Hancock Park Corporate Income Inc.

11/08/2024 | Press release | Distributed by Public on 11/08/2024 09:26

Quarterly Report for Quarter Ending September 30, 2024 (Form 10-Q)

han-20240930
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 814-01185
Hancock Park Corporate Income, Inc.
(Exact name of registrant as specified in its charter)
Maryland 81-0850535
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
10 S. Wacker Drive, Suite 2500, Chicago, Illinois
60606
Address of Principal Executive Offices Zip Code
(847) 734-2000
Registrant's Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
None None None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
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). Yes x No ¨
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 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 ¨
Non-accelerated filer
x
Smaller reporting company ¨
Emerging growth company x
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. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
The number of shares of the issuer's common stock, $0.001 par value, outstanding as of November 5, 2024 was 1,693,121.
HANCOCK PARK CORPORATE INCOME, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
3
Item 1.
Financial Statements
3
Consolidated Statements of Assets and Liabilities as of September 30, 2024 (unaudited) and December 31, 2023 (unaudited)
3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 (unaudited) and 2023 (unaudited)
4
Consolidated Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2024 (unaudited) and 2023 (unaudited)
5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 (unaudited) and 2023 (unaudited)
7
Consolidated Schedules of Investments as of September 30, 2024 (unaudited) and December 31, 2023
8
Notes to Consolidated Financial Statements (unaudited)
20
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
38
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
51
Item 4.
Controls and Procedures
53
PART II. OTHER INFORMATION
54
Item 1.
Legal Proceedings
54
Item 1A.
Risk Factors
54
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
54
Item 3.
Defaults Upon Senior Securities
55
Item 4.
Mine Safety Disclosures
55
Item 5.
Other Information
55
Item 6.
Exhibits
56
SIGNATURES
57
OFS®, HPCI®, OFS Capital®and OFS Credit®are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management™ is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners.
Defined Terms
We have used "we," "us," "our," "our company," and "the Company" to refer to Hancock Park Corporate Income, Inc. in this report. We also have used several other terms in this report, which are explained or defined below:
Term Explanation or Definition
1940 Act Investment Company Act of 1940, as amended
Administration Agreement Administration agreement between the Company and OFS Services, dated July 15, 2016
Advisers Act The Investment Advisers Act of 1940, as amended
Affiliated Account An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor
Affiliated Fund
Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor
ASC Accounting Standards Codification, as issued by the FASB
Banc of California Credit Facility A senior secured revolving credit facility, as amended, with Banc of California (formerly known as Pacific Western Bank), as lender, that provides for borrowings to the Company in an aggregate principal amount up to $20,000,000
BDC Business Development Company under the 1940 Act
BLA Business Loan Agreement, as amended, with Banc of California, as lender, which provides the Company with a senior secured revolving credit facility
Board The Company's board of directors
CCO CCO Capital, LLC, a Delaware limited liability company and the Company's dealer manager
CLO Collateralized Loan Obligation
Code Internal Revenue Code of 1986, as amended
Company Hancock Park Corporate Income, Inc. and its consolidated subsidiaries
Contractual Issuer Expenses Salaries and direct expenses of OFS Advisor's employees, employees of their affiliates and others while engaged in offering and other contractually-defined activities
Dealer Manager Agreement Broker-dealer management agreement dated August 3, 2020 by and among the Company, OFS Advisor, International Assets Advisory, LLC and CCO, and amended and restated on February 2, 2022
EBITDA Earnings before interest, taxes, depreciation, and amortization
Exchange Act Securities Exchange Act of 1934, as amended
FASB Financial Accounting Standards Board
GAAP Accounting principles generally accepted in the United States
HPCI-MB HPCI-MB, Inc., a wholly owned subsidiary taxed under subchapter C of the Code that generally holds the equity investments of the Company that are taxed as pass-through entities
ICTI Investment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative Prices Market quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory Agreement Investment Advisory and Management Agreement between the Company and OFS Advisor, dated July 15, 2016
NAV Net asset value. NAV is calculated as consolidated total assets less consolidated total liabilities, and can be expressed in the aggregate or on a per share basis
Net Loan Fees The cumulative amount of fees, such as origination fees, discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan
Note Purchase Agreement The Note Purchase Agreement, as amended between the Company and a qualified institutional investor, dated November 27, 2019, in which the Company sold in a private placement the Unsecured Note
OCCI OFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company, for which OFS Advisor serves as investment adviser
Offering Continuous offering of up to $200,000,000 of shares of the Company's common stock
Term Explanation or Definition
OFS Advisor OFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Advisers Act, focusing primarily on investments in middle market loans and broadly syndicated loans, debt and equity positions in CLOs and other structured credit investments
OFS Capital OFS Capital Corporation, a Delaware corporation and publicly traded BDC, for which OFS Advisor serves as investment adviser
OFS Services OFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAM Orchard First Source Asset Management, LLC, a subsidiary of OFSAM Holdings, and a full-service provider of capital and leveraged finance solutions to U.S. corporations
OFSAM Holdings Orchard First Source Asset Management Holdings, LLC, a holding company consisting of asset management businesses, including OFS Advisor, a registered investment adviser focusing primarily on investments in middle-market loans and broadly syndicated loans, debt and equity positions in CLOs and other structured credit investments, and OFS CLO Management, LLC, OFS CLO Management II, LLC and OFS CLO Management III, LLC, each a registered investment adviser focusing primarily on investments in broadly syndicated loans
Order An exemptive relief order from the SEC to permit us to co-invest in portfolio companies with Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions
PIK Payment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income
Portfolio Company Investment A debt or equity investment in a portfolio company. Portfolio Company Investments exclude Structured Finance Securities
Prime Rate United States Prime interest rate
RIC Regulated investment company under the Code
SEC United States Securities and Exchange Commission
Second Amended Expense Support Agreement
Second Amended and Restated Expense Support and Conditional Reimbursement Agreement dated February 2, 2022, between the Company and OFS Advisor, agreed to and accepted by CIM Capital IC Management, LLC
Securities Act Securities Act of 1933, as amended
SOFR Secured Overnight Financing Rate
Structured Finance Securities CLO mezzanine debt, CLO subordinated notes, CLO loan accumulation facility securities and other CLO related investments
Unsecured Note An agreement, as amended, with The HCM Master Fund Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands in which the Company sold, in a private placement, an unsecured note in an aggregate principal amount of $15,000,000
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "would," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. 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:
•our ability and experience operating a BDC or maintaining our qualification as a RIC under the Code;
•our dependence on key personnel;
•our ability to maintain or develop referral relationships;
•our ability to replicate historical results;
•the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
•the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk;
•actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings;
•constraint on investment due to access to material nonpublic information;
•restrictions on our ability to enter into transactions with our affiliates;
•the use of borrowed money to finance a portion of our investments;
•our ability to incur additional leverage pursuant to Section 61(a)(2) of the 1940 Act and the impact of such leverage on our net investment income and results of operations;
•competition for investment opportunities;
•the belief that the seniority of our debt investments in a borrower's capital structure may provide greater downside protection against adverse economic changes, including those caused by the impacts of interest rate changes and elevated inflation rates, the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, instability in the U.S. and international banking systems, uncertainties related to the 2024 U.S. presidential election, the risk of recession or a shutdown of U.S. government services and related market volatility on our business, our portfolio companies, our industry and the global economy;
•the percentage of investments that bear interest on a floating rate or fixed rate basis;
•our ability to raise debt or equity capital as a BDC;
•the success of our current borrowings, and issuances of senior securities or future borrowings to fund the growth of our investment portfolio;
•the timing, form and amount of any distributions from our portfolio companies;
•the timing or amount of distribution payments to our stockholders;
•the holding period of our investments;
•the impact of alternative reference rates on our business, including potential additional interest rate reductions approved by the U.S. Federal Reserve, which may impact our investment income, cost of funding and the valuation of our investments;
•the general economy and its impact on the industries in which we invest;
•the impact of current political, economic and industry conditions, including changes in the interest rate environment, inflation, significant market volatility, supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, resource shortages and other conditions affecting the financial and capital markets, which, in turn, impacts our business prospects and the prospects of our portfolio companies;
1
•the impact of the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East and general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China;
•our ability to consummate credit facilities in the future on commercially reasonable terms, if at all;
•the impact of information technology system failures, data security breaches, data privacy compliance, network disruptions, cybersecurity attacks and the increasing use of artificial intelligence and machine learning technology;
•our ability to generate cash from: (i) the net proceeds of the Offering; (ii) cash flows from our operations; (iii) the Banc of California Credit Facility and any other financing arrangements we may enter into in the future; (iv) investment repayments or dispositions; and (v) any future offerings of our equity or debt securities;
•the belief that we have sufficient levels of liquidity to operate our business and support our existing portfolio companies;
•the belief that our cash and cash equivalent balances are not exposed to any significant credit risk as a result of the recent banking failures;
•the impact that environmental, social and governance matters could have on our brand and reputation and our portfolio companies;
•the fluctuation of the fair value of our investments due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value; and
•the effect of new or modified laws or regulations governing our operations.
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, those assumptions also could be inaccurate. 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. These risks and uncertainties include, among others, those described or identified in "Part I-Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 18, 2024. 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.
We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the SEC in the future, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.
The following should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Hancock Park Corporate Income, Inc.
Consolidated Statements of Assets and Liabilities (unaudited)
September 30, 2024 December 31, 2023
Assets:
Non-control/non-affiliate investments, at fair value (amortized cost of $42,210,574 and $46,495,627, respectively)
$ 38,238,085 $ 42,476,072
Cash and cash equivalents 2,470,786 807,831
Interest receivable 181,859 241,886
Prepaid expenses and other assets 33,399 105,376
Total assets $ 40,924,129 $ 43,631,165
Liabilities:
Revolving line of credit $ 5,665,000 $ 7,665,000
Unsecured note (net of discount and deferred debt issuance costs of $157,488 and $212,003, respectively)
14,842,512 14,787,997
Payable for investments purchased 2,025,369 -
Due to adviser and affiliates (Note 3) 480,718 916,038
Payable for repurchase of common stock 472,033 525,963
Distribution payable 143,238 155,292
Interest payable 78,393 78,120
Other liabilities 289,569 255,269
Total liabilities 23,996,832 24,383,679
Commitments and contingencies (Notes 3 and 6)
Net assets:
Common stock, par value of $0.001 per share; 20,000,000 shares authorized, 1,693,121 and 1,835,599 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
1,693 1,835
Paid-in capital in excess of par 22,507,962 23,990,525
Total accumulated losses (5,582,358) (4,744,874)
Total net assets 16,927,297 19,247,486
Total liabilities and net assets $ 40,924,129 $ 43,631,165
Number of common shares outstanding 1,693,121 1,835,599
Net asset value per share $ 10.00 $ 10.49
See Notes to Consolidated Financial Statements (unaudited).
3
Hancock Park Corporate Income, Inc.
Consolidated Statements of Operations (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Investment income
Interest income $ 1,419,520 $ 1,798,212 $ 4,549,533 $ 5,721,854
Dividend income 1,090 1,039 3,196 5,396
Fee income 1,775 2,681 38,063 16,105
Total investment income
1,422,385 1,801,932 4,590,792 5,743,355
Operating expenses
Interest expense 377,659 533,236 1,199,631 1,703,059
Base management fees 121,696 152,905 377,842 480,913
Incentive fees 96,023 124,141 330,146 395,860
Administrative fees 166,324 210,949 514,369 664,261
Professional fees 161,936 176,664 518,803 563,449
Excise taxes 9,723 - 9,723 -
Other expenses 104,933 107,474 319,693 341,723
Contractual Issuer Expenses (credits) (6,023) 118,153 91,840 273,104
Amortization of deferred offering costs 3,765 5,390 18,211 12,622
Total operating expenses 1,036,036 1,428,912 3,380,258 4,434,991
Net expense (limitations) under agreements with the adviser (Note 3) 2,258 (300,699) (110,051) (560,780)
Net operating expenses 1,038,294 1,128,213 3,270,207 3,874,211
Net investment income 384,091 673,719 1,320,585 1,869,144
Net realized and unrealized gain (loss) on investments
Net realized loss on investments - - (803,625) (499,779)
Income tax (expense) benefit on net realized gains on investments (8,000) 18,010 (8,000) (11,834)
Net unrealized appreciation (depreciation) on investments (909,460) 35,794 47,067 (518,831)
Deferred tax expense on net unrealized appreciation (14,589) (9,440) (44,651) (40,521)
Net gain (loss) on investments (932,049) 44,364 (809,209) (1,070,965)
Net increase (decrease) in net assets resulting from operations $ (547,958) $ 718,083 $ 511,376 $ 798,179
Net investment income per common share - basic and diluted
$ 0.22 $ 0.35 $ 0.74 $ 0.95
Net increase (decrease) in net assets resulting from operations per common share - basic and diluted $ (0.32) $ 0.37 $ 0.29 $ 0.41
Distributions declared per common share
$ 0.25 $ 0.25 $ 0.76 $ 0.76
Basic and diluted weighted-average common shares outstanding 1,737,056 1,932,833 1,784,610 1,965,593
See Notes to Consolidated Financial Statements (unaudited).
4
Hancock Park Corporate Income, Inc.
Consolidated Statements of Changes in Net Assets (unaudited)
Common Stock
Number of shares Par value Paid-in capital in excess of par Total accumulated losses Total net assets
Balances at December 31, 2022 1,977,694 $ 1,977 $ 25,885,923 $ (3,869,953) $ 22,017,947
Net investment income - - - 1,869,144 1,869,144
Net realized loss on investments, net of taxes - - - (511,613) (511,613)
Net unrealized depreciation on investments, net of taxes - - - (559,352) (559,352)
Tax reclassifications of permanent differences - - (10,650) 10,650 -
Common stock issued 57,618 58 661,942 - 662,000
Repurchases of common stock (150,234) (150) (1,642,456) - (1,642,606)
Distributions to stockholders - - - (1,485,024) (1,485,024)
Net decrease for the nine month period ended September 30, 2023 (92,616) (92) (991,164) (676,195) (1,667,451)
Balances at September 30, 2023 1,885,078 $ 1,885 $ 24,894,759 $ (4,546,148) $ 20,350,496
Balances at June 30, 2023 1,935,004 $ 1,935 $ 25,436,898 $ (4,777,351) $ 20,661,482
Net investment income - - - 673,719 673,719
Net realized gain on investments, net of taxes - - - 18,010 18,010
Net unrealized appreciation on investments, net of taxes - - - 26,354 26,354
Repurchase of common stock (49,926) (50) (542,139) - (542,189)
Distributions to stockholders - - - (486,880) (486,880)
Net increase (decrease) for the three month period ended September 30, 2023 (49,926) (50) (542,139) 231,203 (310,986)
Balances at September 30, 2023 1,885,078 $ 1,885 $ 24,894,759 $ (4,546,148) $ 20,350,496
5
Common Stock
Number of shares Par value Paid-in capital in excess of par Total accumulated losses Total net assets
Balances at December 31, 2023 1,835,599 $ 1,835 $ 23,990,525 $ (4,744,874) $ 19,247,486
Net investment income - - - 1,320,585 1,320,585
Net realized loss on investments, net of taxes - - - (811,625) (811,625)
Net unrealized appreciation on investments, net of taxes - - - 2,416 2,416
Repurchases of common stock (142,478) (142) (1,482,563) - (1,482,705)
Distributions to stockholders - - - (1,348,860) (1,348,860)
Net decrease for the nine month period ended September 30, 2024 (142,478) (142) (1,482,563) (837,484) (2,320,189)
Balances at September 30, 2024 1,693,121 $ 1,693 $ 22,507,962 $ (5,582,358) $ 16,927,297
Balances at June 30, 2024 1,739,581 $ 1,739 $ 22,979,949 $ (4,596,826) $ 18,384,862
Net investment income - - - 384,091 384,091
Income tax expense on net realized investment gains - - - (8,000) (8,000)
Net unrealized depreciation on investments, net of taxes - - - (924,049) (924,049)
Repurchase of common stock (46,460) (46) (471,987) - (472,033)
Distributions to stockholders - - - (437,574) (437,574)
Net decrease for the three month period ended September 30, 2024 (46,460) (46) (471,987) (985,532) (1,457,565)
Balances at September 30, 2024 1,693,121 $ 1,693 $ 22,507,962 $ (5,582,358) $ 16,927,297
See Notes to Consolidated Financial Statements (unaudited).
6
Hancock Park Corporate Income, Inc.
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30,
2024 2023
Cash flows from operating activities
Net increase in net assets resulting from operations $ 511,376 $ 798,179
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Net unrealized (appreciation) depreciation on investments, net of taxes (2,416) 559,352
Net realized loss on investments 803,625 499,779
Income tax expense from realized gains on investments 8,000 11,834
Amortization of Net Loan Fees on investments (310,339) (312,481)
Amendment fees collected 23,046 10,540
Amortization of deferred debt issuance costs 130,614 55,838
Accretion of interest income on Structured Finance Securities (866,726) (1,133,191)
Paid-in-kind interest income (177,858) (25,349)
Purchase of portfolio investments (7,387,414) (2,577,827)
Proceeds from principal payments on portfolio investments 10,976,950 4,962,535
Proceeds from sale or redemption of portfolio investments 68,252 3,299,761
Proceeds from distributions received from portfolio investments 1,155,518 1,137,209
Changes in operating assets and liabilities:
Interest receivable
60,027 (2,949)
Interest payable 273 (1,447)
Due to adviser and affiliates (435,320) (256,229)
Payable for investments purchased
2,025,369 -
Other assets and liabilities
(22,474) (111,083)
Net cash provided by operating activities 6,560,503 6,914,471
Cash flows from financing activities
Net proceeds from issuance of common stock - 868,080
Distributions paid to common stockholders (1,360,914) (1,491,354)
Borrowings under revolving line of credit 2,500,000 6,235,000
Repayments under revolving line of credit (4,500,000) (10,960,000)
Repurchases of common stock (1,536,634) (1,675,359)
Net cash used in financing activities (4,897,548) (7,023,633)
Net increase (decrease) in cash and cash equivalents 1,662,955 (109,162)
Cash and cash equivalents
Beginning of period 807,831 973,147
End of period $ 2,470,786 $ 863,985
Supplemental disclosure of cash flow information:
Amortization of deferred offering costs limited by investment advisor (see Note 3) $ 18,211 $ 12,622
Cash paid for interest 1,068,744 1,648,668
See Notes to Consolidated Financial Statements (unaudited).
