BCP Investment (BCIC) risk factors, FY2024 10-K

Other

1. 01Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital
2. 02We borrow money, which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing in us
3. 03The lack of liquidity in our investments may adversely affect our business
4. 04We may be unable to realize the benefits anticipated by our prior strategic acquisitions, including estimated cost savings, or it may take longer than anticipated to realize such benefits

Risks Related to Our Business and Structure

1. 05The announcement and pendency of the merger with LRFC could adversely affect the Company’s businesses, financial results and operations
2. 06Most stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Mergers
3. 07The termination of the Merger Agreement could negatively impact the Company
4. 08The Merger Agreement limits the ability of the Company to pursue alternatives to the Mergers
5. 09The Company will be subject to operational uncertainties and contractual restrictions while the Mergers are pending
6. 10If the Mergers do not close, the Company will not benefit from the expenses it has incurred in pursuit of the Mergers
7. 11Litigation filed against LRFC or the Company in connection with the Mergers could result in substantial costs and could delay or prevent the Mergers from being completed
8. 12The Mergers are subject to closing conditions, including stockholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Mergers not being completed, which may result in material adverse consequences to the business and operations of the Company
9. 13Ineffective internal controls could impact our business and operating results
10. 14The Adviser and its affiliates, including our officers and some of our directors, face conflicts of interest caused by compensation arrangements with us and our affiliates, which could result in actions that are not in the best interests of our stockholders
11. 15Our Advisory Agreement entitles the Adviser to receive incentive compensation on income regardless of any capital losses. In such case, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or if we incur a net loss for that quarter
12. 16There may be conflicts of interest related to obligations that the Adviser’s senior management and investment team has to other clients
13. 17The time and resources that individuals employed by the Adviser devote to us may be diverted and we may face additional competition due to the fact that individuals employed by the Adviser are not prohibited from raising money for or managing other entities that make the same types of investments that we target
14. 18Our base management and incentive fees may induce the Adviser to make speculative investments or to incur leverage
15. 19The Adviser relies on key personnel, the loss of any of whom could impair its ability to successfully manage us
16. 20The Adviser may retain additional consultants, advisors and/or operating partners to provide services to us, and such additional personnel will perform similar functions and duties for other organizations which may give rise to conflicts of interest
17. 21The Adviser’s influence on conducting our operations gives it the ability to increase its fees, which may reduce the amount of cash flow available for distribution to our stockholders
18. 22The Adviser’s liability is limited under the Advisory Agreement, and we are required to indemnify the Adviser against certain liabilities, which may lead the Adviser to act in a riskier manner on our behalf than it would when acting for its own account
19. 23The Adviser is able to resign upon 60 days’ written notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations
20. 24We operate in a highly competitive market for investment opportunities
21. 25If the Adviser is unable to source investments effectively, we may be unable to achieve our investment objectives and provide returns to stockholders
22. 26We may have difficulty paying distributions required to maintain our RIC status if we recognize income before or without receiving cash equal to such income
23. 27Any unrealized losses we experience on our loan portfolio may be an indication of future realized losses, which could reduce our resources available to make distributions
24. 28We may experience fluctuations in our quarterly and annual operating results and credit spreads
25. 29We are exposed to risks associated with changes in interest rates and spreads
26. 30We may from time to time expand our business through acquisitions, which could disrupt our business and harm our financial condition
27. 31the potential disruption and strain on our existing business and resources that could result from our planned growth and continuing integration of our acquisitions
28. 32We may invest through joint ventures, partnerships or other special purpose vehicles and our investments through these vehicles may entail greater risks, or risks that we otherwise would not incur, if we otherwise made such investments directly
29. 33Our Board may change our investment objective, operating policies and strategies without prior notice or stockholder approval
30. 34The application of the risk retention rules under Section 941 of the Dodd-Frank Act to CLOs may have broader effects on the CLO and loan markets in general, potentially resulting in fewer or less desirable investment opportunities for us
31. 35Our ability to enter into transactions with our affiliates is restricted
32. 36A failure on our part to maintain our status as a BDC or the application of additional regulatory burdens would significantly reduce our operating flexibility
33. 37Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expense, hinder execution of investment strategy and impact our stock price
34. 38We will be subject to corporate-level U.S. federal income taxes if we are unable to qualify as a RIC under Subchapter M of the Code
35. 39The source income requirement will be satisfied if we obtain at least 90% of our income for each year from dividends, interest, gains from the sale of stock or securities or similar sources
36. 40Corresponding return to common stockholder
37. 41Our indebtedness could adversely affect our financial health and our ability to respond to changes in our business
38. 42our ability to obtain additional financing in the future may be impaired
39. 43Provisions in the Revolving Credit Facility or any other future borrowing facility may limit our discretion in operating our business
40. 44We hold investments in a collateralized loan obligation vehicle, which investments are subject to a number of significant risks
41. 45Because we intend to continue to distribute substantially all of our income and net realized capital gains to our stockholders, we will need additional capital to finance our growth
42. 46Risks Associated with Our Information Technology Systems
43. 47Disruptions in current systems or difficulties in integrating new systems
44. 48Internal and external cyber threats, as well as other disasters, could impair our ability to conduct business effectively

