•]`
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of February 10, 2025 was
PENNANTPARK INVESTMENT CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2024
TABLE OF CONTENTS
2
PART I—CONSOLIDATED FINANCIAL INFORMATION
We are filing this Quarterly Report on Form 10-Q (the "Report"), in compliance with Rule 13a-13 as promulgated by the Securities and Exchange Commission, or the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In this Report, except where context suggest otherwise, the terms “Company,” “we,” “our” or “us” refers to PennantPark Investment Corporation and its consolidated subsidiaries; “PennantPark Investment” refers to only PennantPark Investment Corporation; “our SBIC Fund” refers collectively to our consolidated subsidiaries, PennantPark SBIC II LP, or SBIC II, and its general partner, PennantPark SBIC GP II, LLC; “Funding I” refers to PennantPark Investment Funding I, LLC, a wholly-owned subsidiary prior to deconsolidation on July 31, 2020; “Taxable Subsidiary” refers collectively to our consolidated subsidiaries, PNNT Investment Holdings II, LLC and PNNT Investment Holdings, LLC; “PSLF” refers to PennantPark Senior Loan Fund, LLC, an unconsolidated joint venture; “PTSF II” refers to PennantPark-TSO Senior Loan Fund II, LP, an unconsolidated limited partnership; “PennantPark Investment Advisers” or “Investment Adviser” refers to PennantPark Investment Advisers, LLC; “PennantPark Investment Administration” or “Administrator” refers to PennantPark Investment Administration, LLC; “SBA” refers to the Small Business Administration; “SBIC” refers to a small business investment company under the Small Business Investment Act of 1958, as amended; “BNP Credit Facility” refers to our revolving credit facility with BNP Paribas prior to deconsolidation of Funding I; “Truist Credit Facility” refers to our multi-currency, senior secured revolving credit facility with Truist Bank, as amended and restated; “2026 Notes” refers to our 4.50% Notes due May 2026; “2026 Notes-2” refers to our 4.00% Notes due November 2026; “BDC” refers to a business development company under the Investment Company Act of 1940, as amended, or the “1940 Act”; “SBCAA” refers to the Small Business Credit Availability Act; “Code” refers to the Internal Revenue Code of 1986, as amended; and “RIC” refers to a regulated investment company under the Code. References to our portfolio, our investments and our business include investments we make through consolidated subsidiaries.
3
Item 1. Consolidated Financial Statements
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)
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December 31, 2024 |
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September 30, 2024 |
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(unaudited) |
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Assets |
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Investments at fair value |
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Non-controlled, non-affiliated investments (amortized cost—$ |
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$ |
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$ |
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Non-controlled, affiliated investments (amortized cost—$ |
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Controlled, affiliated investments (amortized cost—$ |
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Total investments (amortized cost—$ |
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Cash and cash equivalents (cost—$ |
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Interest receivable |
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Receivable for investments sold |
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Distribution receivable |
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Due from affiliates |
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Prepaid expenses and other assets |
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Total assets |
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Liabilities |
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Truist Credit Facility payable, at fair value (cost—$ |
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2026 Notes payable, net (par— $ |
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2026 Notes-2 payable, net (par— $ |
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Payable for investment purchased |
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Distributions payable |
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Base management fee payable |
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Incentive fee payable |
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Accounts payable and accrued expenses |
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Interest payable on debt |
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Due to affiliates |
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Total liabilities |
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Net assets |
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Common stock, |
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Paid-in capital in excess of par value |
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Accumulated deficit |
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Total net assets |
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$ |
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$ |
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Total liabilities and net assets |
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$ |
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$ |
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Net asset value per share |
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$ |
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$ |
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
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Three Months Ended December 31, |
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2024 |
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2023 |
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Investment income: |
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From non-controlled, non-affiliated investments: |
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Interest |
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$ |
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$ |
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Payment-in-kind |
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Dividend income |
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Other income |
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From non-controlled, affiliated investments: |
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Payment-in-kind |
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From controlled, affiliated investments: |
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Interest |
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Payment-in-kind |
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Dividend income |
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Total investment income |
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Expenses: |
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Interest and expenses on debt |
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Base management fee |
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Incentive fee |
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General and administrative expenses |
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Administrative services expenses |
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Expenses before provision for taxes |
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Provision for taxes on net investment income |
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Net expenses |
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Net investment income |
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Realized and unrealized gain (loss) on investments and debt: |
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Net realized gain (loss) on investments and debt: |
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Non-controlled, non-affiliated investments |
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( |
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Non-controlled and controlled, affiliated investments |
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Net realized gain (loss) on investments and debt |
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Net change in unrealized appreciation (depreciation) on: |
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Non-controlled, non-affiliated investments |
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Non-controlled and controlled, affiliated investments |
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Provision for taxes on unrealized appreciation (depreciation) on investments |
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Debt appreciation (depreciation) |
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Net change in unrealized appreciation (depreciation) on investments and debt |
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Net realized and unrealized gain (loss) from investments and debt |
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Net increase (decrease) in net assets resulting from operations |
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$ |
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$ |
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Net increase (decrease) in net assets resulting from operations per common share |
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$ |
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$ |
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Net investment income per common share |
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$ |
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$ |
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
(In thousands, except share data)
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Three Months Ended December 31, |
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2024 |
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2023 |
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Net increase (decrease) in net assets resulting from operations: |
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Net investment income |
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$ |
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$ |
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Net realized gain (loss) on investments and debt |
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( |
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Net change in unrealized appreciation (depreciation) on investments |
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Net change in provision for taxes on unrealized appreciation (depreciation) on investments |
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Net change in unrealized appreciation (depreciation) on debt |
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Net increase (decrease) in net assets resulting from operations |
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Distributions to stockholders: |
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Distribution of net investment income |
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Total distributions to stockholders |
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Net increase (decrease) in net assets |
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Net assets: |
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Beginning of period |
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End of period |
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$ |
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$ |
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
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Three Months Ended December 31, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net increase (decrease) in net assets resulting from operations |
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$ |
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$ |
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Adjustments to reconcile net increase (decrease) in net assets resulting from |
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Net change in net unrealized (appreciation) depreciation on investments |
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( |
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Net change in unrealized appreciation (depreciation) on debt |
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( |
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Net realized (gain) loss on investments |
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( |
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Net accretion of discount and amortization of premium |
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( |
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Purchases of investments |
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( |
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( |
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Payment-in-kind income |
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( |
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( |
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Proceeds from dispositions of investments |
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Amortization of deferred financing costs |
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(Increase) decrease in: |
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Interest receivable |
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Receivables from investments sold |
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Distribution receivable |
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( |
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Due from affiliate |
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( |
) |
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Prepaid expenses and other assets |
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( |
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Increase (decrease) in: |
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Due to affiliate |
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( |
) |
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( |
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Payable for investments purchased |
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( |
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Interest payable on debt |
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( |
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( |
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Base management fee payable, net |
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( |
) |
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Incentive fee payable |
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( |
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Accounts payable and accrued expenses |
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( |
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Net cash provided by (used in) operating activities |
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( |
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Cash flows from financing activities: |
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Distributions paid to stockholders |
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$ |
( |
) |
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$ |
( |
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Borrowings under Truist Credit Facility |
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Repayments under Truist Credit Facility |
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( |
) |
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( |
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Net cash provided by (used in) financing activities |
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( |
) |
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Net increase (decrease) in cash equivalents |
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( |
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Effect of exchange rate changes on cash |
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( |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information: |
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Interest paid |
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$ |
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$ |
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Taxes paid |
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$ |
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$ |
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Non-cash exchanges and conversions |
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$ |
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$ |
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Non-cash purchases and disposition of investments |
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$ |
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$ |
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Investments in Non-Controlled, Non-Affiliated Portfolio Companies -
First Lien Secured Debt -
A1 Garage Merger Sub, LLC - Unfunded Term Loan (7)
—
—
$
-
$
A1 Garage Merger Sub, LLC - Revolver (7)
—
—
—
—
ACP Avenu Buyer, LLC
%
ACP Avenu Buyer, LLC - Unfunded Term Loan (7)
—
—
—
(
)
ACP Avenu Buyer, LLC - Funded Revolver
%
ACP Avenu Buyer, LLC - Revolver (7)
—
—
—
(
)
ACP Falcon Buyer, Inc. - Revolver (7)
—
—
—
—
Ad.net Acquisition, LLC - Funded Revolver
%
Ad.net Acquisition, LLC - Revolver (7)
—
—
—
—
Adweek Purchaser, LLC
%
Adweek Purchaser, LLC - Unfunded Term Loan (7)
—
—
—
Aechelon Technology, Inc. - Unfunded Revolver (7)
—
—
—
—
AFC Dell Holding Corp.
%
AFC Dell Holding Corp. - Unfunded Term Loan (7)
—
—
—
—
Atlas Purchaser, Inc. - Third Out
%
Atlas Purchaser, Inc. - Fourth Out
%
Anteriad, LLC (f/k/a MeritDirect, LLC) - Funded Revolver
%
Anteriad, LLC (f/k/a MeritDirect, LLC) - Revolver (7)
—
—
—
—
Applied Technical Services, LLC
%
Applied Technical Services, LLC - Unfunded Term Loan (7)
—
—
—
(
)
Applied Technical Services, LLC - Revolver
%
Applied Technical Services, LLC - Unfunded Revolver (7)
—
—
—
(
)
Arcfield Acquisition Corp.
%
Arcfield Acquisition Corp. - Revolver (7)
—
—
—
(
)
Archer Lewis, LLC - Unfunded Term Loan A (7)
—
—
—
—
Archer Lewis, LLC - Unfunded Term Loan B (7)
—
—
—
—
Archer Lewis, LLC - Unfunded Revolver (7)
—
—
—
(
)
Argano, LLC. - Unfunded Term Loan (7)
—
—
—
—
Argano, LLC. - Unfunded Revolver (7)
—
—
—
(
)
Azureon, LLC
%
Azureon, LLC - Unfunded Term Loan (7)
—
—
—
(
)
Azureon, LLC - Revolver (7)
—
—
—
(
)
Beacon Behavioral Support Service, LLC
%
(PIK
Beacon Behavioral Support Service, LLC - Unfunded Term Loan (7)
—
—
—
(
)
Beacon Behavioral Support Service, LLC - Revolver (7)
—
—
—
(
)
Berwick Industrial Park
%
—
Best Practice Associates, LLC
%
Best Practice Associates, LLC - Revolver (7)
—
—
—
(
)
Beta Plus Technologies, Inc.
%
Big Top Holdings, LLC - Unfunded Revolver (7)
—
—
—
—
BioDerm, Inc. - Revolver
%
Blackhawk Industrial Distribution, Inc.
%
Blackhawk Industrial Distribution, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
Blackhawk Industrial Distribution, Inc. - Funded Revolver
%
Blackhawk Industrial Distribution, Inc. - Unfunded Revolver (7)
—
—
—
(
)
BLC Holding Company, Inc.
%
BLC Holding Company, Inc. - Unfunded Term Loan (7)
—
—
—
—
BLC Holding Company, Inc. - Revolver (7)
—
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name |
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Maturity |
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Industry |
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Current Coupon |
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Basis Point Spread Above Index (4) |
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Par / Shares |
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Cost |
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Fair Value (3) |
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Boss Industries, LLC |
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% |
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$ |
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$ |
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Boss Industries, LLC - Funded Revolver |
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% |
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Boss Industries, LLC - Revolver (7) |
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— |
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— |
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— |
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— |
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BlueHalo Financing Holdings, LLC |
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% |
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Carisk Buyer, Inc. - Unfunded Term Loan (7) |
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— |
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— |
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— |
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( |
) |
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Carisk Buyer, Inc. - Unfunded Term Loan 2 (7) |
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— |
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— |
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— |
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( |
) |
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Carisk Buyer, Inc. - Revolver (7) |
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— |
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— |
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— |
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( |
) |
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Carnegie Dartlet, LLC - Unfunded Term Loan (7) |
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— |
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— |
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— |
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( |
) |
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Carnegie Dartlet, LLC - Funded Revolver |
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% |
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Carnegie Dartlet, LLC - Unfunded Revolver (7) |
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— |
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— |
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— |
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( |
) |
|||
Cartessa Aesthetics, LLC |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cartessa Aesthetics, LLC - Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cartessa Aesthetics, LLC - Unfunded Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Case Works, LLC - Unfunded Term Loan (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Case Works, LLC - Funded Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Case Works, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
CF512, Inc. - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
CJX Borrower, LLC |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
CJX Borrower, LLC - Unfunded Term Loan (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
CJX Borrower, LLC - Funded Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
CJX Borrower, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Compex Legal Services, Inc. - Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compex Legal Services, Inc. - Unfunded Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Crane 1 Services, Inc. - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
C5MI Acquisition, LLC |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
C5MI Acquisition, LLC - Funded Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
C5MI Acquisition, LLC - Unfunded Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Dr. Squatch, LLC - Unfunded Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
DRS Holdings III, Inc. |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
DRS Holdings III, Inc. - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Duggal Acquisition, LLC - Unfunded Term Loan (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Duggal Acquisition, LLC - Funded Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Duggal Acquisition, LLC - Unfunded Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Dynata, LLC - Last-Out Term Loan |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
EDS Buyer, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Emergency Care Partners, LLC |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Emergency Care Partners, LLC - Unfunded Term Loan (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Emergency Care Partners, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
ENC Parent Corporation |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
ETE Intermediate II, LLC - Funded Revolver |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
ETE Intermediate II, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|||
Eval Home Health Solutions Intermediate, LLC - Revolver (7) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited)—(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Events Buyer, LLC
%
$
$
Events Buyer, LLC - Unfunded Term Loan A (7)
—
—
—
—
Events Buyer, LLC - Unfunded Term Loan B (7)
—
—
—
—
Events Buyer, LLC - Revolver (7)
—
—
—
—
Exigo Intermediate II, LLC
%
Exigo Intermediate II, LLC - Revolver (7)
—
—
—
—
Five Star Buyer, Inc.
%
Five Star Buyer, Inc. - Revolver (7)
—
—
—
(
)
Gauge ETE Blocker, LLC - Promissory Note
%
—
GGG MIDCO, LLC
%
GGG MIDCO, LLC - Unfunded Term Loan (7)
—
—
—
—
GGG MIDCO, LLC - Unfunded Revolver (7)
—
—
—
(
)
Graffiti Buyer, Inc.
%
Graffiti Buyer, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
Graffiti Buyer, Inc. - Funded Revolver
%
Graffiti Buyer, Inc. - Revolver (7)
—
—
—
(
)
Halo Buyer, Inc.
%
Hancock Roofing and Construction L.L.C.
%
Hancock Roofing and Construction L.L.C. - Revolver (7)
—
—
—
—
Harris & Co. LLC - Unfunded Term Loan A (7)
—
—
—
Harris & Co. LLC - Unfunded Term Loan B (7)
—
—
—
Harris & Co. LLC - Funded Revolver
%
Harris & Co. LLC - Unfunded Revolver (7)
—
—
—
—
Hills Distribution, Inc.
%
Hills Distribution, Inc. - Unfunded Term Loan (7)
—
—
—
—
HV Watterson Holdings, LLC
%
—
(PIK
HV Watterson Holdings, LLC - Revolver
%
—
(PIK
HV Watterson Holdings, LLC - Unfunded Revolver (7)
—
—
—
(
)
HW Holdco, LLC
%
HW Holdco, LLC - Revolver (7)
—
—
—
—
IG Investment Holdings LLC
%
IG Investments Holdings, LLC - Revolver (7)
—
—
—
(
)
Imagine Acquisitionco, LLC - Funded Revolver
%
Imagine Acquisitionco, LLC (7)
—
—
—
(
)
Infinity Home Services Holdco, Inc.
%
Infinity Home Services Holdco, Inc. (CAD)
%
CAD
Infinity Home Services Holdco, Inc. - 3rd Amendment Unfunded Term Loan (7)
—
—
—
—
Infinity Home Services Holdco, Inc. - Funded Revolver
%
Infinity Home Services Holdco, Inc. - Revolver (7)
—
—
—
—
Inovex Information Systems Incorporated
%
Inovex Information Systems Incorporated - Unfunded Term Loan (7)
—
—
—
—
Inovex Information Systems Incorporated - Funded Revolver
%
Inovex Information Systems Incorporated - Revolver (7)
—
—
—
—
Inventus Power, Inc. - Revolver (7)
—
—
—
—
ITI Holdings, Inc.
%
ITI Holdings, Inc. - Revolver
%
ITI Holdings, Inc. - Unfunded Revolver (7)
—
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Kinetic Purchaser, LLC
%
$
$
Kinetic Purchaser, LLC - Funded Revolver
%
Kinetic Purchaser, LLC - Revolver (7)
—
—
—
—
Lash OpCo, LLC
%
(PIK
Lash OpCo, LLC - Revolver
%
(PIK
Lash OpCo, LLC - Unfunded Revolver (7)
—
—
—
(
)
LAV Gear Holdings, Inc.
%
(PIK
Ledge Lounger, Inc.
%
(PIK
Ledge Lounger, Inc. - Revolver
%
(PIK
Ledge Lounger, Inc. - Unfunded Revolver (7)
—
—
—
(
)
Lightspeed Buyer, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
LJ Avalon Holdings, LLC - Unfunded Term Loan (7)
—
—
—
LJ Avalon Holdings, LLC - Revolver (7)
—
—
—
—
Loving Tan Intermediate II, Inc.
%
Loving Tan Intermediate II, Inc. - Revolver
%
Loving Tan Intermediate II, Inc. - Unfunded Revolver (7)
—
—
—
(
)
Loving Tan Intermediate II, Inc. - Unfunded Term Loan (7)
—
—
—
Marketplace Events Acquisition, LLC
%
Marketplace Events Acquisition, LLC - Unfunded Term Loan (7)
—
—
—
—
Marketplace Events Acquisition, LLC - Revolver (7)
—
—
—
—
MBS Holdings, Inc. - Funded Revolver
%
MBS Holdings, Inc. - Revolver (7)
—
—
—
—
MDI Buyer, Inc. - Revolver
%
MDI Buyer, Inc. - Unfunded Revolver (7)
—
—
—
—
Meadowlark Acquirer, LLC
%
Meadowlark Acquirer, LLC- Unfunded Revolver (7)
—
—
—
(
)
Medina Health, LLC - Revolver (7)
—
—
—
—
Megawatt Acquisitionco, Inc. - Funded Revolver
%
Megawatt Acquisitionco, Inc. - Unfunded Revolver (7)
—
—
—
(
)
Mineola 212, LLC
%
—
MOREGroup Holdings, Inc. - Unfunded Term Loan (7)
—
—
—
MOREGroup Holdings, Inc. - Unfunded Revolver (7)
—
—
—
—
Municipal Emergency Services, Inc.
%
Municipal Emergency Services, Inc. - Unfunded Term Loan 3rd Amendment (7)
—
—
—
Municipal Emergency Services, Inc. - Funded Revolver
%
Municipal Emergency Services, Inc. - Revolver (7)
—
—
—
—
NBH Group LLC - Revolver (7)
—
—
—
—
NFS - CFP Holdings LLC - Unfunded Term Loan (7)
—
—
—
—
NFS - CFP Holdings LLC - Unfunded Revolver (7)
—
—
—
(
)
NORA Acquisition, LLC - Revolver (7)
—
—
—
—
NP Riverhead Industrial, LLC
%
—
Omnia Exterior Solutions, LLC - Unfunded Term Loan 2 (7)
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Omnia Exterior Solutions, LLC - Revolver (7)
—
—
—
$
(
)
ORL Acquisition, Inc.
%
(PIK
ORL Acquisition, Inc. - Revolver (7)
—
—
—
(
)
OSP Embedded Purchaser, LLC
%
OSP Embedded Purchaser, LLC - Revolver (7)
—
—
—
(
)
Pacific Purchaser, LLC - Unfunded Term Loan (7)
—
—
—
Pacific Purchaser, LLC - Revolver (7)
—
—
—
(
)
PAR Excellence Holdings, Inc. - Unfunded Revolver (7)
—
—
—
(
)
PCS MIDCO INC
%
PCS MIDCO INC - Unfunded Term Loan (7)
—
—
—
PCS MIDCO INC - Funded Revolver
%
PCS MIDCO INC - Unfunded Revolver (7)
—
—
—
—
PlayPower, Inc.
%
PlayPower, Inc. - Unfunded Revolver (7)
—
—
—
—
PL Acquisitionco, LLC - Revolver (7)
—
—
—
(
)
Pragmatic Institute, LLC (10)
—
—
Pragmatic Institute, LLC - Revolver (10)
—
—
Project Granite Buyer, Inc.
%
Project Granite Buyer, Inc. - Unfunded Term Loan (7)
—
—
—
—
Project Granite Buyer, Inc. - Revolver (7)
—
—
—
—
Quantic Electronics, LLC - Funded Revolver
%
Quantic Electronics, LLC - Unfunded Revolver (7)
—
—
—
—
Radius Aerospace, Inc. - Revolver
%
Radius Aerospace, Inc. - Unfunded Revolver (7)
—
—
—
(
)
Rancho Health MSO, Inc.
%
Rancho Health MSO, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
Rancho Health MSO, Inc. - Revolver
%
Rancho Health MSO, Inc. - Unfunded Revolver (7)
—
—
—
(
)
Recteq, LLC - Revolver (7)
—
—
—
(
)
Riverpoint Medical, LLC - Revolver
%
Riverpoint Medical, LLC - Unfunded Revolver (7)
—
—
—
—
RRA Corporate, LLC - Unfunded Term Loan 1 (7)
—
—
—
RRA Corporate, LLC - Unfunded Term Loan 2 (7)
—
—
—
RRA Corporate, LLC - Funded Revolver
%
RRA Corporate, LLC - Unfunded Revolver (7)
—
—
—
(
)
RTIC Subsidiary Holdings, LLC
%
RTIC Subsidiary Holdings, LLC - Unfunded Revolver (7)
—
—
—
(
)
Rural Sourcing Holdings, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
Rural Sourcing Holdings, Inc. - Funded Revolver
%
Rural Sourcing Holdings, Inc. - Revolver (7)
—
—
—
(
)
S101 Holdings, Inc. - Unfunded Term Loan 2 (7)
—
—
—
Sabel Systems Technology Solutions, LLC
%
Sabel Systems Technology Solutions, LLC - Revolver (7)
—
—
—
(
)
Safe Haven Defense US LLC - Term Loan
%
Safe Haven Defense US LLC - Unfunded Revolver (7)
—
—
—
—
Sales Benchmark Index LLC - Revolver (7)
—
—
—
—
Schlesinger Global, Inc.
