UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact name of registrant as specified in its charter)
(State of incorporation) |
(I.R.S. Employer Identification No.) |
|
|
(Address of principal executive offices) |
(Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the 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 ☐ |
Accelerated filer ☐ |
Smaller reporting company |
|
|
|
Emerging growth company |
|
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No
The issuer had
RUNWAY GROWTH FINANCE CORP.
FORM 10‑Q FOR THE QUARTER ENDED June 30, 2022
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RUNWAY GROWTH FINANCE CORP.
Statements of Assets and Liabilities
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||||
|
|
(Unaudited) |
|
|
|
|
|
|||
Assets |
|
|
|
|
|
|
|
|
||
Investments at fair value: |
|
|
|
|
|
|
|
|
||
Non-control/non-affiliate investments at fair value (cost of $805,247,907 and $647,448,895, respectively) |
|
$ |
|
799,855,284 |
|
|
$ |
|
655,384,403 |
|
Affiliate investments at fair value (cost of $4,551,235 and $0, respectively) |
|
|
|
2,352,019 |
|
|
|
|
— |
|
Control investments at fair value (cost of $21,172,353 and $34,873,847, respectively) |
|
|
|
5,521,301 |
|
|
|
|
29,130,371 |
|
Investment in U.S. Treasury Bills at fair value (cost of $0 and $45,001,250, respectively) |
|
|
|
— |
|
|
|
|
45,001,500 |
|
Total investments at fair value (cost of $830,971,495 and $727,323,992, respectively) |
|
|
|
807,728,604 |
|
|
|
|
729,516,274 |
|
Cash and cash equivalents |
|
|
|
6,809,818 |
|
|
|
|
4,696,693 |
|
Accrued interest receivable |
|
|
|
3,419,067 |
|
|
|
|
2,368,680 |
|
Other accounts receivable |
|
|
|
81,018 |
|
|
|
|
816,065 |
|
Prepaid and deferred expenses |
|
|
|
401,909 |
|
|
|
|
949,768 |
|
Total assets |
|
|
|
818,440,416 |
|
|
|
|
738,347,480 |
|
Liabilities |
|
|
|
|
|
|
|
|
||
Debt: |
|
|
|
|
|
|
|
|
||
Credit facilities |
|
|
|
163,000,000 |
|
|
|
|
61,000,000 |
|
2026 Senior Notes |
|
|
|
70,000,000 |
|
|
|
|
20,000,000 |
|
Deferred debt costs (net of accumulated amortization of $1,249,583 and $855,295, respectively) |
|
|
|
(4,394,010 |
) |
|
|
|
(1,511,540 |
) |
Total debt, less unamortized deferred debt costs |
|
|
|
228,605,990 |
|
|
|
|
79,488,460 |
|
Reverse repurchase agreement |
|
|
|
— |
|
|
|
|
44,774,963 |
|
Accrued incentive fees |
|
|
|
7,415,334 |
|
|
|
|
6,010,250 |
|
Due to affiliate |
|
|
|
184,759 |
|
|
|
|
221,243 |
|
Interest payable |
|
|
|
1,030,660 |
|
|
|
|
249,247 |
|
Accrued expenses and other liabilities |
|
|
|
1,791,669 |
|
|
|
|
1,408,826 |
|
Total liabilities |
|
|
|
239,028,412 |
|
|
|
|
132,152,989 |
|
Commitments and contingencies (Note 3) |
|
|
|
|
|
|
|
|
||
Net assets |
|
|
|
|
|
|
|
|
||
Common stock, par value |
|
|
|
413,806 |
|
|
|
|
413,806 |
|
Additional paid-in capital |
|
|
|
606,063,671 |
|
|
|
|
606,047,671 |
|
Distributable (losses) |
|
|
|
(21,786,236 |
) |
|
|
|
(266,986 |
) |
Treasury stock |
|
|
|
(5,279,237 |
) |
|
|
|
— |
|
Total net assets |
|
$ |
|
579,412,004 |
|
|
$ |
|
606,194,491 |
|
|
|
|
|
|
|
|
|
|
||
Shares of common stock outstanding ($0.01 par value, 100,000,000 shares authorized) |
|
|
|
40,967,122 |
|
|
|
|
41,380,614 |
|
Net asset value per share |
|
$ |
|
14.14 |
|
|
$ |
|
14.65 |
|
See notes to financial statements.
1
RUNWAY GROWTH FINANCE CORP.
