CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current or prospective portfolio investments, our industry, our beliefs, and our assumptions. We believe that it is important to communicate our future expectations to our investors. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “will,” “should,” “targets,” “projects,” and variations of these words and similar expressions identify forward-looking statements, although not all forward-looking statements include these words. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.
The following factors and factors listed under “Risk Factors” in this report and other documents Crescent Capital BDC, Inc. has filed with the Securities and Exchange Commission, or SEC, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. The occurrence of the events described in these risk factors and elsewhere in this report could have a material adverse effect on our business, results of operation and financial position. The following factors are among those that may cause actual results to differ materially from our forward-looking statements:
uncertainty surrounding the financial stability of the United States, Europe and China;
the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;
potential fluctuation in quarterly operating results;
potential impact of economic recessions or downturns;
adverse developments in the credit markets;
regulations governing our operation as a business development company;
operation in a highly competitive market for investment opportunities;
risks associated with inflation and the current interest rate environment;
changes in interest rates may affect our cost of capital and net investment income;
the impact of changes in London Interbank Offered Rate (“LIBOR”), Secured Overnight Financing Rate (“SOFR”), or other benchmark rate on our operating results;
financing investments with borrowed money;
potential adverse effects of price declines and illiquidity in the corporate debt markets;
the impact of COVID-19 on our portfolio companies and the markets in which they operate, interest rates and the economy in general;
lack of liquidity in investments;
the outcome and impact of any litigation;
the timing, form and amount of any dividend distributions;
risks regarding distributions;
potential adverse effects of new or modified laws and regulations;
the social, geopolitical, financial, trade and legal implications of Brexit;
potential resignation of the Adviser and or the Administrator;
uncertainty as to the value of certain portfolio investments;
defaults by portfolio companies;
our ability to successfully complete and integrate any acquisitions;
risks associated with original issue discount (“OID”) and payment-in-kind (“PIK”) interest income;
the market price of our common stock may fluctuate significantly;
the recently announced acquisition of First Eagle Alternative Capital BDC, Inc. (“FCRD”); by the Company (the “FCRD Acquisition”);
the outcome and impact of any litigation relating to the FCRD Acquisition;
the likelihood that the FCRD Acquisition is completed and the anticipated timing of its completion;
the ability of our business and FCRD’s business to successfully integrate if the FCRD Acquisition is completed; and
any impact to our performance in the periods prior to and following the completion of the FCRD Acquisition.
Although we believe that the assumptions on which these forward-looking statements are based upon are reasonable, some of those assumptions may be based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this report because we are an investment company.
SUMMARY OF RISK FACTORS
The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in “Item 1A. Risk Factors.” This summary should be read in conjunction with “Item 1A. Risk Factors” and should not be relied upon as an exhaustive summary of the material risks facing our business.
Risks Relating to our Business and Structure
Global economic, political and market conditions, including those caused by inflation and a rising interest rate environment, have (and in the future, could further) adversely affect our business, results of operations and financial condition and those of our portfolio companies.
Economic recessions or downturns may 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 debt or pay interest.
We may not replicate the historical results achieved by Crescent.
Adverse developments in the credit markets may impair our ability to enter into new debt financing arrangements.
Our Adviser and its affiliates and employees may have certain conflicts of interest.
Our ability to achieve our investment objective depends on our Adviser’s ability to support our investment process; if our Adviser were to lose key personnel or they were to resign, our ability to achieve our investment objective could be significantly harmed.
Crescent’s principals and employees, the Adviser or their affiliates may, from time to time, possess material non-public information, limiting our investment discretion.
Our 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.
A significant portion of our investment portfolio is and will continue to be recorded at fair value and, as a result, there is and will continue to be uncertainty as to the value of our portfolio investments.
Our Investment Advisory Agreement was negotiated with the Adviser and the Administration Agreement was negotiated with the Administrator, which are both our related parties. The Adviser has limited liability and is entitled to indemnification under the Investment Advisory Agreement.
We 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.
We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.
We will be subject to corporate level income tax if we are unable to qualify as a RIC and our business may be adversely affected if we fail to maintain our qualification as a RIC.
Stockholders may be required to pay tax in excess of the cash they receive. We may be subject to withholding of U. S. Federal income tax on distributions for non-U.S. stockholders.
We 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.
Because we are required to distribute substantially all of our net investment income and net realized capital gains to our stockholders, we will continue to need additional capital to finance our growth.
Because we borrow money, the potential for loss on amounts invested in us will be magnified and may increase the risk of investing in us.
Changes in interest rates, changes in the method for determining the London Interbank Offered Rate, or LIBOR, and the potential replacement of LIBOR may affect our cost of capital and net investment income