest cost for all borrowings for the six months ended June 30, 2017 and June 30, 2016 was 3.85% and 3.48%, respectively. The average daily debt outstanding for the six months ended June 30, 2017 and June 30, 2016 was $942.3 million and $887.2 million, respectively. The maximum debt outstanding for the six months ended June 30, 2017 and June 30, 2016 was $1.0 billion and $977.9 million, respectively.

The following table represents borrowings as of June 30, 2017 :
 
Level
 
Maturity Date
 
Total Aggregate Borrowing Capacity
 
Total Principal Outstanding
 
Less Deferred Financing Costs
 
Amount per Balance Sheet
Wells Fargo Credit Facility
3
 
5/18/2022
 
$
400,000

 
$
327,152

 
$
(7,024
)
 
$
320,128

Citi Credit Facility
3
 
6/27/2018
 
400,000

 
316,003

 
(731
)
 
315,272

UBS Credit Facility
3
 
4/7/2018
 
232,500

 
232,500

 
(317
)
 
232,183

Unsecured Notes
3
 
9/1/2020
 
100,000

 
98,999

 
(398
)
 
98,601

JPMC PB Account
n/a
 
n/a
 
34,860

 
34,004

 
—

 
34,004

Totals
 
 
 
 
$
1,167,360

 
$
1,008,658

 
$
(8,470
)
 
$
1,000,188













43
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)


The following table represents borrowings as of December 31, 2016:
 
Level
 
Maturity Date
 
Total Aggregate Borrowing Capacity
 
Total Principal Outstanding
 
Less Deferred Financing Costs
 
Amount per Balance Sheet
Wells Fargo Credit Facility
3
 
5/29/2020
 
$
400,000

 
$
298,152

 
$
(2,939
)
 
$
295,213

Citi Credit Facility
3
 
6/27/2018
 
400,000

 
286,003

 
(1,097
)
 
284,906

UBS Credit Facility
3
 
4/7/2018
 
232,500

 
232,500

 
(517
)
 
231,983

Unsecured Notes
3
 
9/1/2020
 
100,000

 
98,842

 
(460
)
 
98,382

Totals
 
 
 
 
$
1,132,500

 
$
915,497

 
$
(5,013
)
 
$
910,484


The following table represents interest and debt fees for the three and six months ended June 30, 2017 :
 
Three months ended June 30, 2017
 
Six months ended June 30, 2017
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Deferred Financing Costs (3)
 
Other Fees (4)
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Deferred Financing Costs (3)
 
Other Fees (4)
Wells Fargo Credit Facility
(1)  
 
(2)  
 
$
2,860

 
$
285

 
$
265

 
(1)  
 
(2)  
 
$
5,228

 
$
498

 
$
503

Citi Credit Facility
L+1.70%
 
0.50%
 
2,264

 
184

 
124

 
L+1.70%
 
0.50%
 
4,295

 
367

 
264

UBS Credit Facility
L+4.05%
 
n/a
 
3,054

 
103

 
32

 
L+4.05%
 
n/a
 
5,985

 
205

 
55

Unsecured Notes
6.00%
 
n/a
 
1,579

 
31

 
—

 
6.00%
 
n/a
 
3,156

 
62

 
7

JPMC PB Account
L+0.90%
 
n/a
 
29

 
—

 
—

 
L+0.90%
 
n/a
 
35

 
—

 
—

Totals
 
 
 
 
$
9,786

 
$
603

 
$
421

 
 
 
 
 
$
18,699

 
$
1,132

 
$
829

_________________
(1) Interest rate is priced at one month's LIBOR with no LIBOR floor, plus a spread ranging between 1.65% and 2.50% per annum, depending on the composition of the portfolio of loans owned.
(2) The non-usage fee per annum is 0.50% for the first 25% of the unused balance and 2.0% for the unused balance that exceeds 25%.
(3) Amortization of deferred financing costs.
(4) Includes non-usage fees, custody fees and trustee fees.
















44
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)



The following table represents interest and debt fees for the three and six months ended June 30, 2016 :

 
Three months ended June 30, 2016
 
Six months ended June 30, 2016
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Deferred Financing Costs (5)
 
Other Fees (6)
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Deferred Financing Costs  (5)
 
Other Fees (6)
Wells Fargo Credit Facility
(1)  
 
(2)  
 
$
1,999

 
$
215

 
$
316

 
(1)  
 
(2)  
 
$
3,871

 
$
647

 
$
586

Deutsche Bank Credit Facility
L+4.25%
 
(3) (4)  
 
351

 
330

 
50

 
L+4.25%
 
(3)  
 
679

 
412

 
294

Citi Credit Facility
L+2.00%
 
0.50%
 
1,637

 
184

 
159

 
L+2.00%
 
0.50%
 
3,214

 
516

 
322

UBS Credit Facility
L+4.05%
 
n/a
 
2,479

 
79

 
14

 
L+4.05%
 
n/a
 
4,871

 
95

 
14

Unsecured Notes
6.00%
 
n/a
 
1,595

 
32

 
n/a

 
6.00%
 
n/a
 
3,191

 
63

 
n/a

Totals
 
 
 
 
$
8,061

 
$
840

 
$
539

 
 
 
 
 
$
15,826

 
$
1,733

 
$
1,216

_________________
(1) Interest rate is priced at one month's LIBOR with no LIBOR floor, plus a spread ranging between 1.75% and 2.50% per annum, depending on the composition of the portfolio of loans owned.
(2) The non-usage fee per annum for the first six months is 0.50%; thereafter, 0.50% for the first 20% of the unused balance and 2.0% for the unused balance that exceeds 20%.
(3) The undrawn rate is 0.75% per annum based on average undrawn amount. The Facility is subject to minimum utilization of 82.5% of the loan amount measured quarterly. If the utilized portion of the loan amount is less than the foregoing, such thresholds bears interest at LIBOR + 4.25%.
(4) On June 3, 2016, the Deutsche Bank Credit Facility was repaid and terminated.
(5) Amortization of deferred financing costs.
(6) Includes non-usage fees and custody fees.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate fair value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying statements of assets and liabilities due to their short-term nature. The fair value of the Company's Unsecured Notes is derived from the closing market price from Bloomberg Finance L.P. at June 30, 2017 and December 31, 2016, respectively.
    
At June 30, 2017, the carrying amount of our borrowings under the Facilities approximated their fair value. The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of our borrowings under the Facilities are estimated based upon market interest rates for our own borrowings or entities with similar credit risk, adjusted for nonperformance risk, if any. As of  June 30, 2017 and December 31, 2016, the Facilities would be deemed to be Level 3, as defined in Note 3.








45
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below (amounts in thousands):

 
Level
 
Carrying Amount at June 30, 2017
 
Fair Value at June 30, 2017
Wells Fargo Credit Facility
3
 
$
327,152

 
$
327,152

Citi Credit Facility
3
 
316,003

 
316,003

UBS Credit Facility
3
 
232,500

 
232,500

Unsecured Notes
3
 
98,999

 
99,124

JPMC PB Account
n/a
 
34,004

 
34,004

 
 
 
$
1,008,658

 
$
1,008,783


 
Level
 
Carrying Amount at December 31, 2016
 
Fair Value at December 31, 2016
Wells Fargo Credit Facility
3
 
$
298,152

 
$
298,152

Citi Credit Facility
3
 
286,003

 
286,003

UBS Credit Facility
3
 
232,500

 
232,500

Unsecured Notes
3
 
98,842

 
98,125

 
 
 
$
915,497

 
$
914,780


Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2017 , the Company had unfunded commitments on delayed draw term loans of $34.0 million, unfunded commitments on revolver term loans of $26.7 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2016 , the Company had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in the Company's consolidated schedule of investments. The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments.

Litigation and Regulatory Matters
 
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.
 
Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Guarantees

The Company has provided a guarantee to its controlled portfolio company, Park Ave RE Holdings, LLC, in connection with a secured loan whereby the Company will be responsible for certain liabilities of the portfolio company upon the occurrence of certain events (such as a bankruptcy or the incurrence of additional indebtedness in violation of the terms of the loan).


46
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Note 7 — Economic Dependency
 
Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations.
  
As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services.

Note 8 — Common Stock

On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No.333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through June 30, 2017 , the Company sold 193.1 million shares of common stock for gross proceeds of $2.1 billion, including shares purchased by an affiliate of BSP and shares issued under the DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company is no longer issuing new shares except for DRIP shares. As of June 30, 2017 , the Company had repurchased 12.6 million shares of common stock through its share repurchase program for payments of $ 114.3 million.

The following table reflects the common stock activity for the six months ended June 30, 2017 (dollars in thousands except share amounts):

 
 
Shares
 
Value
Shares Sold
 
—

 
$
—

Shares Issued through DRIP
 
3,475,881

 
29,834

Share Repurchases
 
(103,191
)
 
(868
)
 
 
3,372,690

 
$
28,966


The following table reflects the common stock activity for the year ended December 31, 2016 (dollars in thousands except share amounts):

 
 
Shares
 
Value
Shares Sold
 
1,165,501

 
$
10,000

Shares Issued through DRIP
 
6,591,972

 
58,424

Share Repurchases
 
(9,778,710
)
 
(85,844
)
 
 
(2,021,237
)
 
$
(17,420
)


47
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)


Note 9 — Share Repurchase Program

The Company intends to conduct semi-annual tender offers pursuant to its share repurchase program (“SRP”). The Company’s board of directors considers the following factors in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:

• the effect of such repurchases on the Company's qualification as a RIC (including the consequences of
any necessary asset sales);
• the liquidity of the Company's assets (including fees and costs associated with disposing of assets);
• the Company's investment plans and working capital requirements;
• the relative economies of scale with respect to the Company's size;
• the Company's history in repurchasing shares or portions thereof;
• the condition of the securities markets.
    
On March 8, 2016, the Company's board of directors amended the Company's SRP. The Company intends to conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. The Company intends to continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that the Company may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. The Company's three most recent tender offers were oversubscribed.
 
Quarterly Offer Date
 
Repurchase Date
 
Shares Tendered
 
Shares Repurchased
 
Repurchase Price Per Share
 
Aggregate Consideration for Repurchased Shares (in thousands)
September 12, 2012
 
October 8, 2012
 
—

 
—

 
$
9.71

 
$
—

December 13, 2012
 
January 15, 2013
 
46,975

 
10,732

 
$
9.90

 
$
106.22

March 27, 2013
 
April 25, 2013
 
29,625

 
29,625

 
$
10.18

 
$
301.58

July 15, 2013
 
August 13, 2013
 
30,365

 
30,365

 
$
10.18

 
$
308.97

October 22, 2013
 
November 21, 2013
 
55,255

 
55,255

 
$
10.36

 
$
572.44

February 4, 2014
 
March 6, 2014
 
68,969

 
68,969

 
$
10.36

 
$
714.52

June 6, 2014
 
July 11, 2014
 
117,425

 
117,425

 
$
10.36

 
$
1,216.38

August 7, 2014
 
September 10, 2014
 
111,854

 
111,854

 
$
10.36

 
$
1,158.80

December 19, 2014
 
January 23, 2015
 
313,101

 
313,101

 
$
10.36

 
$
3,243.73

March 16, 2015
 
April 15, 2015
 
162,688

 
162,688

 
$
10.36

 
$
1,685.45

June 26, 2015
 
July 31, 2015
 
533,527

 
533,527

 
$
9.72

 
$
5,185.88

September 18, 2015
 
October 20, 2015
 
728,874

 
728,874

 
$
9.53

 
$
6,946.17

December 23, 2015
 
January 25, 2016
 
7,375,871

 
3,053,869

 
$
9.22

 
$
28,156.67

July 26, 2016
 
December 31, 2016
 
17,004,354

 
6,715,864

 
$
8.58

 
$
57,622.10

June 8, 2017
 
July 6, 2017
 
11,747,753

 
3,433,482

 
$
8.52

 
$
28,576.26

    
Share amounts in the table above represent amounts filed in the tender offer.

Through June 30, 2017 , the Company had repurchased an aggregate of 12.6 million shares of common stock for payments of $ 114.3 million. As of December 31, 2016 , the Company had repurchased 12.5 million shares of common stock for payments of $113.4 million. Amounts include additional shares tendered for death and disability as permitted.


48
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)


Note 10 — Net Increase in Net Assets

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of June 30, 2017 and December 31, 2016 .

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations for the three and six months ended June 30, 2017 and June 30, 2016 :
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Basic and diluted
 
 
 
 
 
 
 
Net increase in net assets from operations
$
14,714

 
$
34,947

 
$
34,081

 
$
55,232

Weighted average common shares outstanding
179,880,734

 
178,671,810

 
179,052,951

 
178,874,087

Net increase in net assets resulting from operations per share
$
0.08

 
$
0.20

 
$
0.19

 
$
0.31

    
The table below shows changes in the Company's offering price and distribution rates since the commencement of the Company's public offering through June 30, 2017.
Announcement Date
 
New Public Offering Price
 
Effective Date
 
Daily Distribution Amount per share
 
Annualized Distribution Rate
November 14, 2011
 
$
10.26

 
November 16, 2011
 
0.002221920
 
7.90
%
May 1, 2012
 
$
10.44

 
June 1, 2012
 
0.002215850
 
7.75
%
August 14, 2012
 
$
10.50

 
September 4, 2012
 
0.002246575
 
7.81
%
September 24, 2012
 
$
10.60

 
October 16, 2012
 
0.002246575
 
7.74
%
October 15, 2012
 
$
10.70

 
November 1, 2012
 
0.002273973
 
7.76
%
February 5, 2013
 
$
10.80

 
February 18, 2013
 
0.002293151
 
7.75
%
February 25, 2013
 
$
10.90

 
March 1, 2013
 
0.002314384
 
7.75
%
April 3, 2013
 
$
11.00

 
April 16, 2013
 
0.002335616
 
7.75
%
August 15, 2013
 
$
11.10

 
August 16, 2013
 
0.002356849
 
7.75
%
October 29, 2013
 
$
11.20

 
November 1, 2013
 
0.002378082
 
7.75
%
May 28, 2015
 
$
11.15

 
April 16, 2015
 
0.002378082
 
7.78
%

Note 11 — Distributions

The Company’s board of directors has authorized, and has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to the Company's cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.


