Investcorp Credit Management BDC net asset value falls to $3.02
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Investcorp Credit Management BDC, Inc. (ICMB) reported total investment income of $3,139,724 for the three months ended September 30, 2026, compared with $4,356,484 a year earlier. Net investment loss after taxes was $1,815,147, versus a $17,491 loss, and net assets declined $4,763,955 from operations, compared with a $1,786,486 decline.
For the nine months ended September 30, 2026, total investment income was $9,825,044, compared with $13,270,447 in 2025. Net assets declined $14,502,238 from operations, versus a $1,066,405 decline; net unrealized depreciation on investments was $10,384,113, compared with $1,786,018. Operating activities provided $23,017,018 in net cash, versus net cash used of $352,738.
At September 30, 2026, investments at fair value were $132,729,599 and net assets were $43,648,682. Net asset value per share was $3.02, compared with $4.03 at December 31, 2025. During the nine-month period, ICMB recorded $65,000,000 in proceeds from 2029 Notes payable and repaid $65,000,000 of 2026 Notes payable and $19,000,000 on its revolving facility.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month operating cash flow was $23,017,018, versus net cash used of $352,738.
Negative
- Major pointNine-month net assets declined from operations by $14,502,238, versus $1,066,405.
- Moderate pointQuarterly investment income fell to $3,139,724 from $4,356,484 year over year.
Filing Explained
ICMB reports no common-share distributions paid in the nine months ended
Key Figures
Key Terms
Payment-in-kind interest income financial
Level 3 significant unobservable inputs financial
non-accrual asset financial
last out tranche financial
3-month SOFR financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much investment income did ICMB report in Q3 2026?
How much did ICMB lose from operations in the first nine months of 2026?
What debt did ICMB issue or repay in the first nine months of 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
COMMISSION FILE NUMBER:
(Exact Name of Registrant as Specified in Its Charter)
(State or other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
(
(Registrant’s Telephone Number, Including Area Code)
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 |
☐ |
Accelerated filer |
☐ |
☒ |
Smaller reporting company |
||
|
|
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
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The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of November 12, 2026 was
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Page |
PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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Consolidated Statements of Assets and Liabilities as of September 30, 2026 (unaudited) and December 31, 2025 |
1 |
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Consolidated Statements of Operations for the three and nine months ended September 30, 2026 (unaudited) and the three and nine months ended September 30, 2025 (unaudited) |
2 |
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Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2026 (unaudited) and the three and nine months ended September 30, 2025 (unaudited) |
3 |
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Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 (unaudited) and the nine months ended September 30, 2025 (unaudited) |
4 |
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Consolidated Schedule of Investments as of September 30, 2026 (unaudited) |
5 |
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Consolidated Schedule of Investments as of December 31, 2025 |
10 |
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Notes to the Unaudited Consolidated Financial Statements |
15 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
39 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
54 |
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Item 4. |
Controls and Procedures |
54 |
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PART II. OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
56 |
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Item 1A. |
Risk Factors |
56 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
56 |
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Item 3. |
Defaults Upon Senior Securities |
57 |
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Item 4. |
Mine Safety Disclosures |
57 |
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Item 5. |
Other Information |
57 |
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Item 6. |
Exhibits |
58 |
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SIGNATURES |
59 |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Assets and Liabilities
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September 30, 2026 |
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December 31, 2025 |
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(Unaudited) |
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Assets |
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Non-controlled, non-affiliated investments, at fair value (amortized cost of $ |
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$ |
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$ |
Affiliated investments, at fair value (amortized cost of $ |
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Total investments, at fair value (amortized cost of $ |
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Cash and cash equivalents |
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Restricted cash and cash equivalents |
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Principal receivable |
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Interest receivable |
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Payment-in-kind interest receivable |
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Prepaid expenses and other assets |
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Total Assets |
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$ |
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$ |
Liabilities |
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Debt: |
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Revolving credit facility |
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$ |
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$ |
2029 Notes payable |
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2026 Notes payable |
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Deferred debt issuance costs |
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( |
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( |
Unamortized discount |
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( |
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( |
Debt, net |
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Interest payable |
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Base management fees payable |
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Income-based incentive fees payable |
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Deferred income liability |
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Directors' fees payable |
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Accrued expenses and other liabilities |
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Total Liabilities |
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Commitments and Contingencies (see Note 6) |
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Net Assets |
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Common stock, par value $ |
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Additional paid-in capital |
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Distributable earnings (loss) |
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( |
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( |
Total Net Assets |
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||
Total Liabilities and Net Assets |
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$ |
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$ |
Net Asset Value Per Share |
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$ |
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$ |
See notes to unaudited consolidated financial statements.
1
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
|
|
For The Three Months Ended September 30, |
|
For The Nine Months Ended September 30, |
||||
|
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2026 |
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2025 |
|
2026 |
|
2025 |
Investment Income: |
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|
Interest income |
|
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|
|
|
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|
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Non-controlled, non-affiliated investments |
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$ |
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$ |
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$ |
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$ |
Non-controlled, affiliated investments |
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( |
|||
Total interest income |
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Payment-in-kind interest income |
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Non-controlled, non-affiliated investments |
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Non-controlled, affiliated investments |
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Total payment-in-kind interest income |
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Dividend income |
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Non-controlled, non-affiliated investments |
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Non-controlled, affiliated investments |
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Total dividend income |
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Payment-in-kind dividend income |
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Non-controlled, non-affiliated investments |
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||||
Non-controlled, affiliated investments |
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Total payment-in-kind dividend income |
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Other fee income |
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Non-controlled, non-affiliated investments |
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Non-controlled, affiliated investments |
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Total other fee income |
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Other income |
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Total investment income |
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Expenses: |
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Interest expense |
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Base management fees |
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Income-based incentive fees |
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( |
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( |
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( |
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Professional fees |
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Allocation of administrative costs from Adviser |
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Amortization of deferred debt issuance costs |
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Amortization of original issue discount |
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Insurance expense |
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Directors' fees |
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Custodian and administrator fees |
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Other expenses |
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||||
Total expenses |
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||||
Waiver of base management fees |
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( |
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( |
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( |
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( |
Waiver of income-based incentive fees |
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( |
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( |
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||
Net expenses |
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Net investment income (loss) before taxes |
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( |
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( |
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Income tax expense (benefit), including excise tax expense |
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||||
Net investment income (loss) after taxes |
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( |
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( |
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( |
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Net realized and unrealized gain/(loss) on investments: |
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Net realized gain (loss) from investments |
|
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Non-controlled, non-affiliated investments |
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( |
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|||
Non-controlled, affiliated investments |
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||||
Net realized gain (loss) from investments |
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( |
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|||
Net change in unrealized appreciation (depreciation) in value of investments |
|
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|
Non-controlled, non-affiliated investments |
|
( |
|
( |
|
( |
|
( |
Non-controlled, affiliated investments |
|
( |
|
( |
|
( |
|
( |
Net change in unrealized appreciation (depreciation) on investments |
|
( |
|
( |
|
( |
|
( |
Total realized gain (loss) and change in unrealized appreciation (depreciation) on investments |
|
( |
|
( |
|
( |
|
( |
Net increase (decrease) in net assets resulting from operations |
|
$( |
|
$( |
|
$( |
|
$( |
Basic and diluted: |
|
|
|
|
|
|
|
|
Earnings per share |
|
$( |
|
$( |
|
$( |
|
$( |
Weighted average shares of common stock outstanding |
|
|
|
|
||||
Distributions paid per common share |
|
$ |
|
$ |
|
$ |
|
$ |
See notes to unaudited consolidated financial statements.
2
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Changes in Net Assets (Unaudited)
|
|
For The Three Months Ended September 30, |
|
For The Nine Months Ended September 30, |
||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
Net assets at beginning of period |
|
$ |
|
$ |
|
$ |
|
$ |
Increase (decrease) in net assets resulting from operations: |
|
|
|
|
|
|
|
|
Net investment income (loss) after taxes |
|
( |
|
( |
|
( |
|
|
Net realized gain (loss) from investments |
|
|
|
( |
|
|||
Net change in unrealized appreciation (depreciation) on investments |
|
( |
|
( |
|
( |
|
( |
Net increase (decrease) in net assets resulting from operations |
|
( |
|
( |
|
( |
|
( |
Stockholder distributions: |
|
|
|
|
|
|
|
|
Distributions from net investment income |
|
|
( |
|
|
( |
||
Distributions from capital gains |
|
|
|
|
||||
Net decrease in net assets resulting from stockholder distributions |
|
|
( |
|
|
( |
||
Capital transactions: |
|
|
|
|
|
|
|
|
Reinvestments of stockholder distributions |
|
|
|
|
||||
Net increase (decrease) in net assets resulting from capital transactions |
|
|
|
|
||||
Net increase (decrease) in net assets |
|
( |
|
( |
|
( |
|
( |
Net assets at end of period |
|
$ |
|
$ |
|
$ |
|
$ |
See notes to unaudited consolidated financial statements.
3
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
|
|
For The Nine Months Ended September 30, |
||
|
|
2026 |
|
2025 |
Cash Flows from Operating Activities |
|
|
|
|
Net increase (decrease) in net assets resulting from operations |
|
$( |
|
$( |
Adjustments to reconcile net increase (decrease) in net assets resulting from |
|
|
|
|
Origination and purchase of investments |
|
( |
|
( |
Payment-in-kind interest and dividends |
|
( |
|
( |
Sales and repayments of investments |
|
|
||
Net realized (gain) loss on investments |
|
|
( |
|
Net change in unrealized appreciation/depreciation on investments |
|
|
||
Amortization of discount/premium on investments |
|
( |
|
( |
Amortization of deferred debt issuance costs |
|
|
||
Amortization of original issue discount |
|
( |
|
|
Net (increase) decrease in operating assets: |
|
|
|
|
Principal receivable |
|
|
||
Interest receivable |
|
|
( |
|
Payment-in-kind interest receivable |
|
|
( |
|
Long-term receivable |
|
|
||
Short-term receivable |
|
|
( |
|
Prepaid expenses and other assets |
|
( |
|
( |
Net increase (decrease) in operating liabilities: |
|
|
|
|
Payable for investments purchased |
|
|
||
Interest payable |
|
|
||
Base management fees payable |
|
( |
|
|
Income-based incentive fees payable |
|
( |
|
( |
Deferred income liability |
|
( |
|
|
Directors fees payable |
|
|
( |
|
Accrued expenses and other liabilities |
|
( |
|
|
Net cash (used in) provided by operating activities |
|
|
( |
|
Cash Flows from Financing Activities: |
|
|
|
|
Payments for deferred financing costs |
|
( |
|
|
Distributions to stockholders |
|
|
( |
|
Proceeds from borrowing on revolving financing facility |
|
|
||
Repayments of borrowing on revolving financing facility |
|
( |
|
( |
Proceeds from 2029 Notes payable |
|
|
||
Repayments of borrowing on 2026 Notes payable |
|
( |
|
|
Net cash (used in) provided by financing activities |
|
( |
|
( |
Net change in cash and cash equivalents |
|
|
( |
|
Cash and cash equivalents and restricted cash and cash equivalents: |
|
|
|
|
Cash and cash equivalents and restricted cash and cash equivalents at beginning of period |
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents at end of period |
|
$ |
|
$ |
Supplemental and non-cash financing cash flow information: |
|
|
|
|
Cash paid for interest |
|
$ |
|
$ |
Cash paid for taxes |
|
$ |
|
$ |
Issuance of shares pursuant to Dividend Reinvestment Plan |
|
$ |
|
$ |
Non-cash purchase of investments |
|
$( |
|
$( |
Non-cash sale of investments |
|
$ |
|
$ |
|
|
September 30, 2026 |
|
September 30, 2025 |
Cash and cash equivalents |
|
$ |
|
$ |
Restricted cash and cash equivalents |
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents |
|
$ |
|
$ |
See notes to unaudited consolidated financial statements.
4
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments
(Unaudited)
September 30, 2026
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost/ |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments |
|
|
|
|
|
|
|
|
|
|
|
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|
||
Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
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|
|
|
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|
||
Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Techniplas Foreign Holdco LP Exit Term Loan |
|
|
|
|
|
$ |
|
$ |
|
$ |
|
|
(4)(7) |
|||
Techniplas Foreign Holdco LP Term Loan |
|
|
|
|
|
|
|
|
|
(4)(7) |
||||||
Total Automobile Components |
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||||
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Arborworks Acquisition LLC - Reinstated Take Back Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Arborworks Acquisition LLC - Revolver |
|
|
|
|
|
|
|
|
|
(4)(5) |
||||||
Northstar Group Services, Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(3)(8) |
|||||
Total Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Congruex Group LLC Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Bioplan USA, Inc. - Take Back Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Axiom Global Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Axiom Global Inc. Term Loan (Add On) |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
KNS MidCo Corp. / Wellfull Inc. Term Loan A |
|
1M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
LaserAway Intermediate Holdings II, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Food Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Max US Bidco Inc. Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(3)(8) |
|||||
Total Food Products |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Easy Way Leisure Corporation Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(7)(8) |
|||||
Total Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See notes to unaudited consolidated financial statements.
5
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
(Unaudited)
September 30, 2026
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost/ |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Senior Secured First Lien Debt Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Integrity Marketing Acquisition, LLC Term Loan |
|
3M S + |
|
|
|
|
$ |
|
$ |
|
$ |
|
|
(5)(8) |
||
Total Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interactive Media & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Uniguest Holdings Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Total Interactive Media & Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Argano, LLC Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Accelevation, LLC Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5) |
|||||
Total IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Crisis Prevention Institute, Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Klein Hersh, LLC Term Loan - Last Out |
|
3M S + |
|
|
|
|
|
|
|
|
(8)(9) |
|||||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AppLogic Networks Parent LLC - Sandvine Exit TL |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Total Software |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Specialty Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ALCV Purchaser, Inc. Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
|
|||||
American Auto Auction Group, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(3) |
|||||
Total Specialty Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Xenon Arc, Inc. - Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Unsecured Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Klein Hersh, LLC Senior Subordinated Note |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
(6)(7)(8) |
|||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Unsecured Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
See notes to unaudited consolidated financial statements.
6
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
(Unaudited)
September 30, 2026
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost/ |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Equity, Warrants and Other Investments(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Techniplas Foreign Holdco LP - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Techniplas Foreign Holdco LP - Class C Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ArborWorks, LLC A-1 - Common Units |
|
|
|
|
|
|
|
|
|
|
(6)(14) |
|||||
ArborWorks, LLC A-1 - Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6)(14) |
|||||
ArborWorks, LLC B-1 - Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6)(14) |
|||||
Total Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Bioplan USA, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electronic Equipment, Instruments & Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4L Technologies, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
4L Technologies, Inc. - Preferred Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
4L Technologies, Inc. - Preferred Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Electronic Equipment, Instruments & Components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Discovery Behavioral Health, Inc. - Preferred Equity |
|
|
|
|
|
|
|
|
|
(6) |
||||||
Total Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fusion Connect, Inc. - Backstop Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Equity Investor Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Investor Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Series A Preferred |
|
|
|
|
|
|
|
|
|
(7) |
||||||
Total IT Services |
|
|
|
|
|
|
|
|
|
|
|
|||||
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
CF Arch Holdings LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6)(14) |
|||||
Victors CCC Aggregator LP - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6)(13) |
|||||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AppLogic Networks Parent LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Software |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Pegasus Aggregator Holdings LP - Equity Interest |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
(6)(13) |
|||
Total Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Equity, Warrants and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Non-Controlled/Non-Affiliated Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
See notes to unaudited consolidated financial statements.
