CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-K (the “Annual Report”) contains forward-looking statements that involve substantial known and unknown risks, uncertainties and other factors. You should not place undue reliance on such statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. 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 difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including:
our future operating results;
our business prospects and the prospects of the companies in which we may invest;
the impact of the investments that we expect to make;
our ability to raise sufficient capital to execute our investment strategy;
the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflicts between Russia and Ukraine and between Israel and Hamas;
general economic, logistical and political trends and other external factors, including inflation and recent supply chain and labor market disruptions;
turmoil in Ukraine and Russia and in the Middle East and the potential for volatility in energy prices and its impact on the industries in which we invest;
the ability of our portfolio companies to achieve their objectives;
our current and expected financing arrangements and investments;
changes in the general interest rate environment;
the adequacy of our cash resources, financing sources and working capital;
the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;
our contractual arrangements and relationships with third parties;
actual and potential conflicts of interest with Onex Credit Advisor, LLC (the “Adviser”) and its affiliates, and its senior investment team;
the elevating levels of inflation, and its impact on our portfolio companies and on the industries in which we may invest;
the dependence of our future success on the general economy and its effect on the industries in which we may invest;
our use of financial leverage, including the use of borrowed money to finance a portion of our investments;
the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;
the impact of any future acquisitions or divestitures;
the ability of the Adviser or its affiliates to attract and retain highly talented professionals;
our ability to qualify and maintain our qualification as a business development company (“BDC”) and as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”);
the effect of changes to tax legislation and our tax position; and
the tax status of the enterprises in which we may invest.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of the assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult
any additional disclosures that we may make directly to you or through reports that we have filed or 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.
Risk Factor Summary
The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. The following should be read in conjunction with the complete discussion of risk factors we face, which are set forth below under “Risk Factors.”
Risks Related to Our Business and Structure
Our Board of Trustees may change our operating policies, strategies and Declaration of Trust without prior notice or shareholder approval, the effects of which may be adverse to our results of operations and financial condition.
We may face increasing competition for investment opportunities, which could delay deployment of our capital, reduce returns and result in losses.
As required by the Investment Company Act of 1940, as amended (the “1940 Act”), a significant portion of our investment portfolio is and will be recorded at fair value as determined in good faith and, as a result, there is and will be uncertainty as to the value of our portfolio investments.
There is a risk that investors in our Common Shares may not receive distributions or that our distributions may decrease over time. Also, the amount of any distributions we may make is uncertain.
Although we have adopted a share repurchase program, we have discretion to not repurchase your shares, to suspend the program, and to cease repurchases.
Changes in existing laws or regulations, the interpretations thereof or newly enacted laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.
General economic conditions could adversely affect the performance of our investments.
The ongoing armed conflicts as a result of the Russian invasion of Ukraine and the war between Israel and Hamas may have a material adverse impact on us and our portfolio companies.
Terrorist attacks, acts of war, natural disasters, and/or force majeure events may adversely affect our operations.
We may face a breach of our cyber security, which could result in adverse consequences to our operations and exposure of confidential information.
Compliance with the SEC’s Regulation Best Interest may negatively impact our ability to raise capital, which would harm our ability to achieve our investment objectives.
Inflation has adversely affected and may continue to adversely affect the business, results of operations and financial condition of our portfolio companies.
Disruptions to the global supply chain may have adverse impact on our portfolio companies and, in turn, harm us.
Risks Related to Our Investments
Our investments in portfolio companies may be risky, and we could lose all or part of our investment.
Our portfolio companies may be highly leveraged and a covenant breach by our portfolio companies may harm our operating results, or incur debt that ranks equally with, or senior to, our investments in such companies.
Changes 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.
Economic recessions or downturns could impair our portfolio companies and adversely affect our operating results.
An investment strategy focused primarily on privately-held companies presents certain challenges, including, but not limited to, the lack of available information about these companies.
A lack of liquidity in certain of our investments may adversely affect our business.
The effect of global climate change may impact the operations of our portfolio companies.
Risks Related to the Adviser and Its Affiliates; Conflicts of Interest
The Adviser and its affiliates, including our officers and interested Trustees, 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 shareholders.
The Adviser relies on key personnel, the loss of any of whom could impair its ability to successfully manage us and whose misconduct could negatively impact the Adviser or us.
There may be trademark risk, as we do not own the Onex name.
Risks Related to Business Development Companies
The requirement that we invest a sufficient portion of our assets in Qualifying Assets could preclude us from investing in accordance with our current business strategy; conversely, the failure to invest a sufficient portion of our assets in Qualifying Assets could result in our failure to maintain our status as a BDC.
Regulations governing our operation as a BDC and RIC will affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.