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EX-32.1 - EXHIBIT 32.1 - Golub Capital BDC 3, Inc.gbdc310-qxfy2020q1exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - Golub Capital BDC 3, Inc.gbdc310-qxfy2020q1exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - Golub Capital BDC 3, Inc.gbdc310-qxfy2020q1exhibit311.htm

______________________________________________________________________________________________________ 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________________________________________________________________________________ 
FORM 10-Q

þ                 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2019

OR

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 814-01244

Golub Capital BDC 3, Inc.
(Exact name of registrant as specified in its charter)

Maryland
 
82-2375481
(State or other jurisdiction of incorporation or organization)
 
 (I.R.S. Employer Identification No.)

200 Park Avenue, 25th Floor
New York, NY 10166
(Address of principal executive offices)

(212) 750-6060
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ   No o

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 shorter period that the registrant was required to submit such files).   Yes o No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
Accelerated filer o
Non-accelerated filer  o
Smaller reporting company o
Emerging growth company þ
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No þ

As of February 14, 2020, the Registrant had 29,715,740.183 shares of common stock, $0.001 par value, outstanding.



Part I. Financial Information
  
Item 1.
Financial Statements
 
Consolidated Statements of Financial Condition as of December 31, 2019 (unaudited) and September 30, 2019
 
Consolidated Statements of Operations for the three months ended December 31, 2019 (unaudited) and 2018 (unaudited)
 
Consolidated Statements of Changes in Net Assets for the three months ended December 31, 2019 (unaudited) and 2018 (unaudited)
 
Consolidated Statements of Cash Flows for the three months ended December 31, 2019
(unaudited) and 2018 (unaudited)
 
Consolidated Schedules of Investments as of December 31, 2019 (unaudited) and September 30, 2019
 
Notes to Consolidated Financial Statements (unaudited)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and Procedures
Part II. Other Information
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits



Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(In thousands, except share and per share data)

 
December 31, 2019
 
September 30, 2019
 
(unaudited)
 
 
Assets
 
 
 
Investments, at fair value (amortized cost of $789,136 and $611,003, respectively)
$
797,693

 
$
616,989

Cash and cash equivalents
3,452

 
2,413

Foreign currencies (cost of $205 and $130, respectively)
206

 
130

Restricted cash and cash equivalents
17,520

 
17,374

Cash collateral held at broker for forward currency contracts
450

 
450

Unrealized net appreciation on forward currency contracts

 
240

Interest receivable
2,102

 
2,226

Capital call receivable

 
16

Other assets
72

 
102

Total Assets
$
821,495

 
$
639,940

Liabilities
  

 
  

Debt
$
364,284

 
$
270,644

Less unamortized debt issuance costs
1,610

 
1,770

Debt less unamortized debt issuance costs
362,674

 
268,874

Other short-term borrowings (proceeds of $2,435 and $16,366, respectively)
2,624

 
16,366

Unrealized net depreciation on forward currency contracts
58

 

Interest payable
2,349

 
881

Distributions payable
3,188

 
6,441

Management and incentive fees payable
4,131

 
3,316

Accounts payable and accrued expenses
735

 
630

Accrued trustee fees

 
12

Total Liabilities
375,759

 
296,520

Commitments and Contingencies (Note 9)
  

 
  

Net Assets
 
 
 
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2019 and September 30, 2019

 

Common stock, par value $0.001 per share, 100,000,000 shares authorized, 29,715,740.183 and 22,894,689.911 shares issued and outstanding as of December 31, 2019 and September 30, 2019, respectively
30

 
23

Paid in capital in excess of par
445,705

 
343,396

Distributable earnings
1

 
1

Total Net Assets
445,736

 
343,420

Total Liabilities and Total Net Assets
$
821,495

 
$
639,940

Number of common shares outstanding
29,715,740.183

 
22,894,689.911

Net asset value per common share
$
15.00

 
$
15.00




See Notes to Consolidated Financial Statements.


3


Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Statement of Operations (unaudited)
(In thousands, except share and per share data)


 
Three months ended December 31,
 
2019
 
2018
Investment income
  

 
 
Interest income
$
14,511

 
$
4,295

Dividend income
2

 

Fee income
49

 
65

Total investment income
14,562

 
4,360

Expenses
 
 
  

Interest and other debt financing expenses
3,502

 
1,021

Base management fee
2,397

 
646

Incentive fee
2,022

 
554

Professional fees
249

 
188

Administrative service fee
275

 
70

General and administrative expenses
15

 
27

Total expenses
8,460

 
2,506

Base management fee waived (Note 4)
(654
)
 
(176
)
Incentive fee waived (Note 4)
(297
)
 
(55
)
Net expenses
7,509

 
2,275

Net investment income
7,053

 
2,085

Net gain (loss) on investment transactions
  

 
  

Net realized gain (loss) from:
  

 
  

Investments
1

 
2

Foreign currency transactions
(12
)
 
7

Net realized gain (loss) on investment transactions
(11
)
 
9

Net change in unrealized appreciation (depreciation) from:
  

 
  

Investments
2,571

 
567

Forward currency contracts
(299
)
 

Translation of assets and liabilities in foreign currencies
(189
)
 
10

Net change in unrealized appreciation (depreciation) on investment transactions
2,083

 
577

Net gain (loss) on investment transactions
2,072

 
586

Net increase in net assets resulting from operations
$
9,125

 
$
2,671

Per Common Share Data
  

 
  

Basic and diluted earnings per common share
$
0.35

 
$
0.34

Basic and diluted weighted average common shares outstanding
25,893,806

 
7,877,554


See Notes to Consolidated Financial Statements.



4



Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(In thousands, except share data)



 
Common Stock
 
Paid in Capital in Excess of Par
 
Distributable Earnings
 
Total Net Assets
 
Shares
 
Par Amount
 
 
 
Balance at September 30, 2018
5,815,002.633

 
$
6

 
$
87,218

 
$
1

 
$
87,225

Issuance of common stock
4,942,655.000

 
5

 
74,135

 

 
74,140

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 


Net investment income

 

 

 
2,085

 
2,085

Net realized gain (loss) on investments and foreign currency transactions

 

 

 
9

 
9

Net change in unrealized appreciation (depreciation) on investment transactions

 

 

 
577

 
577

Distributions to stockholders:
 
 
 
 
 
 
 
 
 
Stock issued in connection with dividend reinvestment plan
102,331.417

 

 
1,535

 

 
1,535

Distributions from distributable earnings

 

 

 
(1,692
)
 
(1,692
)
Distributions declared and payable

 

 

 
(979
)
 
(979
)
Total increase (decrease) for the period ended December 31, 2018
5,044,986.417

 
5

 
75,670

 

 
75,675

Balance at December 31, 2018
10,859,989.050

 
$
11

 
$
162,888

 
$
1

 
$
162,900

Balance at September 30, 2019
22,894,689.911

 
$
23

 
$
343,396

 
$
1

 
$
343,420

Issuance of common stock
6,462,079.629

 
6
 
96,925

 

 
96,931

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 
 
Net investment income

 

 

 
7,053

 
7,053

Net realized gain (loss) on investments and foreign currency transactions

 

 

 
(11
)
 
(11)

Net change in unrealized appreciation (depreciation) on investment transactions

 

 

 
2,083

 
2,083

Distributions to stockholders:
 
 
 
 
 
 
 
 
 
Stock issued in connection with dividend reinvestment plan
358,970.643

 
1

 
5,384

 

 
5,385

Distributions from distributable earnings

 

 

 
(5,937
)
 
(5,937
)
Distributions declared and payable

 

 

 
(3,188
)
 
(3,188
)
Total increase (decrease) for the period ended December 31, 2019
6,821,050.272


7

 
102,309

 

 
102,316

Balance at December 31, 2019
29,715,740.183

 
$
30

 
$
445,705

 
$
1

 
$
445,736

 


See Notes to Consolidated Financial Statements.

5



Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(In thousands)




 
Three months ended December 31,
 
2019
 
2018
Cash flows from operating activities
  

 
 
Net increase in net assets resulting from operations
$
9,125

 
$
2,671

Adjustments to reconcile net increase in net assets resulting from operations to net cash (used in) provided by operating activities:
 
 
 
Amortization of deferred debt issuance costs
205

 
170

Accretion of discounts and amortization of premiums
(700
)
 
(226
)
Net realized (gain) loss on investments
(1
)
 
(2
)
Net change in unrealized (appreciation) depreciation on investments
(2,571
)
 
(567
)
Net change in unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies
189

 
(10
)
Net change in unrealized (appreciation) depreciation on forward currency contracts
299

 

Proceeds from (fundings of) revolving loans, net
(660
)
 
(565
)
Fundings of investments
(198,166
)
 
(94,529
)
Proceeds from principal payments and sales of portfolio investments
21,641

 
3,044

PIK interest
(247
)
 
(15
)
Changes in operating assets and liabilities:
 
 
 
Interest receivable
124

 
(124
)
Other assets
30

 
41

Interest payable
1,468

 
161

Management and incentive fees payable
815

 
403

Accounts payable and accrued expenses
105

 
37

Accrued trustee fees
(12
)
 
1

Net cash (used in) provided by operating activities
(168,356
)
 
(89,510
)
Cash flows from financing activities
  

 
 
Borrowings on debt
183,143

 
116,200

Repayments of debt
(89,503
)
 
(103,200
)
Proceeds from other short-term borrowings
18,800

 
7,598

Repayments on other short-term borrowings
(32,731
)
 

Capitalized debt issuance costs
(45
)
 
(4
)
Proceeds from issuance of common shares
96,947

 
73,430

Distributions paid
(6,994
)
 
(1,717
)
Net cash provided by (used in) financing activities
169,617

 
92,307

Net change in cash and cash equivalents, foreign currencies, and restricted cash and cash equivalents
1,261
 
2,797
Cash and cash equivalents, foreign currencies and restricted cash and cash equivalents, beginning of period
19,917
 
3,653
Cash and cash equivalents, foreign currencies and restricted cash and cash equivalents, end of period
$
21,178

 
$
6,450

Supplemental disclosure of cash flow information:
 
 
 
Cash paid during the period for interest
$
1,829

 
$
605

Distributions declared during the period
9,125

 
2,671

Supplemental disclosure of non-cash operating and financing activity:
 
 
 
Capital call receivable
$

 
$
710

Stock issued in connection with dividend reinvestment plan
5,385

 
1,535

Distributions payable
3,188

 
979


See Notes to Consolidated Financial Statements.


6



Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited) - (continued)
(In thousands)


The following table provides a reconciliation of cash and cash equivalents, foreign currencies, and restricted cash and cash equivalents reported within the Consolidated Statements of Financial Condition that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows:
 
As of December 31,
 
2019
 
2018
Cash and cash equivalents
$
3,452


$
6,380

Foreign currencies
206


70

Restricted cash and cash equivalents
17,520



Total cash and cash equivalents, foreign currencies, and restricted cash and cash equivalents shown in the Consolidated Statements of Cash Flows
$
21,178

 
$
6,450


See Notes to Consolidated Financial Statements.

7


Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Investments
 
 
 
 
 
  
 
  
 
  

 
  

 
  

 
  

Debt Investments
 
 
 
 
 
  
 
  
 
  

 
  

 
  

 
  

Automobile
 
 
 
 
 
  
 
  

  


  


  

 
  

Grease Monkey International, LLC
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
$
474

 
$
470

 
0.1

%
$
469

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
352

 
348

 
0.1

 
349

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
179

 
178

 

 
177

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
163

 
161

 

 
161

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
101

 
100

 

 
100

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2022
 
55

 
54

 

 
54

JHCC Holdings LLC
One stop
 
L + 5.50%
(a) 
 
7.21%
 
09/2025
 
3,027

 
2,999

 
0.7

 
3,027

JHCC Holdings LLC#
One stop
 
P + 4.50%
(f) 
 
9.25%
 
09/2025
 
36

 
35

 

 
36

JHCC Holdings LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
09/2025
 

 
(48
)
 

 

Power Stop, LLC
Senior loan
 
L + 4.50%
(c) 
 
6.44%
 
10/2025
 
673

 
671

 
0.2

 
673

Quick Quack Car Wash Holdings, LLC
One stop
 
L + 6.50%
(a) 
 
8.30%
 
04/2023
 
1,690

 
1,676

 
0.4

 
1,690

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.25%
 
04/2023
 
822

 
815

 
0.2

 
822

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.30%
 
04/2023
 
718

 
712

 
0.2

 
718

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.30%
 
04/2023
 
480

 
476

 
0.1

 
480

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.19%
 
04/2023
 
97

 
94

 

 
97

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.30%
 
04/2023
 
40

 
40

 

 
40

 
 
 
 
 
 
 
 
 
 
8,907

 
8,781

 
2.0

 
8,893

Beverage, Food and Tobacco
 
 
 
 
 
  
 
  

  


  


  

 
  

BJH Holdings III Corp.
One stop
 
L + 5.75%
(a) 
 
7.55%
 
08/2025
 
19,352

 
19,045

 
4.3

 
19,352

BJH Holdings III Corp.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
08/2025
 
180

 
172

 

 
180

Fintech Midco, LLC
One stop
 
L + 5.00%
(a) 
 
6.80%
 
08/2024
 
4,922

 
4,884

 
1.1

 
4,922

Fintech Midco, LLC#
One stop
 
L + 5.00%
(a) 
 
6.80%
 
08/2024
 
443

 
440

 
0.1

 
443

Fintech Midco, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(1
)
 

 

Fintech Midco, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(7
)
 

 

Flavor Producers, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.71%
 
12/2023
 
440

 
435

 
0.1

 
405

Flavor Producers, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.68%
 
12/2022
 
15

 
15

 

 
10

Mendocino Farms, LLC#
One stop
 
L + 8.50%
(a) 
 
2.80% cash/7.50% PIK
 
06/2023
 
271

 
269

 
0.1

 
269

Mendocino Farms, LLC#
One stop
 
L + 8.50%
(a) 
 
2.80% cash/7.50% PIK
 
06/2023
 
213

 
211

 

 
211

Mendocino Farms, LLC#
One stop
 
L + 8.50%
(a) 
 
2.80% cash/7.50% PIK
 
06/2023
 
209

 
208

 

 
207

Mendocino Farms, LLC#
One stop
 
L + 1.00%
(a) 
 
2.79% cash/7.50% PIK
 
06/2023
 
103

 
102

 

 
102

Mendocino Farms, LLC#(5)
One stop
 
L + 1.00%
 
 
N/A(6)
 
06/2023
 

 
(1
)
 

 
(2
)
Mendocino Farms, LLC#(5)
One stop
 
L + 1.00%
 
 
N/A(6)
 
06/2023
 

 
(20
)
 

 
(21
)
SSRG Holdings, LLC
One stop
 
L + 5.25%
(a) 
 
7.05%
 
11/2025
 
6,465

 
6,401

 
1.4

 
6,400

SSRG Holdings, LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
11/2025
 
35

 
34

 

 
34

Wood Fired Holding Corp.
One stop
 
L + 5.75%
(c) 
 
7.67%
 
12/2023
 
3,170

 
3,145

 
0.7

 
3,170

Wood Fired Holding Corp.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Wood Fired Holding Corp.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
12/2023
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
35,818

 
35,329

 
7.8

 
35,682

Buildings and Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
12,776

 
12,680

 
2.9

 
12,776

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
6,808

 
6,760

 
1.5

 
6,808

MRI Software LLC#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
2,509

 
2,499

 
0.6

 
2,509

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
2,422

 
2,398

 
0.5

 
2,422

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
2,402

 
2,378

 
0.5

 
2,402

MRI Software LLC#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
816

 
802

 
0.2

 
816


See Notes to Consolidated Financial Statements.
8

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Buildings and Real Estate - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.55%
 
06/2023
 
$
316

 
$
313

 
0.1

%
$
316

MRI Software LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
06/2023
 

 
(8
)
 

 

 
 
 
 
 
 
 
 
 
 
28,049

 
27,822

 
6.3

 
28,049

Chemicals, Plastics and Rubber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inhance Technologies Holdings LLC
One stop
 
L + 5.50%
(c) 
 
7.60%
 
07/2024
 
2,504

 
2,481

 
0.6

 
2,504

Inhance Technologies Holdings LLC#
One stop
 
L + 5.50%
(c) 
 
7.60%
 
07/2024
 
332

 
326

 
0.1

 
332

Inhance Technologies Holdings LLC#
One stop
 
P + 4.50%
(f) 
 
9.25%
 
07/2024
 
70

 
69

 

 
70

 
 
 
 
 
 
 
 
 
 
2,906

 
2,876

 
0.7

 
2,906

Containers, Packaging and Glass
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AmerCareRoyal, LLC/JHMCRN Holdings, Inc.
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2025
 
2,905

 
2,877

 
0.6

 
2,876

AmerCareRoyal, LLC/JHMCRN Holdings, Inc.
Senior loan
 
L + 5.00%
(a) 
 
6.80%
 
11/2025
 
525

 
520

 
0.1

 
520

 
 
 
 
 
 
 
 
 
 
3,430

 
3,397

 
0.7

 
3,396

Diversified/Conglomerate Manufacturing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blackbird Purchaser, Inc.
Senior loan
 
L + 4.50%
(c)(f) 
 
6.44%
 
04/2026
 
3,836

 
3,767

 
0.9

 
3,836

Blackbird Purchaser, Inc. #
Senior loan
 
L + 4.50%
(c)(f) 
 
6.44%
 
04/2026
 
251

 
228

 
0.1

 
251

Blackbird Purchaser, Inc. #
Senior loan
 
L + 4.50%
(c) 
 
6.44%
 
04/2024
 
44

 
42

 

 
44

Chase Industries, Inc.
Senior loan
 
L + 5.50%
(c) 
 
5.94% cash/1.50% PIK
 
05/2025
 
1,963

 
1,936

 
0.4

 
1,884

Chase Industries, Inc.#
Senior loan
 
L + 5.50%
(c) 
 
5.94% cash/1.50% PIK
 
05/2025
 
340

 
335

 
0.1

 
326

Chase Industries, Inc.#
Senior loan
 
L + 5.50%
(c) 
 
5.94% cash/1.50% PIK
 
05/2023
 
113

 
111

 

 
107

Protective Industrial Products, Inc.
Senior loan
 
L + 4.50%
(a) 
 
6.30%
 
01/2024
 
2,810

 
2,782

 
0.6

 
2,782

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
1,975

 
1,949

 
0.4

 
1,975

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
505

 
498

 
0.1

 
505

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
482

 
476

 
0.1

 
482

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
477

 
471

 
0.1

 
477

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
444

 
438

 
0.1

 
444

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
408

 
402

 
0.1

 
408

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
306

 
302

 
0.1

 
306

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
204

 
201

 
0.1

 
204

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
184

 
181

 

 
184

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
7.95%
 
03/2024
 
30

 
28

 

 
30

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
18

 
18

 

 
18

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
03/2025
 
17

 
16

 

 
17

 
 
 
 
 
 
 
 
 
 
14,407

 
14,181

 
3.2

 
14,280

Diversified/Conglomerate Service
 
 
 
 
 
  
 
  
 
  

 
  

 
  

 
  

3ES Innovation, Inc.(7)(10)
One stop
 
L + 5.75%
(d) 
 
7.81%
 
05/2025
 
3,765

 
3,689

 
0.9

 
3,765

3ES Innovation, Inc.#(5)(7)(10)
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 
(2
)
 

 

Acquia, Inc.
One stop
 
L + 7.00%
(c) 
 
8.91%
 
10/2025
 
1,804

 
1,787

 
0.4

 
1,786

Acquia, Inc.#(5)
One stop
 
L + 7.00%
 
 
N/A(6)
 
10/2025
 

 
(1
)
 

 
(1
)
Apptio, Inc.
One stop
 
L + 7.25%
(a) 
 
8.96%
 
01/2025
 
12,605

 
12,392

 
2.8

 
12,605

Apptio, Inc. #(5)
One stop
 
L + 7.25%
 
 
N/A(6)
 
01/2025
 

 
(2
)
 

 

Arch Global CCT Holdings Corp.
Senior loan
 
L + 4.75%
(a)(f) 
 
6.55%
 
04/2026
 
1,186

 
1,179

 
0.3

 
1,186

Arch Global CCT Holdings Corp.#
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
04/2025
 

 

 

 

Arch Global CCT Holdings Corp.#
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
04/2026
 

 

 

 

Astute Holdings, Inc.
One stop
 
L + 6.00%
(a) 
 
7.80%
 
04/2025
 
2,806

 
2,782

 
0.6

 
2,806

Astute Holdings, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
04/2025
 
43

 
42

 

 
43


See Notes to Consolidated Financial Statements.
9

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Astute Holdings, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
04/2025
 
$

 
$
(10
)
 

%
$

Aurora Lux Finco S.A R.L.(7)(12)
One stop
 
L + 6.00%
(c) 
 
7.93%
 
12/2026
 
7,839

 
7,643

 
1.7

 
7,643

AutoQuotes, LLC
One stop
 
L + 5.75%
(c) 
 
7.66%
 
11/2024
 
2,326

 
2,307

 
0.5

 
2,326

AutoQuotes, LLC#
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 

 

 

Axiom Merger Sub Inc.#
One stop
 
L + 5.25%
(c) 
 
7.26%
 
04/2026
 
1,162

 
1,143

 
0.3

 
1,162

Axiom Merger Sub Inc.#(7)(8)
One stop
 
E + 5.50%
(g) 
 
5.50%
 
04/2026
 
484

 
477

 
0.1

 
481

Axiom Merger Sub Inc.#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
04/2026
 

 
(1
)
 

 

Axiom Merger Sub Inc.#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
04/2026
 

 
(16
)
 

 

Bazaarvoice, Inc.
One stop
 
L + 5.75%
(a) 
 
7.55%
 
02/2024
 
8,397

 
8,297

 
1.9

 
8,397

Bazaarvoice, Inc.#(5)
One stop
 
L + 0.00%
 
 
N/A(6)
 
02/2024
 

 
(3
)
 

 

Bearcat Buyer, Inc.
Senior loan
 
L + 4.25%
(c) 
 
6.19%
 
07/2026
 
583

 
576

 
0.1

 
583

Bearcat Buyer, Inc.
Senior loan
 
L + 4.25%
(c) 
 
6.19%
 
07/2026
 
154

 
153

 

 
154

Bearcat Buyer, Inc.#
Senior loan
 
L + 4.25%
(c) 
 
6.19%
 
07/2026
 
65

 
63

 

 
65

Bearcat Buyer, Inc.#
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2024
 

 

 

 

Bullhorn, Inc.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
10/2025
 
13,648

 
13,451

 
3.1

 
13,648

Bullhorn, Inc. #(7)(8)(13)
One stop
 
L + 6.00%
(c) 
 
6.79%
 
10/2025
 
2,435

 
2,400

 
0.6

 
2,624

Bullhorn, Inc. #(7)(8)
One stop
 
E + 5.75%
(c) 
 
5.75%
 
10/2025
 
977

 
963

 
0.2

 
1,002

Bullhorn, Inc.#
One stop
 
L + 7.46%
(c) 
 
7.46%
 
10/2025
 
534

 
496

 
0.1

 
534

Bullhorn, Inc. #(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
10/2025
 

 
(3
)
 

 

Calabrio, Inc.
One stop
 
L + 6.50%
(c) 
 
8.44%
 
06/2025
 
22,076

 
21,876

 
5.0

 
22,076

Calabrio, Inc. #
One stop
 
L + 6.50%
(a) 
 
8.28%
 
06/2025
 
100

 
99

 

 
100

Caliper Software, Inc.
One stop
 
L + 6.00%
(c) 
 
7.94%
 
11/2025
 
6,725

 
6,648

 
1.5

 
6,725

Caliper Software, Inc.#
One stop
 
L + 6.00%
(c) 
 
7.95%
 
11/2023
 
159

 
157

 

 
159

Centrify Corporation
One stop
 
L + 6.25%
(c) 
 
8.20%
 
08/2024
 
5,220

 
5,160

 
1.1

 
5,063

Centrify Corporation#
One stop
 
P + 5.25%
(f) 
 
10.00%
 
08/2024
 
150

 
148

 

 
145

Cloudbees, Inc.#
One stop
 
L + 9.00%
(a) 
 
10.19% cash/0.50% PIK
 
05/2023
 
843

 
828

 
0.2

 
843

Cloudbees, Inc.#
One stop
 
L + 9.00%
(a) 
 
10.19% cash/0.50% PIK
 
08/2021
 
495

 
490

 
0.1

 
495

Cloudbees, Inc.#
One stop
 
L + 8.50%
 
 
N/A(6)
 
05/2023
 

 

 

 

Confluence Technologies, Inc.
One stop
 
L + 5.75%
(a) 
 
7.55%
 
03/2024
 
8,480

 
8,423

 
1.9

 
8,395

Confluence Technologies, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
03/2024
 

 
(1
)
 

 
(2
)
Connexin Software, Inc.
One stop
 
L + 8.50%
(a) 
 
10.30%
 
02/2024
 
1,261

 
1,249

 
0.3

 
1,261

Connexin Software, Inc. #
One stop
 
L + 8.50%
 
 
N/A(6)
 
02/2024
 

 

 

 

Conservice, LLC
One stop
 
L + 5.25%
(a) 
 
7.05%
 
12/2024
 
890

 
883

 
0.2

 
890

Conservice, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
12/2024
 

 

 

 

Convercent, Inc.
One stop
 
L + 9.00%
(c) 
 
8.25% cash/2.75% PIK
 
12/2024
 
696

 
677

 
0.2

 
686

Convercent, Inc.#
Subordinated debt
 
N/A
 
 
4.00%
 
11/2020
 
35

 
35

 

 
35

Convercent, Inc.#
One stop
 
L + 6.25%
 
 
N/A(6)
 
12/2024
 

 

 

 

Convercent, Inc.#(5)
One stop
 
L + 6.25%
 
 
N/A(6)
 
12/2024
 

 
(1
)
 

 
(1
)
Digital Guardian, Inc.#
One stop
 
L + 9.50%
(c) 
 
8.60% cash/3.00% PIK
 
06/2023
 
1,659

 
1,650

 
0.4

 
1,738

Digital Guardian, Inc.#
Subordinated debt
 
N/A
 
 
8.00% PIK
 
06/2023
 
2

 

 

 
2

Digital Guardian, Inc.#
One stop
 
L + 5.00%
 
 
N/A(6)
 
06/2023
 

 

 

 

Digital Guardian, Inc.#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
06/2023
 

 
(1
)
 

 
8

E2open, LLC
One stop
 
L + 5.75%
(c) 
 
7.66%
 
11/2024
 
22,884

 
22,557

 
5.1

 
22,884

E2open, LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 
(4
)
 

 

GS Acquisitionco, Inc.
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
13,271

 
13,130

 
3.0

 
13,271


See Notes to Consolidated Financial Statements.
10

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
$
4,416

 
$
4,373

 
1.0

%
$
4,416

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
1,155

 
1,144

 
0.3

 
1,155

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
1,066

 
1,056

 
0.2

 
1,066

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
669

 
663

 
0.2

 
669

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
05/2024
 
80

 
79

 

 
80

HSI Halo Acquisition, Inc.
One stop
 
L + 5.75%
(a) 
 
7.55%
 
08/2026
 
966

 
955

 
0.2

 
966

HSI Halo Acquisition, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.54%
 
08/2026
 
123

 
121

 

 
123

HSI Halo Acquisition, Inc.#
One stop
 
L + 5.75%
 
 
N/A(6)
 
09/2025
 

 

 

 

ICIMS, Inc.
One stop
 
L + 6.50%
(a) 
 
8.29%
 
09/2024
 
3,240

 
3,192

 
0.7

 
3,240

ICIMS, Inc.
One stop
 
L + 6.50%
(a) 
 
8.29%
 
09/2024
 
1,065

 
1,055

 
0.2

 
1,065

ICIMS, Inc.#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
09/2024
 

 
(1
)
 

 

Imprivata, Inc.
Senior loan
 
L + 4.00%
(c) 
 
5.94%
 
10/2023
 
825

 
818

 
0.2

 
825

Imprivata, Inc.#(5)
Senior loan
 
L + 4.00%
 
 
N/A(6)
 
10/2023
 

 
(1
)
 

 

Infinisource, Inc.
One stop
 
L + 4.75%
(c) 
 
6.69%
 
10/2026
 
10,833

 
10,728

 
2.4

 
10,725

Infinisource, Inc.#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
10/2026
 

 
(2
)
 

 
(2
)
Infinisource, Inc.#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
10/2026
 

 
(67
)
 

 
(69
)
Infogix, Inc.
One stop
 
L + 6.50%
(c) 
 
8.44%
 
04/2024
 
1,468

 
1,463

 
0.3

 
1,439

Infogix, Inc.
One stop
 
L + 6.50%
(c) 
 
8.44%
 
04/2024
 
230

 
228

 
0.1

 
226

Infogix, Inc.#
One stop
 
L + 6.50%
(c) 
 
8.60%
 
04/2024
 
17

 
17

 

 
17

Integral Ad Science, Inc.
One stop
 
L + 7.25%
(a) 
 
7.80% cash/1.25% PIK
 
07/2024
 
3,318

 
3,272

 
0.7

 
3,318

Integral Ad Science, Inc.
One stop
 
L + 7.25%
(a)(c) 
 
7.80% cash/1.25% PIK
 
07/2024
 
211

 
207

 
0.1

 
211

Integral Ad Science, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
07/2023
 

 
(1
)
 

 
(2
)
Integration Appliance, Inc.
One stop
 
L + 7.25%
(c) 
 
9.43%
 
08/2023
 
14,125

 
14,022

 
3.2

 
14,125

Integration Appliance, Inc.#
One stop
 
L + 7.25%
 
 
N/A(6)
 
08/2023
 

 

 

 

Internet Truckstop Group LLC
One stop
 
L + 5.00%
(c) 
 
6.95%
 
04/2025
 
8,098

 
7,920

 
1.8

 
8,098

Internet Truckstop Group LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
04/2025
 

 
(3
)
 

 

Invoice Cloud, Inc.#
One stop
 
L + 6.50%
(c) 
 
5.15% cash/3.25% PIK
 
02/2024
 
1,086

 
1,078

 
0.2

 
1,086

Invoice Cloud, Inc.#
One stop
 
L + 6.00%
 
 
N/A(6)
 
02/2024
 

 

 

 

Invoice Cloud, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
02/2024
 

 
(7
)
 

 

JAMF Holdings, Inc.
One stop
 
L + 7.00%
(c) 
 
8.91%
 
11/2022
 
1,205

 
1,187

 
0.3

 
1,205

JAMF Holdings, Inc.#
One stop
 
L + 7.00%
(a) 
 
8.80%
 
11/2022
 
6

 
5

 

 
6

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(d) 
 
7.72% cash/1.00% PIK
 
05/2025
 
13,066

 
12,835

 
2.9

 
13,066

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(c)(d) 
 
7.69% cash/1.00% PIK
 
05/2025
 
224

 
206

 
0.1

 
224

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(a)(c) 
 
8.45%
 
05/2025
 
60

 
58

 

 
60

Learn-it Systems, LLC
Senior loan
 
L + 4.50%
(c) 
 
6.40%
 
03/2025
 
762

 
752

 
0.2

 
762

Learn-it Systems, LLC#
Senior loan
 
L + 4.50%
(c) 
 
6.45%
 
03/2025
 
70

 
62

 

 
70

Learn-it Systems, LLC#
Senior loan
 
L + 4.50%
(a)(c)(f) 
 
7.09%
 
03/2025
 
16

 
16

 

 
16

Litera Bidco LLC
One stop
 
L + 5.75%
(c) 
 
7.70%
 
05/2026
 
534

 
528

 
0.1

 
534

Litera Bidco LLC#
One stop
 
L + 5.75%
(c) 
 