Statements of Operations
(Unaudited)
|
|
For the Three Months Ended June 30, |
|
|
For the Six Months Ended June 30, |
|
||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||||
Investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
From non-control/non-affiliate investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
$ |
|
20,430,136 |
|
|
$ |
|
17,229,488 |
|
|
$ |
|
37,192,810 |
|
|
$ |
|
32,250,053 |
|
Payment in-kind interest income |
|
|
|
1,042,832 |
|
|
|
|
1,045,527 |
|
|
|
|
2,049,065 |
|
|
|
|
1,989,558 |
|
Other income |
|
|
|
75,448 |
|
|
|
|
126,678 |
|
|
|
|
265,433 |
|
|
|
|
240,970 |
|
Interest income from U.S. Treasury Bills |
|
|
|
— |
|
|
|
|
15 |
|
|
|
|
— |
|
|
|
|
25 |
|
Dividend income |
|
|
|
317,674 |
|
|
|
|
343,755 |
|
|
|
|
703,092 |
|
|
|
|
687,510 |
|
From affiliate investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
|
4,654 |
|
|
|
|
— |
|
|
|
|
4,654 |
|
|
|
|
— |
|
Payment in-kind interest income |
|
|
|
6,689 |
|
|
|
|
— |
|
|
|
|
96,291 |
|
|
|
|
— |
|
Other income |
|
|
|
8,311 |
|
|
|
|
— |
|
|
|
|
8,311 |
|
|
|
|
— |
|
From control investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
|
618,099 |
|
|
|
|
— |
|
|
|
|
1,112,421 |
|
|
|
|
— |
|
Payment in-kind interest income |
|
|
|
2,654,039 |
|
|
|
|
— |
|
|
|
|
2,984,450 |
|
|
|
|
— |
|
Other income from non-investment sources |
|
|
|
208 |
|
|
|
|
139 |
|
|
|
|
463 |
|
|
|
|
260 |
|
Total investment income |
|
|
|
25,158,090 |
|
|
|
|
18,745,602 |
|
|
|
|
44,416,990 |
|
|
|
|
35,168,376 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Management fees |
|
|
|
2,862,303 |
|
|
|
|
2,276,341 |
|
|
|
|
5,422,239 |
|
|
|
|
4,345,550 |
|
Incentive fees |
|
|
|
3,621,139 |
|
|
|
|
2,836,303 |
|
|
|
|
4,965,135 |
|
|
|
|
3,812,007 |
|
Interest expense |
|
|
|
1,609,132 |
|
|
|
|
761,815 |
|
|
|
|
2,482,617 |
|
|
|
|
1,489,730 |
|
Professional fees |
|
|
|
888,114 |
|
|
|
|
498,913 |
|
|
|
|
1,247,921 |
|
|
|
|
820,505 |
|
Overhead allocation expense |
|
|
|
218,294 |
|
|
|
|
208,736 |
|
|
|
|
455,266 |
|
|
|
|
406,119 |
|
Insurance expense |
|
|
|
268,618 |
|
|
|
|
23,275 |
|
|
|
|
537,236 |
|
|
|
|
46,551 |
|
Administration fee |
|
|
|
168,078 |
|
|
|
|
92,760 |
|
|
|
|
336,651 |
|
|
|
|
240,860 |
|
Debt financing fees |
|
|
|
726,568 |
|
|
|
|
419,216 |
|
|
|
|
1,432,534 |
|
|
|
|
709,201 |
|
Directors’ fees |
|
|
|
82,500 |
|
|
|
|
69,250 |
|
|
|
|
171,000 |
|
|
|
|
134,000 |
|
Tax expense |
|
|
|
823 |
|
|
|
|
41 |
|
|
|
|
1,073 |
|
|
|
|
41 |
|
Other expenses |
|
|
|
233,939 |
|
|
|
|
218,475 |
|
|
|
|
426,848 |
|
|
|
|
341,601 |
|
Total operating expenses |
|
|
|
10,679,508 |
|
|
|
|
7,405,125 |
|
|
|
|
17,478,520 |
|
|
|
|
12,346,165 |
|
Net investment income |
|
|
|
14,478,582 |
|
|
|
|
11,340,477 |
|
|
|
|
26,938,470 |
|
|
|
|
22,822,211 |
|
Realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills |
|
|
|
903,787 |
|
|
|
|
(4,595,853 |
) |
|
|
|
532,526 |
|
|
|
|
(4,795,077 |
) |
Realized gain (loss) on control investments |
|
|
|
(65 |
) |
|
|
|
— |
|
|
|
|
(65 |
) |
|
|
|
— |
|
Net change in unrealized appreciation (depreciation) on non-control/non-affiliate investments, including U.S. Treasury Bills |
|
|
|
(8,164,497 |
) |
|
|
|
(1,683,287 |
) |
|
|
|
(12,319,166 |
) |
|
|
|
(4,121,553 |
) |
Net change in unrealized appreciation (depreciation) on affiliate investments |
