Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.23.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2023
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

11. Commitments and Contingencies

The Company’s commitments and contingencies consist primarily of unfunded commitments to extend credit in the form of loans to the Company’s portfolio companies. As of March 31, 2023, a portion of these unfunded contractual commitments are dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements with its portfolio companies generally contain customary lending provisions which allow the Company relief from funding obligations for previously made unfunded commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook for the portfolio company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments includes only those which are available at the request of the portfolio company and unencumbered by future or unachieved milestones.

As of March 31, 2023, and December 31, 2022, the Company had approximately $562.1 million and $628.9 million, respectively, of available unfunded commitments, including undrawn revolving facilities, which were available at the request of the portfolio company and unencumbered by future or unachieved milestones. In order to draw a portion of the Company's available unfunded commitments, a portfolio company must submit to the Company a formal funding request that complies with the applicable advance notice and other operational requirements. The amounts disclosed exclude unfunded commitments (i) for which, with respect to a portfolio company's agreement, a milestone was achieved after the last day on which the portfolio company could have requested a drawdown funding to be completed within the reporting period; and (ii) related to the portion of portfolio company investments assigned to or directly committed by the Adviser Funds as described in “Note -12 Related Party Transactions”. The fair value of the Company’s unfunded commitments is considered to be immaterial as the yield determined at the time of underwriting is expected to be materially consistent with the yield upon funding, given that interest rates are generally pegged to market indices and given the existence of milestones, conditions and/or obligations imbedded in the borrowing agreements.

As of March 31, 2023, and December 31, 2022, the Company’s unfunded contractual commitments available at the request of the portfolio company, including undrawn revolving facilities, and unencumbered by milestones were as follows:

(in thousands)

 

Unfunded Commitments (1) as of

 

Portfolio Company

 

March 31, 2023

 

 

December 31, 2022

 

Debt Investments:

 

 

 

 

 

 

Phathom Pharmaceuticals, Inc.

 

$

66,500

 

 

$

66,500

 

Thumbtack, Inc.

 

 

40,000

 

 

 

40,000

 

Automation Anywhere, Inc.

 

 

29,400

 

 

 

29,400

 

HilleVax, Inc.

 

 

28,000

 

 

 

28,000

 

Oak Street Health, Inc.

 

 

22,500

 

 

 

33,750

 

Skydio, Inc.

 

 

22,500

 

 

 

22,500

 

Axsome Therapeutics, Inc.

 

 

21,750

 

 

 

21,000

 

Replimune Group, Inc.

 

 

20,700

 

 

 

20,700

 

G1 Therapeutics, Inc.

 

 

19,375

 

 

 

19,375

 

AppDirect, Inc.

 

 

15,000

 

 

 

15,000

 

ATAI Life Sciences N.V.

 

 

14,000

 

 

 

 

Alladapt Immunotherapeutics Inc.

 

 

12,500

 

 

 

15,000

 

Dronedeploy, Inc.

 

 

12,500

 

 

 

12,500

 

Iveric Bio, Inc.

 

 

12,375

 

 

 

 

PathAI, Inc.

 

 

12,000

 

 

 

12,000

 

Viridian Therapeutics, Inc.

 

 

12,000

 

 

 

12,000

 

Tipalti Solutions Ltd.

 

 

10,500

 

 

 

 

Madrigal Pharmaceutical, Inc.

 

 

10,200

 

 

 

34,000

 

Alamar Biosciences, Inc.

 

 

10,000

 

 

 

10,000

 

Aryaka Networks, Inc.

 

 

10,000

 

 

 

20,000

 

Brain Corporation

 

 

10,000

 

 

 

20,700

 

Next Insurance, Inc.

 

 

10,000

 

 

 

 

Nuvolo Technologies Corporation

 

 

9,000

 

 

 

5,970

 

Locus Robotics Corp.

 

 

8,775

 

 

 

 

Kura Oncology, Inc.

 

 

8,250

 

 

 

8,250

 

Tarsus Pharmaceuticals, Inc.

 

 

8,250

 

 

 

10,313

 

Vida Health, Inc.

 

 

8,178

 

 

 

40,000

 

Dashlane, Inc.

 

 

8,000

 

 

 

10,000

 

Elation Health, Inc.

 

 

7,500

 

 

 

7,500

 

Gritstone Bio, Inc.

 

 

7,500

 

 

 

7,500

 

TG Therapeutics, Inc.

 

 

6,500

 

 

 

 

Carwow LTD

 

 

6,467

 

 

 

 

Akero Therapeutics, Inc.

 

 

5,000

 

 

 

5,000

 

Fulfil Solutions, Inc.

 

 

5,000

 

 

 

5,000

 

Modern Life, Inc.

 

 

4,250

 

 

 

 

Riviera Partners LLC

 

 

3,500

 

 

 

3,500

 

Leapwork ApS

 

 

3,450

 

 

 

 

Babel Street

 

 

3,375

 

 

 

3,375

 

 

(in thousands)

 

Unfunded Commitments (1) as of

 

Portfolio Company

 

March 31, 2023

 

 

December 31, 2022

 

Debt Investments:

 

 

 

 

 

 

Signal Media Limited

 

$

3,000

 

 

$

5,250

 

Cutover, Inc.

