Crescent Capital BDC (CCAP) risk factors, 2025 10-K

Risks Relating to Our Business and Structure

1. 01Our Board may change our investment objectives, operating policies and strategies without prior notice or stockholder approval
2. 02A failure on our part to maintain our status as a BDC may significantly reduce our operating flexibility
3. 03We and the Adviser are subject to regulations and SEC oversight. If we or the Adviser fail to comply with applicable requirements, it may adversely impact our results relative to companies that are not subject to such regulations
4. 04We are dependent upon key personnel of Crescent and the Adviser
5. 05We may not replicate the historical performance achieved by Crescent
6. 06We depend on Crescent to manage our business effectively
7. 07As a result of our arrangements with Crescent, the Adviser and the Adviser’s investment committee, there may be times when the Adviser or such persons have interests that differ from those of our stockholders, giving rise to a conflict of interest
8. 08Conflicts may arise related to other arrangements with Crescent and the Adviser and other affiliates
9. 09Crescent’s principals and employees, the Adviser or their affiliates may, from time to time, possess material non-public information, limiting our investment discretion
10. 10Our management and incentive fee structure may create incentives for the Adviser that are not fully aligned with our stockholders’ interests and may induce the Adviser to make speculative investments
11. 11The Adviser has limited liability and is entitled to indemnification under the Investment Advisory Agreement
12. 12Our ability to enter into transactions with our affiliates is restricted
13. 13Our ability to sell or otherwise exit investments also invested in by other Crescent investment vehicles is restricted
14. 14Conflicts of interest may be created by the valuation process for certain portfolio holdings
15. 15We operate in an increasingly competitive market for investment opportunities, which could make it difficult for us to identify and make investments that are consistent with our investment objectives
16. 16Our ability to grow depends on our ability to raise capital
17. 17Regulations governing our operation as a BDC affect our ability to, and the way in which we may, raise additional capital
18. 18If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a BDC or be precluded from investing according to our current business strategy
19. 19Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio
20. 20preserve or enhance the value of our investment
21. 21We will be subject to corporate level income tax if we are unable to qualify as a RIC
22. 22Certain investors are limited in their ability to make significant investments in us
23. 23We may retain income and capital gains in excess of what is permissible for excise tax purposes and such amounts will be subject to 4% U.S. federal excise tax, reducing the amount available for distribution to stockholders
24. 24We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income
25. 25Our investments in OID and PIK interest income may expose us to risks associated with such income being required to be included in accounting income and taxable income prior to receipt of cash
26. 26non-cash accruals that ultimately may not be realized, which the Adviser will be under no obligation to reimburse us or these fees; and
27. 27Stockholders may be required to pay tax in excess of the cash they receive
28. 28Our business could be adversely affected in the event we default under our existing credit facilities or any future credit or other borrowing facility
29. 29We are and may be subject to restrictions under our credit facilities and any future credit or other borrowing facility that could adversely impact our business
30. 30maintenance of a minimum level of stockholders’ equity
31. 31Changes in interest rates may adversely affect the value of our portfolio investments which could have an adverse effect on our business, financial condition and results of operations
32. 32We may be the target of litigation
33. 33There is a risk that investors in our common stock may not receive dividends or that our dividends may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled
34. 34The majority of our portfolio investments are recorded at fair value as determined in good faith by Adviser as Valuation Designee with approval from our Board and, as a result, there may be uncertainty as to the value of our portfolio investments
35. 35We will adjust quarterly the valuation of our portfolio to reflect the fair value of each investment in our portfolio. Any changes in fair value are recorded in our statement of operations as net change in unrealized appreciation or depreciation
36. 36New or modified laws or regulations governing our operations may adversely affect our business
37. 37We are subject to risks related to corporate social responsibility
38. 38We are subject to risks associated with artificial intelligence and machine learning technology
39. 39Additionally, legislative or other actions relating to taxes could have a negative effect on us
40. 40Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us
41. 41The lack of liquidity in our investments may adversely affect our business
42. 42We may be obligated to pay the Adviser certain fees even if we incur a loss
43. 43There is a risk that investors in our common shares may not receive distributions or that our distributions may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled
44. 44We have not established any limit on the amount of funds we may use from available sources, such as borrowings, if any, to fund distributions (which may reduce the amount of capital we ultimately invest in assets)
45. 45Our Adviser and Administrator each have the ability to resign on 120 days’ and 60 days’ notice, respectively, and we may not be able to find a suitable replacement within that time, resulting in a disruption in operations that could adversely affect our financial condition, business and results of operations
46. 46As a public company, we are subject to regulations not applicable to private companies, such as provisions of the Sarbanes-Oxley Act. Efforts to comply with such regulations will involve significant expenditures, and such regulations may adversely affect us
47. 47We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common shares less attractive to investors
48. 48We may not be able to obtain all required state licenses

