OFS Capital Corp Files 2023 Annual Report on Form 10-K

TL;DR

<b>OFS Capital Corp has filed its 2023 10-K report detailing financial instruments and business risks.</b>

AI Summary

OFS Capital Corp (OFSSO) filed a Annual Report (10-K) with the SEC on March 5, 2024. OFS Capital Corp filed its 2023 Form 10-K on March 5, 2024. The filing covers the fiscal year ending December 31, 2023. Key financial instruments mentioned include common stock and various notes due in 2025, 2026, and 2028. The company's principal executive offices are located at 10 South Wacker Drive, Suite 2500, Chicago, IL 60606. The filing details risks related to business and structure, advisors and affiliates, business development companies, and investments.

Why It Matters

For investors and stakeholders tracking OFS Capital Corp, this filing contains several important signals. This 10-K filing provides a comprehensive overview of OFS Capital Corp's financial performance and strategic positioning for the fiscal year 2023, crucial for investors assessing the company's stability and future prospects. The detailed risk factors outlined in the report are essential for understanding potential challenges and their impact on the company's operations and investment portfolio.

Risk Assessment

Risk Level: medium — OFS Capital Corp shows moderate risk based on this filing. The company operates as a business development company, which inherently involves risks related to its investment portfolio, market conditions, and regulatory environment, as detailed in the extensive risk factors section.

Analyst Insight

Investors should review the detailed risk factors and financial statements in the 10-K to assess the company's investment strategy and potential for future returns.

Key Numbers

• 2023-12-31 — Fiscal Year End (Conformed Period of Report)
• 2024-03-05 — Filing Date (Filed as of Date)
• 2023-01-01 — Fiscal Year Start (Fiscal Year)

Key Players & Entities

• OFS Capital Corp (company) — Filer
• 10 SOUTH WACKER DRIVE (address) — Business Address
• CHICAGO (location) — Business Address City
• IL (location) — Business Address State
• 60606 (postal_code) — Business Address Zip
• 847-734-2000 (phone_number) — Business Phone

FAQ

Risk Factors

• Risks Related to Business and Structure [medium — operational]: The company faces risks associated with its business operations and corporate structure.
• Risk Related to Advisor and Affiliates [medium — operational]: There are risks associated with the company's reliance on its advisor and affiliated entities.
• Risks Related to Business Development Companies [medium — financial]: As a BDC, the company is subject to specific risks inherent in this investment structure.
• Risks Related to Investments [medium — financial]: The company's investment portfolio is subject to various market and credit risks.
• Risk Related to Securities and Investment in Common Stock [medium — financial]: Risks are associated with the valuation and performance of securities, particularly common stock.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value per share OFS The Nasdaq Glob
• $9.89 — approximately $ 102.6 million based on $9.89 per share, the last reported sale price
• $150,000,000 — in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit a
• $25,000,000 — in an aggregate principal amount up to $25,000,000 CLO Collateralized loan obligation Co
• $50.0 million — ured Notes Due April 2025 The Company's $50.0 million aggregate principal amount of 6.375% no
• $125.0 million — d Notes Due February 2026 The Company's $125.0 million aggregate principal amount of 4.75% not
• $48.5 million — ed Notes Due October 2025 The Company's $48.5 million aggregate principal amount of 6.5% note
• $54.3 million — ed Notes Due October 2026 The Company's $54.3 million aggregate principal amount of 5.95% not
• $55.0 million — ed Notes Due October 2028 The Company's $55.0 million aggregate principal amount of 4.95% not
• $25.0 million — Notes Due September 2023 The Company's $25.0 million aggregate principal amount of 6.25% not
• $15 million — between 150 and 2,000; revenues between $15 million and $300 million; annual EBITDA between
• $300 million — 2,000; revenues between $15 million and $300 million; annual EBITDA between $5 million and $
• $5 million — and $300 million; annual EBITDA between $5 million and $50 million; generally, private com
• $50 million — n; annual EBITDA between $5 million and $50 million; generally, private companies owned by
• $10 million — operators; and enterprise value between $10 million and $500 million. For additional inform

