Affiliates and Controlled Investments

6 Months Ended

Jun. 30, 2024

Investments in and Advances to Affiliates [Abstract]

10. AFFILIATED AND CONTROLLED INVESTMENTS

Affiliated investments are defined by the Investment Company Act, whereby the Company owns between 5% and 25% of the portfolio company’s outstanding voting securities and the investments are not classified as controlled investments. The aggregate fair value of non-controlled, affiliated investments at June 30, 2024 represented 0% of the Company’s net assets.

Controlled investments are defined by the Investment Company Act, whereby the Company owns more than 25% of the portfolio company’s outstanding voting securities or maintains the ability to nominate greater than 50% of the board representation. The aggregate fair value of controlled investments at June 30, 2024 represented 58% of the Company’s net assets.

Fair value as of June 30, 2024 along with transactions during the six months ended June 30, 2024 in these affiliated investments and controlled investments was as follows:


	For the Six Months Ended June 30, 2024
Issue(1)	Fair value at December 31, 2023		Gross Additions(2)		Gross Reductions(3)		Net Realized Gain (Loss)			Change in Unrealized Appreciation (Depreciation)			Fair value at June 30, 2024		Interest Income		Fee Income		Dividend Income
Non-Controlled, Affiliated Investments
PFS Holdings Corp.
1st Lien, Secured Loan		979		-		419		(625	)		65			-		64		-		-
Common Equity (5% of class)		88		-		-		-			(88	)		-		-		-		-
		1,067		-		419		(625	)		(23	)		-		64		-		-
Totals	$	1,067	$	-	$	419	$	(625	)	$	(23	)	$	-	$	64	$	-	$	-

Controlled Investments
Great Elm Specialty Finance
Subordinated Note		28,733		1,000		-		-			-			29,733		1,884		-		-
Equity (87.5% of class)		17,477		-		-		-			(2,449	)		15,028		-		-		910
		46,210		1,000		-		-			(2,449	)		44,761		1,884		-		910

CLO Formation JV, LLC
Equity (75.0% of class)		-		28,152		-		-			(60	)		28,092		-		-		-
		-		28,152		-		-			(60	)		28,092		-		-		-

Totals	$	46,210	$	29,152	$	-	$	-		$	(2,509	)	$	72,853	$	1,884	$	-	$	910

(1)

Non-unitized equity investments are disclosed with percentage ownership in lieu of quantity.

(2)

Gross additions include increases resulting from new or additional portfolio investments, capitalized PIK income, accretion of discounts and the exchange of one or more existing securities for one or more new securities.

(3)

Gross reductions include decreases resulting from principal collections related to investment repayments or sales and the exchange of one or more existing securities for one or more new securities.

In accordance with SEC Regulation S-X (“S-X”) Rules 3-09 and 4-08(g), the Company must determine which of its unconsolidated controlled portfolio companies, if any, are considered to be “significant subsidiaries.” After performing this analysis, the Company determined that two investments, Great Elm Specialty Finance, LLC (“GESF”) and CLO Formation JV, LLC (“CLO JV”), are significant subsidiaries for the six months ended June 30, 2024 under at least one of the conditions of S-X Rule 1-02(w).

Selected unaudited financial information of GESF as of and for the six months ended June 30, 2024 has been included below.


Balance Sheet	As of June 30, 2024
Current assets		50,285
Noncurrent assets		269
Total Assets		50,554

Current liabilities		240
Noncurrent liabilities		33,330
Total Liabilities		33,570

Net Equity		16,984


Statement of Operations	For the Six Months Ended June 30, 2024
Gross revenues		2,688
Other income (expense)		(5,068	)
Net profit from operations		(2,380	)

The CLO JV was formed as a joint venture between the Company and a strategic partner in April 2024 to make investments in collateralized loan obligation entities and related warehouse facilities. The Company and strategic partner committed to providing $32.0 million in capital with future contributions to be called from each member on a pro rata basis based on their respective commitments. The Company’s initial contribution was $17.4 million for a 75% ownership interest and the strategic partner contributed $5.8 million for a 25% ownership interest.

Selected unaudited financial information of CLO JV as of and for the six months ended June 30, 2024 has been included below.


Balance Sheet	As of June 30, 2024
Total Assets		37,489
Total Liabilities		33
Net Equity		37,456

Statement of Operations	For the Six Months Ended June 30, 2024
Total Revenues		482
Total Expenses		33
Net Income		449

Unrealized Gain (Loss)		7
Net Results		456


Schedule of Investments
Portfolio Company	Initial Acquisition Date	Maturity Date	Quantity/Par		Cost		Fair Value
Structured Finance - CLO Equity (1)
Apex Credit CLO 2024-I Ltd	4/24/2024	4/20/2026		14,957		13,052		12,688
Apex Credit CLO 2024-II Ltd	4/24/2024	4/23/2026		23,848		23,848		24,219
					$	36,900	$	36,907

(1)

The investment in Collateralized Loan Obligation (“CLO”) equity is entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying investments after payment of the contractual payments to debt holders and fund expenses. The effective yield is based on the current projection of the amount and timing of these recurring distributions in addition to the estimated amount of terminal principal payment. These assumptions are periodically reviewed and adjusted. The effective yield and investment cost may ultimately not be realized.