7
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
(Unaudited)
September 30, 2026
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost/ |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Affiliated Investments (15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
American Nuts Holdings, LLC Term Loan A |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8)(11) |
|||||
American Nuts Holdings, LLC Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8)(11) |
|||||
American Nuts Holdings, LLC Term Loan C |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8)(11) |
|||||
Total Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Crafty Apes, LLC Term Loan - Second Out |
|
1M S + |
|
|
|
|
|
|
|
|
(4)(5)(8)(10) |
|||||
Total Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity, Warrants and Other Investments(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
American Nuts Holdings, LLC Class A Units |
|
|
|
|
|
|
|
|
|
|
(6)(8)(14) |
|||||
Total Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crafty Apes LLC - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6)(8)(14) |
|||||
Total Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Equity, Warrants and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Non-Controlled/Affiliated Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
Total Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
*
See notes to unaudited consolidated financial statements.
8
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
(Unaudited)
September 30, 2026
Transactions related to investments in non-controlled “Affiliated Investments” for the nine months ended September 30, 2026 were as follows:
Portfolio Company |
|
Type of Investment(a) |
|
December 31, 2025 Value |
|
Gross Additions (b) |
|
Gross |
|
Net Realized Gains (Losses) |
|
Net Unrealized Gains (Losses) |
|
September 30, 2026 Value |
|
Amount of Interest or Dividends Credited to Income(d) |
American Nuts Holdings, LLC |
|
Senior Secured First Lien Debt - T/L-A (3M S + |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
Senior Secured First Lien Debt - T/L-B (3M S + |
|
|
|
|
|
|
|
|||||||
|
|
Senior Secured First Lien Debt - T/L-C (3M S + |
|
|
|
|
|
( |
|
|
||||||
|
|
Class A Units(e) |
|
|
|
|
|
( |
|
|
||||||
Crafty Apes, LLC |
|
Senior Secured First Lien Debt - Second Out Investment (1M S + |
|
|
|
|
|
( |
|
|
||||||
|
|
Common Stock(e) |
|
|
|
|
|
( |
|
|
||||||
|
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$( |
|
$ |
|
$ |
PIK — Payment-In-Kind
1M S — 1-month SOFR (
3M S — 3-month SOFR (
See notes to unaudited consolidated financial statements.
9
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments
December 31, 2025
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Techniplas Foreign Holdco LP Exit Term Loan |
|
|
|
|
|
|
$ |
|
$ |
|
|
(4)(7) |
||||
Techniplas Foreign Holdco LP Term Loan |
|
|
|
|
|
|
|
|
|
(4)(7) |
||||||
Total Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Arborworks Acquisition LLC - Reinstated Take Back Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Arborworks Acquisition LLC - Revolver |
|
|
|
|
|
|
|
|
|
(4)(5) |
||||||
Northstar Group Services, Inc. Term Loan |
|
6M S + |
|
|
|
|
|
|
|
|
(3)(8) |
|||||
Total Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Congruex Group LLC Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Total Construction & Engineering |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Bioplan USA, Inc. - Priority Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Bioplan USA, Inc. - Take Back Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Total Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Axiom Global Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Axiom Global Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
KNS MidCo Corp. / Wellfull Inc. Term Loan A |
|
1M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
LaserAway Intermediate Holdings II, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Diversified Consumer Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Food Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
INW Manufacturing, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Max US Bidco Inc. Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(3)(8) |
|||||
Total Food Products |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Easy Way Leisure Corporation Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(7)(8) |
|||||
Total Household Durables |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See notes to unaudited consolidated financial statements.
10
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
December 31, 2025
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Senior Secured First Lien Debt Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Asurion, LLC Term Loan |
|
1M S + |
|
|
|
|
|
$ |
|
$ |
|
|
(3)(8) |
|||
Integrity Marketing Acquisition, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Likewize Corporation Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interactive Media & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Uniguest Holdings Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Total Interactive Media & Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Argano, LLC Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Accelevation, LLC Term Loan |
|
1M S + |
|
|
|
|
|
|
|
|
(5)(8) |
|||||
Accelevation, LLC - Revolver |
|
1M S + |
|
|
|
|
|
|
|
|
(5) |
|||||
Total IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Crisis Prevention Institute, Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Klein Hersh, LLC Term Loan - Last Out |
|
3M S + |
|
|
|
|
|
|
|
|
(8)(9) |
|||||
Work Genius Holdings, Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Work Genius Holdings, Inc. Term Loan - Add On |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Work Genius Holdings, Inc - Revolver |
|
3M S + |
|
|
|
|
|
|
|
|
|
|||||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AppLogic Networks Parent LLC - Sandvine Exit TL |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8) |
|||||
Total Software |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Specialty Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ALCV Purchaser, Inc. Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
American Auto Auction Group, LLC Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(3)(8) |
|||||
Total Specialty Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
PVI Holdings, Inc. Term Loan - Last Out |
|
3M S + |
|
|
|
|
|
|
|
|
(8)(10) |
|||||
Xenon Arc, Inc. - Term Loan |
|
3M S + |
|
|
|
|
|
|
|
|
(8) |
|||||
Total Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Unsecured Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Klein Hersh, LLC Senior Subordinated Note |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
(7)(8) |
|||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Unsecured Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
See notes to unaudited consolidated financial statements.
11
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
December 31, 2025
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Non-Affiliated Investments, continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Equity, Warrants and Other Investments(13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Techniplas Foreign Holdco LP - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6)(15) |
|||||
Techniplas Foreign Holdco LP - Class C Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6)(15) |
|||||
Total Automobile Components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
ArborWorks, LLC A-1 - Common Units |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
ArborWorks, LLC A-1 - Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
ArborWorks, LLC B-1 - Preferred Units |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Commercial Services & Supplies |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Bioplan USA, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Containers & Packaging |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electronic Equipment, Instruments & Components |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
4L Technologies, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
4L Technologies, Inc. - Preferred Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
4L Technologies, Inc. - Preferred Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Electronic Equipment, Instruments & Components |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Discovery Behavioral Health, Inc. - Preferred Equity |
|
|
|
|
|
|
|
|
|
(6) |
||||||
Total Health Care Providers & Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Fusion Connect, Inc. - Backstop Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Equity Investor Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Investor Warrants |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Fusion Connect, Inc. - Series A Preferred |
|
|
|
|
|
|
|
|
|
(7) |
||||||
FWS Parent Holding, LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total IT Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
CF Arch Holdings LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Victors CCC Aggregator LP - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6)(14) |
|||||
Work Genius, LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Work Genius, LLC - A-1 Equity Units |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Professional Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
AppLogic Networks Parent LLC - Equity Interest |
|
|
|
|
|
|
|
|
|
|
(6) |
|||||
Total Software |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Pegasus Aggregator Holdings LP - Equity Interest |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
(6)(14) |
|||
Total Trading Companies & Distributors |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Equity, Warrants and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Non-Controlled/Non-Affiliated Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
See notes to unaudited consolidated financial statements.
12
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
December 31, 2025
Investments*(1)(2) |
|
Interest Rate |
|
Initial Acquisition Date |
|
Maturity Date |
|
Principal Amount/ Shares |
|
Amortized Cost |
|
Fair Value |
|
% of |
|
|
Non-Controlled/Affiliated Investments (15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
American Nuts Holdings, LLC Term Loan A |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8)(13) |
|||||
American Nuts Holdings, LLC Term Loan B |
|
3M S + |
|
|
|
|
|
|
|
|
(4)(8)(13) |
|||||
Total Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Crafty Apes, LLC Term Loan - Second Out |
|
1M S + |
|
|
|
|
|
|
|
|
(4)(5)(8)(12) |
|||||
Total Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Senior Secured First Lien Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity, Warrants and Other Investments(13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
American Nuts Holdings, LLC Class A Units |
|
|
|
|
|
|
|
|
|
|
(6)(8) |
|||||
Total Consumer Staples Distribution & Retail |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crafty Apes LLC - Common Stock |
|
|
|
|
|
|
|
|
|
|
(6)(8) |
|||||
Total Entertainment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total Equity, Warrants and Other Investments |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Non-Controlled/Affiliated Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
Total Investments |
|
|
|
|
|
|
|
$ |
|
$ |
|
|
|
|||
*
See notes to unaudited consolidated financial statements.
13
Investcorp Credit Management BDC, Inc. and Subsidiaries
Consolidated Schedule of Investments - (continued)
December 31, 2025
Transactions related to investment in non-controlled “Affiliated Investments” for the twelve months ended December 31, 2025 were as follows:
Portfolio Company |
|
Type of Investment(a) |
|
December 31, 2024 Value |
|
Gross Additions (b) |
|
Gross |
|
Net Realized Gains (Losses) |
|
Net Unrealized Gains (Losses) |
|
December 31, 2025 Value |
|
Amount of Interest or Dividends Credited to Income(d) |
American Nuts Holdings, LLC |
|
Senior Secured First Lien Debt - T/L-A (3M S + |
|
$ |
|
$ |
|
$ |
|
$ |
|
$( |
|
$ |
|
$ |
|
|
Senior Secured First Lien Debt - T/L-B (3M S + |
|
|
|
|
|
( |
|
|
||||||
|
|
Class A Units(e) |
|
|
|
|
|
( |
|
|
||||||
Crafty Apes, LLC |
|
Senior Secured First Lien Debt - Second Out Investment (1M S + |
|
|
|
|
|
( |
|
|
||||||
|
|
Common Stock(e) |
|
|
|
|
|
|
|
|||||||
|
|
|
|
$ |
|
$ |
|
$ |
|
$ |
|
$( |
|
$ |
|
$ |
P — Prime Rate (
PIK — Payment-In-Kind
1M S — 1-month SOFR (
3M S — 3-month SOFR (
6M S — 6-month SOFR (
See notes to unaudited consolidated financial statements.
14
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements (Unaudited)
September 30, 2026
Note 1. Organization
Investcorp Credit Management BDC, Inc. (“ICMB” or the “Company”), a Maryland corporation formed in May 2013, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) for U.S. federal income tax purposes. The Company is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 Financial Services – Investment Companies (“ASC 946”).
On February 11, 2014, the Company completed its initial public offering (the “Offering”), selling
CM Finance LLC, a Maryland limited liability company, commenced operations in March 2012. Immediately prior to the Offering, CM Finance LLC was merged with and into the Company (the “Merger”). In connection with the Merger, the Company issued
CM Investment Partners LLC (the “Adviser”) serves as the Company’s investment adviser pursuant to an investment advisory agreement with the Company (the “Advisory Agreement”). On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”), a subsidiary of Investcorp Bank Holdings B.S.C., acquired the interests in the Adviser, which were previously held by the Cyrus Funds and Stifel and paid off certain debt owed by the Adviser, resulting in Investcorp having a majority ownership interest in the Adviser (the “Investcorp Transaction”). On August 30, 2019, CM Finance, Inc. changed its name to Investcorp Credit Management BDC, Inc. On August 31, 2023, Investcorp acquired approximately an additional
In connection with the Investcorp Transaction, on June 26, 2019, the Company entered into a definitive stock purchase and transaction agreement with Investcorp BDC Holdings Limited (“Investcorp BDC”), an affiliate of Investcorp (the “Stock Purchase Agreement”). Under the Stock Purchase Agreement, Investcorp BDC was required by August 30, 2021 to purchase (i)
The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle-market companies to help these companies fund acquisitions, growth or refinancing. The Company invests primarily in middle-market companies in the form of standalone first and second lien loans, unitranche loans and mezzanine loans. The Company may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.
As a BDC, the Company is required to comply with certain regulatory requirements. For instance, as a BDC, the Company must not acquire any assets other than “qualifying assets,” as defined in Section 55(a) of the 1940 Act, unless, at the time the acquisition is made, at least
15
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
has a market capitalization of less than $
From time to time, the Company may form taxable subsidiaries that are taxed as corporations for U.S. federal income tax purposes (the “Taxable Subsidiaries”). In July 2026, the Company formed ICMB Blocker LLC, a Delaware limited liability company and wholly owned Taxable Subsidiary treated as a corporation for federal income tax purposes, to hold certain equity investments in portfolio companies treated as pass-through entities and facilitate the Company’s continued qualification as a RIC under the Internal Revenue Code (the “Code”). This was the only Taxable Subsidiary held at September 30, 2026. At December 31, 2025, the Company had
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Company.
a. Basis of Presentation
The accompanying consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025. All values are stated in U.S. dollars, unless noted otherwise. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the periods included herein as required by U.S. GAAP. These adjustments are normal and recurring in nature.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments and other amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates utilized in preparing the Company’s consolidated financial statements are reasonable and prudent. Actual results could differ materially from these estimates. All material inter-company balances and transactions have been eliminated.
As permitted under Regulation S-X and ASC 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing all or substantially all of its services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries, CM Finance SPV Ltd. (“SPV”) and Investcorp Credit Management BDC SPV, LLC (“SPV LLC”), which are special purpose vehicles used to finance certain investments and ICMB Blocker LLC in its consolidated financial statements. The effects of all material intercompany balances and transactions have been eliminated in consolidation.
Prior Period Corrections
During the quarter ended June 30, 2026, the Company identified and corrected errors related to the assessment of gross income for purposes of the gross income test under Subchapter M of the Code for the tax years ended December 31, 2025 and 2024 resulting in tax adjustments of approximately $
On the Consolidated Statements of Assets and Liabilities as of December 31, 2025, Accrued expenses and other liabilities increased by $
16
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
after taxes decreased by $
b. Revenue Recognition, Security Transactions, and Realized/Unrealized Gains or Losses
Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing, and commitment fees, as well as purchase and original issue discounts (“OID”) associated with loans to portfolio companies are accreted into interest income over the respective terms of the applicable loans. Accretion of discounts or premiums is calculated by the effective interest or straight-line method, as applicable, as of the purchase date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or debt security, any prepayment penalties are included in other fee income and unamortized fees and discounts are recorded as interest income and are non-recurring in nature. During the three and nine months ended September 30, 2026, $
Structuring fees and similar fees are recognized as income as earned, usually when received. Structuring fees, excess deal deposits, net profits interests and overriding royalty interests are included in other fee income.
Management reviews all debt investments that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on non-accrual status. Accrued and unpaid interest is generally reversed when a debt investment is placed on non-accrual status. However, capitalized payment-in-kind (“PIK”) interest will not be reversed when a debt investment is placed on non-accrual status. Interest payments received on non-accrual debt investments may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual debt investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although management may make exceptions to this general rule if the debt investment has sufficient collateral value and is in the process of collection. As of September 30, 2026, the Company had
Dividend income is recorded on the ex-dividend date.
Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are determined by calculating the difference between the net proceeds from the disposition and the amortized cost basis of the investments, without regard to unrealized gains or losses previously recognized. Realized gains or losses on the sale of investments are calculated using the specific identification method. The Company reports changes in fair value of investments as a component of the net change in unrealized appreciation (depreciation) on investments in the Unaudited Consolidated Statements of Operations.
The Company holds debt investments in its portfolio that contain a PIK interest provision. PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on an accrual basis to the extent that such amounts are expected to be collected. PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due. The Company earned PIK interest of $
The Company may hold equity investments in its portfolio that contain a PIK dividend provision. PIK dividends, which represent contractual dividend payments added to the investment balance, are recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company earned
17
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
c. Paid-In Capital
The Company records the proceeds from the sale of its common stock to common stock and additional paid-in capital, net of commissions and marketing support fees.
d. Net Increase (Decrease) in Net Assets Resulting from Operations per Share
The net increase (decrease) in net assets resulting from operations per share is calculated based upon the weighted average number of shares of common stock outstanding during the reporting period.
e. Distributions
Dividends and distributions to common stockholders are recorded on the declaration date. The amount to be paid out as a dividend or distribution (if any) is determined by the Company’s board of directors (the “Board”) each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed annually, although the Company may decide to retain such capital gains for investment.
