Barings BDC, Inc. (BBDC) 2024年10-K年度報告「NYSE」.pdf

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1、UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended December 31,2024ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THESECURITIES EXCHANGE ACT OF 1934F

2、or the transition period from to Commission file number 814-00733Barings BDC,Inc.(Exact name of registrant as specified in its charter)Maryland 06-1798488(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)300 South Tryon Street,Suite 2500Charlotte,North Ca

3、rolina 28202(Zip Code)(Address of principal executive offices)Registrants telephone number,including area code:(704)805-7200Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading SymbolName of Each Exchange on Which RegisteredCommon Stock,par value$0.001 per shareBBDCTh

4、e New York Stock ExchangeSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes R No Indicate by check mark if the registrant is not required to file reports pursuant to S

5、ection 13 or Section 15(d)of the Act.Yes No RIndicate 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 thepreceding 12 months(or for such shorter period that the registrant was required to file such

6、reports),and(2)has been subject to such filing requirements for the past90 days.Yes 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 during the preceding 12 months(or for such sho

7、rter period that the registrant was required to submit such files).Yes R 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 emerginggrowth company.See the definitions of large accelerated filer,

8、accelerated filer,smaller reporting company,and emerging growth company in Rule 12b-2 ofthe Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filerSmaller reporting company Emerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected n

9、ot to use the extended transition period for complying with anynew or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of

10、 its internal control overfinancial reporting under Section 404(b)of the Sarbanes-Oxley Act by the registered public accounting firm that prepared or issued its audit report.RIf securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of t

11、he registrant included in the filing reflectthe correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any ofthe registrants executiv

12、e officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No RThe aggregate market value of the common stock held by non-affiliates of the registrant(assuming solely for the purpos

13、e of this disclosure that all executive officers,directors and 10%or more stockholders of the registrant are“affiliates”)as of June 28,2024,based on the closing price on that date of$9.73 on the New York StockExchange,was$891,303,268.The number of shares outstanding of the registrants common stock o

14、n February 20,2025 was 105,408,938.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants definitive proxy statement relating to the registrants 2025 Annual Meeting of Stockholders,to be filed with the Securities andExchange Commission within 120 days following the end of the registrants fis

15、cal year,are incorporated by reference in Part III of this Annual Report on Form 10-K as indicated herein.2025/5/19 10:29bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm1/248BARINGS BDC,INC.TABLE OF CONTENTSANNUAL REPORT ON FORM 10-KFor the Fiscal Year

16、 Ended December 31,2024 Page PART I Item 1.Business4Item 1A.Risk Factors33Item 1B.Unresolved Staff Comments67Item 1C.Cybersecurity67Item 2.Properties68Item 3.Legal Proceedings68Item 4.Mine Safety Disclosures68PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer P

17、urchases of EquitySecurities69Item 6.Reserved77Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations77Item 7A.Quantitative and Qualitative Disclosures About Market Risk107Item 8.Financial Statements and Supplementary Data107Item 9.Changes in and Disagreements wi

18、th Accountants on Accounting and Financial Disclosure107Item 9A.Controls and Procedures107Item 9B.Other Information108Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections111PART IIIItem 10.Directors,Executive Officers and Corporate Governance112Item 11.Executive Compensation11

19、2Item 12.Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters112Item 13.Certain Relationships and Related Transactions,and Director Independence112Item 14.Principal Accountant Fees and Services112PART IVItem 15.Exhibits and Financial Statement Schedules113Sig

20、natures118Exhibits22025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm2/248FORWARD-LOOKING STATEMENTSSome of the statements in this Annual Report on Form 10-K constitute forward-looking statements because they relate to futureevents or our

21、future performance or financial condition.Forward-looking statements may include,among other things,statements as toour future operating results,our business prospects and the prospects of our portfolio companies,the impact of the investments that weexpect to make,the ability of our portfolio compan

22、ies to achieve their objectives,our expected financings and investments,theadequacy of our cash resources and working capital,and the timing of cash flows,if any,from the operations of our portfoliocompanies.Words such as“expect,”“anticipate,”“target,”“goals,”“project,”“intend,”“plan,”“believe,”“see

23、k,”“estimate,”“continue,”“forecast,”“may,”“should,”“potential,”variations of such words,and similar expressions indicate a forward-lookingstatement,although not all forward-looking statements include these words.Readers are cautioned that the forward-looking statementscontained in this Annual Report

24、 on Form 10-K are only predictions,are not guarantees of future performance,and are subject to risks,events,uncertainties and assumptions that are difficult to predict.Our actual results could differ materially from those implied orexpressed in the forward-looking statements for any reason,including

25、 the items discussed in Item 1A entitled“Risk Factors”in Part Iof this Annual Report on Form 10-K and in Item 1A entitled“Risk Factors”in Part II of our subsequently filed Quarterly Reports onForm 10-Q or in other reports we may file with the Securities and Exchange Commission(“SEC”)from time to tim

26、e.Other factors thatcould cause our actual results and financial condition to differ materially include,but are not limited to,changes in political,economicor industry conditions,including the risks of a slowing economy,rising inflation and risk of recession and volatility in the financialservices s

27、ector,including bank failures;the interest rate environment or conditions affecting the financial and capital markets;theimpact of global health crises on our or our portfolio companies business and the U.S.and global economies;our,or our portfoliocompanies,future business,operations,operating resul

28、ts or prospects;risks associated with possible disruption due to terrorism inour operations or the economy generally;and future changes in laws or regulations and conditions in our or our portfolio companiesoperating areas.Any forward-looking statements included in this Annual Report on Form 10-K ar

29、e based on our current expectations,estimates,forecasts,information and projections about the industry in which we operate and the beliefs and assumptions of our management as ofthe date of this Annual Report on Form 10-K.We assume no obligation to update or revise any forward-looking statements,whe

30、ther asa result of new information,future events or otherwise,unless we are required to do so by law.Although we undertake no obligation torevise or update any forward-looking statements,whether as a result of new information,future events or otherwise,you are advised toconsult any additional disclo

31、sures that we may make directly to you or through reports that we in the future may file with the SEC,including subsequent annual reports on Form 10-K,quarterly reports on Form 10-Q and current reports on Form 8-K.32025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/0001379785

32、25000010/bbdc-20241231.htm3/248PART IItem 1.Business.OrganizationWe are a Maryland corporation incorporated on October 10,2006.We currently operate as a closed-end,non-diversifiedinvestment company and have elected to be treated as a business development company(“BDC”)under the Investment Company Ac

33、tof 1940,as amended(the“1940 Act”).We have elected and intend to qualify annually for federal income tax purposes to be treated as aregulated investment company(“RIC”)under the Internal Revenue Code of 1986,as amended(the“Code”).Our headquarters is in Charlotte,North Carolina,and our Internet addres

34、s is .We are not including theinformation contained on our website as a part of,or incorporating it by reference into,this Annual Report on Form 10-K.We makeavailable free of charge through our website our Annual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports onForm 8-K,and any

35、amendments to these reports,as soon as reasonably practicable after we electronically file such material with,orfurnish such material to,the Securities and Exchange Commission(the“SEC”).Copies of this Annual Report on Form 10-K and otherreports are also available without charge upon written request

36、to us.The Asset Sale and Externalization TransactionsIn April 2018,we entered into an asset purchase agreement(the“Asset Purchase Agreement”),with BSP Asset Acquisition I,LLC(the“Asset Buyer”),an affiliate of Benefit Street Partners L.L.C.,pursuant to which we agreed to sell our December 31,2017inve

37、stment portfolio to the Asset Buyer for gross proceeds of$981.2 million in cash,subject to certain adjustments to take into accountportfolio activity and other matters occurring since December 31,2017(such transaction referred to herein as the“Asset SaleTransaction”).Also in April 2018,we entered in

38、to a stock purchase and transaction agreement(the“Externalization Agreement”),withBarings LLC(“Barings”or the“Adviser”)through which Barings agreed to become our investment adviser in exchange for(1)apayment by Barings of$85.0 million,or approximately$1.78 per share,directly to our stockholders,(2)a

39、n investment by Barings of$100.0 million in newly issued shares of our common stock at net asset value(“NAV”)and(3)a commitment from Barings to purchaseup to$50.0 million of shares of our common stock in the open market at prices up to and including our then-current NAV per share fora two-year perio

40、d,after which Barings agreed to use any remaining funds from the$50.0 million to purchase additional newly-issuedshares of our common stock at the greater of our then-current NAV per share or market price(collectively,the“ExternalizationTransaction”).The Asset Sale Transaction and the Externalizatio

41、n Transaction are collectively referred to as the“Transactions.”TheTransactions were approved by our stockholders at our July 24,2018 special meeting of stockholders(the“2018 Special Meeting”).The Externalization Transaction closed on August 2,2018(the“Externalization Closing”).Effective as of the E

42、xternalizationClosing,we changed our name from Triangle Capital Corporation to Barings BDC,Inc.(the“Company”)and on August 3,2018,began trading on the New York Stock Exchange(“NYSE”)under the symbol“BBDC.”Prior to the Externalization Transaction,we were internally managed by our executive officers u

43、nder the supervision of ourBoard of Directors(the“Board”).During this period,we did not pay management or advisory fees,but instead incurred the operatingcosts associated with employing executive management and investment and portfolio management professionals.In connection withthe closing of the Ex

44、ternalization Transaction,we entered into an investment advisory agreement(the“Original Advisory Agreement”)and an administration agreement(the“Administration Agreement”)with Barings,pursuant to which Barings serves as our investmentadviser and administrator and manages our investment portfolio whic

45、h initially consisted primarily of the cash proceeds received inconnection with the Asset Sale Transaction.42025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm4/248MVC Capital,Inc.AcquisitionOn December 23,2020 we completed our acquisition

