Runway Growth (RWAY) Earnings Call Transcript

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DATE

Thursday, March 12, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — David R. Spreng
• Chief Investment Officer, Runway Growth Capital LLC — Greg Greifeld
• Chief Financial Officer and Chief Operating Officer — Thomas B. Raterman

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TAKEAWAYS

• Total Investment Income -- $30 million, compared to $36.7 million in the prior year, as stated in the financial review.
• Net Investment Income (NII) -- $11.6 million, down from $15.7 million in the prior year, with the decline partly attributed to lower prepayment fee income.
• Portfolio Activity -- Seven investments totaling $42.9 million funded, including a $20 million loan to a mobility company, a $10 million loan to a special purpose vehicle in consumer products, a $2 million initial funding to Shield Therapeutics, and $10.9 million in follow-on loans to four existing companies.
• Fair Value of Investment Portfolio -- $927.4 million at period end, representing a 2% decrease from $946 million.
• Net Asset Value (NAV) Per Share -- $13.42, falling 1% from $13.55.
• Portfolio Risk Rating -- Weighted average increased to 2.45 from 2.42 (on a 1-to-5 scale where one is most favorable).
• Debt Portfolio Yield -- Weighted average annualized yield of 14.2% for the period, down from 16.8% sequentially and from 14.7% in the prior year.
• Operating Expenses -- $18.4 million, compared to $21 million previously.
• Dividend -- $0.33 per share base dividend declared; $0.32 per share NII delivered; $0.65 per share in spillover income at year end.
• Nonaccrual Loans -- Only one loan (Domingo Healthcare) on nonaccrual status, with a fair market value of $2.4 million, representing 0.25% of the total portfolio.
• Unfunded Commitments -- $145.5 million, including $122.8 million for debt and $22.7 million for equity to a JV with KAPMA; $32.4 million of debt commitments are eligible to be drawn based on milestones.
• Liquidity Position -- $395.2 million in total available liquidity, including cash and cash equivalents; borrowing capacity of $377 million.
• Leverage Ratio and Asset Coverage -- Leverage ratio at 0.90x and asset coverage at 2.11x, compared to 0.92x and 2.09x previously.
• Debt Refinancing Transactions -- $103.25 million of unsecured notes due February 2031 placed at 7.25%, while all 8% and a portion of 7.5% notes due 2027 were redeemed to lock in more favorable rates and extend maturities.
• SWK Holdings Acquisition Status -- Acquisition expected to close in early April, bringing approximately 13 loans with an aggregate fair value of $235 million; debt component of SWK's portfolio yields 16%, overall SWK portfolio yield is 14%.
• Portfolio Position Sizing Outlook -- Following the SWK transaction, average position size is projected to decrease to $23.5 million (2.2% of the portfolio) from $30.3 million (3.1% before the BC Partners transaction).
• Stock Repurchase Program Update -- No shares repurchased during the quarter due to regulatory blackout periods related to the SWK acquisition; share repurchases possible after transaction close and blackout expiration.
• Pipeline Commentary -- Management reported a pipeline stronger than the prior year, citing a "measured optimism" for enhanced origination activity through BC Partners and SWK channels.
• CADMA JV Update -- Portfolio building at a measured pace with initial deals in place and the first distribution from the JV expected to flow through in Q2 income.

SUMMARY

Runway Growth Finance Corp. highlighted the impending close of the SWK Holdings acquisition, set to add meaningful healthcare and life sciences exposure, diversify the portfolio, and reduce average position sizes. Management confirmed a base dividend of $0.33 per share. The company expects run-rate net investment income accretion in the mid-single digits from the upcoming portfolio combination. The company drew attention to elevated prepayment levels and the resulting portfolio optimization measures taken, including active management of sector exposures and disciplined origination. Management identified robust liquidity and borrowing capacity to support both ongoing commitments and new opportunities, reflecting a highly deliberate approach to capital allocation.