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions the Company declares in cash on behalf of the Company’s stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes, and the Company declares, a cash distribution, then the Company’s stockholders who have not “opted out” of the Company’s dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution.
f. Cash and Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents and restricted cash and cash equivalents consist of cash and short-term, highly liquid investments. The Company deposits its cash in financial institutions and, at times, such balance may be in excess of the Federal Deposit Insurance Corporation insurance limits. All of the Company’s cash deposits are held at what management believes to be large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and near maturity such that there is insignificant risk of changes in value. The Company has restrictions on the uses of the cash held by SPV LLC based on the terms of the relevant financing arrangement. For more information on the Company’s financing arrangements and borrowings, see Note 5.
g. Deferred Offering Costs
Deferred offering costs consist of fees and expenses incurred in connection with the offer and sale of the Company’s common stock and bonds, including legal, accounting, printing fees, and other related expenses, as well as costs incurred in connection with the filing of a shelf registration statement. These costs are capitalized when incurred and recognized as a reduction of offering proceeds when the offering is completed.
h. Investment Transactions and Expenses
The Company records its investment transactions on a trade date basis, which is the date when the Company assumes the risks for gains and losses related to that instrument. Purchases of loans, including delayed draw term loans and revolving credit facilities, are recorded on a fully committed basis.
Expenses are accrued as incurred.
i. Investment Valuation
The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its investments and
18
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.
Fair value is defined as the price that would be received upon a sale of an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (a) are independent of us, (b) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (c) are able to transact for the asset, and (d) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).
Securities that are traded on securities exchanges (including such securities traded in the after-hours market) are valued on the basis of the closing price on the valuation date (if such prices are available). Securities that are traded on more than one securities exchange are valued at the closing price on the primary securities exchange on which such securities are traded on the valuation date (or if reported on the consolidated tape, then their last sales price on the consolidated tape). Listed options for which the last sales price falls between the last “bid” and “ask” prices for such options are valued at their last sales price on the date of the valuation on the primary securities exchange on which such options are traded. Options for which the last sales price on the valuation date does not fall between the last “bid” and “ask” prices are valued at the average of the last “bid” and “ask” prices for such options on that date. To the extent these securities are actively traded, and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy. The Company held
Investments that are not traded on securities exchanges but are traded on the over-the-counter markets (such as term loans, notes and warrants) are valued using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (when observable) and fundamental data relating to the issuer. These investments are categorized in Level 2 of the fair value hierarchy, or in instances when lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3.
Investments for which market quotations are not readily available or may be considered unreliable are fair valued, in good faith, using a method determined to be appropriate in the given circumstances. The valuation methods used include the Cost Approach, the Market Approach and the Income Approach. Inputs used in these approaches may include, but are not limited to, interest rate yield curves, credit spreads, recovery rates, comparable company transactions, trading multiples, and volatilities. The valuation method the Company uses may change as changes in the underlying portfolio company dictate, such as moving from the Cost Approach to Market Approach when underlying conditions change at the company. Because of the inherent uncertainty of valuation in these circumstances, the fair values for the aforementioned investments may differ significantly from values that would have been used had a ready and liquid market for such investments existed or from the amounts that might ultimately be realized, and such differences could be material.
The Adviser seeks to ensure that the Company’s valuation policies and procedures, as approved by the Board, are consistently applied across all investments of the Company. The valuations are continuously monitored and the valuation process for Level 3 investments is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The quarterly valuation process begins with each portfolio company or investment being initially valued by the Adviser, with such valuation taking into account information received from any approved third-party valuation firm that the Company may retain with respect to certain investments. The Adviser’s investment professionals will prepare portfolio company valuations using sources and/or proprietary models depending on the availability of information on the Company’s assets and the type of asset being valued.
Valuation models are typically calibrated upon initial funding and are re-calibrated as necessary upon subsequent material events (including, but not limited to, additional financing activity, changes in comparable companies, and recent trades). The preliminary valuation conclusions are then documented and discussed with senior management of the Adviser. On a periodic basis and at least once annually, one or more third-party independent valuation firm(s) engaged by the Company conduct independent appraisals and review the Adviser’s preliminary valuations and make their own independent assessment. The Valuation Committee of the Board then reviews the preliminary valuations of the Adviser and, as applicable, those of any independent valuation firms. The Valuation Committee discusses the valuations and makes a recommendation to the Board regarding the fair value of each investment in good faith based on the input of the Adviser and the independent valuation firm(s). Upon recommendation by the Valuation Committee and a review of the valuation materials of the Adviser and the third-party independent valuation firm(s), the Board determines, in good faith, the fair value of each investment.
19
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
For more information on the classification of the Company’s investments by major categories, see Note 4.
The fair value of the Company’s assets and liabilities that qualify as financial instruments under U.S. GAAP approximates the carrying amounts presented in the Unaudited Consolidated Statements of Assets and Liabilities.
j. Income Taxes
The Company has elected to be treated, for U.S. federal income tax purposes, as a RIC under Subchapter M of the Code. To maintain qualification as a RIC, the Company must, among other things, meet certain source of income and asset diversification requirements and distribute to stockholders, for each taxable year, at least
In July 2026, the Company formed ICMB Blocker LLC, a Delaware limited liability company and wholly owned Taxable Subsidiary treated as a corporation for federal income tax purposes, to hold certain equity investments in portfolio companies treated as pass-through entities and facilitate the Company’s continued qualification as a RIC under the Code. This was the only Taxable Subsidiary held at September 30, 2026. At September 30, 2025, the Company had
For the tax years ended December 31, 2025 and 2024, the Company made use of the provisions under section 851(i) of the Code in order to satisfy the requirement that a RIC must derive at least
The Company incurred excise tax expenses (benefits), which are included in the provision for tax expense (benefit), of $
Book and tax basis differences that are permanent differences are reclassified among the Company’s capital accounts, as appropriate at year-end. Additionally, the tax character of distributions is determined in accordance with the Code, which differs from U.S. GAAP. During the three and nine months ended September 30, 2026,
U.S. GAAP requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet a more-likely-than-not threshold would be recorded as a tax expense in the current year. The Company’s policy is to recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision.
The Company has analyzed such tax positions and has concluded that
As of September 30, 2026, ICMB Blocker LLC, the wholly owned taxable subsidiary, recorded a deferred tax asset and a corresponding valuation allowance of approximately $
20
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
k. Segment Reporting
In accordance with ASC Topic 280, Segment Reporting (“ASC 280”), the Company has determined that it has a single operating and reporting segment. As a result, the Company’s segment accounting policies are the same as described herein and the Company does not have any intra-segment sales and transfers of assets.
Note 3. Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial statements upon adoption.
In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (“ASU 2024-03”), which requires disaggregated disclosure of certain costs and expenses, including purchases of inventory, employee compensation, depreciation, amortization and depletion, within relevant income statement captions. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning with the first quarter ended March 31, 2028. Early adoption and retrospective application are permitted. The Company is currently assessing the impact of this guidance, however, the Company does not expect a material impact on its consolidated financial statements.
In September 2026, the FASB issued ASU 2026-03, Fair Value Measurement (Topic 820): Investment Companies with Equity Securities Subject to Contractual Sale Restrictions, which requires investment companies to consider the effect of a contractual sale restriction when measuring the fair value of an equity security subject to that restriction. This ASU also requires an investment company to disclose the amount of the discount attributable to the contractual sale restrictions included in the fair value measurement of its equity securities. ASU 2026-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those annual periods, applied prospectively to all equity securities. Early adoption is permitted for any reporting period after September 2026. The Company has not early adopted ASU 2026-03 and is currently assessing the impact of this guidance, however, the Company does not expect a material impact on its consolidated financial statements.
Note 4. Investments
The Company’s investments, at any time, may include securities and other financial instruments, including, without limitation, corporate and government bonds, convertible securities, collateralized loan obligations, term loans, revolvers and delayed draw facilities, trade claims, equity securities, privately negotiated securities, direct placements, working interests, warrants and investment derivatives (such as credit default swaps, recovery swaps, total return swaps, options, forward contracts, and futures) (all of the foregoing collectively referred to in these financial statements as “investments”).
a. Certain Risk Factors
In the ordinary course of business, the Company manages a variety of risks including market risk, liquidity risk and credit risk. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.
Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.
With respect to liquidity risk, the Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making the purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.
Credit risk is the potential loss the Company may incur from a failure of an issuer to make payments according to the terms of a contract. The Company is subject to credit risk because of its strategy of investing in the debt of leveraged companies and its involvement in
21
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
derivative instruments. The Company’s exposure to credit risk on its investments is limited to the fair value of the investments. With regard to derivatives, the Company attempts to limit its credit risk by considering its counterparty’s (or its guarantor’s) credit rating.
b. Investments
The composition of the Company’s investments as of September 30, 2026, by investment type, as a percentage of the total portfolio, at amortized cost and fair value, is as follows:
Investment Type |
|
Investments at |
|
Percentage of |
|
Investments at |
|
Percentage of |
Senior Secured First Lien Debt Investments |
|
$ |
|
|
$ |
|
||
Unsecured Debt Investments |
|
|
|
|
||||
Equity, Warrants and Other Investments |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
The composition of the Company’s investments as of December 31, 2025, by investment type, as a percentage of the total portfolio, at amortized cost and fair value, is as follows:
Investment Type |
|
Investments at |
|
Percentage of |
|
Investments at |
|
Percentage of |
Senior Secured First Lien Debt Investments |
|
$ |
|
|
$ |
|
||
Unsecured Debt Investments |
|
|
|
|
||||
Equity, Warrants and Other Investments |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
The Company uses Global Industry Classification Standard (“GICS”) codes to identify the industry groupings in its portfolio. The following table shows the portfolio composition by industry grouping in accordance with the GICS codes at fair value at September 30, 2026 and December 31, 2025:
|
|
September 30, 2026 |
|
December 31, 2025 |
||||
Industry Classification |
|
Investments at |
|
Percentage of |
|
Investments at |
|
Percentage of |
Commercial Services & Supplies |
|
$ |
|
|
$ |
|
||
Professional Services |
|
|
|
|
||||
Diversified Consumer Services |
|
|
|
|
||||
IT Services |
|
|
|
|
||||
Containers & Packaging |
|
|
|
|
||||
Specialty Retail |
|
|
|
|
||||
Trading Companies & Distributors |
|
|
|
|
||||
Food Products |
|
|
|
|
||||
Insurance |
|
|
|
|
||||
Household Durables |
|
|
|
|
||||
Interactive Media & Services |
|
|
|
|
||||
Consumer Staples Distribution & Retail |
|
|
|
|
||||
Software |
|
|
|
|
||||
Entertainment |
|
|
|
|
||||
Construction & Engineering |
|
|
|
|
||||
Automobile Components |
|
|
|
|
||||
Electronic Equipment, Instruments & Components |
|
|
|
|
||||
Health Care Providers & Services |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
||
22
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
The following table shows the portfolio composition by geographic grouping at fair value at September 30, 2026 and December 31, 2025:
|
|
September 30, 2026 |
|
December 31, 2025 |
||||
Geographic Region |
|
Investments at |
|
Percentage of |
|
Investments at |
|
Percentage of |
U.S. West |
|
$ |
|
|
$ |
|
||
U.S. Northeast |
|
|
|
|
||||
U.S. Southwest |
|
|
|
|
||||
U.S. Midwest |
|
|
|
|
||||
U.S. Mid-Atlantic |
|
|
|
|
||||
U.S. Southeast |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
||
The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle-market companies to help these companies fund acquisitions, growth or refinancing. During the nine months ended September 30, 2026, the Company made investments in new and existing portfolio companies of approximately $
c. Derivatives
Derivative contracts include total return swaps and embedded derivatives in the Company’s borrowings. The Company may enter into derivative contracts as part of its investment strategies. On October 28, 2020, the Securities and Exchange Commission (the “SEC”) adopted a rule that modifies the conditions by which BDCs can enter into, or “cover” open positions pursuant to, certain derivatives contracts that involve potential future payment obligations (the “Derivatives Rule”). The Derivatives Rule requires a BDC entering into a derivatives contract to develop and implement a derivatives risk management program, to comply with an outer limit on asset coverage ratio based on the value-at-risk test, and to report its derivative activity to its board of directors on a regular basis.
d. Fair Value Measurements
ASC 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a framework for measuring fair value and a valuation hierarchy that prioritizes the inputs used in the valuation of an asset or liability based upon their transparency. The valuation hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value have been classified in the following three categories:
Level 1 – Valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 – Valuation is based on unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset
23
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Unobservable inputs are developed based on the best information available under the circumstances, which might include the Company’s own data. The Company’s own data used to develop unobservable inputs is adjusted if information is reasonably available without undue cost and effort that indicates that market participants would use different assumptions.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of the market and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
Estimates of fair value for cash and cash equivalents and restricted cash and cash equivalents are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using observable inputs other than quoted prices, or Level 2 inputs and unobservable inputs, or Level 3 inputs.
The following table summarizes the classifications within the fair value hierarchy of the Company’s assets and liabilities measured at fair value as of September 30, 2026:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
Senior Secured First Lien Debt Investments |
|
$ |
|
$ |
|
$ |
|
$ |
Unsecured Debt Investments |
|
|
|
|
||||
Equity, Warrants and Other Investments |
|
|
|
|
||||
Total Investments |
|
$ |
|
$ |
|
$ |
|
$ |
The following table summarizes the classifications within the fair value hierarchy of the Company’s assets and liabilities measured at fair value as of December 31, 2025:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets |
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
Senior Secured First Lien Debt Investments |
|
$ |
|
$ |
|
$ |
|
$ |
Unsecured Debt Investments |
|
|
|
|
||||
Equity, Warrants and Other Investments |
|
|
|
|
||||
Total Investments |
|
$ |
|
$ |
|
$ |
|
$ |
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2026:
|
|
Senior Secured |
|
Unsecured |
|
Equity, Warrants |
|
Total |
Fair value at December 31, 2025 |
|
$ |
|
$ |
|
$ |
|
$ |
Purchases (including PIK interest) |
|
|
|
|
||||
Sales and repayments |
|
( |
|
|
( |
|
( |
|
Amortization |
|
|
|
|
||||
Net realized gains (losses) |
|
( |
|
|
( |
|
( |
|
Transfers in |
|
|
|
|
||||
Transfers out |
|
|
|
|
||||
Net change in unrealized (depreciation) appreciation |
|
|
|
( |
|
( |
||
Fair value at September 30, 2026 |
|
$ |
|
$ |
|
$ |
|
$ |
Change in unrealized appreciation (depreciation) relating to assets still held as of September 30, 2026 |
|
$( |
|
$ |
|
$( |
|
$( |
24
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended September 30, 2025:
|
|
Senior Secured |
|
Unsecured |
|
Equity, Warrants |
|
Total |
Fair value at December 31, 2024 |
|
$ |
|
$ |
|
$ |
|
$ |
Purchases (including PIK interest) |
|
|
|
|
||||
Sales and repayments |
|
( |
|
|
( |
|
( |
|
Amortization |
|
|
|
|
||||
Net realized gains (losses) |
|
( |
|
|
|
|||
Transfers in |
|
|
|
|
||||
Transfers out |
|
( |
|
|
|
( |
||
Net change in unrealized (depreciation) appreciation |
|
( |
|
|
|
( |
||
Fair value at September 30, 2025 |
|
$ |
|
$ |
|
$ |
|
$ |
Change in unrealized appreciation (depreciation) relating to assets still held as of September 30, 2025 |
|
$( |
|
$ |
|
$ |
|
$( |
Transfers into Level 3 during or at the end of the reporting period are reported under Level 1 or Level 2 as of the beginning of the period. Transfers out of Level 3 during or at the end of the reporting period are reported under Level 3 as of the beginning of the period. During the nine months ended September 30, 2026, the Company did
During the nine months ended September 30, 2026, there were
The following tables provide quantitative information regarding the Company’s Level 3 fair value measurements as of September 30, 2026 and December 31, 2025. This information presents the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured debt is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments.
|
|
Fair Value as of |
|
Valuation |
|
Unobservable |
|
Weighted |
|
Range |
Senior Secured First Lien Debt Investments |
|
$ |
|
Income Approach |
|
Market Yields |
|
|
||
Senior Secured First Lien Debt Investments |
|
|
Market Comparable Approach |
|
EBITDA Multiple |
|
|
|||
Senior Secured First Lien Debt Investments |
|
|
Recent Transaction |
|
Recent Transaction |
|
N/A |
|
N/A |
|
Senior Secured First Lien Debt Investments |
|
|
Recovery Analysis |
|
Recovery Amount (1) |
|
N/A |
|
N/A |
|
Unsecured Debt Investments |
|
|
Recovery Analysis |
|
Recovery Amount (1) |
|
N/A |
|
N/A |
|
Equity, Warrants and Other Investments |
|
|
Market Comparable Approach |
|
EBITDA multiple |
|
|
|||
Equity, Warrants and Other Investments |
|
|
Recent Transaction |
|
Recent Transaction |
|
N/A |
|
N/A |
|
|
|
$ |
|
|
|
|
|
|
|
|
(1)
(2)
25
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
|
|
Fair Value as of |
|
Valuation |
|
Unobservable |
|
Weighted |
|
Range |
Senior Secured First Lien Debt Investments |
|
$ |
|
Income Approach |
|
Market Yields |
|
|
||
Senior Secured First Lien Debt Investments |
|
|
Market Comparable Approach |
|
Revenue Multiple |
|
|
|||
Senior Secured First Lien Debt Investments |
|
|
Recovery Analysis |
|
Recovery Amount (1) |
|
N/A |
|
N/A |
|
Unsecured Debt Investments |
|
|
Recovery Analysis |
|
Recovery Amount (1) |
|
N/A |
|
N/A |
|
Equity, Warrants and Other Investments |
|
|
Income Approach |
|
Market Yields |
|
|
|||
Equity, Warrants and Other Investments |
|
|
Market Comparable Approach |
|
EBITDA multiple |
|
|
|||
Equity, Warrants and Other Investments |
|
|
Market Comparable Approach |
|
Revenue Multiple |
|
|
|||
|
|
$ |
|
|
|
|
|
|
|
|
(1)
(2)
Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. Significant increases in illiquidity discounts, PIK discounts and market yields would result in significantly lower fair value measurements. Significant increases in EBITDA (earnings before interest, taxes, depreciation and amortization) multiples or recent transaction values would result in significantly higher fair value measurements.