46、of MVC Capital,Inc.,a Delaware corporation(“MVC”)(the“MVCAcquisition”)pursuant to the terms and conditions of that certain Agreement and Plan of Merger(the“MVC Merger Agreement”),dated as of August 10,2020,with MVC,Mustang Acquisition Sub,Inc.,a Delaware corporation and our wholly owned subsidiary(“

47、MVC Acquisition Sub”),and Barings.To effect the acquisition,MVC Acquisition Sub merged with and into MVC,with MVCsurviving the merger as our wholly owned subsidiary(the“First MVC Merger”).Immediately thereafter,MVC merged with and intous,with us as the surviving company(the“Second MVC Merger”and,tog

48、ether with the First MVC Merger,the“MVC Merger”).In connection with the MVC Acquisition on December 23,2020,following the closing of the MVC Merger,we entered into anamended and restated investment advisory agreement(the“Amended and Restated Advisory Agreement”)with Barings,effectiveJanuary 1,2021,w

49、hich amended the Original Advisory Agreement to,among other things,(i)reduce the annual base management feepayable to Barings from 1.375%to 1.250%of our gross assets,(ii)reset the commencement date for the rolling 12-quarter“look-back”provision used to calculate the income incentive fee and incentiv

50、e fee cap to January 1,2021 from January 1,2020 and(iii)describethe fact that we may enter into guarantees,sureties and other credit support arrangements with respect to one or more of ourinvestments,including the impact of these arrangements on the income incentive fee cap.See“Management Agreements

51、 InvestmentAdvisory Agreement”in this Item 1 of Part I of this Annual Report on Form 10-K for more information.In connection with the MVC Acquisition on December 23,2020,promptly following the closing of the MVC Merger,we enteredinto a Credit Support Agreement(the“MVC Credit Support Agreement”)with

52、Barings,pursuant to which Barings has agreed toprovide credit support to us in the amount of up to$23.0 million relating to the net cumulative realized and unrealized losses on theacquired MVC investment portfolio over a 10-year period.The MVC Credit Support Agreement is intended to give stockholder

53、s of thecombined company downside protection from net cumulative realized and unrealized losses on the acquired MVC portfolio andinsulate the combined companys stockholders from potential value volatility and losses in MVCs portfolio following the closing ofthe MVC Merger.There is no fee or other pa

54、yment by us to Barings or any of its affiliates in connection with the MVC Credit SupportAgreement.Any cash payment from Barings to us under the MVC Credit Support Agreement will be excluded from the incentive feecalculations under the Barings BDC Advisory Agreement(as defined below).See“Note 2.Agre

55、ements and Related PartyTransactions”and“Note.6 Derivative Instruments”in the Notes to our Consolidated Financial Statements included in this AnnualReport on Form 10-K for more information.Sierra Income Corporation AcquisitionOn February 25,2022,we completed our acquisition of Sierra Income Corporat

56、ion,a Maryland corporation(“Sierra”),pursuantto the terms and conditions of that certain Agreement and Plan of Merger(the“Sierra Merger Agreement”),dated as of September 21,2021,with Sierra,Mercury Acquisition Sub,Inc.,a Maryland corporation and our direct wholly owned subsidiary(“Sierra Acquisition

57、Sub”),and Barings.To effect the acquisition,Sierra Acquisition Sub merged with and into Sierra,with Sierra surviving the merger asour wholly owned subsidiary(the“First Sierra Merger”).Immediately thereafter,Sierra merged with and into us,with Barings BDC,Inc.as the surviving company(the“Second Sierr

58、a Merger”and,together with the First Sierra Merger,the“Sierra Merger”).Pursuant to the Sierra Merger Agreement,each share of Sierra common stock,par value$0.001 per share(the“Sierra CommonStock”),issued and outstanding immediately prior to the effective time of the First Sierra Merger(other than sha

59、res of Sierra CommonStock issued and outstanding immediately prior to the effective time of the First Sierra Merger that were held by a subsidiary of Sierraor held,directly or indirectly,by us or Sierra Acquisition Sub)was converted into the right to receive(i)an amount in cash fromBarings,without i

60、nterest,equal to$0.9783641,and(ii)0.44973 shares of our common stock,plus any cash in lieu of fractional shares.As a result of the Sierra Merger,former Sierra stockholders received approximately 46.0 million shares of our common stock for theirshares of Sierra Common Stock.52025/5/19 10:30bbdc-20241

61、231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm5/248In connection with the Sierra Merger,on February 25,2022,following the closing of the Sierra Merger,we entered into(1)asecond amended and restated investment advisory agreement with Barings(the“Second Amended

62、and Restated Barings BDC AdvisoryAgreement”),and(2)a credit support agreement(the“Sierra Credit Support Agreement”)with Barings,pursuant to which Barings hasagreed to provide credit support to us in the amount of up to$100.0 million relating to the net cumulative realized and unrealized losseson the

63、 acquired Sierra investment portfolio over a 10-year period.See“Note 2.Agreements and Related Party Transactions”and“Note6.Derivative Instruments”in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K formore information.Overview of Our BusinessBarings focu

64、ses on investing our portfolio primarily in senior secured private debt investments in well-established middle-marketbusinesses that operate across a wide range of industries.Barings existing SEC co-investment exemptive relief under the 1940 Act(asamended,the“Co-Investment Exemptive Relief”)permits

65、us and Barings affiliated private and SEC-registered funds to co-invest inBarings-originated loans,which allows Barings to efficiently implement its senior secured private debt investment strategy for us.Our investment objective is to generate current income by investing directly in privately-held m

66、iddle-market companies to helpthese companies fund acquisitions,growth or refinancing.Barings employs fundamental credit analysis,and targets investments inbusinesses with low levels of cyclicality(i.e.,the risk of business cycles or other economic cycles adversely affecting them)andoperating risk r

67、elative to other businesses in this market segment.The holding size of each position will generally be dependent upon anumber of factors including total facility size,pricing and structure,and the number of other lenders in the facility.Barings hasexperience managing levered vehicles,both public and

68、 private,and seeks to enhance our returns through the use of leverage with aprudent approach that prioritizes capital preservation.Barings believes this strategy and approach offers attractive risk/return withlower volatility given the potential for fewer defaults and greater resilience through mark

69、et cycles.A significant portion of ourinvestments are expected to be rated below investment grade by rating agencies or,if unrated,would be rated below investment grade ifthey were rated.Below investment grade securities,which are often referred to as“junk,”have predominantly speculativecharacterist

70、ics with respect to the issuers capacity to pay interest and repay principal.To a lesser extent,we may make investments insyndicated loan opportunities for cash management and other purposes,which includes but is not limited to maintaining more liquidinvestments to manage our share repurchase progra

71、m.Relationship with Our Adviser,BaringsOur investment adviser,Barings,a wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company,is a leadingglobal asset management firm and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940,asamended(the“Advi

72、sers Act”).Barings primary investment capabilities include fixed income,private credit,real estate,equity,andalternative investments.Subject to the overall supervision of the Board,Barings Global Private Finance Group(“Barings GPFG”),manages our day-to-day operations,and provides investment advisory

73、 and management services to us.Barings GPFG is part ofBarings$344.1 billion Global Fixed Income Platform(as of December 31,2024)that invests in liquid,private and structured credit.Barings GPFG manages private funds and separately managed accounts,along with multiple traded closed-end funds and busi

74、nessdevelopment companies.Among other things,Barings(i)determines the composition of our portfolio,the nature and timing of the changes therein and themanner of implementing such changes;(ii)identifies,evaluates and negotiates the structure of the investments made by us;(iii)executes,closes,services

75、 and monitors the investments that we make;(iv)determines the securities and other assets that we willpurchase,retain or sell;(v)performs due diligence on prospective portfolio companies and(vi)provides us with such other investmentadvisory,research and related services as we may,from time to time,r

76、easonably require for the investment of our funds.Under the terms of the Administration Agreement,Barings(in its capacity as our Administrator)performs(or oversees,orarranges for,the performance of)the administrative services necessary for our operation,including,but not limited to,office facilities

77、,equipment,clerical,bookkeeping and record keeping services at such office facilities and such other services as Barings,subject toreview by the Board,will from time to time determine to be necessary62025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-2

78、0241231.htm6/248or useful to perform its obligations under the Administration Agreement.Barings also,on our behalf and subject to the Boardsoversight,arranges for the services of,and oversees,custodians,depositories,transfer agents,dividend disbursing agents,otherstockholder servicing agents,account

79、ants,attorneys,underwriters,brokers and dealers,corporate fiduciaries,insurers,banks and suchother persons in any such other capacity deemed to be necessary or desirable.Barings is responsible for the financial and other recordsthat we are required to maintain and will prepare all reports and other

80、materials required to be filed with the SEC or any otherregulatory authority.Included in Barings GPFG is Barings North American Private Finance Team(the“U.S.Investment Team”),which consists of 52investment professionals(as of December 31,2024)located in three offices in the U.S.The U.S.Investment Te

81、am provides a full set ofsolutions to the North American middle market,including revolvers,first and second lien senior secured loans,unitranche structures,mezzanine debt and equity co-investments.The U.S.Investment Team averages over 20 years of industry experience at the ManagingDirector and Direc

82、tor level.Also included in Barings GPFG are its Europe and Asia-Pacific Investment Committees and PrivateFinance Teams,which are responsible for our investment origination and portfolio monitoring activities for middle-market companiesin Europe and Asia-Pacific geographies.In addition,Barings believ

83、es that it has best-in-class support personnel,including expertise inrisk management,legal,accounting,tax,information technology and compliance,among others.We expect to benefit from the supportprovided by these personnel in our operations.Investment CommitteeThe Barings North American Private Finan

84、ce investment committee(the“Investment Committee”),which is responsible for ourinvestment origination and portfolio monitoring activities for middle-market companies in North America,currently consists of sevenmembers:Bryan High,Head of Barings GPFG;Stuart Mathieson,Head of Europe and APAC Private C