%
(PIK
Schlesinger Global, Inc. - Revolver
%
(PIK
Schlesinger Global, Inc. - Unfunded Revolver (7)
—
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Seacoast Service Partners, LLC
%
$
$
Seacoast Service Partners, LLC - Unfunded Term Loan (7)
—
—
—
—
Seacoast Service Partners, LLC - Revolver (7)
—
—
—
—
Seaway Buyer, LLC
%
Seaway Buyer, LLC - Revolver
%
Seaway Buyer, LLC - Unfunded Revolver (7)
—
—
—
(
)
Shiftkey, LLC
%
Sigma Defense Systems, LLC
%
Sigma Defense Systems, LLC - Unfunded Revolver (7)
—
—
—
(
)
Smartronix, LLC - Unfunded Revolver (7)
—
—
—
—
Solutionreach, Inc. - Funded Revolver
%
Spendmend Holdings LLC
%
Spendmend Holdings LLC - Unfunded Term Loan 1 (7)
—
—
—
Spendmend Holdings LLC - Unfunded Term Loan 2 (7)
—
—
—
Spendmend Holdings LLC - Unfunded Revolver (7)
—
—
—
—
STG Distribution, LLC (fka Reception Purchaser) - First Out New Money Term Loans
%
(PIK
STG Distribution, LLC (fka Reception Purchaser) - Second Out Term Loans
%
(PIK
SV-Aero Holdings, LLC - Unfunded Term Loan (7)
—
—
(
)
System Planning and Analysis, Inc.
%
System Planning and Analysis, Inc. - Unfunded Term Loan (7)
—
—
—
System Planning and Analysis, Inc. - Unfunded Revolver (7)
—
—
—
—
TCG 3.0 Jogger Acquisitionco, Inc.
%
TCG 3.0 Jogger Acquisitionco, Inc. - Funded Revolver
%
TCG 3.0 Jogger Acquisitionco, Inc. - Unfunded Revolver (7)
—
—
—
(
)
The Bluebird Group LLC - Revolver (7)
—
—
—
—
The Vertex Companies, LLC
%
The Vertex Companies, LLC - Unfunded Term Loan (7)
—
—
—
(
)
The Vertex Companies, LLC - Unfunded Revolver (7)
—
—
—
(
)
TransGo, LLC - Revolver (7)
—
—
—
—
TWS Acquisition Corporation
%
TWS Acquisition Corporation - Revolver (7)
—
—
—
—
Urology Management Holdings, Inc.
%
Urology Management Holdings, Inc. - Unfunded Term Loan A (7)
—
—
—
—
US Fertility Enterprises, LLC - Unfunded Term Loan (7)
—
—
—
2
VRS Buyer, Inc.
%
VRS Buyer, Inc. - Unfunded Term Loan (7)
—
—
—
—
VRS Buyer, Inc. - Revolver (7)
—
—
—
—
Watchtower Intermediate, LLC. - Unfunded Term Loan (7)
—
—
—
Watchtower Intermediate, LLC. - Revolver (7)
—
—
—
—
Zips Car Wash, LLC
%
(PIK
Total First Lien Secured Debt
Second Lien Secured Debt -
Burgess Point Purchaser Corporation
%
ENC Parent Corporation - Second Lien
%
Halo Buyer, Inc.
%
Team Services Group, LLC
%
Total Second Lien Secured Debt
Subordinate Debt/Corporate Notes -
Beacon Behavioral Holdings LLC
%
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Express Wash Acquisition Company, LLC
%
$
$
Northwinds Topco, Inc.
%
—
(PIK
Northwinds Topco, Inc. - Unfunded Term Loan (7)
—
—
—
(
)
ORL Holdco, Inc. - Convertible Notes
%
—
ORL Holdco, Inc. - Unfunded Convertible Notes (7)
—
—
—
(
)
OSP Embedded Aggregator, LP - Convertible Note
%
—
Schlesinger Global, LLC - Promissory Note
%
StoicLane, Inc. - Convertible Notes
%
—
StoicLane, Inc. - Unfunded Convertible Notes (7)
—
—
—
United Land Services Intermediate Parent Holdings, LLC
%
—
(PIK
United Land Services Intermediate Parent Holdings, LLC - Unfunded Term Loan (7)
—
—
—
(
)
Total Subordinate Debt
Preferred Equity/Partnership Interests -
Accounting Platform Blocker, Inc. - Preferred Equity
—
—
Ad.net Holdings, Inc.
—
—
AFC Acquisitions, Inc. Preferred Equity (9)
—
—
AH Newco Equityholdings, LLC
%
—
Anteriad Holdings, LP - Preferred (f/k/a MeritDirect Holdings, LP) (9)
—
—
BioDerm Holdings, LP (Preferred)
—
—
Cartessa Aesthetics, LLC (9)
—
—
Connatix Parent, LLC (Preferred)
—
—
C5MI Holdco, LLC - Preferred Equity (9)
—
—
Gauge Schlesinger Coinvest, LLC - Class A-2 Preferred Equity
—
—
EvAL Home Health Solutions, LLC - Preferred Equity (9)
—
—
Hancock Claims Consultants Investors, LLC - Class A Preferred Equity (9)
—
—
Imagine Topco, LP Preferred
%
—
Magnolia Topco LP - Class A Preferred Equity (9)
—
—
Magnolia Topco LP - Class B Preferred Equity (9)
—
—
—
Megawatt Acquisition Partners, LLC - Preferred A
—
—
NXOF Holdings, Inc. (Tyto Athene, LLC)
—
—
ORL Holdco, Inc.
—
—
PL Acquisitionco, LLC - Preferred Equity
—
—
—
RTIC Parent Holdings, LLC - Class A Preferred Equity (9)
—
—
—
RTIC Parent Holdings, LLC - Class C Preferred Equity (9)
—
—
RTIC Parent Holdings, LLC - Class D Preferred Equity (9)
—
—
SP L2 Holdings LLC (Preferred)
—
—
SP L2 Holdings LLC (Preferred) - Unfunded (7)
—
—
—
—
TPC Holding Company, LP
—
—
219
TWD Parent Holdings, LLC Preferred
—
—
Total Preferred Equity/Parnership Interests
Common Equity/Partnership Interests/Warrants -
A1 Garage Equity, LLC (9)
—
—
ACP Big Top Holdings, L.P. - Common Equity
—
—
Ad.net Holdings, Inc.
—
—
Aechelon InvestCo, LP - Common Equity
—
—
Aechelon InvestCo, LP - Unfunded (7)
—
—
—
—
Aftermarket Drivetrain Products Holdings, LLC
—
—
AG Investco LP (9)
—
—
AG Investco LP - Unfunded (7), (9)
—
—
—
(
)
Altamira Intermediate Company II, Inc.
—
—
AMCSI Crash Co-Invest, LP
—
—
AMCSI Crash Co-Invest, LP - Unfunded (7)
—
—
—
—
Anteriad Holdings, LP - Common (f/k/a MeritDirect Holdings, LP) (9)
—
—
—
—
Athletico Holdings, LLC (9)
—
—
Atlas Investment Aggregator, LLC
—
—
—
Azureon, LLC (Common) (9)
—
—
BioDerm, Inc.
—
—
—
—
Burgess Point Holdings, LP
—
—
Carnegie Holdco, LLC - Common Equity (9)
—
—
Carisk Parent, L.P. - Common Equity
—
—
Connatix Parent, LLC
—
—
Consello Pacific Aggregator, LLC (9)
—
—
Cowboy Parent LLC
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14
ENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Crane 1 Acquisition Parent Holdings, L.P.
—
—
$
$
C5MI Holdco, LLC - Common Equity (9)
—
—
Delta InvestCo LP (9)
—
—
Delta InvestCo LP (7), (9)
—
—
—
—
Duggal Acquisition, LLC (Common)
—
—
eCommission Holding Corporation (11)
—
—
EDS Topco, LP
—
—
Events Buyer, LLC (Common)
—
—
Exigo, LLC
—
—
FedHC InvestCo LP (9)
—
—
FedHC InvestCo LP - Unfunded (7), (9)
—
—
—
—
FedHC InvestCo II LP (9)
—
—
Five Star Parent Holdings, LLC
—
—
Gauge ETE Blocker, LLC - Common Equity
—
—
Gauge Lash Coinvest LLC
—
—
Gauge Loving Tan, LP - Common Equity
—
—
Gauge Schlesinger Coinvest, LLC
—
—
GCOM InvestCo LP
—
—
GCP Boss Holdco, LLC (Common)
—
—
GGG MIDCO, LLC (Common) (9)
—
—
GMP Hills, LP - Common Equity
—
—
Hancock Claims Consultants Investors, LLC (9)
—
—
HPA SPQ Aggregator LP- Common Equity
—
—
HV Watterson Holdings, LLC
—
—
Icon Partners V C, L.P.
—
—
Icon Partners V C, L.P. - Unfunded (7)
—
—
—
(
)
IHS Parent Holdngs, L.P.
—
—
Imagine Topco, LP
—
—
—
—
Infogroup Parent Holdings, Inc.
—
—
Ironclad Holdco, LLC (Applied Technical Services, LLC)
—
—
ITC Infusion Co-invest, LP (9)
—
—
Kinetic Purchaser, LLC
—
—
KL Stockton Co-Invest LP (Any Hour Services) (9)
—
—
Lightspeed Investment Holdco LLC
—
—
LJ Avalon, LP
—
—
Lorient Peregrine Investments, LP
—
—
Magnolia Topco LP - Class A (9)
—
—
—
—
Magnolia Topco LP - Class B (9)
—
—
—
—
Marketplace Events Acquisition, LLC (Common)
—
—
MDI Aggregator, LP
—
—
Meadowlark Title, LLC (9)
—
—
—
Megawatt Acquisition Partners, LLC - Common Equity A
—
—
—
Municipal Emergency Services, Inc.
—
—
NEPRT Parent Holdings, LLC (Recteq, LLC) (9)
—
—
New Insight Holdings, Inc. - Common Equity
—
—
New Medina Health, LLC (9)
—
—
NFS - CFP Holdings LLC - Common Equity
—
—
NORA Parent Holdings, LLC (9)
—
—
North Haven Saints Equity Holdings, LP (9)
—
—
Northwinds Services Group, LLC - Common Equity
—
—
NXOF Holdings, Inc.
—
—
—
OceanSound Discovery Equity, LP (Holdco Sands Intermediate, LLC) (9)
—
—
OES Co-Invest, LP Class A Common Equity
—
—
OHCP V BC COI, L.P.
—
—
OHCP V BC COI, L.P. - Unfunded (7)
—
—
—
(
)
ORL Holdco, Inc.
—
—
—
OSP Embedded Aggregator, LP
—
—
PAR Excellence Holdings, Inc. - Common Equity
—
—
PCS Parent, LP
—
—
PennantPark-TSO Senior Loan Fund II, LP (11)
—
—
Pink Lily Holdco, LLC (9)
—
—
—
Pragmatic Institute, LLC
—
—
—
Project Granite Holdings, LLC (Common)
—
—
Quad (U.S.) Co-Invest, L.P.
—
—
QuantiTech InvestCo LP (9)
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name |
|
Maturity |
|
Industry |
|
Current Coupon |
|
|
Basis Point Spread Above Index (4) |
|
|
Par / Shares |
|
|
Cost |
|
|
Fair Value (3) |
|
|||||
QuantiTech InvestCo LP - Unfunded (7), (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
QuantiTech InvestCo II LP (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
RFMG Parent, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Sabel InvestCo, LP (Common) (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Sabel InvestCo, LP (Common) - Unfunded (7), (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Safe Haven Defense MidCo, LLC (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SBI Holdings Investments LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Seacoast Service Partners, LLC (Common) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Seaway Topco, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SP L2 Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SSC Dominion Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
StellPen Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SV Aero Holdings, LLC (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TAC LifePort Holdings, LLC (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TCG 3.0 Jogger Co-Invest, LP - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Tinicum Space Coast Co-Invest, LLC (Common) (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Tower Arch Infolinks Media, LP (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Tower Arch Infolinks Media, LP - Unfunded (7), (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TPC Holding Company, LP (8) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TWD Parent Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
United Land Services Holdings LLC - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
UniVista Insurance (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Urology Partners Co., L.P. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Watchtower Holdings, LLC (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab Coinvestment, LP (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab QP CF Feeder, LP (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab QP CF Feeder, LP - Unfunded (7), (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Kentucky Racing Holdco, LLC (Warrants) (9) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Common Equity/Partnership Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
US Government Securities - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
U.S. Treasury Bill (5) |
|
|
|
|
% |
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||||
Total US Government Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investments in Non-Controlled, Affiliated Portfolio Companies - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Secured Debt - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Walker Edison Furniture Company LLC (10) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Walker Edison Furniture Company, LLC - Unfunded Term Loan (7), (10) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
||||
Walker Edison Furniture Company LLC - Junior Revolver (10) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Total First Lien Secured Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity/Partnership Interests - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cascade Environmental Holdings, LLC (Preferred) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Cascade Environmental Holdings, LLC - Series B |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Preferred Equity/Partnership Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Equity/Partnership Interests/Warrants - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cascade Environmental Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Walker Edison Furniture |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Common Equity/Partnership Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments in Non-Controlled, Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investments in Controlled, Affiliated Portfolio Companies - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Secured Debt - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AKW Holdings Limited (8), (11) |
|
|
|
|
% |
|
|
|
GBP |
|
|
|
|
|
|
|
||||||||
JF Holdings Corp. |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Secured Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Subordinated Debt - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS (Unaudited) —(Continued)
DECEMBER 31, 2024
(In thousands, except share data)
Issuer Name |
|
Maturity |
|
Industry |
|
Current Coupon |
|
|
Basis Point Spread Above Index (4) |
|
|
Par / Shares |
|
|
Cost |
|
|
Fair Value (3) |
|
|||||
Flock Financial, LLC (11) |
|
|
|
|
% |
|
|
— |
|
|
|
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
(PIK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
PennantPark Senior Loan Fund, LLC (11) |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Subordinated Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Flock Financial Class A Preferred Equity (11) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Flock Financial Class B Preferred Equity (11) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Preferred Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Equity - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AKW Holdings Limited - Common Equity (8), (11) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
JF Intermediate, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
PennantPark Senior Loan Fund, LLC - Common Equity (11) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Common Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments in Controlled, Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and Cash Equivalents - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
BlackRock Federal FD Institutional 30 |
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Non-Money Market Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments and Cash Equivalents - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Liabilities in Excess of Other Assets - ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Net Assets - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Investments in Non-Controlled, Non-Affiliated Portfolio Companies -
First Lien Secured Debt -
A1 Garage Merger Sub, LLC
$
$
A1 Garage Merger Sub, LLC - Unfunded Term Loan (8)
—
—
—
A1 Garage Merger Sub, LLC - Revolver (8)
—
—
—
—
ACP Avenu Buyer, LLC
ACP Avenu Buyer, LLC - Unfunded Term Loan (8)
—
—
—
(
)
ACP Avenu Buyer, LLC - Funded Revolver
ACP Avenu Buyer, LLC - Revolver (8)
—
—
—
(
)
ACP Falcon Buyer, Inc. - Revolver (8)
—
—
—
—
Ad.net Acquisition, LLC - Funded Revolver
Ad.net Acquisition, LLC - Revolver (8)
—
—
—
—
Adweek Purchaser, LLC
Adweek Purchaser, LLC - Unfunded Term Loan (8)
—
—
—
Aechelon Technology, Inc.
Aechelon Technology, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Aeronix, Inc. - Revolver (8)
—
—
—
—
AFC Dell Holding Corp.
AFC Dell Holding Corp. - Unfunded Term Loan (8)
—
—
—
(
)
Atlas Purchaser, Inc. - Third Out
Atlas Purchaser, Inc. - Fourth Out
Anteriad, LLC (f/k/a MeritDirect, LLC) - Revolver (8)
—
—
—
—
Applied Technical Services, LLC
Applied Technical Services, LLC - Unfunded Term Loan (8)
—
—
—
(
)
Applied Technical Services, LLC - Revolver
Applied Technical Services, LLC - Unfunded Revolver (8)
—
—
—
(
)
Arcfield Acquisition Corp. - Revolver (8)
—
—
—
(
)
Archer Lewis, LLC
Archer Lewis, LLC - Unfunded Term Loan A (8)
—
—
—
(
)
Archer Lewis, LLC - Unfunded Term Loan B (8)
—
—
—
(
)
Archer Lewis, LLC - Unfunded Revolver (8)
—
—
—
(
)
Argano, LLC.
Argano, LLC. - Unfunded Term Loan (8)
—
—
—
—
Argano, LLC. - Unfunded Revolver (8)
—
—
—
—
Beacon Behavioral Support Service, LLC
Beacon Behavioral Support Service, LLC - Unfunded Term Loan (8)
—
—
—
(
)
Beacon Behavioral Support Service, LLC - Revolver (8)
—
—
—
(
)
Berwick Industrial Park
—
Beta Plus Technologies, Inc.
Big Top Holdings, LLC - Unfunded Revolver (8)
—
—
—
—
BioDerm, Inc. - Revolver
BioDerm, Inc. - Revolver (8)
—
—
—
(
)
Blackhawk Industrial Distribution, Inc.
Blackhawk Industrial Distribution, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
Blackhawk Industrial Distribution, Inc. - Revolver
Blackhawk Industrial Distribution, Inc. - Unfunded Revolver (8)
—
—
—
(
)
BlueHalo Financing Holdings, LLC
Broder Bros., Co.
Carisk Buyer, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
Carisk Buyer, Inc. - Revolver (8)
—
—
—
(
)
Carnegie Dartlet, LLC
Carnegie Dartlet, LLC - Unfunded Term Loan (8)
—
—
—
(
)
Carnegie Dartlet, LLC - Unfunded Revolver (8)
—
—
—
(
)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Cartessa Aesthetics, LLC
$
$
Cartessa Aesthetics, LLC - Revolver
Cartessa Aesthetics, LLC - Unfunded Revolver (8)
—
—
—
—
CF512, Inc.
CF512, Inc. - Revolver (8)
—
—
—
(
)
Compex Legal Services, Inc.
Compex Legal Services, Inc. - Revolver
Compex Legal Services, Inc. - Unfunded Revolver (8)
—
—
—
—
Confluent Health, LLC
Connatix Buyer, Inc. - Funded Revolver
Connatix Buyer, Inc. - Revolver (8)
—
—
—
—
Crane 1 Services, Inc.
Crane 1 Services, Inc. - Revolver (8)
—
—
—
(
)
C5MI Acquisition, LLC
C5MI Acquisition, LLC - Funded Revolver
C5MI Acquisition, LLC - Unfunded Revolver (8)
—
—
—
(
)
Dr. Squatch, LLC
Dr. Squatch, LLC - Unfunded Revolver (8)
—
—
—
—
DRS Holdings III, Inc.
DRS Holdings III, Inc. - Revolver (8)
—
—
—
(
)
Duggal Acquisition, LLC
Duggal Acquisition, LLC - Unfunded Term Loan (8)
—
—
—
—
Duggal Acquisition, LLC - Unfunded Revolver (8)
—
—
—
—
Dynata, LLC - Last-Out Term Loan
EDS Buyer, LLC
EDS Buyer, LLC - Revolver (8)
—
—
—
(
)
ENC Parent Corporation
ETE Intermediate II, LLC - Funded Revolver
ETE Intermediate II, LLC - Revolver (8)
—
—
—
—
Eval Home Health Solutions Intermediate, LLC - Revolver (8)
—
—
—
(
)
Exigo Intermediate II, LLC
Exigo Intermediate II, LLC - Revolver (8)
—
—
—
(
)
Five Star Buyer, Inc.
Five Star Buyer, Inc. - Revolver (8)
—
—
—
—
Gauge ETE Blocker, LLC - Promissory Note
—
GGG MIDCO, LLC
GGG MIDCO, LLC - Unfunded Term Loan (8)
—
—
—
—
GGG MIDCO, LLC - Unfunded Revolver (8)
—
—
—
—
Graffiti Buyer, Inc.
Graffiti Buyer, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
Graffiti Buyer, Inc. - Funded Revolver
Graffiti Buyer, Inc. - Revolver (8)
—
—
—
(
)
Halo Buyer, Inc.
Hancock Roofing and Construction L.L.C.
Insurance
Hancock Roofing and Construction L.L.C. - Revolver (8)
—
—
—
(
)
Harris & Co. LLC
Harris & Co. LLC - Unfunded Term Loan A (8)
—
—
—
(
)
Harris & Co. LLC - Unfunded Term Loan B (8)
—
—
—
(
)
Harris & Co. LLC - Unfunded Revolver (8)
—
—
—
(
)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Hills Distribution, Inc. - Unfunded Term Loan (8)
—
—
—
—
HV Watterson Holdings, LLC
(PIK
HV Watterson Holdings, LLC - Revolver
(PIK
HV Watterson Holdings, LLC - Unfunded Revolver (8)
—
—
—
(
)
HW Holdco, LLC
HW Holdco, LLC - Revolver (8)
—
—
—
—
IG Investment Holdings LLC
IG Investments Holdings, LLC - Revolver (8)
—
—
—
(
)
Imagine Acquisitionco, LLC (8)
—
—
—
(
)
Infinity Home Services Holdco, Inc.
Infinity Home Services Holdco, Inc. (CAD)
Infinity Home Services Holdco, Inc. - 1st Amendment Unfunded Term Loan (8)
—
—
—
Infinity Home Services Holdco, Inc. - Funded Revolver
Infinity Home Services Holdco, Inc. - Revolver (8)
—
—
—
—
Infolinks Media Buyco, LLC
Inventus Power, Inc. - Revolver (8)
—
—
—
(
)
ITI Holdings, Inc.
ITI Holdings, Inc. - Revolver
ITI Holdings, Inc. - Unfunded Revolver (8)
—
—
—
—
Kinetic Purchaser, LLC
Kinetic Purchaser, LLC - Revolver (8)
—
—
—
—
Lash OpCo, LLC
(PIK
Lash OpCo, LLC - Revolver
(PIK
Lash OpCo, LLC - Unfunded Revolver (8)
—
—
—
(
)
LAV Gear Holdings, Inc.
Ledge Lounger, Inc.
(PIK
Ledge Lounger, Inc. - Revolver
Ledge Lounger, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Lightspeed Buyer Inc. - Revolver (8)
—
—
—
—
LJ Avalon Holdings, LLC
LJ Avalon Holdings, LLC - Unfunded Term Loan (8)
—
—
—
LJ Avalon Holdings, LLC - Revolver (8)
—
—
—
—
Loving Tan Intermediate II, Inc.
Loving Tan Intermediate II, Inc. - Revolver
Loving Tan Intermediate II, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Loving Tan Intermediate II, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
MBS Holdings, Inc. - Funded Revolver
MBS Holdings, Inc. - Revolver (8)
—
—
—
—
MDI Buyer, Inc.
MDI Buyer, Inc. - Revolver
MDI Buyer, Inc. - Unfunded Revolver (8)
—
—
—
—
Meadowlark Acquirer, LLC
Meadowlark Acquirer, LLC- Unfunded Revolver (8)
—
—
—
(
)
Medina Health, LLC
Medina Health, LLC - Revolver (8)
—
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
Megawatt Acquisitionco, Inc. - Funded Revolver
$
$
Megawatt Acquisitionco, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Mineola 212, LLC
—
MOREGroup Holdings, Inc.
MOREGroup Holdings, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
MOREGroup Holdings, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Municipal Emergency Services, Inc.