Note 5. Borrowings
Financing Facility
On August 23, 2021, the Company, through SPV LLC, entered into a five-year, $
Effective January 17, 2024, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to the Secured Overnight Financing Rate (“SOFR”) plus
On November 19, 2024, we amended the Capital One Revolving Financing to provide for, among other things, a decrease of the applicable interest spreads under the Capital One Revolving Financing from SOFR plus
On May 6, 2026, the Company, through SPV LLC, entered into a sixth amendment (the “Sixth Amendment”) to the Capital One Revolving Financing. The Sixth Amendment provides for, among other things, a decrease of the facility size from $
26
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
As of September 30, 2026 and December 31, 2025, there were $
Restricted cash and cash equivalents (as shown on the Unaudited Consolidated Statements of Assets and Liabilities) are held by the trustee of the Capital One Revolving Financing and are restricted to purchases of investments by SPV LLC that must meet certain eligibility criteria identified by the loan, security and investment management agreement governing the Capital One Revolving Financing. As of September 30, 2026, SPV LLC had assets of $
The fair value of the Company’s borrowings is estimated based on the rate at which similar credit facilities or debentures would be priced. At September 30, 2026 and December 31, 2025, the fair value of the Company’s total borrowings under the Capital One Revolving Financing, was estimated at $
As of September 30, 2026, the carrying amount of the Capital One Revolving Financing was $
Notes Due 2026
On March 31, 2021, the Company closed the public offering of $
The 2026 Notes were due to mature on
The 2026 Notes were fully repaid on March 30, 2026 using the net proceeds from the issuance of the Company's Floating Rate Senior Unsecured Notes due 2029, as described below.
On November 10, 2025, the Company entered into a letter of commitment with Investcorp Capital plc ("ICAP"), an Affiliate of the Adviser, to provide, or cause to be provided, capital to the Company in the event the Company was unable to repay any portion of the principal balance of the Company’s
27
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
Notes Due 2029
On March 29, 2026, the Company and ICAP, acting in its capacity as "Agent", entered into an indenture (the “2029 Notes Indenture”) pursuant to which, on March 30, 2026, the Company issued and sold $
The 2029 Notes mature on
The Company may redeem the 2029 Notes in whole or in part (1) on or prior to July 1, 2028, (a) if the net proceeds the Company receives from a debt financing or refinancing are used to directly or indirectly redeem the 2029 Notes, at a price equal to par plus an additional amount that would provide holders of the Notes with a minimum cash return of not less than 1.09x of the principal amount of the 2029 Notes (the “Minimum Return”), in which case the redemption price will equal the difference (but not less than zero) of the (i) Minimum Return less (ii) sum of all cash interest payments received by the holders of the 2029 Notes through the calculation date, or (b) if the redemption is not funded from the net proceeds from a debt financing or refinancing, at par plus any accrued and unpaid interest, and (2) after July 1, 2028, at par plus any accrued and unpaid interest. Holders of the 2029 Notes will not have the option to have the 2029 Notes repaid prior to maturity.
The 2029 Notes Indenture contains certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC and Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions but giving effect to any no-action relief granted by the SEC to another business development company and upon which the Company may reasonably rely (or to the Company if the Company determines to seek such similar no-action or other relief). The 2029 Notes Indenture also contains covenants (i) restricting consolidations, mergers, asset transfer, equity and debt transactions, dispositions of portfolio investments having an aggregate fair value of
These covenants are subject to important limitations and exceptions that are set forth in the 2029 Notes Indenture, including that the consent and consultation rights of the Required Holders will terminate upon the Purchaser or its affiliates ceasing to hold greater than
Pursuant to an upfront fee agreement between the Company and the Purchaser, dated March 30, 2026 (the “Fee Letter”), on March 30, 2026, the Company paid a $
28
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
As of September 30, 2026, the carrying amount of the 2029 Notes was $
For the three and nine months ended September 30, 2026, the weighted average outstanding debt balance and the weighted average stated interest rate for overall debt outstanding, in aggregate was $
Long-Term Debt Maturities
Set forth below is the aggregate principal amount of our long-term debt as of September 30, 2026 and December 31, 2025 (excluding unamortized premiums, net, and unamortized debt issuance costs) maturing during the following years:
|
|
September 30, 2026 |
|
December 31, 2025 |
2027 |
|
$ |
|
$ |
2028 |
|
|
||
2029 |
|
|
||
Total long-term debt |
|
$ |
|
$ |
Note 6. Indemnification, Guarantees, Commitments and Contingencies
In the normal course of business, the Company enters into contracts that provide a variety of representations and warranties and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.
Loans purchased by the Company may include revolving credit agreements or other financing commitments obligating the Company to advance additional amounts on demand. The Company generally sets aside sufficient liquid assets to cover its unfunded commitments, if any.
The following table details the Company’s unfunded commitments to portfolio companies as of September 30, 2026:
Investments |
|
Unfunded |
|
Fair Value |
|
Annual |
|
Expiration |
Accelevation, LLC - DDTL |
|
$ |
|
$ |
|
|
||
Accelevation, LLC - Revolver |
|
|
|
|
||||
Arborworks Acquisition LLC – Revolver |
|
|
|
|
||||
Argano, LLC - Revolver |
|
|
|
|
||||
Crafty Apes LLC - DDTL - Second Out |
|
|
|
|
||||
Integrity Marketing Acquisition, LLC Revolver |
|
|
|
|
||||
Uniguest Holdings - DDTL |
|
|
|
|
||||
Uniguest Holdings - Revolver |
|
|
|
|
||||
Total Unfunded Commitments |
|
$ |
|
$ |
|
|
|
|
29
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
The following table details the Company’s unfunded commitments to portfolio companies as of December 31, 2025:
Investments |
|
Unfunded |
|
Fair Value |
|
Annual |
|
Expiration |
Accelevation, LLC - DDTL |
|
$ |
|
$ |
|
|
||
Accelevation, LLC - Revolver |
|
|
|
|
||||
Arborworks Acquisition LLC – Revolver |
|
|
|
|
||||
Argano, LLC - Revolver |
|
|
|
|
||||
Crafty Apes LLC - DDTL - Second Out |
|
|
|
|
||||
Integrity Marketing Acquisition, LLC DDTL |
|
|
|
|
||||
Integrity Marketing Acquisition, LLC Revolver |
|
|
|
|
||||
Uniguest Holdings - DDTL |
|
|
|
|
||||
Uniguest Holdings - Revolver |
|
|
|
|
||||
Total Unfunded Commitments |
|
$ |
|
$ |
|
|
|
|
Note 7. Agreements and Related Party Transactions
The following table provides a summary of related party transactions under the Advisory Agreement and the administration agreement with the Adviser (the “Administration Agreement”) for the three and nine months ended September 30, 2026 and 2025:
|
|
For The Three Months Ended September 30, |
|
For The Nine Months Ended September 30, |
||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
Base management fees |
|
$ |
|
$ |
|
$ |
|
$ |
Waiver of base management fees |
|
( |
|
( |
|
( |
|
( |
Income-based incentive fees |
|
|
( |
|
( |
|
( |
|
Waiver of income-based incentive fees |
|
( |
|
|
( |
|
||
Capital gains fee |
|
|
|
|
||||
Allocation of administrative costs from Adviser |
|
|
|
|
||||
Total net expense to affiliates |
|
$( |
|
$ |
|
$ |
|
$ |
The following table provides a summary of related party transactions under the Advisory and Administration Agreements with the Adviser as of September 30, 2026 and December 31, 2025:
|
|
September 30, 2026 |
|
December 31, 2025 |
Due from affiliate |
|
$ |
|
$ |
Total amount due from affiliate |
|
$ |
|
$ |
|
|
|
|
|
Base management fees payable |
|
$ |
|
$ |
Income-based incentive fees payable |
|
|
||
Capital gains fee payable |
|
|
||
Allocation of administrative costs from Adviser payable(1) |
|
|
||
Total amount due to affiliates |
|
$ |
|
$ |
Advisory Agreement
The Company is party to the Advisory Agreement with the Adviser. Under the Advisory Agreement, the Company has agreed to pay the Adviser a fee for investment advisory and management services consisting of two components: a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”). The Incentive Fee has two components: one based on the Company’s pre-Incentive Fee net investment income (the “Income-Based Fee”) and one based on capital gains (the “Capital Gains Fee”).
Under the Advisory Agreement, the Base Management Fee is calculated at an annual rate of
For the three and nine months ended September 30, 2026, $
30
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
such fees was payable. For the three and nine months ended September 30, 2025, $
The Base Management Fee is calculated based on the average value of the Gross Assets at the end of the two most recently completed fiscal quarters prior to the quarter for which such fees are being calculated. The Base Management Fee is payable quarterly in arrears and the Base Management Fees for any partial month or quarter will be appropriately pro-rated.
Under the Advisory Agreement, the Income-Based Fee is calculated and payable quarterly in arrears based on the Company’s Pre-Incentive Fee Net Investment Income (as defined below) for the immediately preceding fiscal quarter, subject to a total return requirement (the “Total Return Requirement”) and deferral of non-cash amounts, and is
“Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, such as commitment, origination, structuring, diligence, managerial assistance and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the Base Management Fee, expenses payable under the Administration Agreement and any interest expense and any distributions 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 that we have not yet received in cash.
Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
No Income-Based Fee is payable under the Advisory Agreement except to the extent
For the three and nine months ended September 30, 2026, the Company incurred $
31
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
Under the Advisory Agreement, the Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021 (the “Commencement Date”), and is equal to
As required by U.S. GAAP, we accrue the Capital Gains Fee on unrealized gains. This accrual reflects the Incentive Fees that would be payable to the Adviser if our entire investment portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an Incentive Fee with respect to unrealized gains unless and until such gains are actually realized. There can be no assurance that such unrealized capital appreciation will be realized in the future. Accordingly, the amount of the accrued Capital Gains Fee at a reporting date may vary from the Capital Gains Fee that is ultimately realized, and the differences could be material.
As of September 30, 2026 and December 31, 2025,
The Advisory Agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of the Adviser’s duties or by reason of the reckless disregard of its duties and obligations under the Advisory Agreement, the Adviser and its officers, managers, partners, agents, employees, controlling persons and members, and any other person or entity affiliated with it, are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Adviser’s services under the Advisory Agreement or otherwise as the Adviser.
Mr. Mauer holds an approximate
Administration Agreement
Pursuant to the Administration Agreement, the Adviser furnishes the Company with office facilities and equipment and provides it with the clerical, bookkeeping, recordkeeping and other administrative services necessary to conduct day-to-day operations. Under the Administration Agreement, the Adviser performs, or oversees the performance of the Company’s required administrative services, which include, among other things, being responsible for the financial records which it is required to maintain and preparing reports to its stockholders and reports filed with the SEC. In addition, the Adviser assists the Company in determining and publishing its net asset value, oversees the preparation and filing of its tax returns and the printing and dissemination of reports and other materials to its stockholders, and generally oversees the payment of its expenses and the performance of administrative and professional services rendered to it by others. Under the Administration Agreement, the Adviser also provides managerial assistance on the Company’s behalf to those portfolio companies that have accepted its offer to provide such assistance. In addition, the Adviser may satisfy certain of its obligations to the Company under the Administration Agreement through the services agreement with Investcorp International Inc., an affiliate of Investcorp, including supplying the Company with accounting and back-office professionals upon the request of the Adviser.
The Company reimburses the Administrator or its affiliates for amounts paid or costs borne that properly constitute Company expenses as set forth in the Administration Agreement. Payments under the Administration Agreement equal an amount based upon the Company’s allocable portion (subject to the review of the Board) of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of the Company’s chief financial officer and chief compliance officer and their respective staffs. The Company incurred costs of $
32
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
$
Co-investment Exemptive Relief
On July 20, 2021, the SEC issued an order, which superseded a prior order issued on March 19, 2019, granting the Company’s application for exemptive relief to co-invest, subject to the satisfaction of certain conditions, in certain private placement transactions with other funds managed by the Adviser or its affiliates and any future funds that are advised by the Adviser or its affiliated investment advisers (the “Exemptive Relief”). Under the terms of the Exemptive Relief, in order for the Company to participate in a co-investment transaction a “required majority” (as defined in Section 57(o) of the 1940 Act) of the directors who are not “interested persons” of the Company, as defined in Section 2(a)(19) of the 1940 Act (each, an “Independent Director”) must conclude that (i) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (ii) the proposed transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objectives and strategies.
License Agreement
The Company has entered into a license agreement with the Adviser under which the Adviser has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Investcorp.” Under this agreement, the Company has a right to use the “Investcorp” name for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company has no legal right to the “Investcorp” name. This license agreement will remain in effect for so long as the Advisory Agreement with the Adviser is in effect and Investcorp is the majority owner of the Adviser.
Note 8. Directors’ Fees
Each Independent Director receives (i) an annual fee of $
Note 9. Net Change in Net Assets Resulting from Operations Per Share
Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.