85、redit and Capital Solutions;Terry Harris,Head of Portfolio Management for Barings GPFG;Tyler Gately,Head of North American Private Credit;MatthewFreund,President of the Company,Barings Capital Investment Corporation(“BCIC”)and Barings Private Credit Corporation(“BPCC”);Brianne Ptacek,Managing Direct

86、or;and Bob Shettle,Managing Director.The Investment Committee averagesapproximately 23 years of industry experience.A majority of the votes cast at a meeting at which a majority of the members of theInvestment Committee is present is required to approve all investments in new middle-market companies

87、.Bryan High and MatthewFreund serve as the Companys portfolio managers.Bryan High,Stuart Mathieson,Terry Harris,Tom Kilpatrick,a member of Barings Private Credit and Capital Solutions Team andOrla Walsh,Managing Director and member of Barings Private Credit Team comprise the Barings GPFG European In

88、vestmentCommittee,and Bryan High,Stuart Mathieson,Terry Harris,Shane Forster,Managing Director,and Justin Hooley,Managing Director,comprise the Barings GPFG Asia-Pacific Investment Committee,which committees are responsible for our investment origination andportfolio monitoring activities for middle

89、-market companies in European and Asia-Pacific geographies,respectively.Barings believesthat the individual and shared experience of these senior team members provides Barings GPFGs investment committees with anappropriate balance of shared investment philosophy and difference of background and opin

90、ion.Stockholder Approval of Reduced Asset Coverage RatioOn July 24,2018,our stockholders voted at the 2018 Special Meeting to approve a proposal to authorize us to be subject to areduced asset coverage ratio of at least 150%under the 1940 Act.As a result of the stockholder approval at the 2018 Speci

91、al Meeting,effective July 25,2018,our applicable asset coverage ratio under the 1940 Act has been decreased to 150%from 200%.As a result,weare permitted under the 1940 Act to incur indebtedness at a level that is more consistent with a portfolio of senior secured debt.As ofDecember 31,2024,our asset

92、 coverage ratio was 180.0%.72025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm7/248Our Business StrategyWe seek attractive returns by generating current income primarily from directly-originated debt investments in middle-marketcompanies l

93、ocated primarily in the United States.We also have investments in middle-market companies located outside the UnitedStates.Our strategy includes the following components:Leveraging Barings GPFGs Origination and Portfolio Management Resources.As of December 31,2024 Barings GPFG hasover 95 investment

94、professionals located in seven different offices in the U.S.,Europe,Australia/New Zealand and Asia.Theseregional investment teams have been working together in their respective regions for a number of years and have extensiveexperience advising,investing in and lending to companies across changing m

95、arket cycles.In addition,the individual membersof these teams have diverse investment backgrounds,with prior experience at investment banks,commercial banks,andprivately and publicly held companies.We believe this diverse experience provides an in-depth understanding of the strategic,financial and o

96、perational challenges and opportunities of middle-market companies.Utilizing Long-Standing Relationships to Source Investments.Barings GPFG has worked diligently over decades to buildstrategic relationships with private equity firms globally.Based on Barings GPFGs long history of providing consisten

97、t,predictable capital to middle-market sponsors,even in periods of market dislocation,Barings believes it has a reputation as areliable partner.Barings also maintains extensive personal relationships with entrepreneurs,financial sponsors,attorneys,accountants,investment bankers,commercial bankers an

98、d other non-bank providers of capital who refer prospective portfoliocompanies to us.These relationships historically have generated significant investment opportunities.We believe that thisnetwork of relationships will continue to produce attractive investment opportunities.Focusing on the Middle-M

99、arket.We primarily invest in middle-market companies.These companies tend to be privatelyowned,often by a private equity sponsor,and are companies that typically generate annual earnings before interest,taxes,depreciation and amortization,as adjusted(“Adjusted EBITDA”),of$15.0 million to$75.0 millio

100、n.Providing One-Stop Customized Financing Solutions.Barings believes that Barings GPFGs ability to commit to andoriginate larger hold positions(in excess of$200 million)in a given transaction is a differentiator to middle-market privateequity sponsors.In todays market,it has become increasingly impo

101、rtant to have the ability to underwrite an entire transaction,providing financial sponsors with certainty of close.Barings GPFG offers a variety of financing structures and has theflexibility to structure investments to meet the needs of our portfolio companies.Applying Consistent Underwriting Polic

102、ies and Active Portfolio Management.We believe robust due diligence on eachinvestment is paramount due to the illiquid nature of a significant portion of our assets.With limited ability to liquidateholdings,private credit investors must take a longer-term,“originate-to-hold”investment approach.Barin

103、gs has implementedunderwriting policies and procedures that are followed for each potential transaction.This consistent and proven fundamentalunderwriting process includes a thorough analysis of each potential portfolio companys competitive position,financialperformance,management team operating dis

104、cipline,growth potential and industry attractiveness,which Barings believesallows it to better assess the companys prospects.After closing,Barings maintains ongoing access to both the sponsor andportfolio company management in order to closely monitor investments and suggest or require remedial acti

105、ons as needed toavoid a default.Maintaining Portfolio Diversification.While we focus our investments in middle-market companies,we seek to invest acrossvarious industries and in both United States-based and foreign-based companies.Barings monitors our investment portfolio toensure we have acceptable

106、 industry balance,using industry and market metrics as key indicators.By monitoring our investmentportfolio for industry balance,we seek to reduce the effects of economic downturns associated with any particular industry ormarket sector.Notwithstanding our intent to invest across a variety of indust

107、ries,we may from time to time hold securities of asingle portfolio company that comprise more than 5.0%of our total assets and/or more than 10.0%of the outstanding votingsecurities of the portfolio company.For that reason,we are classified as a non-diversified management investment companyunder the

108、1940 Act.82025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm8/248Other Investments.To a lesser extent,we will invest opportunistically in assets such as,without limitation,equity,specialsituations,structured credit(e.g.,private asset-backe

109、d securities),syndicated loan opportunities,high yield investments and/ormortgage securities.Our special situation investments generally comprise of investments in stressed and distressed corporatedebt instruments which are expected to include(but which are not limited to)senior secured loans(includ

110、ing assignments andparticipations),second lien loans and subordinated debt(including mezzanine and payment-in-kind(“PIK”)securities),securedfloating rate notes and secured fixed rated notes,unsecured loans,unsecured senior and subordinated corporate bonds,debentures,notes,commercial paper,convertibl

111、e debt obligations,equity investments(including preferred stock and commonequity instruments),hedging arrangements,other forms of subordinated debt,structured credit(e.g.,asset-backed securities)and equity instruments.InvestmentsDebt InvestmentsThe terms of our directly originated debt investments i

112、n middle market companies are tailored to the facts and circumstances ofeach transaction and prospective portfolio company,negotiating a structure that seeks to protect lender rights and manage risk whilecreating incentives for the portfolio company to achieve its business plan.We also seek to limit

113、 the downside risks of our investmentsby negotiating covenants that are designed to protect our investments while affording our portfolio companies as much flexibility inmanaging their businesses as possible.Such restrictions may include affirmative and negative covenants,default penalties,lienprote

114、ctions,change of control provisions and a pledge of the operating companies stock which provides us with additional exit optionsin downside scenarios.Other lending protections may include excess cash flow sweeps(effectively term loan amortization),limitationson a companys ability to make acquisition

115、s,maximums on capital expenditures and limits on allowable dividends and distributions.Further,up-front closing fees of typically 1-3%of the loan amount act effectively as pre-payment protection given the cost to acompany to refinance early.Additionally,we will sometimes include call protection prov

116、isions effective for the first six to twelvemonths of an investment to enhance our potential total return.We focus on investing primarily in senior secured private debt investments in well-established middle-market businesses thatoperate across a wide range of industries.Senior secured private debt

117、investments are negotiated directly with the borrower,rather thanmarketed by a third party or bought and sold in the secondary market.We believe senior secured private debt investments may offerhigher returns and certain more favorable protections than syndicated senior secured loans.Fees generated

118、in connection with our debtinvestments are recognized over the life of the loan using the effective interest method or,in some cases,recognized as earned.Termsof our senior secured private debt investments are generally between five and seven years and bear interest between SOFR(or theapplicable cur

119、rency rate for investments in foreign currencies)plus 450 basis points and SOFR plus 650 basis points per annum.Equity InvestmentsOn a limited basis,we may acquire equity interests in portfolio companies.In such cases,we generally seek to structure ourequity investments as non-control investments th

120、at provide us with minority rights.Investment CriteriaWe utilize the following criteria and guidelines in evaluating investment opportunities in middle market companies.However,not all of these criteria and guidelines have been,or will be,met in connection with each of our investments.Established Co

121、mpanies with Positive Cash Flow.We seek to invest in later-stage or mature companies with a proven historyof generating positive cash flows.We typically focus on companies with a history of profitability and trailing twelve-monthAdjusted EBITDA ranging from$15.0 million to$75.0 million.Experienced M

122、anagement Teams.Based on our prior investment experience,we believe that a management team withsignificant experience with a portfolio company or relevant industry experience is92025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm9/248essent

123、ial to the long-term success of the portfolio company.We believe management teams with these attributes are more likelyto manage the companies in a manner that protects our debt investment.Strong Competitive Position.We seek to invest in companies that have developed strong positions within their re

124、spectivemarkets,are well positioned to capitalize on growth opportunities and compete in industries with barriers to entry.We also seekto invest in companies that exhibit a competitive advantage,which may help to protect their market position and profitability.Varied Customer and Supplier Bases.We p

125、refer to invest in companies that have varied customer and supplier bases.Companies with varied customer and supplier bases are generally better able to endure economic downturns,industryconsolidation and shifting customer preferences.Significant Invested Capital.We believe the existence of signific

126、ant underlying equity value provides important support toinvestments.We seek to identify portfolio companies that we believe have well-structured capital beyond the layer of thecapital structure in which we invest.Investment ProcessOur investment origination and portfolio monitoring activities for m

127、iddle-market companies are performed by Barings GPFG.The investment committee at Barings GPFG is responsible for all aspects of our investment process for investments in middle-marketcompanies;however,other investment committees within Barings are primarily responsible for the investment process for