7
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
Portfolio Company(1)(8)
Investment Type
Industry
Interest Rate(3)
Spread Above
Index(3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Non-control/Non-affiliate Investments
Debt and Equity Investments
AIDC IntermediateCo 2, LLC Computer Systems Design Services
First Lien Debt 10.53% SOFR+ 5.25% 7/8/2022 7/22/2027 $ 491,250 $ 484,363 $ 490,268 2.9 %
First Lien Debt 10.50% SOFR+ 5.25% 7/31/2023 7/22/2027 11,489 11,271 11,466 0.1
502,739 495,634 501,734 3.0
Allen Media, LLC (9) Cable and Other Subscription Programming
First Lien Debt 10.25% SOFR+ 5.50% 9/15/2022 2/10/2027 1,221,223 1,147,608 800,286 4.7
Asurion, LLC (9) Communication Equipment Repair and Maintenance
Second Lien Debt 10.21% SOFR+ 5.25% 8/20/2024 1/31/2028 1,500,000 1,410,119 1,412,408 8.3
BayMark Health Services, Inc. Outpatient Mental Health and Substance Abuse Centers
Second Lien Debt 13.37% SOFR+ 8.50% 6/10/2021 6/11/2028 1,325,758 1,315,225 1,223,674 7.2
Second Lien Debt 13.76% SOFR+ 8.50% 6/10/2021 6/11/2028 357,657 354,789 330,117 2.0
1,683,415 1,670,014 1,553,791 9.2
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Ice Cream and Frozen Dessert Manufacturing
Second Lien Debt 12.21% SOFR+ 7.25% 2/2/2022 6/8/2029 1,833,333 1,696,119 1,721,500 10.2
Boca Home Care Holdings, Inc. Services for the Elderly and Persons with Disabilities
First Lien Debt 11.45% SOFR+ 6.50% 2/25/2022 2/25/2027 986,048 979,135 980,132 5.8
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.50% 2/25/2022 2/25/2027 - (620) (774) -
Common Equity (129 Class A units) (7)
2/25/2022 129,032 86,316 0.5
Preferred Equity (345 Class A units) 12.0% cash / 2.0% PIK
3/3/2023 34,464 35,583 0.2
986,048 1,142,011 1,101,257 6.5
Clevertech Bidco, LLC Commodity Contracts Dealing
First Lien Debt 11.50% SOFR+ 6.75% 11/3/2023 12/30/2027 1,360,123 1,328,271 1,345,162 7.9
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.75% 11/3/2023 12/30/2027 - (2,952) (1,386) -
1,360,123 1,325,319 1,343,776 7.9
Constellis Holdings, LLC Other Justice, Public Order, and Safety Activities
Common Equity (1,362 units) (7)
3/27/2020 46,403 4,212 -
8
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
Portfolio Company(1)(8)
Investment Type
Industry
Interest Rate(3)
Spread Above
Index(3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Convergint Technologies Holdings, LLC (9) Security Systems Services (except Locksmiths)
Second Lien Debt 11.71% SOFR+ 6.75% 9/28/2018 3/30/2029 $ 2,068,608 $ 2,036,726 $ 1,950,956 11.5 %
DRS Imaging Services, LLC Data Processing, Hosting, and Related Services
Common Equity (115 units) (7) (13)
3/8/2018 115,154 99,000 0.6
Excelin Home Health, LLC Home Health Care Services
Second Lien Debt
18.00% PIK
N/A 10/25/2018 12/31/2025 1,326,920 1,312,374 1,053,973 6.2
First Brands Group, LLC (9) Other Motor Vehicle Parts Manufacturing
First Lien Debt 10.51% SOFR+ 5.00% 8/23/2024 3/30/2027 738,832 728,768 732,252 4.3
First Lien Debt 10.51% SOFR+ 5.00% 8/26/2024 3/30/2027 359,808 355,364 356,660 2.1
1,098,640 1,084,132 1,088,912 6.4
Flow Service Partners Management, LLC Plumbing, Heating, and Air-Conditioning Contractors
First Lien Debt 11.25% SOFR+ 6.50% 2/28/2024 2/28/2029 868,438 860,776 846,727 5.0
First Lien Debt 11.25% SOFR+ 6.50% 2/28/2024 2/28/2029 157,898 156,505 153,950 0.9
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.50% 2/28/2024 2/28/2029 - (1,404) (3,977) -
1,026,336 1,015,877 996,700 5.9
GoTo Group (F/K/A LogMeIn, Inc.) (9) Data Processing, Hosting, and Related Services
First Lien Debt 9.97% SOFR+ 4.75% 9/28/2022 4/30/2028 612,640 612,640 214,807 1.3
First Lien Debt 9.97% SOFR+ 4.75% 9/28/2022 4/28/2028 443,636 443,636 368,912 2.2
1,056,276 1,056,276 583,719 3.5
Heritage Grocers Group, LLC (F/K/A Tony's Fresh Market / Cardenas Markets) (9) Supermarkets and Other Grocery (except Convenience) Stores
First Lien Debt 11.45% SOFR+ 6.75% 7/20/2022 8/1/2029 1,960,000 1,878,730 1,938,763 11.5
Honor HN Buyer, Inc. Services for the Elderly and Persons with Disabilities
First Lien Debt 10.50% SOFR+ 5.75% 10/15/2021 10/15/2027 836,966 828,531 836,966 4.9
First Lien Debt 10.50% SOFR+ 5.75% 10/15/2021 10/15/2027 529,279 523,031 529,279 3.1
First Lien Debt (Revolver) (12) 12.75% Prime + 4.75% 10/15/2021 10/15/2027 12,376 11,374 12,376 0.1
First Lien Debt (Delayed Draw) (12) 10.50% SOFR+ 5.75% 3/31/2023 10/15/2027 436,926 433,617 436,926 2.6
1,815,547 1,796,553 1,815,547 10.7
9
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
Portfolio Company(1)(8)
Investment Type
Industry
Interest Rate(3)
Spread Above
Index(3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Idera Inc. Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt 12.15% SOFR+ 6.75% 1/27/2022 3/2/2029 $ 670,732 $ 670,732 $ 670,732 4.0 %
Inergex Holdings, LLC (16) Other Computer Related Services
First Lien Debt
11.75% cash / 2.00% PIK
SOFR+ 7.00% 10/1/2018 10/1/2026 988,392 978,808 983,450 5.8
First Lien Debt (Revolver)
11.75% cash / 2.00% PIK
SOFR+ 7.00% 10/1/2018 10/1/2026 156,250 156,250 155,469 0.9
1,144,642 1,135,058 1,138,919 6.7
Medrina, LLC All Other Outpatient Care Centers
First Lien Debt 11.32% SOFR+ 6.00% 10/20/2023 10/20/2029 739,096 723,543 746,487 4.4
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.00% 10/20/2023 10/20/2029 - (2,239) - -
First Lien Debt (Delayed Draw) (12) n/m (5) SOFR+ 6.00% 10/20/2023 10/20/2029 - (683) 1,489 -
739,096 720,621 747,976 4.4
Metasource, LLC (16) All Other Business Support Services
First Lien Debt
11.12% cash / 0.50% PIK
SOFR+ 6.25% 5/17/2022 5/17/2027 686,096 679,785 657,280 3.9
Nielsen Consumer Inc. (9) Marketing Research and Public Opinion Polling
First Lien Debt 9.34% SOFR+ 4.75% 8/20/2024 3/6/2028 1,500,000 1,492,500 1,497,503 8.8
One GI LLC Offices of Other Holding Companies
First Lien Debt 11.70% SOFR+ 6.75% 12/13/2021 12/22/2025 850,938 845,687 826,260 4.9
First Lien Debt 11.70% SOFR+ 6.75% 12/13/2021 12/22/2025 448,449 445,545 435,444 2.6
First Lien Debt (Revolver) 11.96% SOFR+ 6.75% 12/13/2021 12/22/2025 166,667 165,653 161,833 1.0
1,466,054 1,456,885 1,423,537 8.5
Redstone Holdco 2 LP (F/K/A RSA Security) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt 13.26% SOFR+ 7.75% 4/16/2021 4/27/2029 1,000,000 992,530 761,000 4.5
RPLF Holdings, LLC Software Publishers
Common Equity (62,365 units) (7) (13)
1/17/2018 - 310,644 1.8
10
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
Portfolio Company(1)(8)
Investment Type
Industry
Interest Rate(3)
Spread Above
Index(3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
RumbleOn, Inc. (11) Other Industrial Machinery Manufacturing
First Lien Debt (16)
14.27% cash / 1.50% PIK
SOFR+ 8.75% 8/31/2021 8/31/2026 $ 649,684 $ 632,363 $ 603,557 3.6 %
First Lien Debt (16)
14.27% cash / 1.50% PIK
SOFR+ 8.75% 8/31/2021 8/31/2026 196,065 193,409 182,145 1.1
Warrants (warrants to purchase up to $55,000 in stock) (7)
8/31/2021 8/14/2028 (15) 50,082 5,571 -
845,749 875,854 791,273 4.7
SS Acquisition, LLC (6) Sports and Recreation Instruction
First Lien Debt 12.31% SOFR+ 6.72% 12/30/2021 12/30/2026 625,000 622,193 625,000 3.7
First Lien Debt 13.00% SOFR+ 7.40% 12/30/2021 12/30/2026 300,000 298,379 300,000 1.8
925,000 920,572 925,000 5.5
Tenneco Inc. (9) Other Motor Vehicle Parts Manufacturing
First Lien Debt 10.23% SOFR+ 5.00% 8/21/2024 11/17/2028 1,100,000 1,057,217 1,047,403 6.2
Tolemar Acquisition, Inc. Motorcycle, Bicycle, and Parts Manufacturing
First Lien Debt
10.95% cash/ 1.00% PIK
SOFR+ 6.00% 10/14/2021 10/14/2026 1,311,617 1,306,285 1,246,037 7.4
First Lien Debt (Revolver) (12) 11.20% SOFR+ 6.00% 10/14/2021 10/14/2026 75,000 74,462 68,382 0.4
1,386,617 1,380,747 1,314,419 7.8
TruGreen Limited Partnership Landscaping Services
Second Lien Debt 14.01% SOFR+ 8.50% 5/13/2021 11/2/2028 1,500,000 1,525,823 1,444,500 8.5
Wellful Inc. (F/K/A KNS Acquisition Corp.) (9) Electronic Shopping and Mail-Order Houses
First Lien Debt 11.21% SOFR+ 6.25% 7/26/2021 4/21/2027 925,000 923,915 581,594 3.4
Total Debt and Equity Investments $ 33,328,194 $ 33,061,288 $ 31,278,314 184.8 %
Structured Finance Securities (11)
Subordinated Notes, Mezzanine Debt and Other CLO-Equity Related Investments
Apex Credit CLO 2020 Ltd.
Subordinated Notes (2) (14) 17.92% N/A 11/16/2020 10/20/2031 $ 3,650,000 $ 3,251,464 $ 2,644,616 15.6 %
11
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
Portfolio Company(1)(8)
Investment Type
Industry
Interest Rate(3)
Spread Above
Index(3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Apex Credit CLO 2021 Ltd
Subordinated Notes (2) (14) 20.93% N/A 5/28/2021 7/18/2034 $ 1,480,000 $ 1,122,712 $ 938,900 5.5 %
Apex Credit CLO 2022-1 Ltd.
Subordinated Notes (2) (14) 13.10% N/A 4/28/2022 4/22/2033 1,892,824 1,569,870 1,163,708 6.9
CLO other (10) (14) 2.68% N/A 11,858 20,129 0.1
Elevation CLO 2021-14 Ltd
Subordinated Notes (2) (14) 5.26% N/A 9/21/2021 10/20/2034 1,750,000 1,362,945 761,106 4.6
Elevation CLO 2021-15, Ltd.
Subordinated Notes (2) (14) 2.68% N/A 12/6/2021 1/5/2035 1,250,000 856,953 427,216 2.5
Monroe Capital MML CLO X, Ltd.
Mezzanine Debt - Class E-R 13.88% SOFR+ 8.75% 4/22/2022 5/20/2034 1,000,000 973,484 1,004,096 5.9
Total Structured Finance Securities $ 11,022,824 $ 9,149,286 $ 6,959,771 41.1 %
Total Investments $ 44,351,018 $ 42,210,574 $ 38,238,085 225.9 %
(1)Equity ownership may be held in shares or units of companies affiliated with the portfolio company. The Company's investments are generally classified as "restricted securities" as such term is defined under Rule 6-03(f) of Regulation S-X or Rule 144 of the Securities Act.
(2)Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated note investments. CLO subordinated note investments are entitled to recurring distributions which are generally equal to the residual cash flow of payments received on underlying securities less contractual payments to debt holders and fund expenses.
(3)The Company's debt investments bear interest at rates determined by reference to SOFR or Prime, and reset monthly, quarterly, or semi-annually. For all variable-rate investments, the schedule presents the spread over SOFR or Prime and the interest rate as of September 30, 2024. Unless otherwise noted with footnote 16, all investments with a stated PIK rate require interest payments with the issuance of additional securities as payment of the entire PIK provision.
(4)Unless otherwise noted in footnote 9, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5for further details.
(5)Not meaningful as there is no outstanding balance on the revolver or delayed draw. The Company earns unfunded commitment fees on undrawn revolving lines of credit and delayed draw facility balances, which are reported in fee income. The Company considers undrawn amounts in the determination of fair value.
12
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments (unaudited)
September 30, 2024
(6)The Company has entered into a contractual arrangement with co-lenders whereby, subject to certain conditions, it has agreed to receive its payment after the repayment of certain co-lenders pursuant to a payment waterfall. The table below provides additional details as of September 30, 2024:
Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum
SS Acquisition, LLC 12.31% 11.83% 0.48%
SS Acquisition, LLC (Delayed Draw) 13.00% 11.83% 1.17%
(7)Non-income producing.
(8)Investments pledged as collateral under the Banc of California Credit Facility.
(9)Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5for further details.
(10)Fair value represents discounted cash flows associated with fees earned from CLO equity related investments.
(11)Non-qualifying assets under Section 55(a) of the 1940 Act. Qualifying assets as defined in Section 55 of the 1940 Act must represent at least 70% of the Company's assets immediately following the acquisition of any additional non-qualifying assets. As of September 30, 2024, approximately 81% of the Company's assets were qualifying assets.
(12) Subject to unfunded commitments. See Note 6.
(13) Investment held by HPCI-MB, a wholly owned subsidiary of the Company subject to corporate income tax.
(14) The rate disclosed on subordinated note investments is the estimated effective yield, generally established at purchase, and reevaluated upon the receipt of the initial distribution and each subsequent quarter thereafter. The estimated effective yield is based upon projected amounts and timing of future distributions and the projected amounts and timing of terminal principal payments at the time of estimation. The estimated effective yield and investment cost may ultimately not be realized. Projected cash flows, including the amounts and timing of terminal principal payments, which generally are projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(15) Represents expiration date of the warrants.
(16) The interest rate on these investments contains a PIK provision, whereby the issuer has the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for these investments. The following table provides additional details on these PIK investments, including the maximum annual PIK interest rate allowed as of September 30, 2024:
Portfolio Company Investment Type Range of PIK
Option 		Range of Cash
Option 		Maximum PIK
Rate Allowed
Inergex Holdings, LLC First Lien Debt
0% to 2.00%
11.75% to 13.75%
2.00%
Inergex Holdings, LLC First Lien Debt (Revolver)
0% to 2.00%
11.75% to 13.75%
2.00%
RumbleOn, Inc. First Lien Debt
0% to 1.50%
14.27% to 15.77%
1.50%
RumbleOn, Inc. First Lien Debt
0% to 1.50%
14.27% to 15.77%
1.50%
See Notes to Consolidated Financial Statements (unaudited).