Municipal Emergency Services, Inc. - Unfunded Term Loan B (8)
—
—
—
—
Municipal Emergency Services, Inc. - Unfunded Term Loan 3rd Amendment (8)
—
—
—
Municipal Emergency Services, Inc. - Revolver (8)
—
—
—
—
NBH Group LLC - Revolver (8)
—
—
—
(
)
NFS - CFP Holdings LLC
NFS - CFP Holdings LLC - Unfunded Term Loan (8)
—
—
—
—
NFS - CFP Holdings LLC - Unfunded Revolver (8)
—
—
—
—
NORA Acquisition, LLC
NORA Acquisition, LLC - Revolver (8)
—
—
—
—
NP Riverhead Industrial, LLC
—
Omnia Exterior Solutions, LLC
Omnia Exterior Solutions, LLC - Unfunded Term Loan 1 (8)
—
—
—
(
)
Omnia Exterior Solutions, LLC - Unfunded Term Loan 2 (8)
—
—
—
(
)
Omnia Exterior Solutions, LLC - Revolver (8)
—
—
—
(
)
ORL Acquisition, Inc.
(PIK
ORL Acquisition, Inc. - Revolver (8)
—
—
—
(
)
OSP Embedded Purchaser, LLC
OSP Embedded Purchaser, LLC - Revolver (8)
—
—
—
(
)
Ox Two, LLC
Ox Two, LLC - Revolver (8)
—
—
—
—
Pacific Purchaser, LLC - Unfunded Term Loan (8)
—
—
—
Pacific Purchaser, LLC - Revolver (8)
—
—
—
(
)
PAR Excellence Holdings, Inc.
PAR Excellence Holdings, Inc. - Unfunded Revolver (8)
—
—
—
—
PCS MIDCO INC
PCS MIDCO INC - Unfunded Term Loan (8)
—
—
—
PCS MIDCO INC - Funded Revolver
PCS MIDCO INC - Unfunded Revolver (8)
—
—
—
—
PlayPower, Inc.
PlayPower, Inc. - Unfunded Revolver (8)
—
—
—
(
)
PL Acquisitionco, LLC - Revolver (8)
—
—
—
(
)
Pragmatic Institute, LLC (7)
(PIK
Pragmatic Institute, LLC - Revolver (7)
(PIK
Quantic Electronics, LLC
Quantic Electronics, LLC - Funded Revolver
Quantic Electronics, LLC - Unfunded Revolver (8)
—
—
—
(
)
Radius Aerospace, Inc. - Revolver
Radius Aerospace, Inc. - Unfunded Revolver (8)
—
—
—
(
)
Rancho Health MSO, Inc.
Rancho Health MSO, Inc. - Unfunded Term Loan (8)
—
—
—
—
Rancho Health MSO, Inc. - Unfunded Term Loan 2 (8)
—
—
—
Rancho Health MSO, Inc. - Revolver
Rancho Health MSO, Inc. - Unfunded Revolver (8)
—
—
—
—
Reception Purchaser, LLC
Recteq, LLC - Revolver (8)
—
—
-
(
)
Riverpoint Medical, LLC - Revolver
Riverpoint Medical, LLC - Unfunded Revolver (8)
—
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
22
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
RRA Corporate, LLC
$
$
RRA Corporate, LLC - Unfunded Term Loan 1 (8)
—
—
—
—
RRA Corporate, LLC - Unfunded Term Loan 2 (8)
—
—
—
—
RRA Corporate, LLC - Funded Revolver
RRA Corporate, LLC - Unfunded Revolver (8)
—
—
—
(
)
RTIC Subsidiary Holdings, LLC
RTIC Subsidiary Holdings, LLC - Unfunded Revolver (8)
—
—
—
(
)
Rural Sourcing Holdings, Inc.
Rural Sourcing Holdings, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
Rural Sourcing Holdings, Inc. - Revolver (8)
—
—
—
(
)
S101 Holdings, Inc.
S101 Holdings, Inc. - Unfunded Term Loan 2 (8)
—
—
—
—
Safe Haven Defense US LLC - Term Loan
Safe Haven Defense US LLC - Unfunded Revolver (8)
—
—
—
(
)
Sales Benchmark Index LLC - Revolver (8)
—
—
—
—
Sargent & Greenleaf Inc. - Revolver
(PIK
Sargent & Greenleaf Inc. - Unfunded Revolver (8)
—
—
—
—
Schlesinger Global, Inc.
(PIK
Schlesinger Global, Inc. - Revolver
(PIK
Schlesinger Global, Inc. - Unfunded Revolver (8)
—
—
—
—
Seaway Buyer, LLC
Seaway Buyer, LLC - Revolver
Seaway Buyer, LLC - Unfunded Revolver (8)
—
—
—
(
)
Shiftkey, LLC
Sigma Defense Systems, LLC
Sigma Defense Systems, LLC - Unfunded Revolver (8)
—
—
—
(
)
Simplicity Financial Marketing Group Holdings Inc.
Simplicity Financial Marketing Group Holdings Inc. - Unfunded Term Loan (8)
—
—
—
Simplicity Financial Marketing Group Holdings Inc. - Unfunded Revolver (8)
—
—
—
—
Smartronix, LLC - Unfunded Revolver (8)
—
—
—
—
Solutionreach, Inc. - Unfunded Revolver (8)
—
—
—
—
Spendmend Holdings LLC
Spendmend Holdings LLC - Unfunded Term Loan (8)
—
—
—
Spendmend Holdings LLC - Revolver
Spendmend Holdings LLC - Unfunded Revolver (8)
—
—
—
—
System Planning and Analysis, Inc.
System Planning and Analysis, Inc. - Unfunded Term Loan (8)
—
—
—
System Planning and Analysis, Inc. - Funded Revolver
System Planning and Analysis, Inc. - Unfunded Revolver (8)
—
—
—
(
)
TCG 3.0 Jogger Acquisitionco, Inc.
TCG 3.0 Jogger Acquisitionco, Inc. - Unfunded Revolver (8)
—
—
—
(
)
The Bluebird Group LLC - Revolver (8)
—
—
—
—
The Vertex Companies, LLC
The Vertex Companies, LLC - Revolver
The Vertex Companies, LLC - Unfunded Revolver (8)
—
—
—
—
TPCN Midco, LLC
TPCN Midco, LLC - Unfunded Term Loan (8)
—
—
—
(
)
TPCN Midco, LLC - Unfunded Revolver (8)
—
—
—
(
)
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
TransGo, LLC
$
$
TransGo, LLC - Revolver (8)
—
—
—
—
TWS Acquisition Corporation
TWS Acquisition Corporation - Revolver (8)
—
—
—
—
Urology Management Holdings, Inc.
Urology Management Holdings, Inc. - Unfunded Term Loan A (8)
—
—
—
(
)
Watchtower Intermediate, LLC
Watchtower Intermediate, LLC. - Unfunded Term Loan (8)
—
—
—
Watchtower Intermediate, LLC. - Revolver (8)
—
—
—
(
)
Wildcat Buyerco, Inc.
Wildcat Buyerco, Inc. - Unfunded Term Loan (8)
—
—
—
Wildcat Buyerco, Inc. - Revolver (8)
—
—
—
—
Zips Car Wash, LLC
(PIK
Total First Lien Secured Debt
Second Lien Secured Debt -
Best Practice Associates LLC
Burgess Point Purchaser Corporation
ENC Parent Corporation - Second Lien
Halo Buyer, Inc.
Team Services Group, LLC
Total Second Lien Secured Debt
Subordinate Debt/Corporate Notes -
Beacon Behavioral Holdings LLC
—
(PIK
Express Wash Acquisition Company, LLC
(PIK
Northwinds Topco, Inc.
—
(PIK
Northwinds Topco, Inc. - Unfunded Term Loan (8)
—
—
—
(
)
ORL Holdco, Inc. - Convertible Notes
—
ORL Holdco, Inc. - Unfunded Convertible Notes (8)
—
—
—
(
)
Schlesinger Global, LLC - Promissory Note
(PIK
StoicLane, Inc. - Convertible Notes
—
StoicLane, Inc. - Unfunded Convertible Notes (8)
—
—
—
—
United Land Services Intermediate Parent Holdings, LLC
—
(PIK
United Land Services Intermediate Parent Holdings, LLC - Unfunded Term Loan (8)
—
—
—
(
)
Total Subordinate Debt
Preferred Equity/Partnership Interests -
Accounting Platform Blocker, Inc. - Preferred Equity
—
—
Ad.net Holdings, Inc.
—
—
AFC Acquisitions, Inc. Preferred Equity (10)
—
—
AH Newco Equityholdings, LLC
—
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (10)
—
—
BioDerm Holdings, LP (Preferred)
—
—
Cartessa Aesthetics, LLC (10)
—
—
C5MI Holdco, LLC - Preferred Equity (10)
—
—
Gauge Schlesinger Coinvest, LLC - Class A-2 Preferred Equity
—
—
EvAL Home Health Solutions, LLC - Preferred Equity (10)
—
—
Hancock Claims Consultants Investors, LLC - Class A Preferred Equity (10)
—
—
Imagine Topco, LP Preferred
—
Magnolia Topco LP - Class A Preferred Equity (10)
—
—
Magnolia Topco LP - Class B Preferred Equity (10)
—
—
—
Megawatt Acquisition Partners, LLC - Preferred A
—
—
NXOF Holdings, Inc. (Tyto Athene, LLC)
—
—
ORL Holdco, Inc.
—
—
PL Acquisitionco, LLC - Preferred Equity
—
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name
Maturity
Industry
Current Coupon
Basis Point Spread Above Index (4)
Par / Shares
Cost
Fair Value (3)
RTIC Parent Holdings, LLC - Class A Preferred Equity (10)
—
—
$
—
RTIC Parent Holdings, LLC - Class C Preferred Equity (10)
—
—
RTIC Parent Holdings, LLC - Class D Preferred Equity (10)
—
—
TPC Holding Company, LP
—
—
TWD Parent Holdings, LLC Preferred
—
—
Total Preferred Equity/Parnership Interests
Common Equity/Partnership Interests/Warrants -
A1 Garage Equity, LLC (10)
—
—
ACP Big Top Holdings, L.P. - Common Equity
—
—
Ad.net Holdings, Inc.
—
—
Aechelon InvestCo, LP - Common Equity
—
—
Aechelon InvestCo, LP - Unfunded (8)
—
—
—
—
Aftermarket Drivetrain Products Holdings, LLC
—
—
AG Investco LP (10)
—
—
AG Investco LP - Unfunded (8),(10)
—
—
—
—
Altamira Intermediate Company II, Inc.
—
—
AMCSI Crash Co-Invest, LP
—
—
AMCSI Crash Co-Invest, LP - Unfunded (8)
—
—
—
—
Anteriad Holdings, LP (f/k/a MeritDirect Holdings, LP) (10)
—
—
—
—
Athletico Holdings, LLC (10)
—
—
Atlas Investment Aggregator, LLC
—
—
—
BioDerm, Inc.
—
—
—
—
Burgess Point Holdings, LP
—
—
Carnegie Holdco, LLC - Common Equity (10)
—
—
Carisk Parent, L.P. - Common Equity
—
—
Connatix Parent, LLC
—
—
Consello Pacific Aggregator, LLC (10)
—
—
Cowboy Parent LLC
—
—
Crane 1 Acquisition Parent Holdings, L.P.
—
—
C5MI Holdco, LLC - Common Equity (10)
—
—
Delta InvestCo LP (10)
—
—
Delta InvestCo LP (8),(10)
—
—
—
—
Duggal Acquisition, LLC (Common)
—
—
eCommission Holding Corporation (12)
—
—
EDS Topco, LP
—
—
Exigo, LLC
—
—
FedHC InvestCo LP (10)
—
—
FedHC InvestCo LP - Unfunded (8),(10)
—
—
—
—
FedHC InvestCo II LP (10)
—
—
Five Star Parent Holdings, LLC
—
—
Gauge ETE Blocker, LLC - Common Equity
—
—
Gauge Lash Coinvest LLC
—
—
Gauge Loving Tan, LP - Common Equity
—
—
Gauge Schlesinger Coinvest, LLC
—
—
GCOM InvestCo LP
—
—
GGG MIDCO, LLC (Common) (10)
—
—
GMP Hills, LP - Common Equity
—
—
Hancock Claims Consultants Investors, LLC (10)
—
—
HPA SPQ Aggregator LP- Common Equity
—
—
HV Watterson Holdings, LLC
—
—
Icon Partners V C, L.P.
—
—
Icon Partners V C, L.P. - Unfunded (8)
—
—
—
—
IHS Parent Holdngs, L.P.
—
—
Imagine Topco, LP
—
—
—
—
Infogroup Parent Holdings, Inc.
—
—
Ironclad Holdco, LLC (Applied Technical Services, LLC)
—
—
ITC Infusion Co-invest, LP (10)
—
—
Kinetic Purchaser, LLC
—
—
KL Stockton Co-Invest LP (Any Hour Services) (10)
—
—
LEP Pequod Holdings, LP
—
—
Lightspeed Investment Holdco LLC
—
—
LJ Avalon, LP
—
—
Lorient Peregrine Investments, LP
—
—
Magnolia Topco LP - Class A (10)
—
—
—
—
Magnolia Topco LP - Class B (10)
—
—
—
—
MDI Aggregator, LP
—
—
Meadowlark Title, LLC (10)
—
—
—
Megawatt Acquisition Partners, LLC - Common Equity A
—
—
Municipal Emergency Services, Inc.
—
—
NEPRT Parent Holdings, LLC (Recteq, LLC) (10)
—
—
New Insight Holdings, Inc. - Common Equity
—
—
New Medina Health, LLC (10)
—
—
NFS - CFP Holdings LLC - Common Equity
—
—
NORA Parent Holdings, LLC (10)
—
—
North Haven Saints Equity Holdings, LP (10)
—
—
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
25
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name |
|
Maturity |
|
Industry |
|
Current Coupon |
|
|
Basis Point Spread Above Index (4) |
|
|
Par / Shares |
|
|
Cost |
|
|
Fair Value (3) |
|
|||||
Northwinds Services Group, LLC - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
$ |
|
|
$ |
|
||||
NXOF Holdings, Inc. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
OceanSound Discovery Equity, LP (Holdco Sands Intermediate, LLC) (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
OES Co-Invest, LP Class A Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
OHCP V BC COI, L.P. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
OHCP V BC COI, L.P. - Unfunded (8) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
||
ORL Holdco, Inc. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
OSP Embedded Aggregator, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
PAR Excellence Holdings, Inc. - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
PCS Parent, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
PennantPark-TSO Senior Loan Fund II, LP (12) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Pink Lily Holdco, LLC (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Pragmatic Institute, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Quad (U.S.) Co-Invest, L.P. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
QuantiTech InvestCo LP (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
QuantiTech InvestCo LP - Unfunded (8), (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
QuantiTech InvestCo II LP (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
RFMG Parent, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Safe Haven Defense MidCo, LLC (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SBI Holdings Investments LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Seaway Topco, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SP L2 Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SSC Dominion Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
StellPen Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
SV Aero Holdings, LLC (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TAC LifePort Holdings, LLC (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TCG 3.0 Jogger Co-Invest, LP - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Tower Arch Infolinks Media, LP (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Tower Arch Infolinks Media, LP - Unfunded (8), (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
TPC Holding Company, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TPCN Holdings, LLC - Common Equity (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
TWD Parent Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
United Land Services Holdings LLC - Common Equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
UniVista Insurance (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Urology Partners Co., L.P. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Watchtower Holdings, LLC (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab Coinvestment, LP (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab QP CF Feeder, LP (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
WCP Ivyrehab QP CF Feeder, LP - Unfunded (8), (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Wildcat Parent, LP |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Kentucky Racing Holdco, LLC (Warrants) (10) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Total Common Equity/Partnership Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
US Government Securities - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
U.S. Treasury Bill (5) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Total US Government Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments in Non-Controlled, Non-Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investments in Non-Controlled, Affiliated Portfolio Companies - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Secured Debt - 0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Walker Edison Furniture Company LLC (11) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Walker Edison Furniture Company, LLC - Unfunded Term Loan (11), (8) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|||
Walker Edison Furniture Company LLC - Junior Revolver (11) |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Total First Lien Secured Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity/Partnership Interests - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cascade Environmental Holdings, LLC (Preferred) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Cascade Environmental Holdings, LLC - Series B |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Preferred Equity/Partnership Interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
26
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS – (Continued)
September 30, 2024
(In thousands, except share data)
Issuer Name |
|
Maturity |
|
Industry |
|
Current Coupon |
|
|
Basis Point Spread Above Index (4) |
|
|
Par / Shares |
|
|
Cost |
|
|
Fair Value (3) |
|
|||||
Common Equity/Partnership Interests/Warrants - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cascade Environmental Holdings, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
$ |
|
|
|
— |
|
|||
Walker Edison Furniture |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|||
Total Common Equity/Partnership Interests/Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Total Investments in Non-Controlled, Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investments in Controlled, Affiliated Portfolio Companies - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Lien Secured Debt - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AKW Holdings Limited (GBP) (9), (12) |
|
|
|
12.16% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
(PIK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
JF Holdings Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total First Lien Secured Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Subordinated Debt - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Flock Financial, LLC (12) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
(PIK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
PennantPark Senior Loan Fund, LLC (12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Subordinated Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Preferred Equity - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Flock Financial Class A Preferred Equity (12) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Flock Financial Class B Preferred Equity (12) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Preferred Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Equity - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
AKW Holdings Limited - Common Equity (9), (12) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
JF Intermediate, LLC |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
PennantPark Senior Loan Fund, LLC (12) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Total Common Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments in Controlled, Affiliated Portfolio Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and Cash Equivalents - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
BlackRock Federal FD Institutional 81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-Money Market Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Investments and Cash Equivalents - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Liabilities in Excess of Other Assets - ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Net Assets - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|||||
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
27
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
DECEMBER 31, 2024
1. ORGANIZATION
PennantPark Investment Corporation was organized as a Maryland corporation in January 2007. We are a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. Our investment objective is to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments. We invest primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and, to a lesser extent, equity investments. On April 24, 2007, we closed our initial public offering. On April 14, 2022, trading of the Company's common stock commenced on the New York Stock Exchange after the Company voluntarily withdrew the principal listing of its common stock from the Nasdaq Stock Market LLC effective at market close on April 13, 2022. Our common stock trades on the New York Stock Exchange under the symbol “PNNT.”
We execute our investment strategy directly and through our wholly owned subsidiaries, our unconsolidated joint venture and unconsolidated limited partnership. The term “subsidiary” means entities that primarily engage in investment activities in securities or other assets and are wholly owned by us. The Company does not intend to create or acquire primary control of any entity which primarily engages in investment activities of securities or other assets other than entities wholly owned by the Company. We comply with the provisions of Section 18 of the 1940 Act governing capital structure and leverage on an aggregate basis with our subsidiaries. Our subsidiaries comply with the provisions of Section 17 of the 1940 Act related to affiliated transactions and custody. To the extent that the Company forms a subsidiary advised by an investment adviser other than the Investment Adviser, the investment adviser to such subsidiaries will comply with the provisions of the 1940 Act relating to investment advisory contracts, including but not limited to, Section 15, as if it were an investment adviser to the Company under Section 2(a)(20) of the 1940 Act.
We have entered into an investment management agreement, (the "Investment Management Agreement"), with PennantPark Investment Advisors, LLC (the "Investment Adviser"), an external adviser that manages our day-to-day operations. We have also entered into an administration agreement, (the "Administration Agreement"), with PennantPark Investment Administrator LLC (the "Administrator"), which provides the administrative services necessary for us to operate.
On July 31, 2020, we and certain entities and managed accounts of the private credit investment manager of Pantheon Ventures (UK) LLP, or Pantheon, entered into a limited liability company agreement to co-manage PSLF, a newly formed unconsolidated joint venture formed as a Delaware limited liability company. In connection with this transaction, we contributed in-kind our formerly wholly-owned subsidiary, Funding I. As a result of this transaction, Funding I became a wholly-owned subsidiary of PSLF and was deconsolidated from our financial statements. PSLF invests primarily in middle-market and other corporate debt securities consistent with our strategy. PSLF was formed as a Delaware limited liability company. See Note 4.
In April 2021, we issued $
paid
be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are general,
unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes on any securities exchange or automated dealer quotation system.
In October 2021, we issued $
Notes is paid
general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness. The 2026 Notes-2 are effectively
subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities. We do not intend to list the 2026 Notes-2 on any securities exchange or automated dealer quotation system.
On November 22, 2021, we formed PNNT Investment Holdings II, LLC, a Delaware limited liability company (“Holdings II”), as a wholly owned subsidiary. On December 31, 2022, we contributed
In January 2022, we formed PennantPark-TSO Senior Loan Fund II LP, ("PTSF II"), an unconsolidated limited partnership, organized as a Delaware limited partnership. We sold $
We are operated by a person who has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act of 1936, as amended, or the Commodity Exchange Act, and therefore, is not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of our consolidated financial statements, in conformity with U.S. generally accepted accounting principles, or GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reported periods. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Changes in the economic and regulatory environment, financial markets, the credit worthiness of our portfolio companies and any other parameters used in determining these estimates and assumptions could cause actual results to differ from such estimates and assumptions. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions in consolidation. References to the Financial Accounting Standards Board’s ("FASB’s") or Accounting Standards Codification, as amended ("ASC"), serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the consolidated financial statements are issued.
28
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Our consolidated financial statements are prepared in accordance with GAAP, consistent with ASC Topic 946, Financial Services – Investment Companies, and pursuant to the requirements for reporting on Form 10-K/Q and Articles 6, 10 and 12 of Regulation S-X, as appropriate. In accordance with Article 6-09 of Regulation S-X, we have provided a consolidated statement of changes in net assets in lieu of a consolidated statement of changes in stockholders’ equity.
We expect that there may not be readily available market values for many of the investments which are or will be in our portfolio. We value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that our board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material. See Note 5.
Our portfolio generally consists of illiquid securities, including debt and equity investments. With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, our board of directors undertakes a multi-step valuation process each quarter, as described below:
Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If our board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.
Security transactions are recorded on a trade-date basis. 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, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering prepayment penalties. Net change in unrealized appreciation or depreciation reflects, as applicable, the change in the fair values of our portfolio investments and the Credit Facility during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount ("OID"), market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties earned on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be recurring in nature. Such fees include loan prepayment penalties, structuring fees, amendment fees, and agency fees and are recorded as other investment income when earned.
Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or if there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current. As of December 31, 2024, we had
29
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
We have complied with the requirements of Subchapter M of the Code and have qualified to be treated as a RIC for federal income tax purposes. In this regard, we account for income taxes using the asset and liability method prescribed by ASC Topic 740, Income Taxes, or ASC 740. Under this method, income taxes are provided for amounts currently payable and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Based upon our qualification and election to be treated as a RIC for U.S. federal income tax purposes, we typically do not incur material federal income taxes. However, we may choose to retain a portion of our calendar year income, which may result in the imposition of an excise tax. Additionally, certain of the Company’s consolidated subsidiaries are subject to federal, state and local income taxes. For the three months ended December 31, 2024 and 2023 and we recorded a provision for taxes on net investment income of $
We recognize the effect of a tax position in our Consolidated Financial Statements in accordance with ASC 740 when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not considered to satisfy the “more-likely-than-not” threshold would be recorded as a tax expense or benefit. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the financial statements. There were no tax accruals relating to uncertain tax positions and no amounts accrued for any related interest or penalties with respect to the periods presented herein. The Company’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although the Company files both federal and state income tax returns, the Company’s major tax jurisdiction is federal.
Holdings II, is subject to U.S. federal, state and local corporate income taxes. The income tax expense and related tax liabilities of the Taxable Subsidiary are reflected in the Company’s consolidated financial statements.
For the three months ended December 31, 2024 and 2023, the Company recognized a provision for taxes of
During the three months ended December 31, 2024 and 2023, the Company paid
We operate in a manner to maintain our election to be subject to tax as a RIC and to eliminate corporate-level U.S. federal income tax (other than the
Because federal income tax regulations differ from GAAP, distributions characterized in accordance with tax regulations may differ from net investment income and net realized gains recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
Distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid, if any, as a distribution is determined by our board of directors each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually. The tax attributes for distributions will generally include ordinary income and capital gains but may also include certain tax-qualified dividends and/or a return of capital.
Capital transactions, in connection with our dividend reinvestment plan or through offerings of our common stock, are recorded when issued and offering costs are charged as a reduction of capital upon issuance of our common stock.
On June 4, 2024, we entered into equity distribution agreements with Truist Securities, Inc. and Keefe, Bruyette & Woods, Inc. (together, the "Equity Distribution Agreements"), as sales agents (each a "Sales Agent" and together, the "Sales Agents") in connection with the sale of shares of our common stock, with an aggregate offering price of up to $
During the three months ended December 31, 2024 and 2023, we did
Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, we do not isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt from the fluctuations arising from changes in fair values of investments and liabilities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and liabilities.
30
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.
As permitted under Regulation S-X and as explained by ASC paragraph 946-810-45-3, PennantPark Investment will generally not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to us. Accordingly, we have consolidated the results of our SBIC Funds and our Taxable Subsidiary in our Consolidated Financial Statements. We do not consolidate our non-controlling interests in PSLF or PTSF II. See further description of our investment in PSLF in Note 4.
Asset transfers that do not meet ASC Topic 860, Transfers and Servicing, requirements for sale accounting treatment are reflected in the Consolidated Statements of Assets and Liabilities and the Consolidated Schedules of Investments as investments.
(h) Recent Accounting Pronouncements
In March 2020, the FASB issued ASU, No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through June 30, 2023. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three months ended December 31, 2024, the effect of which was not material to the consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)”, which is intended to address issues identified during the post-implementation review of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment, among other things, eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors”, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The new guidance is effective for interim and annual periods beginning after December 15, 2022. The Company has adopted the new accounting standard implementing appropriate controls and procedures, the effect of which was not material to the consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"). The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company has adopted the new accounting standard, the effect was not material to the the consolidated financial statements.
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities' segment disclosure by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosure of a reportable segment's profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for our fiscal years beginning December 15, 2024, and should be applied on a retrospective basis to all periods presented, noting early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023 - 09 "Improvements to Income Tax Disclosures" ("ASU 2023 - 09"). ASU 2023 - 09 intends to improve the transparency of income tax disclosures. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. We are currently assessing the impact of this guidance, however, we do not expect a material impact to our consolidated financial statements.
31
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
3. AGREEMENTS AND RELATED PARTY TRANSACTIONS
(a) Investment Management Agreement
The Investment Management Agreement with the Investment Adviser was reapproved by our board of directors, including a majority of our directors who are not interested persons of us or the Investment Adviser, in May 2024. Under the Investment Management Agreement, the Investment 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 Investment Adviser serves as the servicer to Funding I and has irrevocably directed that the management fee owed to it with respect to such services be paid to the Company so long as the Investment Adviser remains the servicer. For providing these services, the Investment Adviser receives a fee from us, consisting of two components— a base management fee and an incentive fee or, collectively, Management Fees.
Base Management Fee
The base management fee is calculated at an annual rate of
Incentive Fee
The incentive fee has two parts, as follows:
One part is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. For this purpose, 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 amendment, commitment, origination, prepayment penalties, structuring, diligence and consulting fees or other fees received from portfolio companies, accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense or amendment fees under any credit facility and distribution 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 OID, debt instruments with PIK interest and zero-coupon securities), accrued income not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, computed net of all realized capital losses or unrealized capital appreciation or depreciation. Pre-Incentive Fee Net Investment Income, expressed as a percentage of the value of our net assets at the end of the immediately preceding calendar quarter, is compared to the hurdle rate of
For the three months ended December 31, 2024 and 2023, the Investment Adviser earned an incentive fee of $
The second part of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement, as of the termination date) and, effective January 1, 2018, equals
Under GAAP, we are required to accrue a capital gains incentive fee based upon net realized capital gains and net unrealized capital appreciation and depreciation on investments held at the end of each period. In calculating the capital gains incentive fee accrual, we considered the cumulative aggregate unrealized capital appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Management Agreement. This accrual is calculated using the aggregate cumulative realized capital gains and losses and cumulative unrealized capital appreciation or depreciation. If such amount is positive at the end of a period, then we record a capital gains incentive fee equal to
32
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
(b) Administration Agreement
The Administration Agreement with the Administrator was reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in May 2024. Under the Administration Agreement, the Administrator provides administrative services and office facilities to us. For providing these services, facilities and personnel, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer, Chief Compliance Officer, and their respective staffs. The amount billed by the Administrator may include credits related to its administrative agreement with PSLF. The Administrator also offers, on our behalf, significant managerial assistance to portfolio companies to which we are required to offer such assistance. Reimbursement for certain of these costs is included in administrative services expenses in the Consolidated Statements of Operations. For the three months ended December 31, 2024 and 2023, we recorded $
Under the Administration Agreement the Administrator may be reimbursed by the Company for the costs and expenses to be borne by the Company set forth above include the costs and expenses allocable with respect to the provision of in-house legal, tax, or other professional advice and/or services to the Company, including performing due diligence on its prospective portfolio companies as deemed appropriate by the Administrator, where such in-house personnel perform services that would be paid by the Company if outside service providers provided the same services, subject to the Board's oversight.
(c) Other Related Party Transactions
The Company, the Investment Adviser and certain other affiliates have been granted an order for exemptive relief by the SEC for the Company to co-invest with other funds managed by the Investment Adviser. If we co-invest with other affiliated funds, our Investment Adviser would not receive compensation except to the extent permitted by the exemptive order and applicable law, including the limitations set forth in Section 57(k) of the 1940 Act.
There were no transactions subject to Rule 17a-7 under the 1940 Act during each of the three months ended December 31, 2024 and 2023.
For the three months ended December 31, 2024, we sold $
For the three months ended December 31, 2024, we sold
As of December 31, 2024 and September 30, 2024, PNNT had a payable to PSLF and PTSF II of
As of December 31, 2024 and September 30, 2024, PNNT had a receivable from affiliates of $
33
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Purchases of investments, including PIK interest, for the three months ended December 31, 2024 and 2023 totaled $
Investments and cash and cash equivalents consisted of the following:
|
|
December 31, 2024 |
|
|
September 30, 2024 |
|
||||||||||
Investment Classification ($ in thousands) |
|
Cost |
|
|
Fair Value |
|
|
Cost |
|
|
Fair Value |
|
||||
First lien |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
U.S. Government Securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Second lien |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subordinated debt / corporate notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subordinated notes in PSLF |
|
|
|
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|
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|
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|
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|
||||
Equity |
|
|
|
|
|
|
|
|
|
|
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|
||||
Equity in PSLF |
|
|
|
|
|
|
|
|
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|
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|
||||
Total investments |
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|
|
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|
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|
||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total investments and cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets (excluding cash and cash equivalents) in such industries as of:
Industry Classification |
|
December 31, 2024 (1) |
|
|
|
September 30, 2024 (1) |
|
|
||
Distribution |
|
|
|
% |
|
|
|
% |
||
Business Services |
|
|
|
|
|
|
|
|
||
Short-Term U.S. Government Securities |
|
|
|
|
|
|
|
|
||
Healthcare, Education and Childcare |
|
|
|
|
|
|
|
|
||
Aerospace and Defense |
|
|
|
|
|
|
|
|
||
Consumer Products |
|
|
|
|
|
|
|
|
||
Financial Services |
|
|
|
|
|
|
|
|
||
Media |
|
|
|
|
|
|
|
|
||
Auto Sector |
|
|
|
|
|
|
|
|
||
Environmental Services |
|
|
|
|
|
|
|
|
||
Telecommunications |
|
|
|
|
|
|
|
|
||
Personal, Food and Miscellaneous Services |
|
|
|
|
|
|
|
|
||
Manufacturing/Basic Industry |
|
|
|
|
|
|
|
|
||
Chemicals, Plastics and Rubber |
|
|
|
|
|
|
|
|
||
Government Services |
|
|
|
|
|
|
|
|
||
Buildings and Real Estate |
|
|
|
|
|
|
|
|
||
Conglomerate Manufacturing |
|
|
|
|
|
|
|
|
||
Diversified Conglomerate Service |
|
|
|
|
|
|
|
|
||
Building Materials |
|
|
|
|
|
|
|
|
||
Transportation |
|
|
|
|
|
|
|
|
||
Consumer Services |
|
|
|
|
|
|
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|
||
Electronics |
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|
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|
|
|
|
|
||
Event Services |
|
|
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
|
|
||
Total |
|
|
|
% |
|
|
|
% |
||
34
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
PennantPark Senior Loan Fund, LLC
In July 2020, we and Pantheon formed PSLF, an unconsolidated joint venture as a Delaware limited liability company. PSLF invests primarily in middle-market and other corporate debt securities consistent with its strategy. As of December 31, 2024 and September 30, 2024, PSLF had total assets of $
We provide capital to PSLF in the form of subordinated notes and equity interests. As of December 31, 2024, we and Pantheon owned
We and Pantheon each appointed two members to PSLF’s four-person Member Designees’ Committee, or the Member Designees’ Committee. All material decisions with respect to PSLF, including those involving its investment portfolio, require unanimous approval of a quorum of the Member Designees’ Committee. Quorum is defined as (i) the presence of two members of the Member Designees’ Committee; provided that at least one individual is present that was elected, designated or appointed by each of us and Pantheon; (ii) the presence of three members of the Member Designees’ Committee, provided that the individual that was elected, designated or appointed by each of us or Pantheon, as the case may be, with only one individual present being entitled to cast two votes on each matter; and (iii) the presence of four members of the Member Designees’ Committee constitute a quorum, provided that the two individuals are present that were elected, designated or appointed by each of us and Pantheon.
Additionally, PSLF, through its wholly-owned subsidiary, has entered into a $
In March 2022, PSLF completed a $
On July 26, 2023, CLO VII , LLC ("CLO VII") completed a $
On December 23, 2024, PennantPark CLO X, LLC ("CLO X”) completed a $
On August 28, 2024, PSLF entered into an amendment (the “Amendment”) to PSLF’s limited liability company agreement (the “LLC Agreement”). The Amendment amended the term of PSLF, which would have otherwise expired on January 31, 2025, to be indefinite, subject to the other terms of dissolution, wind down and termination in the LLC Agreement. The Amendment also modified the LLC Agreement to permit any member of PSLF (each, a “PSLF Member”) to request to redeem its interests in PSLF (in minimum tranches of
Below is a summary of PSLF’s portfolio at fair value:
($ in thousands) |
|
December 31, 2024 (Unaudited) |
|
|
September 30, 2024 |
|
||
Total investments |
|
$ |
|
|
$ |
|
||
Weighted average cost yield on income producing investments |
|
|
% |
|
|
% |
||
Number of portfolio companies in PSLF |
|
|
|
|
|
|
||
Largest portfolio company investment at fair value |
|
$ |
|
|
$ |
|
||
Total of five largest portfolio company investments at fair value |
|
$ |
|
|
$ |
|
||
35
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Below is a listing of PSLF’s individual investments as of December 31, 2024 ($ in thousands)
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
First Lien Secured Debt -
A1 Garage Merger Sub, LLC
$
$
ACP Avenu Buyer, LLC
ACP Falcon Buyer, Inc.
AFC - Dell Holding Corp.
Ad.net Acquisition, LLC
Aechelon Technology
Alpine Acquisition Corp II
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)
Anteriad Holdings Inc (fka MeritDirect)
Applied Technical Services, LLC
Archer Lewis, LLC
Argano, LLC
Beacon Behavioral Support Services, LLC
Beta Plus Technologies, Inc.
Big Top Holdings, LLC
Bioderm, Inc.
Blackhawk Industrial Distribution, Inc.
BlueHalo Global Holdings, LLC
Burgess Point Purchaser Corporation
C5MI Acquisition, LLC
CF512, Inc.
Carisk Buyer, Inc.
Carnegie Dartlet, LLC
Cartessa Aesthetics, LLC
Case Works, LLC
Compex Legal Services, Inc.
Confluent Health, LLC
Connatix Buyer, Inc.
Crane 1 Services, Inc.
Dr. Squatch, LLC
DRI Holding Inc.
DRS Holdings III, Inc.
Duggal Acquisition, LLC
Dynata, LLC - First Out Term Loan
Dynata, LLC - Last Out Term Loan
EDS Buyer, LLC
ETE Intermediate II, LLC
Emergency Care Partners, LLC
Eval Home Health Solutions Intermediate, LLC
Exigo Intermediate II, LLC
Fairbanks Morse Defense
Five Star Buyer, Inc.
GGG Midco, LLC
Global Holdings InterCo LLC
Graffiti Buyer, Inc.
HEC Purchaser Corp.
HV Watterson Holdings, LLC
HW Holdco, LLC
Hancock Roofing and Construction L.L.C.
Harris & Co. LLC
Hills Distribution, Inc
IG Investments Holdings, LLC
Imagine Acquisitionco, LLC
Infinity Home Services Holdco, Inc.
Infolinks Media Buyco, LLC
Inventus Power, Inc.
Kinetic Purchaser, LLC
LAV Gear Holdings, Inc.
Lash OpCo, LLC
Lightspeed Buyer Inc.
LJ Avalon Holdings, LLC
MAG DS Corp.
MDI Buyer Inc.
Magenta Buyer, LLC -First out
Magenta Buyer, LLC -Second out
Magenta Buyer, LLC -Third out
36
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
MBS Holdings, Inc.
$
$
Meadowlark Acquirer, LLC
Medina Health, LLC
Megawatt Acquisitionco, Inc.
Michael Baker International, LLC
MOREgroup Holdings, LLC
Municipal Emergency Services, Inc.
NBH Group LLC
NFS - CFP Holdings, LLC
NORA Acquisition, LLC
Omnia Exterior Solutions, LLC
One Stop Mailing, LLC
Owl Acquisition, LLC
PCS Midco, Inc.
PL Acquisitionco, LLC
Pacific Purchaser, LLC
PAR Excellence Holdings, Inc.
Quantic Electronics, LLC
RRA Corporate, LLC
RTIC Subsidiary Holdings, LLC
Radius Aerospace, Inc.
Rancho Health MSO, Inc.
Recteq, LLC
Riverpoint Medical, LLC
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.)
S101 Holdings Inc.
Sales Benchmark Index LLC
Seaway Buyer, LLC
Sigma Defense Systems, LLC
Smartronix, LLC
Solutionreach, Inc.
SpendMend Holdings, LLC
STG Distribution, LLC (fka Reception Purchaser) - First Out New Money Term Loans
STG Distribution, LLC (fka Reception Purchaser) - Second Out Term Loans
Summit Behavioral Healthcare, LLC
SV- Aero Holdings, LLC (Aeronix)
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)
TCG 3.0 Jogger Acquisitionco, Inc.
TPC US Parent, LLC
TWS Acquisition Corporation
Team Services Group, LLC
Teneo Holdings LLC
The Bluebird Group LLC
The Vertex Companies, LLC
Transgo, LLC
Tyto Athene, LLC
Urology Management Holdings, Inc.
US Fertility Enterprises, LLC
Watchtower Buyer, LLC
Zips Car Wash, LLC
Total First Lien Secured Debt
Equity Securities -
Dynata, LLC
—
—
—
48Forty Intermediate Holdings, Inc.- Common Equity
—
—
—
—
—
Total Equity Securities
Total Investments -
Cash and Cash Equivalents -
BlackRock Federal FD Institutional 30
Total Cash and Cash Equivalents
Total Investments and Cash Equivalents -
$
$
Liabilities in Excess of Other Assets — (
(
)
Members' Equity—
$
37
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Below is a listing of PSLF’s individual investments as of September 30, 2024 ($ in thousands):
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
First Lien Secured Debt -
A1 Garage Merger Sub, LLC
%
$
$
ACP Avenu Buyer, LLC
%
ACP Falcon Buyer, Inc.
%
Ad.net Acquisition, LLC
%
Aeronix, Inc. - Term Loan
%
AFC - Dell Holding Corp.
%
Alpine Acquisition Corp II
%
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)
%
Anteriad Holdings Inc (fka MeritDirect)
%
Applied Technical Services, LLC
%
Arcfield Acquisition Corp.
%
Beacon Behavioral Support Services, LLC
%
Beta Plus Technologies, Inc.
%
Big Top Holdings, LLC
%
Bioderm, Inc.
%
Blackhawk Industrial Distribution, Inc.
%
BlueHalo Global Holdings, LLC
%
Broder Bros., Co.
%
Burgess Point Purchaser Corporation
%
Carisk Buyer, Inc.
%
Carnegie Dartlet, LLC
%
Cartessa Aesthetics, LLC
%
CF512, Inc.
%
Connatix Buyer, Inc.
%
Crane 1 Services, Inc.
%
Dr. Squatch, LLC
%
DRI Holding Inc.
%
DRS Holdings III, Inc.
%
Dynata, LLC - First Out Term Loan
%
Dynata, LLC - Last Out Term Loan
%
EDS Buyer, LLC
%
ETE Intermediate II, LLC
%
Eval Home Health Solutions Intermediate, LLC
%
Exigo Intermediate II, LLC
%
Fairbanks Morse Defense
%
Five Star Buyer, Inc.
%
Global Holdings InterCo LLC
%
Graffiti Buyer, Inc.
%
Hancock Roofing and Construction L.L.C.
%
HEC Purchaser Corp.
%
Hills Distribution, Inc
%
HV Watterson Holdings, LLC
HW Holdco, LLC
%
IG Investments Holdings, LLC
%
Imagine Acquisitionco, LLC
%
Infinity Home Services Holdco, Inc.
%
Infolinks Media Buyco, LLC
%
Inventus Power, Inc.
%
Kinetic Purchaser, LLC
%
LAV Gear Holdings, Inc.
%
Lash OpCo, LLC
Lightspeed Buyer Inc.
%
LJ Avalon Holdings, LLC
%
MAG DS Corp.
%
Magenta Buyer, LLC -First out
%
Magenta Buyer, LLC -Second out
%
Magenta Buyer, LLC -Third out
%
MBS Holdings, Inc.
%
Meadowlark Acquirer, LLC
%
Medina Health, LLC
%
Megawatt Acquisitionco, Inc.
%
MOREgroup Holdings, LLC
%
Municipal Emergency Services, Inc.
%
NBH Group LLC
%
NORA Acquisition, LLC
%
Omnia Exterior Solutions, LLC
%
38
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
One Stop Mailing, LLC
%
$
$
Owl Acquisition, LLC
%
Ox Two, LLC (New Issue)
%
Pacific Purchaser, LLC
%
PCS Midco, Inc.
%
PL Acquisitionco, LLC
Quantic Electronics, LLC
%
RTIC Subsidiary Holdings, LLC
%
Radius Aerospace, Inc.
%
Rancho Health MSO, Inc.
%
Reception Purchaser, LLC
%
Recteq, LLC
%
Riverpoint Medical, LLC
%
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.)
%
S101 Holdings Inc.
%
Sales Benchmark Index LLC
%
Sargent & Greenleaf Inc.
Seaway Buyer, LLC
%
Sigma Defense Systems, LLC
%
Simplicity Financial Marketing Group Holdings, Inc
%
Skopima Consilio Parent, LLC
%
Smartronix, LLC
%
Solutionreach, Inc.
%
SpendMend Holdings, LLC
%
Summit Behavioral Healthcare, LLC
%
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)
%
TCG 3.0 Jogger Acquisitionco, Inc.
%
TPC US Parent, LLC
%
TWS Acquisition Corporation
%
Team Services Group, LLC
%
Teneo Holdings LLC
%
The Bluebird Group LLC
%
The Vertex Companies, LLC
%
Transgo, LLC
%
Tyto Athene, LLC
%
Urology Management Holdings, Inc.
%
Watchtower Buyer, LLC
%
Wildcat Buyerco, Inc.
%
Zips Car Wash, LLC
Total First Lien Secured Debt
Equity Security -
Dynata, LLC - Common Equity
—
—
—
Total Investments -
Cash and Cash Equivalents -
BlackRock Federal FD Institutional 30
Total Cash and Cash Equivalents
Total Investments and Cash Equivalents -
$
$
Liabilities in Excess of Other Assets — (
(
)
Members' Equity—
$
39
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Below are the consolidated statements of assets and liabilities for PSLF ($ in thousands):
|
|
December 31, 2024 (Unaudited) |
|
|
September 30, 2024 |
|
||
Assets |
|
|
|
|
|
|
||
Investments at fair value (amortized cost—$ |
|
$ |
|
|
$ |
|
||
Cash and cash equivalents (cost—$ |
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
||
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Receivable for investments sold |
|
|
|
|
|
|
||
Due from affiliate |
|
|
|
|
|
|
||
Total assets |
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
||
2037 Asset-backed debt, net (par—$ |
|
|
|
|
|
|
||
2034 Asset-backed debt, net (par—$ |
|
|
|
|
|
|
||
2035 Asset-backed debt, net (par—$ |
|
|
|
|
|
|
||
Notes payable to members |
|
|
|
|
|
|
||
Credit facility payable |
|
|
|
|
|
|
||
Payable for investments purchased |
|
|
|
|
|
|
||
Interest payable on credit facility and asset backed debt |
|
|
|
|
|
|
||
Distribution payable to members |
|
|
|
|
|
|
||
Interest payable on notes to members |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Due to affiliate |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Members' equity |
|
|
|
|
|
|
||
Total liabilities and members' equity |
|
$ |
|
|
$ |
|
||
———————————
40
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Below are the consolidated statements of operations for PSLF ($ in thousands):
|
|
|
Three Months Ended December 31, |
|
|||||
|
|
|
2024 |
|
|
2023 |
|
||
Investment income: |
|
|
|
|
|
|
|
||
Interest |
|
|
$ |
|
|
$ |
|
||
Other income |
|
|
|
|
|
|
|
||
Total investment income |
|
|
|
|
|
|
|
||
Expenses: |
|
|
|
|
|
|
|
||
Interest expense on credit facility and asset-backed debt |
|
|
|
|
|
|
|
||
Interest expense on notes to members |
|
|
|
|
|
|
|
||
Administration fees |
|
|
|
|
|
|
|
||
General and administrative expenses |
|
|
|
|
|
|
|
||
Total expenses |
|
|
|
|
|
|
|
||
Net investment income |
|
|
|
|
|
|
|
||
Realized and unrealized gain (loss) on investments: |
|
|
|
|
|
|
|
||
Net realized gain (loss) on investments |
|
|
|
( |
) |
|
|
|
|
Net change in unrealized appreciation (depreciation) on investments |
|
|
|
( |
) |
|
|
|
|
Net realized and unrealized gain (loss) on investments |
|
|
|
( |
) |
|
|
|
|
Net increase (decrease) in members' equity resulting from operations |
|
|
$ |
|
|
$ |
|
||
———————————
(1) No management or incentive fees are payable by PSLF.