49
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

The amount of each such distribution is subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company calculates each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date the Company accepts a subscription for shares of the Company’s common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month.

From time to time, the Company may also pay interim distributions at the discretion of its board of directors. The Company may fund its cash distributions to stockholders from any sources of funds available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. The Company’s distributions may exceed its earnings, especially during the period before the Company has substantially invested the proceeds from its IPO and Follow-on. As a result, a portion of the distributions the Company will make may represent a return of capital for tax purposes. As of June 30, 2017 , the Company had accrued $ 12.9 million in stockholder distributions that were unpaid. As of December 31, 2016 , the Company had accrued $ 13.5 million in stockholder distributions that were unpaid.
    
The table below reflects the cash distributions per share that we have paid on our common stock since January 2016.
Record Date
 
Payment Date
 
Per share
 
Distributions Paid in Cash
 
Distributions Paid Through the DRIP
 
Total Distributions Paid
2016:
 
 
 
 
 
 
 
 
 
 
January 31, 2016
 
February 3, 2016
 
$
0.07

 
$
8,922

 
$
4,298

 
$
13,220

February 28, 2016
 
March 1, 2016
 
0.07

 
7,014

 
5,333

 
12,347

March 31, 2016
 
April 1, 2016
 
0.07

 
7,363

 
5,718

 
13,081

April 30, 2016
 
May 2, 2016
 
0.07

 
12,708

 
(2
)
 
12,706

May 31, 2016
 
June 2, 2016
 
0.07

 
7,582

 
5,539

 
13,121

June 30, 2016
 
July 1, 2016
 
0.07

 
7,438

 
5,304

 
12,742

July 31, 2016
 
August 1, 2016
 
0.07

 
7,789

 
5,421

 
13,210

August 31, 2016
 
September 1, 2016
 
0.07

 
7,908

 
5,351

 
13,259

September 30, 2016
 
October 3, 2016
 
0.07

 
7,745

 
5,127

 
12,872

October 31, 2016
 
November 1, 2016
 
0.07

 
8,067

 
5,273

 
13,340

November 30, 2016
 
December 1, 2016
 
0.07

 
7,947

 
5,073

 
13,020

December 31, 2016
 
January 3, 2017
 
0.07

 
8,311

 
5,205

 
13,516

 
 
 
 
 
 
$
98,794

 
$
57,640

 
$
156,434

2017:
 
 
 
 
 
 
 
 
 
 
January 31, 2017
 
February 3, 2017
 
$
0.07

 
$
7,983

 
$
5,081

 
$
13,064

February 28, 2017
 
March 1, 2017
 
0.07

 
7,250

 
4,612

 
11,862

March 31, 2017
 
April 3, 2017
 
0.07

 
8,135

 
5,060

 
13,195

April 30, 2017
 
May 1, 2017
 
0.07

 
7,942

 
4,881

 
12,823

May 31, 2017
 
June 1, 2017
 
0.07

 
8,270

 
4,995

 
13,265

June 30, 2017
 
July 3, 2017
 
0.07

 
8,064

 
4,813

 
12,877

July 31, 2017
 
August 1, 2017
 
0.06

 
6,308

 
3,695

 
10,003

 
 
 
 
 
 
$
53,952

 
$
33,137

 
$
87,089

 
 
 
 
 
 
$
152,746

 
$
90,777

 
$
243,523

    
The Company has not established any limit on the extent to which it may use borrowings, if any, or proceeds from its IPO and Follow-on to fund distributions (which may reduce the amount of capital it ultimately invests in assets). There can be no assurance that the Company will be able to sustain distributions at any particular level.


50
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Note 12 — Income Tax Information and Distributions to Stockholders

The Company has elected to be treated for federal income tax purposes as a RIC under the Code. Generally, a RIC is exempt from federal income taxes if it meets, certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4% of undistributed taxable income.

A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If the Company's expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), it would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, the Company may for tax purposes have aggregate taxable income for several taxable years that it is required to distribute and that is taxable to stockholders even if such taxable income is greater than the aggregate net income the Company actually earned during those taxable years. Such required distributions may be made from the Company cash assets or by liquidation of investments, if necessary. The Company may realize gains or losses from such liquidations. In the event the Company realizes net capital gains from such transactions, the Company may receive a larger capital gain distribution than it would have received in the absence of such transactions.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2015, 2014 and 2013 federal tax returns remain subject to examination by the Internal Revenue Service.

As of June 30, 2017 , the Company had a gross deferred tax asset of $2.5 million and a deferred tax liability of $(3.4) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.5 million. As of December 31, 2016, the Company had a gross deferred tax asset of $2.3 million and a deferred tax liability of $(2.6) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.2 million. 

The deferred tax asset valuation allowance has been determined pursuant to the provisions of ASC Topic 740, including the Company's estimation of future taxable income, if necessary, and is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.     











51

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Note 13 — Financial Highlights

The following is a schedule of financial highlights for the six months ended June 30, 2017 and June 30, 2016:

 
For the Six Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
Per share data:
 
 
 
Net asset value, beginning of period
$
8.62

 
$
8.97

 
 
 
 
Results of operations (1)
       Net investment income
0.30

 
0.34

Net realized and unrealized gain (loss) on investments, net of deferred taxes
(0.11
)
 
(0.03
)
Net increase in net assets resulting from operations
0.19

 
0.31

 
 
 
 
Stockholder distributions (2)
       Distributions
(0.43
)
 
(0.43
)
Net decrease in net assets resulting from stockholder distributions
(0.43
)
 
(0.43
)
 
 
 
 
Capital share transactions
       Issuance of common stock (3)
—

 
(0.01
)
Repurchases of common stock
—

 
—

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

 
(0.01
)
Net asset value, end of period
$
8.38

 
$
8.84

Shares outstanding at end of period
180,493,481

 
179,089,123

Total return (4)
2.20
%
 
3.51
%
Ratio/Supplemental data:
 
 
 
Net assets, end of period (in thousands)
$
1,516,005

 
$
1,586,505

Ratio of net investment income to average net assets (6)(7)
7.83
%
 
7.70
%
Ratio of total expenses to average net assets (6)(7)
6.95
%
 
6.70
%
Portfolio turnover rate (5)
19.92
%
 
14.06
%
______________
(1)  
Per share data was derived by using the weighted average shares outstanding during the period.
(2)  
The per share data for distributions reflects the actual amount of distributions declared per share during the period.
(3)  
The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock mainly from the Company's DRIP.
(4)  
Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.
(5)  
Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value. Not annualized.
(6)  
Ratios are annualized, except for incentive fees.
(7)  
There were no offering costs incurred during the period.







52
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of June 30, 2017 :

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2016
 
Gross additions *
 
Gross reductions **
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at June 30, 2017
Control Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)
 
Senior Secured First Lien Debt
 
$
—

 
$
19,708

 
$
—

 
$
—

 
$
—

 
$
(8,414
)
 
$
11,294

Kahala Ireland OpCo Designated Activity Company (3)
 
Senior Secured First Lien Debt
 
9,770

 
149,409

 
122

 
—

 
—

 
—

 
149,531

Kahala Ireland OpCo Designated Activity Company - Common Equity (3)
 
Equity/Other
 
—

 
8,180

 
—

 
—

 
—

 
2,646

 
10,826

Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)
 
Equity/Other
 
—

 
3,250

 
—

 
(62
)
 
—

 
62

 
3,250

Kahala US OpCo LLC (3)
 
Senior Secured First Lien Debt
 
120

 
2,690

 
 
 
(2,690
)
 
—

 
—

 
—

Kahala US OpCo LLC - Class A Preferred Units (3)
 
Equity/Other
 
—

 
4,000

 
—

 
(31
)
 
—

 
444

 
4,413

Park Ave RE Holdings, LLC (2)
 
Subordinated Debt
 
2,431

 
37,192

 
 
 
—

 
—

 
—

 
37,192

Park Ave RE Holdings, LLC (2)  - Common Shares
 
Equity/Other
 
—

 
6,564

 
—

 
 
 
—

 
672

 
7,236

Park Ave RE Holdings, LLC (2)  - Preferred Shares
 
Equity/Other
 
946

 
23,645

 
—

 
—

 
—

 
—

 
23,645

  Total Control Investments
 
 
 
$
13,267

 
$
254,638

 
$
122

 
$
(2,783
)
 
$
—

 
$
(4,590
)
 
$
247,387

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Answers Corporation
 
Senior Secured First Lien Debt
 
$
44

 
$
—

 
$
2,958

 
$
(8
)
 
$
—

 
$
41

 
2,991

Answers Corporation
 
Senior Secured First Lien Debt
 
(1
)
 
—

 
17,064

 
(15,365
)
 
(18,223
)
 
16,524

 
—

Answers Corporation
 
Senior Secured First Lien Debt
 
1

 
—

 
2,954

 
(2,954
)
 
 
 
—

 
—

Answers Corporation
 
Senior Secured Second Lien Debt
 
125

 
—

 
4,038

 
(12
)
 
2

 
530

 
4,558

Answers Corporation
 
Equity/Other
 
—

 
—

 
11,362

 
—

 
—

 
2,511

 
13,873

B&M CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
240

 
16,772

 
—

 
(2,843
)
 
—

 
564

 
14,493

CVP Cascade CLO, LTD. Subordinated Notes
 
Collateralized Securities
 
3

 
8,868

 
—

 
(1,189
)
 
—

 
(1,522
)
 
6,157

CVP Cascade CLO-2, LTD. Subordinated Notes
 
Collateralized Securities
 
191

 
11,593

 
—

 
(1,078
)
 
—

 
(1,470
)
 
9,045

Danish CRJ LTD.
 
Senior Secured First Lien Debt
 
—

 
20

 
—

 
(7
)
 
—

 
7

 
20

Danish CRJ LTD.
 
Equity/Other
 
—

 
407

 
—

 
—

 
—

 
(153
)
 
254

Fifth Street Senior Loan Fund LLC 2015-1A Class F
 
Collateralized Securities
 
540

 
8,455

 
80

 
—

 
—

 
77

 
8,612

Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes
 
Collateralized Securities
 
1,293

 
20,579

 
—

 
(967
)
 
—

 
(2,759
)
 
16,853

Figueroa CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
(103
)
 
16,101

 
—

 
(2,109
)
 
—

 
(2,385
)
 
11,607

MidOcean Credit CLO II, LLC Income Notes
 
Collateralized Securities
 
1,022

 
22,419

 
—

 
(1,272
)
 
—

 
(1,523
)
 
19,624


53
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2016
 
Gross additions *
 
Gross reductions **
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at June 30, 2017
MidOcean Credit CLO III, LLC Subordinated Notes
 
Collateralized Securities
 
732

 
23,341

 
—

 
(1,852
)
 
—

 
(1,312
)
 
20,177

MidOcean Credit CLO IV, LLC Income Notes
 
Collateralized Securities
 
608

 
15,505

 
—

 
(845
)
 
—

 
(1,933
)
 
12,727

NMFC Senior Loan Program I, LLC
 
Equity/Other
 
3,599

 
47,057

 
—

 
—

 
—

 
3,312

 
50,369

NewStar Arlington Senior Loan Program LLC Subordinated Notes
 
Collateralized Securities
 
2,529

 
24,491

 
—

 
(970
)
 
—

 
2,620

 
26,141

Ocean Trails CLO V, LTD.
 