13
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
Portfolio Company (1) (8)
Investment Type
Industry
Interest Rate(3)
Spread Above Index (3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Non-control/Non-affiliate Investments
AIDC IntermediateCo 2, LLC Computer Systems Design Services
First Lien Debt 11.80% SOFR+ 6.25% 7/22/2022 7/22/2027 $ 495,000 $ 487,081 $ 493,414 2.6 %
First Lien Debt 11.78% SOFR+ 6.25% 7/31/2023 7/22/2027 11,576 11,318 11,539 0.1
506,576 498,399 504,953 2.7
Allen Media, LLC (9) Cable and Other Subscription Programming
First Lien Debt 11.00% SOFR+ 5.50% 9/15/2022 2/10/2027 1,230,815 1,133,039 1,097,475 5.7
All Star Auto Lights, Inc. Motor Vehicle Parts (Used) Merchant Wholesalers
First Lien Debt 10.97% SOFR+ 5.50% 12/19/2019 8/20/2025 5,176,085 5,143,925 5,174,237 26.9
Astro One Acquisition Corporation (17) Other Miscellaneous Nondurable Goods Merchant Wholesalers
Second Lien Debt 14.11% SOFR+ 8.50% 1/31/2022 9/14/2029 1,000,000 865,283 36,810 0.2
Atlantis Holdings, LLC (9) Electronics and Appliance Stores
First Lien Debt 12.60% SOFR+ 7.25% 3/29/2022 3/31/2029 1,557,895 1,514,045 1,524,789 7.9
BayMark Health Services, Inc. Outpatient Mental Health and Substance Abuse Centers
Second Lien Debt 14.11% SOFR+ 8.50% 6/10/2021 6/11/2028 1,325,758 1,313,086 1,325,758 6.9
Second Lien Debt 14.11% SOFR+ 8.50% 6/10/2021 6/11/2028 357,657 354,206 357,657 1.9
1,683,415 1,667,292 1,683,415 8.8
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Ice Cream and Frozen Dessert Manufacturing
Second Lien Debt 12.72% SOFR+ 7.25% 2/2/2022 6/8/2029 833,333 822,613 737,204 3.8
Boca Home Care Holdings, Inc. Services for the Elderly and Persons with Disabilities
First Lien Debt 11.96% SOFR+ 6.50% 2/25/2022 2/25/2027 1,097,177 1,087,235 1,059,724 5.5
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.50% 2/25/2022 2/25/2027 - (813) (4,405) -
Common Equity (129 Class A units) (7)
2/25/2022 129,032 83,000 0.4
Preferred Equity (345 Class A units) 12.0% cash / 2.0% PIK
34,464 34,410 0.2
1,097,177 1,249,918 1,172,729 6.1
14
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
Portfolio Company (1) (8)
Investment Type
Industry
Interest Rate(3)
Spread Above Index (3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Clevertech Bidco, LLC Commodity Contracts Dealing
First Lien Debt 12.25% SOFR+ 6.75% 11/3/2023 12/30/2027 $ 1,370,506 $ 1,330,989 $ 1,330,989 6.9 %
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.75% 11/3/2023 12/30/2027 - (3,781) (3,781) -
1,370,506 1,327,208 1,327,208 6.9
Constellis Holdings, LLC Other Justice, Public Order, and Safety Activities
Common Equity (1362 Common shares) (7)
3/27/2020 46,403 2,699 -
Convergint Technologies Holdings, LLC Security Systems Services (except Locksmiths)
Second Lien Debt 12.22% SOFR+ 6.75% 9/28/2018 3/30/2029 2,068,608 2,031,402 2,047,222 10.6
DRS Imaging Services, LLC Data Processing, Hosting, and Related Services
Common Equity (115 units) (7) (13)
3/8/2018 115,154 40,002 0.2
Electrical Components International, Inc. Current-Carrying Wiring Device Manufacturing
Second Lien Debt 13.96% SOFR+ 8.50% 4/8/2021 6/26/2026 1,322,722 1,241,484 1,280,271 6.7
Excelin Home Health, LLC Home Health Care Services
Second Lien Debt
18.00% PIK
N/A 10/25/2018 12/31/2025 1,160,553 1,138,621 981,944 5.1
GoTo Group (F/K/A LogMeIn, Inc.) (9) Data Processing, Hosting, and Related Services
First Lien Debt 10.28% SOFR+ 4.75% 9/28/2022 8/31/2027 1,378,680 1,057,122 918,794 4.8
Heritage Grocers Group, LLC (F/K/A Tony's Fresh Market / Cardenas Markets) Supermarkets and Other Grocery (except Convenience) Stores
First Lien Debt 12.20% SOFR+ 6.75% 7/20/2022 8/1/2029 1,975,000 1,880,395 1,975,000 10.3
Honor HN Buyer Inc Services for the Elderly and Persons with Disabilities
First Lien Debt 11.25% SOFR+ 5.75% 10/15/2021 10/15/2027 843,421 832,802 843,421 4.4
First Lien Debt 11.25% SOFR+ 5.75% 10/15/2021 10/15/2027 533,332 525,512 533,332 2.8
First Lien Debt (Revolver) (12) 13.25% Prime+ 4.75% 10/15/2021 10/15/2027 12,376 11,126 12,376 0.1
First Lien Debt (Delayed Draw) (12) 11.50% SOFR+ 6.00% 4/28/2023 10/15/2027 352,896 349,763 352,896 1.8
1,742,025 1,719,203 1,742,025 9.1
15
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
Portfolio Company (1) (8)
Investment Type
Industry
Interest Rate(3)
Spread Above Index (3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Idera Inc. Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt 12.28% SOFR+ 6.75% 1/27/2022 3/2/2029 $ 1,000,000 $ 1,000,000 $ 962,500 5.0 %
Inergex Holdings, LLC Other Computer Related Services
First Lien Debt (2)
12.58% cash / 1.0% PIK
SOFR+ 7.00% 10/1/2018 10/1/2024 991,189 985,511 991,189 5.1
First Lien Debt (Revolver)
12.58% cash / 1.0%PIK
SOFR+ 7.00% 10/1/2018 10/1/2024 156,250 154,153 156,250 0.8
1,147,439 1,139,664 1,147,439 5.9
Medrina, LLC All Other Outpatient Care Centers
First Lien Debt 11.74% SOFR+ 6.25% 10/20/2023 10/20/2029 744,681 726,684 726,684 3.8
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.25% 10/20/2023 10/20/2029 - (2,571) (2,571) -
First Lien Debt (Delayed Draw) (12) n/m (5) SOFR+ 6.25% 10/20/2023 10/20/2029 - (1,614) (1,614) -
744,681 722,499 722,499 3.8
Metasource, LLC All Other Business Support Services
First Lien Debt
11.72% cash / 0.50% PIK
SOFR+ 6.25% 5/17/2022 5/17/2027 688,708 683,270 649,146 3.4
First Lien Debt (Delayed Draw) (12) n/m (5) SOFR+ 6.25% 5/17/2022 5/17/2027 - (909) (17,233) (0.1)
688,708 682,361 631,913 3.3
One GI LLC Offices of Other Holding Companies
First Lien Debt 12.21% SOFR+ 6.75% 12/13/2021 12/22/2025 857,500 848,972 815,264 4.2
First Lien Debt 12.21% SOFR+ 6.75% 12/13/2021 12/22/2025 451,863 447,180 429,607 2.2
First Lien Debt (Revolver) (12) n/m (5) SOFR+ 6.75% 12/13/2021 12/22/2025 - (1,635) (8,209) -
1,309,363 1,294,517 1,236,662 6.4
Redstone Holdco 2 LP (F/K/A RSA Security) Computer and Computer Peripheral Equipment and Software Merchant Wholesalers
Second Lien Debt 13.22% SOFR+ 7.75% 4/16/2021 4/27/2029 1,000,000 991,304 735,262 3.7
RPLF Holdings, LLC Software Publishers
Common Equity (62,365 Class A units) (7) (13)
1/17/2018 - 213,000 1.1
16
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
Portfolio Company (1) (8)
Investment Type
Industry
Interest Rate(3)
Spread Above Index (3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
RumbleOn, Inc. (11) Other Industrial Machinery Manufacturing
First Lien Debt
14.36% Cash / 0.50% PIK
SOFR+ 8.75% 8/31/2021 8/31/2026 $ 714,384 $ 692,360 $ 658,305 3.4 %
First Lien Debt
14.36% Cash / 0.50%PIK
SOFR+ 8.75% 8/31/2021 8/31/2026 215,591 213,453 198,667 1.0
Warrants (warrants to purchase up to $55,000 in common stock) (7)
8/31/2021 8/14/2028 (16) 50,082 18,032 0.1
929,975 955,895 875,004 4.5
Spear Education Holdings, LLC Professional and Management Development Training
First Lien Debt 13.00% SOFR+ 7.50% 2/10/2023 12/15/2027 495,000 484,899 494,567 2.6
SS Acquisition, LLC (6) Sports and Recreation Instruction
First Lien Debt 12.41% SOFR+ 6.75% 12/30/2021 12/30/2026 625,000 621,256 625,000 3.2
First Lien Debt 13.10% SOFR+ 7.45% 12/30/2021 12/30/2026 300,000 297,837 300,000 1.6
925,000 919,093 925,000 4.8
STS Operating, Inc. Industrial Machinery and Equipment Merchant Wholesalers
Second Lien Debt 13.46% SOFR+ 8.00% 5/15/2018 4/30/2026 1,593,220 1,593,208 1,593,220 8.3
Tolemar Acquisition, Inc. Motorcycle, Bicycle, and Parts Manufacturing
First Lien Debt 11.75% SOFR+ 6.00% 10/14/2021 10/14/2026 1,315,475 1,311,793 1,228,653 6.4
First Lien Debt (Revolver) (12) 11.75% SOFR+ 6.00% 10/14/2021 10/14/2026 50,735 50,121 36,176 0.2
1,366,210 1,361,914 1,264,829 6.6
TruGreen Limited Partnership Landscaping Services
Second Lien Debt 14.14% SOFR+ 8.50% 5/13/2021 11/2/2028 1,500,000 1,530,562 1,428,984 7.4
Wellful Inc. (F/K/A KNS Acquisition Corp.) Electronic Shopping and Mail-Order Houses
First Lien Debt 11.72% SOFR+ 6.25% 7/26/2021 4/21/2027 943,750 942,317 901,875 4.7
Total Debt and Equity Investments $ 37,746,736 $ 37,069,739 $ 35,379,531 183.9 %
Structured Finance Securities (11)
Apex Credit CLO 2020 Ltd.
Subordinated Notes (14) (15) 14.89% N/A 11/16/2020 10/20/2031 $ 3,650,000 $ 3,357,087 $ 2,316,143 12.0 %
17
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
Portfolio Company (1) (8)
Investment Type
Industry
Interest Rate(3)
Spread Above Index (3)
Initial Acquisition Date Maturity Principal
Amount 		Amortized Cost
Fair Value(4)
Percent of
Net Assets
Apex Credit CLO 2021 Ltd
Subordinated Notes (14) (15) 21.61% N/A 5/28/2021 7/18/2034 $ 1,480,000 $ 1,196,522 $ 979,339 5.1 %
Apex Credit CLO 2022-1 Ltd.
Subordinated Notes (14) (15) 17.30% N/A 4/28/2022 4/22/2033 1,892,824 1,563,211 1,228,407 6.4
CLO other (10) 15.55% N/A 15,891 22,693 0.1
Elevation CLO 2021-14 Ltd
Subordinated Notes (14) (15) 14.49% N/A 9/21/2021 10/20/2034 1,750,000 1,427,657 1,002,131 5.2
Elevation CLO 2021-15, Ltd.
Subordinated Notes (14) (15) 15.55% N/A 12/6/2021 1/5/2035 1,250,000 904,226 580,677 3.0
Monroe Capital MML CLO X, Ltd.
Mezzanine Debt - Class E-R 14.12% SOFR+ 8.75% 4/22/2022 5/20/2034 1,000,000 961,294 967,151 5.0
Total Structured Finance Securities $ 11,022,824 $ 9,425,888 $ 7,096,541 36.8 %
Total Investments $ 48,769,560 $ 46,495,627 $ 42,476,072 220.7 %
(1) The Company's investments are generally classified as "restricted securities" as such term is defined under Rule 6-03(f) of Regulation S-X or Rule 144 of the Securities Act. Equity ownership may be held in shares or units of companies affiliated with the portfolio company.
(2) The interest rate on this investment contains a PIK provision, whereby the issuer has the option to make interest payments in cash or with the issuance of additional securities as payment of the entire PIK provision. The interest rate in the schedule represents the current interest rate in effect for this investment. The following table provides additional details on this PIK investment, including the maximum annual PIK interest rate allowed as of December 31, 2023:
Portfolio Company Investment Type Range of PIK
Option 		Range of Cash
Option 		Maximum PIK
Rate Allowed
Inergex Holdings, LLC First Lien Debt
0% to 1.00%
12.58% to 13.58%
1.00%
Inergex Holdings, LLC First Lien Debt (Revolver)
0% to 1.00%
12.58% to 13.58%
1.00%
RumbleOn, Inc. First Lien Debt
0% to 0.50%
14.36% to 14.86%
0.50%
(3) A majority of the debt investments bear interest at rates determined by reference to SOFR or Prime, and reset monthly, quarterly, or semi-annually. For each variable-rate investment, the Company has provided the spread over the reference rate and current interest rate in effect at December 31, 2023.
(4) Unless otherwise noted in footnote 9, fair value was determined using significant unobservable inputs for all of the Company's investments and are considered Level 3 under GAAP. See Note 5for further details.
18
Hancock Park Corporate Income, Inc.
Consolidated Schedule of Investments
December 31, 2023
(5) Not meaningful as there is no outstanding balance on the revolver or delayed draw loan. The Company generally earns unfunded commitment fees on undrawn revolving lines of credit and delayed draw term loan balances, which are reported in fee income.
(6) The Company entered into a contractual arrangement with co-lenders whereby, subject to certain conditions, it agreed to receive its payment after the repayment of certain co-lenders pursuant to a payment waterfall. The table below provides additional details as of December 31, 2023:
Portfolio Company Reported Interest Rate Interest Rate per Credit Agreement Additional Interest per Annum
SS Acquisition, LLC 12.41% 11.89% 0.51%
SS Acquisition, LLC 13.10% 11.89% 1.21%
(7) Non-income producing.
(8) Investments pledged as collateral under the Banc of California Credit Facility.
(9) Fair value was determined by reference to observable inputs other than quoted prices in active markets and are considered Level 2 under GAAP. See Note 5for further details.
(10) Fair value represents discounted cash flows associated with fees earned from CLO equity related investments.
(11) Non-qualifying assets under Section 55(a) of the 1940 Act. Qualifying assets as defined in Section 55 of the 1940 Act must represent at least 70% of the Company's assets immediately following the acquisition of any additional non-qualifying assets. As of December 31, 2023, approximately 82% of the Company's assets were qualifying assets.
(12) Subject to unfunded commitments. The Company considers undrawn amounts in the determination of fair value on revolving lines of credit and delayed draw term loans. See Note 6.
(13) Investment held by HPCI-MB, a wholly owned subsidiary subject to corporate income tax.
(14) The rate disclosed on subordinated note investments is the estimated effective yield, generally established at purchase, and reevaluated upon the receipt of the initial distribution and each subsequent quarter thereafter. The estimated effective yield is based upon projected amounts and timing of future distributions and the projected amounts and timing of terminal principal payments at the time of estimation. The estimated effective yield and investment cost may ultimately not be realized. Projected cash flows, including the amounts and timing of terminal principal payments, which generally are projected to occur prior to the contractual maturity date, were utilized in deriving the effective yield of the investments.
(15) Amortized cost reflects accretion of effective yield less any cash distributions received or entitled to be received from CLO subordinated note investments. CLO subordinated note positions are entitled to recurring distributions, which are generally equal to the residual cash flow of payments received on underlying securities less contractual payments to debt holders and fund expenses.
(16) Represents expiration date of the warrants.
(17) Investment was on non-accrual status as of December 31, 2023, meaning the Company suspended recognition of all or a portion of income on the investment. SeeNote 4for further details.
See Notes to Consolidated Financial Statements (unaudited).
19
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Note 1. Organization
The Company is a Maryland corporation formed on December 8, 2015 as an externally managed, non-diversified, closed-end investment company. The Company has elected to be regulated as a BDC and as a RIC under Subchapter M of the Code.
The Company's objective is to provide stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments, primarily in middle-market companies located principally in the United States. In addition, the Company may make investments in Structured Finance Securities.
OFS Advisor, an affiliate of the Company and a registered investment adviser, manages the day-to-day operations of, and provides investment advisory services to, the Company. In addition, OFS Advisor serves as the investment adviser to OFS Capital, a publicly traded BDC with an investment strategy similar to that of the Company. OFS Advisor also serves as the investment adviser to OCCI, a non-diversified, externally managed, closed-end management investment company that is registered as an investment company under the 1940 Act and primarily invests in Structured Finance Securities. Additionally, OFS Advisor serves as the investment adviser to separately-managed accounts and sub-adviser to investment companies managed by an affiliate.
The Company intends to raise up to $200,000,000 through offering shares of its common stock to investors in a continuous offering in reliance on exemptions from the registration requirements of the Securities Act. Since August 3, 2020, CCO has served as the dealer manager in the Offering. From time to time, the Company may enter into agreements with placement agents to sell, distribute and market shares of its common stock in the Offering. The Company may pay certain placement or "finder's" fees to placement agents engaged by the Company in connection with the Offering. In addition, investors who are purchasing shares through a placement agent may be required to pay a fee or commission directly to the placement agent.
The Company may make investments through HPCI-MB, a wholly owned and consolidated subsidiary taxed under subchapter C of the Code that generally holds the Company's equity investments in portfolio companies that are taxed as pass-through entities. Under normal market conditions, the Company will invest at least 80% of its total assets in "corporate income-related investments." "Corporate income-related investments" are defined as loans, bonds and securities, such as subordinated debt and stock, where the counterparty is a corporate entity and the investment is expected to provide the Company with income over time. The Company intends for "corporate income related investments" to consist of investments in: (i) floating and fixed rate senior secured loans, which are comprised of first lien, second lien and unitranche loans of United States middle-market companies; (ii) broadly syndicated senior secured corporate loans; (iii) unsecured loans; (iv) collateralized loan obligation debt, subordinated debt, income notes and loan accumulation facility positions; (v) opportunistic credit investments, including stressed and distressed credit situations and long/short credit investments; and (vi) warrants and other equity securities of United States middle-market companies.
Note 2. Summary of Significant Accounting Policies
Basis of presentation:The accompanying interim consolidated financial statements of the Company and related financial information have been prepared in accordance with GAAP in the United States of America for interim financial information and pursuant to ASC Topic 946, Financial Services-Investment Companies, the requirements for reporting on Form 10-Q, and Articles 6, 10 and 12 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. However, in the opinion of management, the consolidated financial statements include all adjustments, consisting only of normal and recurring accruals and adjustments, necessary for fair presentation as of, and for, the periods presented. These consolidated financial statements and notes hereto should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10 K for the year ended December 31, 2023, filed on March 18, 2024. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.
Significant Accounting Policies: The following information supplements the description of significant accounting policies contained in Note 2to the Company's financial statements included in the Company's Annual Report on Form 10 K for the year ended December 31, 2023.
Reclassifications: Certain prior period amounts have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes thereto. Reclassifications did not impact net increase (decrease) in net assets resulting from operations, total assets, total liabilities or total net assets, or consolidated statements of changes in net assets and consolidated statements of cash flows classifications.
Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of investment income, expenses, gains and losses during the reporting period. Actual results could differ significantly from those estimates.
20
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Cash and cash equivalents: The Company's cash and cash equivalent balances are maintained with a member bank of the Federal Deposit Insurance Corporation ("FDIC") and at times, such balances may exceed the FDIC insurance limits. The Company does not believe its cash and cash equivalent balances are exposed to any significant credit risk. Cash and cash equivalent balances are held in a US Bank Trust Company, National Association money market deposit account.
Concentration of credit risk:Aside from the Company's investments, financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits at financial institutions. At various times during the year, the Company exceeds the federally insured limit. The Company places cash deposits only with high credit quality institutions that it believes will mitigate the risk of loss due to credit risk. If borrowers completely fail to perform according to the terms of the contracts, the amount of loss due to credit risk from the Company's investments is equal to the sum of the Company's recorded investments and the unfunded commitments disclosed in Note 6.
Note 3. Related Party Transactions
Investment Advisory and Management Agreement:OFS Advisor manages the day-to-day operations of, and provides investment advisory services to, the Company pursuant to an Investment Advisory Agreement, which became effective on August 30, 2016. Under the terms of the Investment Advisory Agreement, which are in accordance with the 1940 Act and subject to the overall supervision of the Board, OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring investments, and monitoring investments and portfolio companies on an ongoing basis. OFS Advisor is a subsidiary of OFSAM and a registered investment advisor under the Advisers Act.
OFS Advisor's services under the Investment Advisory Agreement are not exclusive to the Company and OFS Advisor is free to furnish similar services to other entities, including other funds advised or sub-advised by OFS Advisor, so long as its services to the Company are not impaired. OFS Advisor also serves as the investment adviser or sub-adviser to various clients, including OFS Capital and OCCI.
OFS Advisor receives fees for providing services to the Company, consisting of two components: a base management fee and an incentive fee. The base management fee is calculated at an annual rate of 1.25% and based on the average value of the Company's total assets (other than cash and cash equivalents, but including assets purchased with borrowed amounts and including assets owned by any consolidated entity) at the end of the two most recently completed calendar quarters.