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value, as defined under ASC 820, is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us on the reporting period date.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:
Level 1: |
Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
|
|
Level 2: |
Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
|
|
Level 3: |
Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability.
|
|
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments and our Truist Credit Facility are classified as Level 3. Our 2026 Notes and 2026 Notes-2 are classified as Level 2, as they are financial instruments with readily observable market inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.
The inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data is available, such information may be the result of consensus pricing information, disorderly transactions or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence were available. Corroborating evidence that would result in classifying these non-binding broker/dealer bids as a Level 2 asset includes observable orderly market-based transactions for the same or similar assets or other relevant observable market-based inputs that may be used in pricing an asset.
Our investments are generally structured as debt and equity investments in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. The transaction price, excluding transaction costs, is typically the best estimate of fair value at inception. Ongoing reviews by our Investment Adviser and independent valuation firms are based on an assessment of each underlying investment, incorporating valuations that consider the evaluation of financing and sale transactions with third parties, expected cash flows and market-based information including comparable transactions, performance multiples and yields, among other factors. These non-public investments valued using unobservable inputs are included in Level 3 of the fair value hierarchy.
A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in our ability to observe valuation inputs may result in a reclassification for certain financial assets or liabilities.
In addition to using the above inputs to value cash equivalents, investments, our 2026 Notes, our 2026 Notes-2 and our Truist Credit Facility, we employ the valuation policy approved by our board of directors which is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. See Note 2.
41
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
As outlined in the table below, some of our Level 3 investments using a market approach valuation technique are valued using the average of the bids from brokers or dealers. The bids include a disclaimer, may not have corroborating evidence, may be the result of a disorderly transaction and may be the result of consensus pricing. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If the board of directors has a bona fide reason to believe any such bids do not reflect the fair value of an investment, it may independently value such investment by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available. In accordance with ASC 820, we do not categorize any investments for which fair value is measured using the net asset value per share within the fair value hierarchy.
The remainder of our investment portfolio and our long-term Truist Credit Facility are valued using a market comparable or an enterprise market value technique. With respect to investments for which there is no readily available market value, the factors that our board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the pricing indicated by the external event, excluding transaction costs, is used to corroborate the valuation. When using earnings multiples to value a portfolio company, the multiple used requires the use of judgment and estimates in determining how a market participant would price such an asset. These non-public investments using unobservable inputs are included in Level 3 of the fair value hierarchy. Generally, the sensitivity of unobservable inputs or combination of inputs such as industry comparable companies, market outlook, consistency, discount rates and reliability of earnings and prospects for growth, or lack thereof, affects the multiple used in pricing an investment. As a result, any change in any one of those factors may have a significant impact on the valuation of an investment. Generally, an increase in a market yield will result in a decrease in the valuation of a debt investment, while a decrease in a market yield will have the opposite effect. Generally, an increase in an earnings before interest, taxes, depreciation and amortization ("EBITDA"), multiple will result in an increase in the valuation of an investment, while a decrease in an EBITDA multiple will have the opposite effect.
Our Level 3 valuation techniques, unobservable inputs and ranges were categorized as follows for ASC 820 purposes:
Asset Category ($ in thousands) |
|
Fair value at |
|
|
Valuation Technique |
|
Unobservable Input |
|
Range of Input |
|
First lien |
|
$ |
|
|
Market Comparable |
|
Broker/Dealer bids or quotes |
|
N/A |
|
First lien |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
First lien |
|
|
|
|
Enterprise Market Value |
|
EBITDA multiple |
|
||
Second lien |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
Second lien |
|
|
|
|
Market Comparable |
|
Broker/Dealer bids or quotes |
|
N/A |
|
Subordinated debt / corporate notes |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
Equity |
|
|
|
|
Enterprise Market Value |
|
EBITDA multiple |
|
||
Total Level 3 investments |
|
$ |
|
|
|
|
|
|
|
|
Debt Category ($ in thousands) |
|
|
|
|
|
|
|
|
|
|
Truist Credit Facility |
|
$ |
|
|
Market Comparable |
|
Market yield |
|
||
Asset Category ($ in thousands) |
|
Fair value at |
|
|
Valuation Technique |
|
Unobservable Input |
|
Range of Input |
|
First lien |
|
$ |
|
|
Market Comparable |
|
Broker/Dealer bids or quotes |
|
N/A |
|
First lien |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
First lien |
|
|
|
|
Enterprise Market Value |
|
EBITDA multiple |
|
||
Second lien |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
Second lien |
|
|
|
|
Market Comparable |
|
Broker/Dealer bids or quotes |
|
N/A |
|
Subordinated debt / corporate notes |
|
|
|
|
Market Comparable |
|
Market yield |
|
||
Equity |
|
|
|
|
Enterprise Market Value |
|
EBITDA multiple |
|
||
Total Level 3 investments |
|
$ |
|
|
|
|
|
|
|
|
Debt Category ($ in thousands) |
|
|
|
|
|
|
|
|
|
|
Truist Credit Facility |
|
$ |
|
|
Market Comparable |
|
Market yield |
|
||
42
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Our investments, cash and cash equivalents, Truist Credit Facility, 2026 Notes and 2026 Notes-2 were categorized as follows in the fair value hierarchy:
|
|
Fair Value at December 31, 2024 |
|
|||||||||||||||||
Description ($ in thousands) |
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Measured at Net Asset Value (1) |
|
|||||
Debt investments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
U.S. Government Securities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total investments and cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Truist Credit Facility |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
2026 Notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2026 Notes-2(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
Fair Value at September 30, 2024 |
|
|||||||||||||||||
Description ($ in thousands) |
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Measured at Net Asset Value (1) |
|
|||||
Debt investments |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
U.S. Government Securities(3) |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Equity investments |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Total investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Total investments and cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Truist Credit Facility |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
||
2026 Notes(2) |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
2026 Notes-2(2) |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Total debt |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
The tables below show a reconciliation of the beginning and ending balances for investments measured at fair value using significant unobservable inputs (Level 3):
|
|
December 31, 2024 |
|
|||||||||
Description ($ in thousands) |
|
Debt |
|
|
Equity |
|
|
Totals |
|
|||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net realized gain (loss) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net change in unrealized appreciation (depreciation) |
|
|
( |
) |
|
|
|
|
|
|
||
Purchases, PIK interest, net discount accretion and non-cash exchanges |
|
|
|
|
|
|
|
|
|
|||
Sales, repayments and non-cash exchanges |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Transfers in/out of Level 3 |
|
— |
|
|
— |
|
|
|
— |
|
||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net change in unrealized appreciation reported within the net change in |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
|
|
December 31, 2023 |
|
|||||||||
Description ($ in thousands) |
|
Debt |
|
|
Equity |
|
|
Totals |
|
|||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net realized gain (loss) |
|
|
( |
) |
|
|
|
|
|
|
||
Net change in unrealized appreciation (depreciation) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Purchases, PIK interest, net discount accretion and non-cash exchanges |
|
|
|
|
|
|
|
|
|
|||
Sales, repayments and non-cash exchanges |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Transfers in/out of Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net change in unrealized appreciation reported within the net change in |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
43
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
The table below shows a reconciliation of the beginning and ending balances for liabilities measured at fair value using significant unobservable inputs (Level 3):
|
|
Three months ended December 31, |
|
|||||
Long-Term Credit Facility |
|
2024 |
|
|
2023 |
|
||
Beginning balance (cost – $ |
|
$ |
|
|
$ |
|
||
Net change in unrealized appreciation (depreciation) included in earnings |
|
|
( |
) |
|
|
|
|
Borrowings (1) |
|
|
|
|
|
|
||
Repayments (1) |
|
|
( |
) |
|
|
( |
) |
Transfers in and/or out of Level 3 |
|
|
— |
|
|
|
— |
|
Ending balance (cost – $ |
|
$ |
|
|
$ |
|
||
Temporary draws outstanding, at cost |
|
|
— |
|
|
|
— |
|
Ending balance (cost – $ |
|
$ |
|
|
$ |
|
||
As of December 31, 2024, we had outstanding non-U.S. dollar borrowings on our Truist Credit Facility:
Foreign Currency |
|
Amount Borrowed |
|
|
Borrowing Cost |
|
|
Current Value |
|
|
Reset Date |
|
Unrealized appreciation/ |
|
||||
British Pound |
|
£ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|||||
Canadian dollar |
|
|
CAD |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
||||
As of September 30, 2024, we had outstanding non-U.S. dollar borrowings on our Truist Credit Facility:
Foreign Currency |
|
Amount Borrowed |
|
|
Borrowing Cost |
|
|
Current Value |
|
|
Reset Date |
|
Unrealized appreciation/ |
|
||||
British Pound |
|
£ |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|||||
Canadian dollar |
|
|
CAD |
|
|
$ |
|
|
$ |
|
|
|
$ |
( |
) |
|||
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10"), which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did
For the three months ended December 31, 2024 and 2023, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $
44
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
6. TRANSACTIONS WITH AFFILIATED COMPANIES
An affiliated portfolio company is a company in which we have ownership of
Name of Investment |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Net Change in |
|
|
Fair Value at December 31, 2024 |
|
|
Interest |
|
|
PIK |
|
|
Dividend Income |
|
|
Net Realized |
|
|||||||||
Controlled Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
AKW Holdings Limited |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Flock Financial, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
JF Intermediate, LLC |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
PennantPark Senior Loan Fund, LLC (2) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Controlled Affiliates |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Non-Controlled Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cascade Environmental Holdings, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Walker Edison Furniture Company LLC |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Non-Controlled Affiliates |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total Controlled and |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Name of Investment |
|
Fair Value at |
|
|
Gross |
|
|
Gross |
|
|
Net Change in |
|
|
Fair Value at December 31, 2023 |
|
|
Interest |
|
|
PIK |
|
|
Dividend Income |
|
|
Net Realized |
|
|||||||||
Controlled Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
AKW Holdings Limited |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
JF Intermediate, LLC (MidOcean JF Holdings Corp.) (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Mailsouth Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
PennantPark Senior Loan Fund, LLC (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
RAM Energy LLC (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||||
Total Controlled Affiliates |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||||
Non-Controlled Affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cascade Environmental Holdings, LLC |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Walker Edison Furniture Company LLC |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Non-Controlled Affiliates |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total Controlled and |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||||
7. CHANGE IN NET ASSETS FROM OPERATIONS PER COMMON SHARE
The following information sets forth the computation of basic and diluted per share net increase in net assets resulting from operations ($ in thousands, except per share data):
|
|
Three Months Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Numerator for net increase (decrease) in net assets resulting from operations |
|
$ |
|
|
$ |
|
||
Denominator for basic and diluted weighted average shares |
|
|
|
|
|
|
||
Basic and diluted net increase (decrease) in net assets per share resulting from operations |
|
$ |
|
|
$ |
|
||
45
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
8. CASH AND CASH EQUIVALENTS
Cash equivalents represent cash in money market funds pending investment in longer-term portfolio holdings and for other general corporate purposes. Our portfolio may consist of temporary investments in U.S. Treasury Bills (of varying maturities), repurchase agreements, money market funds or repurchase agreement-like treasury securities. These temporary investments with original maturities of 90 days or less are deemed cash equivalents and are included in the Consolidated Schedule of Investments. At the end of each fiscal quarter, we may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which is dependent upon the composition of our total assets at quarter-end. We may accomplish this in several ways, including purchasing U.S. Treasury Bills and closing out positions on a net cash basis after quarter-end, temporarily drawing down on the Credit Facility, or utilizing repurchase agreements or other balance sheet transactions as are deemed appropriate for this purpose. These amounts are excluded from average adjusted gross assets for purposes of computing the Investment Adviser’s management fee. U.S. Treasury Bills with maturities greater than 60 days from the time of purchase are valued consistent with our valuation policy. As of December 31, 2024 and September 30, 2024, cash and cash equivalents consisted of money market funds, and non-money market in the amounts of $
9. FINANCIAL HIGHLIGHTS
Below are the financial highlights ($ in thousands, except share and per share data):
|
|
Three Months Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Per Share Data: |
|
|
|
|
|
|
||
Net asset value, beginning of period |
|
$ |
|
|
$ |
|
||
Net investment income (1) |
|
|
|
|
|
|
||
Net change in realized and unrealized gain (loss) (1) |
|
|
|
|
|
( |
) |
|
Net increase (decrease) in net assets resulting from operations (1) |
|
|
|
|
|
|
||
Distributions to stockholders (1), (2) |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock (1) |
|
|
|
|
|
|
||
Net asset value, end of period |
|
$ |
|
|
$ |
|
||
Per share market value, end of period |
|
$ |
|
|
$ |
|
||
Total return* (3) |
|
|
% |
|
|
% |
||
Shares outstanding at end of period |
|
|
|
|
|
|
||
Ratios** / Supplemental Data: |
|
|
|
|
|
|
||
Ratio of operating expenses to average net assets (4) |
|
|
% |
|
|
% |
||
Ratio of debt related expenses to average net assets (5) |
|
|
% |
|
|
% |
||
Ratio of total expenses to average net assets (5) |
|
|
% |
|
|
% |
||
Ratio of net investment income to average net assets (5) |
|
|
% |
|
|
% |
||
Net assets at end of period |
|
$ |
|
|
$ |
|
||
Weighted average debt outstanding |
|
$ |
|
|
$ |
|
||
Weighted average debt per share (1) |
|
$ |
|
|
$ |
|
||
Asset coverage per unit (6) |
|
$ |
|
|
$ |
|
||
Portfolio turnover ratio* (7) |
|
|
% |
|
|
% |
||
* Not annualized for periods less than one year.
**Re-occurring investment income and expenses included in these ratios are annualized for periods less than one year.
***The expense and investment income ratios do not reflect the Company's proportionate share of income and expenses of PSLF and PTSF II.
10. DEBT
The annualized weighted average cost of debt for the three months ended December 31, 2024 and 2023, inclusive of the fee on the undrawn commitment and amendment costs on the Truist Credit Facility and amortized upfront fees on SBA debentures, 2026 Notes and 2026 Notes-2, was
On February 5, 2019, our stockholders approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the Small Business Credit Availability Act, or "SBCAA") as approved by our board of directors on November 13, 2018. As a result, the asset coverage requirement applicable to us for senior securities was reduced from
46
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - (Continued)
December 31, 2024
Truist Credit Facility
As of December 31, 2024, we had the multi-currency Truist Credit Facility for up to $
2026 Notes
In April 2021, we issued $
2026 Notes-2
In October 2021, we issued $
11. COMMITMENTS AND CONTINGENCIES
From time to time, we, may be a party to legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
Unfunded debt and equity investments, if any, are disclosed in the Consolidated Schedules of Investments. Under these arrangements, we may be required to supply a letter of credit to a third party if the portfolio company were to request a letter of credit. As of December 31, 2024 and September 30, 2024, we had $
12. UNCONSOLIDATED SIGNIFICANT SUBSIDIARIES
We must determine which, if any, of our unconsolidated controlled portfolio companies is a "significant subsidiary" within the meaning of Regulation S-X. We have determined that, as of September 30, 2024, PennantPark Senior Loan Fund, LLC triggered at least one of the significance tests. As a result and in accordance with Rule 3-09 of Regulation S-X, separate audited financial statements of PSLF, LLC for the years ended September 30, 2024, 2023, and 2022 were filed as exhibits to our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
In December 2023, the JF Intermediate LLC became controlled affiliate.
JF Intermediate, LLC (Unaudited):
|
|
Three Months Ended December 31, |
|
|||||
Income Statement |
|
2024 |
|
|
2023 |
|
||
Total revenue |
|
$ |
|
|
$ |
|
||
Total expenses |
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
( |
) |
|
$ |
( |
) |
13. Subsequent Events
On February 7, 2025, the Company increased the commitments to its Truist Credit Facility from $
47
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
PennantPark Investment Corporation and its Subsidiaries
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated statement of assets and liabilities of PennantPark Investment Corporation and its subsidiaries (the Company), including the consolidated schedules of investments, as of December 31, 2024, the related consolidated statements of operations and changes in net assets for the three-month periods ended December 31, 2024 and 2023, and cash flows for the three-month periods ended December 31, 2024 and 2023, and the related notes to the consolidated financial statements (collectively, the interim financial information or financial statements). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of September 30, 2024, and the related consolidated statements of operations, changes in net assets, and cash flows for the year then ended (not presented herein); and in our report dated November 25, 2024, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, as of September 30, 2024, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
/s/ RSM US LLP
New York, New York
February 10, 2025
48
Awareness Letter of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
PennantPark Investment Corporation and its Subsidiaries
We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of PennantPark Investment Corporation and its Subsidiaries for the periods ended December 31, 2024 and 2023, as indicated in our report dated February 10, 2025; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended December 31, 2024, is incorporated by reference in Registration Statement No. 333-263564 on Form N-2.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ RSM US LLP
New York, New York
February 10, 2025
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to us and our consolidated subsidiaries regarding future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our Company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Report involve risks and uncertainties, including statements as to:
We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. You should not place undue influence on the forward-looking statements as our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors in “Risk Factors” and elsewhere in this Report.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Report should not be regarded as a representation by us that our plans and objectives will be achieved.
We have based the forward-looking statements included in this Report on information available to us on the date of this Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including reports on Form 10-Q/K and current reports on Form 8-K.
You should understand that under Section 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act.
The following analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained elsewhere in this Report.
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Overview
PennantPark Investment Corporation is a BDC whose objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments.
We believe middle-market companies offer attractive risk-reward to investors due to a limited amount of capital available for such companies. We hold a diversified portfolio that includes first lien secured debt, second lien secured debt, subordinated debt and equity investments ranging from approximately $10 million to $50 million of capital, on average, in the securities of middle-market companies. We expect this investment size to vary proportionately with the size of our capital base. We use the term “middle-market” to refer to companies with annual revenues between $50 million and $1 billion. The companies in which we invest are typically highly leveraged, and, in most cases, are not rated by national rating agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies. Securities rated below investment grade are often referred to as “leveraged loans” or “high yield” securities or “junk bonds” and are often higher risk and have speculative characteristic compared to debt instruments that are rated above investment grade. Our debt investments may generally range in maturity from three to ten years and are made in U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities which operate in various industries and geographical regions.
Our investment activity depends on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.
Organization and Structure of PennantPark Investment Corporation
PennantPark Investment Corporation, a Maryland corporation organized in January 2007, is a closed-end, externally managed, non-diversified investment company that has elected to be treated as a BDC under the 1940 Act. In addition, for federal income tax purposes we have elected to be treated, and intend to qualify annually, as a RIC under the Code.
Our investment activities are managed by the Investment Adviser. Under our Investment Management Agreement, we have agreed to pay our Investment Adviser an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. PennantPark Investment, through the Investment Adviser, provided similar services to SBIC II under its investment management agreement. We have also entered into an Administration Agreement with the Administrator. Under our Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Financial Officer, Chief Compliance Officer, and their respective staffs. PennantPark Investment, through the Administrator, provided similar services to SBIC II under its administration agreement with us. Our board of directors, a majority of whom are independent of us, provides overall supervision of our activities, and the Investment Adviser manages our day-to-day activities.
Revenues
We generate revenue in the form of interest income on the debt securities we hold and capital gains and dividends, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of first lien secured debt, second lien secured debt or subordinated debt, typically bear interest at a fixed or a floating rate. Interest on debt securities is generally payable quarterly or semiannually. In some cases, our investments provide for deferred interest payments and PIK interest. The principal amount of the debt securities and any accrued but unpaid interest generally becomes due at the maturity date. In addition, we generate revenue in the form of amendment, commitment, origination, structuring or diligence fees, fees for providing significant managerial assistance and possibly consulting fees. Loan origination fees, OID and market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, amendment fees, and agency fees and are recorded as other investment income when earned.
Expenses
Our primary operating expenses include interest expense on the outstanding debt and unused commitment fees on undrawn amounts, under our various debt facilities, the payment of a management fee and the payment of an incentive fee to our Investment Adviser, if any, our allocable portion of overhead under our Administration Agreement and other operating costs as detailed below. Our management fee compensates our Investment Adviser for its work in identifying, evaluating, negotiating, consummating and monitoring our investments. We bear all other direct or indirect costs and expenses of our operations and transactions, including:
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Generally, during periods of asset growth, we expect our general and administrative expenses to be relatively stable or to decline as a percentage of total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities would be additive to the expenses described above.
PORTFOLIO AND INVESTMENT ACTIVITY
As of December 31, 2024, our portfolio totaled $1,298.1 million and consisted of $575.0 million or 44% of first lien secured debt, $124.8 million or 10% of U.S. Government Securities, $50.0 million or 4% of second lien secured debt, $206.1 million or 16% of subordinated debt (including $132.2 million or 10% in PSLF) and $342.2 million or 26% of preferred and common equity (including $76.0 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 92% variable-rate investments and 8% fixed-rate investments. As of December 31, 2024, we had two portfolio companies on non-accrual, representing 4.3% and 1.5% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $13.6 million as of December 31, 2024. Our overall portfolio consisted of 158 companies with an average investment size of $7.4 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.0%.
As of September 30, 2024, our portfolio totaled $1,328.1 million and consisted of $667.9 million or 50% of first lien secured debt, $99.6 million or 8% of U.S. Government Securities, $67.2 million or 5% of second lien secured debt, $181.7 million or 14% of subordinated debt (including $115.9 million or 9% in PSLF) and $311.7 million or 23% of preferred and common equity (including $67.9 million or 5% in PSLF). Our interest bearing debt portfolio consisted of 94% variable-rate investments and 6% fixed-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 4.1% and 2.3% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $11.2 million as of September 30, 2024. Our overall portfolio consisted of 152 companies with an average investment size of $8.1 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.3%.
For the three months ended December 31, 2024, we invested $295.7 million in 12 new and 61 existing portfolio companies with a weighted average yield on debt investments of 10.6% (excluding U.S. Government Securities). For the three months ended December 31, 2024, sales and repayments of investments totaled $353.7 million (excluding U.S. Government Securities).