128、 ouropportunistic investments in special situations,structured credit(e.g.,private asset-backed securities),syndicated loan opportunities,high-yield investments and mortgage securities.Each of Barings investment processes is designed to maximize risk-adjusted returns,minimize non-performing assets a

129、nd avoid investment losses.In addition,the investment process is also designed to provide sponsorsand/or prospective portfolio companies with efficient and predictable deal execution.OriginationBarings GPFGs typical origination process for investments in middle-market companies is summarized in the

130、following chart:102025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm10/248Investment Pre-ScreenThe investment pre-screen process typically begins with a review of an offering memorandum or other high-level prospectinformation by an investm

131、ent originator.A fundamental bottoms-up credit analysis is prepared and independent third-party research isgathered in addition to the information received from the sponsor.The investment group focuses on a prospective investmentsfundamentals,sponsor/source and proposed investment structure.This rev

132、iew may be followed by a discussion between the investmentoriginator and an investment group head to identify investment opportunities that should be passed on,either because they fall outsideof Barings GPFGs stated investment strategy or offer an unacceptable risk-adjusted return.If the originator

133、and investment group headagree that an investment opportunity is worth pursuing,a credit analyst assists the originator with preparation of a screeningmemorandum.The screening memorandum is typically discussed internally with the investment group head and other senior membersof the investment group,

134、and in certain instances,the investment group head may elect to review the screening memorandum with theInvestment Committee prior to the preliminary investment proposal.Preliminary Investment ProposalFollowing the screening memorandum discussion,if the decision is made by the investment group head

135、to pursue an investmentopportunity,key pricing and structure terms may be communicated to the prospective borrower verbally or via a non-binding standardpreliminary term sheet in order to determine whether the proposed terms are competitive.Investment ApprovalUpon acceptance by a sponsor/prospective

136、 borrower of preliminary key pricing and structure terms,the investment processcontinues with formal due diligence.The investment team typically attends meetings with the prospective portfolio companysmanagement,reviews historical and forecasted financial information and third-party diligence report

137、s,conducts research to supportpreparation of proprietary financial models including both base case and downside scenarios,valuation analyses,and ultimately,anunderwriting memorandum for review by the Investment Committee.A majority of the votes cast at a meeting at which a majority ofthe members of

138、the Investment Committee is present is required to approve all investments in new middle-market portfolio companies.Commitment LetterFor investments that require written confirmation of commitment,commitment letters are typically reviewed by Barings GPFGsinternal legal team or outside counsel.Commit

139、ment letters typically include customary conditions as well as any conditions specifiedby the Investment Committee.Such conditions could include,but are not limited to,specific confirmatory due diligence,minimum pre-close Adjusted EBITDA,minimum capitalization,satisfactory documentation,satisfactory

140、 legal due diligence and absence of materialadverse change.Unless specified by the Investment Committee as a condition to approval,commitment letters need not include finalInvestment Committee approval as a condition precedent.DocumentationOnce an investment opportunity has been approved,negotiation

141、 of definitive legal documents occurs,usually simultaneously withcompletion of any third-party confirmatory due diligence.Typically,legal documentation will be reviewed by Barings GPFGs internallegal team or by outside legal counsel to ensure that our security interest can be perfected and that all

142、other terms of the definitive loandocuments are consistent with the terms approved by the Investment Committee.ClosingA closing memorandum is provided to the Investment Committee.The closing memorandum addresses final investment structureand pricing terms,the sources and uses of funds,any variances

143、from the original approved terms,an update related to the prospectsfinancial performance and,if warranted,updates to internal financial models.The closing memorandum also addresses each of thespecific conditions to the approval of the investment112025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archiv

144、es/edgar/data/1379785/000137978525000010/bbdc-20241231.htm11/248by the Investment Committee,including results of confirmatory due diligence with any exceptions or abnormalities highlighted,andincludes an analysis of financial covenants with a comparison to the financial forecast prepared by manageme

145、nt.Portfolio Management and Investment MonitoringOur portfolio management and investment monitoring processes are overseen by Barings.Barings portfolio management processis designed to maximize risk-adjusted returns and identify non-performing assets well in advance of potentially adverse events in

146、orderto mitigate investment losses.Key aspects of the Barings investment and portfolio management process include:Culture of Risk Management.The investment team that approves an investment monitors the investments performancethrough repayment.We believe this practice encourages accountability by con

147、necting investment team members with the long-term performance of the investment.This also allows us to leverage the underwriting process,namely the comprehensiveunderstanding of the risk factors associated with the investment that an investment team develops during underwriting.Inaddition,we seek t

148、o foster continuous interaction between investment teams and the Investment Committee.This frequentcommunication encourages the early escalation of issues to members of the Investment Committee to leverage their experienceand expertise well in advance of potentially adverse events.Ongoing Monitoring

149、.Each portfolio company is assigned to an analyst who is responsible for the ongoing monitoring of theinvestment.Upon receipt of information(financial or otherwise)relating to an investment,a preliminary review is performedby the analyst in order to assess whether the information raises any issues t

150、hat require increased attention.Particularconsideration is given to information which may impact the value of an asset.In the event that something material is identified,the analyst is responsible for notifying the relevant members of the deal team and Investment Committee.Quarterly Portfolio Review

151、s.All investments are reviewed on at least a quarterly basis.The quarterly portfolio reviews providea forum to evaluate the current status of each asset and identify any recent or long-term performance trends,either positive ornegative,that may affect its current valuation.Focus Credit List Reviews.

152、Certain credits are deemed to be on the“Focus Credit List”,or a list of similar meaning and aretypically reviewed on a more frequent basis.During these reviews,the investment team provides an update on the situation anddiscusses potential courses of action with the Investment Committee to ensure any

153、 mitigating steps are taken in a timelymanner.Sponsor Relationships.For middle-market loans,we invest primarily in transactions backed by a private equity sponsor andwhen evaluating investment opportunities,we take into account the strength of the sponsor(e.g.,track record,sector expertise,strategy,

154、governance,follow-on investment capacity,relationship with Barings GPFG).Having a strong relationship andstaying in close contact with sponsors and management during not only the underwriting process but also throughout the life ofthe investment allows us to engage the sponsor and management early t

155、o address potential covenant breaks or other issues.Robust Investment and Portfolio Management System.Barings investment and portfolio management system serves as thecentral repository of data used for investment management,including both company-level metrics(e.g.,probability of default,Adjusted EB

156、ITDA,geography)and asset-level metrics(e.g.,price,spread/coupon,seniority).Barings portfolio managementhas established a set of data that analysts must update quarterly,or more frequently when appropriate,in order to produce aone-page summary for each company,which are used during quarterly portfoli

157、o reviews.Valuation Process and Determination of Net Asset ValueThe most significant estimate inherent in the preparation of our financial statements is the valuation of investments and therelated amounts of unrealized appreciation and depreciation of investments recorded.We have a valuation policy,

158、as well as establishedand documented processes and methodologies for determining the fair values of portfolio company investments on a recurring(at leastquarterly)basis in accordance with the 1940 Act and the Financial Accounting Standards Board(FASB)Accounting StandardsCodification(ASC)Topic 820,Fa

159、ir122025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm12/248Value Measurements and Disclosures(“ASC Topic 820”).Our current valuation policy and processes were established by Barings andwere approved by the Board.Under ASC Topic 820,fair v

160、alue is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between a willing buyer and a willing seller at the measurement date.For our portfolio securities,fair value is generally theamount that we might reasonably expect to receive upon the c

161、urrent sale of the security.The fair value measurement assumes that thesale occurs in the principal market for the security,or in the absence of a principal market,in the most advantageous market for thesecurity.If no market for the security exists or if we do not have access to the principal market

162、,the security should be valued based onthe sale occurring in a hypothetical market.Under ASC Topic 820,there are three levels of valuation inputs,as follows:Level 1 Inputs include quoted prices(unadjusted)in active markets for identical assets or liabilities.Level 2 Inputs include quoted prices for

163、similar assets and liabilities in active markets,and inputs that are observable for theasset or liability,either directly or indirectly,for substantially the full term of the financial instrument.Level 3 Inputs include inputs that are unobservable and significant to the fair value measurement.A fina

164、ncial instrument is categorized within the ASC Topic 820 valuation hierarchy based upon the lowest level of input to thevaluation process that is significant to the fair value measurement.For example,a Level 3 fair value measurement may include inputsthat are observable(Levels 1 and 2)and unobservab

165、le(Level 3).Therefore,unrealized appreciation and depreciation related to suchinvestments categorized as Level 3 investments within the tables in the notes to our consolidated financial statements may includechanges in fair value that are attributable to both observable inputs(Levels 1 and 2)and uno

166、bservable inputs(Level 3).Our investment portfolio includes certain debt and equity instruments of privately held companies for which quoted prices orother observable inputs falling within the categories of Level 1 and Level 2 are generally not available.In such cases,the Adviserdetermines the fair

167、value of our investments in good faith primarily using Level 3 inputs.In certain cases,quoted prices or otherobservable inputs exist,and if so,the Adviser assesses the appropriateness of the use of these third-party quotes in determining fairvalue based on(i)its understanding of the level of actual

168、transactions used by the broker to develop the quote and whether the quotewas an indicative price or binding offer and(ii)the depth and consistency of broker quotes and the correlation of changes in brokerquotes with underlying performance of the portfolio company.There is no single approach for det

169、ermining fair value in good faith,as fair value depends upon the specific circumstances ofeach individual investment.The recorded fair values of our Level 3 investments may differ significantly from fair values that wouldhave been used had an active market for the securities existed.In addition,chan

170、ges in the market environment and other events thatmay occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different thanthe valuations currently assigned.For a discussion of the risks inherent in determining the value of securities for