Risks Related to Our Investments

1. 49Inflation may adversely affect the business, results of operations and financial condition of our portfolio companies
2. 50Our investments may be risky, and you could lose all or part of your investment
3. 51generally less publicly available information about their businesses, operations and financial condition
4. 52non-investment grade debt involves a greater risk of default and higher price volatility than investment grade debt
5. 53Our portfolio investments for which there is no readily available market, including our investment in our Joint Ventures and our investments in CLO Funds, are recorded at fair value. As a result, there is uncertainty as to the value of these investments
6. 54Defaults by our portfolio companies could harm our operating results
7. 55When we are a debt or minority equity investor in a portfolio company, which generally is the case, we may not be in a position to control the entity, and its management may make decisions that could decrease the value of our investment
8. 56We may have limited access to information about privately held companies in which we invest
9. 57Prepayments of our debt investments by our portfolio companies could negatively impact our operating results
10. 58Our portfolio companies may incur debt that ranks equal with, or senior to, our investments in such companies
11. 59Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us
12. 60There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
13. 61Our investments in equity securities involve a substantial degree of risk
14. 62Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments
15. 63The disposition of our investments may result in contingent liabilities
16. 64We may not receive any return on our investment in the CLO Funds in which we have invested

Risks Related to Our Common Stock

1. 65We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital
2. 66Investing in shares of our common stock may involve an above average degree of risk
3. 67Shares of closed-end investment companies, including BDCs, frequently trade at a discount to their net asset value, and we cannot assure you that the market price of our common stock will not decline below the net asset value of the stock
4. 68Our share price may be volatile and may fluctuate substantially
5. 69Certain provisions of the Delaware General Corporation Law and our certificate of incorporation and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock

Risks Related to Our Notes

1. 70The 4.875% Notes due 2026 are unsecured and therefore are effectively subordinated to any secured indebtedness we may incur
2. 71The 4.875% Notes due 2026 are subordinated structurally to the indebtedness and other liabilities of our subsidiaries
3. 72There is currently no public market for the 4.875% Notes due 2026. If an active trading market for the 4.875% Notes due 2026 does not develop or is not maintained, holders of the 4.875% Notes due 2026 may not be able to sell them
4. 73A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the 4.875% Notes due 2026, if any, could cause the liquidity or market value of the 4.875% Notes due 2026 to decline significantly
5. 74An increase in market interest rates could result in a decrease in the market value of the 4.875% Notes due 2026
6. 75The indenture governing the 4.875% Notes due 2026 contains limited protection for holders of the 4.875% Notes due 2026
7. 76create restrictions on the payment of dividends or other amounts to us from our subsidiaries
8. 77The optional redemption provision may materially adversely affect your return on the Exchange Notes
9. 78We may not be able to repurchase the 4.875% Notes due 2026 upon a Change of Control Repurchase Event

Risks Relating to Acquisitions

1. 79If we sell investments acquired as a result of our prior strategic acquisitions, it may result in capital gains and increase the incentive fees payable to the Adviser
2. 80Economic recessions or downturns could have a material adverse effect on our business, financial condition and results of operations, and could impair the ability of our portfolio companies to repay loans
3. 81Events outside of our control, including public health crises, could negatively affect our portfolio companies, our investment adviser and the results of our operations
4. 82many years and have substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties in obtaining and/or enforcing legal judgments
5. 83Global economic, political and market conditions, including downgrades of the U.S. credit rating, may adversely affect our business, results of operations and financial condition
6. 84The ongoing Russian invasion of Ukraine and related sanctions have increased global political and economic uncertainty, which may have a material adverse impact on us and our portfolio companies
7. 85Our businesses may be adversely affected by litigation and regulatory proceedings