Risks Relating to Our Investments

1. 49Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing NAV through increased net unrealized depreciation
2. 50Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interests rates may make it more difficult for portfolio companies to make periodic payments on their loans
3. 51We will be subject to the risk that the debt investments we make in our portfolio companies may be repaid prior to maturity
4. 52Inflation has adversely affected and may continue to adversely affect the business, results of operations and financial condition of our portfolio companies
5. 53We typically invest in middle-market companies, which involves higher risk than investments in large companies
6. 54Our investments may be risky and we could lose all or part of our investment
7. 55We may invest in high yield debt, or below investment grade securities, which has greater credit and liquidity risk than more highly rated debt obligations
8. 56Investments in equity securities, many of which are illiquid with no readily available market, involve a substantial degree of risk
9. 57to the extent that the portfolio company requires additional capital and is unable to obtain it, we may not recover our investment; and
10. 58generally, preferred security holders have no voting rights with respect to the issuing company, subject to limited exceptions
11. 59We may be subject to risks associated with syndicated loans
12. 60The disposition of our investments may result in contingent liabilities
13. 61Our subordinated investments may be subject to greater risk than investments that are not similarly subordinated
14. 62There may be circumstances in which our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims
15. 63We may hold the debt securities of leveraged companies
16. 64Our portfolio companies may incur debt or issue equity securities that rank equally with, or senior to, our investments in such companies
17. 65When we are a debt or minority equity investor in a portfolio company, we are often not in a position to exert influence on the entity, and other equity holders and management of the company may make decisions that could decrease the value of our investment in such portfolio company
18. 66Our portfolio companies may be highly leveraged
19. 67Our investments in foreign companies may involve significant risks in addition to the risks inherent in U.S. investments
20. 68The due diligence process that the Adviser undertakes in connection with our investments may not reveal all the facts that may be relevant in connection with an investment
21. 69We may be subject to risks under hedging transactions and may become subject to risk if it invests in non-U.S. securities
22. 70We may not realize anticipated gains on the equity interests in which we invest
23. 71Changes in healthcare laws and other regulations applicable to some of our portfolio companies businesses may constrain their ability to offer their products and services
24. 72Our investments in the consumer products and services sector are subject to various risks including cyclical risks associated with the overall economy
25. 73Our investments in the financial services sector are subject to various risks including volatility and extensive government regulation
26. 74Our investments in technology companies are subject to many risks, including volatility, intense competition, shortened product life cycles, litigation and periodic downturn risks
27. 75The effect of global climate change may impact the operations of our portfolio companies

Risks Relating to Our Common Stock

1. 76Investing in our common stock may involve an above average degree of risk
2. 77Certain investors will be subject to Exchange Act filing requirements
3. 78You may receive dividends in the form of common stock instead of cash, which could result in adverse tax consequences to you
4. 79No stockholder approval is required for certain mergers
5. 80Our shares of common stock have traded at a discount from net asset value and may do so again, which could limit our ability to raise additional equity capital
6. 81The market price of our common stock may fluctuate significantly
7. 82loss of a major funding source
8. 83Common stockholders who participate in the distribution reinvestment plan may increase their risk of overconcentration
9. 84Our stockholders will experience dilution in their ownership percentage if they opt out of our dividend reinvestment plan
10. 85Our future credit ratings may not reflect all risks of an investment in our debt securities
11. 86Provisions of the Maryland General Corporation Law and of the Charter and the Bylaws could deter takeover attempts and have an adverse effect on the price of our common stock
12. 87We incur significant costs as a result of being a publicly traded company
13. 88Economic recessions or downturns could impair our portfolio companies, and defaults by our portfolio companies will harm our operating results
14. 89Adverse developments in the credit markets may impair our ability to enter into new debt financing arrangements
15. 90We may experience fluctuations in our quarterly operating results
16. 91We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations
17. 92Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, a compromise or corruption of its confidential information and/or damage to its business relationships