171、 which readilyavailable market values do not exist,see“Risk Factors Risks Relating to Our Business and Structure Our investment portfolio isand will continue to be recorded at fair value as determined in accordance with the Advisers valuation policies and procedures and,asa result,there is and will

172、continue to be uncertainty as to the value of our portfolio investments”included in Item 1A of Part I of thisAnnual Report on Form 10-K.Investment Valuation ProcessThe Board must determine fair value in good faith for any or all of our investments for which market quotations are not readilyavailable

173、.The Board has designated Barings as valuation designee to perform the fair value determinations relating to the value of theassets held by us for which market quotations are not readily available.Barings has established a pricing committee that is,subject tothe oversight of the Board,responsible fo

174、r the approval,implementation and oversight of the processes and methodologies that relate tothe pricing and valuation of assets we hold.Barings uses independent third-party providers to price the portfolio,but in the event an132025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/13797

175、85/000137978525000010/bbdc-20241231.htm13/248acceptable price cannot be obtained from an approved external source,Barings will utilize alternative methods in accordance withinternal pricing procedures established by Barings pricing committee.At least annually,Barings conducts reviews of the primary

176、pricing vendors to validate that the inputs used in the vendors pricingprocess are deemed to be market observable.While Barings is not provided access to proprietary models of the vendors,the reviewshave included on-site walkthroughs of the pricing process,methodologies and control procedures for ea

177、ch asset class and level forwhich prices are provided.The review also includes an examination of the underlying inputs and assumptions for a sample ofindividual securities across asset classes,credit rating levels and various durations,a process Barings continues to perform annually.Inaddition,the p

178、ricing vendors have an established challenge process in place for all security valuations,which facilitates identificationand resolution of prices that fall outside expected ranges.Barings believes that the prices received from the pricing vendors arerepresentative of prices that would be received t

179、o sell the assets at the measurement date(i.e.exit prices).Our money market fund investments are generally valued using Level 1 inputs and our equity investments listed on an exchangeor on the NASDAQ National Market System are valued using Level 1 inputs,using the last quoted sale price of that day.

180、Oursyndicated senior secured loans and structured product investments are generally valued using Level 2 inputs,which are generallyvalued at the bid quotation obtained from dealers in loans by an independent pricing service.Our middle-market,private debt andequity investments are generally valued us

181、ing Level 3 inputs.Independent ValuationThe fair value of loans and equity investments that are not syndicated or for which market quotations are not readily available,including middle-market loans,are generally submitted to independent providers to perform an independent valuation on those loansand

182、 equity investments as of the end of each quarter.Such loans and equity investments are initially held at cost,as that is a reasonableapproximation of fair value on the acquisition date,and monitored for material changes that could affect the valuation(for example,changes in interest rates or the cr

183、edit quality of the borrower).At the quarter end following that of the initial acquisition,such loans andequity investments are generally sent to a valuation provider which will determine the fair value of each investment.The independentvaluation providers apply various methods(synthetic rating anal

184、ysis,discounting cash flows,and re-underwriting analysis)to establishthe rate of return a market participant would require(the“discount rate”)as of the valuation date,given market conditions,prevailinglending standards and the perceived credit quality of the issuer.Future expected cash flows for eac

185、h investment are discounted back topresent value using these discount rates in the discounted cash flow analysis.A range of values will be provided by the valuationprovider and Barings will determine the point within that range that it will use.If the Barings pricing committee disagrees with thepric

186、e range provided,it may make a fair value recommendation to Barings that is outside of the range provided by the independentvaluation provider and the reasons therefore.In certain instances,we may determine that it is not cost-effective,and as a result is not inthe stockholders best interests,to req

187、uest an independent valuation firm to perform an independent valuation on certain investments.Such instances include,but are not limited to,situations where the fair value of the investment in the portfolio company is determinedto be insignificant relative to the total investment portfolio.For a fur

188、ther discussion of our valuation procedures,see the section entitled“Critical Accounting Policies and Use of Estimates Investment Valuation”included in“Managements Discussion and Analysis of Financial Condition and Results of Operations”included in Item 7 of Part II of this Annual Report on Form 10-

189、K.Valuation InputsThe Advisers valuation techniques are based upon both observable and unobservable pricing inputs.Observable inputs reflectmarket data obtained from independent sources,while unobservable inputs reflect the Advisers market assumptions.The Advisersassessment of the significance of a

190、particular input to the fair value measurement in its entirety requires judgment and considers factorsspecific to the financial instrument.An independent pricing service provider is the preferred source of pricing a loan,however,to theextent the independent pricing service provider price is unavaila

191、ble or not relevant and reliable,the Adviser will utilize alternativeapproaches such as broker quotes or manual prices.The Adviser attempts to maximize the use of observable inputs and minimize theuse of unobservable inputs.The availability of observable inputs can vary from investment to142025/5/19

192、 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm14/248investment and is affected by a wide variety of factors,including the type of security,whether the security is new and not yetestablished in the marketplace,the liquidity of markets and other

193、characteristics particular to the security.Valuation of Investments in Jocassee Partners LLC,Thompson Rivers LLC,Waccamaw River LLC,Sierra Senior Loan StrategyJV I LLC and MVC Private Equity Fund LPAs Jocassee Partners LLC,Thompson Rivers LLC,Waccamaw River LLC,Sierra Senior Loan Strategy JV I LLC J

194、V and MVCPrivate Equity Fund LP are investment companies with no readily determinable fair values,the Adviser estimates the fair value of ourinvestments in these entities using the NAV of each company and our ownership percentage as a practical expedient.The NAV isdetermined in accordance with the s

195、pecialized accounting guidance for investment companies.Quarterly Net Asset Value DeterminationWe determine the NAV per share of our common stock on at least a quarterly basis.The NAV per share is equal to the value ofour total assets minus total liabilities and any preferred stock outstanding divid

196、ed by the total number of shares of common stockoutstanding.Exit Strategies/RefinancingWhile we generally exit most investments through the refinancing or repayment of our debt,we typically assist our portfoliocompanies in developing and planning exit opportunities,including any sale or merger of ou

197、r portfolio companies.We may also assistin the structure,timing,execution and transition of these exit strategies.CompetitionWe compete for investments with a number of investment funds including public funds,private debt funds and private equityfunds,other BDCs,as well as traditional financial serv

198、ices companies such as commercial banks and other sources of financing.Someof these entities have greater financial and managerial resources than we do.In addition,some of our competitors may have higher risktolerances or different risk assessments,which could allow them to consider more investments

199、 and establish more relationships than wedo.Furthermore,many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.We use the expertise of the investment professionals of Barings to assess investment risks and determine appropriate pricing forour

200、investments in portfolio companies.We believe the relationship we have with Barings enables us to learn about,and compete forfinancing opportunities with companies in middle-market businesses that operate across a wide range of industries.For additionalinformation concerning the competitive risks we

201、 face,see“Risk Factors Risks Relating to Our Business and Structure Weoperate in a highly competitive market for investment opportunities,which could reduce returns and result in losses”included inItem 1A of Part I of this Annual Report on Form 10-K.Brokerage Allocation and Other PracticesWe paid$0.

202、2 million in brokerage commissions during the fiscal year ended December 31,2024 in connection with theacquisition and/or disposal of our investments.We did not pay any brokerage commissions during the fiscal years ended December 31,2023 and December 31,2022 in connection with the acquisition and/or

203、 disposal of our investments.We generally acquire and disposeof our investments in privately negotiated transactions;therefore,we infrequently use brokers in the normal course of our business.Barings is primarily responsible for the execution of any publicly traded securities portion of our portfoli

204、o transactions and theallocation of brokerage commissions.We do not expect to execute transactions through any particular broker or dealer,but will seek toobtain the best net results for us,taking into account such factors as price(including the applicable brokerage commission or dealerspread),size

205、of order,difficulty of execution,and operational facilities of the firm and the firms risk and skill in positioning blocks ofsecurities.While we will generally seek reasonably competitive trade execution costs,we will not necessarily pay the lowest spread orcommission available.Subject to applicable

206、 legal requirements,if we use a broker,we may select a broker based partly upon brokerageor research services provided152025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm15/248to us.In return for such services,we may pay a higher commissio

207、n than other brokers would charge if we determine in good faith thatsuch commission is reasonable in relation to the services provided.Dividend Reinvestment PlanWe have adopted a dividend reinvestment plan that provides for reinvestment of our distributions on behalf of our commonstockholders,unless

208、 a common stockholder elects to receive cash as provided below.As a result,if the Board authorizes,and wedeclare,a cash dividend,then our common stockholders who have not“opted out”of our dividend reinvestment plan will have theircash dividends automatically reinvested in additional shares of our co

209、mmon stock,rather than receiving the cash dividends.No action will be required on the part of a registered common stockholder to have his or her cash dividend reinvested in shares ofour common stock.A registered common stockholder may elect to receive an entire dividend in cash by notifying Computer

210、share,Inc.,the“Plan Administrator”and our transfer agent and registrar,in writing so that such notice is received by the Plan Administrator nolater than three days prior to the payment date fixed by the Board for the dividend.The Plan Administrator will set up an account forshares acquired through t

211、he plan for each common stockholder who has not elected to receive dividends in cash and hold such shares innon-certificated form.Upon request by a common stockholder participating in the plan,received in writing not less than three daysprior to the payment date,the Plan Administrator will,instead o

212、f crediting shares to the participants account,issue a certificateregistered in the participants name for the number of whole shares of our common stock and a check for any fractional share.Thosecommon stockholders whose shares are held by a broker or other financial intermediary may receive dividen

213、ds in cash by notifyingtheir broker or other financial intermediary of their election.We intend to use primarily newly issued shares to implement the plan,so long as our shares are trading at or above NAV.If ourshares are trading below NAV,we intend to purchase shares in the open market in connectio

214、n with our implementation of the plan.Ifwe use newly issued shares to implement the plan,the number of shares to be issued to a common stockholder is determined bydividing the total dollar amount of the dividend payable to such common stockholder by the market price per share of our commonstock at t