Collateralized Securities
 
49

 
29,144

 
—

 
(29,128
)
 
906

 
(922
)
 
—

OFSI Fund VI, Ltd. Subordinated Notes
 
Collateralized Securities
 
1,487

 
17,354

 
—

 
(2,395
)
 
—

 
630

 
15,589

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
350

 
9,788

 
—

 
(2,691
)
 
10

 
118

 
7,225

Related Fee Agreements (5)
 
Collateralized Securities
 
488

 
9,647

 
—

 
(2,515
)
 
42

 
(833
)
 
6,341

South Grand MM CLO I, LLC
 
Equity/Other
 
1,144

 
28,382

 
—

 
—

 
—

 
109

 
28,491

Silver Spring CLO, Ltd. Subordinated Notes
 
Collateralized Securities
 
94

 
12,007

 
—

 
(2,381
)
 
—

 
1,777

 
11,403

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
799

 
6,895

 
533

 
(139
)
 
42

 
(523
)
 
6,808

Twentyeighty, Inc. - First Lien Debt (TLA 3/20)
 
Senior Secured First Lien Debt
 
163

 
—

 
2,285

 
—

 
—

 
418

 
2,703

Twentyeighty, Inc. - First Lien Debt (TLB 3/20)
 
Senior Secured First Lien Debt
 
401

 
—

 
4,041

 
—

 
—

 
(93
)
 
3,948

Twentyeighty, Inc. - First Lien Debt (TLC 3/20)
 
Senior Secured First Lien Debt
 
380

 
—

 
3,673

 
—

 
—

 
(644
)
 
3,029

Twentyeighty, Inc. - Class A Common Equity (e)
 
Equity/Other
 
1

 
—

 
—

 
—

 
—

 
—

 
—

THL Credit Greenway Fund II LLC
 
Equity/Other
 
584

 
12,850

 
—

 
(184
)
 
—

 
377

 
13,043

WhiteHorse VIII, Ltd. CLO Subordinated Notes
 
Collateralized Securities
 
178

 
12,563

 
—

 
(2,049
)
 
—

 
(1,529
)
 
8,985

Total Affiliate Investments
 
 
 
$
16,941

 
$
354,238

 
$
48,988

 
$
(72,953
)
 
$
(17,221
)
 
$
12,014

 
$
325,066

Total Control & Affiliate Investments
 
 
 
$
30,208

 
$
608,876

 
$
49,110

 
$
(75,736
)
 
$
(17,221
)
 
$
7,424

 
$
572,453

______________________________________________________
*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(1)  
The principal amount and ownership detail are shown in the consolidated schedules of investments.
(2)  
This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017 .
(3)  
This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017 .
(4)  
This investment was not deemed significant under SEC Rule 4-08(g) as of June 30, 2017 .
(5)  
Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.
(6)  
Gross of deferred taxes.



    

54
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2016 :

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2015
 
Gross additions *
 
Gross reductions **
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at December 31, 2016
Control Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)
 
Senior Secured First Lien Debt
 
$
713

 
$
29,731

 
$
8,933

 
$
—

 
$
—

 
$
(18,956
)
 
$
19,708

Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)
 
Equity/Other
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (4)
 
Equity/Other
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Kahala Ireland OpCo Designated Activity Company (3)
 
Senior Secured First Lien Debt
 
21,354

 
170,281

 
5,828

 
(26,700
)
 
—

 
—

 
149,409

Kahala Ireland OpCo Designated Activity Company - Common Equity (3)
 
Equity/Other
 
—

 
29,428

 
—

 
—

 
—

 
(21,248
)
 
8,180

Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)
 
Equity/Other
 
—

 
3,250

 
—

 
(166
)
 
—

 
166

 
3,250

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
354

 
2,604

 
86

 
—

 
—

 
—

 
2,690

Kahala US OpCo LLC - Class A Preferred Units
 
Equity/Other
 
1

 
4,136

 
—

 
(250
)
 
—

 
114

 
4,000

Park Ave RE Holdings, LLC (2)
 
Subordinated Debt
 
4,750

 
35,192

 
2,000

 
—

 
—

 
—

 
37,192

Park Ave RE Holdings, LLC (2)  - Common Shares
 
Equity/Other
 
—

 
8,115

 
—

 
(587
)
 
—

 
(964
)
 
6,564

Park Ave RE Holdings, LLC (2)  - Preferred Shares
 
Equity/Other
 
2,010

 
23,645

 
—

 
—

 
—

 
—

 
23,645

  Total Control Investments
 
 
 
$
29,182

 
$
306,382

 
$
16,847

 
$
(27,703
)
 
$
—

 
$
(40,888
)
 
$
254,638

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
$
1,938

 
$
19,169

 
$
—

 
$
(5,485
)
 
$
—

 
$
3,088

 
$
16,772

CVP Cascade CLO, LTD. Subordinated Notes
 
Collateralized Securities
 
981

 
11,114

 
—

 
(4,642
)
 
—

 
2,396

 
8,868

CVP Cascade CLO-2, LTD. Subordinated Notes
 
Collateralized Securities
 
860

 
12,216

 
—

 
(5,349
)
 
—

 
4,726

 
11,593

Danish CRJ LTD.
 
Senior Secured First Lien Debt
 
—

 
20

 
—

 
(13
)
 
—

 
13

 
20

Danish CRJ LTD.
 
Equity/Other
 
—

 
1,034

 
—

 
—

 
—

 
(627
)
 
407

Fifth Street Senior Loan Fund LLC 2015-1A Class F
 
Collateralized Securities
 
1,054

 
8,523

 
162

 
—

 
—

 
(230
)
 
8,455

Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes
 
Collateralized Securities
 
2,919

 
23,566

 
—

 
(4,660
)
 
—

 
1,673

 
20,579

Figueroa CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
1,199

 
16,112

 
—

 
(4,518
)
 
—

 
4,507

 
16,101

MidOcean Credit CLO II, LLC
 
Collateralized Securities
 
2,463

 
23,603

 
—

 
(4,627
)
 
—

 
3,443

 
22,419

MidOcean Credit CLO III, LLC
 
Collateralized Securities
 
3,516

 
23,748

 
—

 
(5,133
)
 
—

 
4,726

 
23,341

MidOcean Credit CLO IV, LLC
 
Collateralized Securities
 
2,456

 
14,212

 
—

 
(2,488
)
 
—

 
3,781

 
15,505

NMFC Senior Loan Program I, LLC
 
Equity/Other
 
7,466

 
45,994

 
—

 
—

 
—

 
1,063

 
47,057

NewStar Arlington Senior Loan Program LLC Subordinated Notes
 
Collateralized Securities
 
5,109

 
24,461

 
—

 
(3,405
)
 
—

 
3,435

 
24,491

Ocean Trails CLO V, LTD.
 
Collateralized Securities
 
4,158

 
25,957

 
—

 
(3,266
)
 
—

 
6,453

 
29,144

OFSI Fund VI, Ltd. Subordinated Notes
 
Collateralized Securities
 
2,577

 
20,205

 
—

 
(5,497
)
 
—

 
2,646

 
17,354


55
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2015
 
Gross additions *
 
Gross reductions **
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at December 31, 2016
PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
650

 
9,082

 
2,691

 
(1,615
)
 
180

 
(550
)
 
9,788

Related Fee Agreements (5)
 
Collateralized Securities
 
1,434

 
11,679

 
—

 
(2,182
)
 
—

 
150

 
9,647

South Grand MM CLO I, LLC
 
Equity/Other
 
2,234

 
29,155

 
—

 
—

 
—

 
(773
)
 
28,382

Silver Spring CLO, Ltd.
 
Collateralized Securities
 
(229
)
 
12,269

 
—

 
(3,609
)
 
—

 
3,347

 
12,007

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
—

 
—

 
20,421

 
(3,022
)
 
(11,017
)
 
513

 
6,895

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
—

 
—

 
1,035

 
(1,045
)
 
—

 
10

 
—

Squan Holding Corp. - Class A Common Stock
 
Equity/Other
 
—

 
—

 
—

 
—

 
(12
)
 
12

 
—

Squan Holding Corp. - Series A Preferred Stock
 
Equity/Other
 
—

 
—

 
—

 
—

 
(1,139
)
 
1,139

 
—

THL Credit Greenway Fund II LLC
 
Equity/Other
 
1,135

 
16,910

 
—

 
(2,912
)
 
—

 
(1,148
)
 
12,850

WhiteHorse VIII, Ltd. CLO Subordinated Notes
 
Collateralized Securities
 
1,659

 
13,955

 
—

 
(5,781
)
 
—

 
4,389

 
12,563

Total Affiliate Investments
 
 
 
$
43,579

 
$
362,984

 
$
24,309

 
$
(69,249
)
 
$
(11,988
)
 
$
48,182

 
$
354,238

Total Control & Affiliate Investments
 
 
 
$
72,761

 
$
669,366

 
$
41,156

 
$
(96,952
)
 
$
(11,988
)
 
$
7,294

 
$
608,876

______________________________________________________
*     Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
**     Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.

(1)  
The principal amount and ownership detail are shown in the consolidated schedules of investments.
(2)  
This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Park Ave RE Holdings LLC had total assets and liabilities of $136.3 million and $110.2 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $13.4 million and $1.9 million, respectively.
(3)  
This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Kahala Ireland OpCo Designated Activity Company had total assets and liabilities of $463.1 million and $463.8 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $93.4 million and $2.2 million, respectively.
(4)  
This investment is deemed significant under SEC Rule 4-08(g) as of December 31, 2016. As of December 31, 2016, Capstone Nutrition had total assets and liabilities of $86.0 million and $101.5 million, respectively. Total revenue and net (loss) for the year ended December 31, 2016 were approximately $129.3 million and $(51.6) million, respectively.
(5)  
Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.
(6)  
Gross of deferred taxes.

Note 15 – Subsequent Events

The Company has evaluated subsequent events through the filing of this Form 10-Q and determined that there have been no events that have occurred that would require adjustments to the Company’s disclosures in the consolidated financial statements except for the following:


56
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended June 30, 2017
(Unaudited)

DRIP Sales

From July 1, 2017 through the filing of this Form 10-Q, the Company issued 1.0 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $8.5 million.

Share Repurchase Program

On June 8, 2017, the Company offered to purchase no less than 3,300,000 and up to approximately 3,600,000 shares of its common stock pursuant to its SRP at a price equal to $8.52 per share. The offer expired on July 6, 2017 (the “Expiration Date”). On the Expiration Date, the Company purchased 3,433,482 shares of its common stock for aggregate consideration of $28.6 million pursuant to the limitations of the SRP as detailed in Note 9.  

Dividend Declaration

On July 18, 2017, the Company announced that its board of directors declared monthly cash dividends payable in each of August, September, October and November 2017. These monthly dividends reflect an annualized distribution rate of $0.65 per share, a change from the prior annualized distribution rate of $0.87 per share.


    



    

57


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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Business Development Corporation of America and the notes thereto, and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, BDCA Adviser, LLC (the “ Adviser ” ).

The forward-looking statements contained in this Quarterly Report on Form 10-Q may include statements as to:
•
our future operating results;
•
our business prospects and the prospects of our portfolio companies;
•
the impact of the investments that we expect to make;
•
the ability of our portfolio companies to achieve their objectives;
•
our contractual arrangements and relationships with third parties;
•
our expected financings and investments;
•
the adequacy of our cash resources and working capital;
•
the timing of cash flows, if any, from the operations of our portfolio companies;
•
our repurchase of shares;
•
actual and potential conflicts of interest with our Adviser and its affiliates;
•
the dependence of our future success on the general economy and its effect on the industries in which we invest;
•
the ability to qualify and maintain our qualifications as a regulated investment company (“RIC”) and a business development company (“BDC”);
•
the timing, form and amount of any distributions;
•
the impact of fluctuations in interest rates on our business;
•
the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
•
the impact of changes to generally accepted accounting principles, and the impact to BDCA; and
•
the impact of changes to tax legislation and, generally, our tax position.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K. Other factors that could cause actual results to differ materially include:

•
changes in the economy;
•
risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and
•
future changes in laws or regulations and conditions in our operating areas.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Overview

We are an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, we have elected to be treated for tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment activities are managed by the Adviser, a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by our board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, we are required to comply with certain regulatory requirements.

58



Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. We invest primarily in senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. We define middle market companies as those with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $10 million to $100 million, although we may invest in larger or smaller companies. We may also purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of June 30, 2017 , 80.8% of our portfolio was invested in senior secured loans.

Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in priority of payments and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. We may also invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLO's").

Financial and Operating Highlights
(Dollars in millions, except per share amounts)
 
At June 30, 2017:
 
 
Investment Portfolio:
$
2,442.3

 
Net Assets attributable to Business Development Corporation of America:
1,512.9

 
Debt (net of deferred financing costs):
1,000.2

 
Net Asset Value per share:
8.38

 
 
 
Portfolio Activity for the Six Months Ended June 30, 2017:
 
 
Cost of investments purchased during period, including PIK:
544.3

 
Sales, repayments and other exits during the period:
481.7

 
Number of portfolio companies at end of period:
146

 
 
 
Operating results for the Six Months Ended June 30, 2017:
 
 
Net investment income per share:
0.30

 
Distributions declared per share:
0.43

 
Net increase in net assets resulting from operations per share:
0.19

 
Net investment income:
53.5

 
Net realized and unrealized loss on investments:
(19.4
)
 
Net increase in net assets resulting from operations:
34.1


Portfolio and Investment Activity

During the the six months ended June 30, 2017 , we made $ 540.7 million of investments in new and existing portfolio companies and had $ 481.7 million in aggregate amount of exits and repayments, resulting in net investments of $59.0 million for the period. The portfolio composition by loan market consisted of 76.3% Middle Market (1) , 7.6% Large Corporate (2) , and 16.1% Other (3) investments. In addition, the total portfolio of debt investments at fair value consisted of 91.1% bearing variable interest rates and 8.9% bearing fixed interest rates.
______________

(1) Middle market represents companies with annual revenues of less than $1 billion.
(2) Large corporate represents companies with annual revenues exceeding $1 billion.
(3) Other represents collateralized securities and equity investments.