The incentive fee has two parts. The first part of the incentive fee ("Income Incentive Fee") is calculated and payable quarterly in arrears based on the Company's pre-incentive fee net investment income for the immediately preceding calendar quarter. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination and sourcing, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies, but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee, any expenses payable under the Administration Agreement and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest or dividend feature (such as OID, debt instruments with PIK interest, equity investments with accruing or PIK dividend and zero coupon securities), accrued income that the Company has not yet received in cash.
Pre-incentive fee net investment income is expressed as a rate of return on the value of the Company's net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter. The incentive fee with respect to pre-incentive fee net income is 100.0% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 1.75% (or 7.0% annualized) "hurdle rate" but is less than 2.1875% (or 8.75% annually), referred to as the "catch-up" provision, and 20.0% of the amount of pre-incentive fee net investment income, if any, that exceeds 2.1875%. The "catch-up" is meant to provide OFS Advisor with 20.0% of the pre-incentive fee net investment income as if a hurdle rate did not apply if pre-incentive fee net investment income exceeds 2.1875% in any calendar quarter. The Income Incentive Fee is calculated before the determination of any operating expense limitation under the Second Amended Expense Support Agreement, as further described below.
Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly minimum hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that quarter due to realized and unrealized capital losses. The Company's net investment income used to calculate this part of the incentive fee is also included in the amount of the Company's gross assets used to calculate the base management fee. These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during such quarter.
21
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
The second part of the incentive fee (the "Capital Gain Fee") is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), and will equal 20.0% of the Company's aggregate realized capital gains, if any, on a cumulative basis through the end of each calendar year, computed net of all realized capital losses, income taxes from realized capital gains and unrealized capital depreciation through the end of such year, less all previous amounts paid in respect of the Capital Gain Fee.
The Company accrues the Capital Gain Fee if, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) is positive. An accrued Capital Gain Fee relating to net unrealized appreciation is deferred, and not due to OFS Advisor, until the close of the year in which such gains are realized. If, on a cumulative basis, the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation) decreases during a period, the Company will reverse any excess Capital Gain Fee previously accrued such that the amount of Capital Gain Fee accrued is no more than 20% of the sum of net realized capital gains (losses) plus net unrealized appreciation (depreciation). Since inception through September 30, 2024, the Company has not made a Capital Gain Fee payment.
The Investment Advisory Agreement will remain in effect from year-to-year upon annual approval by the Board or by the affirmative vote of the holders of a majority of the Company's outstanding voting securities, and, in either case, if also approved by a majority of the Company's directors who are not "interested persons" as defined in the 1940 Act. The Board most recently approved the continuation of the Investment Advisory Agreement on April 3, 2024. The Investment Advisory Agreement will automatically terminate in the event of its assignment, as defined in the 1940 Act, and may be terminated by the Company or OFS Advisor without penalty upon not less than 60 days written notice to the other. The holders of a majority of our outstanding voting securities may also terminate the Investment Advisory Agreement without penalty upon not less than 60 days written notice.
Dealer Manager Agreement:Pursuant to the Dealer Manager Agreement, CCO provides certain sales, promotional and marketing services to the Company in connection with the Offering. The Company pays CCO an aggregate dealer manager fee of an amount up to 3.0% of the gross proceeds from sales of the Offering. CCO may, in its discretion, reallow a portion of the dealer manager fee to participating broker-dealers in support of the Offering.
Administration Agreement: OFS Services furnishes the Company with office facilities and equipment, necessary software licenses and subscriptions, and clerical, bookkeeping and record keeping services at such facilities pursuant to the Administration Agreement. The Board most recently approved the continuation of the Administration Agreement on April 3, 2024. Under the Administration Agreement, OFS Services performs, or oversees the performance of, the Company's required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to its stockholders and all other reports and materials required to be filed with the SEC or any other regulatory authority. In addition, OFS Services 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 to its stockholders, and generally oversees the payment of the Company's expenses and the performance of administrative and professional services rendered to the Company by others. Under the Administration Agreement, OFS Services also provides managerial assistance on the Company's behalf to those portfolio companies that have accepted the Company's offer to provide such assistance. Payment under the Administration Agreement is equal to an amount based upon the Company's allocable portion of OFS Services's overhead in performing its obligations under the Administration Agreement, including, but not limited to, rent, information technology services and the Company's allocable portion of the cost of its officers, including its chief executive officer, chief financial officer, chief compliance officer, chief accounting officer, and their respective staffs. To the extent that OFS Services outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis without profit to OFS Services. Amounts charged under the Administration Agreement exclude Contractual Issuer Expenses.
Equity Ownership: As of September 30, 2024, affiliates of OFS Advisor held 74,084 shares of common stock, which is approximately 4.4% of the Company's outstanding shares of common stock.
22
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Expenses recognized under agreements with OFS Advisor, CCO and OFS Services and distributions paid to affiliates for the three and nine months ended September 30, 2024 and 2023 are presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Base management fees $ 121,696 $ 152,905 $ 377,842 $ 480,913
Incentive fees(1)
96,023 124,141 330,146 395,860
Administrative fees 166,324 210,949 514,369 664,261
Dealer manager fees - - - 7,100
Reimbursements of offering and Contractual Issuer Expenses - - - 10,650
Distributions paid to affiliates 18,803 18,803 56,408 56,408
(1) During the three and nine months ended September 30, 2024 and 2023, incentives fees were comprised of Income Incentive Fees.
Expense Limitation Agreements:
The Company benefits from expense limitation agreements with OFS Advisor that operate separately with regard to: (i) the amortization of offering costs and Contractual Issuer Expenses; and (ii) all other operating expenses not constituting such costs. OFS Advisor's obligation to provide expense support to the Company can be terminated at any time.
Expense limitations provided under the Investment Advisory Agreement and Second Amended Expense Support Agreement for the three and nine months ended September 30, 2024 and 2023, are presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Net offering costs and Contractual Issuer Expenses limitations (credits) under the Investment Advisory Agreement $ (2,258) $ 123,543 $ 110,051 $ 275,076
Operating expense limitations under the Second Amended Expense Support Agreement - 177,156 - 285,704
Net expense limitations (credits) $ (2,258) $ 300,699 $ 110,051 $ 560,780
During the three months ended September 30, 2024, the Company was issued net credits of $2,258 on previously incurred Contractual Issuer Expenses, resulting in a negative balance for the quarter. The Company did not experience any net cash outflow related to these credits and there is no impact to net operating expenses.
As of September 30, 2024 and December 31, 2023, the Company is conditionally obligated to reimburse OFS Advisor for aggregate expense support as follows:
September 30, 2024 December 31, 2023
Unreimbursed costs under the Investment Advisory Agreement $ 890,245 $ 829,397
Unreimbursed operating expense support under the Second Amended Expense Support Agreement 144,315 1,315,422
Total conditional reimbursement obligation under expense limitation agreements $ 1,034,560 $ 2,144,819
23
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Offering Costs and Contractual Issuer Expense Limitations: The Company is conditionally liable for offering costs and Contractual Issuer Expenses that OFS Advisor and affiliates have incurred, or OFS Advisor expects to incur, on its behalf, throughout the Offering. The Investment Advisory Agreement entitles OFS Advisor to receive up to 1.5% of the gross proceeds raised in the Offering until all reimbursable offering costs and Contractual Issuer Expenses paid have been recovered.
Unreimbursed offering costs and Contractual Issuer Expenses subject to conditional reimbursement as of September 30, 2024, are summarized below based on the period in which the costs were incurred:
Period Incurred Unreimbursed
Total
Expiration of Reimbursement
Eligibility(1)
Three months ended December 31, 2021 $ 19,768 December 31, 2024
Year ended December 31, 2022 375,824 December 31, 2025
Year ended December 31, 2023 395,986 December 31, 2026
Nine months ended September 30, 2024 98,667 September 30, 2027
Total unreimbursed offering costs and Contractual Issuer Expenses $ 890,245
(1) Expenses are pooled monthly for the determination of their reimbursement expiration date and are summarized into quarterly and yearly pools for presentation purposes. Expiration of reimbursement eligibility for portions of each pool occurs at each month-end within the periods presented above.
All Other Operating Expenses: All other operating expenses, not separately limited under the Investment Advisory Agreement, are limited under the Second Amended Expense Support Agreement such that no distribution by the Company is deemed to be a return of capital contributed by its stockholders. OFS Advisor is required to provide expense support payments to the Company when its distributable taxable income is less than its aggregate distributions declared during the period. For additional details, see the Company's Annual Report on Form 10 K for the year ended December 31, 2023.
Unreimbursed support for operating expenses provided under the Second Amended Expense Support Agreement and conditions for reimbursement to OFS Advisor as of September 30, 2024, are summarized below:
Other Operating Expense Ratio
Support Provided for the Three Months Ended Unreimbursed Expense Support Annualized for the quarter limitation was provided Annual for year limitation was provided
Annualized rate of distribution per share(1)
Expiration of reimbursement
eligibility
March 31, 2022 $ 134,376 7.2% 8.1% 7.0% March 31, 2025
December 31, 2022 9,939 8.5% 8.1% 7.8% December 31, 2025
Total $ 144,315
(1) The annualized rate of distributions per share is expressed as a percentage equal to the annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular quarterly cash distribution per share as of such date without compounding), divided by our offering price per share as of such date.
24
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Note 4. Investments
As of September 30, 2024, the Company had loans to 27 portfolio companies, of which 66% were first lien loans and 34% were second lien loans, at fair value, respectively. The Company also had equity investments in five portfolio companies and investments in six Structured Finance Securities.
As of September 30, 2024, the Company's investments consisted of the following:
Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
First lien debt investments(1)
$ 21,371,716 50.6 % 126.3 % $ 20,168,128 52.8 % 119.2 %
Second lien debt investments 11,314,437 26.8 66.8 10,568,860 27.6 62.4
Preferred equity investments 34,464 0.1 0.2 35,583 0.1 0.2
Common equity and warrant investments 340,671 0.8 2.0 505,743 1.3 3.0
Total Portfolio Company Investments 33,061,288 78.3 195.3 31,278,314 81.8 184.8
Structured Finance Securities 9,149,286 21.7 54.1 6,959,771 18.2 41.1
Total investments $ 42,210,574 100.0 % 249.4 % $ 38,238,085 100.0 % 225.9 %
(1) Includes unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position) with an amortized cost and fair value of $12,742,017 and $12,697,707, respectively.
As of September 30, 2024, all of the Company's debt and equity investments were domiciled in the United States, while its Structured Finance Securities were domiciled in the Cayman Islands. These CLO investments generally hold underlying portfolios of debt investments of United States domiciled companies. Geographic composition is determined by the location of the corporate headquarters of the portfolio company. The industry compositions of the Company's portfolio were as follows:
Percentage of Total Percentage of Total
Industry Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Administrative and Support and Waste Management and Remediation Services $ 4,242,334 10.0 % 25.0 % $ 4,052,736 10.6 % 24.0 %
Construction 1,015,877 2.4 6.0 996,700 2.6 5.9
Education Services 920,572 2.2 5.4 925,000 2.4 5.5
Finance and Insurance 1,325,319 3.1 7.8 1,343,776 3.5 7.9
Health Care and Social Assistance 6,641,573 15.7 39.3 6,272,544 16.5 37.1
Information 2,319,038 5.5 13.7 1,793,649 4.7 10.5
Management of Companies and Enterprises 1,456,885 3.5 8.6 1,423,537 3.7 8.4
Manufacturing 6,094,069 14.5 36.1 5,963,507 15.6 35.3
Other Services (except Public Administration) 1,410,119 3.3 8.3 1,412,408 3.7 8.3
Professional, Scientific, and Technical Services 3,123,192 7.4 18.4 3,138,156 8.2 18.5
Public Administration 46,403 0.1 0.3 4,212 - -
Retail Trade 2,802,645 6.7 16.6 2,520,357 6.6 14.9
Wholesale Trade 1,663,262 3.9 9.8 1,431,732 3.7 8.5
Total Portfolio Company Investments $ 33,061,288 78.3 % 195.3 % $ 31,278,314 81.8 % 184.8 %
Structured Finance Securities 9,149,286 21.7 54.1 6,959,771 18.2 41.1
Total investments $ 42,210,574 100.0 % 249.4 % $ 38,238,085 100.0 % 225.9 %
25
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
As of December 31, 2023, the Company had loans to 28 portfolio companies, of which 67% were first lien loans and 33% were second lien loans, at fair value, respectively. The Company also had equity investments in five portfolio companies and six investments in Structured Finance Securities.
As of December 31, 2023, the Company's investments consisted of the following:
Percentage of Total Percentage of Total
Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
First lien debt investments(1)
$ 23,812,835 51.2 % 123.7 % $ 23,501,556 55.4 % 122.1 %
Second lien debt investments 12,881,769 27.7 66.9 11,486,832 27.0 59.7
Preferred equity investments 34,464 0.1 0.2 34,410 0.1 0.2
Common equity and warrant investments 340,671 0.7 1.8 356,733 0.8 1.9
Total debt and equity investments 37,069,739 79.7 192.6 35,379,531 83.3 183.9
Structured Finance Securities 9,425,888 20.3 49.0 7,096,541 16.7 36.8
Total investments $ 46,495,627 100.0 % 241.6 % $ 42,476,072 100.0 % 220.7 %
(1) Includes unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position) with an amortized cost and fair value of $17,483,339 and $17,384,403, respectively.
As of December 31, 2023, all of the Company's debt and equity investments were domiciled in the United States, while its Structured Finance Securities were domiciled in the Cayman Islands. These CLO investments generally hold underlying portfolios of debt investments of United States domiciled companies. Geographic composition is determined by the location of the corporate headquarters of the portfolio company.
The industry compositions of the Company's portfolio were as follows:
Percentage of Total Percentage of Total
Industry Amortized Cost Amortized Cost Net Assets Fair Value Fair Value Net Assets
Administrative and Support and Waste Management and Remediation Services $ 4,244,326 9.2 % 22.1 % $ 4,108,120 9.7 % 21.4 %
Education Services 1,403,992 3.0 7.3 1,419,567 3.4 7.4
Health Care and Social Assistance 6,497,533 14.0 33.8 6,302,612 14.9 32.7
Information 2,305,315 4.9 12.0 2,269,271 5.4 11.8
Finance and Insurance 1,327,208 2.9 6.9 1,327,208 3.1 6.9
Management of Companies and Enterprises 1,294,517 2.8 6.7 1,236,662 2.9 6.4
Manufacturing 4,381,905 9.4 22.8 4,157,307 9.8 21.6
Professional, Scientific, and Technical Services 1,638,063 3.6 8.5 1,652,392 3.9 8.6
Public Administration 46,403 0.1 0.2 2,699 - -
Retail Trade 4,336,757 9.2 22.5 4,401,664 10.3 22.9
Wholesale Trade 9,593,720 20.6 49.8 8,502,029 19.9 44.2
Total debt and equity investments $ 37,069,739 79.7 % 192.6 % $ 35,379,531 83.3 % 183.9 %
Structured Finance Securities 9,425,888 20.3 49.0 7,096,541 16.7 36.8
Total investments $ 46,495,627 100.0 % 241.6 % $ 42,476,072 100.0 % 220.7 %
Non-Accrual Loans:Management reviews, for placement on non-accrual status, all loans and CLO mezzanine debt investments that become past due on principal and interest, and/or when there is reasonable doubt that principal or interest will be collected. When a loan is placed on non-accrual status, accrued and unpaid cash interest is reversed. Additionally, Net Loan Fees are no longer recognized as of the date the loan is placed on non-accrual status. Depending upon management's judgment, interest payments subsequently received on non-accrual investments may be recognized as interest income or applied as a reduction to amortized cost. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal and interest payments and, in the judgment of management, it is probable that the Company will collect all principal and interest from the investment.
For the three and nine months ended September 30, 2024, no new loans were placed on non-accrual status. As of September 30, 2024, the Company had no loans on non-accrual status, and, as of December 31, 2023, the Company had loans on non-accrual status with an aggregate cost and fair value of $865,283 and $36,810, respectively.
26
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Portfolio Concentration: The following table presents the Company's portfolio companies based on fair value that comprise greater than 10% of the Company's total net assets as of September 30, 2024.
Percentage of Total
Portfolio Company Investment Type Industry Amortized Cost Fair Value Fair Value Net Assets
Apex Credit CLO 2020 Ltd.(1)
Subordinated Note Structured Finance Securities $ 3,251,464 $ 2,644,616 6.9 % 15.6 %
Convergint Technologies Holdings, LLC Second Lien Debt Administrative and Support and Waste Management and Remediation Services 2,036,726 1,950,956 5.1 11.5
Heritage Grocers Group, LLC (F/K/A Tony's Fresh Market / Cardenas Markets) First Lien Debt Retail Trade 1,878,730 1,938,763 5.1 11.5
Honor HN Buyer, Inc. First Lien Debt Health Care and Social Assistance 1,796,553 1,815,547 4.7 10.7
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Second Lien Debt Ice Cream and Frozen Dessert Manufacturing 1,696,119 1,721,500 4.5 10.2
(1) As of September 30, 2024, approximately 12% and 28% of the Company's total portfolio at fair value and its net assets, respectively, were comprised of Structured Finance Securities managed by a single adviser.
Note 5. Fair Value of Financial Instruments
The Company's investments are carried at fair value and determined in accordance with ASC 820 and a documented valuation policy that is applied in a consistent manner. Pursuant to Rule 2a-5 of the 1940 Act ("Rule 2a-5"), the Board designated OFS Advisor as the valuation designee to perform fair value determinations relating to the Company's investments, and the Board maintains oversight of OFS Advisor in its capacity as valuation designee, as prescribed in Rule 2a-5.
Fair value is defined 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. Fair values are determined with models or other valuation techniques, valuation inputs, and assumptions that market participants would use in pricing an asset or liability. Valuation inputs are organized in a hierarchy that gives the highest priority to prices for identical assets or liabilities quoted in active markets (Level 1) and the lowest priority to fair values based on unobservable inputs (Level 3). The three levels of inputs in the fair value hierarchy are described below:
Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2:Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:Unobservable inputs for the asset or liability, and situations where there is little, if any, market activity for the asset or liability at the measurement date.
The inputs into the determination of fair value are based upon the best information under the circumstances and may require management to exercise significant judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. The Company generally categorizes its investment portfolio into Level 3, and to a lesser extent Level 2, of the hierarchy.
The Company assesses the levels of the investments at each measurement date, and transfers between levels are recognized on the measurement date. The following table presents the Company's transfers of Level 2 and Level 3 debt investments for the three and nine months ended September 30, 2024 and 2023:
27
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Transfers from Level 2 to Level 3 $ - $ - $ - $ -
Transfers from Level 3 to Level 2 - 1,985,782 4,471,313 1,985,782
Transfers between levels during the reporting periods were due to the availability of reliable Indicative Prices in those periods. The Company classifies loan investments as Level 2 when sufficient Indicative Prices are available, and the depth of the market is sufficient, in management's judgment, to transact at those prices in amounts approximating the Company's investment position at the measurement date.