7.70%
 
05/2026
 
278

 
275

 
0.1

 
278

Litera Bidco LLC#
One stop
 
L + 5.75%
(c) 
 
7.70%
 
05/2026
 
278

 
278

 
0.1

 
278

Litera Bidco LLC#
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 

 

 

MetricStream, Inc.#
One stop
 
L + 7.00%
(c) 
 
9.00%
 
05/2024
 
2,010

 
1,942

 
0.5

 
2,024

MetricStream, Inc.#
One stop
 
L + 7.00%
 
 
N/A(6)
 
05/2024
 

 

 

 
1

MetricStream, Inc.#(5)
One stop
 
L + 7.00%
 
 
N/A(6)
 
04/2024
 

 
(4
)
 

 
6

Mindbody, Inc.#
One stop
 
L + 7.00%
(a) 
 
8.79%
 
02/2025
 
11,692

 
11,592

 
2.6

 
11,692

Mindbody, Inc.#(5)
One stop
 
L + 7.00%
 
 
N/A(6)
 
02/2025
 

 
(1
)
 

 


See Notes to Consolidated Financial Statements.
11

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ministry Brands, LLC
Senior loan
 
L + 4.00%
(b) 
 
5.85%
 
12/2022
 
$
224

 
$
223

 
$
0.1

%
$
224

Ministry Brands, LLC#
Senior loan
 
L + 4.00%
(b) 
 
5.85%
 
12/2022
 
131

 
131

 

 
131

Ministry Brands, LLC
Senior loan
 
L + 4.00%
(b) 
 
5.85%
 
12/2022
 
128

 
128

 

 
128

Namely, Inc.
One stop
 
L + 7.50%
(c) 
 
8.25% cash/1.25% PIK
 
06/2024
 
2,098

 
2,076

 
0.5

 
2,098

Namely, Inc.#
One stop
 
L + 6.25%
(c) 
 
8.25%
 
06/2024
 
793

 
787

 
0.2

 
793

Namely, Inc.#
One stop
 
L + 6.25%
 
 
N/A(6)
 
06/2024
 

 

 

 

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
12/2023
 
873

 
865

 
0.2

 
873

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
12/2023
 
751

 
745

 
0.2

 
751

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
12/2023
 
112

 
111

 

 
112

Net Health Acquisition Corp.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Nextech Holdings, LLC
One stop
 
L + 5.50%
(a) 
 
7.30%
 
06/2025
 
17,987

 
17,822

 
4.0

 
17,987

Nextech Holdings, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
06/2025
 

 
(3
)
 

 

Nextech Holdings, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
06/2025
 

 
(8
)
 

 

Nexus Brands Group, Inc.
One stop
 
L + 6.00%
(c) 
 
7.83%
 
11/2023
 
593

 
588

 
0.1

 
587

Nexus Brands Group, Inc.
One stop
 
L + 6.00%
(b) 
 
7.84%
 
11/2023
 
516

 
511

 
0.1

 
511

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
11/2023
 
295

 
294

 
0.1

 
292

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
11/2023
 
214

 
213

 
0.1

 
211

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(a)(c) 
 
7.79%
 
11/2023
 
15

 
14

 

 
14

Nexus Brands Group, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
11/2023
 

 
(1
)
 

 
(1
)
Nexus Brands Group, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
11/2023
 

 

 

 
(1
)
Onapsis, Inc., Virtual Forge GMBH and Onapsis GMBH
One stop
 
P + 6.75%
(f) 
 
9.75% cash/1.75% PIK
 
10/2024
 
130

 
123

 

 
134

Onapsis, Inc., Virtual Forge GMBH and Onapsis GMBH#
One stop
 
L + 6.00%
 
 
N/A(6)
 
10/2024
 

 

 

 
1

Onapsis, Inc., Virtual Forge GMBH and Onapsis GMBH#(5)
One stop
 
L + 7.75%
 
 
N/A(6)
 
10/2024
 

 
(8
)
 

 
54

Personify, Inc.
One stop
 
L + 5.75%
(c) 
 
7.69%
 
09/2024
 
3,502

 
3,474

 
0.8

 
3,502

Personify, Inc.#
One stop
 
L + 5.75%
(c) 
 
7.69%
 
09/2024
 
20

 
19

 

 
20

PlanSource Holdings, Inc.
One stop
 
L + 6.25%
(c) 
 
8.15%
 
04/2025
 
2,818

 
2,790

 
0.6

 
2,818

PlanSource Holdings, Inc. #(5)
One stop
 
L + 6.25%
 
 
N/A(6)
 
04/2025
 

 
(1
)
 

 

Project Power Buyer, LLC
One stop
 
L + 5.75%
(c) 
 
7.70%
 
05/2026
 
2,852

 
2,820

 
0.6

 
2,852

Project Power Buyer, LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 
(1
)
 

 

Property Brands, Inc.
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
2,801

 
2,777

 
0.6

 
2,801

Property Brands, Inc.
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
1,131

 
1,122

 
0.3

 
1,131

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
923

 
915

 
0.2

 
923

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
398

 
395

 
0.1

 
398

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
338

 
335

 
0.1

 
338

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
337

 
334

 
0.1

 
337

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
7.80%
 
01/2024
 
140

 
139

 

 
140

Property Brands, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
01/2024
 

 
(1
)
 

 

Property Brands, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
01/2024
 

 
(10
)
 

 

PT Intermediate Holdings III, LLC
One stop
 
L + 5.50%
(c) 
 
7.44%
 
10/2025
 
23,404

 
23,044

 
5.3

 
23,404

Qgenda Intermediate Holdings, LLC
One stop
 
L + 5.00%
(a) 
 
6.80%
 
06/2025
 
5,128

 
5,081

 
1.1

 
5,077

Qgenda Intermediate Holdings, LLC
One stop
 
L + 5.00%
(a) 
 
6.80%
 
06/2025
 
2,481

 
2,457

 
0.6

 
2,456

Qgenda Intermediate Holdings, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
06/2025
 

 
(1
)
 

 
(1
)
Recordxtechnologies, LLC
One stop
 
L + 5.50%
(a) 
 
7.29%
 
12/2025
 
18,841

 
18,606

 
4.2

 
18,652

Recordxtechnologies, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
12/2025
 

 
(2
)
 

 
(2
)
Recordxtechnologies, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
12/2025
 

 
(24
)
 

 
(25
)
RegEd Aquireco, LLC
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
12/2024
 
1,227

 
1,216

 
0.3

 
1,227


See Notes to Consolidated Financial Statements.
12

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RegEd Aquireco, LLC#
Senior loan
 
L + 4.25%
(a) 
 
6.01%
 
12/2024
 
$
26

 
$
25

 

%
$
26

RegEd Aquireco, LLC#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
12/2024
 

 
(29
)
 

 

Saba Software, Inc.
Senior loan
 
L + 4.50%
(a) 
 
6.30%
 
05/2023
 
14,214

 
14,109

 
3.2

 
14,214

SnapLogic, Inc.(5)
One stop
 
L + 8.75%
(b) 
 
5.11% cash/5.50% PIK
 
09/2024
 
3

 
(3
)
 

 
3

SnapLogic, Inc.#
One stop
 
L + 3.25%
 
 
N/A(6)
 
09/2024
 

 

 

 

SnapLogic, Inc.#(5)
One stop
 
L + 3.25%
 
 
N/A(6)
 
09/2024
 

 
(6
)
 

 

Sonatype, Inc.
One stop
 
L + 6.75%
(a) 
 
8.51%
 
12/2025
 
12,912

 
12,784

 
2.9

 
12,783

Sonatype, Inc.#(5)
One stop
 
L + 6.75%
 
 
N/A(6)
 
12/2025
 

 
(3
)
 

 
(2
)
Telesoft Holdings, LLC (Calero Holdings)
One stop
 
L + 5.75%
(c) 
 
7.69%
 
12/2025
 
21,275

 
20,799

 
4.7

 
21,062

Telesoft Holdings, LLC (Calero Holdings)#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
12/2025
 

 
(5
)
 

 
(2
)
TI Intermediate Holdings, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.30%
 
12/2024
 
827

 
820

 
0.2

 
827

TI Intermediate Holdings, LLC#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 

 

 

Transact Holdings, Inc.
Senior loan
 
L + 4.75%
(a) 
 
6.55%
 
04/2026
 
763

 
753

 
0.2

 
761

Transaction Data Systems, Inc.
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2021
 
13,762

 
13,731

 
3.1

 
13,762

Transaction Data Systems, Inc.#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2021
 
15

 
15

 

 
15

Trintech, Inc.
One stop
 
L + 6.00%
(c) 
 
7.93%
 
12/2023
 
2,109

 
2,091

 
0.5

 
2,109

Trintech, Inc.
One stop
 
L + 6.00%
(c) 
 
7.93%
 
12/2023
 
1,049

 
1,040

 
0.2

 
1,049

Trintech, Inc.#
One stop
 
L + 6.00%
(c) 
 
7.93%
 
12/2023
 
40

 
39

 

 
40

True Commerce, Inc.
One stop
 
L + 5.75%
(c) 
 
7.69%
 
11/2023
 
1,308

 
1,297

 
0.3

 
1,308

True Commerce, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2023
 

 
(1
)
 

 

Upserve, Inc.
One stop
 
L + 6.50%
(a) 
 
8.30%
 
07/2023
 
1,694

 
1,681

 
0.4

 
1,677

Upserve, Inc.#
One stop
 
L + 6.50%
(a) 
 
8.30%
 
07/2023
 
565

 
562

 
0.1

 
560

Upserve, Inc.#
One stop
 
L + 6.50%
 
 
N/A(6)
 
07/2023
 

 

 

 

Vector CS Midco Limited & Cloudsense Ltd.#(7)(8)(9)
One stop
 
N/A
 
 
4.50% cash/3.55% PIK
 
05/2024
 
1,933

 
1,917

 
0.4

 
1,961

Vector CS Midco Limited & Cloudsense Ltd.#(5)(7)(8)(9)
One stop
 
L + 4.50%
 
 
N/A(6)
 
05/2024
 

 
(1
)
 

 

Velocity Technology Solutions, Inc.
One stop
 
L + 6.00%
(c) 
 
7.91%
 
12/2023
 
1,618

 
1,600

 
0.4

 
1,618

Velocity Technology Solutions, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Workforce Software, LLC
One stop
 
L + 6.50%
(c) 
 
8.41%
 
07/2025
 
10,900

 
10,698

 
2.5

 
10,900

Workforce Software, LLC#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
07/2025
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
405,165

 
399,849

 
90.9

 
404,199

Electronics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
06/2026
 
8,628

 
8,472

 
1.9

 
8,628

Appriss Holdings, Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
06/2025
 

 
(4
)
 

 

Diligent Corporation#
One stop
 
L + 5.50%
(d) 
 
7.56%
 
04/2022
 
7,667

 
7,596

 
1.7

 
7,667

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d)(f) 
 
7.42%
 
04/2022
 
3,710

 
3,676

 
0.8

 
3,710

Diligent Corporation#
One stop
 
L + 5.50%
(b)(c) 
 
7.58%
 
04/2022
 
2,478

 
2,456

 
0.6

 
2,478

Diligent Corporation
One stop
 
L + 5.50%
(d) 
 
7.56%
 
04/2022
 
1,938

 
1,925

 
0.4

 
1,938

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d)(f) 
 
7.42%
 
04/2022
 
954

 
946

 
0.2

 
954

Diligent Corporation#
One stop
 
L + 5.50%
(d) 
 
7.48%
 
04/2022
 
721

 
710

 
0.2

 
721

Diligent Corporation#
One stop
 
L + 5.50%
(d) 
 
7.56%
 
04/2022
 
274

 
273

 
0.1

 
274

Diligent Corporation#
One stop
 
L + 5.50%
(d) 
 
7.56%
 
04/2022
 
97

 
95

 

 
97

Diligent Corporation#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
04/2022
 

 
(24
)
 

 

Episerver, Inc. (Goldcup 17308 AB)#(7)(8)
One stop
 
L + 6.00%
(a) 
 
6.00%
 
10/2024
 
4,762

 
4,712

 
1.0

 
4,646

Episerver, Inc. (Goldcup 17308 AB)#
One stop
 
L + 5.75%
(a) 
 
7.55%
 
10/2024
 
2,761

 
2,732

 
0.6

 
2,761

Episerver, Inc. (Goldcup 17308 AB)#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
10/2024
 

 
(2
)
 

 

ES Acquisition, LLC
One stop
 
L + 5.50%
(c) 
 
7.41%
 
11/2025
 
15,938

 
15,781

 
3.5

 
15,778


See Notes to Consolidated Financial Statements.
13

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Electronics - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ES Acquisition, LLC#
One stop
 
L + 5.50%
(c) 
 
7.41%
 
11/2025
 
$
51

 
$
49

 

%
$
49

ES Acquisition, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
11/2025
 

 
(52
)
 

 
(53
)
Red Dawn SEI Buyer, Inc.
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
11/2025
 
13,643

 
13,475

 
3.0

 
13,506

Red Dawn SEI Buyer, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
11/2025
 

 
(3
)
 

 
(3
)
Red Dawn SEI Buyer, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
11/2025
 

 
(24
)
 

 
(24
)
Silver Peak Systems, Inc.
One stop
 
L + 7.00%
(a) 
 
8.74%
 
04/2024
 
1,461

 
1,443

 
0.3

 
1,476

Silver Peak Systems, Inc.#
One stop
 
L + 7.00%
 
 
N/A(6)
 
04/2024
 

 

 

 
1

Sovos Compliance Formerly Taxware, LLC
One stop
 
L + 4.75%
(a) 
 
6.55%
 
04/2024
 
7,513

 
7,383

 
1.7

 
7,513

Sovos Compliance Formerly Taxware, LLC
Second lien
 
N/A
 
 
12.00% PIK
 
04/2025
 
3,491

 
3,419

 
0.8

 
3,491

Sovos Compliance Formerly Taxware, LLC#
One stop
 
L + 4.75%
(a) 
 
6.55%
 
04/2024
 
735

 
729

 
0.2

 
735

Sovos Compliance Formerly Taxware, LLC#
Second lien
 
N/A
 
 
12.00% PIK
 
04/2025
 
527

 
516

 
0.1

 
527

Sovos Compliance Formerly Taxware, LLC#
One stop
 
L + 4.75%
(a) 
 
6.55%
 
04/2024
 
328

 
316

 
0.1

 
328

Sovos Compliance Formerly Taxware, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
04/2024
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
77,677

 
76,593

 
17.2

 
77,198

Finance
 
 
 
 
 
  
 
  
 
  

 
  

 
  

 
  

Institutional Shareholder Services
Senior loan
 
L + 4.50%
(c) 
 
6.44%
 
03/2026
 
6,428

 
6,372

 
1.4

 
6,428

Institutional Shareholder Services#
Senior loan
 
L + 4.50%
(c) 
 
6.44%
 
03/2024
 
66

 
65

 

 
66

 
 
 
 
 
 
 
 
 
 
6,494

 
6,437

 
1.4

 
6,494

Healthcare, Education and Childcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Medical Products, LLC
One stop
 
L + 5.25%
(a) 
 
6.99%
 
06/2025
 
977

 
969

 
0.2

 
977

Aspen Medical Products, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
06/2025
 

 

 

 

BIO18 Borrower, LLC
One stop
 
L + 5.25%
(a) 
 
7.05%
 
11/2024
 
1,767

 
1,749

 
0.4

 
1,767

BIO18 Borrower, LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
11/2024
 
1,643

 
1,622

 
0.4

 
1,643

BIO18 Borrower, LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
11/2024
 
40

 
39

 

 
40

Blades Buyer, Inc.
Senior loan
 
L + 4.50%
(a)(c) 
 
6.26%
 
08/2025
 
793

 
787

 
0.2

 
785

Blades Buyer, Inc.#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
08/2025
 

 

 

 

Blades Buyer, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
08/2025
 

 
(3
)
 

 
(4
)
CMI Parent Inc.
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
08/2025
 
14,613

 
14,477

 
3.3

 
14,613

CMI Parent Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
08/2025
 

 
(1
)
 

 

CRH Healthcare Purchaser, Inc.
Senior loan
 
L + 4.50%
(a) 
 
6.30%
 
12/2024
 
2,540

 
2,519

 
0.6

 
2,540

CRH Healthcare Purchaser, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(1
)
 

 

CRH Healthcare Purchaser, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(14
)
 

 

Elite Dental Partners LLC
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
742

 
734

 
0.2

 
683

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
650

 
643

 
0.1

 
598

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
610

 
603

 
0.1

 
561

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
581

 
575

 
0.1

 
535

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
557

 
551

 
0.1

 
513

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.05%
 
06/2023
 
100

 
99

 

 
92

Elite Dental Partners LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
06/2023
 

 
(28
)
 

 

ERG Buyer, LLC
One stop
 
L + 5.50%
(c) 
 
7.44%
 
05/2024
 
2,307

 
2,282

 
0.5

 
2,192

ERG Buyer, LLC#
One stop
 
P + 4.50%
(f) 
 
9.25%
 
05/2024
 
70

 
68

 

 
63

ERG Buyer, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
05/2024
 

 
(42
)
 

 

eSolutions, Inc.
One stop
 
L + 6.50%
(a) 
 
8.30%
 
03/2022
 
22,816

 
22,634

 
5.1

 
22,816

Eyecare Services Partners Holdings LLC#
One stop
 
L + 6.25%
(c) 
 
8.16%
 
05/2023
 
1,490

 
1,387

 
0.3

 
1,460

Eyecare Services Partners Holdings LLC#
One stop
 
L + 6.25%
(c) 
 
8.19%
 
05/2023
 
1,122

 
1,118

 
0.3

 
1,099


See Notes to Consolidated Financial Statements.
14

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Healthcare, Education and Childcare - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Krueger-Gilbert Health Physics, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.69%
 
05/2025
 
$
480

 
$
475

 
0.1

%
$
480

Krueger-Gilbert Health Physics, LLC#
Senior loan
 
L + 4.75%
(b) 
 
6.59%
 
05/2025
 
180

 
169

 

 
180

Krueger-Gilbert Health Physics, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.69%
 
05/2025
 
129

 
128

 

 
129

Krueger-Gilbert Health Physics, LLC#
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
05/2025
 

 

 

 

MD Now Holdings, Inc.
One stop
 
L + 5.00%
(c) 
 
6.94%
 
08/2024
 
2,920

 
2,898

 
0.7

 
2,920

MD Now Holdings, Inc.#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(1
)
 

 

MD Now Holdings, Inc.#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(6
)
 

 

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.55%
 
11/2023
 
441

 
436

 
0.1

 
441

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.55%
 
11/2023
 
152

 
151

 

 
152

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.55%
 
11/2023
 
50

 
50

 

 
50

Summit Behavioral Healthcare, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.66%
 
10/2023
 
1,297

 
1,285

 
0.3

 
1,258

Summit Behavioral Healthcare, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.66%
 
10/2023
 
140

 
139

 

 
136

Summit Behavioral Healthcare, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.66%
 
10/2023
 
64

 
63

 

 
64

 
 
 
 
 
 
 
 
 
 
59,271

 
58,554

 
13.1

 
58,783

Hotels, Motels, Inns, and Gaming
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davidson Hotel Company, LLC
One stop
 
L + 5.25%
(a) 
 
6.96%
 
07/2024
 
2,111

 
2,092

 
0.5

 
2,111

Davidson Hotel Company, LLC#
One stop
 
L + 5.25%
(a) 
 
6.96%
 
07/2024
 
423

 
423

 
0.1

 
423

Davidson Hotel Company, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2024
 

 

 

 

Davidson Hotel Company, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2024
 

 
(5
)
 

 

 
 
 
 
 
 
 
 
 
 
2,534

 
2,510

 
0.6

 
2,534

Insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Integrity Marketing Acquisition, LLC
Senior loan
 
L + 5.75%
(c) 
 
7.67%
 
08/2025
 
366

 
361

 
0.1

 
366

Integrity Marketing Acquisition, LLC#
Senior loan
 
L + 5.75%
(c) 
 
7.79%
 
08/2025
 
222

 
220

 
0.1

 
222

Integrity Marketing Acquisition, LLC#
Senior loan
 
L + 5.75%
 
 
N/A(6)
 
08/2025
 

 

 

 

Integrity Marketing Acquisition, LLC#(5)
Senior loan
 
L + 5.75%
 
 
N/A(6)
 
08/2025
 

 
(1
)
 

 

J.S. Held Holdings, LLC
One stop
 
L + 6.00%
(c) 
 
7.94%
 
07/2025
 
17,575

 
17,175

 
3.9

 
17,575

J.S. Held Holdings, LLC#
One stop
 
P + 5.00%
(f) 
 
9.75%
 
07/2025
 
36

 
31

 

 
36

J.S. Held Holdings, LLC#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
07/2025
 

 
(18
)
 

 

Orchid Underwriters Agency, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.30%
 
12/2024
 
813

 
806

 
0.2

 
813

Orchid Underwriters Agency, LLC#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 

 

 

Orchid Underwriters Agency, LLC#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(3
)
 

 

RSC Acquisition, Inc.
One stop
 
L + 5.50%
(b)(c) 
 
7.41%
 
10/2026
 
8,409

 
8,245

 
1.9

 
8,240

RSC Acquisition, Inc.#
One stop
 
L + 5.50%
(c) 
 
7.44%
 
10/2026
 
578

 
517

 
0.1

 
515

RSC Acquisition, Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
10/2026
 

 
(1
)
 

 
(1
)
 
 
 
 
 
 
 
 
 
 
27,999

 
27,332

 
6.3

 
27,766

Leisure, Amusement, Motion Pictures, Entertainment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CR Fitness Holdings, LLC
Senior loan
 
L + 4.00%
(b) 
 
5.85%
 
07/2025
 
318

 
315

 
0.1

 
318

CR Fitness Holdings, LLC#
Senior loan
 
L + 4.00%
(b) 
 
5.85%
 
07/2025
 
26

 
23

 

 
26

CR Fitness Holdings, LLC#
Senior loan
 
L + 4.00%
(b)(c) 
 
5.97%
 
07/2025
 
9

 
8

 

 
9

EOS Fitness Opco Holdings, LLC
One stop
 
L + 4.75%
(c) 
 
6.69%
 
01/2025
 
1,751

 
1,736

 
0.4

 
1,751

EOS Fitness Opco Holdings, LLC#
One stop
 
L + 4.75%
(c) 
 
6.69%
 
01/2025
 
272

 
266

 
0.1

 
272

EOS Fitness Opco Holdings, LLC#
One stop
 
P + 3.75%
(f) 
 
8.50%
 
01/2025
 
6

 
5

 

 
6

Planet Fit Indy 10 LLC
One stop
 
L + 5.25%
(c) 
 
7.19%
 
07/2025
 
13,389

 
13,312

 
3.0

 
13,389

Planet Fit Indy 10 LLC#
One stop
 
L + 5.25%
(c) 
 
7.14%
 
07/2025
 
3,654

 
3,612

 
0.8

 
3,654

Planet Fit Indy 10 LLC#
One stop
 
L + 5.25%
(c) 
 
7.17%
 
07/2025
 
1,658

 
1,647

 
0.4

 
1,658

Planet Fit Indy 10 LLC#
One stop
 
L + 5.25%
(c) 
 
7.18%
 
07/2025
 
100

 
99

 

 
100


See Notes to Consolidated Financial Statements.
15

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Leisure, Amusement, Motion Pictures, Entertainment - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sunshine Sub, LLC
One stop
 
L + 4.75%
(a) 
 
6.55%
 
05/2024
 
$
1,989

 
$
1,960

 
0.5

%
$
1,989

Sunshine Sub, LLC#
One stop
 
L + 4.75%
(a) 
 
6.55%
 
05/2024
 
1,947

 
1,919

 
0.4

 
1,947

Sunshine Sub, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
05/2024
 

 
(1
)
 

 

Titan Fitness, LLC
One stop
 
L + 4.75%
(a) 
 
6.44%
 
02/2025
 
6,706

 
6,649

 
1.5

 
6,706

Titan Fitness, LLC#
One stop
 
P + 3.75%
(f) 
 
8.50%
 
02/2025
 
30

 
28

 

 
30

Titan Fitness, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
02/2025
 

 
(12
)
 

 

WBZ Investment LLC
One stop
 
L + 5.50%
(a) 
 
7.30%
 
09/2024
 
1,430

 
1,419

 
0.3

 
1,430

WBZ Investment LLC#
One stop
 
L + 5.50%
(a)(f) 
 
7.30%
 
09/2024
 
434

 
428

 
0.1

 
434

WBZ Investment LLC#
One stop
 
L + 5.50%
(a) 
 
7.30%
 
09/2024
 
330

 
327

 
0.1

 
330

WBZ Investment LLC#
One stop
 
L + 5.50%
(a) 
 
7.24%
 
09/2024
 
40

 
40

 

 
40

 
 
 
 
 
 
 
 
 
 
34,089

 
33,780

 
7.7

 
34,089

Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drilling Info Holdings, Inc.
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
07/2025
 
9,112

 
9,020

 
2.0

 
9,112

Drilling Info Holdings, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2023
 

 
(1
)
 

 

Drilling Info Holdings, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2025
 

 
(6
)
 

 

 
 
 
 
 
 
 
 
 
 
9,112

 
9,013

 
2.0

 
9,112

Personal and Non Durable Consumer Products (Mfg. Only)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WU Holdco, Inc.
One stop
 
L + 5.50%
(c) 
 
7.44%
 
03/2026
 
933

 
925

 
0.2

 
933

WU Holdco, Inc.#
One stop
 
L + 5.50%
(c) 
 
7.44%
 
03/2026
 
24

 
24

 

 
24

WU Holdco, Inc.#
One stop
 
L + 5.50%
 
 
N/A(6)
 
03/2025
 

 

 

 

 
 
 
 
 
 
 
 
 
 
957

 
949

 
0.2

 
957

Personal, Food and Miscellaneous Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blue River Pet Care, LLC
One stop
 
L + 5.00%
(a)(c) 
 
7.04%
 
07/2026
 
4,599

 
4,555

 
1.0

 
4,599

Blue River Pet Care, LLC#
One stop
 
L + 5.00%
(a)(c) 
 
6.89%
 
08/2025
 
174

 
172

 

 
174

Blue River Pet Care, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
07/2026
 

 
(49
)
 

 

Captain D's, LLC
Senior loan
 
L + 4.50%
(c) 
 
6.44%
 
12/2023
 
1,238

 
1,226

 
0.3

 
1,238

Captain D's, LLC#
Senior loan
 
P + 3.50%
(b)(f) 
 
7.45%
 
12/2023
 
56

 
55

 

 
56

Clarkson Eyecare LLC
One stop
 
L + 6.25%
(a) 
 
8.05%
 
04/2021
 
6,632

 
6,589

 
1.5

 
6,632

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(a) 
 
8.02%
 
04/2021
 
6,096

 
6,042

 
1.4

 
6,096

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
04/2021
 
3,619

 
3,600

 
0.8

 
3,619

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
04/2021
 
3,152

 
3,136

 
0.7

 
3,152

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(a) 
 
8.05%
 
04/2021
 
3,113

 
3,096

 
0.7

 
3,113

Clarkson Eyecare LLC
One stop
 
L + 6.25%
(a) 
 
8.05%
 
04/2021
 
2,053

 
2,021

 
0.5

 
2,053

Encorevet Group LLC#(5)
Senior loan
 
L + 5.00%
 
 
N/A(6)
 
11/2024
 

 

 

 
(1
)
Encorevet Group LLC#(5)
Senior loan
 
L + 5.00%
 
 
N/A(6)
 
11/2024
 

 
(79
)
 

 
(81
)
Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.09%
 
08/2023
 
1,530

 
1,515

 
0.3

 
1,530

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.10%
 
08/2023
 
1,456

 
1,437

 
0.3

 
1,456

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b)(c) 
 
7.12%
 
08/2023
 
881

 
863

 
0.2

 
881

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.10%
 
08/2023
 
751

 
743

 
0.2

 
751

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.09%
 
08/2023
 
489

 
484

 
0.1

 
489

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.10%
 
08/2023
 
445

 
441

 
0.1

 
445

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b) 
 
7.09%
 
08/2023
 
148

 
147

 

 
148

Imperial Optical Midco Inc.#
One stop
 
L + 5.25%
(b)(c) 
 
7.10%
 
08/2023
 
25

 
25

 

 
25

Midwest Veterinary Partners, LLC
One stop
 
L + 4.75%
(a) 
 
6.55%
 
07/2025
 
249

 
246

 
0.1

 
249

Midwest Veterinary Partners, LLC#
One stop
 
L + 4.75%
(a) 
 
6.55%
 
07/2025
 
78

 
76

 

 
78

Midwest Veterinary Partners, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
07/2025
 

 
(37
)
 

 


See Notes to Consolidated Financial Statements.
16

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Personal, Food and Miscellaneous Services - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PPV Intermediate Holdings II, LLC#
One stop
 
L + 5.00%
(c) 
 
7.61%
 
05/2020
 
$
1,227

 
$
1,221

 
0.3

%
$
1,227

PPV Intermediate Holdings II, LLC#
One stop
 
N/A
 
 
7.90% PIK
 
05/2023
 
8

 
8

 

 
8

PPV Intermediate Holdings II, LLC#
One stop
 
L + 5.00%
 
 
N/A(6)
 
05/2023
 

 

 

 

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.44%
 
01/2023
 
276

 
273

 
0.1

 
276

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.44%
 
01/2023
 
59

 
58

 

 
59

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.44%
 
01/2023
 
5

 
5

 

 
5

Veterinary Specialists of North America, LLC
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
04/2025
 
17,053

 
16,904

 
3.8

 
17,053

Veterinary Specialists of North America, LLC#
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
04/2025
 
1,241

 
1,185

 
0.3

 
1,241

Veterinary Specialists of North America, LLC#
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
04/2025
 
624

 
619

 
0.1

 
624

Veterinary Specialists of North America, LLC#
Senior loan
 
L + 4.25%
(a) 
 
6.05%
 
04/2025
 
65

 
61

 

 
65

 
 
 
 
 
 
 
 
 
 
57,342

 
56,638

 
12.8

 
57,260

Printing and Publishing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Messenger, LLC
One stop
 
L + 6.00%
(a)(f) 
 
7.79%
 
08/2023
 
2,046

 
2,031

 
0.5

 
2,046

Messenger, LLC#
One stop
 
P + 5.00%
(f) 
 
9.75%
 
08/2023
 
18

 
18

 

 
18

Messenger, LLC#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
08/2023
 

 
(1
)
 

 

 
 
 
 
 
 
 
 
 
 
2,064

 
2,048

 
0.5

 
2,064

Retail Stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Ave. LLC
One stop
 
L + 5.50%
(a) 
 
7.30%
 
09/2025
 
1,391

 
1,377

 
0.3

 
1,391

2nd Ave. LLC#
One stop
 
L + 5.50%
 
 
N/A(6)
 
09/2025
 

 

 

 

Jet Equipment & Tools Ltd.#(7)(8)(10)
One stop
 
L + 5.75%
(a) 
 
7.81%
 
11/2024
 
4,289

 
4,246

 
1.0

 
4,320

Jet Equipment & Tools Ltd.(7)(10)
One stop
 
L + 5.75%
(a) 
 
7.55%
 
11/2024
 
3,381

 
3,352

 
0.8

 
3,381

Jet Equipment & Tools Ltd.(7)(10)
One stop
 
L + 5.75%
(a) 
 
7.55%
 
11/2024
 
1,039

 
1,030

 
0.2

 
1,039

Jet Equipment & Tools Ltd.(7)(10)
One stop
 
L + 5.75%
(a) 
 