For the three months ended December 31, 2023, we invested $231.1 million in 12 new and 32 existing portfolio companies with a weighted average yield on debt investments of 11.9%. For the three months ended December 31, 2023, sales and repayments of investments totaled $71.0 million (excluding U.S. Government Securities).
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PennantPark Senior Loan Fund, LLC
As of December 31, 2024, PSLF’s portfolio totaled $1,275.1 million, consisted of 112 companies with an average investment size of $11.4 million and had a weighted average yield interest bearing debt investments of 10.7%.
As of September 30, 2024, PSLF’s portfolio totaled $1,031.2 million, consisted of 102 companies with an average investment size of $10.1 million and had a weighted average yield interest bearing debt investments of 11.3%.
For the three months ended December 31, 2024, PSLF invested $353.8 million (including $286.6 million were purchased from the Company) in 15 new and 43 existing portfolio companies at weighted average yield interest bearing debt investments of 10.5%. PSLF’s sales and repayments of investments for the same period totaled $109.1 million.
For the three months ended December 31, 2023, PSLF invested $81.0 million (including $50.8 million were purchased from the Company) in five new and seven existing portfolio companies at weighted average yield on interest bearing debt investments of 12.7%. PSLF’s sales and repayments of investments for the same period totaled $29.1 million.
At-the-Market Offering
On June 4, 2024, we entered into the Equity Distribution Agreements with Truist Securities, Inc. and Keefe, Bruyette & Woods, Inc. as the the Sales Agents in connection with the sale of shares of our common stock, with an aggregate offering price of up to $100 million under an ATM Program. We may offer and sell shares of our common stock from time to time through a Sales Agent in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions and the trading price of our common stock. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the equity distribution agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with ATM Program offerings will not be made at price less than our current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us.
During the three months ended December 31, 2024 and 2023, we did not issue any shares under the ATM program.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of our assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of income and expenses during the reported periods In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements have been included. Actual results could differ from these estimates due to changes in the economic and regulatory environment, financial markets and any other parameters used in determining such estimates and assumptions, including the credit worthiness of our portfolio companies. We may reclassify certain prior period amounts to conform to the current period presentation. We have eliminated all intercompany balances and transactions. References to ASC serve as a single source of accounting literature. Subsequent events are evaluated and disclosed as appropriate for events occurring through the date the Consolidated Financial Statements are issued. In addition to the discussion below, we
describe our critical accounting policies in the notes to our Consolidated Financial Statements. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10-K. There have been no significant changes in our critical accounting estimates from those disclosed in our 2024 Annual Report on Form 10-K during the three months ended December 31, 2024.
Investment Valuations
We expect that there may not be readily available market values for many of the investments which are or will be in our portfolio, and we value such investments at fair value as determined in good faith by or under the direction of our board of directors using a documented valuation policy and a consistently applied valuation process, as described in this Report. With respect to investments for which there is no readily available market value, the factors that our board of directors may take into account in pricing our investments at fair value include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we consider the pricing indicated by the external event to corroborate or revise our valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and the difference may be material.
Our portfolio generally consists of illiquid securities, including debt and equity investments. With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, our board of directors undertakes a multi-step valuation process each quarter, as described below:
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Our board of directors generally uses market quotations to assess the value of our investments for which market quotations are readily available. We obtain these market values from independent pricing services or at the bid prices obtained from at least two brokers or dealers, if available, or otherwise from a principal market maker or a primary market dealer. The Investment Adviser assesses the source and reliability of bids from brokers or dealers. If our board of directors has a bona fide reason to believe any such market quote does not reflect the fair value of an investment, it may independently value such investments by using the valuation procedure that it uses with respect to assets for which market quotations are not readily available.
Fair value, as defined under ASC 820, is the price that we would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment or liability. ASC 820 emphasizes that valuation techniques maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing an asset or liability based on market data obtained from sources independent of us. Unobservable inputs reflect the assumptions market participants would use in pricing an asset or liability based on the best information available to us on the reporting period date.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchies:
Level 1: |
Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities, accessible by us at the measurement date.
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Level 2: |
Inputs that are quoted prices for similar assets or liabilities in active markets, or that are quoted prices for identical or similar assets or liabilities in markets that are not active and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term, if applicable, of the financial instrument.
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Level 3: |
Inputs that are unobservable for an asset or liability because they are based on our own assumptions about how market participants would price the asset or liability. |
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A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Generally, most of our investments, and our are classified as Level 3. Our 2026 Notes and 2026 Notes-2 are classified as Level 2, as they are financial instruments with readily observable market inputs. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the price used in an actual transaction may be different than our valuation and those differences may be material.
On December 3, 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which establishes an updated regulatory framework for determining fair value in good faith for purposes of the 1940 Act. The new rule clarifies how fund boards of directors can satisfy their valuation obligations and requires, among other things, the board of directors to periodically assess material valuation risks and take steps to manage those risks. The rule also permits boards of directors, subject to board oversight and certain other conditions, to designate the fund’s investment adviser to perform fair value determinations. The new rule went into effect on March 8, 2021 and had a compliance date of September 8, 2022. We came into compliance with Rule 2a-5 under the 1940 Act before the compliance date. While our board of directors has not elected to designate the Investment Adviser as the valuation designee at this time, we have adopted certain revisions to our valuation policies and procedures in order comply with the applicable requirements of Rule 2a-5 under the 1940 Act.
In addition to using the above inputs to value cash equivalents, investments, our 2026 Notes, 2026 Notes-2 and our Truist Credit Facility valuations, we employ the valuation policy approved by our board of directors that is consistent with ASC 820. Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.
Generally, the carrying value of our consolidated financial liabilities approximates fair value. We have adopted the principles under ASC Subtopic 825-10, Financial Instruments ("ASC 825-10"), which provides companies with an option to report selected financial assets and liabilities at fair value, and made an irrevocable election to apply ASC 825-10 to our Truist Credit Facility. We elected to use the fair value option for the Truist Credit Facility to align the measurement attributes of both our assets and liabilities while mitigating volatility in earnings from using different measurement attributes. Due to that election and in accordance with GAAP, we did not incur any expenses relating to amendment costs on the Truist Credit Facility for both the three months ended December 31, 2024 and 2023. ASC 825-10 establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect on earnings of a company’s choice to use fair value. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the Consolidated Statements of Assets and Liabilities and changes in fair value of the Truist Credit Facility is reported in our Consolidated Statements of Operations. We elect not to apply ASC 825-10 to any other financial assets or liabilities, including the 2026 Notes, and 2026 Notes-2.
For the three months ended December 31, 2024 and 2023, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $3.3 million and $(2.0) million, respectively. As of December 31, 2024 and September 30, 2024, the unrealized appreciation (depreciation) on the Truist Credit Facility totaled $4.4 million and $1.1 million, respectively. We use an independent valuation service to measure the fair value of our Truist Credit Facility in a manner consistent with the valuation process that our board of directors uses to value our investments.
Revenue Recognition
We record interest income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt investments with contractual PIK interest, which represents interest accrued and added to the loan balance that generally becomes due at maturity, we will generally not accrue PIK interest when the portfolio company valuation indicates that such PIK interest is not collectable. We do not accrue as a receivable interest on loans and debt investments if we have reason to doubt our ability to collect such interest. Loan origination fees, OID, market discount or premium and deferred financing costs on liabilities, which we do not fair value, are capitalized and then accreted or amortized using the effective interest method as interest income or, in the case of deferred financing costs, as interest expense. We record prepayment penalties on loans and debt investments as income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that we expect to collect such amounts. From time to time, the Company receives certain fees from portfolio companies, which may or may not be non-recurring in nature. Such fees include loan prepayment penalties, structuring fees, amendment fees, and agency fees and are recorded as other investment income when earned.
Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation
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, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized appreciation or depreciation reflects changes in the fair values of our portfolio investments and our Truist Credit Facility, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
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Foreign Currency Translation
Our books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, we do not isolate that portion of the results of operations due to changes in foreign exchange rates on investments, other assets and debt from the fluctuations arising from changes in fair values of investments and liabilities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments and liabilities.
Payment-in-Kind, or PIK Interest
We have investments in our portfolio which contain a PIK interest provision. PIK interest is added to the principal balance of the investment and is recorded as income. In order for us to maintain our ability to be subject to tax as a RIC, substantially all of this income must be paid out to stockholders in the form of dividends for U.S. federal income tax purposes, even though we may not have collected any cash with respect to interest on PIK securities.
Federal Income Taxes
We have elected to be treated, and intend to qualify annually to maintain our election to be treated, as a RIC under Subchapter M of the Code. To maintain our RIC tax election, we must, among other requirements, meet certain annual source-of-income and quarterly asset diversification requirements. We also must annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of the sum of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, or investment company taxable income, determined without regard to any deduction for dividends paid.
Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible U.S. federal excise tax imposed on RICs, we must distribute dividends for federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the sum of (1) 98% of our net ordinary income (subject to certain deferrals and elections) for the calendar year, (2) 98.2% of the excess, if any, of our capital gains over our capital losses, or capital gain net income (adjusted for certain ordinary losses) for the one-year period ending on October 31 of the calendar year plus (3) the sum of any net ordinary income plus capital gain net income for preceding years that was realized but not distributed during such years and on which we did not incur any U.S. federal income tax, or the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, contingent on maintaining our ability to be subject to tax as a RIC, in order to provide us with additional liquidity.
Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and net realized gain recognized for financial reporting purposes. Differences between tax regulations and GAAP may be permanent or temporary. Permanent differences are reclassified among capital accounts in the Consolidated Financial Statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.
For the three months ended December 31, 2024, we recorded a provision for taxes on net investment income of $0.7 million, pertaining to federal excise tax. For the three months ended December 31, 2023, we recorded a provision for taxes on net investment income of $0.4 million, all of which pertains to U.S. federal excise tax.
On November 22, 2021, we formed PNNT Investment Holdings II, LLC, a Delaware limited liability company (“Holdings II”), as a wholly owned subsidiary. On December 31, 2022, we contributed 100% of our interests in PNNT Investment Holdings, LLC (“Holdings”) to Holdings II . Effective as of January 1, 2024, Holdings II made an election to be treated as a corporation for U.S. federal income tax purposes. On January 3, 2024, we purchased an equity interest in Holdings from Holdings II and Holdings became a partnership for U.S. federal income tax purposes. The Company and Holdings II entered into a limited liability company agreement with respect to Holdings that provides for certain payments and the sharing of income, gain, loss and deductions attributable to Holdings’ investments.
For the three months ended December 31, 2024 and 2023, the Company recognized a provision for taxes of zero on net realized gain (loss) on investments by the Taxable Subsidiary. For the three months ended December 31, 2024 and 2023, the Company recognized a provision for less than $0.1 million and $(0.2) million, on net unrealized gain (loss) on investments by the Taxable Subsidiary. The provision for taxes on net realized and unrealized gains on investments is the result of netting (i) the expected tax liability on the gains from the sales of investments which is likely to be realized and unrealized during fiscal year ending and (ii) the expected tax benefit resulting from the use of loss carryforwards to offset such gains.
During the three months ended December 31, 2024 and 2023, the Company paid zero, in federal taxes on realized gains on the sale of investments held by the Taxable Subsidiary. The state and local tax liability is zero as of December 31, 2024 is included under accrued other expenses in the consolidated statement of assets and liabilities.
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We operate in a manner to maintain our election to be subject to tax as a RIC and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and capital gain net income (if any). As a result, we will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiary. As such, a reconciliation of the differences between our reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful.
The Taxable Subsidiary, which is subject to tax as a corporation, allows us to hold equity securities of certain portfolio companies treated as pass-through entities for U.S. federal income tax purposes while facilitating our ability to qualify as a RIC under the Code.
RESULTS OF OPERATIONS
Set forth below are the results of operations for the three months ended December 31, 2024 and 2023.
Investment Income
For the three months ended December 31, 2024, investment income was $34.2 million, which was attributable to $25.2 million from first lien secured debt, $2.0 million from second lien secured debt, $1.1 million from subordinated debt and $5.9 million from other investments, respectively. For the three months ended December 31, 2023, investment income was $34.3 million, which was attributable to $25.1 million from first lien secured debt, $2.6 million from second lien secured debt, $1.3 million from subordinated debt and $5.3 million from preferred and common equity, respectively. The decrease in investment income for the three months ended December 31, 2024 was primarily due to the changes in our portfolio and investment yields.
Expenses
For the three months ended December 31, 2024, expenses totaled $21.2 million and were comprised of $11.7 million of debt related interest and expenses, $4.3 million of base management fees, $2.8 million of incentive fees, $1.7 million of general and administrative expenses and $0.7 million of provision for excise taxes. For the three months ended December 31, 2023, expenses totaled $18.7 million, and were comprised of; $9.6 million of debt-related interest and expenses, $4.0 million of base management fees, $3.3 million of incentive fees, $1.4 million of general and administrative expenses and $0.4 million of provision for excise taxes. The increase in expenses for the three months ended December 31, 2024 was primarily due an increase in debt related interest and expenses.
Net Investment Income
For the three months ended December 31, 2024 and 2023, net investment income totaled $13.0 million, or $0.20 per share and $15.7 million, or $0.24 per share. The decrease in net investment income for the three months ended December 31, 2024 was primarily due to increase in interest expense.
Net Realized Gains or Losses
For the three months ended December 31, 2024 and 2023, net realized gains (losses) totaled $(2.6) million and $1.8 million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Unrealized Appreciation or Depreciation on Investments and Debt
For the three months ended December 31, 2024 and 2023, we reported net change in unrealized appreciation (depreciation) on investments of $2.4 million and $(5.0) million, respectively. As of December 31, 2024 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $13.6 million and $11.2 million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.
For the three months ended December 31, 2024 and 2023, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $3.3 million and $(2.0) million, respectively. As of December 31, 2024 and September 30, 2024, the net unrealized appreciation (depreciation) on the Truist Credit Facility totaled $4.4 million and $1.1 million, respectively. The net change in unrealized depreciation compared to the same periods in the prior period was primarily due to changes in the capital markets.
Net Change in Net Assets Resulting from Operations
For the three months ended December 31, 2024 and 2023, net increase (decrease) in net assets resulting from operations totaled $16.1 million or $0.25 per share and $10.7 million or $0.16 per share, respectively. The increase in net assets from operations for the three months ended December 31, 2024 was primarily due to a decrease in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions.
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LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived primarily from cash flows from operations, including investment sales and repayments, income earned, proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations. As of December 31, 2024, in accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that we are in compliance with a 150% asset coverage ratio requirement after such borrowing, excluding SBA debentures pursuant to exemptive relief from the SEC. This “Liquidity and Capital Resources” section should be read in conjunction with the "Forward-Looking Statements" section above.
On February 5, 2019, our stockholders approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Consolidated Appropriations Act of 2018 (which includes the SBCAA) as approved by our board of directors on November 13, 2018. As a result, the asset coverage requirement applicable to us for senior securities was reduced from 200% (i.e., $1 of debt outstanding for each $1 of equity) to 150% (i.e., $2 of debt outstanding for each $1 of equity), subject to compliance with certain disclosure requirements.
As of December 31, 2024 and September 30, 2024, our asset coverage ratio, as computed in accordance with the 1940 Act was 164% and 164%, respectively.
For the three months ended December 31, 2024 and 2023, the annualized weighted average cost of debt inclusive of the fee on the undrawn commitment and amendment costs on the Truist Credit Facility, and amortized upfront fees on, 2026 Notes and 2026 Notes-2, was 6.2% and 6.4%, respectively.
As of December 31, 2024, we had the multi-currency Truist Credit Facility for up to $475 million, which may be further increased up to $750.0 million in borrowings with certain lenders and Truist Bank, acting as administrative agent, Regions Bank, acting as an additional multicurrency lender, and JPMorgan Chase Bank, N.A., acting as syndication agent for the lenders. As of December 31, 2024 and September 30, 2024, we had $464.5 million and $461.5 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 6.8% and 7.2%, respectively, exclusive of the fee on undrawn commitment, as of December 31, 2024 and September 30, 2024. The Truist Credit Facility is a revolving facility with a stated maturity date of July 29, 2027 and pricing set at 235 basis points over SOFR (or an alternative risk-free floating interest rate index). As of December 31, 2024 and September 30, 2024, we had $10.5 million and $13.5 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions. The Truist Credit Facility is secured by substantially all of our assets. As of December 31, 2024, we were in compliance with the terms of the Truist Credit Facility.
As of December 31, 2024, we had $150.0 million in aggregate principal amount of 2026 Notes outstanding. Interest on the 2026 Notes is paid semiannually on May 1 and November 1, at a rate of 4.50% per year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
As of December 31, 2024, we had $165.0 million in aggregate principal amount of 2026 Notes-2 outstanding. Interest on the 2026 Notes-2 is paid semiannually on May 1 and November 1, at a rate of 4.0% per year, commencing May 1, 2022. The 2026 Notes-2 mature on November 1, 2026, and may be redeemed in whole or in part at our option subject to a make-whole premium if redeemed more than three months prior to maturity. The 2026 Notes-2 are direct unsecured obligations and rank pari passu in right of payment with future unsecured unsubordinated indebtedness. The 2026 Notes-2 are structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, financing vehicles, or similar facilities.
On June 4, 2024, we entered into the Equity Distribution Agreements in connection with the contemplated sale of shares of our common stock, with an aggregate offering price of up to $100 million under the ATM Program. We may offer and sell shares of our common stock from time to time through a Sales Agent in amounts and at times to be determined by us. Actual sales will depend on a variety of factors to be determined by us from time to time, including, market conditions and the trading price of our common stock. The Investment Adviser may, from time to time, in its sole discretion, pay some or all of the commissions payable under the Equity Distribution Agreements or make additional supplemental payments to ensure that the sales price per share of our common stock in connection with the ATM Program will not be less than our current NAV per share. Any such payments made by the Investment Adviser will not be subject to reimbursement by us.
During the three months ended December 31, 2024 and 2023, we did not issue any shares under the ATM program.
We may raise additional equity or debt capital through both registered offerings off our shelf registration statement and private offerings of securities, or by securitizing a portion of our investments, among other sources. Any future additional debt capital we incur, to the extent it is available, may be issued at a higher cost and on less favorable terms and conditions than the Truist Credit Facility, 2026 Notes, and 2026 Notes-2. Furthermore, the Truist Credit Facility availability depends on various covenants and restrictions. The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate or strategic purposes such as a stock repurchase program.
We have entered into certain contracts under which we have material future commitments. Under our Investment Management Agreement, which was reapproved by our board of directors (including a majority of our directors who are not interested persons of us or the Investment Adviser) in May 2024 PennantPark Investment Advisers serves as our investment adviser. Payments under our Investment Management Agreement in each reporting period are equal to (1) a management fee equal to a percentage of the value of our average adjusted gross assets and (2) an incentive fee based on our performance.
Under our Administration Agreement, which was most recently reapproved by our board of directors, including a majority of our directors who are not interested persons of us, in May 2024 the Administrator furnishes us with office facilities and administrative services necessary to conduct our day-to-day operations. If requested to provide significant managerial assistance to our portfolio companies, we or the Administrator will be paid an additional amount based on the services provided. Payment under our Administration Agreement is based upon our allocable portion of the Administrator’s overhead in performing its obligations under our Administration Agreement, including rent and our allocable portion of the costs of our Chief Compliance Officer, Chief Financial Officer, and their respective staffs.
57
If any of our contractual obligations discussed above are terminated, our costs under new agreements that we enter into may increase. In addition, we will likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Management Agreement and our Administration Agreement. Any new investment management agreement would also be subject to approval by our stockholders.
As of December 31, 2024 and September 30, 2024, we had cash and cash equivalents of $55.9 million and $49.9 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.
For the three months ended December 31, 2024, our operating activities provided cash of $18.7 million and our financing activities used cash of $12.7 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily for distributions paid to stockholders.
For the three months ended December 31, 2023, our operating activities used cash of $155.1 million and our financing activities provided cash of $153.2 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily from borrowings under the Truist Credit Facility.
58
PennantPark Senior Loan Fund, LLC
In July 2020, we and Pantheon formed PSLF, an unconsolidated joint venture as a Delaware limited liability company. PSLF invests primarily in middle-market and other corporate debt securities consistent with its strategy. As of December 31, 2024 and September 30, 2024, PSLF had total assets of $1,397.0 million and $1,073.4 million, respectively and its investment portfolio consisted of debt investments in 112 and 102 portfolio companies, respectively. As of the December 31, 2024, we and Pantheon had remaining commitments to fund subordinated notes of $16.3 million and $23.3 million, respectively, and equity interest of $10.0 million and $14.2 million, respectively, in PSLF. As of September 30, 2024, we and Pantheon had remaining commitments to fund subordinated notes of $32.6 million and $46.5 million, respectively, and equity interests of $19.9 million and $28.5 million, respectively, in PSLF. As of December 31, 2024, at fair value, the largest investment in a single portfolio company in PSLF was $31.0 million and the five largest investments totaled $129.9 million. As of September 30, 2024, at fair value, the largest investment in a single portfolio company in PSLF was $25.1 million and the five largest investments totaled $109.9 million. PSLF invests in portfolio companies in the same industries in which we may directly invest.
We provide capital to PSLF in the form of subordinated notes and equity interests. As of December 31, 2024, we and Pantheon owned 57.1% and 42.9%, respectively, of each of the outstanding subordinated notes and equity interests of PSLF. As of September 30, 2024, we and Pantheon owned 60.5% and 39.5%, respectively, of each of the outstnading subordinated notes and equity interest of PSLF. As of December 31, 2024, our investment in PSLF consisted of subordinated notes of $132.2 million and equity interests of $77.4 million, respectively. As of September 30, 2024, our investment in PSLF consisted of subordinated notes of $115.9 million and equity interests of $67.4 million respectively.
We and Pantheon each appointed two members to PSLF’s four-person Member Designees’ Committee, or the Member Designees’ Committee. All material decisions with respect to PSLF, including those involving its investment portfolio, require unanimous approval of a quorum of the Member Designees’ Committee. Quorum is defined as (i) the presence of two members of the Member Designees’ Committee; provided that at least one individual is present that was elected, designated or appointed by each of us and Pantheon; (ii) the presence of three members of the Member Designees’ Committee, provided that the individual that was elected, designated or appointed by each of us or Pantheon, as the case may be, with only one individual present being entitled to cast two votes on each matter; and (iii) the presence of four members of the Member Designees’ Committee constitute a quorum, provided that the two individuals are present that were elected, designated or appointed by each of us and Pantheon.
Additionally, PSLF, through its wholly-owned subsidiary, has entered into a $400.0 million (increased from $325.0 million in August 2024) senior secured revolving credit facility, with BNP Paribas, which bears interest at SOFR (or an alternative risk-free interest rate index) plus 225 basis points during the investment period and is subject to leverage and borrowing base restrictions.