|
|
|
(42,673 |
) |
|
|
|
— |
|
|
|
|
(3,208,432 |
) |
|
|
|
— |
|
Net change in unrealized appreciation (depreciation) on control investments |
|
|
|
(7,992,468 |
) |
|
|
|
1,650,006 |
|
|
|
|
(9,907,576 |
) |
|
|
|
2,177,090 |
|
Net realized and unrealized gain (loss) on investments |
|
|
|
(15,295,916 |
) |
|
|
|
(4,629,134 |
) |
|
|
|
(24,902,713 |
) |
|
|
|
(6,739,540 |
) |
Net increase (decrease) in net assets resulting from operations |
|
$ |
|
(817,334 |
) |
|
$ |
|
6,711,343 |
|
|
$ |
|
2,035,757 |
|
|
$ |
|
16,082,671 |
|
Net increase in net assets resulting from operations per common share |
|
$ |
|
(0.02 |
) |
|
$ |
|
0.21 |
|
|
$ |
|
0.05 |
|
|
$ |
|
0.50 |
|
Net investment income per common share |
|
$ |
|
0.35 |
|
|
$ |
|
0.35 |
|
|
$ |
|
0.65 |
|
|
$ |
|
0.71 |
|
Weighted-average shares outstanding |
|
|
|
41,215,664 |
|
|
|
|
32,396,396 |
|
|
|
|
41,294,985 |
|
|
|
|
31,953,287 |
|
See notes to financial statements.
2
RUNWAY GROWTH FINANCE CORP.
Statements of Changes in Net Assets
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||||||
Net increase (decrease) in net assets from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net investment income |
|
$ |
|
14,478,582 |
|
|
$ |
|
11,340,477 |
|
|
$ |
|
26,938,470 |
|
|
$ |
|
22,822,211 |
|
Realized gain (loss) on non-control/non-affiliate investments, including U.S. Treasury Bills |
|
|
|
903,787 |
|
|
|
|
(4,595,853 |
) |
|
|
|
532,526 |
|
|
|
|
(4,795,077 |
) |
Realized gain (loss) on control investments |
|
|
|
(65 |
) |
|
|
|
— |
|
|
|
|
(65 |
) |
|
|
|
— |
|
Net change in unrealized appreciation (depreciation) on non-control/non-affiliate investments, including U.S. Treasury Bills |
|
|
|
(8,164,497 |
) |
|
|
|
(1,683,287 |
) |
|
|
|
(12,319,166 |
) |
|
|
|
(4,121,553 |
) |
Net change in unrealized appreciation (depreciation) on affiliate investments |
|
|
|
(42,673 |
) |
|
|
|
— |
|
|
|
|
(3,208,432 |
) |
|
|
|
— |
|
Net change in unrealized appreciation (depreciation) on control investments |
|
|
|
(7,992,468 |
) |
|
|
|
1,650,006 |
|
|
|
|
(9,907,576 |
) |
|
|
|
2,177,090 |
|
Net increase (decrease) in net assets resulting from operations |
|
|
|
(817,334 |
) |
|
|
|
6,711,343 |
|
|
|
|
2,035,757 |
|
|
|
|
16,082,671 |
|
Distributions to stockholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends paid to stockholders |
|
|
|
(12,382,340 |
) |
|
|
|
(11,859,731 |
) |
|
|
|
(23,555,007 |
) |
|
|
|
(23,482,930 |
) |
Total distributions to stockholders |
|
|
|
(12,382,340 |
) |
|
|
|
(11,859,731 |
) |
|
|
|
(23,555,007 |
) |
|
|
|
(23,482,930 |
) |
Capital share transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition of treasury shares |
|
|
|
(4,870,014 |
) |
|
|
|
— |
|
|
|
|
(5,279,237 |
) |
|
|
|
— |
|
Issuance of shares of common stock |
|
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
306,911 |
|
Issuance of shares of common stock under dividend reinvestment plan |
|
|
|
— |
|
|
|
|
9,410,371 |
|
|
|
|
— |
|
|
|
|
18,593,591 |
|
Offering costs |
|
|
|
16,000 |
|
|
|
|
(310 |
) |
|
|
|
16,000 |
|
|
|
|
(4,831 |
) |
Net increase (decrease) in net assets resulting from capital share transactions |
|
|
|
(4,854,014 |
) |
|
|
|
9,410,061 |
|
|
|
|
(5,263,237 |
) |
|
|
|
18,895,671 |
|
Total increase (decrease) in net assets |
|