The following table sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations:
|
|
For The Three Months Ended September 30, |
|
For The Nine Months Ended September 30, |
||||
Basic and Diluted Net Increase (Decrease) in Net Assets Per Share: |
|
2026 |
|
2025 |
|
2026 |
|
2025 |
Net increase (decrease) in net assets resulting from operations |
|
$( |
|
$( |
|
$( |
|
$( |
Weighted average shares of common stock outstanding |
|
|
|
|
||||
Basic/diluted net increase (decrease) in net assets from operations per share |
|
$( |
|
$( |
|
$( |
|
$( |
33
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
Note 10. Distributions
The following table reflects the distributions declared on shares of the Company’s common stock since January 1, 2025. Stockholders of record as of each respective record date were entitled to receive the distribution:
Declaration Date |
|
Record Date |
|
Payment Date |
|
Amount per Share |
|
|
|
$ |
|||
|
|
|
$ |
|||
|
|
|
$ |
|||
|
|
|
$ |
|||
|
|
|
$ |
|||
|
|
|
$ |
*
The following table reflects, for U.S. federal income tax purposes, the sources of the cash dividend distributions that the Company has paid on its common stock during the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
||||||
|
|
2026 |
|
2025 |
||||
|
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
Ordinary income and short-term capital gains |
|
$ |
|
|
$ |
|
||
Long-term capital gains |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
||
The figures in the above table are estimates based on the Company’s year-to-date activity. The tax status of distributions for a tax year depends on the Company’s total amount of taxable income for the entire year; therefore, the tax status cannot be confirmed until after the end of the tax year. Accordingly, the Company’s distributions for the tax year may be re-characterized later based upon subsequent events. As applicable, the Company reports the actual tax character of its distributions for U.S. federal income tax purposes annually to stockholders on Internal Revenue Service Form 1099-DIV issued after the end of the year. The Company’s Form 10-K for the year ended December 31, 2025 included information regarding the actual components and tax treatment of all the Company’s distributions for the fiscal year 2025. Because each stockholder’s tax status is unique, stockholders should consult their tax advisor regarding this distribution notice.
Note 11. Share Transactions
The following table summarizes the total shares issued and repurchased for the nine months ended September 30, 2026 and 2025:
|
|
Nine Months Ended September 30, |
||||||
|
|
2026 |
|
2025 |
||||
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
Balance at beginning of period |
|
|
$ |
|
|
$ |
||
Issuance of common shares |
|
|
|
|
||||
Reinvestments of stockholder distributions |
|
|
|
|
||||
Share repurchases |
|
|
|
|
||||
Balance at end of period |
|
|
$ |
|
|
$ |
||
On August 7, 2025, the Board authorized a new share repurchase program of up to $
34
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
Note 12. Financial Highlights
The following represents the per share data and the ratios to average net assets for the Company:
|
|
For The Nine Months Ended September 30, |
||
|
|
2026 |
|
2025 |
Per Share Data:(1) |
|
|
|
|
Net asset value, beginning of period |
|
$ |
|
$ |
Net investment income |
|
( |
|
|
Net realized and unrealized gains (losses) |
|
( |
|
( |
Net increase (decrease) in net assets resulting from operations |
|
( |
|
( |
Capital transactions(2) |
|
|
|
|
Dividends from net investment income |
|
|
( |
|
Distributions from net realized gains |
|
|
||
Net decrease in net assets resulting from capital transactions |
|
|
( |
|
Net asset value, end of period |
|
$ |
|
$ |
Market value per share, end of period |
|
$ |
|
$ |
Total return based on market value(3) |
|
( |
|
|
Shares outstanding at end of period |
|
|
||
Ratio/Supplemental Data: |
|
|
|
|
Net assets, at end of period |
|
$ |
|
$ |
Ratio of total expenses to average net assets(5) |
|
|
||
Ratio of net expenses to average net assets(5) |
|
|
||
Ratio of interest expense and fees and amortization of deferred debt issuance costs to average net assets(5) |
|
|
||
Ratio of net investment income before fee waiver to average net assets(5) |
|
( |
|
( |
Ratio of net investment income after fee waiver to average net assets(5) |
|
( |
|
|
Total Borrowings |
|
$ |
|
$ |
Asset Coverage Ratio(4) |
|
|
||
Portfolio Turnover Rate(6) |
|
|
||
Total return is calculated based on a time-weighted rate of return methodology for the stockholders and is not annualized. Total return is reflected after all investment-related and operating expenses. An individual stockholder’s return may vary from these returns based on the timing of capital transactions. The ratios to average stockholders’ capital are calculated based on the monthly average stockholders’ capital during the period. Credit facility related expenses include interest expense and amortization of deferred debt issuance costs.
Note 13. Other Fee Income
Other fee income includes amendment fees, prepayment fees, structuring fees and other fees.
|
|
For The Three Months Ended September 30, |
|
For The Nine Months Ended September 30, |
||||
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
Amendment fees |
|
$ |
|
$ |
|
$ |
|
$ |
Prepayment fees |
|
|
|
|
||||
Other fees |
|
|
|
|
||||
Total other fee income |
|
$ |
|
$ |
|
$ |
|
$ |
35
Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
Note 14. Tax Information
As of September 30, 2026 and December 31, 2025, the Company’s aggregate investment unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:
|
|
September 30, 2026 |
|
December 31, 2025 |
Tax cost |
|
$ |
|
$ |
Gross unrealized appreciation |
|
|
||
Gross unrealized depreciation |
|
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Note 15. Segment Reporting
Note 16. Subsequent Events
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.
Subsequent to September 30, 2026 and through November 12, 2026, the Company received approximately $
On October 13, 2026, the Company paid in full the additional tax (i.e., the Section 851(i) Tax Liability) based on the excess amount of nonqualifying income for the taxable years ended December 31, 2024 and December 31, 2025 in the amounts of approximately $
On November 4, 2026, the Company repaid $
Merger Agreement with BCP Investment Corporation
On November 11, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BCP Investment Corporation, a Delaware corporation (“BCIC”), and Aria Acquisition Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of BCIC (“Acquisition Sub”). The Merger Agreement provides that (i) Acquisition Sub will merge with and into the Company (the “First Merger”), with the Company continuing as the surviving company and as a wholly-owned subsidiary of BCIC (the “Surviving Company”), and (ii) immediately after the effectiveness of the First Merger, the Surviving Company will merge with and into BCIC (the “Second Merger” and, together with the First Merger, the “Mergers”), with BCIC continuing as the surviving corporation. The Company’s board of directors, on the recommendation of its special committee, and the board of directors of BCIC, have each approved the Merger Agreement and the transactions contemplated thereby, and have declared the Merger Agreement and the transactions contemplated thereby advisable.
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Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
At the date and time when the First Merger becomes effective (the “Effective Time”), each share of the Company’s common stock issued and outstanding immediately prior to the Effective Time (excluding shares held by subsidiaries of the Company or held, directly or indirectly, by BCIC or Acquisition Sub (“Canceled Shares”)) shall be converted into the right to receive a portion of the Aggregate Merger Consideration (as defined below).
Promptly following 5:00 p.m. Eastern Time on the Determination Date, each of BCIC and the Company shall deliver to the other party a calculation of its estimated net asset value, as adjusted pursuant to the terms of the Merger Agreement, as of 5:00 p.m. Eastern Time on the Determination Date, calculated in good faith (the total net asset value of BCIC as of the Determination Date, the “BCIC Closing Net Asset Value,” and the total net asset value of the Company as of the Determination Date, the “ICMB Closing Net Asset Value”).
The Merger Agreement contains customary representations and warranties of the Company, BCIC and Acquisition Sub. Additionally, the Merger Agreement contains customary pre-closing covenants, including covenants requiring the Company and BCIC (i) to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) to conduct its business in the ordinary course, and (iii) to refrain from taking certain actions prior to the consummation of the Mergers without the other party’s consent (which consent shall not be unreasonably withheld, delayed or conditioned), subject to the exceptions set forth in the Merger Agreement.
The consummation of the Mergers is subject to the satisfaction or (to the extent permitted by law) waiver of certain customary closing conditions, including obtaining approval by the Company’s stockholders and the delivery of customary instruments providing for the payoff of the Company’s outstanding indebtedness. The obligation of each party to consummate the Mergers is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party
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Investcorp Credit Management BDC, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited) - continued
September 30, 2026
having performed in all material respects its obligations under the Merger Agreement. The Merger Agreement contains customary termination rights.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Some of the statements in this Quarterly Report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation the risks, uncertainties and other factors we identify in “Risk Factors” in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K under Part I, Item 1A, and in our other filings with the SEC that we make from time to time. The forward-looking statements contained in this Quarterly Report on Form 10-Q involve risks and uncertainties, and include statements regarding the following, without limitation:
Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words.
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of filing of 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, actual results and/or events could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Important assumptions include, without limitation, our ability to originate new loans and investments, borrowing costs 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 Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
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We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rules or regulations. You are advised to consult any additional disclosures that we may make directly to you or through reports that we file from time to time with the SEC, including our annual reports on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K.
Overview
Investcorp Credit Management BDC, Inc. (“ICMB,” the “Company”, “us”, “we” or “our”), a Maryland corporation formed in May 2013, is a closed-end, externally managed, non-diversified management investment company that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, we have elected to be treated and intend to continue to qualify as a RIC under Subchapter M of the Code. On August 30, 2019, we changed our name from CM Finance Inc. to Investcorp Credit Management BDC, Inc. On September 18, 2024, the Company changed its fiscal year end from June 30 to December 31.
Our primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle market companies to help these companies fund acquisitions, growth or refinancing. We invest primarily in middle-market companies in the form of standalone first and second lien loans, unitranche loans and mezzanine loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.
CM Investment Partners LLC (the “Adviser”) serves as our investment adviser pursuant to an investment advisory agreement with us (the “Advisory Agreement”). On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp. (“Stifel”) and certain funds managed by Cyrus Capital and through a direct purchase of equity from the Adviser (the “Investcorp Transaction”). On August 31, 2023, Investcorp acquired approximately an additional 7% ownership interest in the Adviser. On December 12, 2024, Investcorp assigned its ownership of the Adviser to IVC Credit Management Financing, LLC, its parent entity, and the entity that manages Investcorp’s US credit management regulated entities. Investcorp and its credit advisory affiliates are a leading global credit investment platform with assets under management of $21.8 billion as of September 30, 2026. Investcorp and its credit advisory affiliates manage funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States. The business has a strong track record of consistent performance and growth, employing approximately 50 investment professionals in London and New York. Investcorp is a subsidiary of Investcorp Holdings B.S.C. (“Investcorp Holdings”). Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group.” Investcorp Group is a global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis.
In connection with the Investcorp Transaction, on June 26, 2019, our board of directors (the “Board”), including all of the directors who are not “interested persons” of the Company, as defined in Section 2(a)(19) of the 1940 Act (each, an “Independent Director”), unanimously approved the Advisory Agreement and recommended that the Advisory Agreement be submitted to our stockholders for approval, which our stockholders approved at the Special Meeting of Stockholders held on August 28, 2019.
In addition, on June 26, 2019, we entered into a definitive stock purchase and transaction agreement with Investcorp BDC Holdings Limited (“Investcorp BDC”), an affiliate of Investcorp (the “Stock Purchase Agreement”), pursuant to which, following the initial closing under the Stock Purchase Agreement on August 30, 2019 (the “Closing”) and prior to the second anniversary of the date of the Closing, Investcorp BDC was required to purchase (i) 680,985 newly issued shares of our common stock, par value $0.001 per share, at the most recently determined net asset value per share of our common stock at the time of such purchase, as adjusted as necessary to comply with Section 23 of the 1940 Act, and (ii) 680,985 shares of our common stock in open-market or secondary transactions. Investcorp BDC has completed all required purchases under the Stock Purchase Agreement.
At the Closing, we entered into the Advisory Agreement with the Adviser, pursuant to which we have agreed to pay the Adviser a fee for investment advisory and management services consisting of two components — a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”). The Base Management Fee is equal to 1.75% of our gross assets, payable in arrears on a quarterly basis. The Incentive Fee, which provides the Adviser with a share of the income that it generates for the Company, has two components: an income-based fee (the “Income-Based Fee”) and a capital gains fee (the “Capital Gains Fee”). The Income-Based Fee is equal to 20.0% of pre-incentive fee net investment income, subject to an annualized hurdle rate of 8.0% with a “catch-up” fee for returns between the 8.0% hurdle and 10.0%. The Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021, and is equal to 20.0% of the Company’s cumulative aggregate realized capital gains from the Commencement Date (the “Commencement Date”) through the end of each fiscal year, computed net of the Company’s aggregate cumulative realized capital losses and the
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Company’s aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fees.
We have entered into the Advisory Agreement and an administration agreement with the Adviser (the “Administration Agreement”), pursuant to which the Adviser provides us with investment advisory and the administrative services necessary for our operations. See “Note 7. Agreements and Related Party Transactions” in the notes to our consolidated financial statements in this Quarterly Report on Form 10-Q for more information regarding the Advisory Agreement and Administration Agreement and the fees and expenses paid or reimbursed by us thereunder.
From time to time, we may form taxable subsidiaries that are taxed as corporations for U.S. federal income tax purposes (the “Taxable Subsidiaries”). In July 2026, the Company formed ICMB Blocker LLC, a wholly owned Taxable Subsidiary treated as a corporation for federal income tax purposes, to hold certain equity investments in portfolio companies treated as pass-through entities and facilitate the Company’s continued qualification as a RIC under the Code. This was the only Taxable Subsidiary held at September 30, 2026. At December 31, 2025, we had no Taxable Subsidiaries.
We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.
On July 20, 2021, the SEC issued an order, which superseded a prior order issued on March 19, 2019, granting our application for exemptive relief to co-invest, subject to the satisfaction of certain conditions, in certain private placement transactions with other funds managed by the Adviser or its affiliates and any future funds that are advised by the Adviser or its affiliated investment advisers (the “Exemptive Relief”). Under the terms of the Exemptive Relief, in order for us to participate in a co-investment transaction a “required majority” (as defined in Section 57(o) of the 1940 Act) of our Independent Directors must conclude that (i) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to us and our shareholders and do not involve overreaching in respect of us or our shareholders on the part of any person concerned, and (ii) the proposed transaction is consistent with the interests of our shareholders and is consistent with our investment objectives and strategies.
Market Developments
The current inflationary environment and uncertainty as to the probability of, and length and depth of a global recession could affect our portfolio companies. Government spending, government policies and the potential for disruptions in the availability of credit in the United States and elsewhere, in conjunction with other factors, including those described elsewhere in this Quarterly Report and in other filings we have made with the SEC, could affect our portfolio companies, our financial condition and our results of operations. We will continue to monitor the evolving market environment. In these circumstances, developments outside our control could require us to adjust our plan of operations and could impact our financial condition, results of operations or cash flows in the future. Despite these factors, we believe we and our portfolio are well positioned to manage the current environment. For additional information, see Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K, as well as the risk factors listed in our subsequently filed Quarterly Reports on Form 10-Q.
Critical accounting estimates
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ.
Understanding our accounting policies and the extent to which we use management’s judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in “Note 2. Significant Accounting Policies” in our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal period ended December 31, 2025 and in this Quarterly Report on Form 10-Q. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. Management has utilized available information, including our history, industry standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. We have identified the valuation of our portfolio investments, including our investment valuation policy (which has been approved by our Board), as our critical accounting policy and estimates. The critical accounting policies should be read in conjunction with our risk factors in our Annual Report on Form 10-K for the fiscal period ended December 31, 2025 and our subsequently filed Quarterly Reports on Form 10-Q. In addition to the discussion below, our critical accounting policies are further described in the notes to our consolidated financial statements.
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Valuation of portfolio investments
We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our Board. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (a) are independent of us, (b) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (c) are able to transact for the asset, and (d) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).
Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker dealers or market makers.
Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued at fair value as determined in good faith by our Board. Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as determined in good faith by our Board using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our Board. Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may also be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security causes current market quotations not to reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently, causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid ask spread.
Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.
With respect to investments for which market quotations are not readily available, our Board undertakes a multi-step valuation process each quarter, as described below:
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When valuing all of our investments, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available under the circumstances. The availability of observable inputs can vary depending on the financial instrument and is affected by a variety of factors. To the extent the valuation is based on models or inputs that are less observable, the determination of fair value requires more judgment. As markets change, new types of investments are made, or pricing for certain investments becomes more or less observable, management, with oversight from our Board, may refine our valuation methodologies to best reflect the fair value of our investments appropriately.
As of September 30, 2026, our investment portfolio, valued at fair value in accordance with our Board-approved valuation policy, represented 86.9% of our total assets, as compared to 91.4% of our total assets as of December 31, 2025.