215、he close of regular trading on The New York Stock Exchange(the“NYSE”)on the dividend payment date.Market price pershare on that date will be the closing price for such shares on the NYSE or,if no sale is reported for such day,at the average of theirreported bid and asked prices.If we purchase shares

216、 in the open market to implement the plan,the number of shares to be received by acommon stockholder is determined by dividing the total dollar amount of the dividend payable to such common stockholder by theaverage price per share for all shares purchased by the Plan Administrator in the open marke

217、t in connection with the dividend.Thenumber of shares of our common stock to be outstanding after giving effect to payment of the dividend cannot be established until thevalue per share at which additional shares will be issued has been determined and elections of our common stockholders have beenta

218、bulated.There will be no brokerage charges or other fees to common stockholders who participate in the plan.However,certainbrokerage firms may charge brokerage charges or other fees to their customers.We will pay the Plan Administrators fees under theplan.If a participant elects by written notice to

219、 the Plan Administrator to have the Plan Administrator sell part or all of the shares heldby the Plan Administrator in the participants account and remit the proceeds to the participant,the Plan Administrator is authorized todeduct a$15.00 transaction fee plus a$0.10 per share brokerage commission f

220、rom the proceeds.Common stockholders who receive dividends in the form of stock generally are subject to the same federal,state and local taxconsequences as are common stockholders who elect to receive their dividends in cash.However,since a participating stockholderscash dividends will be reinveste

221、d,such stockholder will not receive cash with which to pay any applicable taxes on reinvesteddividends.A common stockholders basis for determining gain or loss upon the sale of stock received in a dividend from us will beequal to the total dollar amount of the dividend payable to the common stockhol

222、der.Any stock received in a dividend will have aholding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S.commonstockholders account.Stock received in a dividend may generate a wash sale if a common stockholder sold our stock at a realized lo

223、sswithin 30 days either before or after such dividend.Participants may terminate their accounts under the plan by notifying the Plan Administrator via its website filling out the transaction request form located at the bottom of their162025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/da

224、ta/1379785/000137978525000010/bbdc-20241231.htm16/248statement and sending it to the Plan Administrator at Computershare,Inc.,P.O.Box 43006,Providence,Rhode Island 02940 or bycalling the Plan Administrator at(866)228-7201.We may terminate the plan upon notice in writing mailed to each participant at

225、 least 30 days prior to any record date for thepayment of any dividend by us.All correspondence concerning the plan should be directed to the Plan Administrator by mail atComputershare,Inc.,P.O.Box 43006,Providence,Rhode Island 02940.EmployeesWe currently do not have any employees and do not expect

226、to have any employees.The services necessary for our business areprovided by individuals who are employees of Barings,pursuant to the terms of the Barings BDC Advisory Agreement(as definedbelow)and our Administration Agreement.Each of our executive officers is an employee of Barings and our day-to-d

227、ay investmentactivities are managed by Barings.Management AgreementsIn connection with the MVC Acquisition,we entered into the Amended and Restated Advisory Agreement following approval ofthe Amended and Restated Advisory Agreement by our stockholders at our December 23,2020 special meeting of stock

228、holders.TheAmended and Restated Advisory Agreement was approved on September 9,2020 by the then-current Board,including a majority of thedirectors on the Board who are not“interested persons,”as defined in Section 2(a)(19)of the 1940 Act(the“Independent Directors”),of the Company or Barings.The term

229、s of the Amended and Restated Advisory Agreement became effective on January 1,2021.Inconnection with the Sierra Merger,we entered into the Second Amended Barings BDC Advisory Agreement on February 25,2022.TheSecond Amended Barings BDC Advisory Agreement was approved by our Board,including a majorit

230、y of the Independent Directors ofthe Company or Barings,on May 5,2022.On June 24,2023,we entered into a third amended and restated investment advisoryagreement with Barings(the“Barings BDC Advisory Agreement”)in order to update the term of the agreement to expire on June 24each year subject to annua

231、l re-approval in accordance with its terms.All other terms and provisions of the Second Amended andRestated Barings BDC Advisory Agreement between the Company and the Adviser,including with respect to the calculation of the feespayable to the Adviser,remain unchanged under the Barings BDC Advisory A

232、greement.Investment Advisory AgreementPursuant to the Barings BDC Advisory Agreement,Barings manages our day-to-day operations and provides us with investmentadvisory services.Among other things,Barings(i)determines the composition of our portfolio,the nature and timing of the changestherein and the

233、 manner of implementing such changes;(ii)identifies,evaluates and negotiates the structure of our investments;(iii)executes,closes,services and monitors the investments that we make;(iv)determines the securities and other assets that we willpurchase,retain or sell;(v)performs due diligence on prospe

234、ctive portfolio companies and(vi)provides us with such other investmentadvisory,research and related services we may,from time to time,reasonably require for the investment of its funds.The Barings BDC Advisory Agreement provides that,absent fraud,willful misfeasance,bad faith or gross negligence in

235、 theperformance of its duties or by reason of the reckless disregard of its duties and obligations,Barings,and its officers,managers,partners,agents,employees,controlling persons,members and any other person or entity affiliated with Barings(collectively,the“IAIndemnified Parties”),are entitled to i

236、ndemnification from us for any damages,liabilities,costs,demands,charges,claims and expenses(including reasonable attorneys fees and amounts reasonably paid in settlement)incurred by the IA Indemnified Parties in or by reasonof any pending,threatened or completed action,suit,investigation or other p

237、roceeding(including an action or suit by or in the right ofus or our security holders)arising out of any actions or omissions or otherwise based upon the performance of any of Barings duties orobligations under the Barings BDC Advisory Agreement or otherwise as our investment adviser.Barings service

238、s under the BaringsBDC Advisory Agreement are not exclusive,and Barings is generally free to furnish similar services to other entities so long as itsperformance under the Barings BDC Advisory Agreement is not adversely affected.Barings has entered into a personnel-sharing arrangement with its affil

239、iate,Baring International Investment Limited(“BIIL”).BIIL is a wholly-owned subsidiary of Baring Asset Management Limited,which in turn is an172025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm17/248indirect,wholly-owned subsidiary of Bari

240、ngs.Pursuant to this arrangement,certain employees of BIIL may serve as“associatedpersons”of Barings and,in this capacity,subject to the oversight and supervision of Barings,may provide research and relatedservices,and discretionary investment management and trading services(including acting as port

241、folio managers)to us on behalf ofBarings.This arrangement is based on no-action letters of the staff of the SEC that permit SEC-registered investment advisers to relyon and use the resources of advisory affiliates or“participating affiliates,”subject to the supervision of that SEC-registered investm

242、entadviser.BIIL is a“participating affiliate”of Barings,and the BIIL employees are“associated persons”of Barings.Under the Barings BDC Advisory Agreement,we pay Barings(i)a base management fee(the“Base Management Fee”)and(ii)an incentive fee(the“Incentive Fee”)as compensation for the investment advi

243、sory and management services it provides usthereunder.The Base Management Fee is calculated based on our gross assets,including the credit support agreements,assets purchased withborrowed funds or other forms of leverage and excluding cash and cash equivalents,at an annual rate of 1.25%.The Base Man

244、agementFee is payable quarterly in arrears on a calendar quarter basis,and is calculated based on the average value of our gross assets,excluding cash and cash equivalents,at the end of the two most recently completed calendar quarters prior to the quarter for which suchfees are being calculated.Bas

245、e Management Fees for any partial month or quarter will be appropriately prorated.The Incentive Fee consists of two components that are independent of each other,with the result that one component may bepayable even if the other is not.A portion of the Incentive Fee is based on our income(the“Income

246、-Based Fee”)and a portion is basedon our capital gains(the“Capital Gains Fee”),each as described below:(i)The Income-Based Fee will be determined and paid quarterly in arrears based on the amount by which(x)the aggregate“Pre-Incentive Fee Net Investment Income”(as defined below)in respect of the cur

247、rent calendar quarter and the eleven precedingcalendar quarters beginning with the calendar quarter that commences on or after January 1,2021,as the case may be(or theappropriate portion thereof in the case of any of our first eleven calendar quarters that commences on or after January 1,2021)(in ei

248、ther case,the“Trailing Twelve Quarters”)exceeds(y)the Hurdle Amount(as defined below)in respect of theTrailing Twelve Quarters.The Hurdle Amount will be determined on a quarterly basis,and will be calculated by multiplying2.0625%(8.25%annualized)by the aggregate of our NAV at the beginning of each a

249、pplicable calendar quarter comprisingthe relevant Trailing Twelve Quarters.For this purpose,“Pre-Incentive Fee Net Investment Income”means interest income,dividend income and any other income(including,without limitation,any accrued income that we have not yet received incash and any other fees such

250、 as commitment,origination,structuring,diligence and consulting fees or other fees that wereceive from portfolio companies)accrued during the calendar quarter,minus our operating expenses accrued during thecalendar quarter(including,without limitation,the Base Management Fee,administration expenses

251、and any interest expenseand dividends paid on any issued and outstanding preferred stock,but excluding the Income-Based Fee and the Capital GainsFee).For the avoidance of doubt,Pre-Incentive Fee Net Investment Income does not include any realized capital gains,realized capital losses or unrealized c

252、apital appreciation or depreciation.The calculation of the Income-Based Fee for each quarter is as follows:(A)No Income-Based Fee will be payable to Barings in any calendar quarter in which our aggregate Pre-Incentive Fee NetInvestment Income for the Trailing Twelve Quarters does not exceed the Hurd

253、le Amount;(B)100%of our aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quarters,if any,that exceedsthe Hurdle Amount but is less than or equal to an amount(the“Catch-Up Amount”)determined on a quarterly basis bymultiplying 2.578125%(10.3125%annualized)by our NAV at the beg

254、inning of each applicable calendar quartercomprising the relevant Trailing Twelve Quarters.The Catch-Up Amount is intended to provide Barings with anincentive fee of 20%on all of our Pre-Incentive Fee Net Investment Income when our Pre-Incentive Fee Net InvestmentIncome reaches the Catch-Up Amount f