 

 

2,382

 

 

 

1,000

 

Zappi, Inc.

 

 

2,358

 

 

 

2,571

 

Yipit, LLC

 

 

2,250

 

 

 

2,250

 

Streamline Healthcare Solutions

 

 

2,200

 

 

 

 

Khoros (p.k.a Lithium Technologies)

 

 

1,812

 

 

 

1,812

 

Ceros, Inc.

 

 

1,707

 

 

 

1,707

 

ThreatConnect, Inc.

 

 

1,600

 

 

 

1,600

 

RVShare, LLC

 

 

1,500

 

 

 

1,500

 

Loftware, Inc.

 

 

1,423

 

 

 

 

Dispatch Technologies, Inc.

 

 

1,250

 

 

 

1,250

 

3GTMS, LLC

 

 

1,222

 

 

 

 

LogicSource

 

 

1,209

 

 

 

1,209

 

Zimperium, Inc.

 

 

1,088

 

 

 

1,088

 

Ikon Science Limited

 

 

1,050

 

 

 

1,050

 

Omeda Holdings, LLC

 

 

938

 

 

 

938

 

Fortified Health Security

 

 

840

 

 

 

840

 

Agilence, Inc.

 

 

800

 

 

 

800

 

Flight Schedule Pro, LLC

 

 

639

 

 

 

639

 

Constructor.io Corporation

 

 

625

 

 

 

625

 

Enmark Systems, Inc.

 

 

457

 

 

 

457

 

Alchemer LLC

 

 

445

 

 

 

890

 

Cybermaxx Intermediate Holdings, Inc.

 

 

390

 

 

 

390

 

Annex Cloud

 

 

386

 

 

 

386

 

ShadowDragon, LLC

 

 

333

 

 

 

333

 

Cytracom Holdings LLC

 

 

72

 

 

 

225

 

Provention Bio, Inc.

 

 

 

 

 

40,000

 

Fever Labs, Inc.

 

 

 

 

 

8,333

 

Demandbase, Inc.

 

 

 

 

 

3,750

 

MacroFab, Inc.

 

 

 

 

 

3,000

 

Mobile Solutions Services

 

 

 

 

 

495

 

Total Unfunded Debt Commitments:

 

 

556,771

 

 

 

623,221

 

 

 

 

 

 

 

Investment Funds & Vehicles:(2)

 

 

 

 

 

 

Forbion Growth Opportunities Fund I C.V.

 

 

2,534

 

 

 

2,842

 

Forbion Growth Opportunities Fund II C.V.

 

 

2,811

 

 

 

2,811

 

Total Unfunded Commitments in Investment Funds & Vehicles:

 

 

5,345

 

 

 

5,653

 

 

 

 

 

 

 

Total Unfunded Commitments

 

$

562,116

 

 

$

628,874

 

(1)
For debt investments, amounts represent unfunded commitments, including undrawn revolving facilities, which are available at the request of the portfolio company. Amount excludes unfunded commitments which are unavailable due to the borrower having not met certain milestones. These amounts also exclude $178.2 million and $173.5 million of unfunded commitments as of March 31, 2023, and December 31, 2022, respectively, to portfolio companies related to loans assigned to or directly committed by the Adviser Funds as described in “Note -12 Related Party Transactions”.
(2)
For investment funds and vehicles, the amount represents uncalled capital commitments in private equity funds.

The following table provides additional information on the Company’s unencumbered unfunded commitments regarding milestones, expirations and type:

(in thousands)

 

March 31, 2023

 

 

December 31, 2022

 

Unfunded Debt Commitments:

 

 

 

 

 

 

Expiring during:

 

 

 

 

 

 

2023

 

$

358,696

 

 

$

461,296

 

2024

 

 

167,468

 

 

 

134,856

 

2025

 

 

1,294

 

 

 

720

 

2026

 

 

9,037

 

 

 

9,038

 

2027

 

 

14,958

 

 

 

15,171

 

2028

 

 

5,318

 

 

 

2,140

 

Total Unfunded Debt Commitments

 

 

556,771

 

 

 

623,221

 

 

 

 

 

 

 

 

Unfunded Commitments in Investment Funds & Vehicles:

 

 

 

 

 

 

Expiring during:

 

 

 

 

 

 

2030

 

 

2,534

 

 

 

2,842

 

2032

 

 

2,811

 

 

 

2,811

 

Total Unfunded Commitments in Investment Funds & Vehicles

 

 

5,345

 

 

 

5,653

 

Total Unfunded Commitments

 

$

562,116

 

 

$

628,874

 

 

The following tables provide the Company’s contractual obligations as of March 31, 2023 and December 31, 2022:

As of March 31, 2023:

 

Payments due by period (in thousands)

 

Contractual Obligations (1)

 