See Note 2.i “Significant Accounting Policies – Investment Valuation” and Note 4. “Investments” in the notes to the consolidated financial statements included in our most recent Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q for more information on our valuation process.
Financing Facility
On August 23, 2021, we, through Investcorp Credit Management BDC SPV, LLC (“SPV LLC”), our wholly-owned subsidiary, entered into a five-year, $115 million senior secured revolving credit facility (the “Capital One Revolving Financing”) with Capital One, N.A. (“Capital One”), which is secured by collateral consisting primarily of loans in our investment portfolio. On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million. On January 17, 2024, we amended the Capital One Revolving Financing to (i) extend the maturity date to January 17, 2029, (ii) increase the applicable interest spreads under the Capital One Revolving Financing and (iii) extend the Scheduled Revolving Period End Date (as defined in the Capital One Revolving Financing) to January 17, 2027. The Capital One Revolving Financing, which will expire on January 17, 2029 (the “Maturity Date”), features a three-year reinvestment period and a two-year amortization period.
Effective January 17, 2024, borrowings under the Capital One Revolving Financing generally bear interest at a rate per annum equal to Secured Overnight Financing Rate (“SOFR”) plus 3.10%. The default interest rate will be equal to the interest rate then in effect plus 2.00%. The Capital One Revolving Financing required the payment of an upfront fee of 1.125% ($1.3 million) of the available borrowings under the Capital One Revolving Financing at the closing, and requires the payment of an unused fee of (i) 0.75% annually for any undrawn amounts below 50% of the Capital One Revolving Financing, (ii) 0.50% annually for any undrawn amounts between 50% and 75% of the Capital One Revolving Financing, and (iii) 0.25% annually for any undrawn amounts above 75% of the Capital One Revolving Financing. Borrowings under the Capital One Revolving Financing are based on a borrowing base. The Capital One Revolving Financing generally requires payment of interest and fees on a quarterly basis. All outstanding principal is due on the Maturity Date. The Capital One Revolving Financing also requires mandatory prepayment of interest and principal upon certain events.
On November 19, 2024, we amended the Capital One Revolving Financing to provide for, among other things, a decrease of the applicable interest spreads under the Capital One Revolving Financing from SOFR plus 3.10% to SOFR plus 2.50%, and to make amendments to the concentration limits and other fees, and certain other amendments.
On May 6, 2026, the Company, through SPV LLC, entered into a sixth amendment (the “Sixth Amendment”) to the Capital One Revolving Financing. The Sixth Amendment provides for, among other things, a decrease of the facility size from $100 million to $50 million.
As of September 30, 2026 and December 31, 2025, there were $39.9 million and $58.9 million in borrowings outstanding under the Capital One Revolving Financing, respectively.
Notes Due 2026
On March 31, 2021, the Company closed the public offering of $65.0 million in aggregate principal amount of 4.875% notes due 2026 (the “2026 Notes”). The total net proceeds to the Company from the sale of the 2026 Notes, after deducting the underwriting discounts and commissions of approximately $1.7 million and estimated offering expenses of approximately $215,000, were approximately $63.1 million.
The 2026 Notes were due to mature on April 1, 2026 and bore interest at a rate of 4.875%. The 2026 Notes were the Company’s direct unsecured obligations and ranked pari passu, which means equal in right of payment, with all outstanding and future unsecured,
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unsubordinated indebtedness issued by the Company. Because the 2026 Notes were not secured by any of the Company’s assets, they were effectively subordinated to all of the Company’s existing and future secured unsubordinated indebtedness (or any indebtedness that is initially unsecured as to which the Company subsequently grants a security interest), to the extent of the value of the assets securing such indebtedness. The 2026 Notes were structurally subordinated to all existing and future indebtedness and other obligations of any of the Company’s subsidiaries and financing vehicles, including, without limitation, borrowings under the Capital One Revolving Financing. The 2026 Notes were obligations exclusively of the Company and not of any of the Company’s subsidiaries. Interest on the 2026 Notes was payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2021.
The 2026 Notes were fully repaid on March 30, 2026 using the net proceeds from the issuance of the Company's Floating Rate Senior Unsecured Notes due 2029, as described below.
On November 10, 2025, the Company entered into a letter of commitment with Investcorp Capital plc (“ICAP”), an Affiliate of the Adviser, to provide, or cause to be provided, capital to the Company in the event the Company was unable to repay any portion of the principal balance of the Company’s 4.875% Notes due 2026. Under the letter of commitment, ICAP was required to provide, or cause to be provided, a loan (“ICAP Loan”) to the Company in an amount up to the lesser of (i) the remaining, unredeemed, principal amount of the Notes outstanding on April 1, 2026 and (ii) $65,000,000. In exchange, the Company paid ICAP a fee in an amount equal to the sum of (i) the upfront fee of 0.50% of principal amount and (ii) an ongoing fee of 1.00% of principal amount per annum during the period from November 10, 2025 until April 1, 2026, pro-rated for any period of less than one year. On March 30, 2026, the Company issued $65.0 million in aggregate principal amount of Floating Rate Senior Unsecured Notes due 2029. The Company used the proceeds from that issuance to fully repay the 2026 Notes on March 30, 2026.
Notes Due 2029
On March 29, 2026, the Company and ICAP, acting in its capacity as “Agent”, entered into an indenture (the “2029 Notes Indenture”) pursuant to which, on March 30, 2026, the Company issued and sold $65.0 million in aggregate principal amount of its Floating Rate Senior Unsecured Notes due 2029 (the “2029 Notes”) to ICAP, acting in its capacity as “Purchaser” (the “Purchaser”). On June 10, 2026, ICAP transferred its holdings of the 2029 Notes to Investcorp BDC Holdings Limited.
The 2029 Notes mature on July 1, 2029, unless previously redeemed in accordance with their terms. The 2029 Notes bear interest at a floating rate equal to the 3-month Term SOFR plus 5.50% (9.5833% at September 30, 2026) per annum. Interest on the 2029 Notes is payable on the last business day of each calendar quarter, commencing June 30, 2026. Interest expense for the three months ended September 30, 2026 included $1.3 million of additional expense associated with the gross-up of interest payments for withholding taxes pursuant to the terms of the 2029 Notes, including amounts attributable to interest payments made in the prior quarter. The 2029 Notes are the Company’s direct unsecured obligations and rank pari passu with the Company’s existing and future unsecured, unsubordinated indebtedness.
The Company may redeem the 2029 Notes in whole or in part (1) on or prior to July 1, 2028, (a) if the net proceeds the Company receives from a debt financing or refinancing are used to directly or indirectly redeem the 2029 Notes, at a price equal to par plus an additional amount that would provide holders of the Notes with a minimum cash return of not less than 1.09x of the principal amount of the 2029 Notes (the “Minimum Return”), in which case the redemption price will equal the difference (but not less than zero) of the (i) Minimum Return less (ii) sum of all cash interest payments received by the holders of the 2029 Notes through the calculation date, or (b) if the redemption is not funded from the net proceeds from a debt financing or refinancing, at par plus any accrued and unpaid interest, and (2) after July 1, 2028, at par plus any accrued and unpaid interest. Holders of the 2029 Notes will not have the option to have the 2029 Notes repaid prior to maturity.
The 2029 Notes Indenture contains certain covenants, including covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC and Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions but giving effect to any no-action relief granted by the SEC to another business development company and upon which the Company may reasonably rely (or to the Company if the Company determines to seek such similar no-action or other relief). The 2029 Notes Indenture also contains covenants (i) restricting consolidations, mergers, asset transfer, equity and debt transactions, dispositions of portfolio investments having an aggregate fair value of 10% or more of the aggregate fair value of all portfolio investments (“Disposal Transactions”), change of control transactions, and the use of the Company’s and its subsidiaries’ unrestricted cash and cash equivalents to the redemption of the Notes if the Board determines that some or all of such unrestricted cash should be applied in repaying an amount of the Company’s or any of its subsidiaries’ indebtedness, in each case without the prior written consent of holders of greater than 50% in principal amount of the 2029 Notes (the “Required Holders”), and (ii) requiring the Company to consult with the Required Holders prior to commencing discussions or negotiations for any debt or equity transaction, Disposal Transaction, change of control transaction, or declaration or payment of dividends or other distributions. The 2029 Notes Indenture also contains a covenant that prohibits the Company and its subsidiaries from
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entering into any transaction or arrangement with any affiliate unless such transaction or arrangement is on arm’s length terms, is no less favorable to the Company than those that would be available from a non-affiliate in comparable circumstances and is approved by the Board (or any committee thereof) acting reasonably and in good faith.
These covenants are subject to important limitations and exceptions that are set forth in the 2029 Notes Indenture, including that the consent and consultation rights of the Required Holders will terminate upon the Purchaser or its affiliates ceasing to hold greater than 50% in aggregate principal amount of the outstanding 2029 Notes. The 2029 Notes Indenture also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, breach of covenant, change of control, including if the Company ceases to be managed by its investment adviser or another affiliate, certain cross-defaults under other indebtedness of the Company or its subsidiaries in excess of $25.0 million, certain events of bankruptcy or insolvency, and an event of default if the 2029 Notes have an asset coverage of less than 125% pursuant to Sections 18(a)(1)(c)(ii) and 61 of the 1940 Act as of the last business day of any calendar quarter.
Pursuant to an upfront fee agreement between the Company and the Purchaser, dated March 30, 2026 (the “Fee Letter”), on March 30, 2026, the Company paid a $650,000 cash fee to the Purchaser in connection with the issuance and sale of the 2029 Notes.
As of September 30, 2026, the carrying amount of the 2029 Notes was $63.8 million, aggregate principal balance of $65.0 million net with deferred debt issuance costs of $0.2 million and unamortized discount of $1.0 million. As of September 30, 2026, the fair value of the 2029 Notes was $64.5 million. The Company concluded that this was Level 3 fair value under Accounting Standards Codification Topic 820 — Fair Value Measurements and Disclosure.
Investments
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount we have available to invest as well as the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.
As a BDC, we are required to comply with certain regulatory requirements. For instance, as a BDC, we may not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Qualifying assets include investments in “eligible portfolio companies.” Under the relevant SEC rules, the term “eligible portfolio company” includes all private companies, companies whose securities are not listed on a national securities exchange, and certain public companies that have listed their securities on a national securities exchange and have a market capitalization of less than $250 million. In each case, the company must be organized in the United States. As of September 30, 2026, the Company did not hold any non-qualifying assets in its portfolio.
To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income we distribute to our stockholders.
Revenues
We generate revenues primarily in the form of interest on the debt we hold. We also generate revenue from royalty income, dividends on our equity interests and capital gains on the sale of warrants and other debt or equity interests that we acquire. Our investments in fixed income instruments generally have an expected maturity of three to five years, although we have no lower or upper constraint on maturity. Interest on our debt investments is generally payable quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock investments may defer payments of cash interest or dividends or payment-in-kind (“PIK”) interest. Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income.
Expenses
Our primary operating expenses include the payment of the Base Management Fee and, depending on our operating results, the Incentive Fee under the Advisory Agreement, as well as the payment of reimbursable expenses to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement, such as our allocable portion of overhead expenses, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. The Base Management Fee and Incentive Fee compensation under the Advisory
45
Agreement remunerates the Adviser for work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to:
Portfolio and Investment Activity
Portfolio composition
We invest primarily in middle-market companies in the form of standalone first and second lien loans, unitranche loans and mezzanine loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.
As of September 30, 2026, our investment portfolio of $132.7 million (at fair value) consisted of debt and equity investments in 31 portfolio companies, of which 85.56% were first lien investments, 0.12% were unsecured debt investments, and 14.32% were equities, warrants and other positions. At September 30, 2026, our average and largest portfolio company investment at fair value was $4.3 million and $11.6 million, respectively.
As of December 31, 2025, our investment portfolio of $172.7 million (at fair value) consisted of debt and equity investments in 37 portfolio companies, of which 80.76% were first lien investments and 19.24% were in equities, warrants and other positions. At December 31, 2025, our average and largest portfolio company investment at fair value was $4.7 million and $11.4 million, respectively.
As of September 30, 2026 and December 31, 2025, our average total yield of debt and income producing securities weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 8.77% and 10.34%, respectively. As of September 30, 2026 and December 31, 2025, our average total yield on the total portfolio weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 6.62% and 7.71%, respectively. The weighted average total yield was
46
computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot SOFR, as applicable, as of September 30, 2026, of all of our debt investments. The weighted average total yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before payment of all of our fees and expenses, including any sales load paid in connection with an offering of our securities. There can be no assurance that the weighted average total yield will remain at its current level.
We use Global Industry Classification Standard (“GICS”) codes to identify the industry groupings of our portfolio companies. At September 30, 2026 and December 31, 2025, respectively, the industry composition of our portfolio in accordance with the GICS codes at fair value, as a percentage of our total portfolio, was as follows:
|
|
Percentage of Total Portfolio at |
||
|
|
September 30, 2026 |
|
December 31, 2025 |
Commercial Services & Supplies |
|
12.16% |
|
7.89% |
Professional Services |
|
11.87% |
|
14.50% |
Diversified Consumer Services |
|
11.11% |
|
8.57% |
IT Services |
|
9.65% |
|
9.18% |
Containers & Packaging |
|
7.51% |
|
6.61% |
Specialty Retail |
|
7.43% |
|
6.68% |
Trading Companies & Distributors |
|
7.21% |
|
7.82% |
Food Products |
|
5.57% |
|
5.87% |
Insurance |
|
5.32% |
|
8.87% |
Household Durables |
|
4.70% |
|
3.53% |
Interactive Media & Services |
|
4.19% |
|
3.15% |
Consumer Staples Distribution & Retail |
|
3.49% |
|
2.68% |
Software |
|
3.17% |
|
2.57% |
Entertainment |
|
2.84% |
|
4.66% |
Construction & Engineering |
|
2.44% |
|
2.23% |
Automobile Components |
|
1.11% |
|
1.05% |
Electronic Equipment, Instruments & Components |
|
0.23% |
|
0.09% |
Health Care Providers & Services |
|
—% |
|
4.05% |
Total |
|
100.00% |
|
100.00% |
During the nine months ended September 30, 2026, we made investments in two existing portfolio companies, which totaled approximately $2.4 million. We made investments in four existing portfolio companies, to which we were previously contractually committed to provide financial support through the terms of the revolvers and delayed draw term loans, which totaled $1.7 million. Of these investments, 100.00% consisted of first lien investments.
During the nine months ended September 30, 2025, we made investments in two new portfolio companies and seven existing portfolio companies. Investments in new and existing portfolio companies, to which we were not previously contractually committed to provide financial support, totaled approximately $24.1 million. Of these investments, 97.10% consisted of first lien investments and 2.90% were in equity, warrants, and other investments.
At September 30, 2026, 97.3% of our debt investments bore interest based on floating rates based on indices such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.7% bore interest at fixed rates. At December 31, 2025, 98.0% of our debt investments bore interest based on floating rates based on indices such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.0% bore interest at fixed rates.
Our investment portfolio may contain loans that are in the form of lines of credit or revolving credit facilities, which require us to provide funding when requested by portfolio companies in accordance with the terms of the underlying loan agreements. As of September 30, 2026, we had eight investments with aggregate unfunded commitments of $3.4 million, and as of December 31, 2025, we had nine investments with aggregate unfunded commitments of $3.7 million. As of September 30, 2026, we had sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
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Asset Quality
In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale. The following is a description of the conditions associated with each investment rating:
Investment Rating 1 |
Investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment. |
|
|
Investment Rating 2 |
Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. Generally, all new loans are initially rated 2. |
|
|
Investment Rating 3 |
Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with their financial covenants. |
|
|
Investment Rating 4 |
Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often in workout. Investments with a rating of 4 will be those for which some loss of return but no loss of principal is expected. |
|
|
Investment Rating 5 |
Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout. Investments with a rating of 5 will be those for which some loss of return and principal is expected. |
If the Adviser determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Adviser will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. While the investment rating system identifies the relative risk for each investment, the rating alone does not dictate the scope and/or frequency of any monitoring that will be performed. The frequency of the Adviser’s monitoring of an investment will be determined by a number of factors, including, but not limited to, the trends in the financial performance of the portfolio company, the investment structure and the type of collateral securing the investment.