Due to the inherent uncertainty of determining the fair value of Level 3 investments, the fair value of the investments may differ significantly from the values that would have been used had a ready market or observable inputs existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions, or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company might realize significantly less than the value at which such investment had previously been recorded and incur a realized capital loss. The Company's investments are subject to market risk as a result of economic and political developments, including impacts from interest rate changes and elevated inflation rates, the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, instability in the U.S. and international banking systems, uncertainties related to the 2024 U.S. presidential election, the risk of recession or a shutdown of U.S. government services and related market volatility. Market risk is directly impacted by the volatility and liquidity in the markets in which certain investments are traded and can affect the fair value of the Company's investments. The Company's investments are also subject to interest rate risk. Changes in interest rates, including potential additional interest rate reductions approved by the U.S. Federal Reserve, may impact our investment income, cost of funding and the valuation of our investment portfolio.
The following tables present the Company's investment portfolio measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, respectively:
Security Level 1 Level 2 Level 3 Fair Value as of September 30, 2024
Debt investments $ - $ 10,901,544 $ 19,835,444 $ 30,736,988
Equity investments - - 541,326 541,326
Structured Finance Securities - - 6,959,771 6,959,771
$ - $ 10,901,544 $ 27,336,541 $ 38,238,085
Security Level 1 Level 2 Level 3 Fair Value as of December 31, 2023
Debt investments $ - $ 3,541,056 $ 31,447,332 $ 34,988,388
Equity investments - - 391,143 391,143
Structured Finance Securities - - 7,096,541 7,096,541
$ - $ 3,541,056 $ 38,935,016 $ 42,476,072
28
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
The following tables provide the primary quantitative information about valuation techniques and the Company's unobservable inputs to its Level 3 fair value measurements as of September 30, 2024 and December 31, 2023. The Company may make changes to the valuation techniques, among techniques otherwise commonly utilized in accordance with its valuation policies, and/or the weighting of techniques used for particular investments based on changes in facts-and-circumstances and depending on the availability of, or changes in, information in order to produce the best estimate of fair value as of the measurement date. In addition to the techniques and unobservable inputs noted in the tables below and in accordance with OFS Advisor's valuation policy, OFS Advisor, as valuation designee, may also use other valuation techniques and methodologies when determining the fair value measurements of the Company's investment assets. The tables are not intended to be all-inclusive and only present the most significant unobservable input(s) relevant to the valuation designee's determination of fair value.
Fair Value as of September 30, 2024 Valuation techniques Unobservable input Range
(Weighted average)
Debt investments:
First Lien $ 12,629,948 Discounted cash flow Discount rates
8.55% - 17.91% (11.77%)
Second Lien 6,151,523 Discounted cash flow Discount rates
13.07% - 19.50% (14.98%)
1,053,973 Market approach Revenue multiples
0.93x - 0.93x (0.93x)
Structured Finance Securities(1):
Subordinated notes and other CLO equity related investments 5,955,675 Discounted cash flow Discount rates
9.94% - 33.50% (26.62%)
Constant default rate
2.00% - 2.00% (2.00%)
Recovery rate
65.00% - 65.00% (65.00%)
Mezzanine debt 1,004,096 Discounted cash flow Discount margin
8.65% - 8.65% (8.65%)
Constant default rate
3.00% - 3.00% (3.00%)
Recovery rate
65.00% - 65.00% (65.00%)
Equity investments:
Preferred equity 35,583 Market approach EBITDA multiples
7.50x - 7.50x (7.50x)
Common equity and warrants 505,743 Market approach EBITDA multiples
6.20x - 15.75x (12.37x)
$ 27,336,541
(1) The cash flows utilized in the discounted cash flow calculations assume: (i) immediate liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices; and (ii) redeployment of proceeds at the issuing CLO's assumed reinvestment rate.
29
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Fair Value at December 31, 2023 Valuation techniques Unobservable inputs Range
(Weighted average)
Debt investments:
First lien $ 15,935,793 Discounted cash flow Discount rates
9.55% - 17.53% (11.94%)
4,024,707 Market approach Transaction Price
Second lien 9,505,578 Discounted cash flow Discount rates
10.45% - 21.70% (13.54%)
1,018,754 Market approach Revenue multiples
0.90x - 1.20x (0.91x)
962,500 Market approach Transaction Price
Structured Finance Securities(1):
Subordinated notes and other CLO equity related investments 6,129,390 Discounted cash flow Discount rates
9.94% - 32.00% (27.32%)
Constant default rate
2.00% - 2.00% (2.00%)
Recovery rate
65.00% - 65.00% (65.00%)
Mezzanine debt 967,151 Discounted cash flow Discount margin
9.50% - 9.50% (9.50%)
Constant default rate
3.00% - 3.00% (3.00%
Recovery rate
65.00% - 65.00% (65.00%)
Equity investments:
Preferred equity 34,410 Market Approach EBITDA multiples
7.50x - 7.50x (7.50x)
Common equity and warrants 316,731 Market approach EBITDA multiples
7.50x - 16.50x (13.71x)
40,002 Market Approach Revenue multiples
0.70x - 0.70x (0.70x)
$ 38,935,016
(1) The cash flows utilized in the discounted cash flow calculations assume: (i) liquidation of (a) certain distressed investments and (b) all investments currently in default held by the issuing CLO at their current market prices; and (ii) redeployment of proceeds at the issuing CLO's assumed reinvestment rate.
Averages in the preceding two tables were weighted by the fair value of the related instruments.
Changes in market credit spreads or events impacting the credit quality of the underlying portfolio company (both of which could impact the discount rate), as well as changes in enterprise value and/or EBITDA multiples, among other things, could have a significant impact on fair values, with the fair value of a particular debt investment susceptible to change in inverse relation to the changes in the discount rate. Changes in enterprise value and/or EBITDA multiples, as well as changes in the discount rate, could have a significant impact on fair values, with the fair value of an equity investment susceptible to change in tandem with the changes in enterprise value and/or EBITDA multiples, and in inverse relation to changes in the discount rate. Due to the wide range of approaches in developing input assumptions to these valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful.
30
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
The following tables present changes in the investments measured at fair value using Level 3 inputs for the nine months ended September 30, 2024 and 2023, respectively:
First Lien Debt Investments Second Lien Debt Investments Preferred Equity Common Equity and Warrants Structured Finance Securities Total
Level 3 assets, December 31, 2023 $ 19,960,500 $ 11,486,832 $ 34,410 $ 356,733 $ 7,096,541 $ 38,935,016
Net realized losses - (797,032) - - - (797,032)
Net unrealized appreciation (depreciation) on investments (235,549) 647,073 1,173 149,010 139,832 701,539
Amortization of Net Loan Fees 109,650 106,675 - - 12,190 228,515
Paid-in-kind interest income 11,491 166,367 - - - 177,858
Accretion of interest income on Structured Finance Securities - - - - 866,726 866,726
Purchase of portfolio investments 1,484,843 860,000 - - - 2,344,843
Proceeds from principal payments on portfolio investments (6,157,584) (3,245,211) - - - (9,402,795)
Sale or redemption of portfolio investments - (68,252) - - - (68,252)
Proceeds from distributions received from portfolio investments - - - - (1,155,518) (1,155,518)
Amendment fees received (23,046) - - - - (23,046)
Transfers from Level 3 to Level 2 (2,520,357) (1,950,956) - - - (4,471,313)
Level 3 assets, September 30, 2024
$ 12,629,948 $ 7,205,496 $ 35,583 $ 505,743 $ 6,959,771 $ 27,336,541
First Lien Debt Investments Second Lien Debt Investments Subordinated
Debt
Investments 		Preferred Equity Common Equity and Warrants Structured Finance Notes Total
Level 3 assets, December 31, 2022 $ 21,702,915 $ 14,305,307 $ 58,092 $ - $ 344,400 $ 8,924,790 $ 45,335,504
Net unrealized appreciation (depreciation) on investments 233,049 (497,173) 426,638 (59) 153,128 (925,703) (610,120)
Net realized gain (loss) on investments - - (484,730) - 16,070 - (468,660)
Amortization of Net Loan Fees 84,785 55,706 - - - 34,215 174,706
Paid-in-kind interest income 16,462 8,887 - - - - 25,349
Accretion of interest income on Structured Finance Securities - - - - - 1,133,191 1,133,191
Purchase of portfolio investments 2,524,613 - - 34,464 18,750 - 2,577,827
Proceeds from principal payments on portfolio investments (4,670,728) - - - - - (4,670,728)
Proceeds from distributions received from portfolio investments - - - - (173,737) (963,472) (1,137,209)
Amendment fees received (2,969) (7,571) - - - - (10,540)
Transfers from Level 3 to Level 2 (1,985,782) - - - - - (1,985,782)
Level 3 assets, September 30, 2023
$ 17,902,345 $ 13,865,156 $ - $ 34,405 $ 358,611 $ 8,203,021 $ 40,363,538
31
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
The net unrealized appreciation (depreciation) reported in the Company's consolidated statements of operations for the nine months ended September 30, 2024 and 2023, attributable to the Company's Level 3 assets still held at those respective period ends, was as follows:
Nine Months Ended September 30,
2024 2023
Debt investments $ 83,547 $ (335,113)
Equity investments 150,183 103,070
Structured Finance Securities 139,832 (925,701)
Net unrealized appreciation (depreciation) on investments held $ 373,562 $ (1,157,744)
Other Financial Assets and Liabilities
GAAP requires disclosure of the fair value of financial instruments for which it is practical to estimate such values. The Company believes that the carrying amounts of its other financial instruments, such as cash, cash equivalents, receivables and payables, approximate the fair value of such items due to the short maturity of such financial instruments. The Banc of California Credit Facility is a variable rate instrument and fair value approximates book value as of September 30, 2024 and December 31, 2023.
The following tables present the fair value measurements of the Company's debt and the level within the fair value hierarchy of the significant unobservable inputs used to determine such fair values as of September 30, 2024 and December 31, 2023:
September 30, 2024
Description Level 1 Level 2
Level 3(1)
Total
Banc of California Credit Facility $ - $ - $ 5,665,000 $ 5,665,000
Unsecured Note - - 14,379,601 14,379,601
Total debt, at fair value $ - $ - $ 20,044,601 $ 20,044,601
December 31, 2023
Description Level 1 Level 2
Level 3(1)
Total
Banc of California Credit Facility $ - $ - $ 7,665,000 $ 7,665,000
Unsecured Note - - 13,935,862 13,935,862
Total debt, at fair value $ - $ - $ 21,600,862 $ 21,600,862
(1) For Level 3 measurements, fair value is estimated by discounting remaining payments using current market rates for similar instruments at the measurement date and considering such factors as the legal maturity date.
The following table sets forth the carrying values and fair values of the Company's debt as of September 30, 2024 and December 31, 2023:
September 30, 2024 December 31, 2023
Description
Carrying Value(1)
Fair Value
Carrying Value(1)
Fair Value
Banc of California Credit Facility $ 5,665,000 $ 5,665,000 $ 7,665,000 $ 7,665,000
Unsecured Note 14,842,512 14,379,601 14,787,997 13,935,862
Total debt $ 20,507,512 $ 20,044,601 $ 22,452,997 $ 21,600,862
(1) Carrying value of the Unsecured Note is calculated as the outstanding principal amount less unamortized deferred debt issuance costs.
The information presented should not be interpreted as an estimate of the fair value of the entire Company since fair value measurements are only required for a portion of the Company's assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful.
32
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Note 6. Commitments and Contingencies
The following table presents the Company's outstanding commitments to fund investments to portfolio companies as of September 30, 2024:
Portfolio Company Investment Type Commitment
Boca Home Care Holdings, Inc. First Lien Debt (Revolver) $ 129,032
Clevertech Bidco, LLC First Lien Debt (Revolver) 126,033
Flow Service Partners Management, LLC First Lien Debt (Revolver) 159,091
Honor HN Buyer Inc. First Lien Debt (Revolver) 86,634
Honor HN Buyer Inc. First Lien Debt (Delayed Draw) 151,909
Medrina LLC First Lien Debt (Revolver) 106,383
Medrina LLC First Lien Debt (Delayed Draw) 148,936
Tolemar Acquisition, Inc. First Lien Debt (Revolver) 57,353
$ 965,371
As of September 30, 2024, the Company had cash and cash equivalents of $2,470,786 and an unused commitment of $14,335,000 under the Banc of California Credit Facility, subject to the terms of the borrowing base, to fund these outstanding commitments to portfolio companies.
The following table shows the Company's outstanding commitments to fund investments to portfolio companies as of December 31, 2023:
Portfolio Company Investment Type Commitment
Boca Home Care Holdings, Inc. First Lien Debt (Revolver) $ 129,032
Clevertech Bidco, LLC First Lien Debt (Revolver) 126,033
Honor HN Buyer Inc. First Lien Debt (Revolver) 86,634
Honor HN Buyer Inc. First Lien Debt (Delayed Draw) 239,038
Medrina LLC First Lien Debt (Revolver) 106,383
Medrina LLC First Lien Debt (Delayed Draw) 148,936
Metasource, LLC First Lien Debt (Delayed Draw) 300,000
One GI LLC First Lien Debt (Revolver) 166,667
Tolemar Acquisition, Inc. First Lien Debt (Revolver) 169,853
$ 1,472,576
Legal and regulatory proceedings: From time to time, the Company is involved in legal proceedings in the normal course of its business. Although the outcome of such litigation cannot be predicted with any certainty, management is of the opinion, based on the advice of legal counsel, that final disposition of any litigation should not have a material adverse effect on the financial position of the Company as of September 30, 2024.
Additionally, the Company is subject to periodic inspection by regulators to assess compliance with applicable BDC regulations.
Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnification. The Company's maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. The Company believes the risk of any material obligation under these indemnifications to be low.
Note 7. Borrowings
Banc of California Credit Facility:On September 12, 2018, the Company entered into the Banc of California Credit Facility. The Banc of California Credit Facility bears interest at a variable rate of the Prime Rate plus a 0.25% margin and includes an annual commitment fee of $100,000 (based upon the current maximum principal amount of the facility).
33
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
On December 15, 2023, the Company amended the Banc of California Credit Facility to: (i) extend the maturity date from August 31, 2024 to February 28, 2026; (ii) reduce the interest rate from Prime Rate plus 0.75% to Prime Rate plus 0.25%; (iii) increase the interest rate floor from 4.25% to 5.00%; and (iv) eliminate the 0.50% unused line fee and replace it with an annual commitment fee of 0.50% of the maximum principal amount of the facility. Fees and legal costs incurred in connection with the Banc of California Credit Facility are amortized over the life of the facility.
The maximum availability of the Banc of California Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans included in the borrowing base, which excludes subordinated loan investments and as otherwise specified in the BLA, subject to an overall maximum principal amount of $20,000,000. The Company has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
As of September 30, 2024 and December 31, 2023, the Company had outstanding debt of $5,665,000 and $7,665,000 under the Banc of California Credit Facility, respectively, and $14,335,000 and $12,335,000 of unused commitments subject to the terms of the borrowing base, respectively.
For the three and nine months ended September 30, 2024 and 2023, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Banc of California Credit Facility were as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Stated interest expense(1)
$ 127,870 $ 308,373 $ 450,267 $ 1,028,471
Amortization of debt issuance costs 25,366 440 76,099 1,323
Total interest and debt financing costs $ 153,236 $ 308,813 $ 526,366 $ 1,029,794
Cash paid for interest expense $ 128,913 $ 306,928 $ 449,994 $ 1,029,918
Effective interest rate 10.64 % 9.55 % 10.36 % 8.99 %
Average outstanding balance $ 5,760,652 $ 12,935,109 $ 6,775,219 $ 15,277,454
(1) For the three and nine months ended September 30, 2023, stated interest expense includes unused fees.
Unsecured Note:On November 27, 2019, the Company entered into the Note Purchase Agreement under which the Company sold the Unsecured Note. The Unsecured Note bears interest at a fixed rate of 5.50% and matures on November 27, 2026.
The Company may, at its option, upon notice to the purchaser, redeem at any time all, or from time to time, any part of, the Unsecured Note, in an amount not less than 10% of the aggregate principal amount of the Unsecured Note then outstanding in the case of a partial redemption, at 100% of the principal amount so redeemed, together with interest on such Unsecured Note accrued to, but excluding, the date of redemption, and with no redemption settlement amount paid by the Company in connection with any such redemption. Fees and legal costs incurred with the Unsecured Note are amortized over the life of the facility.
The Note Purchase Agreement, as amended, contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants, such as information reporting, maintenance of the Company's status as a business development company within the meaning of the 1940 Act and a minimum asset coverage ratio. The Note Purchase Agreement, as amended, also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, certain judgements and orders and certain events of bankruptcy.
On each of September 30, 2024 and December 31, 2023, the Company's Unsecured Note had an aggregate outstanding principal of $15,000,000.
34
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
For the three and nine months ended September 30, 2024 and 2023, the components of interest expense, cash paid for interest, average interest rates and average outstanding balances for the Unsecured Note were as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Stated interest expense $ 206,250 $ 206,250 $ 618,750 $ 618,750
Amortization of debt issuance costs 18,173 18,173 54,515 54,515
Total interest and debt financing costs $ 224,423 $ 224,423 $ 673,265 $ 673,265
Cash paid for interest expense $ 206,250 $ 206,250 $ 618,750 $ 618,750
Effective interest rate 5.98 % 5.98 % 5.98 % 5.98 %
Average outstanding balance $ 15,000,000 $ 15,000,000 $ 15,000,000 $ 15,000,000
For the three and nine months ended September 30, 2024 and 2023, the average dollar borrowings and weighted average effective interest rate on the Company's outstanding borrowings were as follows:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Average dollar borrowings $ 20,760,652 $ 27,935,109 $ 21,775,219 $ 30,277,454
Weighted average effective interest rate 7.28 % 7.64 % 7.35 % 7.50 %
Note 8. Financial Highlights
The following is a schedule of financial highlights for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Per Share Operating Performance:
Net asset value per share at beginning of period
$ 10.57 $ 10.68 $ 10.49 $ 11.13
Net investment income(1)
0.22 0.35 0.74 0.95
Net realized gain (loss), net of taxes(1)
- 0.01 (0.45) (0.26)
Net unrealized appreciation (depreciation) on investments, net of deferred taxes(1)
(0.54) 0.01 - (0.28)
Total net income (loss) from operations(1)
(0.32) 0.37 0.29 0.41
Distributions(2)
(0.25) (0.25) (0.76) (0.76)
Repurchase of common stock(1)(3)
- - (0.02) 0.02
Net asset value per share at end of period $ 10.00 $ 10.80 $ 10.00 $ 10.80
Total return based on net asset value(4)(5)
(3.0) % 3.5 % 2.5 % 4.1 %
Shares outstanding at end of period 1,693,121 1,885,078 1,693,121 1,885,078
Weighted average shares outstanding 1,737,056 1,932,833 1,784,610 1,965,593
Ratio/Supplemental Data
Average net asset value(6)
$ 17,656,080 $ 20,505,989 $ 18,329,561 $ 21,054,588
Net asset value at end of period
$ 16,927,297 $ 20,350,496 $ 16,927,297 $ 20,350,496
Net investment income
$ 384,091 $ 673,719 $ 1,320,585 $ 1,869,144
Ratio of net operating expenses to average net assets(7)
23.5 % 22.0 % 23.8 % 24.5 %
Ratio of net investment income to average net assets(7)
8.7 % 13.1 % 9.6 % 11.8 %
Portfolio turnover(8)
13.5 % 0.1 % 18.4 % 5.1 %
(1)Calculated on the average share method.