59


Our portfolio composition, based on fair value at June 30, 2017 was as follows:
 
June 30, 2017
 
Percentage of
Total Portfolio
 
Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt
69.1
%
 
8.6
%
Senior Secured Second Lien Debt
11.7

 
10.2

Subordinated Debt
3.1

 
13.6

Collateralized Securities (2)
7.7

 
8.5

Equity/Other
8.4

 
N/A

Total
100.0
%
 
8.9
%
______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

During the year ended December 31, 2016 , we made $ 678.5 million of investments in new and existing portfolio companies and had $ 587.9 million in aggregate amount of exits and repayments, resulting in net investments of $90.6 million for the period. The portfolio composition by loan market consisted of 75.2% Middle Market (1) , 7.2% Large Corporate (2) , and 17.6% Other (3) investments. In addition, the total portfolio of debt investments at fair value consisted of 92.2% bearing variable interest rates and 7.8% bearing fixed interest rates.
______________

(1) Middle market represents companies with annual revenues of less than $1 billion.
(2) Large corporate represents companies with annual revenues exceeding $1 billion.
(3) Other represents collateralized securities and equity investments.

Our portfolio composition, based on fair value at December 31, 2016 was as follows:
 
December 31, 2016
 
Percentage of
Total Portfolio
 
Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt
68.1
%
 
9.1
%
Senior Secured Second Lien Debt
10.9

 
10.7

Subordinated Debt
3.4

 
13.5

Collateralized Securities (2)
10.4

 
11.5

Equity/Other
7.2

 
N/A

Total
100.0
%
 
9.7
%
______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

Portfolio Asset Quality

Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.

60


 Loan Rating
 
Summary Description
1
  
Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable.
 
 
2
  
Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. All investments are initially rated a “2”.
 
 
3
  
Performing debt investment requiring closer monitoring. Trends and risk factors show some deterioration.
 
 
4
  
Underperforming debt investment. Some loss of interest or dividend expected, but still expecting a positive return on investment. Trends and risk factors are negative.
 
 
5
  
Underperforming debt investment with expected loss of interest and some principal.

The weighted average risk ratings of our investments based on fair value was 2.24 and 2.18 as of June 30, 2017 and December 31, 2016, respectively. As of June 30, 2017 , the Company had seven portfolio companies, which represented thirteen portfolio investments, on non-accrual status with a total principal amount of $140.2 million, amortized cost of $131.4 million, and fair value of $61.6 million, which represented 5.1%, 5.2% and 2.5% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016 , the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.
 
RESULTS OF OPERATIONS

Operating results for the three and six months ended June 30, 2017 and June 30, 2016 was as follows (dollars in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Total investment income
$
56,261

 
$
57,573

 
$
112,932

 
$
114,491

Total expenses
28,932

 
29,910

 
58,196

 
53,290

Income tax expense, including excise tax
635

 
—

 
1,270

 
—

Net investment loss attributable to non-controlling interests
4

 
4

 
6

 
11

Net investment income
$
26,690

 
$
27,659

 
$
53,460

 
$
61,190


  Investment Income

For the three and six months ended June 30, 2017 , total investment income was $ 56.3 million and $ 112.9 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.4 billion and a weighted average current yield of 8.9%. Included within total investment income was $3.4 million and $5.1 million, respectively, of fee income for the three and six months ended June 30, 2017 . Fee income consists primarily of prepayment and amendment fees. For the three and six months ended June 30, 2016, total investment income was $57.6 million and $114.5 million, respectively, and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.3 billion and a weighted average current yield of 9.7%. Included within total investment income was $2.2 million and $3.5 million, respectively, of fee income for the three and six months ended June 30, 2016. Fee income consists primarily of prepayment and amendment fees.


61


Operating Expenses

The composition of our operating expenses for the three and six months ended June 30, 2017 and June 30, 2016 was as follows (dollars in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Management fees
$
9,691

 
$
9,593

 
$
19,229

 
$
19,006

Incentive fee on income
4,948

 
6,878

 
11,314

 
6,878

Interest and debt fees
10,810

 
9,440

 
20,660

 
18,775

Professional fees
1,344

 
1,460

 
2,824

 
2,780

Other general and administrative
1,720

 
2,133

 
3,346

 
5,014

Administrative services
203

 
203

 
406

 
453

Insurance
2

 
55

 
8

 
110

Directors' fees
214

 
148

 
409

 
274

Total operating expenses
$
28,932

 
$
29,910


$
58,196

 
$
53,290


For the three and six months ended June 30, 2017 , we incurred $ 9.7 million and $ 19.2 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2017 , we incurred $ 4.9 million and $ 11.3 million, respectively, of incentive fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2016, we incurred $9.6 million and $19.0 million, respectively, of management fees, of which the Adviser did not waive any such fees. For the three and six months ended June 30, 2016, we incurred $6.9 million and $6.9 million, respectively, of incentive fees, of which the Adviser did not waive any such fees.

For the three and six months ended June 30, 2017 , we incurred interest and debt fees of $ 10.8 million and $ 20.7 million, respectively. For the three and six months ended June 30, 2016, we incurred interest and debt fees of $9.4 million and $18.8 million, respectively. Interest and debt fees are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs and amortization of discount if applicable related to the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility, Unsecured Notes and the JPMC PB Account. The increase in interest and debt fees for the three and six months ended June 30, 2017 as compared to the same periods in 2016 is a result of an increase in the average debt outstanding and an increase in amortization of deferred financing costs due to credit facility amendments.


62


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

Net realized gain and net change in unrealized appreciation (depreciation) on investments for the three and six months ended June 30, 2017 and June 30, 2016 were as follows (dollars in thousands):
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
Net realized gain (loss) from investments
 
 
 
 
 
 
 
   Control investments
$
—

 
$
—

 
$
—

 
$
—

   Affiliate investments
(18,192
)
 
—

 
(17,221
)
 
180

   Non-affiliate investments
(6,020
)
 
1,207

 
(17,762
)
 
2,224

Total net realized gain (loss) from investments
(24,212
)
 
1,207

 
(34,983
)
 
2,404

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
 
 
 
 
 
 
   Control investments
755

 
(8,498
)
 
(5,196
)
 
(1,995
)
   Affiliate investments
12,852

 
24,066

 
12,014

 
15,878

   Non-affiliate investments
(1,275
)
 
(10,171
)
 
9,090

 
(22,929
)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
12,332

 
5,397

 
15,908

 
(9,046
)
Net change in unrealized appreciation (depreciation) attributable to non-controlling interests
(96
)
 
684

 
(304
)
 
684

Net realized and unrealized gain (loss) on investments
$
(11,976
)
 
$
7,288

 
$
(19,379
)
 
$
(5,958
)

Net realized and unrealized gain (loss) on investments, net of deferred taxes, resulted in a net loss of $ 12.0 million and $ 19.4 million, respectively, for the three and six months ended June 30, 2017 compared to a net gain of $ 7.3 million and a net loss of $ (6.0) million, respectively, for the same periods in 2016. We look at net realized gains (losses) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

The net realized and unrealized loss for the three and six months ended  June 30, 2017  was primarily driven by realized losses on multiple senior secured investments and unrealized depreciation on our Collateralized Securities. The net realized and unrealized gain (loss) for the three and six months ended June 30, 2016 was primarily driven by the unrealized appreciation on our Collateralized Securities.
        
Changes in Net Assets from Operations

For the three and six months ended June 30, 2017 , we recorded a net increase in net assets resulting from operations of $ 14.7  million and $ 34.1 million, respectively, versus a net increase in net assets resulting from operations of $34.9 million and $55.2 million, respectively, for the three and six months ended June 30, 2016. The decrease is primarily attributable to an increase in net realized and unrealized loss on investments. Based on the weighted average shares of common stock outstanding for the three and six months ended June 30, 2017 , our per share net increase in net assets resulting from operations was $ 0.08 and $ 0.19 , respectively, versus a net increase in net assets resulting from operations of $0.20 and $0.31, respectively, for the three and six months ended June 30, 2016.

Cash Flows

For the six months ended June 30, 2017 , net cash used in operating activities was $ 28.9 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio
investments. During the six months ended June 30, 2017 , we used $ 28.9 million in operating activities, primarily as a result of purchases of investments of $ 540.7 million as well as an increase in receivable for unsettled trades of $ 22.5 million, partially offset by sales and repayments of investments of $ 481.7 million.


63


Net cash used in financing activities of $ 17.7 million during the six months ended June 30, 2017 primarily related to net repurchases of common stock of $ 57.6 million and payments of stockholder distributions of $ 47.9 million, partially offset by proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the JPMC PB Account of $93.0 million.

For the six months ended June 30, 2016, net cash provided by operating activities was $104.6 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio
investments. The increase in cash flows used in operating activities for the six months ended June 30, 2016 was primarily due to $328.0 million in sales and repayments of investments, a net increase in net assets of $55.2 million and an increase in unsettled purchases of $46.6 million, offset by cash used in operating activities for purchases of $325.3 million.

Net cash used in financing activities of $5.4 million during the six months ended June 30, 2016 primarily related to net proceeds from the Wells Fargo Credit Facility, Citi Credit Facility and the UBS Credit Facility of $75.5 million. These inflows were partially offset by payments of stockholder distributions of $50.8 million and repurchases of common stock of $28.2 million.
    
Recent Developments

Distribution Reinvestment Plan ("DRIP") Sales

From July 1, 2017 through the filing of this Form 10-Q, we issued 1.0 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $8.5 million.

Share Repurchase Program

On June 8, 2017, we offered to purchase no less than 3,300,000 and up to approximately 3,600,000 shares of our common stock pursuant to our share repurchase program (“SRP”) at a price equal to $8.52 per share. The offer expired on July 6, 2017 (the “Expiration Date”). On the Expiration Date, we purchased 3,433,482 shares of our common stock for aggregate consideration of $28.6 million pursuant to the limitations of the SRP as detailed in Note 9 to the consolidated financial statements.  

Dividend Declaration

On July 18, 2017, we announced that our board of directors declared monthly cash dividends payable in each of August, September, October and November 2017. These monthly dividends reflect an annualized distribution rate of $0.65 per share, a change from the prior annualized distribution rate of $0.87 per share.

Liquidity and Capital Resources

We generate cash flows from fees, interest and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of June 30, 2017 , we had issued 193.1 million shares of our common stock for gross proceeds of $ 2.1 billion, including shares issued to the BSP affiliate and shares issued pursuant to the DRIP.

Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to raise proceeds in our public offering will be dependent on a number of factors as well, including general market conditions for BDCs.


64


We intend to conduct semi-annual tender offers pursuant to our share repurchase program. Our board of directors will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:

•
the effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales);
•
the liquidity of our assets (including fees and costs associated with disposing of assets);
•
our investment plans and working capital requirements;
•
the relative economies of scale with respect to our size;
•
our history in repurchasing shares or portions thereof; and
•
the condition of the securities markets.

On March 8, 2016, our board of directors amended our share repurchase program. We intend to conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. We intend to continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that we may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

Distributions

Our board of directors has authorized, and has declared, cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. From November 2013 until July 2017, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year. In July 2017, the board of directors reduced the distribution rate with respect to our cash distributions to $0.001780822 per day, which is equivalent to $0.65 annually, per share of common stock.

The amount of each such distribution is subject to the discretion of our board of directors and applicable legal restrictions related to the payment of distributions. We calculate each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date we accept a subscription for shares of our common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month.

From time to time, we may also pay interim distributions at the discretion of our board of directors. Our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our IPO. As a result, a portion of the distributions we make may represent a return of capital for tax purposes.

The table below shows the components of the distributions we have declared and/or paid during the six months ended June 30, 2017 and 2016 (dollars in thousands).

 
For the Six Months Ended June 30,
 
2017
 
2016
Distributions declared
$
77,086

 
$
77,217

Distributions paid
$
77,725

 
$
77,689

Portion of distributions paid in cash
$
47,891

 
$
50,813

Portion of distributions paid in DRIP shares
$
29,834

 
$
26,876


As of June 30, 2017 , we had $ 12.9 million of distributions accrued and unpaid.
    
We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available

65


sources to make distributions. We may have distributions which could be characterized as a return of capital for tax purposes . During the six months ended June 30, 2017 and 2016, no portion of our distributions were characterized as return of capital for tax purposes. You should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all.

The following table sets forth the distributions made during the six months ended June 30, 2017 and 2016 (dollars in thousands):
 
For the Six Months Ended June 30,
 
2017
 
2016
Monthly distributions
$
77,086

 
$
77,217

Total distributions
$
77,086

 
$
77,217


Election as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code commencing with our taxable year ended December, 31 2011, and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders from our tax earnings and profits. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to U.S federal excise, state, local and foreign taxes. We may be subject to a 4% U.S federal excise tax.

Related Party Transactions and Agreements

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, we amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as investment adviser to us following the closing of the Transaction.

Investment Advisory Agreement
    
We entered into an Investment Advisory Agreement on November 1, 2016 under which the Adviser, subject to the overall supervision of our board of directors manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or subadvisor to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust. The Adviser’s policies are designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities pursuant to the SEC exemptive order. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.







66


Administration Agreement

In connection with the closing of the Transaction, we terminated our previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP will provide us with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from entering into negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. The SEC staff has granted us exemptive relief that allows it to enter into certain negotiated co-investment transactions alongside other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our eligible directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Transactions with Affiliates

In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of our common stock based on our net asset value per share as of September 30, 2016 in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933. On November 7, 2016, we issued approximately 1.2 million shares of our common stock to such BSP affiliate.

Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at June 30, 2017 (dollars in thousands):

 
 
 
Payment Due by Period
 
Total
 
Less than 1 year
 
1 - 3 years
 
3- 5 years
 
More than 5 years
Wells Fargo Credit Facility (1)
$
327,152

 
$
—

 
$
—

 
$
327,152

 
$
—

Citi Credit Facility (2)
316,003

 
316,003

 
—

 
—

 
—

UBS Credit Facility (3)
232,500

 
232,500

 
—

 
—

 
—

Unsecured Notes (4)
98,999

 
—

 
—

 
98,999

 
—

JPMC PB Account (5)
34,004

 
—

 
—

 
—

 
34,004

Total contractual obligations
$
1,008,658

 
$
548,503

 
$
—

 
$
426,151

 
$
34,004

______________

(1)  
As of June 30, 2017 , we had $72.8 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.
(2)  
As of June 30, 2017 , we had $84.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.
(3)  
As of June 30, 2017 , we had no unused borrowing capacity under the UBS Credit Facility, subject to borrowing base limits.
(4)  
As of June 30, 2017 , we had no unused borrowing capacity under the Unsecured Notes.
(5)  
As of June 30, 2017 , we had $0.9 million of unused borrowing capacity under the JPMC PB Account.


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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of June 30, 2017 , we had unfunded commitments on delayed draw term loans of $34.0 million, unfunded commitments on revolver term loans of $26.7 million and unfunded equity capital commitments of $6.0 million. As of December 31, 2016 , we had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in our consolidated schedule of investments. We maintain sufficient cash on hand and available borrowing capacity to fund such unfunded commitments.

Significant Accounting Estimates and Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

While our significant accounting policies are more fully described in Note 2 of Notes to Consolidated Financial Statements appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the consolidated statements of assets and liabilities at fair value. On a quarterly basis we perform an analysis of each investment to determine fair value as follows:

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, we use the quote obtained.

Investments without a readily determined market value are primarily valued using a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, we measure the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of our measurement date.

For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on the priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk,

68


among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available. 

As part of our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•
Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our board of directors;
•
The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and
•
The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser, independent valuation firm (to the extent applicable) and the audit committee of the board of directors.

Because there is not a readily available market value for most of the investments in its portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

Revenue Recognition

Interest Income

Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments.

We have a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in our case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets. We monitor the expected cash inflows from our equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.
Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends

We hold debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.


69


Non-accrual income

Investments are placed on non-accrual status when principal or interest/dividend payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated using the specific identification method. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
 
See Note 2 to the consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements, subject to the requirements of the 1940 Act, in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We would not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
    
As of June 30, 2017 , our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 3.52% and fixed rate debt, bearing an interest rate of 6.00% with a total carrying value of $ 1,008.7 million. The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 100 or 200 basis points or decrease by 25 basis points assuming that our current statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity.

Change in Interest Rates
 
Estimated Percentage Change in Interest Income net of Interest Expense
(-) 25 Basis Points
 
1.39
%
Base Interest Rate
 
—
%
(+) 100 Basis Points
 
6.05
%
(+) 200 Basis Points
 
11.99
%

Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

70


    
ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
 
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.

Change in Internal Control Over Financial Reporting
 
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of June 30, 2017 , we are not defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.

CLOs typically will have no significant assets other than their underlying loans; payments on CLO investments are and will be payable solely from the cash flows from such loans.

CLOs typically will have no significant assets other than their underlying loans. Accordingly, payments on Collateralized Securities are and will be payable solely from the cash flows from such underlying loans, net of all management fees and other expenses. Payments to us as a holder of Collateralized Securities are subject to payments received on the underlying loans. This means that relatively small numbers of defaults of underlying loans may adversely impact our returns.

Collateralized Securities are exposed to leveraged credit risk.

We may be in a subordinated position with respect to realized losses on the loans in CLOs. The leveraged nature of CLOs, in particular, magnifies the adverse impact of loan defaults. Collateralized Securities represent a leveraged investment with respect to the underlying loans. Therefore, changes in the market value of Collateralized Securities could be greater than the change in the market value of the underlying loans, which are subject to credit, liquidity and interest rate risk.

There is the potential for interruption and deferral of cash flow from CLO investments.

If certain minimum collateral value ratios and/or interest coverage ratios are not met by a CLO, primarily due to loan defaults, then cash flow that otherwise would have been available to pay distributions to us on our CLO investments may

71


instead be used to redeem any senior notes or to purchase additional loans, until the ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the holders of such Collateralized Securities, which would adversely impact our returns.

The inability of a CLO collateral manager to reinvest the proceeds of the prepayment of loans may adversely affect us.

There can be no assurance that for any CLO investment, in the event that any of the loans of a CLO underlying such investment are prepaid, the CLO collateral manager will be able to reinvest such proceeds in new loans with equivalent investment returns. If the CLO collateral manager cannot reinvest in new loans with equivalent investment returns, the interest proceeds available to pay interest on the rated liabilities and investments may be adversely affected.

Collateralized Securities are subject to prepayments and calls, increasing re-investment risk.

Collateralized Securities and/or the underlying loans may be prepaid more quickly than expected, which could have an adverse impact on the Company’s value. Prepayment rates are influenced by changes in interest rates and a variety of economic, geographic and other factors beyond the Company’s control, and consequently cannot be predicted with certainty. In addition, for a CLO collateral manager there is often a strong incentive to refinance well performing portfolios once the senior tranches amortize. The yield to maturity of the investments will depend on the amount and timing of payments of principal on the loans and the price paid for the securities. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments of the debt.

Furthermore, Collateralized Securities generally do not contain optional call provisions, other than a call at the option of the holders of the equity tranches for the senior notes and the junior secured notes to be paid in full after the expiration of an initial period in the deal (referred to as the ‘‘non-call period’’).

The exercise of the call option is by the relevant percentage (usually a majority) of the holders of the equity tranches and, therefore, where the Company does not hold the relevant percentage it will not be able to control the timing of the exercise of the call option. The equity tranches also generally have a call at any time based on certain tax event triggers. In any event, the call can only be exercised by the holders of equity tranches if they can demonstrate (in accordance with the detailed provisions in the transaction) that the senior notes and junior secured notes will be paid in full if the call is exercised.

Early prepayments and/or the exercise of a call option other than at the Company’s request may also give rise to increased re-investment risk with respect to certain investments, as the Company may realize excess cash earlier than expected. If the Company is unable to reinvest such cash in a new investment with an expected rate of return at least equal to that of the investment repaid, this may reduce the Company’s net income and, consequently, could have an adverse impact on its ability to pay dividends.

Loans of CLOs may be sold and replaced resulting in a loss to us.

The loans underlying Collateralized Securities may be sold and replacement collateral purchased within the parameters set out in the relevant CLO indenture between the CLO and the CLO trustee and those parameters may typically only be amended, modified or waived by the agreement of a majority of the holders of the senior notes and/or the junior secured notes and/or the equity tranche once the CLO has been established. If these transactions result in a net loss, the magnitude of the loss from the perspective of the equity tranche would be increased by the leveraged nature of the investment.

Our investments in CLOs may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income.

We may in the future purchase residual or subordinated interests in CLOs that are treated for U.S. federal income tax purposes as shares in a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’). If we acquire shares in a PFIC (including equity tranche investments in CLOs that are PFICs), we may be subject to U.S. federal income tax on a portion of any ‘‘excess distribution’’ or gain from the disposition of such shares even if such income is distributed as a taxable distribution by us to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our share of the PFICs income for each year regardless of whether we receive any distributions from such PFICs. We must nonetheless distribute such income to maintain our status as a RIC.

If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (‘‘CFC’’) (including equity tranche investments in a CLO treated as CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of

72


the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC status regardless of whether or not the CFC makes an actual distribution during such year.

If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.

Proposed regulations may impact our ability to qualify as a RIC if we do not receive timely distributions from our CLO investments.

As discussed above, we may be required to include in our income our proportionate share of the income of certain CLO investments to the extent that such CLOs are PFICs for which we have made a qualifying electing fund (‘‘QEF’’) election or are CFCs. To qualify as a RIC, we must, among other thing, derive in each taxable year at least 90% of our gross income from certain sources specified in the Code (the ‘‘90% Income Test’’). Although the Code generally provides that the income inclusions from a QEF or a CFC will be ‘‘good income’’ for purposes of this 90% Income Test to the extent that the QEF or the CFC distribute such income to us in the same taxable year to which the income is included in our income, the Code does not specifically provide whether these income inclusions would be ‘‘good income’’ for this 90% Income Test if we do not receive distributions from the QEF or CFC during such taxable year. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF or a CFC included in a RIC’s gross income would constitute ‘‘good income’’ for purposes of the 90% Income Test. Such rulings are not binding on the IRS except with respect to the taxpayers to whom such rulings were issued. Accordingly, under current law, we believe that the income inclusions from a CLO that is a QEF or a CFC would be ‘‘good income’’ for purposes of the 90% Income Test. Recently, the IRS and U.S. Treasury Department issued proposed regulations that provide that the income inclusions from a QEF or a CFC would not be good income for purposes of the 90% Income Test unless we receive a cash distribution from such entity in the same year attributable to the included income. If such income were not considered ‘‘good income’’ for purposes of the 90% Income Test, we may fail to qualify as a RIC. If these regulations are finalized, we will carefully monitor our investments in CLOs to avoid disqualification as a RIC.

The Collateralized Securities in which we invest may be subject to withholding tax if they fail to comply with certain reporting requirements.

Legislation commonly referred to as the ‘‘Foreign Account Tax Compliance Act,’’ or FATCA, imposes a withholding tax of 30% on payments of U.S. source interest and distributions, and gross proceeds from the disposition of an instrument that produces U.S. source interest or distributions paid after December 31, 2018, to certain non-U.S. entities, including certain non U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its U.S. account holders and its U.S. owners. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

As discussed above, we intend to conduct tender offers pursuant to our share repurchase program on a semi-annual basis. We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. Our three most recent tender offers were oversubscribed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


73

BUSINESS DEVELOPMENT CORPORATION OF AMERICA


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Amendments to Second Articles of Amendment

During the Company’s 2017 annual meeting of shareholders (as such meeting may have been adjourned and reconvened), our shareholders approved amendments to our Second Articles of Amendment and Restatement by a majority of the votes cast at such meeting. As a result, on August 8, 2017, we filed the Third Articles of Amendment and Restatement (the “Articles of Amendment”) with the State of Maryland Department of Assessments and Taxation, pursuant to which our Second Articles of Amendment and Restatement were amended to classify our board of directors into three classes, with the directors in each class serving staggered three-year terms of office (with such Articles of Amendment referred to herein as the “Classified Board Amendment”).

The Classified Board Amendment classifies the board of directors into three separate classes designated as Class I, Class II, and Class III, with two of the classes comprised of two directors and one comprised of three directors. Beginning with the 2018 annual meeting, the classes shall rotate for election each year such that the directors in one class will be subject to election every third year to serve a three-year term staggered among the classes. The Classified Board Amendment also provides that a director elected by the board of directors to fill a vacancy will hold office until the next election of the class for which such director has been chosen, subject to election and qualification of a successor and to such director’s earlier death, resignation, or removal.

Following the filing of the Classified Board Amendment, our board of directors is now classified into the following classes:

Class and Names of Directors
Annual Meeting at which Term Expires
Class I
2018
Richard J. Byrne
Lee S. Hillman
Randolph C. Read
 
 
 
Class II
2019
Edward G. Rendell
 
Dennis M. Schaney
 
Class III
2020
Ronald J. Kramer
Leslie D. Michelson
 
Committees of the Board
In accordance with the transactions described above, the board of directors reconstituted the committees of the board. The board of directors determined in its business judgment that each of the members of the below committees are “independent” as defined in the applicable rules and regulations of the SEC and disinterested as required under the 1940 Act. The reconstituted committees of the board of directors are as follows:
Audit Committee
The board of directors appointed Messrs. Hillman, Kramer, Michelson and Read to the Audit Committee with Lee Hillman serving as chair of the Audit Committee.
Compensation Committee
The board of directors appointed Messrs. Hillman, Read, Rendell, and Schaney to the Compensation Committee with Edward Rendell serving as chair of the Compensation Committee. The board of directors determined that the members of the

74


Compensation Committee are non-employee directors under the applicable rules and regulations of the SEC and outside directors under Section 162(m) of the Internal Revenue Code of 1986, as amended.

Nominating and Corporate Governance Committee
The board of directors appointed Messrs. Kramer, Michelson, Rendell and Schaney to the Nominating and Corporate Governance Committee with Mr. Kramer serving as chair of the Nominating and Corporate Governance Committee.

Appointment of Leslie D. Michelson as Lead Independent Director
The board of directors also reappointed Leslie D. Michelson to the position of Lead Independent Director.

Amendment of Bylaws

On August 3, 2017, the board of directors approved, effective immediately, amendments to and a restatement of our Bylaws (the “Bylaw Amendments”) in connection with the Company’s preparation to list its shares of common stock on a national securities exchange. The Bylaw Amendments implement an exclusive forum provision and make other technical or minor changes that are consistent with the bylaws enacted by other business development corporations whose securities are listed and traded on national securities exchanges. New Article XIII of the Bylaws provides that, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for certain legal actions involving the Company will be the Circuit Court for Baltimore City, Maryland (or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division).

The above descriptions of the Classified Board Amendment and the Bylaw Amendments are qualified in their entirety by reference to the complete text of the Articles of Amendment and the amended provisions contained in the Amended and Restated Bylaws, respectively, copies of which are filed with this Quarterly Report on Form 10-Q report as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference .






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ITEM 6. EXHIBITS

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the six months ended June 30, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.
Description
 
 
3.1
Third Articles of Amendment and Restatement of the Registrant.
 
 
3.2
Amended and Restated Bylaws.
 
 
11
Computation of Per Share Earnings (included in the notes to the unaudited consolidated financial statements contained in this report).
 
 
31.1
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 
 
31.2
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 
 
32
Written statement of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
 
 
 
 
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Richard J. Byrne
Richard J. Byrne
 
Chief Executive Officer, President and Chairman of the Board of Directors
(Principal Executive Officer)
 
August 10, 2017
/s/ Corinne D. Pankovcin
Corinne D. Pankovcin
 
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 
August 10, 2017





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Exhibit 3.1


THIRD ARTICLES OF AMENDMENT AND RESTATEMENT
OF
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

FIRST : Business Development Corporation of America (the “ Corporation ”), a Maryland corporation, desires to amend and restate its charter.

SECOND : The following provisions are all the provisions of the charter of the Corporation currently in effect and as hereinafter amended:

ARTICLE I
NAME

The name of the corporation is Business Development Corporation of America.

ARTICLE II
PURPOSE

The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force, including conducting and carrying on the business of a business development company, subject to making an election therefor under the Investment Company Act of 1940, as amended (the “ 1940 Act ”).

ARTICLE III
RESIDENT AGENT AND PRINCIPAL OFFICE

The address of the principal office of the Corporation in the State of Maryland is c/o The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland 21201.  The name and address of the resident agent of the Corporation is The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland.  The resident agent is a Maryland corporation.

ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

Section 4.1 Number, Term and Election of Directors . The business and affairs of the Corporation shall be managed under the direction of the board of directors. The number of directors of the Corporation is seven, which number may be increased or decreased from time to time by the board of directors pursuant to the bylaws of the Corporation (“ Bylaws ”). A majority of the board of directors shall be independent directors,

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except for a period of up to 60 days after the death, removal or resignation of an independent director pending the election of such independent director’s successor. A director is considered independent if he or she is not an “interested person” as that term is defined under Section 2(a)(19) of the 1940 Act. The names of the directors currently in office are Richard J. Byrne, Lee S. Hillman, Ronald J. Kramer, Leslie D. Michelson, Randolph C. Read, Edward G. Rendell, and Dennis M. Schaney.

The Corporation elects, at such time as it becomes eligible, to make the election provided for under Section 3-804(c) of the Maryland General Corporation Law (the “ MGCL ”), subject to applicable requirements of the 1940 Act and except as may be provided by the board of directors in setting the terms of any class or series of Preferred Stock (as hereinafter defined), any and all vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is duly elected and qualifies.

From and after the date of these Articles of Amendment and Restatement are filed with and accepted for record by the State Department of Assessments and Taxation of the State of Maryland ( “SDAT” ), the directors (other than any director elected solely by holders of one or more classes or series of Preferred Stock ) shall be classified , with respect to the terms for which they severally hold office, into three classes, as nearly equal in number as possible as determined by the board of directors, one class to hold office initially for a term expiring at the next succeeding annual meeting of stockholders , another class to hold office initially for a term expiring at the second succeeding annual meeting of stockholders and another class to hold office initially for a term expiring at the third succeeding annual meeting of stockholders, with the members of each class to hold office until their successors are duly elected and qualify. At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. Unless the bylaws of the Corporation provide otherwise, a plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director, subject to applicable requirements of the 1940 Act and except as may be provided by the board of directors in setting the terms of any class or series of Preferred Stock. Directors may be elected to an unlimited number of successive terms.

Section 4.2 Extraordinary Actions . Except as provided in Section 4.8 and Section 6.2 , notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of shares of stock entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable and taken or approved by the board of directors, and approved by the affirmative vote of holders of shares of stock entitled to cast a majority of all the votes entitled to be cast on the matter.

Section 4.3 Authorization by Board of Stock Issuance . The board of directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of stock of any class or series, whether now or hereafter authorized, for such consideration as the board of directors may deem advisable (or without

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consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter or the Bylaws.

Section 4.4 Preemptive Rights . Except as may be provided by the board of directors in setting the terms of classified or reclassified shares of stock pursuant to Section 5.4 or as may otherwise be provided by contract approved by the board of directors, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.

Section 4.5 Appraisal Rights . Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the board of directors, upon the affirmative vote of a majority of the board of directors, shall determine that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

Section 4.6 Determinations by Board . The determination as to any of the following matters, made in good faith by or pursuant to the direction of the board of directors consistent with the charter shall be final and conclusive and shall be binding upon the Corporation and every stockholder: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of stated capital, capital surplus, net assets, other surplus, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any class or series of stock of the Corporation); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation or any shares of stock of the Corporation; the number of shares of stock of any class or series of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; the application of any provision of the charter in the case of any ambiguity, including, without limitation, any provision of the definitions of Affiliate and Sponsor and whether expenses qualify as Organizational and Offering Expenses; any conflict between the MGCL and the provisions set forth in the North American Securities Administrators Association (“ NASAA ”) Omnibus Guidelines; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the charter or the Bylaws or otherwise to be determined by the board of directors, including changing the name of the Corporation; provided, however, that any determination by the board of directors as to any of the preceding matters shall not render invalid or improper any action taken or omitted prior to such determination and no director shall be liable for making or failing to make such a determination; and provided further that for so long as the shares of Common Stock of the Corporation do not qualify as “covered securities” as defined by Section 18 of the 1933 Act, to the extent the board of directors determines that the MGCL conflicts with the provisions set forth in the NASAA

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Omnibus Guidelines, the NASAA Omnibus Guidelines control to the extent any provisions of the MGCL are not mandatory.

Section 4.7 Removal of Directors .  Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire board of directors, may be removed from office at any time, only for cause and only by the affirmative vote of at least a two-thirds of all the votes entitled to be cast generally in the election of directors. For the purposes of this paragraph, “cause” shall mean with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

Section 4.8 Stockholders’ Consent in lieu of Meeting . Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting by consent, in writing or by electronic transmission, in any manner and by the vote permitted by the MGCL and set forth in the Bylaws.

ARTICLE V
STOCK

Section 5.1 Authorized Stock . The Corporation has authority to issue 500,000,000 shares of stock, of which 450,000,000 shares are classified as common stock, $0.001 par value per share (“ Common Stock ”), and 50,000,000 shares are classified as Preferred Stock, $0.001 par value per share (“ Preferred Stock ”). The aggregate par value of all authorized stock having par value is $500,000. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to Sections 5.2 , 5.3 or 5.4 of this Article V , the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph. A majority of the entire board of directors may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

Section 5.2 Common Stock . Except as may otherwise be specified in the charter, each share of Common Stock shall entitle the holder thereof to one vote. Except as otherwise provided in this charter, and subject to the express terms of any class or series of Preferred Stock, holders of Common Stock shall have the exclusive right to vote on all matters as to which a stockholder is entitled to vote pursuant to applicable law at all meetings of stockholders. In the event of any voluntary or involuntary liquidation, dissolution or winding up, the aggregate assets available for distribution to holders of Common Stock shall be determined in accordance with applicable law and the charter. Each holder of Common Stock shall be entitled to receive, ratably with each other holder of Common Stock, that portion of the assets available for distribution as the number of outstanding shares of stock of such class held by such holder bears to the total number of outstanding shares of stock of such class then outstanding. The board of directors may classify or reclassify any unissued shares of Common Stock from time to time, into one or more classes or series of Common Stock or Preferred Stock by setting or changing the preferences, conversion or other rights, voting powers,

4

restrictions, limitations, as to dividends or other distributions, qualifications, or terms or conditions of redemption of the stock.

Section 5.3  Preferred Stock . The board of directors may issue shares of Preferred Stock or classify or reclassify any unissued shares of Preferred Stock from time to time, in one or more classes or series of Preferred Stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations, as to dividends or other distributions, qualifications, or terms or conditions of redemption of the stock.

Section 5.4 Classified or Reclassified Shares . Prior to issuance of classified or reclassified shares of any class or series, the board of directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“ SDAT ”). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the charter (including determinations by the board of directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary filed with the SDAT or other charter document.

Section 5.5 Charter and Bylaws . The rights of all stockholders and the terms of all stock are subject to the provisions of the charter and the Bylaws. The board of directors of the Corporation shall have the exclusive power to make, alter, amend or repeal the Bylaws.

ARTICLE VI
AMENDMENTS; CERTAIN EXTRAORDINARY ACTIONS

Section 6.1 Amendments Generally . The Corporation reserves the right from time to time, and upon the requisite approval by the board of directors and the stockholders, to make any amendment to the charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter, of any shares of outstanding stock. Provided that the board of directors has declared the amendment advisable and submitted it to the stockholders, any amendment to the charter must be approved by a vote by the holders of a majority of the outstanding shares of stock of the Corporation entitled to vote on the matter (or such greater proportion as may be required elsewhere in the charter). All rights and powers conferred by the charter on stockholders, directors and officers are granted subject to this reservation.

Section 6.2 Approval of Certain Charter Amendments and Dissolution . The affirmative vote of the holders of shares entitled to cast at least two-thirds of all the votes entitled to be cast on the matter shall be necessary to effect:

5

(a) any amendment to the charter to make the Common Stock a “redeemable security” or to convert the Corporation, whether by merger or otherwise, from a “closed-end company” to an “open-end company” (as such terms are defined in the 1940 Act); and
(b) any amendment to Section 4.2, Section 4.6, Section 6.1 or this Section 6.2.

ARTICLE VII
LIMITATION OF LIABILITY; INDEMNIFICATION AND
ADVANCE OF EXPENSES

Section 7.1 Limitation of Stockholder Liability . No stockholder shall be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Corporation by reason of being a stockholder, nor shall any stockholder be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with the Corporation’s assets or the affairs of the Corporation by reason of being a stockholder.
For the purposes of this Section 7.1 , “Person” is defined as an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Internal Revenue Code of 1986, as amended (the “ Code ”)), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

Section 7.2 Limitation of Director and Officer Liability . To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages.

Section 7.3 Indemnification and Advance of Expenses . To the maximum extent that Maryland law in effect from time to time permits the indemnification of directors and officers of a corporation and the advance of expenses to directors and officers of corporations, the Corporation shall indemnify or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any individual who is a present or former director or officer of the Corporation and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity, and (ii) any individual who, while a director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, member, manager or trustee of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in such capacity from and against any claim or liability to which such person may become subject or which such person may incur. The rights to indemnification and advancement of expenses provided to a director or officer hereby shall vest immediately upon election of such director or officer. The Corporation may, with the approval of the board of directors or any duly authorized committee thereof, provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (i) or (ii) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The board of directors may take such action as is necessary to carry out this Section 7.3 .

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Section 7.4 Express Exculpatory Clauses in Instruments . Neither the stockholders nor the directors, officers, employees or agents of the Corporation shall be liable under any written instrument creating an obligation of the Corporation by reason of their being stockholders, directors, officers, employees or agents of the Corporation, and all persons shall look solely to the Corporation’s net assets for the payment of any claim under or for the performance of that instrument. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any stockholder, director, officer, employee or agent liable thereunder to any third party, nor shall the directors or any officer, employee or agent of the Corporation be liable to anyone as a result of such omission.

Section 7.5 The 1940 Act . The provisions of this Article VII shall be subject to any applicable limitations of the 1940 Act.

Section 7.6 Amendment or Repeal . Neither the amendment nor repeal of this Article VII , nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article VII , shall apply to or affect in any respect the applicability of the preceding sections of this Article VII with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

Section 7.7 Non-Exclusivity . The exculpation, indemnification and advancement of expenses provided or authorized by this Article VII shall not be deemed exclusive of any other rights, by indemnification or otherwise, to which a director or officer may be entitled under the Bylaws, a resolution of stockholders or directors, an agreement or otherwise.

RECITALS CONTINUED:

THIRD : The amendment and restatement of the charter of the Corporation as hereinabove set forth has been duly advised by the board of directors and approved by the stockholders of the Corporation as required by law.

FOURTH : The name and address of the Corporation’s current resident agent and the current address of the principal office of the Corporation are as set forth in Article III of the foregoing amendment and restatement of the charter.

FIFTH : The number of directors of the Corporation and the names of those currently in office are as set forth in Section 4.1 of Article IV of the foregoing amendment and restatement of the charter.

SIXTH : The total number of shares of stock which the Corporation had authority to issue immediately prior to the foregoing amendment and restatement of the charter was 500,000,000, consisting of 450,000,000 shares of common stock, $0.001 par value per share, and 50,000,000 shares of preferred stock, $0.001 par value per share. The aggregate par value of all authorized shares of stock having par value was $500,000.


7

SEVENTH : The total number of shares of stock which the Corporation has authority to issue after giving effect to the foregoing amendment and restatement of the charter, the number of shares of each class or series thereof, and the aggregate value of all shares of stock of the Corporation having par value were not changed by the amendments set forth in the foregoing amendment and restatement of the charter of the Corporation.

EIGHTH : The undersigned acknowledges these Third Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

IN WITNESS WHEREOF, the Corporation has caused these Third Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Chief Financial Officer on August 8, 2017.