7.55%
 
11/2024
 
400

 
396

 
0.1

 
400

Jet Equipment & Tools Ltd.#(5)(7)(8)(10)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 
(1
)
 

 

Pet Supplies Plus, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.24%
 
12/2024
 
3,333

 
3,305

 
0.8

 
3,333

Pet Supplies Plus, LLC#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Sola Franchise, LLC and Sola Salon Studios, LLC
One stop
 
L + 5.25%
(c) 
 
7.19%
 
10/2024
 
932

 
924

 
0.2

 
932

Sola Franchise, LLC and Sola Salon Studios, LLC#
One stop
 
L + 5.25%
(c) 
 
7.19%
 
10/2024
 
675

 
670

 
0.2

 
675

Sola Franchise, LLC and Sola Salon Studios, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
10/2024
 

 

 

 

Sola Franchise, LLC and Sola Salon Studios, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
10/2024
 

 
(7
)
 

 

Vermont Aus Pty Ltd#(7)(8)(11)
One stop
 
L + 5.75%
(j) 
 
6.72%
 
12/2024
 
439

 
432

 
0.1

 
445

Vermont Aus Pty Ltd#(7)(8)(11)
One stop
 
L + 5.75%
(j) 
 
6.72%
 
12/2024
 
16

 
14

 

 
17

 
 
 
 
 
 
 
 
 
 
15,895

 
15,737

 
3.7

 
15,933

Total debt investments
 
 
 
 
 
 
 
 
$
792,116

 
$
781,826

 
177.1

%
$
789,595

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Investments(14)(15)
 
 
 
 
 
  
 
  
 
 
 
  

 
  

 
 
Automobile
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grease Monkey International, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
73

 
$
73

 
0.1

%
$
203

Quick Quack Car Wash Holdings, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
93

 

 
84

 
 
 
 
 
 
 
 
 
 


 
166

 
0.1

 
287

Beverage, Food and Tobacco
 
 
 
 
 
 
 
 
 
 
 


 


 


Mendocino Farms, LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 
59

 
257

 
0.1

 
287

SSRG Holdings, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
40

 
399

 
0.1

 
399

Wood Fired Holding Corp.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
103

 
103

 

 
103


See Notes to Consolidated Financial Statements.
17

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Beverage, Food and Tobacco - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wood Fired Holding Corp.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
103

 
$

 

%
$

 
 
 
 
 
 
 
 
 
 
 
 
759

 
0.2

 
789

Chemicals, Plastics and Rubber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inhance Technologies Holdings LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
34

 

 
20

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified/Conglomerate Service
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Astute Holdings, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
83

 

 
108

Calabrio, Inc.#
Common stock
 
N/A
 
 
N/A
 
N/A
 
58

 
444

 
0.1

 
487

Caliper Software, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
1

 
596

 
0.2

 
709

Caliper Software, Inc.#
Common stock
 
N/A
 
 
N/A
 
N/A
 
53

 
53

 

 
88

Caliper Software, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 
8

 

 
10

Centrify Corporation#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
170

 

 
84

Centrify Corporation#
LP interest
 
N/A
 
 
N/A
 
N/A
 
60

 

 

 

Cloudbees, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
15

 
93

 

 
90

Cloudbees, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
19

 
27

 

 
59

Confluence Technologies, Inc.#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 
53

 

 
80

Connexin Software, Inc.#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
26

 
26

 

 
37

Convercent, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
82

 
16

 

 
16

Digital Guardian, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
72

 
87

 

 
67

Digital Guardian, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
25

 
43

 

 
44

Digital Guardian, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
15

 
27

 

 
27

Digital Guardian, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
14

 
25

 

 
29

Digital Guardian, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
3

 
4

 

 
8

GS Acquisitionco, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
44

 

 
81

HSI Halo Acquisition, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 
69

 

 
71

HSI Halo Acquisition, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 

 

 

Internet Truckstop Group LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
146

 
146

 
0.1

 
162

MetricStream, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
44

 
67

 

 
56

Namely, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
8

 
14

 

 
20

Net Health Acquisition Corp.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
126

 

 
134

Nexus Brands Group, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
49

 

 
52

Onapsis, Inc., Virtual Forge GMBH and Onapsis GMBH#
Warrant
 
N/A
 
 
N/A
 
N/A
 
2

 
6

 

 
6

Personify, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
145

 
145

 
0.1

 
213

Pride Midco, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
1

 
556

 
0.2

 
647

Property Brands, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
11

 
106

 
0.1

 
187

RegEd Aquireco, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
70

 

 
71

RegEd Aquireco, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
1

 

 

 

SnapLogic, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
43

 
108

 

 
108

SnapLogic, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
16

 
6

 

 
6

Telesoft Holdings, LLC (Calero Holdings)#
LP interest
 
N/A
 
 
N/A
 
N/A
 
131

 
131

 

 
131

 
 
 
 
 
 
 
 
 
 
 
 
3,398

 
0.8

 
3,888

Electronics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 
52

 

 
62

Episerver, Inc. (Goldcup 17308 AB)#
Common stock
 
N/A
 
 
N/A
 
N/A
 
17

 
173

 
0.1

 
181

ES Acquisition, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
289

 
0.1

 
304

Red Dawn SEI Buyer, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 
219

 
219

 
0.1

 
219


See Notes to Consolidated Financial Statements.
18

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Electronics - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Silver Peak Systems, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
17

 
$
6

 

%
$
8

 
 
 
 
 
 
 
 
 
 
 
 
739

 
0.3

 
774

Healthcare, Education and Childcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Medical Products, LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 

 
17

 

 
18

BIO18 Borrower, LLC#(14)
LLC units
 
N/A
 
 
N/A
 
N/A
 
141

 
246

 
0.1

 
318

CMI Parent Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
492

 
0.1

 
492

CMI Parent Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
5

 
5

 

 
5

CRH Healthcare Purchaser, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 
102

 
102

 

 
121

Elite Dental Partners LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 

 
161

 

 
91

ERG Buyer, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
165

 

 
63

ERG Buyer, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
2

 
2

 

 

Krueger-Gilbert Health Physics, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
46

 
46

 

 
53

MD Now Holdings, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
3

 
33

 

 
35

Summit Behavioral Healthcare, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 
14

 

 
3

Summit Behavioral Healthcare, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
1,283

 
0.2

 
1,199

Insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Orchid Underwriters Agency, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
18

 
18

 

 
23

Leisure, Amusement, Motion Pictures, Entertainment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
15

 
24

 

 
28

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
10

 
16

 

 
19

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
9

 
13

 

 
16

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
8

 
12

 

 
14

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
3

 
5

 

 
6

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 

 

 
1

 
 
 
 
 
 
 
 
 
 
 
 
70

 

 
84

Personal, Food and Miscellaneous Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blue River Pet Care, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
207

 
0.1

 
207

Captain D's, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
15

 
15

 

 
14

Midwest Veterinary Partners, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
13

 

 
13

Midwest Veterinary Partners, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
3

 

 

 

PPV Intermediate Holdings II, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
77

 
77

 

 
84

Ruby Slipper Cafe LLC, The#
LLC units
 
N/A
 
 
N/A
 
N/A
 
6

 
61

 

 
76

 
 
 
 
 
 
 
 
 
 
 
 
373

 
0.1

 
394

Retail Stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Ave. LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
157

 
157

 

 
157

Jet Equipment & Tools Ltd.#(7)(8)(10)
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
173

 
0.1

 
281

Pet Supplies Plus, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
34

 
34

 

 
50

Sola Franchise, LLC and Sola Salon Studios, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
1

 
88

 

 
126

Sola Franchise, LLC and Sola Salon Studios, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
18

 

 
26

 
 
 
 
 
 
 
 
 
 
 
 
470

 
0.1

 
640

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total equity investments

$
7,310


1.8

%
$
8,098

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total investments

$
792,116


$
789,136


178.9

%
$
797,693

 
 
 
 
 
 
 
 
 
 
 

See Notes to Consolidated Financial Statements.
19

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
Investment Type
 
Spread Above Index (1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Money market funds (included in cash and cash equivalents and restricted cash and cash equivalents)
 
  
 
  

 
  

 
  

 
  

BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718)
 
1.52% (16)
 
 
 
 
 
$
2,555

 
0.6

%
$
2,555

Total money market funds

$
2,555


0.6

%
$
2,555

 
 
 
 
 
 
 
 
 
 
 
Total investments and money market funds

$
791,691


179.5

%
$
800,248







See Notes to Consolidated Financial Statements.
20

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments (unaudited) - (continued)
December 31, 2019
(In thousands)


 
#
 
Denotes that all or a portion of the loan collateralizes the DB Credit Facility (as defined in Note 8).
(1)
The majority of the investments bear interest at a rate that is permitted to be determined by reference to the London Interbank Offered Rate (‘‘LIBOR’’ or ‘‘L’’) denominated in U.S. dollars or U.K. pound sterling (‘‘GBP’’), Euro Interbank Offered Rate (‘‘EURIBOR’’ or ‘‘E’’) or Prime (‘‘P’’) and which reset daily, monthly, quarterly, semiannually or annually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect as of December 31, 2019. Certain investments are subject to a LIBOR, EURIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable. Listed below are the index rates as of December 31, 2019, which was the last business day of the period on which LIBOR was determined. The actual index rate for each loan listed may not be the applicable index rate outstanding as of December 31, 2019, as the loan may have priced or repriced based on an index rate prior to December 31, 2019.
(a) Denotes that all or a portion of the loan was indexed to the 30-day LIBOR, which was 1.76% as of December 31, 2019.
(b) Denotes that all or a portion of the loan was indexed to the 60-day LIBOR, which was 1.83% as of December 31, 2019.
(c) Denotes that all or a portion of the loan was indexed to the 90-day LIBOR, which was 1.91% as of December 31, 2019.
(d) Denotes that all or a portion of the loan was indexed to the 180-day LIBOR, which was 1.91% as of December 31, 2019.
(e) Denotes that all or a portion of the loan was indexed to the 360-day LIBOR, which was 2.00% as of December 31, 2019.
(f) Denotes that all or a portion of the loan was indexed to the Prime rate, which was 4.75% as of December 31, 2019.
(g) Denotes that all or a portion of the loan was indexed to the 90-day EURIBOR, which was -0.38% as of December 31, 2019.
(h) Denotes that all or a portion of the loan was indexed to the 30-day GBP LIBOR, which was 0.70% as of December 31, 2019.
(i) Denotes that all or a portion of the loan was indexed to the 90-day GBP LIBOR, which was 0.79% as of December 31, 2019.
(j) Denotes that all or a portion of the loan was indexed to the Australia Three Month Interbank Rate, which was 0.97% as of December 31, 2019.
(2) 
For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect as of December 31, 2019.
(3) 
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
(4) 
The fair value of the investment was valued using significant unobservable inputs. See Note 7. Fair Value Measurements.
(5) 
The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(6) 
The entire commitment was unfunded as of December 31, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
(7) 
The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the ‘‘1940 Act’’). Under the 1940 Act, the Company can not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2019, total non-qualifying assets at fair value represented 3.9% of the Company’s assets calculated in accordance with the 1940 Act.
(8) 
Investment is denominated in foreign currency and is translated into U.S. dollars as of the valuation date or the date of the transaction. See Note 2. Significant Accounting Policies and Recent Accounting Updates - Foreign Currency Translation.
(9) 
The headquarters of this portfolio company is located in the United Kingdom.
(10) 
The headquarters of this portfolio company is located in Canada.
(11) 
The headquarters of this portfolio company is located in Australia.
(12) 
The headquarters of this portfolio company is located in Luxembourg.
(13) 
The sale of a portion of this loan does not qualify for sale accounting under ASC Topic 860 - Transfers and Servicing (‘‘ASC Topic 860’’), and therefore, the asset remains in the Consolidated Schedule of Investments. See Note 8. Borrowings.
(14) 
Equity investments are non-income producing securities unless otherwise noted.
(15) 
Ownership of certain equity investments occurs through a holding company or partnership.
(16) 
The rate shown is the annualized seven-day yield as of December 31, 2019.








See Notes to Consolidated Financial Statements.
21

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Investments
  
 
  
 
 
  
 
  
 
  

 
  

 
  

 
  

Debt investments
  
 
  
 
 
  
 
  
 
  

 
  

 
  

 
  

Automobile
  
 
  
 
 
  
 
  
 
  

 
  

 
  

 
  

Grease Monkey International, LLC
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
$
475

 
$
471

 
0.1

%
$
475

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
353

 
349

 
0.1

 
353

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
179

 
179

 
0.1

 
179

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
163

 
162

 
0.1

 
163

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
55

 
54

 

 
55

Grease Monkey International, LLC#
Senior loan
 
L + 5.00%
(a) 
 
7.04%
 
11/2022
 
19

 
17

 

 
19

JHCC Holdings LLC
One stop
 
L + 5.50%
(c) 
 
7.60%
 
09/2025
 
3,035

 
3,005

 
0.9

 
3,004

JHCC Holdings LLC#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
09/2025
 
10

 
9

 

 
9

JHCC Holdings LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
09/2025
 

 
(50
)
 

 
(51
)
Power Stop, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.85%
 
10/2025
 
675

 
672

 
0.2

 
675

Quick Quack Car Wash Holdings, LLC
One stop
 
L + 6.50%
(a) 
 
8.54%
 
04/2023
 
1,695

 
1,680

 
0.5

 
1,695

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.54%
 
04/2023
 
720

 
714

 
0.2

 
720

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.55%
 
04/2023
 
630

 
619

 
0.2

 
630

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.54%
 
04/2023
 
481

 
477

 
0.1

 
481

Quick Quack Car Wash Holdings, LLC#
One stop
 
L + 6.50%
(a) 
 
8.55%
 
04/2023
 
40

 
40

 

 
40

  
 
 
 
 
 
 
 
 
 
8,530

 
8,398

 
2.5

 
8,447

Beverage, Food and Tobacco
  
 
  
 
 
  
 
  
 
  

 
  

 
  

 
  

BJH Holdings III Corp.(12)
One stop
 
L + 5.75%
(a) 
 
7.79%
 
08/2025
 
19,400

 
19,079

 
5.6

 
19,206

BJH Holdings III Corp.#
One stop
 
L + 5.75%
(a) 
 
7.79%
 
08/2025
 
80

 
72

 

 
76

Fintech Midco, LLC
One stop
 
L + 5.25%
(a) 
 
7.30%
 
08/2024
 
4,934

 
4,894

 
1.4

 
4,934

Fintech Midco, LLC#
One stop
 
L + 5.25%
(a) 
 
7.30%
 
08/2024
 
444

 
441

 
0.1

 
444

Fintech Midco, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
08/2024
 

 
(1
)
 

 

Fintech Midco, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
08/2024
 

 
(8
)
 

 

Flavor Producers, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.85%
 
12/2023
 
441

 
436

 
0.1

 
405

Flavor Producers, LLC#(5)
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
12/2022
 

 
(1
)
 

 
(5
)
Mendocino Farms, LLC#
One stop
 
L + 8.50%
(a) 
 
3.04% cash/7.50% PIK
 
06/2023
 
267

 
265

 
0.1

 
267

Mendocino Farms, LLC#
One stop
 
L + 8.50%
(a) 
 
3.04% cash/7.50% PIK
 
06/2023
 
210

 
208

 
0.1

 
210

Mendocino Farms, LLC#(5)
One stop
 
L + 1.00%
 
 
N/A(6)
 
06/2023
 

 
(3
)
 

 

Wood Fired Holding Corp.
One stop
 
L + 5.75%
(c) 
 
8.06%
 
12/2023
 
3,186

 
3,159

 
0.9

 
3,186

Wood Fired Holding Corp.#
One stop
 
L + 5.75%
(c) 
 
7.85%
 
12/2023
 
20

 
19

 

 
20

Wood Fired Holding Corp.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
12/2023
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
28,982

 
28,558

 
8.3

 
28,743

Buildings and Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.80%
 
06/2023
 
12,808

 
12,705

 
3.7

 
12,808

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.80%
 
06/2023
 
6,825

 
6,774

 
2.0

 
6,825

MRI Software LLC#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
06/2023
 
2,516

 
2,504

 
0.7

 
2,516

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.80%
 
06/2023
 
2,428

 
2,404

 
0.7

 
2,428

MRI Software LLC
One stop
 
L + 5.75%
(a) 
 
7.80%
 
06/2023
 
316

 
314

 
0.1

 
316

MRI Software LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
06/2023
 

 
(16
)
 

 

 
 
 
 
 
 
 
 
 
 
24,893

 
24,685

 
7.2

 
24,893

Chemicals, Plastics and Rubber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inhance Technologies Holdings LLC
One stop
 
L + 5.25%
(c) 
 
7.57%
 
07/2024
 
2,511

 
2,486

 
0.7

 
2,511

Inhance Technologies Holdings LLC#
One stop
 
L + 5.25%
(c) 
 
7.57%
 
07/2024
 
333

 
326

 
0.1

 
333

Inhance Technologies Holdings LLC#
One stop
 
P + 4.25%
(f) 
 
9.25%
 
07/2024
 
50

 
49

 

 
50

 
 
 
 
 
 
 
 
 
 
2,894

 
2,861

 
0.8

 
2,894

Diversified/Conglomerate Manufacturing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blackbird Purchaser, Inc.
Senior loan
 
L + 4.50%
(c)(f) 
 
6.60%
 
04/2026
 
3,846

 
3,774

 
1.1

 
3,846

Blackbird Purchaser, Inc.#
Senior loan
 
L + 4.50%
(c)(f) 
 
6.60%
 
04/2026
 
251

 
228

 
0.1

 
251

Blackbird Purchaser, Inc.#
Senior loan
 
L + 4.50%
(c) 
 
6.60%
 
04/2024
 
35

 
33

 

 
35

Chase Industries, Inc.
Senior loan
 
L + 4.00%
(c)(f) 
 
6.10%
 
05/2025
 
1,966

 
1,938

 
0.6

 
1,966


See Notes to Consolidated Financial Statements.
22

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Manufacturing - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Chase Industries, Inc.#
Senior loan
 
L + 4.00%
(c) 
 
6.10%
 
05/2025
 
$
340

 
$
324

 
0.1

%
$
340

Chase Industries, Inc.#
Senior loan
 
L + 4.00%
(c)(f) 
 
6.10%
 
05/2023
 
153

 
152

 
0.1

 
153

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
1,980

 
1,952

 
0.6

 
1,980

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
506

 
499

 
0.2

 
506

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
483

 
476

 
0.1

 
483

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
479

 
472

 
0.1

 
479

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
446

 
439

 
0.1

 
446

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
409

 
403

 
0.1

 
409

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
307

 
302

 
0.1

 
307

Togetherwork Holdings, LLC
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
204

 
201

 
0.1

 
204

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
184

 
182

 
0.1

 
184

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
18

 
18

 

 
18

Togetherwork Holdings, LLC#
One stop
 
L + 6.25%
(a) 
 
8.29%
 
03/2025
 
17

 
16

 

 
17

Togetherwork Holdings, LLC#(5)
One stop
 
L + 6.25%
 
 
N/A(6)
 
03/2024
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
11,624

 
11,407

 
3.5

 
11,624

Diversified/Conglomerate Service
  
 
  
 
 
  
 
  
 
  

 
  

 
  

 
  

3ES Innovation, Inc.(7)(10)
One stop
 
L + 5.75%
(d) 
 
7.81%
 
05/2025
 
3,774

 
3,695

 
1.1

 
3,774

3ES Innovation, Inc.#(5)(7)(10)
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 
(2
)
 

 

Apptio, Inc.
One stop
 
L + 7.25%
(c) 
 
9.56%
 
01/2025
 
12,605

 
12,382

 
3.7

 
12,605

Apptio, Inc.#(5)
One stop
 
L + 7.25%
 
 
N/A(6)
 
01/2025
 

 
(2
)
 

 

Arch Global CCT Holdings Corp.
Senior loan
 
L + 4.75%
(a)(f) 
 
6.79%
 
04/2026
 
986

 
980

 
0.3

 
986

Arch Global CCT Holdings Corp.#
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
04/2025
 

 

 

 

Arch Global CCT Holdings Corp.#
Senior loan
 
L + 4.75%
 
 
N/A(6)
 
04/2026
 

 

 

 

Astute Holdings, Inc.
One stop
 
L + 6.00%
(a) 
 
8.04%
 
04/2025
 
2,813

 
2,787

 
0.8

 
2,813

Astute Holdings, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
04/2025
 
20

 
19

 

 
20

Astute Holdings, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
04/2025
 

 
(11
)
 

 

AutoQuotes, LLC
One stop
 
L + 5.75%
(c) 
 
7.88%
 
11/2024
 
2,326

 
2,306

 
0.7

 
2,326

AutoQuotes, LLC#
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 

 

 

Axiom Merger Sub Inc.#
One stop
 
L + 5.50%
(b)(c) 
 
7.85%
 
04/2026
 
1,164

 
1,145

 
0.3

 
1,164

Axiom Merger Sub Inc.#(7)(8)
One stop
 
E + 5.75%
(g) 
 
5.75%
 
04/2026
 
485

 
477

 
0.1

 
469

Axiom Merger Sub Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
04/2026
 

 
(1
)
 

 

Axiom Merger Sub Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
04/2026
 

 
(17
)
 

 

Bazaarvoice, Inc.
One stop
 
L + 5.75%
(a) 
 
7.79%
 
02/2024
 
8,418

 
8,311

 
2.5

 
8,418

Bazaarvoice, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
02/2024
 

 
(3
)
 

 

Bearcat Buyer, Inc.
Senior loan
 
L + 4.25%
(c) 
 
6.35%
 
07/2026
 
584

 
577

 
0.2

 
578

Bearcat Buyer, Inc.
Senior loan
 
L + 4.25%
(c) 
 
6.35%
 
07/2026
 
155

 
153

 
0.1

 
153

Bearcat Buyer, Inc.#
Senior loan
 
L + 4.25%
(c) 
 
6.35%
 
07/2026
 
65

 
63

 

 
63

Bearcat Buyer, Inc.#
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2024
 

 

 

 

Bullhorn, Inc.
One stop
 
L + 6.75%
(b) 
 
8.91%
 
11/2022
 
2,562

 
2,569

 
0.8

 
2,588

Bullhorn, Inc.
One stop
 
L + 6.75%
(b) 
 
8.91%
 
11/2022
 
614

 
615

 
0.2

 
620

Calabrio, Inc.
One stop
 
L + 6.50%
(c) 
 
8.60%
 
06/2025
 
22,076

 
21,867

 
6.4

 
22,076

Calabrio, Inc.#
One stop
 
L + 6.50%
(a) 
 
8.54%
 
06/2025
 
70

 
69

 

 
70

Caliper Software, Inc.
One stop
 
L + 6.00%
(c)(f) 
 
8.10%
 
11/2025
 
6,742

 
6,662

 
2.0

 
6,742

Caliper Software, Inc.#
One stop
 
L + 6.00%
(c) 
 
8.10%
 
11/2023
 
142

 
140

 

 
142

Centrify Corporation
One stop
 
L + 6.25%
(c) 
 
8.36%
 
08/2024
 
5,233

 
5,169

 
1.5

 
5,076

Centrify Corporation#
One stop
 
P + 5.25%
(f) 
 
10.25%
 
08/2024
 
150

 
148

 
0.1

 
146

Cloudbees, Inc.#
One stop
 
L + 9.00%
(a) 
 
10.60% cash/0.50% PIK
 
05/2023
 
842

 
826

 
0.3

 
838

Cloudbees, Inc.#
One stop
 
L + 9.00%
(a) 
 
10.54% cash/0.50% PIK
 
08/2021
 
494

 
490

 
0.1

 
480

Cloudbees, Inc.#
One stop
 
L + 8.50%
 
 
N/A(6)
 
05/2023
 

 

 

 

Confluence Technologies, Inc.#
One stop
 
L + 5.50%
(a) 
 
7.55%
 
03/2024
 
2,531

 
2,507

 
0.7

 
2,531

Confluence Technologies, Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
03/2024
 

 
(1
)
 

 


See Notes to Consolidated Financial Statements.
23

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Connexin Software, Inc.
One stop
 
L + 8.50%
(a) 
 
10.54%
 
02/2024
 
$
1,261

 
$
1,248

 
0.4

%
$
1,249

Connexin Software, Inc.#
One stop
 
L + 8.50%
 
 
N/A(6)
 
02/2024
 

 

 

 

Conservice, LLC
One stop
 
L + 5.25%
(a) 
 
7.29%
 
12/2024
 
893

 
885

 
0.3

 
893

Conservice, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
12/2024
 

 

 

 

Digital Guardian, Inc.#
One stop
 
L + 9.50%
(c) 
 
8.82% cash/3.00% PIK
 
06/2023
 
1,647

 
1,637

 
0.5

 
1,729

Digital Guardian, Inc.#
Subordinated debt
 
N/A
 
 
8.00% PIK
 
06/2023
 
2

 

 

 
2

Digital Guardian, Inc.#
One stop
 
L + 5.00%
 
 
N/A(6)
 
06/2023
 

 

 

 

Digital Guardian, Inc.#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
06/2023
 

 
(1
)
 

 
7

E2open, LLC
One stop
 
L + 5.75%
(c) 
 
7.87%
 
11/2024
 
22,942

 
22,596

 
6.7

 
22,942

E2open, LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 
(4
)
 

 

GS Acquisitionco, Inc.
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
13,304

 
13,155

 
3.8

 
13,138

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
4,427

 
4,382

 
1.3

 
4,372

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
1,158

 
1,146

 
0.3

 
1,144

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
1,069

 
1,058

 
0.3

 
1,055

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
669

 
662

 
0.2

 
661

GS Acquisitionco, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.80%
 
05/2024
 
25

 
24

 

 
23

HSI Halo Acquisition, Inc.
One stop
 
L + 5.75%
(c) 
 
7.87%
 
08/2026
 
969

 
957

 
0.3

 
959

HSI Halo Acquisition, Inc.#
One stop
 
L + 5.75%
 
 
N/A(6)
 
09/2025
 

 

 

 

HSI Halo Acquisition, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
08/2026
 

 
(3
)
 

 
(3
)
ICIMS, Inc.
One stop
 
L + 6.50%
(a) 
 
8.56%
 
09/2024
 
3,240

 
3,189

 
0.9

 
3,240

ICIMS, Inc.
One stop
 
L + 6.50%
(a) 
 
8.56%
 
09/2024
 
1,065

 
1,054

 
0.3

 
1,065

ICIMS, Inc.#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
09/2024
 

 
(1
)
 

 

Imprivata, Inc.
Senior loan
 
L + 4.00%
(c) 
 
6.10%
 
10/2023
 
1,159

 
1,149

 
0.3

 
1,159

Imprivata, Inc.#(5)
Senior loan
 
L + 4.00%
 
 
N/A(6)
 
10/2023
 

 
(1
)
 

 

Infogix, Inc.
One stop
 
L + 6.50%
(c) 
 
8.60%
 
04/2024
 
1,472

 
1,466

 
0.4

 
1,442

Infogix, Inc.
One stop
 
L + 6.50%
(c) 
 
8.60%
 
04/2024
 
231

 
228

 
0.1

 
226

Infogix, Inc.#
One stop
 
L + 6.50%
(c) 
 
8.60%
 
04/2024
 
13

 
13

 

 
12

Integral Ad Science, Inc.
One stop
 
L + 7.25%
(a) 
 
8.05% cash/1.25% PIK
 
07/2024
 
3,307

 
3,258

 
1.0

 
3,307

Integral Ad Science, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
07/2023
 

 
(1
)
 

 
(2
)
Integration Appliance, Inc.
One stop
 
L + 7.25%
(c) 
 
9.43%
 
08/2023
 
14,125

 
14,015

 
4.1

 
14,125

Integration Appliance, Inc.#
One stop
 
L + 7.25%
(a) 
 
9.29%
 
08/2023
 
1

 
1

 

 
1

Internet Truckstop Group LLC
One stop
 
L + 5.50%
(c) 
 
7.61%
 
04/2025
 
8,118

 
7,932

 
2.4

 
8,118

Internet Truckstop Group LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
04/2025
 

 
(3
)
 

 

Invoice Cloud, Inc.#
One stop
 
L + 6.50%
(c) 
 
5.43% cash/3.25% PIK
 
02/2024
 
1,077

 
1,068

 
0.3

 
1,077

Invoice Cloud, Inc.#
One stop
 
L + 6.00%
 
 
N/A(6)
 
02/2024
 

 

 

 

Invoice Cloud, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
02/2024
 

 
(8
)
 

 

JAMF Holdings, Inc.
One stop
 
L + 7.00%
(c) 
 
9.18%
 
11/2022
 
1,205

 
1,186

 
0.4

 
1,205

JAMF Holdings, Inc.#
One stop
 
L + 7.00%
(a) 
 
9.05%
 
11/2022
 
18

 
17

 

 
18

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(d) 
 
7.72% cash/1.00% PIK
 
05/2025
 
13,033

 
12,791

 
3.8

 
13,033

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(d) 
 
7.69% cash/1.00% PIK
 
05/2025
 
223

 
205

 
0.1

 
223

Kaseya Traverse Inc#
One stop
 
L + 6.50%
(c) 
 
8.60%
 
05/2025
 
30

 
28

 

 
30

Keais Records Service, LLC
One stop
 
L + 4.50%
(a) 
 
6.54%
 
10/2024
 
4,128

 
4,102

 
1.2

 
4,128

Keais Records Service, LLC#(5)
One stop
 
L + 4.50%
 
 
N/A(6)
 
10/2024
 

 
(1
)
 

 

Keais Records Service, LLC#(5)
One stop
 
L + 4.50%
 
 
N/A(6)
 
10/2024
 

 
(2
)
 

 

Learn-it Systems, LLC
Senior loan
 
L + 4.50%
(c) 
 
6.65%
 
03/2025
 
764

 
754

 
0.2

 
764

Learn-it Systems, LLC#
Senior loan
 
L + 4.50%
(c) 
 
6.61%
 
03/2025
 
14

 
6

 

 
14

Learn-it Systems, LLC#
Senior loan
 
L + 4.50%
(a)(c)(f) 
 
7.04%
 
03/2025
 
13

 
13

 

 
13

Litera Bidco LLC
One stop
 
L + 5.75%
(d) 
 
7.95%
 
05/2026
 
534

 
528

 
0.2

 
534

Litera Bidco LLC#
One stop
 
L + 5.75%
(d) 
 
7.96%
 
05/2026
 
278

 
275

 
0.1

 
278

Litera Bidco LLC#
One stop
 
L + 5.75%
(d) 
 
7.96%
 
05/2026
 
278

 
278

 
0.1

 
278

Litera Bidco LLC#
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 

 

 

MetricStream, Inc.#
One stop
 
L + 7.00%
(a) 
 
9.04%
 
05/2024
 
2,010

 
1,939

 
0.6

 
2,023


See Notes to Consolidated Financial Statements.
24

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MetricStream, Inc.#
One stop
 
L + 7.00%
 
 
N/A(6)
 
05/2024
 
$

 
$

 

%
$
1

MetricStream, Inc.#(5)
One stop
 
L + 7.00%
 
 
N/A(6)
 
04/2024
 

 
(4
)
 

 
6

Mindbody, Inc.#
One stop
 
L + 7.00%
(a) 
 
9.06%
 
02/2025
 
11,692

 
11,587

 
3.4

 
11,692

Mindbody, Inc.#(5)
One stop
 
L + 7.00%
 
 
N/A(6)
 
02/2025
 

 
(1
)
 

 

Ministry Brands, LLC
Senior loan
 
L + 4.00%
(a) 
 
6.04%
 
12/2022
 
224

 
223

 
0.1

 
224

Ministry Brands, LLC#
Senior loan
 
L + 4.00%
(a) 
 
6.04%
 
12/2022
 
132

 
131

 