(2)The per share data for distributions is the actual amount of distributions declared per share during the period. The determination of the tax attributes of the Company's distributions is made annually as of the end of its fiscal year based
35
Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
upon its estimated ICTI for the full year and distributions paid for the full year. The Company anticipates its distributions to be comprised 100% from net investment income.
(3)The repurchase of common stock on a per share basis reflects the incremental net asset value change as a result of the retirement of shares from the Company's repurchases of common stock and the dilutive or anti-dilutive impact from significant changes in weighted-average shares outstanding during the period.
(4)Calculated as ending net asset value less beginning net asset value, adjusting for cumulative monthly distributions reinvested at the Company's quarter-end net asset value.
(5)Not annualized.
(6)Based on the average of the net asset value at the beginning and end of the indicated period and, if applicable, the preceding calendar quarters.
(7)Annualized.
(8)Portfolio turnover rate is calculated using the lesser of period-to-date sales, portfolio investment distributions and principal payments or period-to-date purchases over the average of the invested assets at fair value.
Note 9. Capital Transactions
Common stock transactions
Below is a summary of transactions with respect to shares of the Company's common stock issued in the Offering during the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Shares Amount Shares Amount Shares Amount Shares Amount
Gross proceeds from the Offering - $ - - $ - - $ - 57,618 $ 710,000
Commissions and dealer manager fees - - - - - - - (48,000)
Net proceeds to the Company - $ - - $ - - $ - 57,618 $ 662,000
Repurchases of Shares
The following table summarizes the common stock repurchases by the Company for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Shares Amount Shares Amount Shares Amount Shares Amount
Repurchase of common stock 46,460 $ 472,033 49,926 $ 542,189 142,478 $ 1,482,705 150,234 $ 1,642,606
All repurchased shares were retired upon acquisition.
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Hancock Park Corporate Income, Inc.
Notes to Consolidated Financial Statements (unaudited)
Distributions
The following table reflects the cash distributions per share that the Company declared on its common stock during the nine months ended September 30, 2024 and 2023. Stockholders of record as of each respective record date were entitled to receive the distribution.
Date Declared Record Dates Payment Date Per Share Amount Cash Distribution
Nine Months Ended September 30, 2024
January 27, 2024 January 29, 2024 February 5, 2024 $ 0.0846 $ 155,292
February 27, 2024 February 27, 2024 March 5, 2024 0.0846 155,292
March 27, 2024 March 27, 2024 April 5, 2024 0.0846 151,178
April 26, 2024 April 26, 2024 May 6, 2024 0.0846 151,178
May 29, 2024 May 29, 2024 June 5, 2024 0.0846 151,178
June 26, 2024 June 26, 2024 July 5, 2024 0.0846 147,168
July 27, 2024 July 29, 2024 August 5, 2024 0.0846 147,168
August 28, 2024 August 28, 2024 September 5, 2024 0.0846 147,168
September 26, 2024 September 26, 2024 October 7, 2024 0.0846 143,238
Total $ 0.7614 $ 1,348,860
Nine Months Ended September 30, 2023
January 26, 2023 January 27, 2023 February 6, 2023 $ 0.0846 $ 167,313
February 23, 2023 February 24, 2023 March 6, 2023 0.0846 167,595
March 29, 2023 March 29, 2023 April 5, 2023 0.0846 166,868
April 25, 2023 April 26, 2023 May 5, 2023 0.0846 166,868
May 26, 2023 May 26, 2023 June 5, 2023 0.0846 166,868
June 28, 2023 June 28, 2023 July 5, 2023 0.0846 162,632
July 27, 2023 July 27, 2023 August 7, 2023 0.0846 163,701
August 28, 2023 August 29, 2023 September 5, 2023 0.0846 163,701
September 26, 2023 September 27, 2023 October 5, 2023 0.0846 159,478
Total $ 0.7614 $ 1,485,024
Certain of the above distributions were funded, in part, through the reimbursement of certain operating expenses under the Second Amended Expense Support Agreement. The Second Amended Expense Support Agreement is designed to ensure no portion of the Company's distribution to stockholders will be paid from Offering proceeds, such that no distribution is deemed to be a return of capital contributed by its stockholders, and will provide for expense reduction payments to the Company in any quarterly period in which the Company's aggregate distributions to stockholders exceeds the Company's cumulative ICTI and net realized gains. The Second Amended Expense Support Agreement may be terminated by OFS Advisor, without payment of any penalty, with or without notice to the Company. However, the Second Amended Expense Support Agreement is subordinated to the Banc of California Credit Facility, and prior to cancelling the Second Amended Expense Support Agreement, OFS Advisor must provide Banc of California with 30 days advance written notice of termination of the Second Amended Expense Support Agreement.
The determination of the tax attributes of the Company's distributions is made annually as of the end of its fiscal year based upon its estimated ICTI for the full year and distributions paid for the full year. Each year, a statement on Form 1099-DIV identifying the tax character of distributions is mailed to the Company's stockholders.
Note 10. Subsequent Events Not Disclosed Elsewhere
On October 29, 2024, the Board declared a distribution of $0.0846 per common share, which represents a 9.0% annualized distribution yield based on the Company's common stock offering price as of October 30, 2024, which was paid on November 5, 2024 to stockholders of record on October 29, 2024.
On November 5, 2024, the Board approved a tender offer, commencing on November 27, 2024, to purchase 2.5% of the weighted average number of shares of the outstanding common stock for the trailing 12-month period ending September 30, 2024.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. For additional overview information on the Company, see "Item 1. Business" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 18, 2024.
Overview
Key performance metrics per common share are presented below:
September 30, 2024 June 30, 2024
Net asset value $ 10.00 $ 10.57
Three Months Ended Nine Months Ended
September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023
Net investment income $ 0.22 $ 0.26 $ 0.74 $ 0.95
Net increase (decrease) in net assets resulting from operations (0.32) 0.32 0.29 0.41
Distributions declared 0.25 0.25 0.76 0.76
Our NAV per common share decreased to $10.00 at September 30, 2024 from $10.57at June 30, 2024, due to a net loss on investments of $0.54 per common share and our distributions declared during the quarter of $0.25 per common share, which exceeded our quarterly net investment income of $0.22 per common share.
For the three months ended September 30, 2024, total investment income decreased $107,349 compared to the prior quarter, primarily due to a decrease in repayments of debt investments that result in the acceleration of Net Loan fees compared to the prior quarter. See "-Results of Operations" for additional information.
For the three months ended September 30, 2024, we recognized a net loss on investments of $932,049, primarily due to net unrealized depreciation of $909,460. The net unrealized depreciation was comprised of net unrealized depreciation of $965,633 on our loans and Structured Finance Securities, partially offset by net unrealized appreciation of $56,173 on our equity investments.
As of September 30, 2024, we had no loans on non-accrual status. See "-Portfolio Composition and Investment Activity" for additional information.
For the three months ended September 30, 2024, our weighted-average debt interest costs of 7.3% remained stable, compared to the prior quarter. As of September 30, 2024, 73% of our total outstanding debt was fixed rate and 100% contractually matures in 2026.
As of September 30, 2024, our asset coverage ratio of 182% exceeded the minimum asset coverage requirement under the 1940 Act of 150%, and we remained in compliance with all applicable covenants under our outstanding debt facilities. As of September 30, 2024, we had an unused commitment of $14,335,000 under our Banc of California Credit Facility, subject to the terms of the borrowing base. As of September 30, 2024, we had unfunded commitments of $965,371 to fund various undrawn revolvers and other portfolio investments. We continue to believe that we have sufficient levels of liquidity to support our commitments to existing portfolio companies and selectively deploy capital in new investment opportunities. See "-Liquidity and Capital Resources" for additional information.
On October 29, 2024, our Board declared a $0.0846 per common share distribution, which represents a 9.0% annualized distribution yield based on our common stock offering price as of October 30, 2024, which was paid on November 5, 2024 to stockholders of record on October 29, 2024.
On November 5, 2024, our Board approved a tender offer, commencing on November 27, 2024, to purchase 2.5% of the weighted average number of shares of the outstanding common stock for the trailing 12-month period ending September 30, 2024.
Related Party Transactions
We have entered into a number of business relationships with affiliated or related parties, including the following:
•The Investment Advisory Agreement with OFS Advisor to manage our operating and investment activities. Under the Investment Advisory Agreement, we have agreed to pay OFS Advisor an annual base management fee based on the average value of our total assets (other than cash and cash equivalents but including assets
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purchased with borrowed amounts and including assets owned by any consolidated entity) as well as an incentive fee based on our investment performance. See "Item 1. Financial Statements--Notes to Consolidated Financial Statements- Note 3."
•The Dealer Manager Agreement with CCO, an affiliate of OFS Advisor, to provide sales, promotional and marketing services to us in connection with the Offering. See "Item 1. Financial Statements--Notes to Consolidated Financial Statements- Note 3."
•The Administration Agreement with OFS Services, an affiliate of OFS Advisor, to provide us with the office facilities and administrative services necessary to conduct our operations. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 3."
•Expense Limitation Agreements: OFS Advisor limits our incurred expenses under the: (1) Investment Advisory Agreement which contains provisions limiting organization and offering costs and Contractual Issuer Expenses; and (2) Second Amended Expense Support Agreement which limits all other operating expenses. Both agreements contain conditions pursuant to which we may become obligated to reimburse OFS Advisor for expense limitations provided thereunder. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 3."
OFS Advisor's services under the Investment Advisory Agreement are not exclusive to us and OFS Advisor is free to furnish similar services to other entities, including other funds advised or sub-advised by OFS Advisor, so long as its services to us are not impaired. OFS Advisor also serves as the investment adviser to other funds, including OFS Capital and OCCI. Additionally, OFS Advisor provides sub-advisory services to various funds, including: (i) CMFT Securities Investments, LLC, a wholly owned subsidiary of CIM Real Estate Finance Trust, Inc., a corporation that qualifies as a real estate investment trust; and (ii) CIM Real Assets & Credit Fund, an externally managed registered investment company that operates as an interval fund that invests primarily in a combination of real estate, credit and related investments.
The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with certain affiliates absent an order from the SEC permitting the BDC to do so. On August 4, 2020, we received our existing Order, which superseded a previous order that we received on October 12, 2016, and provides us with greater flexibility to enter into co-investment transactions with certain Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions. We are generally permitted to co-invest with Affiliated Funds if, under the terms of the Order, a "required majority" (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including that: (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned; and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.
In addition, we may file an application for an amendment to our existing Order to permit us to co-invest in our existing portfolio companies with certain affiliates that are private funds even if such other funds had not previously invested in such existing portfolio companies, subject to certain conditions. However, if filed, there is no guarantee that such application will be granted.
Conflicts may arise when an account managed by OFS Advisor makes an investment in conjunction with an investment being made by an Affiliated Account, or in a transaction where an Affiliated Account has already made an investment. Investment opportunities are, from time to time, appropriate for more than one account in the same, different or overlapping securities of a portfolio company's capital structure. Conflicts arise in determining the terms of investments, particularly where these accounts may invest in different types of securities in a single portfolio company. Potential conflicts arise when addressing, among other things, questions as to whether payment obligations and covenants should be enforced, modified or waived, or whether debt should be restructured, modified or refinanced. For additional information see "Item 1. Business-Regulation-Conflicts of Interest" and "Item 1A. Risk Factors-Risks Related to OFS Advisor and its Affiliates-We have potential conflicts of interest related to obligations that OFS Advisor or its affiliates may have to other clients" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 18, 2024.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are those relating to revenue recognition, expense limitation agreements and fair value estimates. Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board. For descriptions of our revenue recognition and fair value policies, see "Item 8. Financial Statements-Notes to Consolidated Financial Statements-Note 2" and "Item 7. Management's Discussion and
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Analysis of Financial Condition and Results of Operations- Critical Accounting Policies and Significant Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 18, 2024.
The following table illustrates the impact of our fair value measures if we selected the low or high end of the range of values for all investments as of September 30, 2024:
Fair Value as of September 30, 2024 Range of Fair Value
Investment Type
Low-end High-end
Debt investments:
First lien $ 20,168,128 $ 19,969,919 $ 20,370,752
Second lien 10,568,860 10,365,218 10,771,705
Structured Finance Securities:
Subordinated notes and other CLO equity related investments 5,955,675 5,695,071 6,216,282
Mezzanine debt 1,004,096 983,391 1,024,800
Equity investments:
Preferred equity 35,583 35,583 35,583
Common equity and warrants 505,743 453,659 556,823
$ 38,238,085 $ 37,502,841 $ 38,975,945
Portfolio Composition and Investment Activity
Portfolio Composition
The following table summarizes the composition of our investment portfolio as of September 30, 2024 and December 31, 2023:
September 30, 2024 December 31, 2023
Amortized Cost Fair Value Amortized Cost Fair Value
First lien debt investments(1)
$ 21,371,716 $ 20,168,128 $ 23,812,835 $ 23,501,556
Second lien debt investments 11,314,437 10,568,860 12,881,769 11,486,832
Preferred equity investments 34,464 35,583 34,464 34,410
Common equity and warrant investments 340,671 505,743 340,671 356,733
Total Portfolio Company Investments 33,061,288 31,278,314 37,069,739 35,379,531
Structured Finance Securities 9,149,286 6,959,771 9,425,888 7,096,541
Total Investments $ 42,210,574 $ 38,238,085 $ 46,495,627 $ 42,476,072
Total number of Portfolio Companies and Structured Finance Securities 36 36 37 37
(1) As of September 30, 2024 and December 31, 2023, first lien debt investments include unitranche investments (which are loans that combine both senior and subordinated debt, in a first lien position) with an amortized cost and fair value of $12,742,017 and $12,697,707, respectively, and $17,483,339 and $17,384,403, respectively.
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As of September 30, 2024, 100% and 80% of our loan portfolio and total portfolio, respectively, consisted of first lien and second lien debt investments, based on fair value.
As of September 30, 2024, the three largest industries of our Portfolio Company Investments by fair value, were: (1) Health Care and Social Assistance of 20.1%; (2) Manufacturing of 19.1%; and (3) Administrative and Support and Waste Management and Remediation Services of 13.0%, totaling an aggregate of approximately 52.2% of the investment portfolio. For a full summary of our investment portfolio by industry, see "Item 1. Financial Statements-Note 4."
The following table presents our ten largest investments by portfolio company based on fair value as of September 30, 2024:
Issuer Type Amortized Cost Fair Value % of Total Portfolio, at Fair Value % of Net Assets, at Fair Value
Apex Credit CLO 2020 Ltd.(1)
Structured Finance Security $ 3,251,464 $ 2,644,616 6.9 % 15.6 %
Convergint Technologies Holdings, LLC Debt 2,036,726 1,950,956 5.1 11.5
Heritage Grocers Group, LLC (F/K/A Tony's Fresh Market / Cardenas Markets) Debt 1,878,730 1,938,763 5.1 11.5
Honor HN Buyer, Inc. Debt 1,796,553 1,815,547 4.7 10.7
BCPE North Star US Holdco 2, Inc. (F/K/A Dessert Holdings) Debt 1,696,119 1,721,500 4.5 10.2
BayMark Health Services, Inc. Debt 1,670,014 1,553,791 4.1 9.2
Nielsen Consumer Inc. Debt 1,492,500 1,497,503 3.9 8.8
TruGreen Limited Partnership Debt 1,525,823 1,444,500 3.8 8.5
One GI LLC Debt 1,456,885 1,423,537 3.7 8.5
Asurion, LLC Debt 1,410,119 1,412,408 3.7 8.3
Total $ 18,214,933 $ 17,403,121 45.5 % 102.8 %
(1) As of September 30, 2024, approximately 12.4% and 28.0% of our total portfolio at fair value and net assets, respectively, were comprised of Structured Finance Securities managed by a single adviser.
A deterioration or improvement in the operating performance of these portfolio investments, or other factors underlying the valuation of these investments, could have a material impact on our NAV.
Structured Finance Securities
The following table summarizes the composition of our Structured Finance Securities as of September 30, 2024 and December 31, 2023:
September 30, 2024 December 31, 2023
Amortized Cost Fair Value Amortized Cost Fair Value
Subordinated notes and other CLO equity related investments $ 8,175,802 $ 5,955,675 $ 8,464,594 $ 6,129,390
Mezzanine debt 973,484 1,004,096 961,294 967,151
Total Structured Finance Securities $ 9,149,286 $ 6,959,771 $ 9,425,888 $ 7,096,541
Number of Structured Finance Security Issuers 6 6 6 6
As of September 30, 2024, we had no non-performing Structured Finance Securities. Non-performing Structured Finance Securities are securities that have not been optionally redeemed and have an effective yield of 0.0%, as remaining residual distributions are anticipated to be recognized as a return of capital.
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Portfolio Yields
The following table presents weighted-average yields metrics for our portfolio as of September 30, 2024 and June 30, 2024, respectively:
For the Three Months Ended
September 30, 2024 June 30, 2024
Weighted-average performing income yield(1):
Debt investments 13.3 % 14.5 %
Structured Finance Securities 14.0 13.6
Interest-bearing investments 13.5 % 14.3 %
Weighted-average realized yield(2):
Interest-bearing investments 13.5 % 14.1 %
(1) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost.
(2) Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of Net Loan Fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing Structured Finance Securities.
For the three months ended September 30, 2024, the weighted average performing income yield on interest-bearing investments decreased to 13.5% from 14.3% during the prior quarter, primarily due to a decrease in repayments of debt investments that result in the acceleration of Net Loan fees compared to the prior quarter and the timing of the redeployment of proceeds from repayments related to certain debt investments during the current quarter.