• Post-acquisition leverage is expected to trend just under 1.2x, with a stated preference to operate between 1.2x and 1.3x, depending on the pace of repayments and deploying capital in smaller deal sizes.
• Raterman said, "Following the close of the SWK transaction, which should be on or about April 6, we expect to reduce our average position size to $23.5 million, or 2.2% of the portfolio."
• Management stated they anticipate the SWK transaction will offer "run-rate net investment income accretion in the mid-single digits," while also broadening access to the ABS and secured lending markets for future funding.
• The recent transition to more normalized prepayment fee income contributed to a sequential decline in net investment income, while only a single nonaccrual loan—Domingo Healthcare—remained in the portfolio at quarter-end.
• Repurchases of common stock were precluded by regulatory constraints tied to the SWK deal, with management indicating renewed discussions post-close and "probably May" as the earliest timing for possible resumption.
• Subject to minor adjustments, the SWK portfolio acquired will consist of 13 loans with a fair value of $235 million, plus equity and royalty holdings, and produces an aggregate yield of approximately 14%.

INDUSTRY GLOSSARY

• First Lien Senior Secured Loan: A loan backed by collateral where the lender has first claim over assets in the event of default, providing the highest repayment priority.
• Nonaccrual Loan: A loan for which the lender no longer accrues interest income due to the borrower's financial condition, typically indicating elevated credit risk.
• Spillover Income: Earnings in excess of distributions that may be carried over to support future dividend payments in subsequent periods.
• Prepayment Fee Income: Fees earned when borrowers repay loans ahead of schedule, often contributing to variability in investment income.
• ABS (Asset-Backed Securities): Debt securities backed by pools of underlying financial assets such as loans or receivables, commonly used for funding or risk transfer in specialty finance.
• Unfunded Commitments: Contracted but undrawn obligations to provide future financing to portfolio companies or investment vehicles, contingent on agreed milestones or triggers.
• Net Investment Income (NII): Income earned from investments after deducting operating expenses but before realized and unrealized capital gains or losses.
• Leverage Ratio: The ratio of total debt to equity or assets, used to gauge a company's financial leverage and risk profile.
• Asset Coverage: The measure of the proportion of a company's assets relative to its total debt, used to evaluate its ability to repay obligations, especially in regulated investment vehicles.

Full Conference Call Transcript

David R. Spreng, Chief Executive Officer; Greg Greifeld, Chief Investment Officer of Runway Growth Capital LLC, our investment adviser; and Thomas B. Raterman, Chief Financial Officer and Chief Operating Officer. Runway Growth Finance Corp.'s fourth quarter and fiscal year ended 2025 financial results were released just after today's market close and can be accessed from Runway Growth Finance Corp.'s investor relations website at investors.runwaygrowth.com. We have arranged for a replay of the call to be available on the Runway Growth Finance Corp. web page. During this call, I want to remind you that we may make forward-looking statements based on current expectations. The statements on this call that are not purely historical are forward-looking statements.

These forward-looking statements are not a guarantee of future performance and are subject to uncertainties and other factors that could cause actual results to differ materially from those expressed in the forward-looking statements, including, without limitation, market conditions caused by uncertainties surrounding interest rates, changing economic conditions, and other factors we identify in our filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions can prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions can be incorrect. You should not place undue reliance on these forward-looking statements.

The forward-looking statements contained on this call are made as of the date hereof, and Runway Growth Finance Corp. assumes no obligation to update the forward-looking statements or subsequent events. To obtain copies of SEC-related filings, please visit our website. With that, I will turn the call over to David. Thank you, Quinlan, and thanks, everyone, for joining us.

David R. Spreng: Good evening to discuss our fourth quarter and full year 2025 financial results. Today, I will discuss our highlights for the quarter and the year and provide an update on our pending acquisition of SWK Holdings. Then Greg will discuss our portfolio activity and share our outlook on the current market backdrop, and Tom will conclude with a deep dive into our financial performance. In the fourth quarter, Runway Growth Finance Corp. delivered total investment income of $30 million and net investment income of $11.6 million. During the quarter, we completed seven investments in new and existing portfolio companies across the high growth verticals of technology, health care, and select consumer sectors, representing $42.9 million in funded loans.

Taking a step back, 2025 was a dynamic year shaped by several market moving events and volatility, including ongoing tariff uncertainty, evolving interest rate policy, geopolitical conflicts, and increasing attention to AI-driven disruption. In times like these, it is critical to stay disciplined in our investment process and diligent in our approach to portfolio construction, traits that have defined our company since its founding. We believe our consistent performance across cycles reflects this philosophy.