255、or the Trailing Twelve Quarters;and182025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm18/248(C)For any quarter in which our aggregate Pre-Incentive Fee Net Investment Income for the Trailing Twelve Quartersexceeds the Catch-Up Amount,the

256、Income-Based Fee shall equal 20%of the amount of our Pre-Incentive Fee NetInvestment Income for such Trailing Twelve Quarters,as the Hurdle Amount and Catch-Up Amount will have beenachieved.Subject to the Incentive Fee Cap described below,the amount of the Income-Based Fee that will be paid to Barin

257、gs for aparticular quarter will equal the excess of the aggregate Income-Based Fee so calculated less the aggregate Income-Based Fees thatwere paid to Barings in the preceding eleven calendar quarters(or portion thereof)comprising the relevant Trailing Twelve Quarters.(ii)The Income-Based Fee is sub

258、ject to a cap(the“Incentive Fee Cap”).The Incentive Fee Cap in any quarter is an amount equalto(a)20%of the Cumulative Pre-Incentive Fee Net Return(as defined below)during the relevant Trailing Twelve Quartersless(b)the aggregate Income-Based Fee that were paid to Barings in the preceding eleven cal

259、endar quarters(or portionthereof)comprising the relevant Trailing Twelve Quarters.For this purpose,“Cumulative Pre-Incentive Fee Net Return”during the relevant Trailing Twelve Quarters means(x)Pre-Incentive Fee Net Investment Income in respect of the TrailingTwelve Quarters less(y)any Net Capital Lo

260、ss,if any,in respect of the Trailing Twelve Quarters.If,in any quarter,theIncentive Fee Cap is zero or a negative value,we will pay no Income-Based Fee to Barings in that quarter.If,in any quarter,the Incentive Fee Cap is a positive value but is less than the Income-Based Fee calculated in accordanc

261、e with paragraph(i)above,we will pay Barings the Incentive Fee Cap for such quarter.If,in any quarter,the Incentive Fee Cap is equal to orgreater than the Income-Based Fee calculated in accordance with paragraph(i)above,we will pay Barings the Income-BasedFee for such quarter.“Net Capital Loss”in re

262、spect of a particular period means the difference,if positive,between(i)aggregate capital losses on ourassets,whether realized or unrealized,in such period and(ii)aggregate capital gains or other gains on our assets(including,for theavoidance of doubt,the value ascribed to any credit support arrange

263、ment in our financial statements even if such value is notcategorized as a gain therein),whether realized or unrealized,in such period.(iii)The second part of the Incentive Fee(the“Capital Gains Fee”)is determined and payable in arrears as of the end of eachcalendar year(or upon termination of the B

264、arings BDC Advisory Agreement),commencing with the calendar year ended onDecember 31,2018,and is calculated at the end of each applicable year by subtracting(1)the sum of our cumulativeaggregate realized capital losses and aggregate unrealized capital depreciation from(2)our cumulative aggregate rea

265、lizedcapital gains,in each case calculated from August 2,2018.If such amount is positive at the end of such year,then the CapitalGains Fee payable for such year is equal to 20%of such amount,less the cumulative aggregate amount of Capital Gains Feespaid in all prior years commencing with the calenda

266、r year ended on December 31,2018.If such amount is negative,thenthere is no Capital Gains Fee payable for such year.If this Agreement is terminated as of a date that is not a calendar yearend,the termination date will be treated as though it were a calendar year end for purposes of calculating and p

267、aying aCapital Gains Fee.Under the Barings BDC Advisory Agreement,the“cumulative aggregate realized capital gains”are calculated as the sum of thedifferences,if positive,between(a)the net sales price of each investment in our portfolio when sold and(b)the accreted or amortizedcost basis of such inve

268、stment.The“cumulative aggregate realized capital losses”are calculated as the sum of the differences,if negative,between(a)the netsales price of each investment in our portfolio when sold and(b)the accreted or amortized cost basis of such investment.The“aggregate unrealized capital depreciation”is c

269、alculated as the sum of the differences,if negative,between(a)the valuationof each investment in our portfolio as of the applicable Capital Gains Fee calculation date and(b)the accreted or amortized cost basisof such investment.Under the Barings BDC Advisory Agreement,the“accreted or amortized cost

270、basis of an investment”shall mean the accreted oramortized cost basis of such investment as reflected in our financial statements.192025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm19/248Payment of Company ExpensesUnder the Barings BDC Ad

271、visory Agreement,all investment professionals of Barings and its staff,when and to the extentengaged in providing services required to be provided by Barings under the Barings BDC Advisory Agreement,and the compensationand routine overhead expenses of such personnel allocable to such services,are pr

272、ovided and paid for by Barings and not by us,exceptthat all costs and expenses relating to our operations and transactions,including,without limitation,those items listed in the BaringsBDC Advisory Agreement,will be borne by us.Duration and Termination of Advisory AgreementThe Barings BDC Advisory A

273、greement was most recently re-approved on May 7,2024 by our Board,including a majority of thedirectors who are not“interested persons”as defined in Section 2(a)(19)of the 1940 Act(the“Independent Directors”),for anadditional one-year term ending on June 24,2025,and will continue automatically for su

274、ccessive one-year periods,provided that suchcontinuance is specifically approved at least annually by(i)the vote of the Board,or by the vote of a majority of the outstanding votingsecurities of the Company and(ii)the vote of a majority of the Independent Directors.The Barings BDC Advisory Agreement

275、may beterminated at any time,without the payment of any penalty,upon 60 days written notice,(i)by the vote of a majority of theoutstanding voting securities of the Company or(ii)by the vote of the Board,or(iii)by the Adviser.The Barings BDC AdvisoryAgreement will automatically terminate in the event

276、 of its“assignment”(as such term is defined for purposes of Section 15(a)(4)of the1940 Act).Administration AgreementUnder the terms of the Administration Agreement,Barings performs(or oversees,or arranges for,the performance of)theadministrative services necessary for our operation,including,but not

277、 limited to,office facilities,equipment,clerical,bookkeeping andrecord-keeping services at such office facilities and such other services as Barings,subject to review by the Board,from time to time,determines to be necessary or useful to perform its obligations under the Administration Agreement.Bar

278、ings also,on our behalf andsubject to oversight by the Board,arranges for the services of,and oversees,custodians,depositories,transfer agents,dividenddisbursing agents,other stockholder servicing agents,accountants,attorneys,valuation experts,underwriters,brokers and dealers,corporate fiduciaries,i

279、nsurers,banks and such other persons in any such other capacity deemed to be necessary or desirable.We will reimburse Barings for the costs and expenses incurred by it in performing its obligations and providing personnel andfacilities under the Administration Agreement in an amount to be negotiated

280、 and mutually agreed to by us and Barings quarterly inarrears.In no event will the agreed-upon quarterly expense amount exceed the amount of expenses that would otherwise bereimbursable by us under the Administration Agreement for the applicable quarterly period,and Barings will not be entitled to t

281、herecoupment of any amounts in excess of the agreed-upon quarterly expense amount.The costs and expenses incurred by Barings on ourbehalf under the Administration Agreement include,but are not limited to:the allocable portion of Barings rent for our Chief Financial Officer and Chief Compliance Offic

282、er and their respectivestaffs,which is based upon the allocable portion of the usage thereof by such personnel in connection with theirperformance of administrative services under the Administration Agreement;the allocable portion of the salaries,bonuses,benefits and expenses of our Chief Financial

283、Officer and ChiefCompliance Officer and their respective staffs,which is based upon the allocable portion of the time spent by suchpersonnel in connection with performing administrative services for us under the Administration Agreement;the actual cost of goods and services used for us and obtained

284、by Barings from entities not affiliated with us,which isreasonably allocated to us on the basis of assets,revenues,time records or other methods conforming with generallyaccepted accounting principles;all fees,costs and expenses associated with the engagement of a sub-administrator,if any;and202025/

285、5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm20/248costs associated with(a)the monitoring and preparation of regulatory reporting,including registration statements andamendments thereto,prospectus supplements,and tax reporting,(b)the coord

286、ination and oversight of service provideractivities and the direct cost of such contractual matters related thereto and(c)the preparation of all financial statementsand the coordination and oversight of audits,regulatory inquiries,certifications and sub-certifications.The Administration Agreement wi

287、ll continue automatically for successive annual periods so long as such continuance isspecifically approved at least annually by the Board,including a majority of the Independent Directors.The Administration Agreementmay be terminated at any time,without the payment of any penalty,by vote of the Boa

288、rd,or by Barings,upon 60 days written notice tothe other party.The Administration Agreement may not be assigned by a party without the consent of the other party.Election to be Regulated as a Business Development Company and Regulated Investment CompanyWe are a closed-end,non-diversified management

289、investment company that has elected to be treated as a BDC under the 1940Act.In addition,we have elected to be treated,and intend to qualify annually,as a RIC under Subchapter M of the Code.Our electionto be regulated as a BDC and our election to be treated as a RIC for U.S.federal income tax purpos

290、es have a significant impact on ouroperations.Some of the most important effects on our operations of our election to be regulated as a BDC and our election to be treatedas a RIC are outlined below.We report our investments at market value or fair value with changes in value reported through our Con

291、solidatedStatements of Operations.In accordance with the requirements of Article 6 of Regulation S-X,we report all of our investments,including debt investments,at market value or,for investments that do not have a readily available market value,at their“fair value”in accordance with theBarings valu

292、ation policy.Changes in these values are reported through our statements of operations under the caption of“netunrealized appreciation(depreciation)on investments.”See“Valuation Process and Determination of Net Asset Value”above.We intend to distribute substantially all of our income to our stockhol

293、ders.We generally will be required to pay incometaxes only on the portion of our taxable income we do not distribute,actually or constructively,to stockholders.As a RIC,so long as we meet certain minimum distribution,source-of-income and asset diversification requirements,wegenerally are required to