|
|
(18,053,688 |
) |
|
|
|
4,261,673 |
|
|
|
|
(26,782,487 |
) |
|
|
|
11,495,412 |
|
Net assets at beginning of period |
|
|
|
597,465,692 |
|
|
|
|
473,477,424 |
|
|
|
|
606,194,491 |
|
|
|
|
466,243,685 |
|
Net assets at end of period |
|
$ |
|
579,412,004 |
|
|
$ |
|
477,739,097 |
|
|
$ |
|
579,412,004 |
|
|
$ |
|
477,739,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital share activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Treasury shares acquired |
|
|
|
(381,710 |
) |
|
|
|
— |
|
|
|
|
(413,492 |
) |
|
|
|
— |
|
Shares issued |
|
|
|
— |
|
|
|
|
637,127 |
|
|
|
|
— |
|
|
|
|
1,276,403 |
|
Shares outstanding at beginning of period |
|
|
|
41,348,832 |
|
|
|
|
32,053,327 |
|
|
|
|
41,380,614 |
|
|
|
|
31,414,051 |
|
Shares outstanding at end of period |
|
|
|
40,967,122 |
|
|
|
|
32,690,454 |
|
|
|
|
40,967,122 |
|
|
|
|
32,690,454 |
|
See notes to financial statements.
3
RUNWAY GROWTH FINANCE CORP.
Statements of Cash Flows
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||||
|
|
2022 |
|
|
2021 |
|
||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
||
Net increase in net assets resulting from operations |
|
$ |
|
2,035,757 |
|
|
$ |
|
16,082,671 |
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash |
|
|
|
|
|
|
|
|
||
Purchases of investments |
|
|
|
(233,472,843 |
) |
|
|
|
(133,681,004 |
) |
Purchases of U.S. Treasury Bills |
|
|
|
— |
|
|
|
|
(54,999,849 |
) |
Payment in-kind interest |
|
|
|
(5,129,806 |
) |
|
|
|
(1,989,558 |
) |
Sales or repayments of investments |
|
|
|
94,058,934 |
|
|
|
|
96,783,551 |
|
Sales or maturities of U.S. Treasury Bills |
|
|
|
44,999,747 |
|
|
|
|
94,999,162 |
|
Realized (gain) loss on investments, including U.S. Treasury Bills |
|
|
|
(532,461 |
) |
|
|
|
4,795,077 |
|
Net change in unrealized appreciation (depreciation) on investments, including U.S. Treasury Bills |
|
|
|
25,435,174 |
|
|
|
|
1,944,463 |
|
Amortization of fixed income premiums or accretion of discounts |
|
|
|
(3,571,075 |
) |
|
|
|
(3,660,438 |
) |
Amortization of deferred debt costs |
|
|
|
394,289 |
|
|
|
|
232,034 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
||
Accrued interest receivable |
|
|
|
(1,050,387 |
) |
|
|
|
449,244 |
|
Other accounts receivable |
|
|
|
735,047 |
|
|
|
|
129,250 |
|
Prepaid and deferred expenses |
|
|
|
547,859 |
|
|
|
|
(271,779 |
) |
Accrued incentive fees |
|
|
|
1,405,084 |
|
|
|
|
1,066,789 |
|
Due to affiliate |
|
|
|
(36,484 |
) |
|
|
|
(26,971 |
) |
Interest payable |
|
|
|
781,413 |
|
|
|
|
293,110 |
|
Accrued expenses and other liabilities |
|
|
|
382,843 |
|
|
|
|
210,164 |
|
Net cash provided by (used in) operating activities |
|
|
|
(73,016,909 |
) |
|
|
|
22,355,916 |
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
||
Payment of deferred financing costs |
|
|
|
(3,276,759 |
) |
|
|
|
(12,320 |
) |
Borrowings under credit facilities |
|
|
|
173,000,000 |
|
|
|
|
93,000,000 |
|
Repayments under credit facilities |
|
|
|
(71,000,000 |
) |
|
|
|
(75,000,000 |
) |
Proceeds from 2026 Senior Notes |
|
|
|
50,000,000 |
|
|
|
|
— |
|
Proceeds from reverse repurchase agreements |
|
|
|
— |
|
|
|
|
44,774,914 |
|
Repayments of reverse repurchase agreements |
|
|
|
(44,774,963 |
) |
|
|
|
(94,524,914 |
) |
Acquisition of treasury shares |
|
|
|
(5,279,237 |
) |
|
|
|
||