That said, we are not complacent and remain focused on executing against the initiatives we have discussed in recent quarters, which include further enhancing the risk profile of our portfolio through diversification and smaller position sizes, expanding our suite of financing solutions, and maximizing the value of our existing commitments through robust monitoring and diligent risk mitigation. As a part of the BC Partners credit ecosystem, we have made steady progress on these objectives. We have also leveraged their combined resources and network in evaluating attractive and complementary portfolios, as demonstrated by our announced acquisition of SWK Holdings in the fourth quarter. As an update on timing, the transaction with SWK is now expected to close in early April.

Our confidence in closing this transaction remains unchanged. One key aspect of our transaction with SWK is the diversification it will bring to our portfolio. While we remain confident in our current asset mix, increasing our exposure and strengthening our capabilities in health care and life sciences will enhance our portfolio and drive optionality moving forward. In the coming quarters, we believe there could be attractive opportunities across all of our areas of focus: technology, health care, and select consumer sectors.

Greg will provide additional detail on how we think about software investing, with the takeaway being we have strong conviction in our underwriting and disciplined investment framework, which we believe position us well to consistently identify and execute on attractive opportunities in the sector. By broadening exposure across sectors and maintaining an allocation to software companies that meet our high standards, Runway Growth Finance Corp. is better positioned to generate consistent, attractive, and risk-adjusted results for our shareholders. Before I turn the call over to Greg, I will conclude with an update on our originations in the first quarter.

Although this is seasonally our slowest quarter, activity thus far is encouraging, and our pipeline is stronger than it was at this point last year, giving us measured optimism for the remainder of 2026. As we take advantage of enhanced origination channels through BC Partners and SWK throughout the remainder of the year, we will apply the same rigor to new opportunities and act thoughtfully in making any additions to our portfolio. I will now turn the call over to Greg for a more in-depth look at our portfolio activity. Thank you, David.

Greg Greifeld: Tonight, I will recap our portfolio activity during the quarter, provide an update on our progress against our portfolio optimization initiatives, and discuss how we are competitively positioned for the year ahead. Before I turn to our portfolio activity, I think it is important to reiterate some of what David described about our approach in deploying capital. At our core, Runway Growth Finance Corp. upholds a credit-first investment discipline with a preference for less economically sensitive business models. Combined with our focus on first lien senior secured investments to late-stage companies, we aim to generate durable growth and attractive returns on a risk basis.

As it pertains to software specifically, we are confident in our current portfolio and continue to be positive on the sector as an investment opportunity. We believe the best companies will not only be able to coexist with AI, but will be able to leverage AI as a tool to optimize their operating models and accelerate penetration in the markets they serve. As our investment team has evaluated deals over the last several years, finding companies that fit this mold has been a key priority.

While this is easier said than done, we believe our dedication to process, our deeply experienced team, and our long-standing relationships across the venture ecosystem allow us to identify the right opportunities to grow our portfolio. More specifically, if you look at our existing portfolio, our software companies share the following characteristics: mission-critical functions with a long diligence and implementation cycle, strong moats defined by domain expertise and high switching costs, and customer diversification, which we believe meaningfully de-risks revenue growth projections. Further, the founders we partner with are forward-thinking and always looking for ways to optimize their businesses. This includes using AI to improve operations, lower cost structure, and extend cash runways.

From a credit perspective, our software portfolio metrics are on solid footing. The software companies in our portfolio are delivering consistent revenue growth and maintaining stable LTVs. Lastly, we always actively monitor our portfolio companies, remaining in close contact with our borrowers and their sponsors. This allows us to have continued confidence in the outlook for our software portfolio and our portfolio at large. Turning now to our portfolio activity during the fourth quarter. Runway Growth Finance Corp. completed seven investments in new and existing portfolio companies for a total of $42.9 million funded.

These investments included completion of a new $20 million investment to a fast-growing mobility company offering a seamless, all-inclusive car subscription service, funding $20 million at close; completion of a new $10 million investment to a special purpose vehicle formed by an experienced consumer products investor and operator to support their latest investment, funding $10 million at close; completion of a new $20 million investment to Shield Therapeutics, funding $2 million at close; Shield Therapeutics is a commercial-stage specialty pharmaceutical company focused on delivering innovative therapies to address significant unmet needs in patients with iron deficiencies. We also completed follow-on investments with an aggregate amount of $10.9 million to four existing portfolio companies, including BlueShift, Bombora, Autobooks, and Marley Spoon.