 
 
 
 
BUSINESS DEVELOPMENT CORPORATION OF AMERICA
 

 
 
 
By:
/s/ Richard Byrne
 
Richard Byrne
Chief Executive Officer

 
 
 
 
Attest
/s/ Corinne Pankovcin
 
 
Corinne Pankovcin
Chief Financial Officer
 
 
 
 


8

Exhibit 3.2

BUSINESS DEVELOPMENT CORPORATION OF AMERICA
AMENDED AND RESTATED BYLAWS

ARTICLE I

OFFICES

Section 1.     PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the board of directors may designate.
Section 2.     ADDITIONAL OFFICES . The Corporation may have additional offices, including a principal executive office, at such places as the board of directors may from time to time determine or the business of the Corporation may require.
ARTICLE II

MEETINGS OF STOCKHOLDERS
Section 1.     PLACE . All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set in accordance with these Bylaws and stated in the notice of the meeting.
Section 2.     ANNUAL MEETING . An annual meeting of stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on the date and at the time and place set by the board of directors.
Section 3.     SPECIAL MEETINGS . The president, the chief executive officer, the chairman of the board or a majority of the board of directors may call a special meeting of the stockholders. A special meeting of stockholders shall also be called by the secretary of the Corporation to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast not less than ten percent of all the votes entitled to be cast on such matter at such meeting. The written request must state the purpose of such meeting and the matters proposed to be acted on at such meeting. Within ten days after receipt of such written request, either in person or by mail, the secretary of the Corporation shall provide all stockholders with written notice, either in person or by mail, of such meeting and the purpose of such meeting. Notwithstanding anything to the contrary herein, such meeting shall be held at the time and place specified in the stockholder request; provided, however, that if none is so specified, such meeting shall be held at a time and place convenient to the stockholders.
Section 4.     NOTICE . Except as provided otherwise in Section 3 of this Article II, not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting notice in writing or by electronic transmission stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, by mail, by presenting it to such stockholder personally, by leaving it at the stockholder’s residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder’s address as it appears on the records of the Corporation, with postage thereon prepaid. If transmitted electronically, such notice shall be deemed to be given when transmitted to the stockholder by an electronic transmission to any address or number of the stockholder at which

1


the stockholder receives electronic transmissions. The Corporation may give a single notice to all stockholders who share an address, which single notice shall be effective as to any stockholder at such address, unless a stockholder objects to receiving such single notice or revokes a prior consent to receiving such single notice. Failure to give notice of any meeting to one or more stockholders, or any irregularity in such notice, shall not affect the validity of any meeting fixed in accordance with this Article II or the validity of any proceedings at any such meeting.
Subject to Section 11(a) of this Article II, any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. The Corporation may postpone or cancel a meeting of stockholders by making a public announcement (as defined in Section 11(c)(3) of this Article II) of such postponement or cancellation prior to the meeting. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 4 .
Section 5.     ORGANIZATION AND CONDUCT . Every meeting of stockholders shall be conducted by an individual appointed by the board of directors to be chairman of the meeting or, in the absence of such appointment or appointed individual, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting in the following order: the vice chairman of the board, if there is one, the chief executive officer, the president, the vice presidents in their order of rank and seniority, the secretary or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary or, in the secretary’s absence, an assistant secretary or, in the absence of both the secretary and assistant secretaries, an individual appointed by the board of directors or, in the absence of such appointment, an individual appointed by the chairman of the meeting shall act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary or, in the absence of all assistant secretaries, an individual appointed by the board of directors or the chairman of the meeting shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of the chairman and without any action by the stockholders, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and such other individuals as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments; (e) determining when and for how long the polls should be opened and when the polls should be closed; (f) maintaining order and security at the meeting; (g) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; (h) concluding a meeting or recessing or adjourning the meeting to a later date and time and at a place announced at the meeting; and (i) complying with any state and local laws and regulations concerning safety and security. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.
Section 6.     QUORUM . At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting on any matter shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation (the “ Charter ”) for the vote necessary for the approval of any matter. If such quorum is not established at any meeting of the stockholders, the chairman of the meeting may adjourn the meeting sine die or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.

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The stockholders present either in person or by proxy, at a meeting which has been duly called and at which a quorum has been established, may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough stockholders to leave fewer than would be required to establish a quorum.
Section 7.     VOTING . A plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Charter. Unless otherwise provided by statute or by the Charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Voting on any question or in any election may be viva voce unless the chairman of the meeting shall order that voting be by ballot or otherwise.
Section 8.     PROXIES . A holder of record of shares of stock of the Corporation may cast votes in person or by proxy executed by the stockholder or by the stockholder’s duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.
Section 9.     VOTING OF STOCK BY CERTAIN HOLDERS . Stock of the Corporation registered in the name of a corporation, partnership, trust, limited liability company or other entity, if entitled to be voted, may be voted by the president or a vice president, general partner, trustee or managing member thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any trustee or other fiduciary may vote stock registered in the name of such person in the capacity of trustee or fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time.
The board of directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date, the time after the record date within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the board of directors considers necessary or desirable. On receipt by the Corporation of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the holder of record of the specified stock in place of the stockholder who makes the certification.
Section 10.     INSPECTORS . The board of directors or the chairman of the meeting may appoint, before or at the meeting, one or more inspectors for the meeting and any successor to the inspector. The inspectors, if any, shall (a) determine the number of shares of stock represented at the meeting, in person or by proxy, and the validity and effect of proxies, (b) receive and tabulate all votes, ballots or consents, (c) report such tabulation to the chairman of the meeting, (d) hear and determine all challenges and questions arising in connection with the right to vote, and (e) do such acts as are proper to fairly conduct the election or vote. Each such report shall be in writing and signed by the inspector or by a majority of them if there is more than one inspector acting at such meeting. If

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there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.
Section 11.     ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER STOCKHOLDER PROPOSALS.
(a)     Annual Meetings of Stockholders .
(1)    Nominations of individuals for election to the board of directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 11(a) and at the time of the annual meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and who has complied with this Section 11(a) .
(2)    For any nomination or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 11 , the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and any such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder’s notice shall set forth all information required under this Section 11 and shall be delivered to the secretary at the principal executive office of the Corporation not earlier than the 150 th day nor later than 5:00 p.m., Eastern Time, on the 120 th day prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article II) for the preceding year’s annual meeting; provided, however, that in connection with the Corporation’s first annual meeting or in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150 th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120 th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.
(3)    Such stockholder’s notice shall set forth:
(i)    as to each individual whom the stockholder proposes to nominate for election or reelection as a director (each, a “ Proposed Nominee ”), all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and the rules thereunder;
(ii)    as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the stockholder’s reasons for proposing such business at the meeting and any material interest in such business of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder or the Stockholder Associated Person therefrom;
(iii)    as to the stockholder giving the notice, any Proposed Nominee and any Stockholder Associated Person,
(A)    the class, series and number of all shares of stock or other securities of the Corporation (collectively, the “ Company Securities ”), if any, which are owned (beneficially or of record) by such stockholder, Proposed Nominee or Stockholder Associated Person, the date on which each such Company Security was acquired and the investment intent of such acquisition and

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(B)    the nominee holder for, and number of, any Company Securities owned beneficially but not of record by such stockholder, Proposed Nominee or Stockholder Associated Person;
(iv)    as to the stockholder giving the notice, any Stockholder Associated Person with an interest or ownership referred to in clauses (ii) or (iii) of this paragraph (3) of this Section 11(a) and any Proposed Nominee,
(A)    the name and address of such stockholder, as they appear on the Corporation’s stock ledger, and the current name and business address, if different, of each such Stockholder Associated Person and any Proposed Nominee and
(B)    the investment strategy or objective, if any, of such stockholder and each such Stockholder Associated Person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such Stockholder Associated Person; and
(v)    to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder’s notice.
(4)    Such stockholder’s notice shall, with respect to any Proposed Nominee, be accompanied by a certificate executed by the Proposed Nominee (i) certifying that such Proposed Nominee (a) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation in connection with service or action as a director that has not been disclosed to the Corporation and (b) will serve as a director of the Corporation if elected; and (ii) attaching a completed Proposed Nominee questionnaire (which questionnaire shall be provided by the Corporation, upon request, to the stockholder providing the notice and shall include all information relating to the Proposed Nominee that would be required to be disclosed in connection with the solicitation of proxies for the election of the Proposed Nominee as a director in an election contest (even if an election contest is not involved), or would otherwise be required in connection with such solicitation, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder, or would be required pursuant to the rules of any national securities exchange or over-the-counter market).
(5)    Notwithstanding anything in this subsection (a) of this Section 11 to the contrary, in the event that the number of directors to be elected to the board of directors is increased, and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of the proxy statement (as defined in Section 11(c)(3) of this Article II) for the preceding year’s annual meeting, a stockholder’s notice required by this Section 11(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation.
(6)    For purposes of this Section 11 , “ Stockholder Associated Person ” of any stockholder shall mean (i) any person acting in concert with such stockholder, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder (other than a stockholder that is a depositary) and (iii) any person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such stockholder or such Stockholder Associated Person.
(b)     Special Meetings of Stockholders . Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of individuals for election to the board of directors may be made at a special meeting of stockholders at which directors are to be elected only (i) by or at the direction of the board of directors or (ii) provided that the special meeting has been called in accordance with Section 3 of this Article II for the purpose of electing directors, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 11 and at the time of the special meeting, who is entitled to vote at the meeting in the election of

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each individual so nominated and who has complied with the notice procedures set forth in this Section 11 . In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the board of directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation’s notice of meeting, if the stockholder’s notice, containing the information required by paragraph (a)(3) of this Section 11 , is delivered to the secretary at the principal executive office of the Corporation not earlier than the 120 th day prior to such special meeting and not later than 5:00 p.m., Eastern Time on the later of the 90 th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder’s notice as described above.
(c)     General .
(1)    If information submitted pursuant to this Section 11 by any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall be inaccurate in any material respect, such information may be deemed not to have been provided in accordance with this Section 11 . Any such stockholder shall notify the Corporation of any inaccuracy or change (within two business days of becoming aware of such inaccuracy or change) in any such information. Upon written request by the secretary or the Board of Directors, any such stockholder shall provide, within five business days of delivery of such request (or such other period as may be specified in such request), (i) written verification, satisfactory, in the discretion of the Board of Directors or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 11 and (ii) a written update of any information (including, if requested by the Corporation, written confirmation by such stockholder that it continues to intend to bring such nomination or other business proposal before the meeting) submitted by the stockholder pursuant to this Section 11 as of an earlier date. If a stockholder fails to provide such written verification or written update within such period, the information as to which written verification or a written update was requested may be deemed not to have been provided in accordance with this Section 11 .
(2)    Only such individuals who are nominated in accordance with this Section 11 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 11 . The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 11 .
(3)    For purposes of this Section 11 , “ the date of the proxy statement ” shall have the same meaning as “the date of the company’s proxy statement released to shareholders” as used in Rule 14a-8(e) promulgated under the Exchange Act, as interpreted by the Securities and Exchange Commission from time to time. “ Public announcement ” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or other widely circulated news or wire service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act or the Investment Company Act of 1940, as amended (the “ Investment Company Act ”).
(4)    Notwithstanding the foregoing provisions of this Section 11 , a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11 . Nothing in this Section 11 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, or the right of the Corporation to omit a proposal from, the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. Nothing in this Section 11 shall require disclosure of revocable proxies received by the stockholder or Stockholder Associated Person pursuant to a solicitation of proxies after the filing of an effective Schedule 14A by such stockholder or Stockholder Associated Person under Section 14(a) of the Exchange Act.

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Section 12.     CONTROL SHARE ACQUISITION ACT . Notwithstanding any other provision of the Charter or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law, or any successor statute (the “ MGCL ”), shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.
ARTICLE III

DIRECTORS
Section 1.     GENERAL POWERS . The business and affairs of the Corporation shall be managed under the direction of its board of directors.
Section 2.     NUMBER, TENURE AND RESIGNATION . At any regular meeting or at any special meeting called for that purpose, a majority of the entire board of directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the MGCL, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Any director of the Corporation may resign at any time by delivering his or her resignation to the board of directors, the chairman of the board or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation.
Section 3.     ANNUAL AND REGULAR MEETINGS . An annual meeting of the board of directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors. The board of directors may provide, by resolution, the time and place for the holding of regular meetings of the board of directors without other notice than such resolution.
Section 4.     SPECIAL MEETINGS . Special meetings of the board of directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or a majority of the directors then in office. The person or persons authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by them. The board of directors may provide, by resolution, the time and place for the holding of special meetings of the board of directors without other notice than such resolution.
Section 5.     NOTICE . Notice of any special meeting of the board of directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, courier or United States mail to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 24 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the board of directors need be stated in the notice, unless specifically required by statute or these Bylaws.