Total

 

 

Less than 1 year

 

 

1 - 3 years

 

 

3 - 5 years

 

 

After 5 years

 

Debt (2)(3)

 

$

1,733,000

 

 

$

 

 

$

375,000

 

 

$

993,000

 

 

$

365,000

 

Lease and License Obligations (4)

 

 

8,022

 

 

 

2,142

 

 

 

2,259

 

 

 

2,454

 

 

 

1,167

 

Total

 

$

1,741,022

 

 

$

2,142

 

 

$

377,259

 

 

$

995,454

 

 

$

366,167

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2022:

 

Payments due by period (in thousands)

 

Contractual Obligations (1)

 

Total

 

 

Less than 1 year

 

 

1 - 3 years

 

 

3 - 5 years

 

 

After 5 years

 

Debt (5)(3)

 

$

1,594,000

 

 

$

 

 

$

382,000

 

 

$

847,000

 

 

$

365,000

 

Lease and License Obligations (4)

 

 

8,641

 

 

 

2,723

 

 

 

2,259

 

 

 

2,452

 

 

 

1,207

 

Total

 

$

1,602,641

 

 

$

2,723

 

 

$

384,259

 

 

$

849,452

 

 

$

366,207

 

(1)
Excludes commitments to extend credit to the Company’s portfolio companies and uncalled capital commitments in investment funds.
(2)
Includes $175.0 million in principal outstanding under the SBA Debentures, $105.0 million of the July 2024 Notes, $50.0 million of the February 2025 Notes, $70.0 million of the June 2025 Notes, $50.0 million of the June 2025 3-Year Notes, $50.0 million of the March 2026 A Notes, $50.0 million of the March 2026 B Notes, $150.0 million of the 2031 Asset-Backed Notes, $40.0 million of the 2033 Notes, $325.0 million of the September 2026 Notes and $350.0 million of the January 2027 Notes as of March 31, 2023. There was also $197.0 million outstanding under the SMBC Facility and $121.0 million outstanding under the MUFG Bank Facility as of March 31, 2023.
(3)
Amounts represent future principal repayments and not the carrying value of each liability. See “Note 5 – Debt”.
(4)
Facility leases and licenses including short-term leases.
(5)
Includes $175.0 million in principal outstanding under the SBA Debentures, $105.0 million of the July 2024 Notes, $50.0 million of the February 2025 Notes, $70.0 million of the June 2025 Notes, $50.0 million of the June 2025 3-Year Notes, $50.0 million of the March 2026 A Notes, $50.0 million of the March 2026 B Notes, $150.0 million of the 2031 Asset-Backed Notes, $40.0 million of the 2033 Notes, $325.0 million of the September 2026 Notes and $350.0 million of the January 2027 Notes as of December 31, 2022. There was also $72.0 million outstanding under the SMBC Facility and $107.0 million outstanding under the MUFG Bank Facility as of December 31, 2022.

Certain premises are leased or licensed under agreements which expire at various dates through December 2028. For the three months ended March 31, 2023 and 2022, total rent expense, including short-term leases, amounted to approximately $0.8 million and $0.8 million, respectively. The Company recognizes an operating lease liability and a ROU asset for all leases, with the exception of short-term leases. The lease payments on short-term leases are recognized as rent expense on a straight-line basis. The discount rate applied to measure each ROU asset and lease liability is based on the Company’s incremental weighted average cost of debt. The Company considers the general economic environment and its credit rating and factors in various financing and asset specific adjustments to ensure the discount rate applied is appropriate to the intended use of the underlying lease. While some of the leases contained options to extend and terminate, it is not reasonably certain that either option will be utilized and therefore, only the payments in the initial term of the leases were included in the lease liability and ROU asset.

The following table sets forth information related to the measurement of the Company’s operating lease liabilities and supplemental cash flow information related to operating leases as of March 31, 2023, and 2022:

(in thousands)

 

Three Months Ended March 31, 2023

 

 

Three Months Ended March 31, 2022

 

Total operating lease cost

 

$

698

 

 

$

703

 

Cash paid for amounts included in the measurement of lease liabilities

 

$

609

 

 

$

594

 

 

 

 

As of March 31, 2023

 

 

As of December 31, 2022

 

Weighted-average remaining lease term (in years)

 

 

5.60

 

 

 

5.48

 

Weighted-average discount rate

 

 

5.35

%

 

 

5.37

%

The following table shows future minimum lease payments under the Company’s operating leases and a reconciliation to the operating lease liability as of March 31, 2023:

(in thousands)

 

As of March 31, 2023

 

2023

 

$

1,896

 

2024

 

 

1,110

 

2025

 

 

1,149

 

2026

 

 

1,191

 

Thereafter

 

 

2,544

 

Total lease payments

 

 

7,890

 

Less: imputed interest & other items

 

 

(2,924

)

Total operating lease liability

 

$

4,966

 

The Company may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, the Company does not expect any current matters will materially affect the Company’s financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on the Company’s financial condition or results of operations in any future reporting period.