The following table shows the investment rankings of the investments in our portfolio, according to the Adviser’s investment rating system:
|
|
As of September 30, 2026 |
|
December 31, 2025 |
||||||||
Investment Rating |
|
Fair Value |
|
% of |
|
Number of |
|
Fair Value |
|
% of |
|
Number of |
1 |
|
$11,424,700 |
|
8.6% |
|
4 |
|
$4,323,793 |
|
2.5% |
|
3 |
2 |
|
86,450,221 |
|
65.1% |
|
27 |
|
111,975,828 |
|
64.9% |
|
36 |
3 |
|
20,339,675 |
|
15.4% |
|
8 |
|
43,224,192 |
|
25.0% |
|
12 |
4 |
|
14,343,629 |
|
10.8% |
|
9 |
|
13,125,458 |
|
7.6% |
|
8 |
5 |
|
171,374 |
|
0.1% |
|
11 |
|
9,591 |
|
0.0% |
|
9 |
Total |
|
$132,729,599 |
|
100.0% |
|
59 |
|
$172,658,862 |
|
100.0% |
|
68 |
Results of Operations
Comparison of the three months ended September 30, 2026 and September 30, 2025
Investment income
Investment income, attributable primarily to interest and fees on our debt investments, for the three months ended September 30, 2026 decreased to $3.1 million from $4.4 million for the three months ended September 30, 2025 primarily due to a decrease in interest income due to lower average assets and lower index and interest rates in 2026 compared to 2025 and Easy Way Leisure Corporation Term Loan changing to non-accrual status in the fourth quarter of 2025.
Expenses, net of waivers
Expenses, net of waivers for the three months ended September 30, 2026 increased to $5.0 million compared to $3.8 million for the three months ended September 30, 2025 primarily due to an increase in interest expense due to a higher interest rate on the 2029 Notes held during the three months ended September 30, 2026 as well as additional interest expense associated with the gross-up for withholding taxes offset by the waiver of base management fees and the waiver of income-based incentive fees.
Net investment income (loss) before taxes
Net investment income (loss) before taxes decreased to ($1.8) million for the three months ended September 30, 2026 from $0.6 million for the three months ended September 30, 2025 primarily due to a decrease in interest income due to lower average assets and lower index and interest rates in 2026 compared to 2025 and Easy Way Leisure Corporation Term Loan changing to non-accrual status in the
48
fourth quarter of 2025, and a decrease in PIK dividend income related to Fusion Connect, Inc. - Series A Preferred, which is on non-accrual status in 2026 compared to 2025, partially offset by an increase in the waiver of base management fees and waiver of income-based incentive fees.
Income tax expense (benefit), including excise tax expense
Income tax expense (benefit), including excise tax expense decreased to $840 for the three months ended September 30, 2026 compared to $0.6 million for the three months ended September 30, 2025 primarily due to the allocation of 851(i) related tax expense for the three months ended September 30, 2025, and the reduction in excise tax for the three months ended September 30, 2026 due to reduced distributable earnings.
Net realized gain or loss
There was no net realized gain or loss on investments for the three months ended September 30, 2026.
There was no net realized gain or loss on investments for the three months ended September 30, 2025.
Net change in unrealized appreciation (depreciation) on investments
We recorded a net change in unrealized depreciation of $2.9 million for the three months ended September 30, 2026 primarily due to changes in marks for ArborWorks, LLC A-1 - Preferred Units, Bioplan USA, Inc. - Common Stock, Congruex Group LLC Term Loan B, Crafty Apes LLC - Common Stock, Easy Way Leisure Corporation Term Loan, Fusion Connect, Inc. - Series A Preferred, Klein Hersh, LLC Term Loan - Last Out, and Max US Bidco Inc. Term Loan B.
We recorded a net change in unrealized depreciation of $1.8 million for the three months ended September 30, 2025, primarily due to changes in marks for Advanced Solutions International - Preferred Stock, ArborWorks, LLC A-1 - Preferred Units, CareerBuilder, LLC Term Loan B3, Fusion Connect, Inc. - Series A Preferred, LABL, Inc. Term Loan B, and investments in Techniplas Foreign Holdco LP.
Comparison of the nine months ended September 30, 2026 and September 30, 2025
Investment income
Investment income, attributable primarily to interest and fees on our debt investments, for the nine months ended September 30, 2026 decreased to $9.8 million from $13.3 million for the nine months ended September 30, 2025 primarily due to a decrease in interest income due to lower average assets and lower index and interest rates in 2026 compared to 2025 and Easy Way Leisure Corporation Term Loan changing to non-accrual status in the fourth quarter of 2025, and a decrease in PIK dividend income related to Fusion Connect, Inc. - Series A Preferred, which is on non-accrual status in 2026 compared to 2025.
Expenses, net of waivers
Expenses, net of waivers for the nine months ended September 30, 2026 increased to $11.8 million compared to $11.2 million for the nine months ended September 30, 2025 primarily due to an increase in interest expense due to a higher interest rate on the 2029 Notes held during the nine months ended September 30, 2026 as well as additional interest expense associated with the gross-up for withholding taxes offset by the waiver of base management fees and the waiver of income-based incentive fees.
Net investment income (loss) before taxes
Net investment income (loss) before taxes decreased to ($2.0) million for the nine months ended September 30, 2026 from $2.1 million for the nine months ended September 30, 2025 primarily due to a decrease in interest income due to lower average assets and lower index and interest rates in 2026 compared to 2025 and Easy Way Leisure Corporation Term Loan changing to non-accrual status in the fourth quarter of 2025, and a decrease in PIK dividend income related to Fusion Connect, Inc. - Series A Preferred, which is on non-accrual status in 2026 compared to 2025, partially offset by an increase in the waiver of base management fees and the waiver of income-based incentive fees.
Income tax expense (benefit), including excise tax expense
Income tax expense (benefit), including excise tax expense decreased to $840 for the nine months ended September 30, 2026 compared to $1.9 million for the nine months ended September 30, 2025 primarily due to the allocation of 851(i) related tax expense for the nine
49
months ended September 30, 2025, and the reduction in excise tax for the nine months ended September 30, 2026 due to reduced distributable earnings.
Net realized gain or loss
There was a net realized loss on investments of $2.1 million for the nine months ended September 30, 2026 due to the realization of losses associated with the sale of FWS Parent Holding, LLC - Equity Interest, Likewize Corporation Term Loan, and the Term Loan and Revolver positions held in Work Genius Holdings, Inc. and the equity positions held in Work Genius, LLC, offset by the realization of gains associated with the sale of Asurion, LLC Term Loan.
There was a net realized gain on investments of $0.6 million for the nine months ended September 30, 2025 primarily due to the realization of a gain associated with the sale of our investment in Investcorp Transformer Aggregator LP - Equity Interest, partially offset by the realization of losses associated with the restructuring of our investments in American Nuts Holdings, LLC and a write off of our investment in American Teleconferencing Services, Ltd.
Net change in unrealized appreciation (depreciation) on investments
We recorded a net change in unrealized depreciation of $10.4 million for the nine months ended September 30, 2026 primarily due to changes in marks for American Nuts Holdings, LLC Class A Units, AppLogic Networks Parent LLC - Equity Interest, ArborWorks, LLC A-1 - Preferred Units, Bioplan USA, Inc. - Common Stock, Congruex Group LLC Term Loan B, Crafty Apes LLC - Common Stock, Discovery Behavioral Health, LLC - Preferred Equity, Easy Way Leisure Corporation Term Loan, Fusion Connect, Inc. - Series A Preferred, Klein Hersh, LLC Term Loan - Last Out, Max US Bidco Inc. Term Loan B, Work Genius, LLC - Equity Interest, Work Genius, LLC - A-1 Equity Units, and Work Genius Holdings, Inc. Term Loan.
We recorded a net change in unrealized depreciation of $1.8 million for the nine months ended September 30, 2025, primarily due to changes in marks for Advanced Solutions International - Preferred Stock, American Nuts Holdings, LLC Class A Units, ArborWorks, LLC A-1 - Preferred Units, Bioplan USA, Inc. - Common Stock, CareerBuilder, LLC Term Loan B3, Crafty Apes LLC - Common Stock, Fusion Connect, Inc. - Series A Preferred, Klein Hersh, LLC Term Loan - Last Out, LABL, Inc. Term Loan B, and investments in Techniplas Foreign Holdco LP, the realization of previously unrealized gains resulting from the sale of our investment in Investcorp Transformer Aggregator LP - Equity Interest, the realization of previously unrealized losses resulting from the restructuring of our investments in American Nuts Holdings, LLC, and a write off of our investment in American Teleconferencing Services, Ltd.
Net Asset Value to Adjusted Net Asset Value
In the quarter ended June 30, 2026, the Company recorded a Tax Liability under Section 851(i) associated with the tax periods ending December 31, 2024 and December 31, 2025 totaling $2.0 million, which was partially offset by a related reduction in incentive fee payable of $0.1 million. Also in the quarter ended June 30, 2026, the Adviser waived $0.6 million of management fees earned and agreed to waive $0.2 million of previously earned incentive fees as well as $1.1 million of future management and incentive fees (the "Waiver of Future Management and Incentive Fees") to the extent such fees are earned.
In the quarter ended September 30, 2026, the Adviser waived the previously earned incentive fees of $0.2 million, as announced, as well as an additional $0.6 million of management fees earned in the quarter. The Adviser plans to waive future management and incentive fees up to the remaining $0.6 million to the extent earned. The Waiver of Future Management and Incentive Fees are not reflected in the Company's reported net asset value ("NAV") as of September 30, 2026. If the Company were able to recognize the Waiver of Future Management and Incentive Fees as of September 30, 2026, NAV would have increased by $0.6 million.
The following table shows a Reconciliation of Net Asset Value to Adjusted Net Asset Value:
Net Asset Value at September 30, 2026 |
|
$43,648,682 |
|
|
|
Waiver of Future Management and Incentive Fees |
|
585,469 |
|
|
|
Adjusted Net Asset Value at September 30, 2026 |
|
$44,234,151 |
|
|
|
Adjusted Net Asset Value per Share at September 30, 2026 |
|
$3.06 |
Adjusted NAV represents the Company’s reported NAV, as determined in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), plus the impact of the Waiver of Future Management and Incentive Fees, which are not reflected in the Company’s reported NAV as of September 30, 2026 as they relate to fees earned subsequent to September 30, 2026. The Company believes presenting Adjusted NAV is a useful and appropriate supplemental disclosure for analyzing the Company’s financial performance due to the unique circumstances giving rise to the Section 851(i) Tax Liability. However, this measure is a non-U.S. GAAP
50
measure and should not be considered as a replacement for NAV or other measures presented in accordance with U.S. GAAP. Instead, this measure should be reviewed only in connection with such U.S. GAAP measures in analyzing the Company’s financial performance. A reconciliation of NAV, determined in accordance with U.S. GAAP, to Adjusted NAV, which includes the impact of the Waiver of Future Management and Incentive Fees, is detailed in the table above.
Liquidity and Capital Resources
Our primary liquidity needs include interest and principal repayments under the Capital One Revolving Financing, interest payments on the 2029 Notes, our unfunded loan commitments (if any), investments in portfolio companies, dividend distributions to our stockholders and operating expenses. We believe that our current cash on hand and our anticipated cash flows from operations, including from contractual monthly portfolio company payments and prepayments, will be adequate to meet our cash needs for our daily operations. This “Liquidity and Capital Resources” section should be read in conjunction with “Market Developments” above and the risk factors referenced in our most recent Annual Report on Form 10-K.
Cash flows
For the nine months ended September 30, 2026, our cash and cash equivalents and restricted cash and cash equivalents balance increased by $3.8 million. During that period, $23.0 million in net cash was provided by operating activities, primarily from proceeds from sales and repayments of investments in portfolio companies of $33.8 million and a net change in unrealized depreciation on investments of $10.4 million, offset by purchases of investments in portfolio companies of $4.1 million and a net decrease in net assets resulting from operations of $14.5 million. During that same period, $19.3 million in net cash was used in financing activities, primarily for the repayment of $19.0 million under the Capital One Revolving Financing and a full repayment of $65.0 million for the 2026 Notes using the proceeds of $65.0 million from the issuance of the 2029 Notes.
Capital resources
As of September 30, 2026, we had $9.5 million of cash and cash equivalents as well as $9.2 million in restricted cash and cash equivalents and $10.1 million of capacity under the Capital One Revolving Financing. As of September 30, 2026, we had $104.9 million of senior securities outstanding at par value and our asset coverage ratio based on par value was 141.6%. We intend to generate additional cash primarily from cash flows from operations, including income earned from investments in our portfolio companies and, to a lesser extent, from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less.
As discussed below in further detail, we have elected to be treated as a RIC under the Code. To maintain our RIC status, we generally must distribute substantially all of our net taxable income to stockholders in the form of dividends. Our net taxable income does not necessarily equal our net income as calculated in accordance with U.S. GAAP.
Asset Coverage Requirements
On May 2, 2018, our Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, effective May 2, 2019, our applicable minimum asset coverage ratio under the 1940 Act was decreased to 150% from 200%. Thus, we are permitted under the 1940 Act, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance. As of September 30, 2026, our asset coverage for borrowed amounts was 141.6%.
Regulated Investment Company Status and Distributions
We have elected to be treated as a RIC under Subchapter M of the Code. If we continue to qualify as a RIC for a taxable year, we will not be subject to corporate-level U.S. federal income tax on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized appreciation or depreciation until realized. Dividends declared and paid by us in a year may differ from taxable income for that year as such dividends may include the distribution of current year taxable income or the distribution of prior year taxable income carried forward into and distributed in the current year. Distributions also may include returns of capital.
To continue to qualify for RIC tax treatment, we must, among other things, distribute to our stockholders, with respect to each taxable year, at least 90% of our investment company net taxable income (i.e., our net ordinary income and our realized net short-term capital
51
gains in excess of realized net long-term capital losses, if any). We will also be subject to a federal excise tax, based on distributive requirements of our taxable income on a calendar year basis.
We intend to distribute to our stockholders between 90% and 100% of our annual taxable income (which includes our taxable interest and fee income). However, the covenants contained in the Capital One Revolving Financing and any other borrowing or financing arrangement we or our subsidiaries may have may prohibit us from making distributions to our stockholders, and, as a result, could hinder our ability to satisfy the distribution requirement. In addition, we may retain for investment some or all of our net taxable capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. Our stockholders also may be eligible to claim tax credits (or, in certain circumstances, tax refunds) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. To the extent our taxable earnings for a fiscal taxable year fall below the total amount of our dividends for that fiscal year, a portion of those dividend distributions may be deemed a return of capital to our stockholders.
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 test for borrowings applicable to us as a BDC under the 1940 Act and due to provisions in the agreements governing our borrowing or financial arrangements. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.
In accordance with certain applicable U.S. Department of the Treasury (“Treasury”) Regulations and a Revenue Procedure issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution. If too many stockholders elect to receive cash, each stockholder electing to receive cash must receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. We have no current intention of paying dividends in shares of our stock in accordance with these Treasury Regulations or private letter rulings.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of September 30, 2026, our off-balance sheet arrangements consisted of $3.4 million in unfunded commitments to six of our portfolio companies. As of December 31, 2025, our off-balance sheet arrangements consisted of $3.7 million in unfunded commitments to six of our portfolio companies. We maintain sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
Recent Developments
The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued.