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Section 6.     QUORUM . A majority of the directors shall constitute a quorum for transaction of business at any meeting of the board of directors, provided that, if less than a majority of such directors is present at such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to applicable law, the Charter or these Bylaws, the vote of a majority or other percentage of a particular group of directors is required for action, a quorum must also include a majority or such other percentage of such group.
The directors present at a meeting which has been duly called and at which a quorum has been established may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave fewer than required to establish a quorum.
Section 7.     VOTING . The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the board of directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws. If enough directors have withdrawn from a meeting to leave fewer than required to establish a quorum but the meeting is not adjourned, the action of the majority of that number of directors necessary to constitute a quorum at such meeting shall be the action of the board of directors, unless the concurrence of a greater proportion is required for such action by applicable law, the Charter or these Bylaws.
Section 8.     ORGANIZATION . At each meeting of the board of directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as chairman of the meeting. In the absence of both the chairman and vice chairman of the board, the chief executive officer or, in the absence of the chief executive officer, the president or, in the absence of the president, a director chosen by a majority of the directors present, shall act as chairman of the meeting. The secretary or, in his or her absence, an assistant secretary of the Corporation or, in the absence of the secretary and all assistant secretaries, an individual appointed by the chairman of the meeting, shall act as secretary of the meeting.
Section 9.     TELEPHONE MEETINGS . Directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time; provided, however, that this section does not apply to any action of the directors pursuant to any provision of the Investment Company Act applicable to the Corporation that requires the vote of the directors to be cast in person at a meeting. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 10.     CONSENT BY DIRECTORS WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of the board of directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each director and is filed with the minutes of proceedings of the board of directors; provided, however, that this Section 10 does not apply to any action of the directors pursuant to any provision of the Investment Company Act applicable to the Corporation that requires the vote of the directors to be cast in person at a meeting.
Section 11.     VACANCIES . If for any reason any or all of the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder. Subject to applicable requirements of the Investment Company Act, and except as may be provided by the board of directors in setting the terms of any class or series of preferred stock, any and all vacancies on the board of directors may be filled only by a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is duly elected and qualifies.
Section 12.     COMPENSATION . Directors shall not receive any stated salary for their services as directors but, by resolution of the board of directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they

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performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the board of directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they perform or engage in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor.
Section 13.     RELIANCE . Each director, officer, employee and agent of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Corporation, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the board of directors or officers of the Corporation, regardless of whether such counsel or expert may also be a director.
Section 14.     CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS . A director, officer, employee or agent shall have no responsibility to devote his or her full time to the affairs of the Corporation. Any director, officer, employee or agent, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to, in addition to or in competition with those of or relating to the Corporation.
Section 15.     LOSS OF DEPOSITS . No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited.
Section 16.     SURETY BONDS . Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties.
Section 17.     RATIFICATION . The board of directors or the stockholders may ratify and make binding on the Corporation any action or inaction by the Corporation or its officers to the extent that the board of directors or the stockholders could have originally authorized the matter. Moreover, any action or inaction questioned in any stockholders’ derivative proceeding or any other proceeding on the ground of lack of authority, defective or irregular execution, adverse interest of a director, officer or stockholder, non-disclosure, miscomputation, the application of improper principles or practices of accounting, or otherwise, may be ratified, before or after judgment, by the board of directors or by the stockholders, and if so ratified, shall have the same force and effect as if the questioned action or inaction had been originally duly authorized, and such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned action or inaction.
Section 18.     EMERGENCY PROVISIONS . Notwithstanding any other provision in the Charter or these Bylaws, this Section 16 shall apply during the existence of any catastrophe, or other similar emergency condition, as a result of which a quorum of the board of directors under Article III of these Bylaws cannot readily be obtained (an “ Emergency ”). During any Emergency, unless otherwise provided by the board of directors, (a) a meeting of the board of directors or a committee thereof may be called by any director or officer by any means feasible under the circumstances; (b) notice of any meeting of the board of directors during such an Emergency may be given less than 24 hours prior to the meeting to as many directors and by such means as may be feasible at the time, including publication, television or radio, and (c) the number of directors necessary to constitute a quorum shall be one-third of the entire board of directors.





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ARTICLE IV

COMMITTEES
Section 1.     NUMBER, TENURE AND QUALIFICATIONS . The board of directors may appoint from among its members one or more committees, composed of one or more directors, to serve at the pleasure of the board of directors.
Section 2.     POWERS . The board of directors may delegate to committees appointed under Section 1 of this Article any of the powers of the board of directors, except as prohibited by law.
Section 3.     MEETINGS . Notice of committee meetings shall be given in the same manner as notice for special meetings of the board of directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The board of directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member.
Section 4.     TELEPHONE MEETINGS . Members of a committee of the board of directors may participate in a meeting by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time; provided, however, that this Section 4 does not apply to any action of the committee pursuant to any provision of the Investment Company Act applicable to the Corporation that requires the vote of the committee to be cast in person at a meeting. Participation in a meeting by these means shall constitute presence in person at the meeting.
Section 5.     CONSENT BY COMMITTEES WITHOUT A MEETING . Any action required or permitted to be taken at any meeting of a committee of the board of directors may be taken without a meeting, if a consent in writing or by electronic transmission to such action is given by each member of the committee and is filed with the minutes of proceedings of such committee; provided, however, that this Section 5 does not apply to any action of the committee pursuant to any provision of the Investment Company Act applicable to the Corporation that requires the vote of the committee to be cast in person at a meeting.
Section 6.     VACANCIES . Subject to the provisions hereof, the board of directors shall have the power at any time to change the membership of any committee, to fill any vacancy, to designate an alternate member to replace any absent or disqualified member or to dissolve any such committee.
ARTICLE V

OFFICERS
Section 1.     GENERAL PROVISIONS . The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the board of directors may from time to time elect such other officers with such powers and duties as it shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the board of directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall serve until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be

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held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent.
Section 2.     REMOVAL AND RESIGNATION . Any officer or agent of the Corporation may be removed, with or without cause, by the board of directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by delivering his or her resignation to the board of directors, the chairman of the board, the chief executive officer, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation.
Section 3.     VACANCIES . A vacancy in any office may be filled by the board of directors for the balance of the term.
Section 4.     CHAIRMAN OF THE BOARD . The board of directors may designate from among its members a chairman of the board, who shall not, solely by reason of these Bylaws, be an officer of the Corporation. The board of directors may designate the chairman of the board as an executive or non-executive chairman. The chairman of the board shall preside over the meetings of the board of directors. The chairman of the board shall perform such other duties as may be assigned to him or her by these Bylaws or the board of directors.
Section 5.     CHIEF EXECUTIVE OFFICER . The board of directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the board of directors, and for the management of the business and affairs of the Corporation. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the board of directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of chief executive officer and such other duties as may be prescribed by the board of directors from time to time.
Section 6.     CHIEF OPERATING OFFICER . The board of directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as determined by the board of directors or the chief executive officer.
Section 7.     CHIEF FINANCIAL OFFICER . The board of directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as determined by the board of directors or the chief executive officer.
Section 8.     PRESIDENT . In the absence of a chief executive officer, the president shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the board of directors, the president shall be the chief operating officer. He or she may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the board of directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the board of directors from time to time.
Section 9.     VICE PRESIDENTS . In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the chief executive officer, the president or the board of directors. The board of directors may

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designate one or more vice presidents as executive vice president, senior vice president, or vice president for particular areas of responsibility.
Section 10.     SECRETARY . The secretary shall (a) keep the minutes of the proceedings of the stockholders, the board of directors and committees of the board of directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the board of directors.
Section 11.     TREASURER . The treasurer shall have the custody of the funds and securities of the Corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the board of directors and in general perform such other duties as from time to time may be assigned to him or her by the chief executive officer, the president or the board of directors. In the absence of a designation of a chief financial officer by the board of directors, the treasurer shall be the chief financial officer of the Corporation.
The treasurer shall disburse the funds of the Corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and board of directors, at the regular meetings of the board of directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation.
Section 12.     ASSISTANT SECRETARIES AND ASSISTANT TREASURERS . The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chief executive officer, the president or the board of directors.
Section 13.     COMPENSATION . The compensation of the officers shall be fixed from time to time by or under the authority of the board of directors and no officer shall be prevented from receiving such compensation by reason of the fact that he or she is also a director.

ARTICLE VI

CONTRACTS, CHECKS AND DEPOSITS

Section 1.     CONTRACTS . The board of directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when duly authorized or ratified by action of the board of directors and executed by an authorized person.
Section 2.     CHECKS AND DRAFTS . All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the board of directors.
Section 3.     DEPOSITS . All funds of the Corporation not otherwise employed shall be deposited or invested from time to time to the credit of the Corporation as the board of directors, the chief executive officer, the president, the chief financial officer or any other officer designated by the board of directors may determine.


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ARTICLE VII

STOCK
Section 1.     CERTIFICATES . Except as may otherwise be provided by the board of directors, stockholders of the Corporation are not entitled to certificates representing the shares of stock held by them. In the event that the Corporation issues shares of stock represented by certificates, such certificates shall be in such form as prescribed by the board of directors or a duly authorized officer, shall contain the statements and information required by the MGCL and shall be signed by the officers of the Corporation in the manner permitted by the MGCL. In the event that the Corporation issues shares of stock without certificates, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. There shall be no differences in the rights and obligations of stockholders based on whether or not their shares are represented by certificates.
Section 2.     TRANSFERS . All transfers of shares of stock shall be made on the books of the Corporation, by the holder of the shares, in person or by his or her attorney, in such manner as the board of directors or any officer of the Corporation may prescribe and, if such shares are certificated, upon surrender of certificates duly endorsed. The issuance of a new certificate upon the transfer of certificated shares is subject to the determination of the board of directors that such shares shall no longer be represented by certificates. Upon the transfer of any uncertificated shares, to the extent then required by the MGCL, the Corporation shall provide to the record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates.
The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by the laws of the State of Maryland.
Notwithstanding the foregoing, transfers of shares of any class or series of stock will be subject in all respects to the Charter and all of the terms and conditions contained therein.
Section 3.     REPLACEMENT CERTIFICATE . Any officer of the Corporation may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated; provided, however, if such shares have ceased to be certificated, no new certificate shall be issued unless requested in writing by such stockholder and the board of directors has determined that such certificates may be issued. Unless otherwise determined by an officer of the Corporation, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Corporation a bond in such sums as it may direct as indemnity against any claim that may be made against the Corporation.
Section 4.     FIXING OF RECORD DATE . The board of directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken.

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When a record date for the determination of stockholders entitled to notice of and to vote at any meeting of stockholders has been set as provided in this section, such record date shall continue to apply to the meeting if adjourned or postponed, except if the meeting is adjourned or postponed to a date more than 120 days after the record date originally fixed for the meeting, in which case a new record date for such meeting may be determined as set forth herein.
Section 5.     STOCK LEDGER . The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder.
Section 6.     FRACTIONAL STOCK; ISSUANCE OF UNITS . The board of directors may authorize the Corporation to issue fractional stock or authorize the issuance of scrip, all on such terms and under such conditions as it may determine. Notwithstanding any other provision of the Charter or these Bylaws, the board of directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the board of directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit.
ARTICLE VIII

ACCOUNTING YEAR
The board of directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
    
DISTRIBUTIONS

Section 1.     AUTHORIZATION . Dividends and other distributions upon the stock of the Corporation may be authorized by the board of directors and declared by the Corporation, subject to the provisions of law and the Charter. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Charter.
Section 2.     CONTINGENCIES . Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the board of directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the board of directors shall determine, and the board of directors may modify or abolish any such reserve.
ARTICLE X

INVESTMENT POLICY
Subject to the provisions of the Charter, the board of directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion.


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ARTICLE XI

SEAL
Section 1.     SEAL . The board of directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words “Incorporated Maryland.” The board of directors may authorize one or more duplicate seals and provide for the custody thereof.
Section 2.     AFFIXING SEAL . Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word “(SEAL)” adjacent to the signature of the person authorized to execute the document on behalf of the Corporation.
ARTICLE XII

WAIVER OF NOTICE
Whenever any notice of a meeting is required to be given pursuant to the Charter or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by electronic transmission, given by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice of such meeting, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.

ARTICLE XIII
    
EXCLUSIVE FORUM FOR CERTAIN LITIGATION

Unless the Corporation consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United State District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of any duty owed by any director or officer or other agent of the Corporation to the Corporation or to the stockholders of the Corporation, (c) any action asserting a claim against the Corporation or any director or officer or other agent of the Corporation arising pursuant to any provision of the MGCL or the Charter or these Bylaws, or (d) any action asserting a claim against the Corporation or any director or officer or other agent of the Corporation that is governed by the internal affair doctrine.
ARTICLE XIV
    
AMENDMENT OF BYLAWS

The board of directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws.

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Exhibit 31.1

I, Richard J. Byrne, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 of Business Development Corporation of America;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date:
August 10, 2017
/s/ Richard J. Byrne
 
 
Richard J. Byrne

 
 
Chief Executive Officer, President, and
Chairman of the Board of Directors
(Principal Executive Officer)




Exhibit 31.2
 
I, Corinne D. Pankovcin, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2017 of Business Development Corporation of America;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date:
August 10, 2017
/s/ Corinne D. Pankovcin
 
 
Corinne D. Pankovcin
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)




Exhibit 32
 
SECTION 1350 CERTIFICATIONS
 
This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended.
 
The undersigned, who are the Principal Executive Officer and Principal Financial Officer of Business Development Corporation of America (the “Company”), each hereby certify as follows:
 
To the best of their knowledge, the quarterly report of Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this quarterly report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated this  10 th day of August 2017
 
/s/ Richard J. Byrne
Richard J. Byrne
Chief Executive Officer, President, and Chairman of the Board of Directors
(Principal Executive Officer)
 
/s/ Corinne D. Pankovcin
Corinne D. Pankovcin
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)