In March 2022, PSLF completed a $304.0 million debt securitization in the form of a collateralized loan obligation, or the “2034 Asset-Backed Debt”. The 2034 Asset-Backed Debt is secured by a diversified portfolio of PennantPark CLO IV, LLC., a wholly-owned and consolidated subsidiary of PSLF, consisting primarily of middle market loans and participation interests in middle market loans. The 2034 Asset-Backed Debt is scheduled to mature in April 2034. On the closing date of the transaction, in consideration of PSLF’s transfer to PennantPark CLO IV, LLC of the initial closing date loan portfolio, which included loans distributed to PSLF by certain of its wholly owned subsidiaries and us, PennantPark CLO IV, LLC transferred to PSLF 100% of the Preferred Shares of PennantPark CLO IV, LLC and 100% of the Subordinated Notes issued by PennantPark CLO IV, LLC. As of December 31, 2024 and September 30, 2024 there were $246.0 million and $246.0 million, respectively, of external 2034 Asset-Back Debt.
On July 26, 2023, CLO VII , LLC ("CLO VII") completed a $300 million debt securitization in the form of a collateralized loan obligation (the "2035 Debt Securitization" or "2035 Asset-Backed Debt"). The 2035 Asset-Backed Debt is secured by a diversified portfolio consisting primarily of middle market loans. The 2035 Debt Securitization was executed through a private placement of: (i) $151.0 million Class A-1a Notes maturing 2035, which bear interest at the three-month SOFR plus 2.7%, (ii) $20.0 million Class A-1b Loans 2035, which bear interest at 6.5%, (iii) $12.0 million Class A-2 Senior Secured Floating Rate Notes due 2035, which bear interest at the three-month SOFR plus 3.2%, (iv) $21.0 million Class B Senior Secured Floating Rate Notes due 2035, which bear interest at the three-month SOFR plus 4.1%, (v) $24.0 million Class C Secured Deferrable Floating Rate Notes due 2035, which bear interest at the three-month SOFR plus 4.7%, and (vi) $18.0 million Class D Secured Deferrable Floating Rate Notes due 2035, which bear interest at the three-month SOFR plus 7.0%. As of December 31, 2024 and September 30, 2024, there were $246.0 million and $246.0 million, repectively, of external 2035 Asset-Backed Debt.
On December 23, 2024, PennantPark CLO X, LLC ("CLO X”) completed a $400.5 million debt securitization in the form of a collateralized loan obligation (the "2037 Debt Securitization" or "2037 Asset-Backed Debt"). The 2037 Asset-Backed Debt is secured by a diversified portfolio consisting primarily of middle market loans. The 2037 Debt Securitization was executed through a private placement of: (i) $158.0 million Class A-1 Notes maturing 2037, which bear interest at the three-month SOFR plus 1.59%, (ii) $30.0 million Class A-1A Loans maturing 2037, which bear interest at the three-month SOFR plus 1.59%, (iii) $40.0 million Class A-1W Loans maturing 2037, which bear interest at the three-month SOFR plus 1.59%, (iv) $16.0 million Class A-2W Loans due 2037, which bear interest at the three-month SOFR plus 1.75%, (v) $28.0 million Class B Notes due 2037, which bear interest at the three-month SOFR plus 1.85%, (vi) $32.0 million Class C Notes due 2037, which bear interest at the three-month SOFR plus 2.40%., (vii) $24.0 million Class D Notes due 2037, which bear interest at the three-month SOFR plus 3.85%. As of December 31, 2024, there was $328 million of external 2037 Asset-Backed Debt.
On August 28, 2024, PSLF entered into an amendment (the “Amendment”) to PSLF’s limited liability company agreement (the “LLC Agreement”). The Amendment amended the term of PSLF, which would have otherwise expired on January 31, 2025, to be indefinite, subject to the other terms of dissolution, wind down and termination in the LLC Agreement. The Amendment also modified the LLC Agreement to permit any member of PSLF (each, a “PSLF Member”) to request to redeem its interests in PSLF (in minimum tranches of 25% of the interests then-owned by such PSFL Member) at any time. Under the Amendment, if a PSLF Member makes a redemption request, PSLF will be required to use commercially reasonable efforts to redeem any such PSFL Member’s interests within 18 months and, in any event, within three years from the date of such redemption request, subject to customary limitations with respect to the liquidity of PSLF and the requirement that the Company’s proportionate share or ownership of PSLF not exceed 87.5%.
Below is a summary of PSLF’s portfolio at fair value:
($ in thousands) |
|
December 31, 2024 (Unaudited) |
|
|
September 30, 2024 |
|
||
Total investments |
|
$ |
1,275,076 |
|
|
$ |
1,031,225 |
|
Weighted average cost yield on income producing investments |
|
|
10.7 |
% |
|
|
11.3 |
% |
Number of portfolio companies in PSLF |
|
|
112 |
|
|
|
102 |
|
Largest portfolio company investment at fair value |
|
$ |
31,035 |
|
|
$ |
25,073 |
|
Total of five largest portfolio company investments at fair value |
|
$ |
129,894 |
|
|
$ |
109,927 |
|
59
Below is a listing of PSLF’s individual investments as of December 31, 2024 ($ in thousands):
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
First Lien Secured Debt - 955.1%
A1 Garage Merger Sub, LLC
12/22/28
Personal, Food and Miscellaneous Services
9.11%
SOFR+475
20,032
$
19,807
$
20,032
ACP Avenu Buyer, LLC
10/02/29
Business Services
9.84%
SOFR+525
7,647
7,512
7,437
ACP Falcon Buyer, Inc.
08/01/29
Business Services
10.09%
SOFR+550
15,312
15,040
15,465
AFC - Dell Holding Corp.
04/09/27
Distribution
10.04%
SOFR+550
16,211
16,063
16,211
Ad.net Acquisition, LLC
05/07/26
Media
10.59%
SOFR+626
4,825
4,825
4,825
Aechelon Technology
08/16/29
Aerospace and Defense
11.86%
SOFR+750
4,950
4,852
4,950
Alpine Acquisition Corp II
11/30/26
Containers, Packaging and Glass
10.65% (PIK 8.4%)
SOFR+610
14,657
14,455
13,631
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)
06/10/25
Media
10.75%
SOFR+650
13,777
13,752
13,639
Anteriad Holdings Inc (fka MeritDirect)
06/30/26
Media
10.23%
SOFR+590
14,495
14,426
14,495
Applied Technical Services, LLC
12/29/26
Environmental Services
10.24%
SOFR+590
15,660
15,531
15,467
Archer Lewis, LLC
08/28/29
Healthcare, Education and Childcare
10.09%
SOFR+575
12,130
11,984
12,009
Argano, LLC
09/13/29
Business Services
10.15%
SOFR+575
14,963
14,821
14,813
Beacon Behavioral Support Services, LLC
06/21/29
Healthcare, Education and Childcare
9.83%
SOFR+525
18,945
18,683
18,661
Beta Plus Technologies, Inc.
07/01/29
Business Services
10.08%
SOFR+575
14,663
14,456
14,259
Big Top Holdings, LLC
02/28/30
Manufacturing / Basic Industries
10.11%
SOFR+575
6,678
6,572
6,678
Bioderm, Inc.
01/31/28
Healthcare, Education and Childcare
11.03%
SOFR+650
8,865
8,776
8,754
Blackhawk Industrial Distribution, Inc.
09/17/26
Distribution
9.73%
SOFR+525
25,441
25,103
25,005
BlueHalo Global Holdings, LLC
10/31/25
Aerospace and Defense
10.39%
SOFR+600
20,776
20,709
20,672
Burgess Point Purchaser Corporation
07/25/29
Auto Sector
9.68%
SOFR+535
6,234
5,935
5,521
C5MI Acquisition, LLC
07/31/29
Business Services
10.33%
SOFR+600
7,481
7,378
7,369
CF512, Inc.
08/20/26
Media
10.72%
SOFR+600
9,192
9,085
9,054
Carisk Buyer, Inc.
11/30/29
Healthcare, Education and Childcare
9.58%
SOFR+525
11,456
11,346
11,284
Carnegie Dartlet, LLC
02/07/30
Education
9.86%
SOFR+550
22,828
22,500
22,485
Cartessa Aesthetics, LLC
06/14/28
Distribution
10.08%
SOFR+575
22,050
21,840
22,050
Case Works, LLC
10/01/29
Business Services
9.59%
SOFR+525
10,515
10,431
10,430
Compex Legal Services, Inc.
02/09/26
Business Services
9.95%
SOFR+545
936
936
936
Confluent Health, LLC
11/30/28
Healthcare, Education and Childcare
11.86%
SOFR+750
1,965
1,965
1,965
Connatix Buyer, Inc.
07/13/27
Media
10.39%
SOFR+561
8,693
8,677
8,693
Crane 1 Services, Inc.
08/16/27
Personal, Food and Miscellaneous Services
10.22%
SOFR+586
5,314
5,276
5,274
Dr. Squatch, LLC
08/31/27
Personal and Non-Durable Consumer Products
9.77%
SOFR+535
31,035
30,897
31,035
DRI Holding Inc.
12/21/28
Media
9.71%
SOFR+535
5,815
5,428
5,640
DRS Holdings III, Inc.
11/03/25
Consumer Products
10.71%
SOFR+635
13,666
13,644
13,611
Duggal Acquisition, LLC
09/30/30
Marketing Services
9.08%
SOFR+475
5,000
4,954
4,950
Dynata, LLC - First Out Term Loan
07/15/28
Business Services
9.79%
SOFR+500
1,584
1,478
1,584
Dynata, LLC - Last Out Term Loan
10/15/28
Business Services
10.29%
SOFR+550
9,743
9,743
9,037
EDS Buyer, LLC
01/10/29
Aerospace and Defense
10.08%
SOFR+575
23,346
23,039
23,171
ETE Intermediate II, LLC
05/29/29
Personal, Food and Miscellaneous Services
11.01%
SOFR+650
12,218
12,029
12,218
Emergency Care Partners, LLC
10/18/27
Healthcare, Education and Childcare
10.13%
SOFR+550
6,000
5,960
5,955
Eval Home Health Solutions Intermediate, LLC
05/10/30
Healthcare, Education and Childcare
10.11%
SOFR+575
7,377
7,277
7,304
Exigo Intermediate II, LLC
03/15/27
Business Services
10.92%
SOFR+635
9,626
9,538
9,626
Fairbanks Morse Defense
06/17/28
Aerospace and Defense
9.57%
SOFR+450
3,483
3,413
3,500
Five Star Buyer, Inc.
02/23/28
Hotels, Motels, Inns and Gaming
11.55%
SOFR+710
4,207
4,147
4,176
GGG Midco, LLC
09/27/30
Home and Office Furnishings, Housewares and Durable Consumer Products
9.44%
SOFR+500
8,978
8,891
8,888
Global Holdings InterCo LLC
03/16/26
Banking, Finance, Insurance & Real Estate
9.98%
SOFR+560
6,808
6,797
6,536
Graffiti Buyer, Inc.
08/10/27
Distribution
10.04%
SOFR+560
3,989
3,947
3,930
HEC Purchaser Corp.
06/17/29
Healthcare, Education and Childcare
9.75%
SOFR+550
7,960
7,873
7,928
HV Watterson Holdings, LLC
12/17/26
Business Services
12% (PIK 4.0%)
15,299
15,191
13,998
HW Holdco, LLC
05/10/26
Media
10.43%
SOFR+590
23,355
23,229
23,355
Hancock Roofing and Construction L.L.C.
12/31/26
Insurance
9.93%
SOFR+560
6,146
6,146
6,146
Harris & Co. LLC
08/09/30
Financial Services
9.36%
SOFR+500
10,911
10,774
10,911
Hills Distribution, Inc
11/08/29
Distribution
10.40%
SOFR+600
14,256
14,073
14,113
IG Investments Holdings, LLC
09/22/28
Business Services
9.57%
SOFR+500
4,383
4,327
4,350
Imagine Acquisitionco, LLC
11/15/27
Business Services
9.59%
SOFR+510
5,495
5,431
5,481
Infinity Home Services Holdco, Inc.
12/28/28
Personal, Food and Miscellaneous Services
9.84%
SOFR+560
13,855
13,706
13,855
Infolinks Media Buyco, LLC
11/01/26
Media
9.83%
SOFR+550
13,057
12,992
13,057
Inventus Power, Inc.
06/30/25
Consumer Products
11.97%
SOFR+761
13,068
12,982
13,068
Kinetic Purchaser, LLC
11/10/27
Consumer Products
10.48%
SOFR+615
13,701
13,552
13,701
LAV Gear Holdings, Inc.
10/31/25
Leisure, Amusement, Motion Pictures, Entertainment
10.98%
SOFR+640
4,613
4,599
4,387
Lash OpCo, LLC
02/18/27
Consumer Products
12.94% (PIK 5.1%)
SOFR+785
20,714
20,608
20,403
Lightspeed Buyer Inc.
02/03/26
Healthcare, Education and Childcare
9.08%
SOFR+475
20,267
20,143
20,065
LJ Avalon Holdings, LLC
01/31/30
Environmental Services
9.38%
SOFR+525
7,695
7,595
7,695
MAG DS Corp.
04/01/27
Aerospace and Defense
9.93%
SOFR+550
8,244
7,900
7,708
MDI Buyer Inc.
07/25/28
Chemicals, Plastics and Rubber
10.11%
SOFR+575
19,931
19,736
19,736
Magenta Buyer, LLC -First out
07/31/28
Software
11.60%
SOFR+701
450
450
414
Magenta Buyer, LLC -Second out
07/31/28
Software
12.60% (PIK 6.25%)
SOFR+801
577
577
340
Magenta Buyer, LLC -Third out
07/31/28
Software
11.85% (PIK 5.5%)
SOFR+726
2,134
2,134
717
60
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
MBS Holdings, Inc.
04/16/27
Telecommunications
10.67%
SOFR+585
8,309
$
8,241
$
8,317
Meadowlark Acquirer, LLC
12/10/27
Business Services
9.98%
SOFR+590
2,915
2,880
2,843
Medina Health, LLC
10/20/28
Healthcare, Education and Childcare
10.58%
SOFR+625
19,750
19,611
19,750
Megawatt Acquisitionco, Inc.
03/01/30
Business Services
9.83%
SOFR+525
7,940
7,836
6,939
Michael Baker International, LLC
12/18/28
Business Services
9.11%
SOFR+475
499
498
500
MOREgroup Holdings, LLC
01/16/30
Business Services
9.58%
SOFR+525
19,850
19,587
19,850
Municipal Emergency Services, Inc.
10/01/27
Distribution
9.48%
SOFR+515
9,652
9,570
9,652
NBH Group LLC
08/19/26
Healthcare, Education and Childcare
10.38%
SOFR+585
7,335
7,296
7,335
NFS - CFP Holdings, LLC
09/20/30
Business Services
9.08%
SOFR+475
12,968
12,915
12,870
NORA Acquisition, LLC
08/31/29
Healthcare, Education and Childcare
10.68%
SOFR+635
20,244
19,976
20,244
Omnia Exterior Solutions, LLC
12/29/29
Diversified Conglomerate Service
9.58%
SOFR+550
18,127
17,886
17,991
One Stop Mailing, LLC
05/07/27
Transportation
10.72%
SOFR+636
8,358
8,250
8,358
Owl Acquisition, LLC
02/04/28
Education
9.71%
SOFR+535
3,893
3,815
3,844
PCS Midco, Inc.
03/01/30
Financial Services
10.08%
SOFR+575
5,797
5,725
5,797
PL Acquisitionco, LLC
11/09/27
Retail
11.99% (PIK 3.5%)
SOFR+725
8,309
8,226
6,066
Pacific Purchaser, LLC
10/02/28
Business Services
10.53%
SOFR+625
12,870
12,660
12,754
PAR Excellence Holdings, Inc.
09/03/30
Healthcare, Education and Childcare
9.47%
SOFR+475
10,000
9,908
9,900
Quantic Electronics, LLC
11/19/26
Aerospace and Defense
10.43%
SOFR+610
4,736
4,697
4,736
RRA Corporate, LLC
08/15/29
Business Services
9.33%
SOFR+500
3,990
3,954
3,970
RTIC Subsidiary Holdings, LLC
05/03/29
Consumer Products
10.08%
SOFR+575
24,887
24,489
24,452
Radius Aerospace, Inc.
03/31/25
Aerospace and Defense
10.48%
SOFR+615
12,530
12,516
12,217
Rancho Health MSO, Inc.
06/30/29
Healthcare, Education and Childcare
9.82%
SOFR+525
20,516
20,450
20,362
Recteq, LLC
01/29/26
Consumer Products
11.48%
SOFR+715
9,625
9,577
9,529
Riverpoint Medical, LLC
06/21/25
Healthcare, Education and Childcare
9.58%
SOFR+525
3,921
3,914
3,921
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.)
06/16/29
Professional Services
10.05%
SOFR+575
5,462
5,386
5,381
S101 Holdings Inc.
12/29/26
Electronics
10.22%
SOFR+615
9,915
9,808
9,865
Sales Benchmark Index LLC
07/07/26
Business Services
10.53%
SOFR+620
6,676
6,637
6,676
Seaway Buyer, LLC
06/13/29
Chemicals, Plastics and Rubber
10.48%
SOFR+615
14,663
14,484
14,076
Sigma Defense Systems, LLC
12/18/27
Telecommunications
11.23%
SOFR+690
24,510
24,277
24,388
Smartronix, LLC
11/23/28
Aerospace and Defense
10.35%
SOFR+610
25,014
24,746
25,014
Solutionreach, Inc.
07/17/25
Communications
11.74%
SOFR+715
9,239
9,223
9,239
SpendMend Holdings, LLC
03/01/28
Business Services
9.49%
SOFR+515
9,485
9,293
9,485
STG Distribution, LLC (fka Reception Purchaser) - First Out New Money Term Loans
10/04/29
Transportation
12.91% (PIK 6.5%)
SOFR+845
1,878
1,775
1,859
STG Distribution, LLC (fka Reception Purchaser) - Second Out Term Loans
10/04/29
Transportation
12.13% (PIK 6.5%)
SOFR+760
4,368
2,339
2,271
Summit Behavioral Healthcare, LLC
11/24/28
Healthcare, Education and Childcare
8.76%
SOFR+425
3,545
3,397
2,836
SV- Aero Holdings, LLC (Aeronix)
11/01/30
Aerospace and Defense
9.58%
SOFR+525
15,000
14,925
14,850
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)
08/16/27
Aerospace and Defense
9.28%
SOFR+500
17,046
16,901
17,063
TCG 3.0 Jogger Acquisitionco, Inc.
01/23/29
Media
10.83%
SOFR+650
9,925
9,781
9,826
TPC US Parent, LLC
11/24/25
Food
10.49%
SOFR+565
11,363
11,312
11,363
TWS Acquisition Corporation
06/06/25
Education
10.80%
SOFR+640
2,162
2,162
2,162
Team Services Group, LLC
11/24/28
Healthcare, Education and Childcare
9.57%
SOFR+510
9,654
9,455
9,670
Teneo Holdings LLC
03/13/31
Business Services
9.11%
SOFR+475
2,978
2,948
3,001
The Bluebird Group LLC
07/27/26
Business Services
10.98%
SOFR+665
17,411
17,326
17,411
The Vertex Companies, LLC
08/31/27
Business Services
9.52%
SOFR+500
14,592
14,471
14,387
Transgo, LLC
12/29/28
Auto Sector
9.78%
SOFR+575
18,428
18,231
18,428
Tyto Athene, LLC
04/03/28
Aerospace and Defense
9.49%
SOFR+490
11,393
11,313
11,234
Urology Management Holdings, Inc.
06/15/26
Healthcare, Education and Childcare
9.83%
SOFR+550
10,976
10,899
10,921
US Fertility Enterprises, LLC
10/07/31
Healthcare, Education and Childcare
9.16%
SOFR+450
5,000
4,951
5,034
Watchtower Buyer, LLC
12/01/29
Consumer Products
10.33%
SOFR+600
21,190
20,960
21,190
Zips Car Wash, LLC
02/01/25
Business Services
11.91% (PIK 11.91%)
SOFR+740
20,308
20,302
18,021
Total First Lien Secured Debt
1,279,715
1,272,501
Equity Securities - 1.9%
Dynata, LLC
—
Business Services
—
—
134,330
2,351
2,575
48Forty Intermediate Holdings, Inc.- Common Equity
—
Containers, Packaging and Glass
—
—
1,988
—
—
Total Equity Securities
2,351
2,575
Total Investments - 957.%
1,282,066
1,275,076
Cash and Cash Equivalents - 84.6%
BlackRock Federal FD Institutional 30
112,691
112,691
Total Cash and Cash Equivalents
112,691
112,691
Total Investments and Cash Equivalents - 1,041.6%
$
1,394,757
$
1,387,767
Liabilities in Excess of Other Assets — (941.6)%
(1,254,533
)
Members' Equity—100.0%
$
133,234
61
Below is a listing of PSLF’s individual investments as of September 30, 2024 ($ in thousands):
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
First Lien Secured Debt - 916.4%
A1 Garage Merger Sub, LLC
12/22/28
Personal, Food and Miscellaneous Services
10.95
%
SOFR+610
14,738
$
14,504
$
14,738
ACP Avenu Buyer, LLC
10/02/29
Business Services
10.57
%
SOFR+525
7,667
7,526
7,418
ACP Falcon Buyer, Inc.
08/01/29
Business Services
10.83
%
SOFR+550
15,351
15,067
15,412
Ad.net Acquisition, LLC
05/07/26
Media
11.28
%
SOFR+626
4,838
4,838
4,838
Aeronix, Inc. - Term Loan
12/18/28
Aerospace and Defense
9.85
%
SOFR+525
14,888
14,700
14,888
AFC - Dell Holding Corp.
04/09/27
Distribution
10.49
%
SOFR+550
7,131
7,059
7,059
Alpine Acquisition Corp II
11/30/26
Containers, Packaging and Glass
11.30
%
SOFR+610
14,687
14,459
14,100
Amsive Holding Corporation (f/k/a Vision Purchaser Corporation)
06/10/25
Media
10.75
%
SOFR+650
13,813
13,769
13,675
Anteriad Holdings Inc (fka MeritDirect)
06/30/26
Media
10.50
%
SOFR+590
14,714
14,638
14,714
Applied Technical Services, LLC
12/29/26
Environmental Services
10.50
%
SOFR+590
14,522
14,389
14,304
Arcfield Acquisition Corp.
08/03/29
Aerospace and Defense
11.56
%
SOFR+625
21,574
21,270
21,466
Beacon Behavioral Support Services, LLC
06/21/29
Healthcare, Education and Childcare
9.92
%
SOFR+525
14,963
14,750
14,738
Beta Plus Technologies, Inc.
07/01/29
Business Services
10.35
%
SOFR+575
14,700
14,486
14,259
Big Top Holdings, LLC
02/28/30
Manufacturing / Basic Industries
11.18
%
SOFR+625
6,965
6,852
6,965
Bioderm, Inc.
01/31/28
Healthcare, Education and Childcare
11.84
%
SOFR+650
8,887
8,795
8,776
Blackhawk Industrial Distribution, Inc.