Weighted-average yields of our investments are not the same as a return on investment for our stockholders, but rather the gross investment income from our investment portfolio before the payment of all of our fees and expenses. There can be no assurance that the weighted average yields will remain at their current levels. As of September 30, 2024, 97% of our total loan portfolio, at fair value, consisted of variable rate investments, generally indexed to SOFR. See additional information under "Item 3. Quantitative and Qualitative Disclosures About Market Risk".
Investment Activity
The following is a summary of our investment activity for the three and nine months ended September 30, 2024:
Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024
Investments in debt and equity securities $ 5,216,101 $ 7,387,414
Investments in Structured Finance Securities - -
Total investment purchases and originations $ 5,216,101 $ 7,387,414
Proceeds from principal payments on portfolio investments $ 5,314,719 $ 10,976,950
Proceeds from sale or redemption of portfolio investments - 68,252
Proceeds from distributions received from portfolio investments 220,404 1,155,518
Total proceeds from principal payments, sales or redemptions, and distributions received from portfolio investments $ 5,535,123 $ 12,200,720
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We categorize debt investments into seven risk categories based on relevant information about the ability of borrowers to service their debt. For additional information regarding our risk categories, see "Item 1. Business-Portfolio Review/Risk Monitoring" in our Annual Report on Form 10-K for the year ended December 31, 2023. The following table shows the classification of our debt securities, excluding Structured Finance Securities, by credit risk rating as of September 30, 2024 and December 31, 2023:
Debt Investments
September 30, 2024 December 31, 2023
Risk Category Amortized Cost Fair Value % of Debt Investments, at Fair Value Amortized Cost Fair Value % of Debt Investments, at Fair Value
1 (Low Risk) $ - $ - - % $ - $ - - %
2 (Below Average Risk)
- - - - - -
3 (Average) 28,245,979 27,717,416 90.2 33,633,578 33,050,840 94.5
4 (Special Mention) 4,440,173 3,019,572 9.8 2,195,743 1,900,738 5.4
5 (Substandard) - - - - - -
6 (Doubtful) - - - 865,283 36,810 0.1
7 (Loss) - - - - - -
$ 32,686,152 $ 30,736,988 100.0 % $ 36,694,604 $ 34,988,388 100.0 %
Non-Accrual Loans
Management reviews, for placement on non-accrual status, all loans and CLO mezzanine debt investments that become past due on principal and interest, and/or when there is reasonable doubt that principal or interest will be collected. When a loan is placed on non-accrual status, accrued and unpaid cash interest is reversed. Additionally, Net Loan Fees are no longer recognized as of the date the loan is placed on non-accrual status. Depending upon management's judgment, interest payments subsequently received on non-accrual investments may be recognized as interest income or applied as a reduction to amortized cost. Interest accruals and Net Loan Fee amortization are resumed on non-accrual investments only when they are brought current with respect to principal and interest payments and, in the judgment of management, it is probable that the Company will collect all principal and interest from the investment. For the three and nine months ended September 30, 2024, no new loans were placed on non-accrual status.
As of September 30, 2024
As of September 30, 2024, we had no debt investments on non-accrual status.
As of December 31, 2023
The following table shows the classification of our debt investments on non-accrual status:
December 31, 2023
Amortized Cost Fair Value
First lien debt $ - $ -
Second lien debt 865,283 36,810
Total $ 865,283 $ 36,810
Results of Operations
Our key financial measures are described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations-Key Financial Measures" in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 18, 2024. The following is a discussion of the key financial measures that management uses in reviewing the performance of our operations.
We do not believe that our historical operating performance is necessarily indicative of our future results of operations. We are primarily focused on debt investments in middle-market and larger companies in the United States and, to a lesser extent, equity investments, including warrants and other minority equity securities. In addition, we may make investments in Structured Finance Securities. Moreover, as a BDC and a RIC, we are also subject to certain constraints on our operations,
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including, but not limited to, limitations imposed by the 1940 Act and the Code. For the reasons described above, the results of operations described below may not necessarily be indicative of the results we expect to report in future periods.
Net increase (decrease) in net assets resulting from operations can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, comparisons of net increase (decrease) in net assets resulting from operations may not be meaningful.
The following analysis compares our quarterly results of operations to the preceding quarter, as well as our year-to-date results of operations to the corresponding period in the prior year. We believe a comparison of our current quarterly results to the preceding quarter is more meaningful and transparent than a comparison to the corresponding prior-year quarter as our results of operations are not influenced by seasonal factors the latter comparison is designed to elicit and highlight.
Comparison of the three months ended September 30, 2024 and June 30, 2024 and nine months ended September 30, 2024 and 2023
Three Months Ended Nine Months Ended
September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023
Interest income $ 1,419,520 $ 1,521,725 $ 4,549,533 $ 5,721,854
Dividend income 1,090 1,056 3,196 5,396
Fee income 1,775 6,953 38,063 16,105
Total investment income 1,422,385 1,529,734 4,590,792 5,743,355
Total operating expenses 1,036,036 1,118,291 3,380,258 4,434,991
Net expense support (limitations) 2,258 (45,830) (110,051) (560,780)
Net investment income 384,091 457,273 1,320,585 1,869,144
Net gain (loss) on investments (932,049) 114,243 (809,209) (1,070,965)
Net increase (decrease) in net assets resulting from operations $ (547,958) $ 571,516 $ 511,376 $ 798,179
Investment Income
For the three months ended September 30, 2024, interest income decreased $102,205 compared to the prior quarter, primarily due to a decrease in repayments of debt investments that result in the acceleration of Net Loan fees compared to the prior quarter and the timing of the redeployment of proceeds from repayments related to certain debt investments during the current quarter.
For the nine months ended September 30, 2024, interest income decreased $1,172,321 compared to the corresponding period in the prior year, primarily due to decreases in cash interest of $1,076,162 related to a smaller average investment portfolio at cost.
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Gross Expenses.
Our gross expenses are limited under the Investment Advisory Agreement and Second Amended Expense Support Agreement. Operating expenses shown with respect to each governing expense limitation agreement for the three months ended September 30, 2024 and June 30, 2024 and nine months ended September 30, 2024 and 2023 are presented below:
Three Months Ended Nine Months Ended
September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023
Expenses subject to limitation under the Investment Advisory Agreement:
Contractual Issuer Expenses (credits) $ (6,023) $ 38,737 $ 91,840 $ 273,104
Amortization of deferred offering costs 3,765 7,093 18,211 12,622
Total expenses (credits) subject to limitation under the Investment Advisory Agreement
(2,258) 45,830 110,051 285,726
Expenses subject to limitation under the Second Amended Expense Support Agreement:
Interest expense 377,659 398,553 1,199,631 1,703,059
Base management fees 121,696 125,424 377,842 480,913
Incentive fees 96,023 114,318 330,146 395,860
Administrative fees 166,324 160,568 514,369 664,261
Professional fees 161,936 164,699 518,803 563,449
Excise taxes 9,723 - 9,723 -
Other expenses 104,933 108,124 316,307 341,118
Total expenses subject to limitation under the Second Amended Expense Support Agreement
1,038,294 1,071,686 3,266,821 4,148,660
HPCI-MB operating expenses - 775 3,386 605
Total operating expenses $ 1,036,036 $ 1,118,291 $ 3,380,258 $ 4,434,991
Expenses Limited under the Investment Advisory Agreement
OFS Advisor incurred, on our behalf, offering costs of $0 and $6,826 during the three months ended September 30, 2024 and June 30, 2024. For the nine months ended September 30, 2024 and 2023, offering costs incurred on our behalf were $6,826 and $29,572, respectively.
Contractual Issuer Expenses relate to the direct involvement of OFS Advisor's employees and employees of its affiliates in the Offering process. OFS Advisor incurred, on our behalf, Contractual Issuer Expenses of $91,840 and $273,104 during the nine months ended September 30, 2024 and 2023, respectively. During the three months ended September 30, 2024, OFS Advisor received a credit of $6,023 relating to expenses previously billed by an affiliate involved in the Offering process. For the nine months ended September 30, 2024, Contractual Issuer Expenses decreased $181,264 compared to the corresponding period in the prior year, primarily due to reduced involvement of OFS Advisor's employees and employees of their affiliates in the Offering process.
Expense limitations provided under the Investment Advisory Agreement associated with offering costs and expenses for the three months ended September 30, 2024 and June 30, 2024 and nine months ended September 30, 2024 and 2023 are presented below:
Three Months Ended Nine Months Ended
September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023
Total expenses (credits) limited under the Investment Advisory Agreement $ (2,258) $ 45,830 $ 110,051 $ 285,726
Reimbursed offering costs and Contractual Issuer Expenses - - - (10,650)
Net offering costs and Contractual Issuer Expenses limited (credits) under the Investment Advisory Agreement $ (2,258) $ 45,830 $ 110,051 $ 275,076
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We are conditionally obligated to pay OFS Advisor up to 1.5% of the gross proceeds raised in the Offering until all reimbursable offering costs and Contractual Issuer Expenses paid by OFS Advisor and their affiliates have been recovered. As of September 30, 2024, reimbursable offering costs and Contractual Issuer Expenses were $890,245. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 3" for additional information.
Expenses Limited under the Second Amended Expense Support Agreement
For the three months ended September 30, 2024 and June 30, 2024
For the three months ended September 30, 2024, total expenses subject to limitation under the Second Amended Expense Support Agreement decreased $33,392 compared to the prior quarter.
Interest expense for the three months ended September 30, 2024 decreased $20,894 compared to the prior quarter, primarily due to a reduction in our average outstanding debt balance.
Incentive fees for the three months ended September 30, 2024 decreased $18,295 compared to the prior quarter, primarily due to a decrease in net investment income.
For the nine months ended September 30, 2024 and 2023
For the nine months ended September 30, 2024, total expenses subject to limitation under the Second Amended Expense Support Agreement decreased $881,839 compared to the corresponding period in the prior year, primarily due to a decrease of $503,428 in interest expense related to the reduction in our average outstanding debt balances.
For the nine months ended September 30, 2024, expenses payable to OFS Advisor and affiliates (base management fees, incentive fees and administrative fees) decreased $318,677 compared to the corresponding period in the prior year attributed to a smaller investment portfolio.
Gross operating expenses (operating expenses excluding offering expenses and Contractual Issuer Expenses, and before limitations) are subject to limitation under the Second Amended Expense Support Agreement. OFS Advisor's obligation to provide such expense support is a function of declared distributions on our common stock, and the amount of support provided is determined by reference to estimated unsupported investment company taxable income and the amount of declared distributions. The Second Amended Expense Support Agreement provides expense support such that distributions are not paid from Offering proceeds (i.e., not a return of capital). The determination of expense limitation under the Second Amended Expense Support Agreement for the three months ended September 30, 2024 and June 30, 2024 and nine months September 30, 2024 and 2023 are presented below:
Three Months Ended Nine Months Ended
September 30, 2024 June 30, 2024 September 30, 2024 September 30, 2023
Total investment income - RIC $ 1,422,385 $ 1,529,734 $ 4,590,792 $ 5,739,833
Expenses limited under the Second Amended Expense Support Agreement(1):
Interest expense, base management fees and incentive fees 595,378 638,295 1,907,619 2,579,832
Other operating expenses(2)
442,916 433,391 1,359,202 1,568,828
Total expenses limited under the Second Amended Expense Support Agreement
1,038,294 1,071,686 3,266,821 4,148,660
Net investment income prior to limitation - RIC 384,091 458,048 1,323,971 1,591,173
Differences in recognition of ICTI and GAAP net investment income(3)
53,483 (8,524) 24,889 (391,853)
ICTI prior to expense limitation(4)
437,574 449,524 1,348,860 1,199,320
Declared distributions 437,574 449,524 1,348,860 1,485,024
Expense limitation under Second Amended Expense Support Agreement
$ - $ - $ - $ 285,704
(1)Expense limitation under the Second Amended Expense Support Agreement excludes organization costs, amortization of deferred offering costs, Contractual Issuer Expenses, and the related expense support under the Investment Advisory Agreement, and other operating expenses of HPCI-MB as such expenses are permanent differences between GAAP net investment income and ICTI. See "Item 8. Financial Statements-Notes to Consolidated Financial Statements-Note 8" in our Annual Report on Form 10-K.
(2)Generally defined in the Second Amended Expense Support Agreement as our operating expenses determined in accordance with GAAP excluding organization and offering expenses, Contractual Issuer Expenses, interest expense, base
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management fees, and incentive fees. Excludes expenses incurred at HPCI-MB, which do not affect ICTI. The annualized ratio of other operating expenses to net assets for the period in which support is provided, and the annual ratio for the year in which support is provided, constitute conditions for reimbursement to OFS Advisor. See "Item 8. Financial Statements-Note 3" in our Annual Report on Form 10-K.
(3)Includes temporary and permanent differences between GAAP net investment income and estimated ICTI, such as HPCI-MB earnings-and-profits distributions to the RIC, differences in income recognition on subordinated note Structured Finance Securities, taxable investment and debt modifications, and non-deductible excise tax.
(4)ICTI is estimated on an annual basis and cannot be finally determined until relevant tax forms relating to our investments are received and the U.S. federal income tax return is filed, generally in October of the following tax year. Actual amounts could differ materially from prior estimates. If such actual taxable income amounts were known as of the point of determination for an expense payment or reimbursement, we may have arrived at different required expense support or reimbursement amounts than as previously calculated. OFS Advisor is not obligated to recalculate such historical amounts based on these provision-to-return true-ups. If additional income is reflected on the final tax return when filed, resulting in a spillover of excess distributable taxable income, such accumulated distributable taxable income may result in lower expense support payments in subsequent periods.
Expense support provided by OFS Advisor is reimbursable for three years from the date incurred. Expense limitation under both the Investment Advisory Agreement and Second Amended Expense Support Agreement can be terminated by OFS Advisor, without payment of any penalty, with or without notice to us at any time.
Net realized and unrealized gain (loss) on investments
Net gain (loss) on investments for the three months ended September 30, 2024 and June 30, 2024
For the three months ended September 30, 2024, net loss on investments of $932,049 was primarily due to net unrealized depreciation of $909,460. The net unrealized deprecation on our investment portfolio of $909,460 was comprised of net unrealized depreciation of $965,633 on our loans and Structured Finance Securities, partially offset by net unrealized appreciation of $56,173 on our equity investments.
For the three months ended June 30, 2024, net gain on investments of $114,243 was due to net unrealized appreciation of $911,275 on our investment portfolio, net of taxes, partially offset by a net realized loss on investments of $797,032. For the three months ended June 30, 2024, net unrealized appreciation of $911,275 primarily related to net unrealized appreciation of $575,670 on our Structured Finance Securities.
Net loss on investments for the nine months ended September 30, 2024 and 2023
For the nine months ended September 30, 2024, net loss on investments of $809,209 was primarily due to net unrealized depreciation of $1,136,551 on our current loan portfolio, partially offset by net unrealized appreciation of $150,183 on our equity investments.
During the nine months ended September 30, 2023, net loss on investments of $1,070,965 was primarily due to net unrealized depreciation of $925,701 on our Structured Finance Securities and net losses of 92,912 on our loans and equity investments. During the nine months ended September 30, 2023, our Structured Finance Securities managed by a single advisor experienced unrealized depreciation of $623,483.
Liquidity and Capital Resources
As of September 30, 2024, we held cash of $2,470,786 and had an unused commitment of $14,335,000 under our Banc of California Credit Facility, subject to the terms of the borrowing base. As of September 30, 2024, we had a payable for investments purchased of $2,025,369 and unfunded commitments of $965,371 to fund various undrawn revolvers and other portfolio investments. We continue to believe that we have sufficient levels of liquidity to support our commitments to existing portfolio companies and selectively deploy capital in new investment opportunities.
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Sources and Uses of Cash
We expect to generate cash primarily from: (i) the net proceeds of the Offering; (ii) cash flows from our operations; (iii) the Banc of California Credit Facility and any other financing arrangements we may enter into in the future; (iv) investment repayments or dispositions; and (v) any future offerings of our equity or debt securities. We may fund a portion of our investments through borrowings from banks, including the Banc of California Credit Facility, and issuances of senior securities. Our primary use of cash will be for: (i) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements; (ii) the cost of operations (including paying OFS Advisor); (iii) debt service of any borrowings, including the Unsecured Note; and (iv) cash distributions to the holders of our stock. These principal sources and uses of cash and liquidity are presented below:
Nine Months Ended September 30,
2024 2023
Cash from net investment income(1)
$ 588,554 $ 1,225,984
Net repayments of portfolio investments(1)
5,971,949 5,688,487
Net cash provided by operating activities 6,560,503 6,914,471
Net proceeds from issuances of common stock - 868,080
Distributions paid to common stockholders (1,360,914) (1,491,354)
Net repayments under revolving line of credit (2,000,000) (4,725,000)
Repurchases of common stock (1,536,634) (1,675,359)
Net cash used in financing activities (4,897,548) (7,023,633)
Net change in cash and cash equivalents $ 1,662,955 $ (109,162)
(1) Cash from net investment income includes all other cash flows from operating activities reported in our statements of cash flows. Net purchases and originations/repayments and sales of portfolio investments includes the purchase and origination of portfolio investments, proceeds from principal payments on portfolio investments, proceeds from sale or redemption of portfolio investments, changes in receivables for investments sold, payable from investments purchased as reported in our statements of cash flows, as well as the excess of proceeds from distributions received from Structured Finance Securities over accretion of interest income on Structured Finance Securities.
Our operating activities provided $6,560,503 and $6,914,471 in cash for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the principal source of operating liquidity was the repayment of portfolio investments. Net cash provided by operating activities benefited from the positive cash flow impact of expense limitations under the Investment Advisory Agreement and Second Amended Expense Support Agreement of $110,051 and $560,780 for the nine months ended September 30, 2024 and 2023, respectively, which reduced the net amount paid to OFS Advisor. Expense support and limitation under both the Investment Advisory Agreement and the Second Amended Expense Support Agreement are cancelable at any time. However, the Second Amended Expense Support Agreement is subordinated to the Banc of California Credit Facility, and prior to cancelling the Second Amended Expense Support Agreement, OFS Advisor must provide Banc of California with 30 days advance written notice of such termination.
Net purchases and origination of portfolio investments relates to the investment activity of our portfolio. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Portfolio Composition and Investment Activity."
We received proceeds of $-0- and $868,080 from the sale of our common stock during the nine months ended September 30, 2024 and 2023, respectively. Offering proceeds are net of aggregate commissions and dealer manager fees of $-0- and $65,920 for the nine months ended September 30, 2024 and 2023, respectively.
During the nine months ended September 30, 2024 and 2023, we paid $1,536,634 and $1,675,359, respectively, in connection with our tender offers to repurchase shares of our common stock. Subsequent to September 30, 2024, we paid $472,033 in connection with our third quarter 2024 tender offer to repurchase shares of our common stock.