 
132

Ministry Brands, LLC
Senior loan
 
L + 4.00%
(a) 
 
6.04%
 
12/2022
 
128

 
128

 

 
128

Namely, Inc.
One stop
 
L + 7.50%
(a) 
 
8.29% cash/1.25% PIK
 
06/2024
 
2,098

 
2,075

 
0.6

 
2,098

Namely, Inc.#
One stop
 
L + 6.25%
 
 
N/A(6)
 
06/2024
 

 

 

 

Namely, Inc.#(5)
One stop
 
L + 6.25%
 
 
N/A(6)
 
06/2024
 

 
(6
)
 

 

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.60%
 
12/2023
 
875

 
867

 
0.3

 
866

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.60%
 
12/2023
 
753

 
746

 
0.2

 
746

Net Health Acquisition Corp.
One stop
 
L + 5.50%
(c) 
 
7.60%
 
12/2023
 
112

 
111

 

 
111

Net Health Acquisition Corp.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 
(1
)
Nextech Holdings, LLC
One stop
 
L + 5.50%
(a) 
 
7.54%
 
06/2025
 
18,032

 
17,860

 
5.3

 
18,032

Nextech Holdings, LLC#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
06/2025
 
50

 
47

 

 
50

Nextech Holdings, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
06/2025
 

 
(8
)
 

 

Nexus Brands Group, Inc.
One stop
 
L + 6.00%
(c) 
 
8.12%
 
11/2023
 
595

 
590

 
0.2

 
595

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(c) 
 
8.10%
 
11/2023
 
296

 
295

 
0.1

 
296

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(c) 
 
8.10%
 
11/2023
 
214

 
213

 
0.1

 
214

Nexus Brands Group, Inc.#
One stop
 
L + 6.00%
(a)(c) 
 
8.13%
 
11/2023
 
80

 
79

 

 
80

Nexus Brands Group, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
11/2023
 

 
(2
)
 

 

Personify, Inc.
One stop
 
L + 5.75%
(c) 
 
7.85%
 
09/2024
 
3,510

 
3,481

 
1.0

 
3,510

Personify, Inc.#
One stop
 
L + 5.75%
(c) 
 
7.85%
 
09/2024
 
20

 
19

 

 
20

PlanSource Holdings, Inc.
One stop
 
L + 6.25%
(c) 
 
8.81%
 
04/2025
 
2,296

 
2,275

 
0.7

 
2,296

PlanSource Holdings, Inc.#(5)
One stop
 
L + 6.25%
 
 
N/A(6)
 
04/2025
 

 
(1
)
 

 

Project Power Buyer, LLC
One stop
 
L + 5.75%
(c) 
 
7.86%
 
05/2026
 
2,859

 
2,825

 
0.8

 
2,859

Project Power Buyer, LLC#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
05/2025
 

 
(1
)
 

 

Property Brands, Inc.
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
2,808

 
2,783

 
0.8

 
2,808

Property Brands, Inc.
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
1,134

 
1,124

 
0.3

 
1,134

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
925

 
917

 
0.3

 
925

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
399

 
395

 
0.1

 
399

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
339

 
336

 
0.1

 
339

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
338

 
335

 
0.1

 
338

Property Brands, Inc.#
One stop
 
L + 6.00%
(a) 
 
8.04%
 
01/2024
 
140

 
139

 

 
140

Property Brands, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
01/2024
 

 
(1
)
 

 

Property Brands, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
01/2024
 

 
(11
)
 

 

Qgenda Intermediate Holdings, LLC
One stop
 
L + 4.75%
(a) 
 
6.79%
 
06/2025
 
5,141

 
5,092

 
1.5

 
5,141

Qgenda Intermediate Holdings, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
06/2025
 

 
(1
)
 

 

RegEd Aquireco, LLC
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
12/2024
 
1,230

 
1,219

 
0.4

 
1,230

RegEd Aquireco, LLC#
Senior loan
 
P + 3.25%
(f) 
 
8.25%
 
12/2024
 
29

 
28

 

 
29

RegEd Aquireco, LLC#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
12/2024
 

 
(30
)
 

 

Saba Software, Inc.
Senior loan
 
L + 4.50%
(b) 
 
6.59%
 
05/2023
 
14,252

 
14,138

 
4.2

 
14,252

SnapLogic, Inc.(5)
One stop
 
L + 8.75%
(a) 
 
5.29% cash/5.50% PIK
 
09/2024
 
3

 
(4
)
 

 
3

SnapLogic, Inc.#(5)
One stop
 
L + 3.25%
 
 
N/A(6)
 
09/2024
 

 
(7
)
 

 
(7
)
SnapLogic, Inc.#
One stop
 
L + 3.25%
 
 
N/A(6)
 
09/2024
 

 

 

 

TI Intermediate Holdings, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.54%
 
12/2024
 
829

 
821

 
0.2

 
829

TI Intermediate Holdings, LLC#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 

 

 


See Notes to Consolidated Financial Statements.
25

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Diversified/Conglomerate Service - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transact Holdings, Inc.
Senior loan
 
L + 4.75%
(c) 
 
7.01%
 
04/2026
 
$
765

 
$
754

 
0.2

%
$
761

Transaction Data Systems, Inc.
One stop
 
L + 5.25%
(a) 
 
7.30%
 
06/2021
 
13,797

 
13,761

 
4.0

 
13,797

Transaction Data Systems, Inc.#
One stop
 
L + 5.25%
(a) 
 
7.30%
 
06/2021
 
12

 
12

 

 
12

Trintech, Inc.
One stop
 
L + 6.50%
(c) 
 
8.76%
 
12/2023
 
2,114

 
2,096

 
0.6

 
2,114

Trintech, Inc.
One stop
 
L + 6.50%
(c) 
 
8.76%
 
12/2023
 
1,052

 
1,042

 
0.3

 
1,052

Trintech, Inc.#
One stop
 
L + 6.50%
(c) 
 
8.69%
 
12/2023
 
60

 
59

 

 
60

True Commerce, Inc.
One stop
 
L + 5.75%
(c) 
 
7.85%
 
11/2023
 
1,311

 
1,300

 
0.4

 
1,311

True Commerce, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2023
 

 
(1
)
 

 

Upserve, Inc.#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
07/2023
 
908

 
903

 
0.3

 
908

Upserve, Inc.#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
07/2023
 
565

 
562

 
0.2

 
565

Upserve, Inc.#
One stop
 
L + 5.50%
 
 
N/A(6)
 
07/2023
 

 

 

 

Vector CS Midco Limited & Cloudsense Ltd.#(7)(8)(9)
One stop
 
L + 7.25%
(i) 
 
4.50% cash/2.75% PIK
 
05/2024
 
1,916

 
1,898

 
0.5

 
1,802

Vector CS Midco Limited & Cloudsense Ltd.#(5)(7)(8)(9)
One stop
 
L + 4.50%
 
 
N/A(6)
 
05/2024
 

 
(1
)
 

 

Velocity Technology Solutions, Inc.
One stop
 
L + 6.00%
(c) 
 
8.10%
 
12/2023
 
1,622

 
1,603

 
0.5

 
1,622

Velocity Technology Solutions, Inc.#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Workforce Software, LLC
One stop
 
L + 6.50%
(c) 
 
7.76% cash/1.00% PIK
 
07/2025
 
10,900

 
10,689

 
3.1

 
10,791

Workforce Software, LLC#(5)
One stop
 
L + 6.50%
 
 
N/A(6)
 
07/2025
 

 
(2
)
 

 
(1
)
 
 
 
 
 
 
 
 
 
 
286,108

 
282,615

 
83.4

 
285,469

Electronics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.
One stop
 
L + 5.50%
(c) 
 
7.60%
 
06/2026
 
8,649

 
8,487

 
2.5

 
8,649

Appriss Holdings, Inc.#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
06/2025
 

 
(4
)
 

 

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d) 
 
7.56%
 
04/2022
 
7,687

 
7,608

 
2.2

 
7,687

Diligent Corporation#
One stop
 
L + 5.50%
(c) 
 
7.81%
 
04/2022
 
3,720

 
3,682

 
1.1

 
3,720

Diligent Corporation
One stop
 
L + 5.50%
(c)(d) 
 
7.56%
 
04/2022
 
1,943

 
1,928

 
0.6

 
1,943

Diligent Corporation#
One stop
 
L + 5.50%
(d) 
 
7.73%
 
04/2022
 
1,365

 
1,314

 
0.4

 
1,365

Diligent Corporation#
One stop
 
L + 5.50%
(c) 
 
7.81%
 
04/2022
 
957

 
947

 
0.3

 
957

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d) 
 
7.64%
 
04/2022
 
721

 
708

 
0.2

 
721

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d) 
 
7.56%
 
04/2022
 
275

 
274

 
0.1

 
275

Diligent Corporation#
One stop
 
L + 5.50%
(c)(d) 
 
7.56%
 
04/2022
 
97

 
95

 

 
97

Episerver, Inc.#(7)(8)
One stop
 
L + 6.00%
(a) 
 
6.00%
 
10/2024
 
4,774

 
4,721

 
1.3

 
4,528

Episerver, Inc.#
One stop
 
L + 5.75%
(a) 
 
7.79%
 
10/2024
 
2,768

 
2,737

 
0.8

 
2,768

Episerver, Inc.#(5)
One stop
 
L + 5.75%
 
 
N/A(6)
 
10/2024
 

 
(2
)
 

 

Silver Peak Systems, Inc.
One stop
 
L + 7.00%
(a) 
 
9.03%
 
04/2024
 
1,461

 
1,442

 
0.4

 
1,462

Silver Peak Systems, Inc.#
One stop
 
L + 7.00%
 
 
N/A(6)
 
04/2024
 

 

 

 

Sovos Compliance
One stop
 
L + 4.75%
(a) 
 
6.79%
 
04/2024
 
7,513

 
7,375

 
2.2

 
7,513

Sovos Compliance
Second lien
 
N/A
 
 
12.00% PIK
 
04/2025
 
3,387

 
3,312

 
1.0

 
3,387

Sovos Compliance#
One stop
 
L + 4.75%
(a) 
 
6.79%
 
04/2024
 
735

 
728

 
0.2

 
735

Sovos Compliance#
Second lien
 
N/A
 
 
12.00% PIK
 
04/2025
 
511

 
499

 
0.1

 
511

Sovos Compliance#
One stop
 
L + 4.75%
(a) 
 
6.79%
 
04/2024
 
328

 
315

 
0.1

 
328

Sovos Compliance#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
04/2024
 

 
(2
)
 

 

 
 
 
 
 
 
 
 
 
 
46,891

 
46,164

 
13.5

 
46,646

Finance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional Shareholder Services
Senior loan
 
L + 4.50%
(c) 
 
6.60%
 
03/2026
 
6,445

 
6,385

 
1.9

 
6,380

Institutional Shareholder Services#
Senior loan
 
L + 4.50%
(c) 
 
6.60%
 
03/2024
 
57

 
56

 

 
53

 
 
 
 
 
 
 
 
 
 
6,502


6,441


1.9


6,433

Healthcare, Education and Childcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Medical Products, LLC
One stop
 
L + 5.25%
(a) 
 
7.30%
 
06/2025
 
980

 
971

 
0.3

 
980

Aspen Medical Products, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
06/2025
 

 

 

 

BIO18 Borrower, LLC
One stop
 
L + 5.25%
(a) 
 
7.30%
 
11/2024
 
1,772

 
1,753

 
0.5

 
1,772

BIO18 Borrower, LLC#
One stop
 
L + 5.25%
(a) 
 
7.30%
 
11/2024
 
33

 
32

 

 
33

BIO18 Borrower, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
11/2024
 

 
(22
)
 

 

Blades Buyer, Inc.
Senior loan
 
L + 4.50%
(b) 
 
6.75%
 
08/2025
 
495

 
491

 
0.1

 
491


See Notes to Consolidated Financial Statements.
26

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Healthcare, Education and Childcare - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blades Buyer, Inc.#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
08/2025
 
$

 
$

 

%
$

Blades Buyer, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
08/2025
 

 
(3
)
 

 
(3
)
CMI Parent Inc.
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
08/2025
 
14,650

 
14,508

 
4.2

 
14,504

CMI Parent Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
08/2025
 

 
(1
)
 

 
(2
)
CRH Healthcare Purchaser, Inc.
Senior loan
 
L + 4.50%
(c) 
 
6.60%
 
12/2024
 
2,546

 
2,524

 
0.7

 
2,546

CRH Healthcare Purchaser, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(1
)
 

 

CRH Healthcare Purchaser, Inc.#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(15
)
 

 

Elite Dental Partners LLC
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
744

 
736

 
0.2

 
707

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
652

 
645

 
0.2

 
619

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
611

 
604

 
0.2

 
581

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
583

 
576

 
0.2

 
554

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
559

 
553

 
0.2

 
531

Elite Dental Partners LLC#
One stop
 
L + 5.25%
(a) 
 
7.29%
 
06/2023
 
100

 
99

 

 
95

Elite Dental Partners LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
06/2023
 

 
(30
)
 

 

ERG Buyer, LLC
One stop
 
L + 5.50%
(c) 
 
7.60%
 
05/2024
 
2,313

 
2,286

 
0.7

 
2,244

ERG Buyer, LLC#
One stop
 
P + 4.50%
(f) 
 
9.50%
 
05/2024
 
10

 
8

 

 
6

ERG Buyer, LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
05/2024
 

 
(44
)
 

 

eSolutions, Inc.
One stop
 
L + 6.50%
(a) 
 
8.54%
 
03/2022
 
22,875

 
22,672

 
6.7

 
22,875

Eyecare Services Partners Holdings LLC#
One stop
 
L + 6.25%
(c) 
 
8.55%
 
05/2023
 
1,494

 
1,383

 
0.4

 
1,464

Eyecare Services Partners Holdings LLC#
One stop
 
L + 6.25%
(c) 
 
8.35%
 
05/2023
 
1,125

 
1,121

 
0.3

 
1,102

Silver Peak Systems, Inc.#
One stop
 
L + 4.75%
(b) 
 
7.02%
 
05/2025
 
481

 
476

 
0.1

 
481

Krueger-Gilbert Health Physics, LLC
One stop
 
L + 4.75%
(c) 
 
6.85%
 
05/2025
 
130

 
128

 

 
130

Krueger-Gilbert Health Physics, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
05/2025
 

 
(12
)
 

 

Krueger-Gilbert Health Physics, LLC#
One stop
 
L + 4.75%
 
 
N/A(6)
 
05/2025
 

 

 

 

MD Now Holdings, Inc.
One stop
 
L + 5.00%
(c) 
 
7.10%
 
08/2024
 
2,927

 
2,904

 
0.9

 
2,927

MD Now Holdings, Inc.#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(1
)
 

 

MD Now Holdings, Inc.#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2024
 

 
(7
)
 

 

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.79%
 
11/2023
 
442

 
437

 
0.1

 
442

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.79%
 
11/2023
 
152

 
151

 

 
152

ONsite Mammography, LLC#
One stop
 
L + 6.75%
(a) 
 
8.79%
 
11/2023
 
50

 
50

 

 
50

Summit Behavioral Healthcare, LLC
Senior loan
 
L + 4.75%
(c) 
 
6.87%
 
10/2023
 
1,300

 
1,287

 
0.4

 
1,235

Summit Behavioral Healthcare, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.87%
 
10/2023
 
140

 
138

 

 
133

Summit Behavioral Healthcare, LLC#
Senior loan
 
L + 4.75%
(c) 
 
6.87%
 
10/2023
 
64

 
59

 

 
61

Upstream Intermediate, LLC
Senior loan
 
L + 4.00%
(a) 
 
6.04%
 
01/2024
 
626

 
624

 
0.2

 
626

 
 
 
 
 
 
 
 
 
 
57,854

 
57,080

 
16.6

 
57,336

Hotels, Motels, Inns, and Gaming
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Davidson Hotel Company, LLC
One stop
 
L + 5.25%
(a) 
 
7.29%
 
07/2024
 
2,116

 
2,096

 
0.6

 
2,095

Davidson Hotel Company, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2024
 

 

 

 
(1
)
Davidson Hotel Company, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2024
 

 

 

 
(4
)
Davidson Hotel Company, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2024
 

 
(5
)
 

 
(11
)
 
 
 
 
 
 
 
 
 
 
2,116

 
2,091

 
0.6

 
2,079

Insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Integrity Marketing Acquisition, LLC
Senior loan
 
L + 5.75%
(c) 
 
7.88%
 
08/2025
 
366

 
361

 
0.1

 
360

Integrity Marketing Acquisition, LLC#
Senior loan
 
L + 5.75%
 
 
N/A(6)
 
08/2025
 

 

 

 

Integrity Marketing Acquisition, LLC#(5)
Senior loan
 
L + 5.75%
 
 
N/A(6)
 
08/2025
 

 
(2
)
 

 
(5
)
Integrity Marketing Acquisition, LLC#(5)
Senior loan
 
L + 5.75%
 
 
N/A(6)
 
08/2025
 

 
(1
)
 

 
(3
)
J.S. Held Holdings, LLC
One stop
 
L + 6.00%
(c) 
 
8.10%
 
07/2025
 
17,584

 
17,165

 
5.1

 
17,584

J.S. Held Holdings, LLC#
One stop
 
P + 5.00%
(f) 
 
10.00%
 
07/2025
 
14

 
9

 

 
14

J.S. Held Holdings, LLC#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
07/2025
 

 
(20
)
 

 

Orchid Underwriters Agency, LLC
Senior loan
 
L + 4.50%
(c) 
 
6.70%
 
12/2024
 
815

 
808

 
0.2

 
815

Orchid Underwriters Agency, LLC#
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 

 

 

Orchid Underwriters Agency, LLC#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2024
 

 
(4
)
 

 


See Notes to Consolidated Financial Statements.
27

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Insurance - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RSC Acquisition, Inc.#
Senior loan
 
L + 4.25%
(a)(b)(c)(f) 
 
6.40%
 
11/2022
 
$
7,873

 
$
7,801

 
2.3

%
$
7,873

RSC Acquisition, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
11/2022
 

 
(62
)
 

 

 
 
 
 
 
 
 
 
 
 
26,652


26,055


7.7


26,638

Leisure, Amusement, Motion Pictures, Entertainment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CR Fitness Holdings, LLC
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
07/2025
 
319

 
316

 
0.1

 
319

CR Fitness Holdings, LLC#
Senior loan
 
L + 4.25%
(c) 
 
6.55%
 
07/2025
 
26

 
23

 

 
26

CR Fitness Holdings, LLC#
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2025
 

 

 

 

EOS Fitness Opco Holdings, LLC
One stop
 
L + 4.75%
(c) 
 
6.85%
 
01/2025
 
1,755

 
1,740

 
0.5

 
1,755

EOS Fitness Opco Holdings, LLC#
One stop
 
L + 4.75%
(c) 
 
6.86%
 
01/2025
 
136

 
130

 

 
136

EOS Fitness Opco Holdings, LLC#
One stop
 
P + 3.75%
(f) 
 
8.75%
 
01/2025
 
6

 
5

 

 
6

Planet Fit Indy 10 LLC
One stop
 
L + 5.25%
(c) 
 
7.35%
 
07/2025
 
13,423

 
13,342

 
3.9

 
13,423

Planet Fit Indy 10 LLC#
One stop
 
L + 5.25%
(c) 
 
7.46%
 
07/2025
 
3,664

 
3,619

 
1.1

 
3,664

Planet Fit Indy 10 LLC#
One stop
 
L + 5.25%
(c) 
 
7.35%
 
07/2025
 
15

 
14

 

 
15

Planet Fit Indy 10 LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
07/2025
 

 
(12
)
 

 

Sunshine Sub, LLC
One stop
 
L + 4.75%
(a) 
 
6.79%
 
05/2024
 
1,994

 
1,963

 
0.6

 
1,994

Sunshine Sub, LLC#
One stop
 
L + 4.75%
(a) 
 
6.79%
 
05/2024
 
1,952

 
1,923

 
0.6

 
1,952

Sunshine Sub, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
05/2024
 

 
(1
)
 

 

Titan Fitness, LLC
One stop
 
L + 4.75%
(a) 
 
6.88%
 
02/2025
 
6,723

 
6,663

 
2.0

 
6,723

Titan Fitness, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
02/2025
 

 
(13
)
 

 

Titan Fitness, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
02/2025
 

 
(2
)
 

 

WBZ Investment LLC
One stop
 
L + 5.50%
(a) 
 
7.54%
 
09/2024
 
1,434

 
1,422

 
0.4

 
1,434

WBZ Investment LLC#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
09/2024
 
331

 
328

 
0.1

 
331

WBZ Investment LLC#
One stop
 
L + 5.50%
(a) 
 
7.54%
 
09/2024
 
178

 
171

 
0.1

 
178

WBZ Investment LLC#
One stop
 
P + 4.50%
(f) 
 
9.50%
 
09/2024
 
5

 
5

 

 
5

 
 
 
 
 
 
 
 
 
 
31,961


31,636


9.4


31,961

Oil and Gas
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drilling Info Holdings, Inc.
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
07/2025
 
8,781

 
8,688

 
2.6

 
8,781

Drilling Info Holdings, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2023
 

 
(1
)
 

 

Drilling Info Holdings, Inc.#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
07/2025
 

 
(10
)
 

 

 
 
 
 
 
 
 
 
 
 
8,781


8,677


2.6


8,781

Personal and Non Durable Products (Mfg. Only)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WU Holdco, Inc.
One stop
 
L + 5.50%
(c) 
 
7.60%
 
03/2026
 
936

 
927

 
0.3

 
936

WU Holdco, Inc.#
One stop
 
L + 5.50%
(c) 
 
7.62%
 
03/2026
 
24

 
24

 

 
24

WU Holdco, Inc.#
One stop
 
L + 5.50%
 
 
N/A(6)
 
03/2025
 

 

 

 

 
 
 
 
 
 
 
 
 
 
960


951


0.3


960

Personal, Food and Miscellaneous Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blue River Pet Care, LLC
One stop
 
L + 5.00%
(c)(d) 
 
7.04%
 
07/2026
 
4,610

 
4,565

 
1.3

 
4,564

Blue River Pet Care, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
07/2026
 

 
(51
)
 

 
(52
)
Blue River Pet Care, LLC#(5)
One stop
 
L + 5.00%
 
 
N/A(6)
 
08/2025
 

 
(2
)
 

 
(2
)
Captain D's, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.54%
 
12/2023
 
1,242

 
1,229

 
0.4

 
1,242

Captain D's, LLC#
Senior loan
 
L + 4.50%
(a)(f) 
 
7.48%
 
12/2023
 
45

 
44

 

 
45

Clarkson Eyecare LLC
One stop
 
L + 6.25%
(c) 
 
8.35%
 
04/2021
 
6,649

 
6,597

 
1.9

 
6,515

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(c) 
 
8.35%
 
04/2021
 
3,628

 
3,605

 
1.0

 
3,555

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(c)(f) 
 
8.38%
 
04/2021
 
3,160

 
3,140

 
0.9

 
3,097

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(c) 
 
8.35%
 
04/2021
 
3,121

 
3,101

 
0.9

 
3,058

Clarkson Eyecare LLC#
One stop
 
L + 6.25%
(c) 
 
8.38%
 
04/2021
 
3,068

 
3,004

 
0.8

 
2,903

Clarkson Eyecare LLC
One stop
 
L + 6.25%
(c) 
 
8.37%
 
04/2021
 
2,058

 
2,019

 
0.6

 
2,017

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b)(c) 
 
6.87%
 
08/2023
 
1,459

 
1,439

 
0.4

 
1,445

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b) 
 
6.86%
 
08/2023
 
753

 
745

 
0.2

 
746

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b) 
 
6.84%
 
08/2023
 
577

 
543

 
0.2

 
542

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b) 
 
6.84%
 
08/2023
 
490

 
485

 
0.1

 
486

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b) 
 
6.90%
 
08/2023
 
446

 
441

 
0.1

 
442


See Notes to Consolidated Financial Statements.
28

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Personal, Food and Miscellaneous Services - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
(b) 
 
6.84%
 
08/2023
 
$
148

 
$
147

 

%
$
147

Imperial Optical Midco Inc.#
One stop
 
L + 4.75%
 
 
N/A(6)
 
08/2023
 

 

 

 

Midwest Veterinary Partners, LLC
One stop
 
L + 4.75%
(a) 
 
6.79%
 
07/2025
 
250

 
247

 
0.1

 
248

Midwest Veterinary Partners, LLC#
One stop
 
L + 4.75%
(a)(b) 
 
6.81%
 
07/2025
 
68

 
66

 

 
66

Midwest Veterinary Partners, LLC#(5)
One stop
 
L + 4.75%
 
 
N/A(6)
 
07/2025
 

 
(38
)
 

 
(40
)
PPV Intermediate Holdings II, LLC#
One stop
 
L + 5.00%
(c) 
 
7.56%
 
05/2020
 
798

 
787

 
0.2

 
798

PPV Intermediate Holdings II, LLC#
One stop
 
P + 4.00%
(f) 
 
9.00%
 
05/2023
 
9

 
8

 

 
9

PPV Intermediate Holdings II, LLC#
One stop
 
N/A
 
 
7.90% PIK
 
05/2023
 
8

 
8

 

 
8

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.60%
 
01/2023
 
170

 
167

 

 
170

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.60%
 
01/2023
 
59

 
59

 

 
59

Ruby Slipper Cafe LLC, The#
One stop
 
L + 7.50%
(c) 
 
9.60%
 
01/2023
 
5

 
5

 

 
5

Veterinary Specialists of North America, LLC
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
04/2025
 
17,096

 
16,939

 
5.0

 
17,096

Veterinary Specialists of North America, LLC#
Senior loan
 
L + 4.25%
(a) 
 
6.29%
 
04/2025
 
626

 
620

 
0.2

 
626

Veterinary Specialists of North America, LLC#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
04/2025
 

 
(5
)
 

 

Veterinary Specialists of North America, LLC#(5)
Senior loan
 
L + 4.25%
 
 
N/A(6)
 
04/2025
 

 
(58
)
 

 

 
 
 
 
 
 
 
 
 
 
50,543


49,856


14.3


49,795

Printing and Publishing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Messenger, LLC
One stop
 
L + 6.00%
(a)(f) 
 
8.05%
 
08/2023
 
2,051

 
2,035

 
0.6

 
2,031

Messenger, LLC#
One stop
 
P + 5.00%
(f) 
 
10.00%
 
08/2023
 
18

 
18

 

 
18

Messenger, LLC#(5)
One stop
 
L + 6.00%
 
 
N/A(6)
 
08/2023
 

 
(1
)
 

 
(1
)
 
 
 
 
 
 
 
 
 
 
2,069


2,052


0.6


2,048

Retail Stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Ave. LLC
One stop
 
L + 5.50%
(c) 
 
7.65%
 
09/2025
 
1,390

 
1,377

 
0.4

 
1,377

2nd Ave. LLC#(5)
One stop
 
L + 5.50%
 
 
N/A(6)
 
09/2025
 

 

 

 
(1
)
Jet Equipment & Tools Ltd.#(7)(8)(10)
One stop
 
L + 5.75%
(a) 
 
7.70%
 
11/2024
 
4,300

 
4,254

 
1.2

 
4,250

Jet Equipment & Tools Ltd.(7)(10)
One stop
 
L + 5.75%
(a) 
 
7.79%
 
11/2024
 
3,390

 
3,359

 
1.0

 
3,390

Jet Equipment & Tools Ltd.(7)(10)
One stop
 
L + 5.75%
(a) 
 
7.79%
 
11/2024
 
1,042

 
1,033

 
0.3

 
1,042

Jet Equipment & Tools Ltd.#(5)(7)(8)(10)
One stop
 
L + 5.75%
 
 
N/A(6)
 
11/2024
 

 
(1
)
 

 

Pet Supplies Plus, LLC
Senior loan
 
L + 4.50%
(a) 
 
6.54%
 
12/2024
 
3,341

 
3,312

 
1.0

 
3,341

Pet Supplies Plus, LLC#(5)
Senior loan
 
L + 4.50%
 
 
N/A(6)
 
12/2023
 

 
(1
)
 

 

Sola Franchise, LLC and Sola Salon Studios, LLC
One stop
 
L + 5.25%
(c) 
 
7.35%
 
10/2024
 
934

 
926

 
0.3

 
934

Sola Franchise, LLC and Sola Salon Studios, LLC#
One stop
 
L + 5.25%
(c) 
 
7.35%
 
10/2024
 
677

 
671

 
0.2

 
677

Sola Franchise, LLC and Sola Salon Studios, LLC#
One stop
 
L + 5.25%
 
 
N/A(6)
 
10/2024
 

 

 

 

Sola Franchise, LLC and Sola Salon Studios, LLC#(5)
One stop
 
L + 5.25%
 
 
N/A(6)
 
10/2024
 

 
(7
)
 

 

Vermont Aus Pty Ltd#(7)(8)(11)
One stop
 
L + 5.75%
(j) 
 
6.75%
 
12/2024
 
439

 
431

 
0.1

 
428

Vermont Aus Pty Ltd#(7)(8)(11)
One stop
 
L + 5.75%
(j) 
 
6.75%
 
12/2024
 
10

 
7

 

 
10

 
 
 
 
 
 
 
 
 
 
15,523


15,361


4.5


15,448

Total debt investments
 
$
612,883

 
$
604,888

 
177.7

%
$
610,195


See Notes to Consolidated Financial Statements.
29

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Equity investments(13)(14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Automobile
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Grease Monkey International, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
73

 
$
73

 
0.1

%
$
159

Quick Quack Car Wash Holdings, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
93

 

 
108

 
 
 
 
 
 
 
 
 
 
 
 
166

 
0.1

 
267

Beverage, Food and Tobacco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mendocino Farms, LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 
59

 
257

 
0.1

 
257

Wood Fired Holding Corp.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
103

 
103

 

 
102

Wood Fired Holding Corp.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
103

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
360

 
0.1

 
359

Chemicals, Plastics and Rubber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Inhance Technologies Holdings LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
34

 

 
22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified/Conglomerate Service
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Astute Holdings, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
83

 

 
102

Calabrio, Inc.#
Common stock
 
N/A
 
 
N/A
 
N/A
 
58

 
444

 
0.1

 
444

Caliper Software, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
1

 
596

 
0.2

 
683

Caliper Software, Inc.#
Common stock
 
N/A
 
 
N/A
 
N/A
 
53

 
53

 

 
77

Caliper Software, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 
8

 

 
9

Centrify Corporation#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
170

 
0.1

 
139

Centrify Corporation#
LP interest
 
N/A
 
 
N/A
 
N/A
 
60

 

 

 

Cloudbees, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
15

 
93

 

 
93

Cloudbees, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
19

 
27

 

 
49

Confluence Technologies, Inc.#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 
32

 

 
58

Connexin Software, Inc.#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
26

 
26

 

 
37

Digital Guardian, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
725

 
87

 

 
85

Digital Guardian, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
248

 
43

 

 
46

Digital Guardian, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
150

 
27

 

 
29

Digital Guardian, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
25

 
4

 

 
8

GS Acquisitionco, Inc.#(14)
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
44

 

 
75

Internet Truckstop Group LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
146

 
146

 
0.1

 
157

MetricStream, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
44

 
67

 

 
67

Namely, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
8

 
14

 

 
13

Net Health Acquisition Corp.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
126

 
0.1

 
133

Nexus Brands Group, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
40

 

 
41

Personify, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
145

 
145

 
0.1

 
216

Pride Midco, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
1

 
556

 
0.2

 
629

Property Brands, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
11

 
106

 
0.1

 
142

RegEd Aquireco, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 

 
70

 

 
75

RegEd Aquireco, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
1

 

 

 
6

SnapLogic, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 
43

 
108

 

 
108

SnapLogic, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
16

 
6

 