09/17/26
Distribution
10.92
%
SOFR+640
20,504
20,245
20,152
BlueHalo Global Holdings, LLC
10/31/25
Aerospace and Defense
10.70
%
SOFR+600
13,292
13,218
13,026
Broder Bros., Co.
12/04/25
Personal and Non-Durable Consumer Products
10.97
%
SOFR+611
9,374
9,374
9,374
Burgess Point Purchaser Corporation
07/25/29
Auto Sector
10.20
%
SOFR+535
4,874
4,625
4,585
Carisk Buyer, Inc.
11/30/29
Healthcare, Education and Childcare
10.35
%
SOFR+575
5,473
5,400
5,390
Carnegie Dartlet, LLC
02/07/30
Education
10.35
%
SOFR+550
9,950
9,810
9,801
Cartessa Aesthetics, LLC
06/14/28
Distribution
10.35
%
SOFR+575
17,106
16,879
17,106
CF512, Inc.
08/20/26
Media
11.21
%
SOFR+619
2,891
2,876
2,848
Connatix Buyer, Inc.
07/13/27
Media
10.53
%
SOFR+561
8,716
8,702
8,716
Crane 1 Services, Inc.
08/16/27
Personal, Food and Miscellaneous Services
10.71
%
SOFR+586
2,549
2,529
2,530
Dr. Squatch, LLC
08/31/27
Personal and Non-Durable Consumer Products
9.95
%
SOFR+535
22,993
22,842
22,993
DRI Holding Inc.
12/21/28
Media
10.20
%
SOFR+535
5,830
5,423
5,626
DRS Holdings III, Inc.
11/03/25
Consumer Products
11.20
%
SOFR+635
13,777
13,760
13,667
Dynata, LLC - First Out Term Loan
07/15/28
Business Services
10.38
%
SOFR+526
1,588
1,476
1,586
Dynata, LLC - Last Out Term Loan
10/15/28
Business Services
10.88
%
SOFR+576
9,768
9,768
8,993
EDS Buyer, LLC
01/10/29
Aerospace and Defense
10.35
%
SOFR+575
11,144
11,013
10,977
ETE Intermediate II, LLC
05/29/29
Personal, Food and Miscellaneous Services
11.56
%
SOFR+650
12,249
12,049
12,249
Eval Home Health Solutions Intermediate, LLC
05/10/30
Healthcare, Education and Childcare
10.85
%
SOFR+575
7,396
7,293
7,322
Exigo Intermediate II, LLC
03/15/27
Business Services
11.20
%
SOFR+635
9,651
9,556
9,603
Fairbanks Morse Defense
06/17/28
Aerospace and Defense
9.74
%
SOFR+450
3,491
3,417
3,495
Five Star Buyer, Inc.
02/23/28
Hotels, Motels, Inns and Gaming
12.21
%
SOFR+710
4,241
4,175
4,241
Global Holdings InterCo LLC
03/16/26
Banking, Finance, Insurance & Real Estate
11.43
%
SOFR+615
6,952
6,940
6,605
Graffiti Buyer, Inc.
08/10/27
Distribution
10.45
%
SOFR+560
3,118
3,081
3,087
Hancock Roofing and Construction L.L.C.
12/31/26
Insurance
10.20
%
SOFR+560
6,146
6,146
6,023
HEC Purchaser Corp.
06/17/29
Healthcare, Education and Childcare
9.75
%
SOFR+550
7,980
7,887
7,924
Hills Distribution, Inc
11/08/29
Distribution
11.11
%
SOFR+600
14,292
14,106
14,149
HV Watterson Holdings, LLC
12/17/26
Business Services
12.00% (PIK 4.0%)
15,144
15,019
13,887
HW Holdco, LLC
05/10/26
Media
11.04
%
SOFR+590
18,355
18,296
18,355
IG Investments Holdings, LLC
09/22/28
Business Services
11.35
%
SOFR+610
4,383
4,322
4,339
Imagine Acquisitionco, LLC
11/15/27
Business Services
10.20
%
SOFR+510
5,509
5,440
5,481
Infinity Home Services Holdco, Inc.
12/28/28
Personal, Food and Miscellaneous Services
11.49
%
SOFR+685
13,890
13,730
14,029
Infolinks Media Buyco, LLC
11/01/26
Media
10.10
%
SOFR+550
12,286
12,214
12,194
Inventus Power, Inc.
06/30/25
Consumer Products
12.46
%
SOFR+761
13,101
12,980
12,905
Kinetic Purchaser, LLC
11/10/27
Consumer Products
10.75
%
SOFR+615
13,701
13,520
13,701
LAV Gear Holdings, Inc.
10/31/25
Leisure, Amusement, Motion Pictures, Entertainment
11.66
%
SOFR+640
4,613
4,601
4,530
Lash OpCo, LLC
02/18/27
Consumer Products
12.94% (PIK 5.10%)
SOFR+785
20,447
20,338
20,243
Lightspeed Buyer Inc.
02/03/26
Healthcare, Education and Childcare
10.20
%
SOFR+535
14,267
14,170
14,267
LJ Avalon Holdings, LLC
01/31/30
Environmental Services
10.48
%
SOFR+525
6,255
6,151
6,255
MAG DS Corp.
04/01/27
Aerospace and Defense
10.20
%
SOFR+550
8,266
7,890
7,770
Magenta Buyer, LLC -First out
07/31/28
Software
12.13
%
SOFR+701
450
450
425
Magenta Buyer, LLC -Second out
07/31/28
Software
12.38
%
SOFR+801
569
569
390
Magenta Buyer, LLC -Third out
07/31/28
Software
11.63
%
SOFR+726
2,109
2,109
617
MBS Holdings, Inc.
04/16/27
Telecommunications
10.67
%
SOFR+585
8,330
8,256
8,338
Meadowlark Acquirer, LLC
12/10/27
Business Services
10.50
%
SOFR+590
2,923
2,884
2,850
Medina Health, LLC
10/20/28
Healthcare, Education and Childcare
10.85
%
SOFR+625
14,912
14,765
14,912
Megawatt Acquisitionco, Inc.
03/01/30
Business Services
9.85
%
SOFR+525
7,960
7,851
7,514
MOREgroup Holdings, LLC
01/16/30
Business Services
10.35
%
SOFR+575
12,450
12,303
12,263
Municipal Emergency Services, Inc.
10/01/27
Distribution
9.77
%
SOFR+515
5,912
5,822
5,912
NBH Group LLC
08/19/26
Healthcare, Education and Childcare
11.19
%
SOFR+585
7,353
7,311
7,133
NORA Acquisition, LLC
08/31/29
Healthcare, Education and Childcare
10.95
%
SOFR+635
14,850
14,597
14,850
Omnia Exterior Solutions, LLC
12/29/29
Diversified Conglomerate Service
10.01
%
SOFR+550
9,768
9,650
9,622
62
Issuer Name 3
Maturity
Industry
Current
Coupon
Basis Point
Spread Above
Index (1)
Par
Cost
Fair Value (2)
One Stop Mailing, LLC
5/7/2027
Transportation
11.21
%
SOFR+636
8,380
$
8,256
$
8,380
Owl Acquisition, LLC
2/4/2028
Education
10.20
%
SOFR+535
3,893
3,811
3,825
Ox Two, LLC (New Issue)
5/18/2026
Distribution
11.12
%
SOFR+651
9,340
9,307
9,340
Pacific Purchaser, LLC
10/2/2028
Business Services
11.51
%
SOFR+600
12,903
12,682
12,877
PCS Midco, Inc.
3/1/2030
Financial Services
10.81
%
SOFR+575
5,812
5,735
5,812
PL Acquisitionco, LLC
11/9/2027
Retail
11.99% (PIK 3.5%)
SOFR+725
8,193
8,100
6,554
Quantic Electronics, LLC
11/19/2026
Aerospace and Defense
10.95
%
SOFR+635
3,280
3,245
3,263
RTIC Subsidiary Holdings, LLC
5/3/2029
Consumer Products
10.35
%
SOFR+575
19,950
19,673
19,551
Radius Aerospace, Inc.
3/31/2025
Aerospace and Defense
10.75
%
SOFR+575
12,565
12,543
12,313
Rancho Health MSO, Inc.
12/18/2025
Healthcare, Education and Childcare
10.85
%
SOFR+560
5,530
5,530
5,530
Reception Purchaser, LLC
4/28/2028
Transportation
25.00
%
SOFR+615
4,937
4,888
3,703
Recteq, LLC
1/29/2026
Consumer Products
11.75
%
SOFR+715
9,650
9,592
9,554
Riverpoint Medical, LLC
6/21/2025
Healthcare, Education and Childcare
9.85
%
SOFR+525
3,932
3,919
3,936
Rural Sourcing Holdings, Inc. (HPA SPQ Merger Sub, Inc.)
6/16/2029
Professional Services
10.74
%
SOFR+575
4,336
4,268
4,282
S101 Holdings Inc.
12/29/2026
Electronics
11.48
%
SOFR+615
6,467
6,387
6,402
Sales Benchmark Index LLC
1/3/2025
Business Services
10.80
%
SOFR+620
6,676
6,668
6,676
Sargent & Greenleaf Inc.
12/20/2024
Electronics
12.45% (PIK 1.00%)
SOFR+760
4,634
4,634
4,634
Seaway Buyer, LLC
6/13/2029
Chemicals, Plastics and Rubber
10.75
%
SOFR+615
14,700
14,510
14,186
Sigma Defense Systems, LLC
12/18/2027
Telecommunications
11.50
%
SOFR+690
14,621
14,465
14,475
Simplicity Financial Marketing Group Holdings, Inc
12/2/2026
Banking, Finance, Insurance & Real Estate
11.38
%
SOFR+640
11,359
11,207
11,472
Skopima Consilio Parent, LLC
5/17/2028
Business Services
9.46
%
SOFR+461
1,290
1,269
1,289
Smartronix, LLC
11/23/2028
Aerospace and Defense
10.35
%
SOFR+610
25,078
24,798
25,073
Solutionreach, Inc.
7/17/2025
Communications
12.40
%
SOFR+715
9,239
9,216
9,239
SpendMend Holdings, LLC
3/1/2028
Business Services
10.26
%
SOFR+565
9,510
9,302
9,510
Summit Behavioral Healthcare, LLC
11/24/2028
Healthcare, Education and Childcare
9.31
%
SOFR+425
3,554
3,398
3,305
System Planning and Analysis, Inc. (f/k/a Management Consulting & Research, LLC)
8/16/2027
Aerospace and Defense
10.26
%
SOFR+500
15,803
15,600
15,772
TCG 3.0 Jogger Acquisitionco, Inc.
1/23/2029
Media
11.10
%
SOFR+650
9,950
9,800
9,851
TPC US Parent, LLC
11/24/2025
Food
10.98
%
SOFR+565
11,392
11,330
11,392
TWS Acquisition Corporation
6/6/2025
Education
11.33
%
SOFR+640
1,568
1,567
1,568
Team Services Group, LLC
11/24/2028
Healthcare, Education and Childcare
9.95
%
SOFR+510
9,661
9,462
9,537
Teneo Holdings LLC
3/13/2031
Business Services
9.60
%
SOFR+475
2,985
2,955
2,994
The Bluebird Group LLC
7/27/2026
Business Services
11.25
%
SOFR+665
14,445
14,404
14,445
The Vertex Companies, LLC
8/31/2027
Business Services
10.99
%
SOFR+610
7,611
7,536
7,611
Transgo, LLC
12/29/2028
Auto Sector
10.60
%
SOFR+575
14,479
14,282
14,479
Tyto Athene, LLC
4/3/2028
Aerospace and Defense
10.23
%
SOFR+490
11,393
11,306
11,165
Urology Management Holdings, Inc.
6/15/2026
Healthcare, Education and Childcare
11.46
%
SOFR+550
10,928
10,836
10,819
Watchtower Buyer, LLC
12/1/2029
Consumer Products
10.60
%
SOFR+600
13,942
13,769
13,803
Wildcat Buyerco, Inc.
2/27/2027
Electronics
10.60
%
SOFR+575
19,256
19,126
19,256
Zips Car Wash, LLC
12/31/2024
Business Services
12.46% (PIK 1.5%)
SOFR+740
19,687
19,648
18,801
Total First Lien Secured Debt
1,033,954
1,028,874
Equity Security - 2.1%
Dynata, LLC - Common Equity
—
Business Services
—
—
134
2,351
2,351
Total Investments - 918.5%
1,036,305
1,031,225
Cash and Cash Equivalents - 32.6%
BlackRock Federal FD Institutional 30
36,595
36,595
Total Cash and Cash Equivalents
36,595
36,595
Total Investments and Cash Equivalents - 951.1)%
$
1,072,900
$
1,067,820
Liabilities in Excess of Other Assets — (851.1)%
(955,549
)
Members' Equity—100.0%
$
112,271
63
Below are the consolidated statements of assets and liabilities for PSLF, ($ in thousands):
|
|
December 31, 2024 (Unaudited) |
|
|
September 30, 2024 |
|
||
Assets |
|
|
|
|
|
|
||
Investments at fair value (amortized cost—$1,282,066 and $1,036,305, respectively) |
|
$ |
1,275,076 |
|
|
$ |
1,031,225 |
|
Cash and cash equivalents (cost—$112,691 and $36,595, respectively) |
|
|
112,691 |
|
|
|
36,595 |
|
Interest receivable |
|
|
4,897 |
|
|
|
5,089 |
|
Prepaid expenses and other assets |
|
|
3,004 |
|
|
|
372 |
|
Receivable for investments sold |
|
|
1,297 |
|
|
|
— |
|
Due from affiliate |
|
|
61 |
|
|
|
71 |
|
Total assets |
|
|
1,397,026 |
|
|
|
1,073,352 |
|
Liabilities |
|
|
|
|
|
|
||
2037 Asset-backed debt, net (par—$328,000 and $0, respectively) |
|
|
325,842 |
|
|
|
— |
|
2034 Asset-backed debt, net (par—$246,000 and $246,000, respectively) |
|
|
244,769 |
|
|
|
244,672 |
|
2035 Asset-backed debt, net (par—$246,000 and $246,000, respectively) |
|
|
244,216 |
|
|
|
244,118 |
|
Notes payable to members |
|
|
231,106 |
|
|
|
191,546 |
|
Credit facility payable |
|
|
142,600 |
|
|
|
247,600 |
|
Payable for investments purchased |
|
|
47,324 |
|
|
|
7,314 |
|
Interest payable on credit facility and asset backed debt |
|
|
13,379 |
|
|
|
12,525 |
|
Distribution payable to members |
|
|
8,500 |
|
|
|
8,000 |
|
Interest payable on notes to members |
|
|
5,009 |
|
|
|
4,372 |
|
Accounts payable and accrued expenses |
|
|
1,017 |
|
|
|
934 |
|
Due to affiliate |
|
|
30 |
|
|
|
— |
|
Total liabilities |
|
|
1,263,792 |
|
|
|
961,081 |
|
|
|
|
|
|
|
|
||
Members' equity |
|
|
133,234 |
|
|
|
112,271 |
|
Total liabilities and members' equity |
|
$ |
1,397,026 |
|
|
$ |
1,073,352 |
|
64
Below are the consolidated statements of operations for PSLF, ($ in thousands):
|
|
|
Three Months Ended December 31, |
|
|||||
|
|
|
2024 |
|
|
2023 |
|
||
Investment income: |
|
|
|
|
|
|
|
||
Interest |
|
|
$ |
32,953 |
|
|
$ |
27,107 |
|
Other income |
|
|
|
523 |
|
|
|
140 |
|
Total investment income |
|
|
|
33,476 |
|
|
|
27,247 |
|
Expenses: |
|
|
|
|
|
|
|
||
Interest expense on credit facility and asset-backed debt |
|
|
|
15,643 |
|
|
|
12,640 |
|
Interest expense on notes to members |
|
|
|
7,343 |
|
|
|
5,844 |
|
Administration fees |
|
|
|
778 |
|
|
|
568 |
|
General and administrative expenses |
|
|
|
396 |
|
|
|
197 |
|
Total expenses |
|
|
|
24,160 |
|
|
|
19,249 |
|
Net investment income |
|
|
|
9,316 |
|
|
|
7,998 |
|
Realized and unrealized gain (loss) on investments: |
|
|
|
|
|
|
|
||
Net realized gain (loss) on investments |
|
|
|
(2,126 |
) |
|
|
— |
|
Net change in unrealized appreciation (depreciation) on investments |
|
|
|
(1,918 |
) |
|
|
943 |
|
Net realized and unrealized gain (loss) on investments |
|
|
|
(4,044 |
) |
|
|
943 |
|
Net increase (decrease) in members' equity resulting from operations |
|
|
$ |
5,272 |
|
|
$ |
8,941 |
|
(1) No management or incentive fees are payable by PSLF.
Distributions
In order to be treated as a RIC for federal income tax purposes and to not be subject to corporate-level tax on undistributed income or gains, we are required, under Subchapter M of the Code, to annually distribute dividends for U.S. federal income tax purposes to our stockholders out of the assets legally available for distribution of an amount generally at least equal to 90% of our investment company taxable income, determined without regard to any deduction for dividends paid.
Although not required for us to maintain our RIC tax status, in order to preclude the imposition of a 4% nondeductible federal excise tax imposed on RICs, we must distribute dividends for U.S. federal income tax purposes to our stockholders in respect of each calendar year of an amount at least equal to the Excise Tax Avoidance Requirement. In addition, although we may distribute realized net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually, out of the assets legally available for such distributions in the manner described above, we have retained and may continue to retain such net capital gains or investment company taxable income, contingent on our ability to be subject to tax as a RIC, in order to provide us with additional liquidity.
During the three months ended December 31, 2024, we declared distributions of $0.24 per share, for total distributions of $15.7 million. During the three months ended December 31, 2023, we declared distributions of $0.21 per share, for total distributions of $13.7 million. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.
Effective October 2023, we changed from a quarterly distribution to a monthly distribution. We intend to continue to make monthly distributions to our stockholders. Our monthly distributions, if any, are determined by our board of directors.
We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage ratio for borrowings applicable to us as a BDC under the 1940 Act and/or due to provisions in future credit facilities. If we do not distribute at least a certain percentage of our income annually, we could suffer adverse tax consequences, including possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions at a particular level.
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU, No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through June 30, 2023. The FASB approved an (optional) two year extension to December 31, 2024, for transitioning away from LIBOR. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the three months ended December 31, 2024, the effect of which was not material to the consolidated financial statements.
In March 2022, the FASB issued ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)”, which is intended to address issues identified during the post-implementation review of ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendment, among other things, eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, “Receivables - Troubled Debt Restructurings by Creditors”, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The new guidance is effective for interim and annual periods beginning after December 15, 2022. The Company has adopted the new accounting standard implementing appropriate controls and procedures, the effect of which was not material to the consolidated financial statements.
65
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("ASU 2022-03"), which changed the fair value measurement disclosure requirements of ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"). The amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods therein. Early application is permitted. The Company has adopted the new accounting standard, the effect was not material to the the consolidated financial statements.
In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities' segment disclosure by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosure of a reportable segment's profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for our fiscal years beginning December 15, 2024, and should be applied on a retrospective basis to all periods presented, noting early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023 - 09 "Improvements to Income Tax Disclosures" ("ASU 2023 - 09"). ASU 2023 - 09 intends to improve the transparency of income tax disclosures. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. We are currently assessing the impact of this guidance, however, we do not expect a material impact to our consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. As of December 31, 2024, our debt portfolio consisted of 92% variable-rate investments and 8% fixed rate investments. The variable-rate loans are usually based on a SOFR (or an alternative risk-free floating interest rate index) rate and typically have durations of three months after which they reset to current market interest rates. Variable-rate investments subject to a floor generally reset by reference to the current market index after one to nine months only if the index exceeds the floor. In regards to variable-rate instruments with a floor, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. In contrast, our cost of funds, to the extent it is not fixed, will fluctuate with changes in interest rates since it has no floor.
Assuming that the most recent Consolidated Statements of Assets and Liabilities was to remain constant, and no actions were taken to alter the interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:
Change in Interest Rates |
|
Change in Interest Income, |
|
|
Change in Interest Income, |
|
||
Down 1% |
|
$ |
(3,033 |
) |
|
$ |
(0.05 |
) |
Up 1% |
|
|
3,033 |
|
|
|
0.05 |
|
Up 2% |
|
|
6,066 |
|
|
|
0.09 |
|
Up 3% |
|
|
9,100 |
|
|
|
0.14 |
|
Up 4% |
|
|
12,155 |
|
|
|
0.19 |
|
Although management believes that this measure is indicative of our sensitivity to interest rate changes, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets on the Consolidated Statements of Assets and Liabilities and other business developments that could affect net increase in net assets resulting from operations, or net investment income. Accordingly, no assurances can be given that actual results would not differ materially from those shown above.
Because we borrow money to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds as well as our level of leverage. 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 or net assets.
We may hedge against interest rate and foreign currency fluctuations by using standard hedging instruments such as futures, options and forward contracts or our Truist Credit Facility subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates and foreign currencies, they may also limit our ability to participate in the benefits of lower interest rates or higher exchange rates with respect to our portfolio of investments with fixed interest rates or investments denominated in foreign currencies. During the periods covered by this Report, we did not engage in interest rate hedging activities or foreign currency derivatives hedging activities.
66
Item 4. Controls and Procedures
As of the period covered by this Report, we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic filings with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
67
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
None of us, our Investment Adviser or our Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against our Investment Adviser or Administrator. From time to time, we, our Investment Adviser or Administrator may be a party to certain legal proceedings, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this Report, you should consider carefully the factors discussed below, as well as in Part I “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed on November 26, 2024, which could materially affect our business, financial condition and/or operating results. The risks as in our Annual Report on Form 10-K, are not the only risks facing PennantPark Investment Corp. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
10b5-1 Disclosure
None of the officers or directors of the Company has
68
Item 6. Exhibits
Unless specifically indicated otherwise, the following exhibits are incorporated by reference to exhibits previously filed with the SEC:
3.1 |
|
|
|
3.2 |
|
|
|
3.3 |
|
|
|
10.1* |
|
|
|
31.1* |
|
|
|
31.2* |
|
|
|
32.1* |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
32.2* |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
99.1 |
|
|
|
101.INS* |
Inline XBRL Instance Document-the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document |
|
|
101.SCH* |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
101.CAL* |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
101.DEF* |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
101.LAB* |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
101.PRE* |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
104 |
Cover Page formatted as Inline XBRL and contained in Exhibit 101 |
* Filed herewith.
69
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
PENNANTPARK INVESTMENT CORPORATION |
||
|
|
|
||
Date: February 10, 2025 |
|
By: |
|
/s/ Arthur H. Penn |
|
|
|
|
Arthur H. Penn |
|
|
|
|
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) |
|
|
|
||
Date: February 10, 2025 |
|
By: |
|
/s/ Richard T. Allorto, Jr. |
|
|
|
|
Richard T. Allorto, Jr. |
|
|
|
|
Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) |
70