Filing Documents

• ofs-20231231.htm (10-K) — 6699KB
• ofscc202310-kexhibit411.htm (EX-4.11) — 91KB
• ofsccinsidertradingpolicy2.htm (EX-19.1) — 37KB
• ofscc202310-kexhibit211.htm (EX-21.1) — 2KB
• kpmgexhibit231consent2023.htm (EX-23.1) — 2KB
• ofscc202310-kexhibit311.htm (EX-31.1) — 10KB
• ofscc202310-kexhibit312.htm (EX-31.2) — 10KB
• ofscc202310-kexhibit321.htm (EX-32.1) — 5KB
• ofscc202310-kexhibit322.htm (EX-32.2) — 5KB
• ofsccdodd-frankcompensatio.htm (EX-97.1) — 24KB
• image_0.jpg (GRAPHIC) — 6KB
• ofs-20231231_g1.jpg (GRAPHIC) — 31KB
• ofs-20231231_g2.jpg (GRAPHIC) — 60KB
• 0001487918-24-000006.txt (&nbsp;) — 26463KB
• ofs-20231231.xsd (EX-101.SCH) — 93KB
• ofs-20231231_cal.xml (EX-101.CAL) — 65KB
• ofs-20231231_def.xml (EX-101.DEF) — 542KB
• ofs-20231231_lab.xml (EX-101.LAB) — 915KB
• ofs-20231231_pre.xml (EX-101.PRE) — 669KB
• ofs-20231231_htm.xml (XML) — 6145KB

Risk Factors

Item 1A. Risk Factors 28

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 62

Cybersecurity

Item 1C. Cybersecurity 62

Properties

Item 2. Properties 63

Legal Proceedings

Item 3. Legal Proceedings 63

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 63 PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 64

Reserved

Item 6. Reserved 73

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 74

Quantitative and Qualitative Disclosures about Market Risk

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 96

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 98

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 164

Controls and Procedures

Item 9A. Controls and Procedures 164

Other Information

Item 9B. Other Information 164

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 164 PART III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 165

Executive Compensation

Item 11. Executive Compensation 165

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 165

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 165

Principal Account ant Fees and Services

Item 14. Principal Account ant Fees and Services 165 PART IV

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules 166

Form 10-K Summary

Item 16. Form 10-K Summary 168

Signatures

Signatures 169 OFS , OFS Capital , OFS Credit and HPCI are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Annual Report on Form 10-K are the property of their respective owners. Defined Terms We have used "we," "us," "our," "our company," and "the Company" to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below: Term Explanation or Definition 1940 Act Investment Company Act of 1940, as amended Adjusted NII A financial measure calculated and presented on a basis other than in accordance with GAAP and represents net investment income excluding the capital gains incentive fee Administration Agreement Administration Agreement between the Company and OFS Services dated November 7, 2012 Advisers Act Investment Advisers Act of 1940, as amended Affiliated Account An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor Affiliated Fund Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor Annual Distribution Requirement Distributions to our stockholders, for each taxable year, of at least 90% of our ICTI ASC Accounting Standards Codification, as issued by the FASB ASC Topic 820 ASC Topic 820, Fair Value Measurements and Disclosures ASU Accounting Standards Updates, as issued by the FASB BDC Business Development Company under the 1940 Act BLA Business Loan Agreement, as amended, with Banc of California, as lender, which provides the Company with a senior secured revolving credit facility BNP Facility A secured revolving credit facility, as amended, that provides for borrowings in an aggregate principal amount up to $150,000,0

Business

Item 1. Business GENERAL We are an externally managed, closed-end, non-diversified management investment company and have elected to be treated as a BDC under the 1940 Act, which imposes certain investment restrictions on our portfolio. Our investment objective is to provide our stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. Our investment strategy is to maintain a credit investment portfolio focused primarily on middle-market companies in the United States. We use the term "middle-market" to refer to companies that may exhibit one or more of the following characteristics: number of employees between 150 and 2,000; revenues between $15 million and $300 million; annual EBITDA between $5 million and $50 million; generally, private companies owned by private equity firms or owners/operators; and enterprise value between $10 million and $500 million. For additional information about how we define the middle-market, see " —Investment Criteria/Guidelines. " Our investment strategy focuses primarily on investments in middle-market companies in the United States, including investments in senior secured loans, which are comprised of first lien, second lien and unitranche loans, as well as investments in subordinated loans and, to a lesser extent, common stock, preferred stock and other equity securities. Our investments may be directly originated or may be purchased on a secondary basis in the U.S. leveraged loan market for Broadly Syndicated Loans (as defined below). As a BDC, we must not acquire any assets other than "qualifying assets" as specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our assets, as defined by the 1940 Act, are qualifying assets (with certain limited exceptions). Qualifying assets include investments in "eligible portfolio companies." Under the relevant SEC rules, the term "eligible portfolio company" includes all priv

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View this 10-K filing on SEC EDGAR