 
6

 
 
 
 
 
 
 
 
 
 
 
 
3,121


1.0


3,527

Electronics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.#
Preferred stock
 
N/A
 
 
N/A
 
N/A
 

 
52

 

 
59

Episerver, Inc.#
Common stock
 
N/A
 
 
N/A
 
N/A
 
17

 
173

 
0.1

 
185

Silver Peak Systems, Inc.#
Warrant
 
N/A
 
 
N/A
 
N/A
 
17

 
6

 

 
6

 
 
 
 
 
 
 
 
 
 
 
 
231


0.1


250

Healthcare, Education and Childcare
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aspen Medical Products, LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 

 
17

 

 
17

BIO18 Borrower, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
141

 
246

 
0.1

 
304

CMI Parent Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
492

 
0.1

 
492

CMI Parent Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
5

 
5

 

 
5


See Notes to Consolidated Financial Statements.
30

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

 
Investment
Type
 
Spread
Above
Index(1)
 
Interest
Rate(2)
 
Maturity
Date
 
Principal ($) /
Shares
(3)
 
Amortized Cost
 
Percentage
of Net
Assets
 
Fair
Value (4)
Healthcare, Education and Childcare - (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CRH Healthcare Purchaser, Inc.#
LP interest
 
N/A
 
 
N/A
 
N/A
 
$
102

 
$
102

 

%
$
115

Elite Dental Partners LLC#
Common stock
 
N/A
 
 
N/A
 
N/A
 

 
161

 
0.1

 
136

ERG Buyer, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
165

 

 
104

ERG Buyer, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
2

 
2

 

 

Krueger-Gilbert Health Physics, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
40

 
40

 

 
46

MD Now Holdings, Inc.#
LLC units
 
N/A
 
 
N/A
 
N/A
 
3

 
33

 

 
35

Summit Behavioral Healthcare, LLC#(14)
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 
14

 

 
5

Summit Behavioral Healthcare, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
1,277


0.3


1,259

Insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Orchid Underwriters Agency, LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
18

 
18

 

 
23

 
 
 
 
 
 
 
 
 
 
 
 


 


 


Leisure, Amusement, Motion Pictures, Entertainment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
15

 
24

 

 
28

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
10

 
16

 

 
19

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
9

 
13

 

 
15

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
8

 
12

 

 
13

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
3

 
5

 

 
6

WBZ Investment LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 

 

 

 
1

 
 
 
 
 
 
 
 
 
 
 
 
70




82

Personal, Food and Miscellaneous Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Blue River Pet Care, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
207

 
0.1

 
207

Captain D's, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
15

 
15

 

 
13

Midwest Veterinary Partners, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
13

 

 
13

Midwest Veterinary Partners, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
3

 

 

 

PPV Intermediate Holdings II, LLC#
LLC interest
 
N/A
 
 
N/A
 
N/A
 
72

 
72

 

 
69

Ruby Slipper Cafe LLC, The#
LLC units
 
N/A
 
 
N/A
 
N/A
 
6

 
61

 

 
79

 
 
 
 
 
 
 
 
 
 
 
 
368

 
0.1

 
381

Retail Stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Ave. LLC#
LP interest
 
N/A
 
 
N/A
 
N/A
 
157

 
157

 
0.1

 
157

Jet Equipment & Tools Ltd.#(7)(8)(10)
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
173

 
0.1

 
263

Pet Supplies Plus, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
34

 
34

 

 
49

Sola Franchise, LLC and Sola Salon Studios, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 
1

 
88

 
0.1

 
129

Sola Franchise, LLC and Sola Salon Studios, LLC#
LLC units
 
N/A
 
 
N/A
 
N/A
 

 
18

 

 
26

 
 
 
 
 
 
 
 
 
 
 
 
470


0.3


624

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total equity investments
 


 
$
6,115


2.0

%
$
6,794

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total investments
 
$
612,883

 
$
611,003

 
179.7

%
$
616,989

 
 
 
 
 
 
 
 
 
 
 
Money market funds (included in cash and cash equivalents and restricted cash and cash equivalents)
 
  

 
  

 
  

 
  

BlackRock Liquidity Funds T-Fund Institutional Shares (CUSIP 09248U718)
 
1.81% (15)
 
 
 
 
 
$
2,925

 
0.9

%
$
2,925

Total money market funds
 
$
2,925

 
0.9

%
$
2,925

 
 
 
 
 
 
 
 
 
 
 
Total investments and money market funds
 
 
 
 
 
 
 
$
613,928

 
180.6

%
$
619,914

 
#
 
Denotes that all or a portion of the loan collateralizes the DB Credit Facility (as defined in Note 8).
(1) 
The majority of the investments bear interest at a rate that is permitted to be determined by reference to the LIBOR (‘‘L’’) denominated in U.S. dollars or GBP, EURIBOR (‘‘E’’ ) or Prime (‘‘P’’) and which reset daily, monthly, quarterly, semiannually or annually. For each, the Company has provided the spread over LIBOR or Prime and the weighted average current interest rate in effect as of September 30, 2019. Certain investments are subject to a LIBOR, EURIBOR or Prime interest rate floor. For fixed rate loans, a spread above a reference rate is not applicable. Listed below are the index rates as of September 30, 2019, which was the last business day of the period on which LIBOR was determined. The actual index rate for each loan listed may not be the applicable index rate outstanding as of September 30, 2019, as the loan may have priced or repriced based on an index rate prior to September 30, 2019.

See Notes to Consolidated Financial Statements.
31

Golub Capital BDC 3, Inc. and Subsidiaries
Consolidated Schedule of Investments
September 30, 2019
(In thousands)

(a) Denotes that all or a portion of the loan was indexed to the 30-day LIBOR, which was 2.02% as of September 30, 2019.
(b) Denotes that all or a portion of the loan was indexed to the 60-day LIBOR, which was 2.07% as of September 30, 2019.
(c) Denotes that all or a portion of the loan was indexed to the 90-day LIBOR, which was 2.09% as of September 30, 2019.
(d) Denotes that all or a portion of the loan was indexed to the 180-day LIBOR, which was 2.06% as of September 30, 2019.
(e) Denotes that all or a portion of the loan was indexed to the 360-day LIBOR, which was 2.03% as of September 30, 2019.
(f) Denotes that all or a portion of the loan was indexed to the Prime rate, which was 5.00% as of September 30, 2019.
(g) Denotes that all or a portion of the loan was indexed to the 90-day EURIBOR, which was -0.44% as of September 30, 2019.
(h) Denotes that all or a portion of the loan was indexed to the 30-day GBP LIBOR, which was 0.72% as of September 30, 2019.
(i) Denotes that all or a portion of the loan was indexed to the 90-day GBP LIBOR, which was 0.76% as of September 30, 2019.
(2) 
For portfolio companies with multiple interest rate contracts, the interest rate shown is a weighted average current interest rate in effect as of September 30, 2019.
(3) 
The total principal amount is presented for debt investments while the number of shares or units owned is presented for equity investments.
(4) 
The fair value of the investment was valued using significant unobservable inputs. See Note 7. Fair Value Measurements.
(5) 
The negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued below par. The negative amortized cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(6) 
The entire commitment was unfunded as of September 30, 2019. As such, no interest is being earned on this investment. The investment may be subject to an unused facility fee.
(7) 
The investment is treated as a non-qualifying asset under Section 55(a) of the Investment Company Act of 1940, as amended (the ‘‘1940 Act’’). Under the 1940 Act, the Company can not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2019, total non-qualifying assets at fair value represented 3.9% of the Company’s assets calculated in accordance with the 1940 Act.
(8) 
Investment is denominated in foreign currency and is translated into U.S. dollars as of the valuation date or the date of the transaction. See Note 2. Significant Accounting Policies and Recent Accounting Updates - Foreign Currency Translation.
(9) 
The headquarters of this portfolio company is located in the United Kingdom.
(10) 
The headquarters of this portfolio company is located in Canada.
(11) 
The headquarters of this portfolio company is located in Australia.
(12) 
The sale of a portion of this loan does not qualify for sale accounting under ASC Topic 860 - Transfers and Servicing (‘‘ASC Topic 860’’), and therefore, the asset remains in the Consolidated Schedule of Investments. See Note 8. Borrowings.
(13) 
Equity investments are non-income producing securities unless otherwise noted.
(14) 
Ownership of certain equity investments occurs through a holding company or partnership.
(15) 
The rate shown is the annualized seven-day yield as of September 30, 2019.

See Notes to Consolidated Financial Statements.
32

Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


Note 1.    Organization

Golub Capital BDC 3, Inc. (“GBDC 3” and, collectively with its subsidiaries, the “Company”) is an externally managed, closed-end, non-diversified management investment company that was formed on August 1, 2017 and elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), on September 29, 2017. On October 2, 2017, the date of the commencement of operations, the Company entered into subscription agreements (collectively, the “Subscription Agreements”) to sell shares of GBDC 3's common stock in private placements. In addition, for U.S. federal income tax purposes, GBDC 3 has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company’s investment strategy is to invest primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche loans) and other senior secured loans of U.S. middle-market companies that are, in most cases, sponsored by private equity firms. The Company also selectively invests in second lien and subordinated (a loan that ranks senior only to a borrower’s equity securities and ranks junior to all of such borrower’s other indebtedness in priority of payment) loans of, and warrants and minority equity securities in, primarily U.S. middle-market companies. The Company has entered into an investment advisory agreement (the “Investment Advisory Agreement”) with GC Advisors LLC (the “Investment Adviser”), under which the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. Under an administration agreement (the “Administration Agreement”) the Company is provided with certain services by an administrator (the “Administrator”), which is currently Golub Capital LLC.

Note 2.    Significant Accounting Policies and Recent Accounting Updates

Basis of presentation: The Company is an investment company as defined in the accounting and reporting guidance under Accounting Standards Codification (“ASC”) Topic 946 - Financial Services - Investment Companies (“ASC Topic 946”).

The accompanying interim consolidated financial statements of the Company and related financial information have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as established by the Financial Accounting Standards Board (“FASB”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements.

In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications consisting solely of normal accruals that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. The unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto in the Company’s Form 10-K for the year ended September 30, 2019, as filed with the U.S. Securities and Exchange Commission (the “SEC”).

Fair value of financial instruments: The Company applies fair value to all of its financial instruments in accordance with ASC Topic 820 - Fair Value Measurement (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity-specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

33


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)



The availability of observable inputs can vary depending on the financial instrument and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market and the current market conditions. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for financial instruments classified as Level 3.

Any changes to the valuation methodology are reviewed by management and the Company’s board of directors (the “Board”) to confirm that the changes are appropriate. As markets change, new products develop and the pricing for products becomes more or less transparent, the Company will continue to refine its valuation methodologies. See further description of fair value methodology in Note 7, Fair Value Measurements.

Use of estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation: As provided under ASC Topic 946 and Regulation S-X, the Company will generally not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly owned subsidiaries, GBDC 3 Holdings LLC (“GBDC 3 Holdings”), GBDC 3 Funding LLC (“GBDC 3 Funding”) and GBDC 3 Funding II LLC (“GBDC 3 Funding II”), in its consolidated financial statements.

Assets related to transactions that do not meet ASC Topic 860 requirements for accounting sale treatment are reflected in the Company’s Consolidated Statements of Financial Condition as investments. Those assets are owned by special purpose entities, including GBDC 3 Holdings and GBDC 3 Funding, that are consolidated in the Company’s consolidated financial statements. The creditors of the special purpose entities have received security interests in such assets and such assets are not intended to be available to the creditors of GBDC (or any affiliate of GBDC).

Cash and cash equivalents and foreign currencies: Cash, cash equivalents and foreign currencies are highly liquid investments with an original maturity of three months or less at the date of acquisition. The Company deposits its cash in financial institutions and, at times, such balances exceed the Federal Deposit Insurance Corporation insurance limits.

Restricted cash and cash equivalents:  Restricted cash and cash equivalents include amounts that are collected and are held by trustees who have been appointed as custodians of the assets securing certain of the Company’s financing transactions. Restricted cash and cash equivalents are held by the trustees for payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets.

Foreign currency translation: The Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:
(1)
cash and cash equivalents, fair value of investments, interest receivable, and other assets and liabilities—at the spot exchange rate on the last business day of the period; and
(2)
purchases and sales of investments, income and expenses—at the exchange rates prevailing on the respective dates of such transactions.
Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Fluctuations arising from the

34


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


translation of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies on the Consolidated Statements of Operations.

Foreign security and currency transactions involve certain considerations and risks not typically associated with investing in U.S. companies. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Forward currency contracts: A forward currency contract is an obligation between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Company utilized forward currency contracts to economically hedge the currency exposure associated with certain foreign-denominated investments. The use of forward currency contracts does not eliminate fluctuations in the price of the underlying securities the Company owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the exchange rates on the contract date and reporting date and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized gains (losses) and unrealized appreciation (depreciation) on the contracts are included in the Consolidated Statements of Operations. Unrealized appreciation (depreciation) on forward currency contracts is recorded on the Consolidated Statements of Financial Condition by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable.

The primary risks associated with forward currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks can exceed the amounts reflected in the Consolidated Statements of Financial Condition.

Refer to Note 6 for more information regarding the forward currency contracts.

Revenue recognition:

Investments and related investment income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt investments.

Loan origination fees, original issue discount and market discount or premium are capitalized, and the Company accretes or amortizes such amounts over the life of the loan as interest income. For the three months ended December 31, 2019 and 2018, interest income included $700 and $226, respectively, of accretion of discounts. For the three months ended December 31, 2019 and 2018, the Company received loan origination fees of $2,995 and $1,335, respectively.

For investments with contractual payment-in-kind (“PIK”) interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, the Company will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. For the three months ended December 31, 2019 and 2018, the Company recorded PIK income of $238 and $17, respectively, and received PIK payments in cash of $28 and $0, respectively.

In addition, the Company generates revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance, consulting fees and prepayment premiums on loans. The Company records these fees as fee income when earned. All other income is recorded into income when earned. For the three months ended December 31, 2019 and 2018, fee income included $32 and $61, respectively, of prepayment premiums, which fees are non-recurring.

For the three months ended December 31, 2019 and 2018, the Company received interest and fee income in cash, which excludes capitalized loan origination fees, in the amounts of $13,774 and $3,993, respectively.


35


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the amortized cost basis of the investment. For the three months ended December 31, 2019 and 2018, the Company recorded dividend income of $2 and $0, respectively, and return of capital distributions of $0 and $0, respectively.

Investment transactions are accounted for on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. The Company reports current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments and foreign currency translation in the Consolidated Statements of Operations.

Non-accrual loans: A loan can be left on accrual status during the period the Company is pursuing repayment of the loan. Management reviews all loans that become 90 days or more past due on principal and interest, or when there is reasonable doubt that principal or interest will be collected, for possible placement on non-accrual status. When a loan is placed on non-accrual status, unpaid interest credited to income is reversed. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans is recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid, and, in management’s judgment, payments are likely to remain current. As of each of December 31, 2019 and September 30, 2019, the Company had no portfolio company investments on non-accrual status.

Income taxes: The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify and be subject to tax as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute dividends for U.S. federal income tax purposes to its stockholders of an amount generally at least equal to 90% of its investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. The Company has made, and intends to continue to make, the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal income taxes with respect to all income distributed to its stockholders.

Depending on the level of taxable income earned in a tax year, the Company can determine to retain taxable income in excess of current year dividend distributions and distribute such taxable income in the next tax year. The Company may then be required to incur a 4% excise tax on such income. To the extent that the Company determines that its estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the three months ended December 31, 2019 and 2018, the Company did not incur U.S. federal excise tax.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense or tax benefit in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material unrecognized tax benefits or unrecognized tax liabilities related to uncertain income tax positions through

36


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


December 31, 2019. The Company's tax return for the 2018 tax year remains subject to examination by U.S. federal and most state tax authorities.

Distributions: Distributions to common stockholders are recorded on the record date. Subject to the discretion of and as determined by the Board, the Company intends to authorize and declare ordinary cash distributions based on a formula approved by the Board on a quarterly basis. The amount to be paid out as a dividend or distribution is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are distributed at least annually, although the Company can retain such capital gains for investment in its discretion.

The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of any distributions the Company declares in cash on behalf of its stockholders, unless a stockholder elects to receive cash. As a result, if the Board authorizes and the Company declares a cash distribution, then stockholders who have not “opted out” of the DRIP will have their cash distribution automatically reinvested in additional shares of the Company’s common stock, rather than receiving the cash distribution. Shares issued under the DRIP will be issued at a price per share equal to the most recent net asset value (“NAV”) per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act).

Deferred debt issuance costs: Deferred debt issuance costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of December 31, 2019 and September 30, 2019, the Company had deferred debt issuance costs of $1,610 and $1,770, respectively. These amounts are amortized and included in interest expense in the Consolidated Statements of Operations over the estimated average life of the borrowings. Amortization expense for the three months ended December 31, 2019 and 2018 was $205 and $170, respectively.

Note 3.    Stockholders’ Equity

GBDC 3 is authorized to issue 1,000,000 shares of preferred stock at a par value of $0.001 per share and 100,000,000 shares of common stock at a par value of $0.001 per share. Since the commencement of operations on October 2, 2017, GBDC 3 has entered into Subscription Agreements with several investors, including with affiliates of the Investment Adviser, providing for the private placement of GBDC 3’s common stock. Under the terms of the Subscription Agreements, investors are required to fund drawdowns to purchase GBDC 3’s common stock at a price per share equal to the most recent NAV per share as determined by the Board (subject to adjustment to the extent required by Section 23 of the 1940 Act) up to the amount of their respective capital subscriptions on an as-needed basis as determined by GBDC 3 with a minimum of 10 calendar days prior notice.

As of December 31, 2019 and September 30, 2019, the Company had the following subscriptions, pursuant to the Subscription Agreements, and contributions from its stockholders:
 
As of December 31, 2019
 
As of September 30, 2019
 
Subscriptions
 
Contributions
 
Subscriptions
 
Contributions
GBDC 3 Stockholders
$
577,558

 
$
431,847

 
$
527,509

 
$
334,916

Total
$
577,558

 
$
431,847

 
$
527,509

 
$
334,916


As of December 31, 2019 and September 30, 2019, the ratio of total contributed capital to total capital subscriptions was 74.8% and 63.5%, respectively, and the Company had uncalled capital commitments of $145,711 and $192,593, respectively.
 

37


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The following table summarizes the shares of GBDC 3 common stock issued and outstanding for the three months ended December 31, 2019 and 2018:
 
Date
 
 
Shares Issued
 
NAV ($) per share
 
Proceeds
 
 
 
 
 
 
 
 
 
Shares outstanding, September 30, 2018
 
 
 
5,815,002.633

 
$
15.00

 
$
87,225

Issuance of shares
10/15/18
 
 
659,020.644
 
15.00

 
9,885

Issuance of shares
10/26/18
 
 
988,531.000
 
15.00

 
14,828

Issuance of shares
11/26/18
 
 
988,531.000
 
15.00

 
14,828

Issuance of shares
12/17/18
 
 
2,306,572.356
 
15.00

 
34,599

Shares issued for capital drawdowns
 
 
 
4,942,655.000
 
$
15.00

 
$
74,140

Issuance of shares (1)
11/27/18
 
 
49,178.285
 
15.00

 
738

Issuance of shares (1)
12/28/18
 
 
53,153.132
 
15.00

 
797

Shares issued through DRIP
 
 
 
102,331.417
 
$
15.00

 
$
1,535

Shares outstanding as of December 31, 2018
 
 
 
10,859,989.050
 
$
15.00

 
$
162,900

 
 
 
 
 
 
 
 
 
Shares outstanding, September 30, 2019
 
 
 
22,894,689.911
 
$
15.00

 
$
343,420

Issuance of shares
10/14/19
 
 
1,900,611.630
 
15.00

 
28,509

Issuance of shares
11/18/19
 
 
1,900,611.628
 
15.00

 
28,509

Issuance of shares
12/19/19
 
 
2,660,856.371
 
15.00

 
39,913

Shares issued for capital drawdowns
 
 
 
6,462,079.629
 
$
15.00

 
$
96,931

Issuance of shares (1)
11/26/19
 
 
185,724.541

 
15.00

 
2,786

Issuance of shares (1)
12/27/19
 
 
173,246.102

 
15.00

 
2,599

Shares issued through DRIP
 
 
 
358,970.643

 
$
15.00

 
$
5,385

Shares outstanding, December 31, 2019
 
 
 
29,715,740.183
 
$
15.00

 
$
445,736

 
(1) 
Shares issued through the DRIP.

Note 4.    Related Party Transactions

Investment Advisory Agreement: Under the Investment Advisory Agreement, the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. The Board reapproved the Investment Advisory Agreement in May 2019. The Investment Adviser is a registered investment adviser with the SEC. The Investment Adviser receives fees for providing services, consisting of two components, a base management fee and an Incentive Fee (as defined below).

The base management fee is calculated at an annual rate equal to 1.375% of the fair value of the average adjusted gross assets of the Company at the end of the two most recently completed calendar quarters (excluding cash and cash equivalents and foreign currencies but including assets purchased with borrowed funds, securitization-related assets, unrealized depreciation or appreciation on derivative instruments and cash collateral on deposit with custodian) and is payable quarterly in arrears. Additionally, the Investment Adviser voluntarily excludes any assets funded with secured borrowing proceeds from the base management fee calculation. The base management fee is adjusted, based on the actual number of days elapsed relative to the total number of days in such calendar quarter, for any share issuances or repurchases during such calendar quarter. For purposes of the Investment Advisory Agreement, cash equivalents mean U.S. government securities and commercial paper instruments maturing within 270 days of purchase (which is different than the GAAP definition, which defines cash equivalents as U.S.

38


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


government securities and commercial paper instruments maturing within 90 days of purchase). To the extent that the Investment Adviser or any of its affiliates provides investment advisory, collateral management or other similar services to a subsidiary of GBDC 3, the base management fee will be reduced by an amount equal to the product of (1) the total fees paid to the Investment Adviser by such subsidiary for such services and (2) the percentage of such subsidiary’s total equity, including membership interests and any class of notes not exclusively held by one or more third parties, that is owned, directly or indirectly, by the Company. For periods ending on or prior to the earlier of (1) the date of pricing of an initial public offering or listing on a national securities exchange of the shares of common stock of GBDC 3 or (2) a sale of all or substantially all of the Company’s assets to, or other liquidity event with, an entity for consideration of publicly listed securities of the acquirer (each, a “Liquidity Event”), the Investment Adviser has irrevocably agreed to waive any base management fee in excess of 1.00% of the fair value of the Company’s average adjusted gross assets as calculated in accordance with the Investment Advisory Agreement as described above.

For the three months ended December 31, 2019 and 2018, the base management fees incurred by the Company were $2,397 and $646, respectively, and the base management fees irrevocably waived by the Investment Adviser were $654 and $176, respectively.

The Incentive Fee consists of three parts: the income component (the “Income Incentive Fee”), the capital gains component (the “Capital Gain Incentive Fee”) and the subordinated liquidation incentive component (the “Subordinated Liquidation Incentive Fee” and, together with the Income Incentive Fee and the Capital Gain Incentive Fee, the “Incentive Fee”).

The Income Incentive Fee is calculated quarterly in arrears based on Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the calendar quarter (including the base management fee, taxes, any expenses payable under the Investment Advisory Agreement and the Administration Agreement, any expenses of securitizations and any interest expense and dividends paid on any outstanding preferred stock, but excluding the Incentive Fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that the Company has not yet received in cash.

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the Income Incentive Fee, it is possible that an Incentive Fee is calculated under this formula with respect to a period in which the Company has incurred a loss. For example, if the Company receives Pre-Incentive Fee Net Investment Income in excess of the hurdle rate (as defined below) for a calendar quarter, the Income Incentive Fee will result in a positive value, and an Income Incentive Fee will be paid even if the Company has incurred a loss in such a period due to realized and/or unrealized capital losses unless the payment of such Income Incentive Fee would cause the Company to pay Income Incentive Fees and Capital Gain Incentive Fees on a cumulative basis that exceed the Incentive Fee Cap described below.

Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before considering any Incentive Fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed ‘‘hurdle rate’’ of 1.5% quarterly. If market interest rates rise, it is possible that the Company will be able to invest funds in debt instruments that provide for a higher return, which would increase the Company’s Pre-Incentive Fee Net Investment Income and make it easier for the Investment Adviser to surpass the fixed hurdle rate and receive an Income Incentive Fee. Pre-Incentive Fee Net Investment Income used to calculate this part of the Incentive Fee is also included in the amount of the Company’s total assets (excluding cash and cash equivalents but including assets purchased with borrowed funds securitization-

39


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


related assets, unrealized depreciation or appreciation on derivative instruments and cash collateral on deposit with custodian) used to calculate the base management fee.

The Company calculates the Income Incentive Fee with respect to Pre-Incentive Fee Net Investment Income quarterly, in arrears, as follows:

zero in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate;
50.0% of Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than the percentage at which amounts payable to the Investment Adviser pursuant to the Income Incentive Fee equal 20.0% of the Pre-Incentive Fee Net Investment Income that exceeds the hurdle rate as if a hurdle rate did not apply. This portion of Pre-Incentive Fee Net Investment Income that exceeds the hurdle rate is referred to as the ‘‘catch-up’’ provision; and
20.0% of the amount of Pre-Incentive Fee Net Investment Income, if any, that exceeds the catch-up provision in any calendar quarter.

The sum of these calculations yields the Income Incentive Fee. This amount is appropriately adjusted for any share issuances or repurchases during the quarter. For the three months ended December 31, 2019 and 2018, the Income Incentive Fee incurred was $1,478 and $406, respectively.

For periods ending on or prior to the date of the closing of a Liquidity Event, the Investment Adviser has agreed to irrevocably waive that portion of the Income Incentive fee calculated under the Investment Advisory Agreement in amounts in excess of the following amounts (computed on a quarterly basis, in arrears):

zero in any calendar quarter in which the Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate;
50.0% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than the percentage at which the amount payable to the Investment Adviser equals to 15.0% of the Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply. This portion of the Company’s Pre-Incentive Fee Net Investment Income that exceeds the hurdle rate is referred to as the “catch-up” provision; and
15.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the catch-up provision in any calendar quarter.

For the three months ended December 31, 2019 and 2018, the Income Incentive Fee irrevocably waived by the Investment Adviser was $161 and $18, respectively.

The second part of the Incentive Fee, the Capital Gain Incentive Fee, equals (a) 20.0% of the Company’s Capital Gain Incentive Fee Base (as defined below), if any, calculated in arrears as of the end of each calendar year (or, upon termination of the Investment Advisory Agreement, as of the termination date), commencing with the calendar year ended December 31, 2017, less (b) the aggregate amount of any previously paid Capital Gain Incentive Fees. The Company’s ‘‘Capital Gain Incentive Fee Base’’ equals (1) the sum of (A) realized capital gains, if any, on a cumulative positive basis from September 29, 2017, the date the Company elected to be a BDC, through the end of each calendar year, (B) all realized capital losses on a cumulative basis and (C) all unrealized capital depreciation on a cumulative basis, less (2) unamortized deferred debt issuance costs as of the date of calculation, if and to the extent such costs exceed all unrealized capital appreciation on a cumulative basis.

The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the net sales price of each investment in the Company’s portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.

40


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive, between (a) the net sales price of each investment in the Company’s portfolio when sold and (b) the accreted or amortized cost basis of such investment.
The aggregate unrealized capital depreciation is calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable Capital Gain Incentive Fee calculation date and (b) the accreted or amortized cost basis of such investment.

The Capital Gain Incentive Fee is calculated on a cumulative basis from September 29, 2017 through the end of each calendar year or termination of the Investment Advisory Agreement. For periods ending on or prior to the date of the closing of a Liquidity Event, the Investment Adviser has agreed to irrevocably waive that portion of the Capital Gain Incentive Fee, calculated as described above, in excess of 15.0% of the Capital Gain Incentive Fee Base, provided that any amounts so waived shall be deemed paid to the Investment Adviser for purposes of determining the Capital Gain Incentive Fee payable after the closing of a public offering or listing. For the three months ended December 31, 2019 and 2018, the accrual of the Capital Gain Incentive Fee waiver was $136 and $37, respectively.

In accordance with GAAP, the Company is required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee on a quarterly basis, as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. If the Capital Gain Incentive Fee Base, adjusted as required by GAAP to include unrealized capital appreciation, is positive at the end of a period, then GAAP requires the Company to accrue a capital gain incentive fee equal to 15.0% prior to a Liquidity Event (20.0% following a Liquidity Event) of such amount, less the aggregate amount of the actual Capital Gain Incentive Fees paid and capital gain incentive fees accrued under GAAP in all prior periods. If such amount is negative, then there is no accrual for such period. The resulting accrual under GAAP in a given period results in additional expense if such cumulative amount is greater than in the prior period or a reversal of previously recorded expense if such cumulative amount is less than in the prior period. There can be no assurance that such unrealized capital appreciation will be realized in the future.

For the three months ended December 31, 2019 and 2018, the Capital Gain Incentive Fee incurred was $544 and $148, respectively.

There was no Capital Gain Incentive Fee as calculated under the Investment Advisory Agreement (as described above) payable as of December 31, 2019 and September 30, 2019.

As of December 31, 2019 and September 30, 2019, included in management and incentive fees payable on the Consolidated Statements of Financial Condition was $1,070 and $663, respectively, for accruals for the capital gain incentive fee (net of waiver) under GAAP, none of which was payable pursuant to the Investment Advisory Agreement.

The third part of the Incentive Fee, the Subordinated Liquidation Incentive Fee, equals 15.0% of the net proceeds from a liquidation of the Company in excess of adjusted capital, as calculated immediately prior to liquidation. For purposes of this calculation, (a) ‘‘liquidation’’ includes any merger of the Company with another entity or the acquisition of all or substantially all of the shares of the Company’s common stock in a single or series of related transactions and (b) ‘‘adjusted capital’’ means the net asset value of the Company calculated immediately prior to liquidation in accordance with GAAP less unrealized capital appreciation that would have been subject to the Capital Gain Incentive Fee had capital gain been recognized on the transfer of such assets in the liquidation. The Investment Advisory Agreement provides that no Subordinated Liquidation Incentive Fee shall be payable for any liquidation that occurs more than six months after the date of an initial public offering of the Company’s common stock or a listing of the Company’s common stock on a national securities exchange. For periods prior to the date of the closing of a Liquidity Event, the Investment Adviser has agreed to waive the Subordinated Liquidation Incentive Fee.

41


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)



The Company has structured the calculation of the Incentive Fee to include a fee limitation such that the Income Incentive Fee and the Capital Gain Incentive Fee will not be paid at any time if, after such payment, the cumulative Income Incentive Fees and Capital Gain Incentive Fees paid to date would exceed an incentive fee cap (the "Incentive Fee Cap"). For periods ending on or prior to the date of the closing of a Liquidity Event, the Incentive Fee Cap in any quarter is equal to the difference between (a) 15.0% of Cumulative Pre-Incentive Fee Net Income and (b) cumulative incentive fees of any kind paid to the Investment Adviser by the Company since September 29, 2017. For periods beginning after the date of the closing of a Liquidity Event, the Incentive Fee Cap in any quarter will be equal to the difference, if positive, between (a) the sum of (i) 20.0% of Cumulative Pre-Incentive Fee Net Income for the period beginning on the date immediately following the closing of a Liquidity Event and (ii) 15.0% of Cumulative Pre-Incentive Fee Net Income for the period from September 29, 2017 and ending on the date of the closing of a Liquidity Event and (b) cumulative Income Incentive Fees and Capital Gain Incentive Fees paid to the Investment Adviser by the Company from September 29, 2017.