294、 pay U.S.federal income taxes only on the portion of our taxable income and gains we do not distribute(actually or constructively)and certain built-in gains.We intend to distribute to our stockholders substantially all of our income.We may,however,make deemed distributions to our stockholders of any

295、 retained net long-term capital gains.If this happens,ourstockholders will be treated as if they received an actual distribution of the net capital gains and reinvested the net after-taxproceeds in us.Our stockholders also may be eligible to claim a tax credit(or,in certain circumstances,a tax refun

296、d)equal totheir allocable share of the corporate-level U.S.federal income tax we pay on the deemed distribution.See“Material U.S.FederalIncome Tax Considerations”below.We met the minimum distribution requirements for 2022,2023 and 2024 and continuallymonitor our distribution requirements with the go

297、al of ensuring compliance with the Code.In addition,we have wholly-owned taxable subsidiaries(the“Taxable Subsidiaries”)which hold a portion of one or more of ourportfolio investments that are listed on the Consolidated Schedule of Investments.The Taxable Subsidiaries are consolidated forfinancial r

298、eporting purposes in accordance with U.S.generally accepted accounting principles(“U.S.GAAP”)such that ourconsolidated financial statements reflect our investments in the portfolio companies owned by the Taxable Subsidiaries.Thepurpose of the Taxable Subsidiaries is to permit us to hold certain inte

299、rests in portfolio companies that are organized aspartnerships or limited liability companies(“LLCs”)(or other forms of pass-through entities)and still satisfy the RIC taxrequirement that at least 90.0%of our gross income for U.S.federal income tax purposes must consist of qualifying investmentincom

300、e.Absent the Taxable Subsidiaries,a proportionate amount of any gross income of a partnership or LLC(or other pass-through entity)portfolio investment would flow through directly to us.To the extent that such income did not consist ofqualifying investment income,it could jeopardize our ability to qu

301、alify as a RIC and therefore cause us to incur significantamounts of corporate level U.S.federal income212025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm21/248taxes.Where interests in partnerships or LLCs(or other pass-through entities)a

302、re owned by the Taxable Subsidiaries,however,the income from such interests is taxed to the Taxable Subsidiaries and does not flow through to us,thereby helping us preserveour RIC status and resultant tax advantages.The Taxable Subsidiaries are not consolidated for U.S.federal income tax purposesand

303、 may generate income tax expense as a result of their ownership of the portfolio companies.This income tax expense,if any,is reflected in our Consolidated Statements of Operations.Our ability to use leverage as a means of financing our portfolio of investments is limited.As a BDC,and as a result of

304、the stockholder vote to approve the proposal to authorize us to be subject to the reduced assetcoverage ratio of at least 150%under the 1940 Act,we are required to meet a coverage ratio of total assets to total seniorsecurities of at least 150%.For this purpose,senior securities include all borrowin

305、gs and any preferred stock we may issue in thefuture.Additionally,our ability to continue to utilize leverage as a means of financing our portfolio of investments may be limitedby this asset coverage test.We are required to comply with the provisions of the 1940 Act applicable to business developmen

306、t companies.As a BDC,we are required to have a majority of directors who are not“interested persons”under the 1940 Act.In addition,weare required to comply with other applicable provisions of the 1940 Act,including those requiring the adoption of a code ofethics,fidelity bonding and investment custo

307、dy arrangements.See“Regulation of Business Development Companies”below.Co-Investment Exemptive ReliefAs a BDC,we are required to comply with certain regulatory requirements.For example,we generally are not permitted to makeloans to companies controlled by Barings or other funds managed by Barings.We

308、 are also not permitted to make any co-investmentswith Barings or its affiliates(including any fund managed by Barings or an investment adviser controlling,controlled by or undercommon control with Barings)without exemptive relief from the SEC,subject to certain exceptions.The Co-Investment Exemptiv

309、eRelief that the SEC has granted to Barings permits certain present and future funds,including us,advised by Barings(or an investmentadviser controlling,controlled by or under common control with Barings)to co-invest in suitable negotiated investments.Co-investments made under the Co-Investment Exem

310、ptive Relief are subject to compliance with the conditions and other requirementscontained in the Co-Investment Exemptive Relief,which could limit our ability to participate in a co-investment transaction.Regulation of Business Development CompaniesThe following is a general summary of the material

311、regulatory provisions affecting BDCs.It does not purport to be a completedescription of all of the laws and regulations affecting BDCs.We have elected to be regulated as a BDC under the 1940 Act.The 1940 Act contains prohibitions and restrictions relating totransactions between BDCs and their affili

312、ates,principal underwriters and affiliates of those affiliates or underwriters.The 1940 Actrequires that a majority of the directors on a BDCs board of directors be persons other than“interested persons,”as that term is definedin the 1940 Act.In addition,the 1940 Act provides that we may not change

313、the nature of our business so as to cease to be,or towithdraw our election as,a BDC unless approved by a majority of our outstanding voting securities.In addition,the 1940 Act defines“a majority of the outstanding voting securities”as the lesser of(i)67.0%or more of the votingsecurities present at a

314、 meeting if the holders of more than 50.0%of our outstanding voting securities are present or represented byproxy,or(ii)50.0%of our voting securities.Qualifying AssetsUnder the 1940 Act,a BDC may not acquire any asset other than assets of the type listed in Section 55(a)of the 1940 Act,whichare refe

315、rred to as qualifying assets,unless,at the time the acquisition is made,qualifying assets represent at least 70.0%of thecompanys total assets.The principal categories of qualifying assets relevant to our business are any of the following:222025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edga

316、r/data/1379785/000137978525000010/bbdc-20241231.htm22/248(1)Securities purchased in transactions not involving any public offering from the issuer of such securities,which issuer(subject to certain limited exceptions)is an eligible portfolio company,or from any person who is,or has been during thepr

317、eceding 13 months,an affiliated person of an eligible portfolio company,or from any other person,subject to such rules as maybe prescribed by the SEC.An eligible portfolio company is defined in the 1940 Act and rules adopted pursuant thereto as anyissuer which:(a)is organized under the laws of,and h

318、as its principal place of business in,the United States;(b)is not an investment company(other than an SBIC wholly-owned by the BDC)or a company that would be aninvestment company but for exclusions under the 1940 Act for certain financial companies such as banks,brokers,commercial finance companies,

319、mortgage companies and insurance companies;and(c)satisfies any of the following:(i)does not have any class of securities with respect to which a broker or dealer may extend margin credit;(ii)is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated personwho is a d

320、irector of the eligible portfolio company;(iii)is a small and solvent company having total assets of not more than$4.0 million and capital and surplus ofnot less than$2.0 million;(iv)does not have any class of securities listed on a national securities exchange;or(v)has a class of securities listed

321、on a national securities exchange,but has an aggregate market value ofoutstanding voting and non-voting common equity of less than$250.0 million.(2)Securities in companies that were eligible portfolio companies when we made our initial investment if certain otherrequirements are satisfied.(3)Securit

322、ies of any eligible portfolio company that we control.(4)Securities purchased in a private transaction from a U.S.issuer that is not an investment company or from an affiliatedperson of the issuer,or in transactions incident thereto,if the issuer is in bankruptcy and subject to reorganization or if

323、the issuer,immediately prior to the purchase of its securities,was unable to meet its obligations as they came due without material assistance(other than conventional lending or financing arrangements).(5)Securities of an eligible portfolio company purchased from any person in a private transaction

324、if there is no readymarket for such securities and we already own 60.0%of the outstanding equity of the eligible portfolio company.(6)Securities received in exchange for or distributed on or with respect to securities described in(1)through(5)above,orpursuant to the exercise of warrants or rights re

325、lating to such securities.(7)Cash,cash equivalents,U.S.government securities or high-quality debt securities maturing in one year or less from thetime of investment.In addition,a BDC must have been organized and have its principal place of business in the United States and must be operatedfor the pu

326、rpose of making investments in the types of securities described in(1),(2)or(3)above.232025/5/19 10:30bbdc-20241231https:/www.sec.gov/Archives/edgar/data/1379785/000137978525000010/bbdc-20241231.htm23/248Managerial Assistance to Portfolio CompaniesIn order to count portfolio securities as qualifying

327、 assets for the purpose of the 70.0%test,we must either control the issuer of thesecurities or must offer to make available to the issuer of the securities(other than small and solvent companies described above)significant managerial assistance;except that,where we purchase such securities in conjun

328、ction with one or more other persons actingtogether,one of the other persons in the group may make available such managerial assistance.Making available“significantmanagerial assistance”means,among other things,any arrangement whereby we,through our directors,officers or employees,offer toprovide,an

329、d,if accepted,do so provide,significant guidance and counsel concerning the management,operations or businessobjectives and policies of a portfolio company.Barings provides such managerial assistance on our behalf to portfolio companies thatrequest this assistance.We may receive fees for these servi

330、ces.Temporary InvestmentsPending investment in other types of“qualifying assets,”as described above,our investments may consist of cash,cashequivalents,U.S.government securities or high-quality debt securities maturing in one year or less from the time of investment,whichwe refer to,collectively,as

331、temporary investments,so that 70.0%of our assets are qualifying assets.We may invest in U.S.Treasurybills or in repurchase agreements,provided that such agreements are fully collateralized by cash or securities issued by the U.S.Government or its agencies.A repurchase agreement involves the purchase

332、 by an investor,such as us,of a specified security and thesimultaneous agreement by the seller to repurchase it at an agreed-upon future date and at a price that is greater than the purchase priceby an amount that reflects an agreed-upon interest rate.There is no percentage restriction on the propor

333、tion of our assets that may beinvested in such repurchase agreements.However,if more than 25.0%of our total assets constitute repurchase agreements from asingle counterparty,we would not meet the asset diversification tests required to maintain our tax treatment as a RIC for U.S.federalincome tax purposes.Thus,we do not intend to enter into repurchase agreements with a single counterparty in exces