Executive Summary

Q4 2024 net investment income was $33.8 million ($0.40 per share) with adjusted NII of $0.36 per share; NAV fell to $9.23 due to $72.3 million net unrealized losses driven primarily by Razor, Securus and Astra markdowns .
The Board cut the regular dividend to $0.25 for Q1 2025 and declared a $0.04 special; management intends at least $0.02 special dividends in Q2 and Q3 2025, and the Adviser will waive one‑third of base management fees for three quarters in 2025 .
Liquidity remained strong at ~$615 million and net regulatory leverage was 1.14x, within the 0.9–1.2x target; no incentive fees accrued in Q4 given the total return hurdle was not met .
Stock reaction catalysts: dividend reset and special dividends, fee waiver, and clarity on resolving non‑accruals (notably Razor), alongside commentary on spread compression and rate declines that impact forward NII trajectory .

What Went Well and What Went Wrong

What Went Well
- Dividend coverage on Q4 GAAP NII ($0.40) vs the prior $0.34 regular dividend, with no incentive fees accrued; available liquidity of ~$615 million and net leverage at 1.14x .
- Shareholder alignment actions: fee waiver of 1/3 base management fees through Q3 2025; share repurchase of 510,687 shares at $8.86 .
- Portfolio first‑lien focus and diversified exposure; new investments were 100% first lien and portfolio was 91.2% senior secured, 83.6% first lien .
Quotes:
- “We are optimistic about our future... declines in NII and ROE primarily reflect the impact from lower base rates and an increase in non‑accruals and expenses versus the prior year.” — CEO Phil Tseng .
- “Our adviser voluntarily agreed to waive 1/3 of our base management fee for 3 calendar quarters... These fees cannot be earned back.” — CEO Phil Tseng .
- “All of our new investments were first lien loans and at quarter end, 83.6% of the portfolio was in first lien loans, up from 81.3%.” — President Jason Mehring .
What Went Wrong
- NAV per share fell from $10.11 (Q3) to $9.23 (Q4) on $72.3 million net unrealized losses; largest markdown was Razor (~$50.3 million) with additional losses in Securus, Astra, Homerenew Buyer, Pluralsight, Fishbowl and InMoment .
- Non‑accruals increased to 5.6% of fair value (14.4% cost) vs 3.8% (9.3% cost) in Q3; InMoment and Renovo added to non‑accruals .
- Spread compression and lower base rates reduced effective portfolio yields (12.4% vs 13.4% in Q3), pressuring NII sustainability and prompting the dividend reset .
Data points:
- Weighted average portfolio yield declined to 12.4% (debt) and 11.1% (total) in Q4 from 13.4% and 11.9% in Q3 .
- GAAP EPS was a loss of $(0.45) in Q4 vs $0.25 in Q3 and $(0.60) in Q2 .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Investment Income ($USD Millions)	$71.5	$70.9	$61.2
GAAP NII per share ($)	$0.42	$0.40	$0.40
Adjusted NII per share ($)	$0.38	$0.36	$0.36
GAAP EPS ($)	$(0.60)	$0.25	$(0.45)
NAV per share ($)	$10.20	$10.11	$9.23
Non‑accrual (% FV)	4.9%	3.8%	5.6%
Net regulatory leverage (x)	1.13x	1.08x	1.14x
Weighted avg debt portfolio yield (%)	13.7%	13.4%	12.4%
Weighted avg interest rate on debt (%)	5.00%	5.43%	5.19%

Segment/Portfolio Composition (Q4 2024):

Total portfolio fair value: ~$1.8B; senior secured 91.2%; first lien 83.6%; floating rate 94.5% (97.5% with floors) .

Q4 2024 KPIs:

New investments: $120.7M (98.8% senior secured loans), exits/repayments: $168.6M; new investments yield 10.8% vs exited 14.0% .
Available liquidity: ~$615.3M; combined weighted‑average interest rate on debt: 5.19% .
No incentive compensation accrued in Q4 .

Cross‑reference note: The company issued a corrected release to affirm Q4 had net unrealized losses of $72.3M (not gains), consistent with call commentary and 8‑K exhibits .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Regular Dividend per share	Q1 2025	$0.34 (Q4 2024 declared)	$0.25	Lowered
Special Dividend per share	Q1 2025	N/A	$0.04	Introduced
Special Dividend per share (intended)	Q2 2025	N/A	≥$0.02 (subject to Board approval)	Introduced
Special Dividend per share (intended)	Q3 2025	N/A	≥$0.02 (subject to Board approval)	Introduced
Base Management Fee Waiver	2025 (Q1–Q3)	N/A	Adviser waives 1/3 of base fee (Jan 1–Sep 30, 2025)	New