To the extent the Incentive Fee Cap is zero or a negative value in any quarter, no incentive fee would be payable in that quarter. ‘‘Cumulative Pre-Incentive Fee Net Income’’ is equal to the sum of (a) Pre-Incentive Fee Net Investment Income for each period since September 29, 2017 and (b) cumulative aggregate realized capital gains, cumulative aggregate realized capital losses, cumulative aggregate unrealized capital depreciation and cumulative aggregate unrealized capital appreciation since September 29, 2017.

The sum of the Income Incentive Fee, the Capital Gain Incentive Fee and the Subordinated Liquidation Incentive Fee is the Incentive Fee. Prior to the closing of a Liquidity Event, the Company will deposit one-third of each Income Incentive Fee and Capital Gain Incentive Fee payment into an escrow account (the “Escrow Account”) to be administered by U.S. Bank National Association (the “Escrow Agent”). Assets in the Escrow Account will be held by the Escrow Agent until the closing of a Liquidity Event at which time the Escrow Agent will release the assets to the Investment Adviser. If no Liquidity Event occurs prior to October 2, 2023, the Escrow Agent will return all assets in the Escrow Account to the Company for the benefit of the stockholders. For the three months ended December 31, 2019 and 2018, the Company deposited $409 and $95, respectively, into the Escrow Account.

Administration Agreement: Pursuant to the Administration Agreement, the Administrator furnishes the Company with office facilities and equipment and provides clerical, bookkeeping, and record-keeping services at such facilities and provides the Company with other administrative services as the Administrator, subject to review by the Board, determines necessary to conduct the Company's day-to-day operations. The Company reimburses the Administrator for the allocable portion (subject to the review and approval of the Board) of the Administrator’s overhead and other expenses incurred by it in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions and the Company’s allocable portion of the cost of its chief financial officer and chief compliance officer and their respective staffs. The Board reviews such expenses to determine that these expenses, including any allocation of expenses among the Company and other entities for which the Administrator provides similar services, are reasonable and comparable to administrative services charged by unaffiliated third-party asset managers. In addition, under the Administration Agreement, the Administrator also provides, on the Company’s behalf, managerial assistance to those portfolio companies to which the Company is required to provide such assistance and will be paid an additional amount based on the cost of the services provided, which amount shall not exceed the amount the Company receives from such portfolio companies.

As of December 31, 2019 and September 30, 2019, included in accounts payable and accrued expenses is $275 and $219, respectively, for accrued allocated shared services under the Administration Agreement.


42


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


Other related party transactions: The Company agreed to reimburse the Investment Adviser for formation and costs associated with the initial closing of the Subscription Agreements incurred on its behalf up to an aggregate amount of $700. Any costs in excess of $700 will be borne by the Investment Adviser. Since our formation on August 1, 2017, formation and initial closing costs paid by the Investment Adviser on behalf of the Company and reimbursed by the Company totaled $199.

The Administrator pays for certain unaffiliated third-party expenses incurred by the Company. Such expenses include postage, printing, office supplies, rating agency fees and professional fees. These expenses are not marked-up and represent the same amount the Company would have paid had the Company paid the expenses directly. These expenses are subsequently reimbursed in cash. Total expenses reimbursed to the Administrator during the three months ended December 31, 2019 and 2018 were $173 and $140, respectively. As of December 31, 2019 and September 30, 2019, included in accounts payable and accrued expenses were $211 and $173 for reimbursable expenses that were paid by the Administrator on behalf of the Company.

On August 1, 2017, GCOP LLC, an affiliate of the Investment Adviser, purchased 700.000 shares of common stock of the Company for an aggregate purchase price of $11. On October 1, 2018, GCOP LLC, entered into a Subscription Agreement for an aggregate commitment of $10,000. As of December 31, 2019, the Company has issued 464,366.891 shares of its common stock to GCOP LLC in exchange for aggregate capital contributions totaling $6,966.

On October 2, 2017, GEMS Fund 4, L.P., a Delaware limited partnership whose general partner is controlled by the Investment Adviser, entered into a Subscription Agreement for an aggregate commitment of $27,500. As of December 31, 2019, the Company has issued 1,668,333.332 shares of its common stock to GEMS Fund 4, L.P. in exchange for aggregate capital contributions totaling $25,025.

On October 2, 2017, the Company entered into an unsecured revolving credit facility with the Investment Adviser (as amended, the “Adviser Revolver”) with a maximum credit limit of $40,000 and with an expiration date of October 2, 2020. On June 28, 2019, the Company and the Investment Adviser amended the Adviser Revolver to increase the borrowing capacity from $40,000 to $100,000. On August 15, 2019, the Company and the Investment Adviser entered into a second amendment to the Adviser Revolver to increase the borrowing capacity from $100,000 to $125,000. On October 28, 2019, the Company amended the Adviser Revolver to decrease the borrowing capacity from $125,000 to $40,000. Refer to Note 8 for discussion of the Adviser Revolver.

Note 5.    Investments

Investments as of December 31, 2019 and September 30, 2019 consisted of the following:
 
As of December 31, 2019
 
As of September 30, 2019
  
Principal
 
Amortized
Cost
 
Fair
Value
 
Principal
 
Amortized
Cost
 
Fair
Value
Senior secured
$
111,289

 
$
109,949

 
$
110,771

 
$
97,133

 
$
95,943

 
$
96,765

One stop
676,772

 
667,907

 
674,769

 
511,850

 
505,134

 
509,530

Second lien
4,018

 
3,935

 
4,018

 
3,898

 
3,811

 
3,898

Subordinated debt
37

 
35

 
37

 
2

 

 
2

Equity
N/A

 
7,310

 
8,098

 
N/A

 
6,115

 
6,794

Total
$
792,116

 
$
789,136

 
$
797,693

 
$
612,883

 
$
611,003

 
$
616,989



43


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The following tables show the portfolio composition by geographic region at amortized cost and fair value as a percentage of total investments in portfolio companies. The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which is not always indicative of the primary source of the portfolio company’s business.
 
As of December 31, 2019
 
As of September 30, 2019
Amortized Cost:
  

 
  

 
 
 
 
United States
 
 
  

 
 
 
 
Mid-Atlantic
$
194,247

 
24.6
%
 
$
144,732

 
23.7
%
Midwest
206,931

 
26.2

 
158,842

 
26.0

Northeast
41,619

 
5.3

 
24,902

 
4.1

Southeast
139,693

 
17.7

 
117,930

 
19.3

Southwest
78,538

 
10.0

 
63,330

 
10.4

West
105,220

 
13.3

 
86,421

 
14.1

Canada
12,883

 
1.6

 
12,511

 
2.0

United Kingdom
1,916

 
0.2

 
1,897

 
0.3

Australia
446

 
0.1

 
438

 
0.1

Luxembourg
7,643

 
1.0

 

 

Total
$
789,136

 
100.0
%
 
$
611,003

 
100.0
%
Fair Value:
  

 
  

 
  

 
 
United States
 
 
  

 
 
 
 
Mid-Atlantic
$
196,593

 
24.6
%
 
$
146,386

 
23.7
%
Midwest
208,618

 
26.2

 
159,689

 
25.9

Northeast
42,414

 
5.3

 
25,284

 
4.1

Southeast
141,115

 
17.7

 
118,977

 
19.3

Southwest
79,479

 
10.0

 
64,246

 
10.4

West
106,222

 
13.3

 
87,448

 
14.1

Canada
13,186

 
1.6

 
12,719

 
2.1

United Kingdom
1,961

 
0.2

 
1,802

 
0.3

Australia
462

 
0.1

 
438

 
0.1

Luxembourg
7,643

 
1.0

 

 

Total
$
797,693

 
100.0
%
 
$
616,989

 
100.0
%


44


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The industry compositions of the portfolio at amortized cost and fair value as of December 31, 2019 and September 30, 2019 were as follows:
 
As of December 31, 2019
 
As of September 30, 2019
Amortized Cost:
  

 
  

 
 
 
 
Automobile
$
8,947

 
1.1
%
 
$
8,564

 
1.4
%
Beverage, Food and Tobacco
36,088

 
4.6

 
28,918

 
4.7

Buildings and Real Estate
27,822

 
3.5

 
24,685

 
4.0

Chemicals, Plastics and Rubber
2,910

 
0.4

 
2,895

 
0.5

Containers, Packaging and Glass
3,397

 
0.4

 

 

Diversified/Conglomerate Manufacturing
14,181

 
1.8

 
11,407

 
1.9

Diversified/Conglomerate Service
403,247

 
51.1

 
285,736

 
46.8

Electronics
77,332

 
9.8

 
46,395

 
7.6

Finance
6,437

 
0.8

 
6,441

 
1.1

Healthcare, Education and Childcare
59,837

 
7.6

 
58,357

 
9.5

Hotels, Motels, Inns, and Gaming
2,510

 
0.3

 
2,091

 
0.3

Insurance
27,350

 
3.5

 
26,073

 
4.3

Leisure, Amusement, Motion Pictures, Entertainment
33,850

 
4.3

 
31,706

 
5.2

Oil and Gas
9,013

 
1.1

 
8,677

 
1.4

Personal and Non Durable Consumer Products (Mfg. Only)
949

 
0.1

 
951

 
0.2

Personal, Food and Miscellaneous Services
57,011

 
7.2

 
50,224

 
8.2

Printing and Publishing
2,048

 
0.3

 
2,052

 
0.3

Retail Stores
16,207

 
2.1

 
15,831

 
2.6

Total
$
789,136

 
100.0
%
 
$
611,003

 
100.0
%
 
As of December 31, 2019
 
As of September 30, 2019
Fair Value:
  

 
  

 
 
 
 
Automobile
$
9,180

 
1.1
%
 
$
8,714

 
1.4
%
Beverage, Food and Tobacco
36,471

 
4.6

 
29,102

 
4.7

Buildings and Real Estate
28,049

 
3.5

 
24,893

 
4.0

Chemicals, Plastics and Rubber
2,926

 
0.4

 
2,916

 
0.5

Containers, Packaging and Glass
3,396

 
0.4

 

 

Diversified/Conglomerate Manufacturing
14,280

 
1.8

 
11,624

 
1.9

Diversified/Conglomerate Service
408,087

 
51.2

 
288,996

 
46.9

Electronics
77,972

 
9.8

 
46,896

 
7.6

Finance
6,494

 
0.8

 
6,433

 
1.0

Healthcare, Education and Childcare
59,982

 
7.5

 
58,595

 
9.5

Hotels, Motels, Inns, and Gaming
2,534

 
0.3

 
2,079

 
0.4

Insurance
27,789

 
3.5

 
26,661

 
4.3

Leisure, Amusement, Motion Pictures, Entertainment
34,173

 
4.3

 
32,043

 
5.2

Oil and Gas
9,112

 
1.1

 
8,781

 
1.4

Personal and Non Durable Consumer Products (Mfg. Only)
957

 
0.1

 
960

 
0.2

Personal, Food and Miscellaneous Services
57,654

 
7.2

 
50,176

 
8.1

Printing and Publishing
2,064

 
0.3

 
2,048

 
0.3

Retail Stores
16,573

 
2.1

 
16,072

 
2.6

Total
$
797,693

 
100.0
%
 
$
616,989

 
100.0
%
GBDC 3 Senior Loan Fund LLC:

On October 2, 2017, the Company agreed to co-invest with RGA Reinsurance Company (“RGA”) primarily in senior secured loans through GBDC 3 Senior Loan Fund LLC (“GBDC 3 SLF”), an unconsolidated Delaware LLC.

45


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


GBDC 3 SLF will be capitalized as transactions are completed and all portfolio and investment decisions in respect of GBDC 3 SLF must be approved by the GBDC 3 SLF investment committee consisting of two representatives of each of the Company and RGA (with unanimous approval required from (i) one representative of each of the Company and RGA or (ii) both representatives of each of the Company and RGA).

As of December 31, 2019 and September 30, 2019, the Company had $109,375 and $109,375, respectively, of LLC equity interest subscriptions to GBDC 3 SLF, none of which were funded as of each December 31, 2019 and September 30, 2019 as GBDC 3 SLF has not yet commenced operations.

Note 6.    Forward Currency Contracts

The Company enters into forward currency contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on the value of the Company's investments denominated in foreign currencies.

The outstanding forward currency contracts as of December 31, 2019 and September 30, 2019 were as follows:
As of December 31, 2019
Counterparty
 
Currency to be sold
 
Currency to be purchased
 
Settlement Date
 
Unrealized appreciation ($)
 
Unrealized depreciation ($)
Macquarie Bank Limited
 
4,606

EUR
 
$
5,656

USD
 
12/12/2022
 
$
153

 
$

Macquarie Bank Limited
 
C$
5,654

CAD
 
$
4,284

USD
 
12/12/2022
 

 
(46
)
Macquarie Bank Limited
 
£
1,550

GBP
 
$
1,933

USD
 
2/21/2023
 

 
(165
)
 
 
 
 
 
 
 
 
 
 
$
153

 
$
(211
)
As of September 30, 2019
Counterparty
 
Currency to be sold
 
Currency to be purchased
 
Settlement Date
 
Unrealized appreciation ($)
 
Unrealized depreciation ($)
Macquarie Bank Limited
 
4,606

EUR
 
$
5,656

USD
 
12/12/2022
 
$
251

 
$

Macquarie Bank Limited
 
C$
5,654

CAD
 
$
4,284

USD
 
12/12/2022
 
23

 

Macquarie Bank Limited
 
£
1,550

GBP
 
$
1,933

USD
 
2/21/2023
 

 
(34
)
 
 
 
 
 
 
 
 
 
 
$
274

 
$
(34
)

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) with its derivative counterparty, Macquarie Bank Limited (“Macquarie”). The ISDA Master Agreement is a bilateral agreement between the Company and Macquarie that governs over the counter (“OTC”) derivatives, including forward currency contracts, and contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. The provisions of the ISDA Master Agreement permit a single net payment in the event of a default (close-out netting) or similar event, including the bankruptcy or insolvency of the counterparty.

For financial reporting purposes, cash collateral that has been pledged to cover obligations of the Company and cash collateral received from Macquarie, if any, is included in the Consolidated Statements of Financial Condition as cash collateral held at broker for forward currency contracts or cash collateral received from broker for forward currency contracts. The Company minimizes counterparty credit risk by only entering into agreements with counterparties that it believes to be of good standing and by monitoring the financial stability of those counterparties.

The following table is intended to provide additional information about the effect of the forward foreign currency exchange contracts on the financial statements of the Company including: the fair value of derivatives by risk category, the location of those fair values on the Consolidated Statement of Financial Condition, and the Company’s

46


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Company as of December 31, 2019 and September 30, 2019.

As of December 31, 2019
Counterparty
 
Risk exposure category
 
Unrealized appreciation on forward currency contracts
 
Unrealized depreciation on forward currency contracts
 
Net amounts presented in the Consolidated Statement of Financial Condition
 
Collateral (Received) Pledged (1)
 
Net Amount (2)
Macquarie Bank Limited
 
Foreign exchange
 
$
153

 
$
(211
)
 
$
(58
)
 
$
58

 
$

As of September 30, 2019
Counterparty
 
Risk exposure category
 
Unrealized appreciation on forward currency contracts
 
Unrealized depreciation on forward currency contracts
 
Net amounts presented in the Consolidated Statement of Financial Condition
 
Collateral (Received) Pledged (1)
 
Net Amount (2)
Macquarie Bank Limited
 
Foreign exchange
 
$
274

 
$
(34
)
 
$
240

 
$

 
$
240



(1) 
In some instances, the actual collateral pledged may be more than the amount shown due to overcollateralization.
(2) 
Represents the net amount due from/(to) counterparties in the event of default.
During the three months ended December 31, 2018, the Company had no forward currency contracts outstanding. The impact of derivative transactions for the three months ended December 31, 2019 on the Consolidated Statement of Operations, including realized and unrealized gains (losses) is summarized in the table below:
Realized gain (loss) on forward currency contracts recognized in income
Risk exposure category
For the three months ended December 31, 2019
Foreign exchange
$

 
 
Change in unrealized appreciation (depreciation) on forward currency contracts recognized in income
 
Risk exposure category
For the three months ended December 31, 2019
Foreign exchange
$
(299
)
 
 

The following table is a summary of the average outstanding volume for forward currency contracts for the three months ended December 31, 2019:
Average U.S. Dollar notional outstanding 
For the three months ended December 31, 2019
Forward currency contracts
$
11,874


Exclusion of the Investment Adviser from Commodity Pool Operator Definition

Engaging in commodity interest transactions such as swap transactions or futures contracts for the Company may cause the Investment Adviser to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”) and related Commodity Futures Trading Commission (the “CFTC”) regulations. On February 6, 2020, the Investment Adviser claimed an exclusion from the definition of the term “commodity pool operator” under the CEA

47


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


and the CFTC regulations in connection with its management of the Company and, therefore, is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of the Company.

Note 7.    Fair Value Measurements

The Company follows ASC Topic 820 for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Assets and liabilities are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels are defined as follows: 
Level 1:     Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2:     Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities.
Level 3:     Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and require significant management judgment or estimation.
In certain cases, the inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company assesses the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities for the three months ended December 31, 2019 and 2018. The following section describes the valuation techniques used by the Company to measure different assets and liabilities at fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.

Investments

Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by the Board, based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of the Board to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately 25% (based on the number of portfolio companies) of the Company’s valuations of debt and equity investments without readily available market quotations subject to review by an independent valuation firm. All investments as of December 31, 2019 and September 30, 2019, with the exception of money market funds included in cash and cash equivalents (Level 1 investments) and forward currency contracts (Level 2 investments), were valued using Level 3 inputs of the fair value hierarchy.

48


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)



When determining fair value of Level 3 debt and equity investments, the Company takes into account the following factors, where relevant: the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment and the credit markets generally that affect the price at which similar investments are made and other relevant factors. The primary method for determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s net income before net interest expense, income tax expense, depreciation and amortization (“EBITDA”). A portfolio company’s EBITDA can include pro-forma adjustments for items such as acquisitions, divestitures, or expense reductions. The enterprise value analysis is performed to determine the value of equity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, the Company will use the enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, the Company uses a market interest rate yield analysis to determine fair value.

In addition, for certain debt investments, the Company bases its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.

Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that are ultimately received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If the Company were required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which such investment had previously been recorded.

The Company’s investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

The following table presents fair value measurements of the Company’s investments and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of December 31, 2019 and September 30, 2019:
As of December 31, 2019
 
Fair Value Measurements Using
Description
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets, at fair value:
 
  

 
  

 
  

 
  

Debt investments(1)
 
$

 
$

 
$
789,595

 
$
789,595

Equity investments(1)
 

 

 
8,098

 
8,098

Money market funds(1)(2)
 
2,555

 

 

 
2,555

Forward currency contracts
 

 
153

 

 
153

Total assets, at fair value:
 
$
2,555

 
$
153

 
$
797,693

 
$
800,401

Liabilities, at fair value:
 
 
 
 
 
 
 
 
Forward currency contracts
 
$

 
$
(211
)
 

 
$
(211
)
Total liabilities, at fair value:
 
$

 
$
(211
)
 
$

 
$
(211
)

49


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


As of September 30, 2019
 
Fair Value Measurements Using
Description
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets, at fair value:
 
  

 
  

 
  

 
  

Debt investments(1)
 
$

 
$

 
$
610,195

 
$
610,195

Equity investments(1)
 

 

 
6,794

 
6,794

Money market funds(1)(2)
 
2,925

 

 

 
2,925

Forward currency contracts
 

 
274

 

 
274

Total assets, at fair value:
 
$
2,925

 
$
274

 
$
616,989

 
$
620,188

Liabilities, at fair value:
 
 
 
 
 
 
 
 
Forward currency contracts
 
$

 
$
(34
)
 
$

 
$
(34
)
Total liabilities, at fair value:
 
$

 
$
(34
)
 
$

 
$
(34
)
 
(1) 
Refer to the Consolidated Schedules of Investments for further details.
(2) 
Included in cash and cash equivalents on the Consolidated Statements of Financial Condition.
The net change in unrealized appreciation (depreciation) for the three months ended December 31, 2019 and the three months ended December 31, 2018 reported within the net change in unrealized appreciation (depreciation) on investment transactions in the Company’s Consolidated Statements of Operations attributable to the Company's Level 3 assets held as of December 31, 2019 and December 31, 2018 was $2,786 and $720, respectively.

The following tables present the changes in investments measured at fair value using Level 3 inputs for the three months ended December 31, 2019 and 2018:
 
For the three months ended December 31, 2019
  
Debt
Investments
 
Equity
Investments
 
Total
Investments
Fair value, beginning of period
$
610,195

 
$
6,794

 
$
616,989

Net change in unrealized appreciation (depreciation) on investments
2,463

 
108

 
2,571

Realized gain (loss) on investments

 
1

 
1

Funding of (proceeds from) revolving loans, net
660

 

 
660

Fundings of investments
196,970

 
1,196

 
198,166

PIK interest
247

 

 
247

Proceeds from principal payments and sales of portfolio investments
(21,640
)
 
(1
)
 
(21,641
)
Accretion of discounts and amortization of premiums
700

 

 
700

Fair value, end of period
$
789,595

 
$
8,098

 
$
797,693


 
For the three months ended December 31, 2018
  
Debt
Investments
 
Equity
Investments
 
Total
Investments
Fair value, beginning of period
$
141,576

 
$
2,083

 
$
143,659

Net change in unrealized appreciation (depreciation) on investments
515

 
52

 
567

Realized gain (loss) on investments

 
2

 
2

Funding of (proceeds from) revolving loans, net
565

 

 
565

Fundings of investments
92,268

 
2,261

 
94,529

PIK interest
15

 

 
15

Proceeds from principal payments of and sales of portfolio investments
(2,833
)
 
(211
)
 
(3,044
)
Accretion of discounts and amortization of premiums
226

 

 
226

Fair value, end of period
$
232,332

 
$
4,187

 
$
236,519


The following table presents quantitative information about the significant unobservable inputs of the Company’s Level 3 investments as of December 31, 2019 and September 30, 2019:

50


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


Quantitative information about Level 3 Fair Value Measurements
 
Fair value as of December 31, 2019
 
Valuation Techniques
 
Unobservable Input
 
Range (Weighted Average)(1)
Assets, at fair value:
  

 
  
 
  
 
  
Senior secured loans
$
110,010

 
Market rate approach
 
Market interest rate
 
4.3% - 9.5% (5.2%)
  
 
 
Market comparable companies
 
EBITDA multiples
 
7.5x - 23.5x (15.0x)
 
761

 
Market comparable companies
 
Broker/ Dealer bids or quotes
 
N/A
One stop loans(2)
$
674,769

 
Market rate approach
 
Market interest rate
 
4.3% - 11.5% (6.9%)
  
 
 
Market comparable companies
 
EBITDA multiples
 
7.5x - 33.0x (16.3x)
  
 
 
Market comparable companies
 
Revenue multiples
 
2.5x - 11.0x (6.5x)
Subordinated debt and second lien loans(3)
$
4,055

 
Market rate approach
 
Market interest rate
 
4.0% - 12.0% (11.9%)
 
 
 
Market comparable companies
 
EBITDA multiples
 
17.5x
 
 
 
Market comparable companies
 
Revenue multiples
 
4.0x - 5.0x (4.9x)
Equity(4)
$
8,098

 
Market comparable companies
 
EBITDA multiples
 
7.5x - 33.0x (16.9x)
 
 
 
 
 
Revenue multiples
 
2.5x - 6.5x (5.3x)
 
(1) 
Unobservable inputs were weighted by the relative fair value of the instruments.

(2) 
The Company valued $546,589 and $128,180 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.

(3) 
The Company valued $4,018 and $37 of subordinated debt and second lien loans using EBITDA and revenue multiples, respectively. All subordinated debt and second lien loans were also valued using the market rate approach.

(4) 
The Company valued $6,383 and $1,715 of equity investments using EBITDA and revenue multiples, respectively.

51


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)




Quantitative information about Level 3 Fair Value Measurements
 
Fair value as of September 30, 2019
 
Valuation Techniques
 
Unobservable Input
 
Range (Weighted Average) (1)
Assets, at fair value:
 
 
 
 
 
 
 
Senior secured loans
$
96,004

 
Market rate approach
 
Market interest rate
 
4.3% - 9.5% (6.3%)
  
 
 
Market comparable companies
 
EBITDA multiples
 
7.5x - 24.0x (14.6x)
 
$
761

 
Market comparable companies
 
Broker/ Dealer bids or quotes
 
N/A
One stop loans(2)
$
509,530

 
Market rate approach
 
Market interest rate
 
5.3% - 11.5% (8.0%)
  
 
 
Market comparable companies
 
EBITDA multiples
 
7.0x - 28.0x (15.7x)
  
 
 
Market comparable companies
 
Revenue multiples
 
3.0x - 11.0x (6.0x)
Subordinated debt and second lien loans(3)
$
3,900

 
Market rate approach
 
Market interest rate
 
8.0% - 12.0% (12.0%)
 
 
 
Market comparable companies
 
EBITDA multiples
 
17.5x
 
 
 
Market comparable companies
 
Revenue multiples
 
3.0x
Equity(4)
$
6,794

 
Market comparable companies
 
EBITDA multiples
 
7.5x - 27.0x (16.3x)
 
 
 
 
 
Revenue multiples
 
3.0x - 6.5x (5.2x)
(1) 
Unobservable inputs were weighted by the relative fair value of the instruments.
(2) 
The Company valued $399,514 and $110,016 of one stop loans using EBITDA and revenue multiples, respectively. All one stop loans were also valued using the market rate approach.
(3) 
The Company valued $3,898 and $2 of subordinated debt and second lien loans using EBITDA and revenue multiples, respectively. All subordinated debt and second lien loans were also valued using the market rate approach.
(4) 
The Company valued $5,174 and $1,620 of equity investments using EBITDA and revenue multiples, respectively.
The above tables are not intended to be all-inclusive but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.
The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity investments are EBITDA multiples, revenue multiples and market interest rates. The Company uses EBITDA multiples and, to a lesser extent, revenue multiples on its debt and equity investments to determine any credit gains or losses. Increases or decreases in either of these inputs in isolation may have resulted in a significantly lower or higher fair value measurement. The Company uses market interest rates for loans to determine if the effective yield on a loan is commensurate with the market yields for that type of loan. If a loan’s effective yield is significantly less than the market yield for a similar loan with a similar credit profile, then the resulting fair value of the loan may have been lower.

Other Financial Assets and Liabilities

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. As a result, with the exception of the line item titled “debt” which is reported at cost, all assets and liabilities approximate fair value on the Consolidated Statements of Financial Condition due to their short maturity. Fair value of the Company’s debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar instruments at the measurement date, if available.

The following are the carrying values and fair values of the Company’s debt and other short-term borrowings as of December 31, 2019 and September 30, 2019. Fair value is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if available.

52


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


 
As of December 31, 2019
 
As of September 30, 2019
  
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Debt
$
364,284

 
$
364,284

 
$
270,644

 
$
270,644

Other short-term borrowings
2,624

 
2,624

 
16,366

 
16,366


Note 8.    Borrowings

In accordance with the 1940 Act, with certain limited exceptions, the Company is currently allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. The Company has not sought or obtained any approval necessary to be subject to the reduced asset coverage requirements available to BDCs pursuant to Section 61(a)(2) of the 1940 Act, which permits a BDC to have asset coverage of 150%, or a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirement under the 1940 Act. As of December 31, 2019, the Company’s asset coverage for borrowed amounts was 220.7%.

Adviser Revolver: On October 2, 2017, the Company entered into the Adviser Revolver with the Investment Adviser, with a maximum credit limit of $40,000 and expiration date of October 2, 2020. On June 28, 2019, the Company and the Investment Adviser amended the Adviser Revolver to increase the borrowing capacity from $40,000 to $100,000. On August 15, 2019, the Company and the Investment Adviser entered into a second amendment to the Adviser Revolver to increase the borrowing capacity from $100,000 to $125,000. On October 28, 2019, the Company entered into a third amendment to the Adviser Revolver, which decreased the borrowing capacity from $125,000 to $40,000. Other material terms of the Adviser Revolver were unchanged. The Adviser Revolver bears interest at a rate equal to the short-term Applicable Federal Rate (“AFR”). The short-term AFR as of December 31, 2019 was 1.6%. As of December 31, 2019 and September 30, 2019, the Company had $5,000 and $3,500, respectively, of outstanding debt under the Adviser Revolver.

For the three months ended December 31, 2019 and 2018, the Company had borrowings on the Adviser Revolver of $11,000 and $0, respectively, and repayments on the Adviser Revolver of $9,500 and $0, respectively.

For the three months ended December 31, 2019 and 2018, the stated interest expense, cash paid for interest expense, annualized average interest rates and average outstanding balances for the Adviser Revolver were as follows:
 
For the three months ended December 31,
 
2019
 
2018
Stated interest expense
$
7

 
$

Cash paid for interest expense
$
259

 
$

Annualized average stated interest rate
1.8
%
 
N/A

Average outstanding balance
$
1,467

 
$


SMBC Revolver: On March 16, 2018, the Company entered into a revolving credit agreement with Sumitomo Mitsui Banking Corporation, which prior to its termination allowed the Company to borrow up to $110,000 at anytime outstanding, subject to leverage and borrowing base restrictions (as amended, the “SMBC Revolver”). On February 4, 2019, all outstanding borrowings under the SMBC Revolver were repaid, following which the SMBC Revolver was terminated. Obligations under the SMBC Revolver would have otherwise matured on March 16, 2020.


53


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The SMBC Revolver bore interest at a rate equal, at the Company's election, to either one-month LIBOR plus 1.50% per annum or Prime. In addition to the stated interest rate on the SMBC Revolver, the Company was required to pay a non-usage fee at a rate of 0.20% per annum on the unused portion of the SMBC Revolver.

The SMBC Revolver was secured by the unfunded capital commitments of certain stockholders of the Company. The Company made customary representations and warranties and was required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. Borrowings under the SMBC Revolver were subject to the asset coverage requirements contained in the 1940 Act.

As of December 31, 2019 and September 30, 2019, the Company had no outstanding debt under the SMBC Revolver. For the three months ended December 31, 2018, the Company had borrowings on the SMBC Revolver of $116,200 and repayments on the SMBC Revolver of $103,200.

For the three months ended December 31, 2019 and 2018, the components of interest expense, cash paid for interest and facility fees, annualized average interest rates and average outstanding balances for the SMBC Revolver were as follows:
 
For the three months ended December 31,
 
2019
 
2018
Stated interest expense
$

 
$
748

Facility fees

 
17

Amortization of debt issuance costs

 
170

Total interest and other debt financing expenses
$

 
$
935

Cash paid for interest expense
$

 
$
605

Annualized average stated interest rate
N/A

 
3.9
%
Average outstanding balance
$

 
$
76,009


SB Revolver: On February 4, 2019, the Company entered into a revolving credit agreement (as amended, the “SB Revolver”) with Signature Bank (“SB”), as administrative agent and a lender, which allowed the Company to borrow up to $175,000 at any one time outstanding, subject to leverage and borrowing base restrictions, with a stated maturity date of February 4, 2021. On April 8, 2019, the Company entered into an amendment to the SB Revolver with SB which increased the borrowing capacity under the SB Revolver to $225,000 from $175,000. Other material terms of the SB Revolver were unchanged. On May 31, 2019, the Company amended the SB Revolver to permit borrowings in foreign currencies.

The SB Revolver bears interest at a rate, at the Company’s election, of either the one-, two- or three-month LIBOR plus 1.50% per annum or the prime rate minus 1.40%, as calculated under the SB Revolver. The revolving period under the SB Revolver will continue through February 4, 2021. The SB Revolver is secured by the unfunded commitments of stockholders of the Company, collateral accounts and the proceeds of the foregoing.  In addition to the stated interest rate on the SB Revolver, the Company is required to pay a non-usage fee at a rate of 0.15% per annum on the unused portion of the SB Revolver.