Subsequent to September 30, 2026 and through November 12, 2026, the Company received approximately $11.5 million from the repayment of five positions, including two full repayments. As of November 12, 2026, the Company had investments in 29 portfolio companies.
On October 13, 2026, the Company paid in full the additional tax (i.e., the Section 851(i) Tax Liability) based on the excess amount of nonqualifying income for the taxable years ended December 31, 2024 and December 31, 2025 in the amounts of approximately $1.2 million and $2.1 million, respectively.
On November 4, 2026, the Company repaid $10.0 million of outstanding borrowings under its Capital One Revolving Financing.
Merger Agreement with BCP Investment Corporation
On November 11, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BCP Investment Corporation, a Delaware corporation (“BCIC”), and Aria Acquisition Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of BCIC (“Acquisition Sub”). The Merger Agreement provides that (i) Acquisition Sub will merge with and into the Company (the “First Merger”), with the Company continuing as the surviving company and as a wholly-owned subsidiary of BCIC (the “Surviving Company”), and (ii) immediately after the effectiveness of the First Merger, the Surviving Company will merge with and into BCIC (the “Second Merger” and, together with the First Merger, the “Mergers”), with BCIC continuing as the surviving corporation. The Company’s board of directors, on the recommendation of its special committee, and the board of directors of BCIC, have each approved
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the Merger Agreement and the transactions contemplated thereby, and have declared the Merger Agreement and the transactions contemplated thereby advisable.
At the date and time when the First Merger becomes effective (the “Effective Time”), each share of the Company’s common stock issued and outstanding immediately prior to the Effective Time (excluding shares held by subsidiaries of the Company or held, directly or indirectly, by BCIC or Acquisition Sub (“Canceled Shares”)) shall be converted into the right to receive a portion of the Aggregate Merger Consideration (as defined below). The “Aggregate Merger Consideration” means the sum of (A) a number of shares of common stock, par value $0.01 per share, of BCIC (“BCIC Common Stock”) equal to the number of shares of the Company’s common stock issued and outstanding as of the second business day immediately preceding the business day on which the closing is expected to occur (the “Determination Date”) (excluding any Canceled Shares), multiplied by the Exchange Ratio (as defined below); provided, that in no event will the aggregate number of shares of BCIC Common Stock to be issued pursuant to the Merger Agreement (the “Aggregate Share Consideration”) exceed 19.99% of the number of shares of BCIC Common Stock outstanding as of November 9, 2026, and (B) if the Aggregate Share Consideration Value (as defined below) is less than ninety percent (90%) of the ICMB Closing Net Asset Value (as defined below), an amount in cash, without interest, to be paid by BCIC equal to (a) ninety percent (90%) of the ICMB Closing Net Asset Value minus (b) the Aggregate Share Consideration Value (such cash amount, the “BCIC Aggregate Cash Consideration”); provided, that in no event shall the BCIC Aggregate Cash Consideration exceed sixty percent (60%) of the Aggregate Merger Consideration. In the event that, as a result of the foregoing stock and cash limitations, the Aggregate Merger Consideration would be less than ninety percent (90%) of the ICMB Closing Net Asset Value, BCIC and the Company shall negotiate in good faith to adjust the Exchange Ratio and/or the BCIC Aggregate Cash Consideration so as to preserve the intended economic terms and the intended tax treatment under the Merger Agreement.
Promptly following 5:00 p.m. Eastern Time on the Determination Date, each of BCIC and the Company shall deliver to the other party a calculation of its estimated net asset value, as adjusted pursuant to the terms of the Merger Agreement, as of 5:00 p.m. Eastern Time on the Determination Date, calculated in good faith (the total net asset value of BCIC as of the Determination Date, the “BCIC Closing Net Asset Value,” and the total net asset value of the Company as of the Determination Date, the “ICMB Closing Net Asset Value”). Based on such calculations, the parties will calculate the “BCIC Per Share NAV,” which will equal the BCIC Closing Net Asset Value divided by the number of shares of BCIC Common Stock issued and outstanding as of the Determination Date, and the “ICMB Per Share NAV,” which will equal ninety percent (90%) of the quotient of the ICMB Closing Net Asset Value divided by the number of shares of the Company’s common stock issued and outstanding as of the Determination Date (excluding any Canceled Shares). The “Exchange Ratio” will be equal to the quotient (rounded to four decimal places) of (i) the ICMB Per Share NAV divided by (ii) the BCIC Per Share NAV. The “Aggregate Share Consideration Value” shall refer to (a) the BCIC Per Share NAV multiplied by (b) the Aggregate Share Consideration.
A portion of the Aggregate Merger Consideration, having an aggregate value of $500,000 (the “Holdback Amount”), will be held-back from payment to the Company’s stockholders in connection with the consummation of the First Merger and instead be deposited by BCIC in a separate fund maintained by a nationally recognized financial institution (the “Holdback Fund”). The Holdback Amount will be satisfied (i) first, from the BCIC Aggregate Cash Consideration, and (ii) second, solely to the extent the BCIC Aggregate Cash Consideration is less than the Holdback Amount, from shares of BCIC Common Stock (valued in accordance with the average of the volume-weighted average price per share of BCIC Common Stock on NASDAQ on each of the five (5) consecutive trading days ending with the third (3rd) complete trading day immediately prior to the effective date of the First Merger), with the portion of the BCIC Aggregate Cash Consideration and, if applicable, the Aggregate Share Consideration, payable in respect of each share of the Company’s common stock issued and outstanding immediately prior to the Effective Time to be reduced pro rata accordingly. The Holdback Fund shall be held solely to satisfy any taxes, interest, penalties, and related costs and expenses of the Company, BCIC or their respective subsidiaries arising out of certain tax matters pertaining to the Company with respect to periods prior to the First Merger (collectively, “Specified Tax Liabilities”). On or promptly after October 15, 2027, the balance of the Holdback Amount, net of amounts retained by BCIC to satisfy Specified Tax Liabilities, shall be released to holders of shares of the Company’s common stock issued and outstanding immediately prior to the Effective Time.
The Merger Agreement contains customary representations and warranties of the Company, BCIC and Acquisition Sub. Additionally, the Merger Agreement contains customary pre-closing covenants, including covenants requiring the Company and BCIC (i) to use reasonable best efforts to cause the consummation of the transactions contemplated by the Merger Agreement, (ii) to conduct its business in the ordinary course, and (iii) to refrain from taking certain actions prior to the consummation of the Mergers without the other party’s consent (which consent shall not be unreasonably withheld, delayed or conditioned), subject to the exceptions set forth in the Merger Agreement.
The consummation of the Mergers is subject to the satisfaction or (to the extent permitted by law) waiver of certain customary closing conditions, including obtaining approval by the Company’s stockholders and the delivery of customary instruments providing for the payoff of the Company’s outstanding indebtedness. The obligation of each party to consummate the Mergers is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party
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having performed in all material respects its obligations under the Merger Agreement. The Merger Agreement contains customary termination rights.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a change in market interest rates will not have a material adverse effect on our net investment income.
Generally, we believe higher yielding assets such as those in our investment portfolio do not necessarily follow a linear interest rate relationship and are less sensitive in price-to-interest rate changes than many other debt investments. Our investments in fixed-rate assets are generally exposed to changes in value due to interest rate fluctuations, and our floating-rate assets are generally exposed to cash-flow variability from fluctuation in rates. At September 30, 2026, 97.3% of our debt investments bore interest based on floating rates, such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to three months.
Consequently, our net interest income (interest income less interest expense) is exposed to risks related to interest-rate fluctuations. Variable-rate instruments subject to a floor generally reset periodically to the applicable floor and, in the case of investments in our portfolio, quarterly to a floor based on SOFR, only if the index is below the floor. As of September 30, 2026, 100.0% of our floating-rate portfolio was subject to interest-rate floors set below the current applicable rate or have no floor. Under these loans, 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 addition, our interest expense will be affected by changes in the published interest rates in connection with the Capital One Revolving Financing to the extent it goes above the floor and our 2029 Notes, which were issued on March 30, 2026; however, our 2026 Notes, which were repaid on March 30, 2026, bore interest at a fixed rate. As of September 30, 2026, our floating rate borrowings totaled $104.9 million in principal amount, which represented 100.0% of our outstanding debt.
Based on our investment portfolio as of September 30, 2026, with certain interest rate floors and our financing arrangements at September 30, 2026, a 1.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 2.18% or (0.83)%, respectively, and a 2.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 4.36% or (1.53)%, respectively.
Although management believes that this analysis is indicative of our existing sensitivity as of September 30, 2026 to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations or net income. It also does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loans or borrowings. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis included herein.
Because it is our intention to hold loans to maturity, the fluctuating relative value of these loans that may occur due to changes in interest rates may have an impact on unrealized gains and losses during quarterly reporting periods. Based on our assessment of the interest rate risk, as of September 30, 2026, we had no hedging transactions in place as we deemed the risk acceptable, and we did not believe it was necessary to mitigate this risk at that time.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of September 30, 2026, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the material weaknesses relating to compliance with the RIC qualifying income requirements and withholding tax obligations on interest payments under the 2029 Notes, as described herein.
After giving full consideration to the material weaknesses described herein, evaluating their effects on the financial statements, and reflecting the related adjustments, management believes that the condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, the Company’s financial condition, results of operations, and cash flows for the periods and dates presented.
Previously Disclosed Material Weakness Relating to RIC Qualifying Income
As previously disclosed in the Company’s Form 10-Q for the quarter ended June 30, 2026 (the “Q2 2026 Form 10-Q”), management identified a material weakness in internal control over financial reporting relating to the design and operation of controls to identify, evaluate and monitor compliance with the qualifying income requirements applicable to a regulated investment company (“RIC”), such
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as the Company, under Section 851(b)(2) of the Internal Revenue Code. Subsequent to June 30, 2026, management has taken a number of steps to address the material weakness, including (i) enhancing risk assessment processes and related process-level controls relating to RIC qualifying income requirements, (ii) forming a domestic taxable subsidiary to serve as a tax blocker corporation for investments that may generate non-qualifying income for RIC qualification purposes and (iii) formulating a proposed written accounting policy that would establish procedures for the use of tax blocker corporations for equity investments in entities treated as pass-through entities for tax purposes. Management is continuing to evaluate these actions and other measures to address this material weakness.
Material Weakness Relating to Withholding Tax on the 2029 Notes
The Company did not design and maintain effective controls to identify and evaluate its withholding tax obligations with respect to interest payments on the 2029 Notes which were triggered as a result of the non-US noteholder’s concurrent ownership of more than a certain percentage of the shares of the Company’s common stock. As a result, the Company failed to remit applicable taxes on interest payments made to the holder of the 2029 Notes or to include the required gross up interest that the indenture required as a result of the withholding. This control deficiency created a reasonable possibility that a material misstatement of the Company’s consolidated financial statements, including related tax liabilities and expenses, would not be prevented or detected on a timely basis. Accordingly, management concluded that this deficiency constituted a material weakness in the Company’s internal control over financial reporting.
Although management discovered and corrected for the error for the quarter ended September 30, 2026, the control deficiency resulted in an immaterial misstatement in our condensed consolidated financial statements as of and for the three months ended June 30, 2026.
Remediation Plan for the Withholding Tax Material Weakness
Management is committed to taking actions to remediate the material weakness relating to the Company’s withholding tax obligations on interest payments under the 2029 Notes. The planned remediation measures are expected to include designing and implementing controls to identify and evaluate applicable withholding tax requirements that may arise in unique situations, including concurrent ownership of more than a certain percentage of the shares of the Company’s common stock by non-US noteholders and lenders, with assistance from external tax advisers as appropriate. Management is evaluating the scope and timing of these remediation measures.
Changes in Internal Control Over Financial Reporting
Other than as noted above, management did not identify any change in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
Neither we, the Adviser, nor our subsidiaries, nor any of our respective property, are currently subject to any material legal proceedings, other than ordinary routine litigation incidental to our businesses. We, the Adviser, and our subsidiaries may from time to time, however, be involved in litigation arising out of our operations in the normal course of business or otherwise, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these matters will materially affect our financial condition or results of operations. There can be no assurance whether any current or future legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.
Item 1A. Risk Factors
You should carefully consider the risks referenced below and all other information contained in this Quarterly Report on Form 10-Q, including our interim financial statements and the related notes thereto, before making a decision to purchase our securities. Any such risks and uncertainties are not the only ones facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition and/or operating results, as well as the market price of our securities.
There have been no material changes during the nine months ended September 30, 2026 to the risk factors previously disclosed in our Annual Report on Form 10-K for the Annual Period ended December 31, 2025 (filed with the SEC on March 30, 2026), except as set forth below. If any such changes or risks actually occur, our business, financial condition or results of operations could be materially adversely affected. If that happens, the value of our securities could decline, and you may lose all or part of your investment.
Risks Related to U.S. Federal Income Tax
To maintain our qualification as a RIC under Subchapter M of the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The source-of-income requirement is satisfied if we derive at least 90% of our income for each taxable year from dividends, interest, gains from the sale of stock or securities or similar sources. We determined that we failed to satisfy this requirement for our short taxable year ended December 31, 2024 and for our taxable year ended December 31, 2025, as a result of gross income allocated to us by Arborworks Acquisition, LLC, an underlying portfolio investment, that did not constitute qualifying income under section 851(b)(2) of the Code. We believe that we are eligible to rely on the cure provisions under section 851(i) of the Code, which permit a RIC to cure a source-of-income failure by disclosing the failure to the IRS and paying an additional tax based on the amount of nonqualifying income. We have submitted a closing agreement request to the IRS seeking confirmation that, having paid the Section 851(i) Tax Liability, we will be treated as having satisfied the source-of-income requirement for the affected taxable years and that our failure to satisfy that requirement did not disqualify us from treatment as a RIC for those affected taxable years. On October 13, 2026, we filed an amended U.S. federal income tax return for our taxable year ended December 31, 2024 and a U.S. federal income tax return for our taxable year ended December 31, 2025. In addition, on October 13, 2026, we paid in full the additional tax (i.e., the Section 851(i) Tax Liability) based on the excess amount of nonqualifying income for our taxable years ended December 31, 2024 and December 31, 2025 in the amounts of approximately $1.2 million and $2.1 million, respectively. There can be no assurance that the IRS will grant the requested closing agreement or agree that our failure was due to reasonable cause and not willful neglect. If the IRS does not grant relief under section 851(i) of the Code as described above, we would fail to qualify as a RIC for the affected taxable years and would become subject to entity-level U.S. federal income tax (and any applicable state and local income taxes) on our taxable income for those years, which could substantially reduce our net assets and the amount available for distribution to our stockholders.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
During the three months ended September 30, 2026, we did not issue shares of common stock under our dividend reinvestment plan. Issuances under our dividend reinvestment plan are not subject to the registration requirements under the Securities Act. No cash payments were made for shares of common stock issued under our dividend reinvestment plan during the three months ended September 30, 2026.
Issuer Purchases of Equity Securities
None.
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Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended September 30, 2026, none of our directors or officers
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Item 6. Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:
3.1 |
Articles of Amendment and Restatement(1) |
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3.1.1 |
Articles of Amendment(2) |
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3.2 |
Bylaws(3) |
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31.1 |
Chief Executive Officer Certification Pursuant to Exchange Act Rule 13a-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
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31.2 |
Chief Financial Officer Certification Pursuant to Exchange Act Rule 13a-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
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32.1 |
Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
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32.2 |
Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** |
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101.INS |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
** The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q, are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 12, 2026
INVESTCORP CREDIT MANAGEMENT BDC, INC. |
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By: |
/s/ Suhail A. Shaikh |
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Suhail A. Shaikh |
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Chief Executive Officer |
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(Principal Executive Officer) |
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By: |
/s/ Robert Andrew Muns |
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Robert Andrew Muns |
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Chief Financial Officer |
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(Principal Financial Officer) |
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