During the nine months ended September 30, 2024, we paid $1,360,914 in dividends to common stockholders and, subsequent to September 30, 2024 and through November 5, 2024, we paid $286,476 in dividends to our common stockholders.
Borrowings
Banc of California Credit Facility. The Banc of California Credit Facility is available for general corporate purposes, including investment funding, and is scheduled to mature on February 28, 2026. The maximum amount available to borrow under the Banc of California Credit Facility is equal to 50% of the aggregate outstanding principal amount of eligible loans
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included in the borrowing base, which excludes subordinated loan investments and as otherwise specified in the BLA, subject to a maximum principal amount of $20,000,000.
The Banc of California Credit Facility bears interest at a variable Prime Rate plus a 0.25% margin, with a 5.00% floor, and includes an annual commitment fee equal to 0.50% of the maximum principal amount of the facility. As of September 30, 2024, the stated interest rate on the Banc of California Credit Facility was 8.25%. As of September 30, 2024, the Banc of California Credit Facility bore an effective interest rate of 10.05%, inclusive of interest on the outstanding balance, deferred financing cost amortization and commitment fees.
Our Banc of California Credit Facility is a $20,000,000 revolving line of credit, of which $5,665,000 was drawn as of September 30, 2024. As of September 30, 2024, we were in compliance in all material respects with the applicable covenants under the Banc of California Credit Facility.
On December 15, 2023, we amended the Banc of California Credit Facility to: (i) extend the maturity date from August 31, 2024 to February 28, 2026; (ii) reduce the interest rate from Prime Rate plus 0.75% to Prime Rate plus 0.25%; (iii) increase the interest rate floor from 4.25% to 5.00%; and (iv) eliminate the 0.50% unused line fee and replace it with an annual commitment fee of 0.50% of the maximum principal amount of the facility.
Unsecured Note. On November 27, 2019, we entered into the Note Purchase Agreement pursuant to which we issued a $15,000,000 Unsecured Note. The purchase price of the Unsecured Note was $14,700,000 after deducting the offering price discount. Interest on the Unsecured Note is due quarterly. We are obligated to repay the Unsecured Note at par if certain change in control events occur. The Unsecured Note is a general unsecured obligation that ranks pari passu with all outstanding and future unsecured unsubordinated indebtedness we may issue.
The Note Purchase Agreement contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, affirmative and negative covenants such as information reporting, maintenance of our status as a business development company within the meaning of the 1940 Act and a minimum asset coverage ratio. The Note Purchase Agreement also contains customary events of default with customary cure and notice periods, including, without limitation, nonpayment, incorrect representation in any material respect, certain judgments and orders, and certain events of bankruptcy. As of September 30, 2024, we were in compliance in all material respects with the applicable covenants under the Note Purchase Agreement.
As of September 30, 2024, the Unsecured Note had the following terms and balances:
Principal Unamortized Discount and Issuance Costs Stated Interest Rate
Effective Interest Rate(1)
Maturity
Unsecured Note $ 15,000,000 $ 157,488 5.50 % 5.98 % 11/27/2026
(1) The effective interest rate on the Unsecured Note includes deferred debt issuance cost amortization.
Other Liquidity Matters
We expect to fund the growth of our investment portfolio through the private placement of our common shares and issuances of senior securities or future borrowings to the extent permitted by the 1940 Act. We cannot assure stockholders that our plans to raise capital will be successful. In addition, we intend to distribute to our stockholders substantially all of our taxable income in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the ability to fund new investments or make additional investments in our portfolio companies. The illiquidity of certain of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their current fair value and incur significant realized losses on our invested capital.
From time to time, we may enter into agreements with placement agents to sell, distribute and market shares of our common stock in the Offering. We may pay certain placement or "finder's" fees to placement agents engaged by us in connection with the Offering. In addition, investors who are purchasing shares through a placement agent may be required to pay a fee or commission directly to the placement agent.
BDCs are generally required to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities. Our required asset coverage ratio of 150% limits the amount that we may borrow. To fund growth in our investment portfolio in the future, we anticipate needing to raise additional capital from various sources, including the equity markets and the securitization or other debt-related markets, which may or may not be available on favorable terms, if at all.
As of September 30, 2024, the aggregate amount of senior securities outstanding was $20,665,000, for which our asset coverage was 182%. The asset coverage ratio for a class of senior securities representing indebtedness is calculated by
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aggregating our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness.
In addition, as a BDC, we must 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 assets, as defined by the 1940 Act, 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 organized in the United States. Conversely, we may invest up to 30% of our portfolio in opportunistic investments not otherwise eligible under BDC regulations. Specifically, as part of this 30% basket, we may consider investments in investment funds that are operating pursuant to certain exceptions to the 1940 Act and in advisers to similar investment funds, as well as in debt or equity of middle-market portfolio companies located outside of the United States and debt and equity of public companies that do not meet the definition of eligible portfolio companies because their market capitalization of publicly traded equity securities exceeds the levels provided for in the 1940 Act. We have made, and may continue to make, opportunistic investments in Structured Finance Securities and other non-qualifying assets, consistent with our investment strategy. As of September 30, 2024, approximately 81% of our investments were qualifying assets.
We continue to monitor the current banking environment. If the banks and financial institutions with whom we have credit facilities enter into receivership, undergo consolidation or become insolvent in the future, our liquidity may be reduced significantly. At various times, our cash and cash equivalent balances at third-party financial institutions exceed the federally insured limit. Our cash balances are retained in custodian accounts with U.S. Bank Trust Company, National Association, and we do not believe they are exposed to any significant credit risk. We continue to monitor our portfolio and believe the deposit risk and counterparty risk to be minimal.
Contractual Obligations
We, with approval of our Board, entered into the Investment Advisory Agreement, the Second Amended Expense Support Agreement, the Dealer Manager Agreement and the Administration Agreement. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 1and Note 3."
As of September 30, 2024, we had $2,470,786 of cash and an unused commitment of $14,335,000 under our Banc of California Credit Facility, subject to the terms of the borrowing base, to meet our short-term contractual obligations, such as a payable for investments purchased of $2,025,369 and $965,371 in outstanding commitments to fund investments under various undrawn revolvers and other portfolio company credit facilities. As of September 30, 2024, our Banc of California Credit Facility that matures in February 2026 and had $5,665,000 outstanding, and our Unsecured Note that matures in November 2026 and had $15,000,000 outstanding, could be repaid by selling portfolio investments that have a fair value of $38,238,085. We cannot, however, be certain that this source of funds will be available and upon terms acceptable to us in sufficient amounts in the future. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value and incur significant realized losses on our invested capital.
We may become 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. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized on the balance sheet. There is no guarantee that these amounts will be funded to the borrowing party now or in the future. We continue to believe that we have sufficient levels of liquidity to support our existing portfolio companies and will meet these unfunded commitments by using our cash on hand or utilizing our available borrowings under the Banc of California Credit Facility. In addition, a portion of our portfolio includes more liquid broadly syndicated loans in larger portfolio companies that can be sold over a relatively short period to generate cash.
Off-Balance Sheet Arrangements
Amounts Conditionally Reimbursable to OFS Advisor.OFS Advisor and affiliates have incurred offering costs and Contractual Issuer Expenses, of which $890,245 and $829,397 were unreimbursed as of September 30, 2024 and December 31, 2023, respectively. We remain conditionally liable to OFS Advisor for organization and offering costs incurred on our behalf. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 3."
OFS Advisor and affiliates have provided aggregate unreimbursed and unexpired operating expense support of $144,315 and $1,315,422 as of September 30, 2024 and December 31, 2023, respectively. We remain conditionally liable to OFS Advisor for operating expense support provided to us. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 3."
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Distributions
We have elected to be taxed as a RIC under Subchapter M of the Code. In order to maintain our status as a RIC, we are required to distribute annually to our stockholders at least 90% of our ICTI, as defined by the Code. Additionally, to avoid a 4% excise tax on undistributed earnings we are required to distribute each calendar year the sum of: (i) 98% of our ordinary income for such calendar year; (ii) 98.2% of our net capital gains for the one-year period ending October 31 of that calendar year; and (iii) any income recognized, but not distributed, in preceding years and on which we paid no federal income tax. Maintenance of our RIC status also requires adherence to certain source of income and asset diversification requirements. Generally, a RIC is entitled to deduct dividends it pays to its stockholders from its income to determine "taxable income." Taxable income includes our taxable interest, dividend and fee income, and taxable net capital gains. 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, as gains or losses are not included in taxable income until they are realized. In addition, gains realized for financial reporting purposes may differ from gains included in taxable income as a result of our election to recognize gains using installment sale treatment, which generally results in the deferment of gains for tax purposes until notes or other amounts, including amounts held in escrow received as consideration from the sale of investments, are collected in cash. Taxable income includes non-cash income, such as changes in accrued and reinvested interest and dividends, which includes contractual PIK interest, and the amortization of discounts and fees. Cash collections of income resulting from contractual PIK interest and dividends or the amortization of discounts and fees generally occur upon the repayment of the loans or debt securities that include such items. Non-cash taxable income is reduced by non-cash expenses, such as realized losses and depreciation, and amortization expense.
Our Board maintains a variable dividend policy with the objective of distributing twelve monthly distributions in an amount not less than 90-100% of our annual taxable income for a particular year. In addition, during the year, we may pay a special dividend, such that we may distribute approximately all of our annual taxable income in the year it was earned, while maintaining the option to spill over our excess taxable income to a following year. We may choose to retain a portion of our taxable income in any year and pay the 4% U.S. federal excise tax on the retained amounts. Each year, a statement on Form 1099-DIV identifying the source of the distribution is mailed to the Company's stockholders.
Expense limitation payments under the Second Amended Expense Support Agreement have supported certain historical distributions, and our distributions may, in the future, be funded through expense limitation payments by OFS Advisor under the Second Amended Expense Support Agreement. The Second Amended Expense Support Agreement is designed to ensure no portion of our distribution to stockholders will be paid from Offering proceeds (i.e., no return of capital), and provides for expense limitation payments to us in any quarterly period in which our cumulative distributions to stockholders exceeds the Company's cumulative estimated ICTI and net realized gains. For purposes of determining quarterly expense limitation payments, ICTI is estimated; however, ICTI cannot be finally determined until relevant tax forms relating to the Company's investments are received and the U.S. federal income tax return is filed in the subsequent year. Any such distributions funded through expense limitation payments are not based on our investment performance, and can only be sustained if we achieve positive investment performance in future periods and/or OFS Advisor continues to make such payments. The Second Amended Expense Support Agreement may be terminated by us or OFS Advisor, without payment of any penalty, upon written notice to us.
Share Repurchases
Since November 2018, the Board has approved quarterly tender offers to purchase shares of our outstanding common stock. Since November 2019, we have conducted quarterly tender offers to purchase, in each case, 2.5% of the weighted average number of shares of the outstanding common stock for the trailing 12-month period. The repurchase offers allowed our stockholders to sell their shares back to us at a price equal to the most recently determined net asset value per share of our common stock immediately prior to the date of repurchase. See "Item 1. Financial Statements-Notes to Consolidated Financial Statements-Note 9" for details on share repurchases.
Recent Developments
On October 29, 2024, our Board declared a $0.0846 per common share distribution, which represents a 9.0% annualized distribution yield based on our common stock offering price as of October 30, 2024, which was paid on November 5, 2024 to stockholders of record on October 29, 2024.
On November 5, 2024, our Board approved a tender offer, commencing on November 27, 2024, to purchase 2.5% of the weighted average number of shares of the outstanding common stock for the trailing 12-month period ending September 30, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. The economic effects of the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle
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East, interest rate changes and elevated inflation rates, ongoing supply chain and labor market disruptions, including those as a result of strikes, work stoppages or accidents, uncertainties related to the 2024 U.S. presidential election, instability in the U.S. and international banking systems and the risk of recession or a shutdown of U.S. government services has introduced significant volatility in the financial markets, and the effects of this volatility has impacted and could continue to impact our market risks. For additional information concerning risks and their potential impact on our business and our operating results, see"Part I-Item 1A. Risk Factors"in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on March 18, 2024.
Investment Valuation Risk
Because there is not a readily available market value for most of the investments in our portfolio, we value a significant portion of our portfolio investments at fair value as determined in good faith by OFS Advisor, as valuation designee, based, in part, on independent third-party valuation firms that have been engaged at the direction of OFS Advisor to assist in the valuation of most portfolio investments without a readily available market quotation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, some investments may be subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than its current fair value. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Estimates" as well as Notes 2 and 5 to our consolidated financial statements for the nine months ended September 30, 2024 for more information relating to our investment valuation.
Interest Rate Risk
As of September 30, 2024, 97% of our loan portfolio, at fair value, bore interest at floating interest rates and contained interest rate reset provisions that adjust applicable interest rates to current rates on a periodic basis. The 50 basis point reduction in the U.S. Federal Reserve target federal funds rate effected in September 2024 influences SOFR-based rates, to which our variable rate debt investments are generally indexed. This rate decrease will likely result in our variable rate debt investments generating less interest income, all-else equal. Changes in interest rates, including potential additional interest rate reductions approved by the U.S. Federal Reserve, may impact our investment income, cost of funding and the valuation of our investments. Additional reductions in interest rates would reduce our interest income, which could in turn decrease our net investment income if such decreases in base interest rates are not offset by other factors, such as increases in the spread over such base interest rates or decreases in our operating expenses.
Our outstanding Unsecured Note bears interest at a fixed rate, which may result in net interest margin compression in a period of falling rates. Our Banc of California Credit Facility has a floating interest rate provision based on the Prime Rate, which resulted in a stated interest rate of 8.25% as of September 30, 2024.
Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates as of September 30, 2024. As of September 30, 2024, 1-month and 3-month SOFR were 4.85% and 4.59%, respectively. Assuming that the interim, unaudited Statement of Assets and Liabilities as of September 30, 2024 were to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:
Basis point increase Interest income Interest expense Net change
25 $ (31,428)
(1)
$ (14,359) $ (45,787)
50 47,048 (28,718) 18,330
75 125,524 (43,078) 82,446
100 204,000 (57,437) 146,563
125 282,475 (71,796) 210,679
Basis point decrease Interest income Interest expense Net change
25 $ (188,379) $ 14,359 $ (174,020)
50 (266,855) 28,718 (238,136)
75 (345,331) 43,078 (302,253)
100 (423,806) 57,437 (366,369)
125 (502,282) 71,796 (430,486)
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(1) A portion of the loan portfolio has yet to reset to comparatively lower current SOFR rates and a 25 basis point increase from current rates would still yield an interest rate lower than the current interest rate on these securities as of September 30, 2024.
Although we believe that the foregoing analysis is indicative of our net interest margin sensitivity to interest rate changes as of September 30, 2024, it does not adjust for potential changes in the credit market, credit quality, size and composition of the assets in our portfolio, and other business developments, including borrowings under our credit facilities, that could affect net increase in net assets resulting from operations, or net income. Accordingly, no assurances can be given that actual results would not differ materially from the table above.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of the Company's disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2024, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II-OTHER INFORMATION
Item 1. Legal Proceedings
We, OFS Advisor and OFS Services, are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business, including the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
Investing in our common stock may be speculative and involves a high degree of risk. In addition to the other information contained in this Quarterly Report on Form 10-Q, including our financial statements, and the related notes, schedules and exhibits, you should carefully consider the risk factors described in "Part I- Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on March 18, 2024 (the "Annual Report on Form 10-K"), which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and/or operating results.
There have been no material changes from the risk factors previously disclosed in "Part I-Item 1A. Risk Factors" in our Annual Report on Form 10-K. The risks previously disclosed in our Annual Report on Form 10-K should be read together with the other information disclosed elsewhere in this Quarterly Report on Form 10-Q and our other reports filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Sales of Unregistered Securities, Use of Proceeds
During the three months ended September 30, 2024, we did not sell any shares of our common stock.
Because shares of our common stock have been acquired by investors in one or more transactions "not involving a public offering", they are "restricted securities" and may be required to be held indefinitely. Our common stock may not be sold, transferred, assigned, pledged or otherwise disposed of unless: (i) the transferor provides OFS Advisor with at least 10 days written notice of the transfer; (ii) the transfer is made in accordance with applicable securities laws; and (iii) the transferee agrees in writing to be bound by these restrictions and the other restrictions imposed on the common stock and to execute such other instruments or certifications as are reasonably required by us. Accordingly, an investor must be willing to bear the economic risk of investment in the common stock until we are liquidated. No sale, transfer, assignment, pledge or other disposition, whether voluntary or involuntary, of the common shares may be made except by registration of the transfer on our books.
Issuer Purchases of Equity Securities
Since November 2018, the Board has approved quarterly tender offers to purchase shares of our outstanding common stock. Since November 2019, we have conducted quarterly tender offers to purchase, in each case, 2.5% of the weighted average number of shares of the outstanding common stock for the trailing 12-month period. The repurchase offers allowed our stockholders to sell their shares back to us at a price equal to the most recently determined net asset value per share of our common stock immediately prior to the date of repurchase.
The following table summarizes the common stock repurchases by us for the three months ended September 30, 2024:
Three Months Ended September 30, 2024 Number of Shares Amount
July 1, 2024 through July 31, 2024 - $ -
August 1, 2024 through August 31, 2024 - -
September 1, 2024 through September 30, 2024 46,460 472,033
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Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) Not applicable.
(b) Not applicable.
(c) During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.
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Item 6. Exhibits
Listed below are the exhibits that are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
Incorporated by Reference
Exhibit
Number 		Description Form and SEC File No. Filing Date with SEC Filed with this 10-Q
3.1 Form 10-12G (000-55552) December 21, 2015
3.2 Form 10-12G/A (000-55552) February 8, 2016
3.3 8-K (814-001185) August 24, 2017
14.1
Joint Code of Ethics of Hancock Park Corporate Income and OFS Advisor
*
31.1
Certification of Chief Executive Officer pursuant to Rules 13a-14 and 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
*
31.2
Certification of Chief Financial Officer pursuant to Rules 13a-14 and 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
*
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
†
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
†
101 Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part I, Item 1, "Financial Statements" of this Quarterly Report on Form 10-Q. *
104 Cover Page Interactive Data File (embedded within the Inline XBRL document) *
* Filed herewith.
† Furnished herewith.
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SIGNATURES
Pursuant to the requirements 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 8, 2024 HANCOCK PARK CORPORATE INCOME, INC.
By: /s/ Bilal Rashid
Name: Bilal Rashid
Title: Chief Executive Officer
By: /s/ Jeffrey A. Cerny
Name: Jeffrey A. Cerny
Title: Chief Financial Officer
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