As of December 31, 2019 and September 30, 2019, the Company had outstanding debt under the SB Revolver of $109,284 and $144,444, respectively. For the three months ended December 31, 2019 and 2018, the Company had borrowings on the SB Revolver of $31,243 and $0, respectively, and repayments on the SB Revolver of $66,403 and $0, respectively.


54


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


For the three months ended December 31, 2019 and 2018, the stated interest expense, cash paid for interest expense, annualized average interest rates and average outstanding balances for the SB Revolver were as follows:
 
For the three months ended December 31,
 
2019
 
2018
Stated interest expense
$
1,239

 
$

Facility fees
31

 

Amortization of debt issuance costs
95

 

Total interest expense
$
1,365

 
$

Cash paid for interest expense
$
1,378

 
$

Annualized average stated interest rate
3.4
%
 
N/A

Average outstanding balance
144,167

 
$


DB Credit Facility: On September 10, 2019 (the “Effective Date”), the Company and GBDC 3 Funding, entered into a loan financing and servicing agreement (the “DB Credit Facility”), with the Company, as equityholder and as servicer, the lenders from time to time parties thereto, Deutsche Bank AG, New York Branch, as facility agent, the other agents parties thereto, each of the entities from time to time party thereto as securitization subsidiaries and Deutsche Bank Trust Company Americas, as collateral agent and as collateral custodian. As of September 30, 2019, allowed GBDC 3 Funding to borrow up to $250,000, subject to leverage and borrowing base restrictions. The period during which GBDC 3 Funding may request drawdowns under the DB Credit Facility (the “Revolving Period”) commenced on the Effective Date and will continue through September 10, 2022 unless there is an earlier termination or event of default. The DB Credit Facility will mature on the earliest of (i) three years from the last day of the Revolving Period, (ii) the date on which the Company ceases to exist or (iii) the occurrence of an event of default.

As of December 31, 2019, the DB Credit Facility bears interest at the applicable base rate plus 2.00% per annum. The base rate under the DB Credit Facility is (i) the three-month Canadian Dollar Offered Rate with respect to any advances denominated in Canadian dollars, (ii) the three-month EURIBOR with respect to any advances denominated in euros, (iii) the three-month Bank Bill Swap Rate with respect to any advances denominated in Australian dollars and (iv) the three-month LIBOR with respect to any other advances. A syndication/agent fee is payable to the facility agent each quarter and is calculated based on the aggregate commitments outstanding each day during the preceding collection period at a rate of 1/360 of 0.25% of the aggregate commitments on each day. In addition, a non-usage fee of 0.25% per annum is payable on the undrawn amount under the DB Credit Facility, and, during the Revolving Period, an additional fee based on unfunded commitments of the lenders may be payable if borrowings under the DB Credit Facility do not exceed a minimum utilization percentage threshold. A prepayment fee would be payable in the event of any permanent reduction in commitments of the DB Credit Facility in the amount of 0.50% or 0.25% of the amount of the reduction during the first or second year after the Effective Date, respectively.

The DB Credit Facility is secured by all of the assets held by GBDC 3 Funding. GBDC 3 Funding has made customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. The borrowings of the Company, including under the DB Credit Facility, are subject to the leverage restrictions contained in the Investment Company Act of 1940, as amended.

The Company transfers certain loans and debt securities it has originated or acquired from time to time to GBDC 3 Funding through a purchase and sale agreement and causes GBDC 3 Funding to originate or acquire loans, consistent with the Company's investment objectives.
 
As of December 31, 2019 and September 30, 2019, the Company had outstanding debt under the DB Credit Facility of $250,000 and $122,700, respectively. For the three months ended December 31, 2019 and 2018, the Company

55


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


had borrowings on the DB Credit Facility of $140,900 and $0, respectively, and repayments on the DB Credit Facility of $13,600 and $0, respectively.

For the three months ended December 31, 2019 and 2018, the stated interest expense, cash paid for interest expense, annualized average interest rates and average outstanding balances for the DB Credit Facility were as follows:

 
For the three months ended December 31,
 
2019
 
2018
Stated interest expense
$
1,679

 
$

Facility fees
213

 

Amortization of debt issuance costs
110

 

Total interest expense
$
2,002

 
$

Cash paid for interest expense
$

 
$

Annualized average stated interest rate
4.0
%
 
N/A

Average outstanding balance
$
167,228

 
$


Other Short-Term Borrowings:  Borrowings with original maturities of less than one year are classified as short-term. The Company's short-term borrowings are the result of investments that were sold under repurchase agreements. Investments sold under repurchase agreements are accounted for as collateralized borrowings as the sale of the investment does not qualify for sale accounting under ASC Topic 860 and remains as an investment on the Consolidated Statements of Financial Condition.

As of December 31, 2019, the Company had $2,624 of short-term borrowings and the fair value of the loan associated with the short-term borrowings was $2,624. As of September 30, 2019, the Company had $16,366 of short-term borrowings and the fair value of the loan associated with the short-term borrowings was $16,202. For the three months ended December 31, 2019 and 2018, the annualized interest rate on short-term borrowings was 5.0% and 4.9%, respectively, and interest expense was $128 and $86, respectively. The net change in unrealized appreciation (depreciation) for the three months ended December 31, 2019 and 2018, reported within the net change in unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies was ($189) and $0, respectively.

For the three months ended December 31, 2019, the average total debt outstanding (including the debt under the Adviser Revolver, SB Revolver, DB Credit Facility and other short-term borrowings) was $323,125. For the three months ended December 31, 2018, the average total debt outstanding (including the debt under the Adviser Revolver, SMBC Revolver and other short-term borrowings) was $82,946.

For the three months ended December 31, 2019 and 2018, the effective annualized average interest rate, which includes amortization of debt financing costs and non-usage facility fees, on the Company's total debt was 4.3% and 4.9%, respectively.

A summary of the Company’s maturity requirements for borrowings as of December 31, 2019 is as follows:

56


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


 
Payments Due by Period
  
Total
 
Less Than
1 Year
 
1 – 3 Years
 
3 – 5 Years
 
More Than
5 Years
SB Revolver
$
109,284

 
$

 
$
109,284

 
$

 
$

DB Credit Facility
250,000

 

 
250,000

 

 
-

Adviser Revolver
5,000

 
5,000

 

 

 

Other short-term borrowings
2,624

 
2,624

 

 

 

Total borrowings
$
366,908

 
$
7,624

 
$
359,284

 
$

 
$


Note 9.    Commitments and Contingencies

Commitments: The Company had outstanding commitments to fund investments totaling $119,652 and $107,199 under various undrawn revolvers and other credit facilities as of December 31, 2019 and September 30, 2019, respectively. As described in Note 5, the Company had commitments of up to $109,375 and $109,375, respectively, to GBDC 3 SLF as of each of December 31, 2019 and September 30, 2019 which could be contributed primarily for the purpose of funding new investments approved by the GBDC 3 SLF investment committee. As of December 31, 2019, GBDC 3 SLF has not yet commenced operations.

Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as these involve future claims against the Company that have not occurred. The Company expects the risk of any future obligations under these indemnifications to be remote.

Off-balance sheet risk: Off-balance sheet risk refers to an unrecorded potential liability that may result in a future obligation or loss, even though it does not appear on the Consolidated Statements of Financial Condition. The Company has entered and, in the future, may enter into derivative instruments that contain elements of off-balance sheet market and credit risk. Refer to Note 6 for outstanding forward currency contracts as of December 31, 2019 and September 30, 2019. Derivative instruments can be affected by market conditions, such as interest rate volatility, which could impact the fair value of the derivative instruments. If market conditions move against the Company, it may not achieve the anticipated benefits of any derivative instruments and may realize a loss. The Company minimizes market risk through monitoring its investments and borrowings.

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. The Company has engaged, and in the future, in derivative transactions with counterparties. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. The Company’s maximum loss that it could incur related to counterparty risk on derivative instruments is the value of the collateral for that respective derivative instrument. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

Legal proceedings: In the normal course of business, the Company is subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company does not believe any disposition will have a material adverse effect on the Company’s consolidated financial statements.


57


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


Note 10. Financial Highlights

The financial highlights for the Company are as follows:
Per share data:(1)
 
Three months ended December 31,
 
 
2019
 
2018
Net asset value at beginning of period
 
$
15.00

 
$
15.00

Distributions declared:(2)
 
 
 
 
From net investment income
 
(0.34
)
 
(0.31
)
From capital gains
 
0.00
^
 

Net investment income
 
0.27

 
0.26

Net realized gain (loss) on investment transactions
 
0.00^

 
0.00
^
Net change in unrealized appreciation (depreciation) on investment transactions(3)
 
0.07

 
0.05

Net asset value at end of period
 
$
15.00

 
$
15.00

Total return based on net asset value per share(4)
 
2.24
%
 
2.12
%
Number of common shares outstanding
 
29,715,740.183

 
10,859,989.050

 
 
Three months ended December 31,
Listed below are supplemental data and ratios to the financial highlights:
 
2019
 
2018
Ratio of net investment income to average net assets*
 
7.24
 %
 
7.01
 %
Ratio of total expenses to average net assets(5)*
 
7.13
 %
 
7.04
 %
Ratio of management fee waiver to average net assets*
 
(0.67
)%
 
(0.59
)%
Ratio of incentive fee waiver to average net assets
 
(0.08
)%
 
(0.05
)%
Ratio of net expenses to average net assets(6)*
 
6.38
 %
 
6.40
 %
Ratio of incentive fees to average net assets
 
0.52
 %
 
0.47
 %
Ratio of total expenses (without incentive fees) to average net assets*
 
6.61
 %
 
6.57
 %
Total return based on average net asset value(7)*
 
9.37
 %
 
8.98
 %
Net assets at end of period
 
$
445,736

 
$
162,900

Average debt outstanding
 
$
323,125

 
$
82,946

Average debt outstanding per share
 
$
10.87

 
$
7.64

Portfolio Turnover*
 
12.24
 %
 
6.42
 %
Asset coverage ratio(8)
 
220.71
 %
 
305.20
 %
Asset coverage ratio per unit(9)
 
$
2,207

 
$
3,052

Average market value per unit (10):
 
 
 
 
SMBC Revolver
 
N/A

 
N/A

SB Revolver
 
N/A

 
N/A

DB Credit Facility
 
N/A

 
N/A

Adviser Revolver
 
N/A

 
N/A

Other short-term borrowings
 
N/A

 
N/A

 
* Annualized for periods of less than one year.
^ Represents an amount less than $0.01
(1) 
Based on actual number of shares outstanding at the end of the corresponding period or the weighted average shares outstanding for the period, unless otherwise noted, as appropriate.
(2) 
The per share data for distributions reflect the amount of distributions paid or payable with a record date during the applicable period.
(3) 
Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on the shares outstanding as of the dividend record date.
(4) 
Total return based on net asset value per share assumes distributions are reinvested in accordance with the DRIP. Total return does not include sales load.
(5) 
For the three months ended December 31, 2019 and 2018, incentive fee is not annualized in the calculation.

58


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


(6) 
For the three months ended December 31, 2019 and 2018, incentive fee waived is not annualized in the calculation.
(7) 
Total return based on average net asset value is calculated as (a) the net increase in net assets resulting from operations divided by (b) the daily average of total net assets. Total return does not include sales load.
(8) 
In accordance with the 1940 Act, with certain limited exceptions, the Company is currently allowed to borrow amounts such that its asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing.
(9) 
Asset coverage ratio per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage ratio per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
(10) 
Not applicable because such senior securities are not registered for public trading.

Note 11. Earnings Per Share

The following information sets forth the computation of the net increase in net assets per share resulting from operations for the three months ended December 31, 2019 and 2018:
  
 
Three months ended December 31,
 
 
2019
 
2018
Earnings available to stockholders
 
$
9,125

 
$
2,671

Basic and diluted weighted average shares outstanding
 
25,893,806

 
7,877,554

Basic and diluted earnings per share
 
$
0.35

 
$
0.34


Note 12. Dividends and Distributions

The Company’s dividends and distributions are recorded on the record date. The following table summarizes the Company’s dividend declarations and distributions with a record date during the three months ended December 31, 2019 and 2018:
Date Declared
 
Record Date
 
Payment Date
 
Shares Outstanding
 
Amount Per Share
 
Total Dividends Declared
For the three months ended December 31, 2019
 
 
 
 
8/6/2019
 
10/18/2019
 
12/27/2019
 
24,795,301.540

 
$
0.0974

 
$
2,415

11/22/2019
 
11/28/2019
 
12/27/2019
 
26,881,637.710

 
0.1310

 
3,522

11/22/2019
 
12/20/2019
 
2/26/2020
 
29,542,494.081

 
0.1079

 
3,188

Total dividends declared for the three months ended December 31, 2019
 
 
 
$
9,125

 
 
 
 
 
 
 
 
 
 
 
For the three months ended December 31, 2018
 
 
 
 
8/7/2018
 
10/17/2018
 
12/28/2018
 
6,474,023.277

 
$
0.1025

 
$
664

11/27/2018
 
11/28/2018
 
12/28/2018
 
8,500,263.562

 
0.1212

 
1,030

11/27/2018
 
12/26/2018
 
2/27/2019
 
10,806,835.918

 
0.0904

 
977
Total dividends declared for the three months ended December 31, 2018
 
 
 
$
2,671



59


Golub Capital BDC 3, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
(In thousands, except shares and per share data)


The following table summarizes the Company’s distributions reinvested during the three months ended December 31, 2019 and 2018:
 
Payment Date
 
DRIP Shares Issued
 
NAV ($) per share
 
DRIP Shares Value
For the three months ended December 31, 2019
November 26, 2019
 
185,724.541

 
$
15.00

 
$
2,786

December 27, 2019
 
173,246.102

 
15.00

 
2,599

 
 
358,970.643

 
$
15.00

 
$
5,385

 
 
 
 
 
 
 
For the three months ended December 31, 2018
November 27, 2018
 
49,178.285

 
$
15.00

 
$
738

December 28, 2018
 
53,153.132

 
15.00

 
797

 
 
102,331.417

 
$
15.00

 
$
1,535


Note 13. Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through February 14, 2020, the date the financial statements were available to be issued. There are no subsequent events to disclose except for the following:
On February 7, 2020, the Company, together with GBDC 3 Funding II entered into an amendment to the SB Revolver (the “SB Revolver Amendment”). The SB Revolver Amendment amended the SB Revolver to, among other things, increase the borrowing capacity under the SB Revolver to $275,000 from $225,000 and increase the borrowing base against which the Company may borrow through April 7, 2020, after which the borrowing base will revert to the terms applicable to the Company prior to the SB Revolver Amendment. The other material terms of the SB Revolver were unchanged.
On November 22, 2019 and February 4, 2020, the Board declared distributions to holders of record as set forth in the table below:
Record Date
 
Payment Date
 
Amount Per Share
January 21, 2020
 
February 26, 2020
 
Net increase in net assets resulting from operations earned by the Company (if positive) as determined in accordance with GAAP for the period January 1, 2020 through January 31, 2020 per share
February 25, 2020
 
May 22, 2020
 
Net increase in net assets resulting from operations earned by the Company (if positive) as determined in accordance with GAAP for the period February 1, 2020 through February 29, 2020 per share
March 27, 2020
 
May 22, 2020
 
Net increase in net assets resulting from operations earned by the Company (if positive) as determined in accordance with GAAP for the period March 1, 2020 through March 31, 2020 per share
April 29, 2020
 
July 24, 2020
 
Net increase in net assets resulting from operations earned by the Company (if positive) as determined in accordance with GAAP for the period April 1, 2020 through April 30, 2020 per share

On January 1, 2020, the Company entered into Subscription Agreements with additional stockholders totaling
$231,616 in the aggregate, including an additional subscription agreement entered into by GCOP LLC, an affiliate of Investment Adviser, for $13,000.

60



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our interim and unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In this report, “we,” “us,” “our” and “GBDC 3” refer to Golub Capital BDC 3, Inc. and its consolidated subsidiaries.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including statements as to:

our future operating results;
our business prospects and the prospects of our portfolio companies;
the effect of investments that we expect to make and the competition for those investments;
our contractual arrangements and relationships with third parties;
completion of a public offering of our securities or other liquidity event;
actual and potential conflicts of interest with GC Advisors LLC, or GC Advisors, and other affiliates of Golub Capital LLC, or collectively, Golub Capital;
the dependence of our future success on the general economy and its effect on the industries in which we invest;
the ability of our portfolio companies to achieve their objectives;
the use of borrowed money to finance a portion of our investments;
the adequacy of our financing sources and working capital;
the timing of cash flows, if any, from the operations of our portfolio companies;
general economic and political trends and other external factors;
the ability of GC Advisors to locate suitable investments for us and to monitor and administer our investments;
the ability of GC Advisors or its affiliates to attract and retain highly talented professionals;
our ability to qualify and maintain our qualification as a regulated investment company, or RIC, and as a business development company;
general price and volume fluctuations in the stock markets;
the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, and the rules and regulations issued thereunder and any actions toward repeal thereof; and
the effect of changes to tax legislation and our tax position.

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in our annual report on Form 10-K for the year ended September 30, 2019.

We have based the forward-looking statements included in this report on information available to us on the date of this report. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from historical performance. You are advised to consult any additional disclosures that we make directly to you or through reports that we have filed or in the future file with the Securities and Exchange Commission, or the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. This quarterly report on Form 10-Q contains statistics and other data that have been obtained from or compiled from information made available by third-party service providers. We have not independently verified such statistics or data.


61



Overview

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for U.S. federal income tax purposes, we have elected to be treated as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As a business development company and a RIC, we are also subject to certain constraints, including limitations imposed by the 1940 Act and the Code. We were formed in August 2017 and commenced operations on October 2, 2017.

Our investment objective is to generate current income and capital appreciation by investing primarily in one stop (a loan that combines characteristics of traditional first lien senior secured loans and second lien or subordinated loans and that are often referred to by other middle-market lenders as unitranche loans) and other senior secured loans of U.S. middle-market companies. We also selectively invest in second lien and subordinated (a loan that ranks senior only to a borrower’s equity securities and ranks junior to all of such borrower’s other indebtedness in priority of payment) loans of, and warrants and minority equity securities in, middle-market companies. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, a leading lender to U.S. middle-market companies with over $30.0 billion in capital under management as of December 31, 2019, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom Golub Capital has invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital.

Our investment activities are managed by GC Advisors and supervised by our board of directors of which a majority of the members are independent of us, GC Advisors and its affiliates.

Under an investment advisory agreement, or the Investment Advisory Agreement, which was reapproved by our board of directors in May 2019, we have agreed to pay GC Advisors an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. Under an administration agreement, or the Administration Agreement, we are provided with certain administrative services by an administrator, or the Administrator, which is currently Golub Capital LLC. Under the Administration Agreement, we have agreed to reimburse the Administrator for our allocable portion (subject to the review and approval of our independent directors) of overhead and other expenses incurred by the Administrator in performing its obligations under the Administration Agreement.

We seek to create a portfolio that includes primarily one stop and other senior secured loans by primarily investing approximately $5.0 million to $30.0 million of capital, on average, in the securities of U.S. middle-market companies. We also selectively invest more than $30.0 million in some of our portfolio companies and generally expect that the size of our individual investments will vary proportionately with the size of our capital base.

We generally invest in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. These securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. In addition, many of our debt investments have floating interest rates that reset on a periodic basis and typically do not fully pay down principal prior to maturity, which may increase our risk of losing part or all of our investment.


62



As of December 31, 2019 and September 30, 2019, our portfolio at fair value was comprised of the following:
 
 
As of December 31, 2019
 
As of September 30, 2019
Investment Type
 
Investments at
 Fair Value
(In thousands)
 
Percentage of
Total
Investments
 
Investments at
Fair Value
(In thousands)
 
Percentage of
Total
Investments
Senior secured
 
$
110,771

 
13.9
%
 
$
96,765

 
15.7
%
One stop
 
674,769

 
84.6

 
509,530

 
82.6

Second lien
 
4,018

 
0.5

 
3,898

 
0.6

Subordinated debt
 
37

 
0.0
*
 
2

 
0.0
*
Equity
 
8,098

 
1.0

 
6,794

 
1.1

Total
 
$
797,693

 
100.0
%
 
$
616,989

 
100.0
%
 
*
Represents an amount less than 0.1%
One stop loans include loans to technology companies undergoing strong growth due to new services, increased adoption and/or entry into new markets. We refer to loans to these companies as late stage lending loans. Other targeted characteristics of late stage lending businesses include strong customer revenue retention rates, a diversified customer base and backing from growth equity or venture capital firms. In some cases, the borrower’s high revenue growth is supported by a high level of discretionary spending. As part of the underwriting of such loans and consistent with industry practice, we adjust our characterization of the earnings of such borrowers for a reduction or elimination of such discretionary expenses, if appropriate. As of December 31, 2019 and September 30, 2019, one stop loans included $128.2 million and $110.0 million, respectively, of late stage lending loans at fair value.

As of December 31, 2019 and September 30, 2019, we had debt and equity investments in 131 and 118 portfolio companies, respectively. The following table shows the weighted average annualized income yield and weighted average annualized investment income yield of our earning portfolio company investments, which represented 100% of our debt investments, as well as the total return based on our average net asset value and the total return based on the change in the net asset value of our stock and assuming distributions were reinvested in accordance with our dividend reinvestment plan, or DRIP, in each case for the three months ended December 31, 2019 and 2018 was as follows:
 
For the three months ended December 31,
 
2019
 
2018
Weighted average annualized income yield(1)
8.0%
 
8.7%
Weighted average annualized investment income yield(2)
8.4%
 
9.1%
Total return based on average net asset value(3)*
9.4%
 
9.0%
Total return based on net asset value per share(4)
2.2%
 
2.1%
 
* Annualized for periods of less than one year.
(1) 
Represents income from interest and fees, excluding amortization of capitalized fees and discounts divided by the average fair value of earning portfolio company investments, and does not represent a return to any investor in us.
(2) 
Represents income from interest, fees and amortization of capitalized fees and discounts, divided by the average fair value of earning portfolio company investments, and does not represent a return to any investor in us.
(3) 
Total return based on average net asset value is calculated as (a) the net increase in net assets resulting from operations divided by (b) the daily average of total net assets. Total return does not include sales load.
(4) 
Total return based on net asset value assumes distributions are reinvested in accordance with the DRIP. Total return does not include sales load.
As of December 31, 2019, GBDC 3 has earned an inception-to-date internal rate of return, or IRR, of 10.5% for stockholders taken as a whole. For the three months ended December 31, 2019 and 2018, GBDC 3 earned an IRR of 9.7% and 9.4%, respectively, for stockholders taken as a whole. An individual stockholder’s IRR may vary based on the timing of their capital transactions. The IRR is the annualized effective compound rate of return that brings a series of cash flows to the current value of the cash invested. The IRR was computed based on the actual dates of cash inflows (share issuances, including share issuances through the DRIP), outflows (capital distributions), the

63



stockholders' net asset value, or NAV, at the end of the period and distributions declared and payable at the end of the period (residual value of the stockholders’ NAV and distributions payable as of each measurement date).

Revenues: We generate revenue in the form of interest and fee income on debt investments and capital gains and distributions, if any, on portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior secured, one stop, or subordinated loans, typically have a term of three to seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments fluctuates significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. In some cases, our investments provide for deferred interest payments or payment-in-kind, or PIK, interest. The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date. In addition, we generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans as fee income. For additional details on revenues, see “Critical Accounting Policies - Revenue Recognition.”

We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investment transactions in the Consolidated Statements of Operations.

Expenses: Our primary operating expenses include the payment of fees to GC Advisors under the Investment Advisory Agreement and interest expense on our outstanding debt. We bear all out-of-pocket costs and expenses of our operations and transactions, including:

reimbursement to GC Advisors of organizational and offering expenses up to an aggregate amount of $0.7 million;
calculating our NAV (including the cost and expenses of any independent valuation firm);
fees and expenses incurred by GC Advisors payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments, which fees and expenses include, among other items, due diligence reports, appraisal reports, any studies commissioned by GC Advisors and travel and lodging expenses;
expenses related to unsuccessful portfolio acquisition efforts;
administration fees and expenses, if any, payable under the Administration Agreement (including payments based upon our allocable portion of the Administrator’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief compliance officer, chief financial officer and their respective staffs);
fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments in portfolio companies, including costs associated with meeting financial sponsors;
transfer agent, dividend agent and custodial fees and expenses;
U.S. federal and state registration and franchise fees;
U.S. federal, state and local taxes;
independent directors’ fees and expenses;
costs of preparing and filing reports or other documents required by the SEC or other regulators;
costs of any reports, proxy statements or other notices to stockholders, including printing costs;
costs associated with individual or group stockholders;
costs associated with compliance under the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act;

64



our allocable portion of any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs;
proxy voting expenses; and
all other expenses incurred by us or the Administrator in connection with administering our business.

We expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets during periods of asset growth and to increase during periods of asset declines.

Recent Developments
On February 7, 2020, we, together with our direct wholly owned subsidiary GBDC 3 Funding II LLC, entered into an amendment to the SB Revolver (as defined in Note 8 of our consolidated financial statements), or the SB Revolver Amendment. The SB Revolver Amendment amended the SB Revolver to, among other things, increase the borrowing capacity under the SB Revolver to $275.0 million from $225.0 million and increase the borrowing base against which we may borrow through April 7, 2020, after which the borrowing base will revert to the terms applicable to us prior to the SB Revolver Amendment. The other material terms of the SB Revolver were unchanged.
On November 22, 2019 and February 4, 2020, our board of directors declared distributions to holders of record as set forth in the table below:
Record Date
 
Payment Date
 
Amount Per Share
January 21, 2020
 
February 26, 2020
 
Net increase in net assets resulting from operations earned by us (if positive) as determined in accordance with the generally accepted accounting principles in the United States of America, or GAAP, for the period January 1, 2020 through January 31, 2020 per share
February 25, 2020
 
May 22, 2020
 
Net increase in net assets resulting from operations earned by us (if positive) as determined in accordance with GAAP for the period February 1, 2020 through February 29, 2020 per share
March 27, 2020
 
May 22, 2020
 
Net increase in net assets resulting from operations earned by us (if positive) as determined in accordance with GAAP for the period March 1, 2020 through March 31, 2020 per share
April 29, 2020
 
July 24, 2020
 
Net increase in net assets resulting from operations earned by us (if positive) as determined in accordance with GAAP for the period April 1, 2020 through April 30, 2020 per share

On January 1, 2020, we entered into subscription agreements with additional stockholders totaling $231.6 million in the aggregate, including an additional subscription agreement entered into by GCOP LLC, an affiliate of GC Advisors, for $13.0 million.


65



Consolidated Results of Operations

Consolidated operating results for the three months ended December 31, 2019 and 2018 are as follows:
 
For the three months ended December 31,
 
Variances
  
2019
 
2018
 
2019 vs. 2018
  
(In thousands)
Interest income
$
13,811

 
$
4,069

 
$
9,742

Income from accretion of discounts and origination fees
700

 
226

 
474

Dividend income
2

 

 
2

Fee income
49

 
65

 
(16
)
Total investment income
14,562

 
4,360

 
10,202

Net expenses
7,509

 
2,275

 
5,234

Net investment income
7,053

 
2,085

 
4,968

Net realized gain (loss) on investment transactions
(11
)
 
9

 
(20
)
Net change in unrealized appreciation (depreciation) on investment transactions
2,083

 
577

 
1,506

Net increase in net assets resulting from operations
$
9,125

 
$
2,671

 
$
6,454

Average earning portfolio company investments, at fair value
$
691,197

 
$
187,983

 
$
503,214


Net income can vary substantially from period to period for various reasons, including the recognition of realized gains and losses and unrealized appreciation and depreciation. As a result, quarterly comparisons of net income may not be meaningful. In addition, as we have continued to raise and deploy capital, we have experienced significant growth in total assets, total liabilities and net assets from December 31, 2018 to December 31, 2019. As a result, quarterly comparisons of operating results may not be meaningful.

Investment Income

Investment income increased from the three months ended December 31, 2018 to the three months ended December 31, 2019 by $10.2 million primarily as a result of an increase in the average earning debt investments balance, which is the annual average balance of accruing loans in our debt investment portfolio, of $503.2 million.

The annualized income yield by debt security type for the three months ended December 31, 2019 and 2018 was as follows:
 
For the three months ended December 31,
  
2019
 
2018
Senior secured
6.7%
 
7.2%
One stop
8.2%
 
8.9%
Second lien
12.2%
 
N/A
Subordinated debt(1)
4.3%
 
8.0%
(1) Represents two and one portfolio company investment(s) for the three months ended December 31, 2019 and 2018, respectively.

Due to the significant growth in the portfolio from the three months ended December 31, 2018 to the three months ended December 31, 2019, changes in investment yields may not be indicative of market conditions and as a result, quarterly comparisons may not be meaningful.

For additional details on investment yields and asset mix, refer to the “Liquidity and Capital Resources - Portfolio Composition, Investment Activity and Yield” section below.


66



Expenses

The following table summarizes our expenses for the three months ended December 31, 2019 and 2018:
 
For the three months ended December 31,
 
Variances
  
2019
 
2018
 
2019 vs. 2018
  
(In thousands)
Interest and facility fee expenses
$
3,297

 
$
851

 
$
2,446

Amortization of debt issuance costs
205

 
170

 
35

Base management fee, net of waiver
1,743

 
470

 
1,273

Income incentive fee, net of waiver
1,317

 
388

 
929

Capital gain incentive fee accrued under GAAP, net of waiver
408

 
111

 
297

Professional fees, net of waiver
249

 
188

 
61

Administrative service fee
275

 
70

 
205

General and administrative expenses
15

 
27

 
(12
)
Net expenses
$
7,509

 
$
2,275

 
$
5,234

Average debt outstanding
$
323,125

 
$
82,946

 
$
240,179


Interest Expense

Interest and facility fee expense increased by $2.4 million from the three months ended December 31, 2018 to the three months ended December 31, 2019 primarily due to an increase in the weighted average of outstanding borrowings of $240.2 million. Amortization of debt issuance costs increased from the three months ended December 31, 2018 to the three months ended December 31, 2019 by less than $0.1 million, primarily due to the amortization of debt issuance costs related to the DB Credit Facility entered into on September 10, 2019. The effective annualized average interest rate on our outstanding debt decreased to 4.3% for the three months ended December 31, 2019 from 4.9% for the three months ended December 31, 2018 primarily due to a lower average LIBOR during the three months ended December 31, 2019 as compared to the three months ended December 31, 2018.

Management Fees

The base management fee increased as a result of a sequential increase in average assets from the three months ended December 31, 2018 to the three months ended December 31, 2019.

Incentive Fees

The incentive fee payable under the Investment Advisory Agreement consists of two parts: (1) the income component, or the Income Incentive Fee, and (2) the capital gains component, or the Capital Gain Incentive Fee. The Income Incentive Fee increased by $0.9 million from the three months ended December 31, 2018 to the three months ended December 31, 2019, primarily as a result of the increase in our average earning debt investment balances that resulted in an increase in our Pre-Incentive Fee Net Investment Income (as defined in Note 4 to our consolidated financial statements). For the three months ended December 31, 2019 and 2018, the Income Incentive Fee calculation and the Income Incentive Fee earned by GC Advisors as a percentage of Pre-Incentive Fee Net Investment Income, net of waiver, was the maximum 15.0%.