Management’s rationale: “We really tried to be very thoughtful here on the regular dividend level… lower base rates, tightening spreads, and non‑accruals yield less interest income.” — CEO Phil Tseng .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4)	Trend
Non‑accruals/credit resolution	Q2: Non‑accruals rose to 4.9% FV with SellerX, Pluralsight, McAfee challenges; plan to resolve with sponsor support . Q3: Non‑accruals decreased to 3.8% FV; Razor preferred equity on non‑accrual; Pluralsight recap .	Non‑accruals increased to 5.6% FV; InMoment and Renovo added; largest markdown Razor; management focused on thoughtful multi‑quarter resolutions .	Mixed to worsening in Q4 vs Q3.
Amazon aggregators	Q2/Q3: Focus on sector consolidation; mixed outcomes (Thrasio resolved; SellerX under stress) .	Razor accounted for ~70% of markdowns; SellerX marked up on progress; sector improvements may take time .	Ongoing volatility; selective improvement at SellerX.
Rates/spread compression	Q2: Tightening spreads; yields declined as refinancings repriced . Q3: Yields eased (new 11.3% vs exit 13.4%); base rate cuts discussed .	Lower base rates and tighter spreads cited as headwinds; portfolio yields declined to 12.4% (debt) .	Headwinds persist.
Portfolio construction	Q2/Q3: Emphasis on first lien, lender‑of‑influence, diversification .	100% of new debt investments first lien; 83.6% first lien portfolio; maintain subsector exposure limits .	Reinforced discipline.
Liquidity/leverage	Q2: Liquidity $780M; net leverage 1.13x . Q3: Liquidity $582M; net leverage 1.08x .	Liquidity $615M; net leverage 1.14x; no incentive fees accrued .	Stable within range.
Dividend policy & fee waiver	Q2/Q3: Dividend $0.34 with coverage; special $0.10 in Q4; fee support below $0.32 NII for limited period .	Regular dividend reset $0.25; special $0.04; adviser fee waiver for three quarters .	Reset and support measures.
Platform resources (BlackRock/HPS)	Q3: Global direct lending integration; no strategy shift .	HPS acquisition expected mid‑year (subject to approvals); expanded resources anticipated; no near‑term strategy change .	Potential future positive.

Management Commentary

Strategic focus: “We will maintain a highly diversified portfolio and limit exposure to industry subsectors… and continue to prioritize investing in first lien loans… where we consider second lien loans, we will emphasize those where we are a lender of influence.” — CEO Phil Tseng .
Sector update: “Razor… continues to struggle with inventory issues… SellerX… simplified its business… top brand nearly doubled in revenue YoY as it diversified into brick‑and‑mortar.” — CEO Phil Tseng .
Market backdrop: “Spread compression… has been an ongoing theme… many companies have repriced or refinanced… suggesting a level of stabilization ahead.” — President Jason Mehring .
Financing posture: “We have ample financing options… three low‑cost credit facilities, three unsecured note issuances and an SBA program… weighted average interest rate on debt… 5.2%.” — CFO Erik Cuellar .
Dividend reset rationale: “We really try to be very thoughtful… sustainable level based on the earnings power of the portfolio today… base rates coming down… tightening spreads… non‑accruals will yield less interest income.” — CEO Phil Tseng .

Q&A Highlights

Spillover and specials: ~$0.10 spillover carryover from Q4 2024 special; specials designed to support total return while managing distribution requirements .
HPS acquisition: No material strategy change anticipated; expected to enhance sourcing and resources post‑close (subject to approvals) .
NAV floor confidence: Largest markdown (Razor) was unexpected due to equity investor decision; issues concentrated in known cohort; further markdowns possible but centered around discussed names .
Renovo exposure: Demand softness and operational issues more salient than tariffs; supply chains largely domestic; tariffs not viewed as a significant new issue currently .
2026 notes refinance: Company aims to maintain investment‑grade ratings; will access capital markets nearer to maturity .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 was unavailable at the time of this analysis due to data access limits. As a result, estimate comparisons could not be performed and should be refreshed when S&P Global data is accessible. Values would have been retrieved from S&P Global consensus by default if available.

Key Takeaways for Investors

Dividend reset signals prudent recalibration amid lower base rates, tighter spreads, and higher non‑accruals; specials and fee waiver partially offset near‑term NII pressure .
Watch credit resolution timeline for Razor, Securus, Astra, InMoment and Renovo; successful restructuring or improved operating trends would be catalysts for NAV stabilization .
Portfolio quality remains anchored by first‑lien senior secured exposure and diversified holdings; continued incumbency in existing borrowers can support risk management .
Liquidity and leverage provide capacity to deploy selectively; no incentive fees accrued in Q4 reflects alignment and reduces expense drag near‑term .
Spread compression and rate path are key macro drivers for forward NII; monitor yield stabilization and refinancing dynamics (new 11–12% yields vs exits at ~14%) .
Potential platform upside from BlackRock’s pending HPS acquisition (subject to approvals) could enhance origination and co‑investment opportunities without changing strategy .
Near‑term trading: Dividend reset and fee waiver could underpin total return; medium‑term thesis depends on reducing non‑accruals, stabilizing yields, and maintaining IG status ahead of 2025/2026 maturities .

Additional Notes

The company issued a corrected press release to clarify Q4 saw net unrealized losses (not gains), consistent with 8‑K exhibits and call remarks .
Portfolio metrics YoY: Adjusted NII per share was $1.52 in 2024 vs $1.84 in 2023; NAV per share declined from $11.90 (Dec 31, 2023) to $9.23 (Dec 31, 2024), reflecting elevated unrealized losses in 2024 .

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