We recorded an accrual for the capital gain incentive fee under GAAP of $0.4 million and $0.1 million for the three months ended December 31, 2019 and 2018, respectively. However, in accordance with GAAP, we are required to include the aggregate unrealized capital appreciation on investments in the calculation and accrue a capital gain incentive fee as if such unrealized capital appreciation were realized, even though such unrealized capital appreciation is not permitted to be considered in calculating the fee actually payable under the Investment Advisory Agreement. The cumulative capital gain incentive fee accrual calculated in accordance with GAAP as of December 31, 2019 and September 30, 2019 was $1.1 million and $0.7 million, respectively, none of which was payable as a Capital Gain Incentive Fee pursuant to the Investment Advisory Agreement. The capital gain incentive fee accrual under GAAP was primarily due to unrealized appreciation in the investment portfolio. For additional

67



details on unrealized appreciation and depreciation of investments, refer to the “Net Realized and Unrealized Gains and Losses” see section below.

Professional Fees, Administrative Service Fees, and General and Administrative Expenses

In total, professional fees, the administrative service fee, and general and administrative expenses increased by $0.3 million from the three months ended December 31, 2018 to the three months ended December 31, 2019. These increases are associated with increased costs to service a growing portfolio. In general, we expect certain of our operating expenses, including professional fees, the administrative service fee, and other general and administrative expenses to decline as a percentage of our total assets during periods of growth and increase as a percentage of our total assets during periods of asset declines.

The Administrator pays for certain expenses incurred by us. These expenses are subsequently reimbursed in cash. Total expenses reimbursed by us to the Administrator for the three months ended December 31, 2019 and 2018, were $0.2 million and $0.1 million, respectively.

As of December 31, 2019 and September 30, 2019, included in accounts payable and accrued expenses were $0.2 million and $0.2 million, respectively, for accrued expenses paid on behalf of us by the Administrator.

Net Realized and Unrealized Gains and Losses

The following table summarizes our net realized and unrealized gains (losses) for the three months ended December 31, 2019 and 2018:
 
For the three months ended December 31,
 
Variances
 
2019
 
2018
 
2019 vs. 2018
 
(In thousands)
Net realized gain (loss) from investments
$
1

 
$
2

 
$
(1
)
Net realized gain (loss) from foreign currency transactions
(12
)
 
7

 
(19
)
Net realized gain (loss) on investment transactions
(11
)
 
9

 
(20
)
Unrealized appreciation from investments
$
3,799

 
$
1,426

 
$
2,373

Unrealized (depreciation) from investments
(1,228
)
 
(859
)
 
(369
)
Unrealized (depreciation) from forward currency contracts
(299
)
 

 
(299
)
Unrealized appreciation (depreciation) on foreign currency translation
(189
)
 
10

 
(199
)
Net change in unrealized appreciation (depreciation) on investment transactions
$
2,083

 
$
577

 
$
1,506


During the three months ended December 31, 2019, we had a net realized loss on investment transactions of less than $0.1 million primarily due to realized losses on foreign currency transactions partially offset by realized gains on the sales of equity investments. For the three months ended December 31, 2018, we had a net realized gain on investments and foreign currency transactions of less than $0.1 million primarily due to realized gains on the sale of equity investments and realized gains on foreign currency transactions.

For the three months ended December 31, 2019, we had $3.8 million in unrealized appreciation on 54 portfolio company investments, which was partially offset by $1.2 million in unrealized depreciation on 79 portfolio company investments. Unrealized appreciation during the three months ended December 31, 2019 resulted from an increase in fair value primarily due to the rise in market prices of portfolio company investments. Unrealized depreciation primarily resulted from the amortization of discounts and negative credit related adjustments that caused a reduction in fair value of portfolio company investments during the three months ended December 31, 2019.

For the three months ended December 31, 2018, we had $1.4 million in unrealized appreciation on 41 portfolio company investments, which was partially offset by less than $0.9 million unrealized depreciation on 52 portfolio company investments. Unrealized appreciation during the three months ended December 31, 2018 resulted from an increase in fair value primarily due to the rise in market prices of portfolio company investments. Unrealized depreciation primarily resulted from the amortization of discounts and negative credit related adjustments that

68



caused a reduction in fair value of portfolio company investments during the three months ended December 31, 2018.

During the three months ended December 31, 2019, we recognized unrealized depreciation on forward currency contracts of $0.3 million, which was comprised of unfavorable movements in currency rates for three open forward currency contracts. See Note 6 in the notes to the consolidated financial statements for details of open positions on forward currency contracts.

Liquidity and Capital Resources

For the three months ended December 31, 2019, we experienced a net increase in cash and cash equivalents, foreign currencies and restricted cash and cash equivalents of $1.3 million. During the period we used $168.4 million in operating activities, primarily as a result of fundings of portfolio investments of $198.2 million, partially offset by proceeds from principal payments and sales of portfolio investments of $21.6 million. During the same period, cash provided by financing activities was $169.6 million, primarily driven by borrowings on debt of $183.1 million, proceeds from short-term borrowings of $18.8 million and proceeds from the issuance of common stock of $96.9 million that were partially offset by repayments of debt of $89.5 million, repayments on short-term borrowings of $32.7 million and distributions paid of $7.0 million.

For the three months ended December 31, 2018, we experienced a net increase in cash, cash equivalents and foreign currencies of $2.8 million. During the period we used $89.5 million in operating activities, primarily as a result of fundings of portfolio investments of $94.5 million. During the same period, cash provided by financing activities was $92.3 million, primarily driven by borrowings on debt of $116.2 million, proceeds from short-term borrowings of $7.6 million and proceeds from the issuance of common shares of $73.4 million that were offset by repayments of debt of $103.2 million and distributions paid of $1.7 million.

As of December 31, 2019 and September 30, 2019, we had cash and cash equivalents of $3.5 million and $2.4 million, respectively. In addition, we had foreign currencies of $0.2 million and $0.1 million as of December 31, 2019 and September 30, 2019, respectively, and restricted cash and cash equivalents of $17.5 million and $17.4 million, respectively.

Cash and cash equivalents and foreign currencies are available to fund new investments, pay operating expenses and
pay distributions. As of December 31, 2019 and September 30, 2019, $17.5 million and $17.4 million, respectively, of our restricted cash and cash equivalents could be used to fund new investments that meet the guidelines under the DB Credit Facility (as defined in Note 8 of our consolidated financial statements), as well as for the payment of interest expense and revolving debt of the DB Credit Facility.

As of December 31, 2019 and September 30, 2019, we had investor capital subscriptions totaling $577.6 million and $527.5 million, respectively, of which $431.8 million and $334.9 million, respectively, had been called and contributed, leaving $145.7 million and $192.6 million of uncalled investor capital subscriptions, respectively.

Revolving Credit Facilities

SB Revolver - On February 4, 2019, we entered into the SB Revolver (as defined in Note 8 of our consolidated financial statements) with Signature Bank, which initially allowed us to borrow up to $175.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. On April 8, 2019, we entered into an amendment which increased the borrowing capacity under the SB Revolver to $225.0 million. As of December 31, 2019 and September 30, 2019, we had $109.3 million and $144.4 million outstanding, respectively, under the SB Revolver. As of December 31, 2019 and September 30, 2019, subject to leverage and borrowing base restrictions, we had approximately $115.7 million and $80.6 million of remaining commitments, respectively, and no availability on the SB Revolver.

DB Credit Facility - On September 10, 2019, we entered into the DB Credit Facility. As of December 31, 2019 and September 30, 2019, the DB Credit Facility allowed GBDC 3 Funding LLC, or GBDC 3 Funding, to borrow up to $250.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of December 31, 2019 and September 30, 2019, we had $250.0 million and $122.7 million outstanding under the DB Credit Facility,

69



respectively. As of December 31, 2019 and September 30, 2019, subject to leverage and borrowing base restrictions, we had $0 and approximately $127.3 million of remaining commitments, respectively, and $0 and less than $1.0 million of availability on the DB Credit Facility, respectively.

Adviser Revolver - As of December 31, 2019 and September 30, 2019, we were permitted to borrow up to $40.0 million and $125.0 million, respectively, at any one time outstanding under the Adviser Revolver (as defined in Note 8 of our consolidated financial statements). As of December 31, 2019 and September 30, 2019, we had $5.0 million and $3.5 million, respectively, outstanding under the Adviser Revolver. On October 28, 2019, we entered into an amendment to the Adviser Revolver, which decreased the borrowing capacity from $125.0 million to $40.0 million.

In accordance with the 1940 Act, with certain limited exceptions, we are currently allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, is at least 200% after such borrowing. We are still evaluating the merits of operating with a higher leverage ratio, as permitted by and subject to the requirements of Section 61(a)(2) of the 1940 Act and have not sought or obtained approval to reduce our asset coverage ratio and, as a result, remain subject to the 200% asset coverage requirement under Section 61(a)(1) of the 1940 Act. As of December 31, 2019, our asset coverage for borrowed amounts was 220.7%.

As of December 31, 2019 and September 30, 2019, we had outstanding commitments to fund investments totaling $119.7 million and $107.2 million, respectively. There is no guarantee that these amounts will be funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers as of December 31, 2019 and September 30, 2019, respectively, subject to the terms of each loan’s respective credit agreement. As of December 31, 2019, we believe that we had sufficient assets and liquidity to adequately cover future obligations under our unfunded commitments based on historical rates of drawings upon unfunded commitments and cash balances that we maintain, availability under our SB Revolver, DB Credit Facility and Adviser Revolver, ongoing principal repayments on debt investments assets and uncalled investor capital subscriptions.

Although we expect to fund the growth of our investment portfolio through net proceeds from capital calls on existing and future investor capital subscriptions and through our dividend reinvestment plan as well as future borrowings, to the extent permitted by the 1940 Act, we cannot assure you that our efforts to raise capital will be successful. In addition to capital not being available, it also could not be available on favorable terms. To the extent we are not able to raise capital on what we believe are favorable terms, we will focus on optimizing returns by investing in capital generated by repayments into new investments we believe are attractive from a risk/reward perspective. Furthermore, to the extent we are not able to raise capital and are at or near our targeted leverage ratios, we expect to receive smaller allocations, if any, on new investment opportunities under GC Advisors’ allocation policy.

Portfolio Composition, Investment Activity and Yield

As of December 31, 2019 and September 30, 2019, we had investments in 131 and 118 portfolio companies, respectively, with a total fair value of $797.7 million and $617.0 million, respectively.

The following table shows the asset mix of our new investment commitments for the three months ended December 31, 2019 and 2018:
  
For the three months ended December 31,

2019

2018
  
Commitments
(In thousands)

Percentage of
Commitments

Commitments
(In thousands)

Percentage of
Commitments
Senior secured
$
31,012


14.2
%

$
31,395


25.7
%
One stop
186,397


85.3


88,468


72.4

Subordinated debt
35


0.0
*




Equity
1,196


0.5


2,261


1.9

   Total new investment commitments
$
218,640


100.0
%

$
122,124


100.0
%

70



 
* Represents an amount less than 0.1%

For the three months ended December 31, 2019 and 2018, we had approximately $21.6 million and $3.0 million, respectively, in proceeds from principal payments, return of capital distributions of portfolio companies and sales of equity investments in portfolio companies.
 
The following table shows the principal, amortized cost and fair value of our portfolio of investments by asset class:
 
As of December 31, 2019(1)
 
As of September 30, 2019(2)
  
Principal
 
Amortized
Cost
 
Fair
Value
 
Principal
 
Amortized
Cost
 
Fair
Value
 
(In thousands)
 
(In thousands)
Senior secured:
 
 
 
 
 
 
  

 
  

 
  

Performing
$
111,289

 
$
109,949

 
$
110,771

 
$
97,133

 
$
95,943

 
$
96,765

Non-accrual(3)

 

 

 

 

 

One stop:
  

 
 
 
 
 
 
 
 
 
 
Performing
676,772

 
667,907

 
674,769

 
511,850

 
505,134

 
509,530

Non-accrual(3)

 

 

 

 

 

Second lien:
 
 
 
 
 
 
 
 
 
 
 
Performing
4,018

 
3,935

 
4,018

 
3,898

 
3,811

 
3,898

Non-accrual(3)

 

 

 

 

 

Subordinated debt:
 
 
 
 
 
 
 
 
 
 
 
Performing
37

 
35

 
37

 
2

 
0*

 
2

Non-accrual(3)

 

 

 

 

 

Equity
N/A

 
7,310

 
8,098

 
N/A

 
6,115

 
6,794

Total
$
792,116

 
$
789,136

 
$
797,693

 
$
612,883

 
$
611,003

 
$
616,989

 
* Represents less than $1,000.
(1) 
As of December 31, 2019, $32.5 million and $33.0 million of our loans at amortized cost and fair value, respectively, included a feature permitting a portion of interest due on such loan to be PIK interest.
(2) 
As of September 30, 2019, $40.0 million and $40.6 million of our loans at amortized cost and fair value, respectively, included a feature permitting a portion of interest due on such loan to be PIK interest.
(3) 
We refer to a loan as non-accrual when we cease recognizing interest income on the loan because we have stopped pursuing repayment of the loan or, in certain circumstances, it is past due 90 days or more on principal and interest or our management has reasonable doubt that principal or interest will be collected. See “— Critical Accounting Policies — Revenue Recognition.” As of December 31, 2019 and September 30, 2019, there were no loans in our portfolio that were on non-accrual.
As of December 31, 2019 and September 30, 2019, the fair value of our debt investments as a percentage of the outstanding principal value was 99.7% and 99.6%, respectively.


71



The following table shows the weighted average rate, spread over LIBOR and fees on investments originated during the three months ended December 31, 2019 and 2018:
 
For the three months ended December 31,
  
2019
 
2018
Weighted average rate of new investment fundings
7.4%
 
7.7%
Weighted average spread over LIBOR of new floating rate investment fundings
5.5%
 
5.2%
Weighted average fees of new investment fundings
1.4%
 
1.5%
Weighted average annualized income yield (1)
8.0%
 
8.7%
(1) 
Represents income from interest and fees, excluding amortization of capitalized fees and discounts, divided by the average fair value of earning debt investments, and does not represent a return to any investor in us.

As of December 31, 2019, 83.0% of our debt portfolio at fair value and at amortized cost had interest rate floors that limit the minimum applicable interest rates on such loans. As of September 30, 2019, 81.7% of our debt portfolio at fair value and at amortized cost had interest rate floors that limit the minimum applicable interest rates on such loans.
As of December 31, 2019 and September 30, 2019, the portfolio median earnings before interest, taxes, depreciation and amortization, or EBITDA, for our portfolio companies was $33.6 million and $29.4 million, respectively. The portfolio median EBITDA is based on the most recently reported trailing twelve-month EBITDA received from the portfolio company.

As part of the monitoring process, GC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal system developed by Golub Capital and its affiliates. This system is not generally accepted in our industry or used by our competitors. It is based on the following categories, which we refer to as GC Advisors’ internal performance ratings:
 
 
 
Internal Performance Ratings
Rating
 
Definition
5
 
Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and the trends and risk factors are generally favorable.
4
 
Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected, and the risk factors are neutral to favorable.
3
 
Involves a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination. The borrower could be out of compliance with debt covenants; however, loan payments are generally not past due.
2
 
Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments could be past due (but generally not more than 180 days past due).
1
 
Involves a borrower performing substantially below expectations and indicates that the loan’s risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 1 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

For any investment rated 1, 2 or 3, GC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions.

GC Advisors monitors and, when appropriate, changes the internal performance ratings assigned to each investment in our portfolio. In connection with our valuation process, GC Advisors and our board of directors review these internal performance ratings on a quarterly basis.

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The following table shows the distribution of our investments on the 1 to 5 internal performance rating scale at fair value as of December 31, 2019 and September 30, 2019:
 
 
As of December 31, 2019
 
As of September 30, 2019
Internal
Performance
Rating
 
Investments
at Fair Value
(In thousands)
 
Percentage of
Total
Investments
 
Investments
at Fair Value
(In thousands)
 
Percentage of
Total
Investments
5
 
$
26,356

 
3.3
%
 
$
1,949

 
0.3
%
4
 
753,784

 
94.5

 
605,050

 
98.1

3
 
17,399

 
2.2

 
9,990

 
1.6

2
 
154

 
0.0
*
 

 

1
 

 

 

 

Total
 
$
797,693

 
100.0
%
 
$
616,989

 
100.0
%
* Represents an amount less than 0.1%
Contractual Obligations and Off-Balance Sheet Arrangements

A summary of our significant contractual payment obligations as of December 31, 2019 is as follows:
 
Payments Due by Period (In Thousands)
  
Total
 
Less Than
1 Year
 
1 – 3 Years
 
3 – 5 Years
 
More Than
5 Years
SB Revolver
$
109,284

 
$

 
$
109,284

 
$

 
$

Adviser Revolver
5,000

 
5,000

 

 

 

DB Credit Facility
250,000

 

 
250,000

 

 

Other short-term borrowings
2,624

 
2,624

 

 

 

Unfunded commitments (1)
119,652

 
119,652

 

 

 

Total contractual obligations
$
486,560

 
$
127,276

 
$
359,284

 
$

 
$

 
(1) 
Unfunded commitments represent unfunded commitments to fund investments as of December 31, 2019. There is no guarantee that these amounts will be funded to the borrowing party now or in the future. The unfunded commitments relate to loans with various maturity dates, but we are showing this amount in the less than one year category as this entire amount was eligible for funding to the borrowers as of December 31, 2019, subject to the terms of each loan’s respective credit agreement. The unfunded commitments amount does not include $109.4 million of commitments as of December 31, 2019 for GBDC 3 Senior Loan Fund LLC, which is described in Note 5 in the notes to our consolidated financial statements.
We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of December 31, 2019, we had outstanding commitments to fund investments totaling $119.7 million.

We have certain contracts under which we have material future commitments. We have entered into the Investment Advisory Agreement with GC Advisors in accordance with the 1940 Act. Under the Investment Advisory Agreement, GC Advisors provides us with investment advisory and management services.

Under the Administration Agreement, the Administrator furnishes us with office facilities and equipment, provides us with clerical, bookkeeping and record keeping services at such facilities and provides us with other administrative services necessary to conduct our day-to-day operations. The Administrator also provides on our behalf managerial assistance to those portfolio companies to which we are required to offer to provide such assistance.

If any of the contractual obligations discussed above is terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we receive under our Investment Advisory Agreement and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.


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Distributions

We intend to make periodic distributions to our stockholders as determined by our board of directors. For additional information on distributions, see “Critical Accounting Policies - Income Taxes.”

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, the asset coverage requirements applicable to us as a business development company under the 1940 Act could limit our ability to make distributions. If we do not distribute a certain percentage of our income annually, we will suffer adverse U.S. federal income tax consequences, including the possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions.

Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations can differ from net investment income and realized gains recognized for financial reporting purposes. Differences are permanent or temporary. Permanent differences are reclassified within capital accounts in the financial statements to reflect their tax character. For example, permanent differences in classification result from the treatment of distributions paid from short-term gains as ordinary income dividends for tax purposes. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future.

To the extent our taxable earnings fall below the total amount of our distributions for any tax year, a portion of those distributions could be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders could be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any written disclosure accompanying a distribution payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, our stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our dividend reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes.


Related Party Transactions

We have entered into a number of business relationships with affiliated or related parties, including the following:

We entered into the Investment Advisory Agreement with GC Advisors. Each of Mr. Lawrence Golub, our chairman, and Mr. David Golub, our president and chief executive officer, is a manager of GC Advisors, and each of Messrs. Lawrence Golub and David Golub owns an indirect pecuniary interest in GC Advisors.
Golub Capital LLC provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our Administration Agreement.
We have entered into a license agreement with Golub Capital LLC, pursuant to which Golub Capital LLC has granted us a non-exclusive, royalty-free license to use the name “Golub Capital.”
Under a staffing agreement, or the Staffing Agreement, Golub Capital LLC has agreed to provide GC Advisors with the resources necessary to fulfill its obligations under the Investment Advisory Agreement. The Staffing Agreement provides that Golub Capital LLC will make available to GC Advisors experienced investment professionals and provide access to the senior investment personnel of Golub Capital LLC for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. The Staffing Agreement also includes a commitment that the members of GC Advisors’ investment committee will serve in such capacity. Services under the Staffing Agreement are provided on a direct cost reimbursement basis. We are not a party to the Staffing Agreement.

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We have entered into the Adviser Revolver with GC Advisors in order to have the ability to borrow funds on a short-term basis.
GC Advisors also sponsors or manages, and expects in the future to sponsor or manage, other investment funds, accounts or investment vehicles (together referred to as “accounts”) that have investment mandates that are similar, in whole and in part, with ours. For example, GC Advisors presently serves as the investment adviser to Golub Capital BDC, Inc., a publicly-traded business development company (Nasdaq: GBDC) which focuses on investing primarily in one stop and other senior secured loans of U.S. middle-market companies. In addition, our officers and directors serve in similar capacities for Golub Capital BDC, Inc. If GC Advisors and its affiliates determine that an investment is appropriate for us and for other such accounts, depending on the availability of such investment and other appropriate factors, and pursuant to GC Advisors’ allocation policy, GC Advisors or its affiliates could determine that we should invest side-by-side with one or more other accounts. We do not intend to make any investments if they are not permitted by applicable law and interpretive positions of the SEC and its staff, or if they are inconsistent with GC Advisors’ allocation procedures.

In addition, we have adopted a formal code of ethics that governs the conduct of our and GC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the General Corporation Law of the State of Maryland.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Fair Value Measurements

We value investments for which market quotations are readily available at their market quotations. However, a readily available market value is not expected to exist for many of the investments in our portfolio, and we value these portfolio investments at fair value as determined in good faith by our board of directors under our valuation policy and process.

Valuation methods include comparisons of the portfolio companies to peer companies that are public, determination of the enterprise value of a portfolio company, discounted cash flow analysis and a market interest rate approach. The factors that are taken into account in fair value pricing investments include: available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments can differ significantly from the values that would have been used had a readily available market value existed for such investments and differ materially from values that are ultimately received or settled.

Our board of directors is ultimately and solely responsible for determining, in good faith, the fair value of investments that are not publicly traded, whose market prices are not readily available on a quarterly basis or any other situation where portfolio investments require a fair value determination.

With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below:

Our quarterly valuation process begins with each portfolio company investment being initially valued by the investment professionals of GC Advisors responsible for credit monitoring. Preliminary valuation conclusions are

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then documented and discussed with our senior management and GC Advisors. At least once annually, the valuation for each portfolio investment, subject to a de minimus threshold, is reviewed by an independent valuation firm. The board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith.

Determination of fair values involves subjective judgments and estimates. Under current accounting standards, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements.

We follow ASC Topic 820 for measuring fair value. Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity. Our fair value analysis includes an analysis of the value of any unfunded loan commitments. Assets and liabilities are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the asset or liability as of the measurement date. The three levels are defined as follows:

Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and inputs that are observable for the assets or liabilities, either directly or indirectly, for substantially the full term of the assets or liabilities.
Level 3: Inputs include significant unobservable inputs for the assets or liabilities and include situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or a liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and we consider factors specific to the asset or liability. We assess the levels of assets and liabilities at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfers. There were no transfers among Level 1, 2 and 3 of the fair value hierarchy for assets and liabilities during the three months ended December 31, 2019 and 2018. The following section describes the valuation techniques used by us to measure different assets and liabilities at fair value and includes the level within the fair value hierarchy in which the assets and liabilities are categorized.

Valuation of Investments

Level 1 investments are valued using quoted market prices. Level 2 investments are valued using market consensus prices that are corroborated by observable market data and quoted market prices for similar assets and liabilities. Level 3 investments are valued at fair value as determined in good faith by our board of directors, based on input of management, the audit committee and independent valuation firms that have been engaged at the direction of our board of directors to assist in the valuation of each portfolio investment without a readily available market quotation at least once during a trailing twelve-month period under a valuation policy and a consistently applied valuation process. This valuation process is conducted at the end of each fiscal quarter, with approximately 25% (based on the number of portfolio companies) of our valuations of debt and equity investments without readily available market quotations subject to review by an independent valuation firm. As of December 31, 2019 and September 30, 2019, with the exception of money market funds included in cash and cash equivalents (Level 1 investments) and forward currency contracts (Level 2 investments), all investments were valued using Level 3 inputs of the fair value hierarchy.

When determining fair value of Level 3 debt and equity investments, we may take into account the following factors, where relevant: the enterprise value of a portfolio company, the nature and realizable value of any collateral,

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the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons to publicly traded securities, and changes in the interest rate environment and the credit markets generally that may affect the price at which similar investments may be made and other relevant factors. The primary method for determining enterprise value uses a multiple analysis whereby appropriate multiples are applied to the portfolio company’s EBITDA. A portfolio company’s EBITDA may include pro-forma adjustments for items such as acquisitions, divestitures, or expense reductions. The enterprise value analysis is performed to determine the value of equity investments and to determine if debt investments are credit impaired. If debt investments are credit impaired, we will use the enterprise value analysis or a liquidation basis analysis to determine fair value. For debt investments that are not determined to be credit impaired, we use a market interest rate yield analysis to determine fair value.

In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.

Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a market existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we may realize significantly less than the value at which such investment had previously been recorded.

Our investments are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments are traded.

In connection with each sale of shares of our common stock, we make a determination that we are not selling shares of our common stock at a price below the then-current net asset value per share of common stock at the time at which the sale is made or otherwise in violation of the 1940 Act.  GC Advisors will consider the following factors, among others, in making such determination:

The net asset value of our common stock disclosed in the most recent periodic report filed with the SEC; 
Its assessment of whether any change in the net asset value per share of our common stock has occurred (including through the realization of gains on the sale of portfolio securities) during the period beginning on the date of the most recently disclosed net asset value per share of our common stock and ending two days prior to the date of the sale; and
The magnitude of the difference between the sale price of the shares of common stock and management’s assessment of any change in the net asset value per share of our common stock during the period discussed above.

Valuation of Other Financial Assets and Liabilities

Fair value of our debt is estimated using Level 3 inputs by discounting remaining payments using comparable market rates or market quotes for similar instruments at the measurement date, if available.

Revenue Recognition:

Our revenue recognition policies are as follows:

Investments and Related Investment Income: Interest income is accrued based upon the outstanding principal amount and contractual interest terms of debt investments. Premiums, discounts, and origination fees are amortized or accreted into interest income over the life of the respective debt investment. For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due

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at maturity, we do not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not likely to be collectible. In addition, we may generate revenue in the form of amendment, structuring or due diligence fees, fees for providing managerial assistance, consulting fees and prepayment premiums on loans and record these fees as fee income when earned. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans as fee income. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Distributions received from LLC, and limited partnership, or LP, investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

We account for investment transactions on a trade-date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. We report changes in fair value of investments from the prior period that is measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investment transactions in our Consolidated Statements of Operations.

Non-accrual: Loans may be left on accrual status during the period we are pursuing repayment of the loan. Management reviews all loans that become past due 90 days or more on principal and interest or when there is reasonable doubt that principal or interest will be collected for possible placement on non-accrual status. We generally reverse accrued interest when a loan is placed on non-accrual. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. We restore non-accrual loans to accrual status when past due principal and interest are paid and, in our management’s judgment, are likely to remain current. As of each of December 31, 2019 and September 30, 2019, we had no portfolio company investments on non-accrual status.

Income taxes:

We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. In order to be subject to tax as a RIC, we are required to meet certain source of income and asset diversification requirements, as well as timely distribute to our stockholders dividends for U.S. federal income tax purposes of an amount generally at least equal to 90% of investment company taxable income, as defined by the Code and determined without regard to any deduction for dividends paid, for each tax year. We have made and intend to continue to make the requisite distributions to our stockholders, which will generally relieve us from U.S. federal income taxes.

Depending on the level of taxable income earned in a tax year, we may choose to retain taxable income in excess of current year dividend distributions and would distribute such taxable income in the next tax year. We may then be required to incur a 4% excise tax on such income. To the extent that we determine that our estimated current year annual taxable income, determined on a calendar year basis, could exceed estimated current calendar year dividend distributions, we accrue excise tax, if any, on estimated excess taxable income as taxable income is earned. For each of the three months ended December 31, 2019 and 2018, we did not incur any U.S federal excise tax.




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Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates. Many of the loans in our portfolio have floating interest rates, and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate reset provisions that adjust applicable interest rates under such loans to current market rates on a quarterly basis. The loans that are subject to floating LIBOR are also generally subject to a minimum base rate, or floor, that we charge on our loans if the current market rates are below the respective floors. As of each of December 31, 2019 and September 30, 2019, the weighted average LIBOR floor on the loans subject to floating interest rates was 1.01%, respectively. In addition, the SB Revolver has a floating interest rate provision based on the one-month, two-month, or three-month LIBOR, the DB Credit Facility has a floating interest rate provision equal to three-month LIBOR and the Adviser Revolver has a floating interest rate provision equal to the short-term Applicable Federal Rate. We expect that other credit facilities into which we enter in the future may have floating interest rate provisions.

Assuming that the interim and unaudited Consolidated Statement of Financial Condition as of December 31, 2019 was to remain constant and that we took no actions to alter our interest rate sensitivity as of such date, the following table shows the annualized impact of hypothetical base rate changes in interest rates.
Change in interest rates
 
Increase (decrease) in
interest income
 
Increase (decrease) in
interest expense
 
Net increase
(decrease) in
 investment income
 
 
(In thousands)
Down 25 basis points
 
$
(1,947
)
 
$
(911
)
 
$
(1,036
)
Up 50 basis points
 
3,928

 
1,821

 
2,107

Up 100 basis points
 
7,856

 
3,643

 
4,213

Up 150 basis points
 
11,784

 
5,464

 
6,320

Up 200 basis points
 
15,713

 
7,286

 
8,427


Although we believe that this analysis is indicative of our sensitivity to interest rate changes as of December 31, 2019, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowings under the SB Revolver, DB Credit Facility, the Adviser Revolver or other borrowings, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

We could in the future hedge against interest rate fluctuations by using standard hedging instruments such as interest rate swaps, futures, options and forward contracts to the limited extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates.


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Item 4. Controls and Procedures.

As of December 31, 2019 (the end of the period covered by this report), management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based on that evaluation, our management, including the chief executive officer and chief financial officer, concluded that, at the end of such period, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

There has not been any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1: Legal Proceedings.

We, GC Advisors and Golub Capital LLC may, from time to time, be involved in legal and regulatory proceedings arising out of their respective operations in the normal course of business or otherwise. While there can be no assurance of the ultimate disposition of any such proceedings, each of us, GC Advisors and Golub Capital LLC do not believe it is currently subject to any material legal proceedings.

Item 1A: Risk Factors.

There have been no material changes during the three months ended December 31, 2019 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended September 30, 2019.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds.

Previously disclosed on Form 8-K filings.

Item 3: Defaults Upon Senior Securities.

None.

Item 4: Mine Safety Disclosures.

None.

Item 5: Other Information.

None.


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Item 6: Exhibits.

EXHIBIT INDEX
 
 
 
Number
 
Description
 
 
 
 
 
Third Amendment to Revolving Credit and Security Agreement, dated as of February 7, 2020, by and among Golub Capital BDC 3, Inc. and GBDC 3 Funding II LLC, as borrowers, and Signature Bank, as administrative agent and a lender. (Incorporated by reference to Exhibit 10.1 to the Registrant's Report on Form 8-K (File No. 814-01244), filed on February 13, 2020)

 
 
Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
 
  
Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended.*
 
  
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
_________________
* Filed herewith




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 
 
Golub Capital BDC 3, Inc.
 
 
A Maryland Corporation
 
 
 
Date: February 14, 2020
By:
/s/ David B. Golub
 
 
David B. Golub
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
Date: February 14, 2020
By:
/s/ Ross A. Teune
 
 
Ross. A. Teune
 
 
Chief Financial Officer
 
 
(Principal Accounting and Financial Officer)



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