Looking at the year ahead, we will continue to focus our opportunities to efficiently scale our portfolio while maintaining our defensive profile. We have a strong funnel featuring contributions from BC Partners and expect the pending acquisition of SWK to be additive to our sourcing capabilities, particularly within health care. Now I will turn the call over to Tom for a review of our financials. Thank you, Greg.

Thomas B. Raterman: Turning now to the fourth quarter results, we generated total investment income of $30 million and net investment income of $11.6 million in 2025, a decrease compared to $36.7 million and $15.7 million in 2025. Our weighted average portfolio risk rating increased to 2.45 in 2025 compared to 2.42 in 2025. Our rating system is based on a scale of one to five, where one represents the most favorable credit rating. Our total investment portfolio had a fair value of $927.4 million, a decrease of 2% from $946 million in 2025. To reiterate, we have structured our portfolio to be comprised almost exclusively of first lien senior secured loans, which reflects our focus on risk mitigation and diligent portfolio management.

We delivered $0.32 per share of net investment income in the fourth quarter. Our base dividend in the fourth quarter was $0.33 per share, and at the end of the year, we had spillover income of approximately $0.65 per share. Prepayment fee income during the quarter declined sequentially, returning to more normalized levels, which contributed to the decline in NII. For the first quarter, we expect a $0.02 headwind related to a one-time charge stemming from the full redemption of our 8% notes and partial redemption of our 7.5% notes, both of which were due in 2027.

As we evaluated the SWK transaction, a key benefit was its ability to stabilize our asset base amid recently elevated prepayments and the deliberate portfolio optimization we have taken, including exiting or resizing certain positions. We continue to expect this outcome upon closing. However, the modest delay in timing will contribute to some softness in Q1 2026 earnings. With respect to the dividend, we believe it is set at a sustainable level. Our board will continue to evaluate and approve future distributions, knowing how important consistency is to our fellow shareholders. Our debt portfolio generated a dollar-weighted average annualized yield of 14.2% for 2025, decreasing from 16.8% quarter over quarter and decreasing from 14.7% in the comparable period last year.

The sequential decline was the result of lower prepayment income in the quarter. Moving to our expenses, total operating expenses were $18.4 million for 2025, a decrease from $21 million in 2025. We recorded a net realized loss on investments of $377,000 in 2025 compared to a net realized loss on investments of $1.3 million in 2025. During the fourth quarter, we experienced two full repayments and one partial repayment totaling $60.6 million and scheduled amortization of $2.2 million. As of 12/31/2025, we had only one loan on nonaccrual status, and that is Domingo Healthcare.

The loan has a cost basis of $4.8 million and fair market value of $2.4 million, or 50% of cost, representing just 0.25% of the total investment portfolio at fair value as of 12/31/2025. As of 12/31/2025, Runway Growth Finance Corp. had net assets of $484.9 million, decreasing from $489.5 million at the end of 2025. NAV per share was $13.42 at the end of the fourth quarter, a decrease of 1% compared to $13.55 at the end of 2025. At the end of 2025, our leverage ratio and asset coverage were 0.90x and 2.11x, respectively, compared to 0.92x and 2.09x, respectively, at the end of 2025.

As of 12/31/2025, our total available liquidity was $395.2 million, including unrestricted cash and cash equivalents. We have borrowing capacity of $377 million. As of 12/31/2025, we had a total of $145.5 million in unfunded commitments, which was comprised of $122.8 million to provide debt financing to our portfolio companies and $22.7 million to provide equity financing to our JV with KAPMA. Approximately $32.4 million of our unfunded debt commitments are eligible to be drawn based on achieved milestones. Subsequent to quarter end, we took steps to enhance our balance sheet and reduce our cost of funds by launching an underwritten public offering of $103.25 million in aggregate principal amount of unsecured notes due in February 2031 at 7.25%.

We also redeemed a portion of our 7.5% notes and all of our 8% notes which were due in 2027, taking advantage of an attractive rate and spread environment as well as extending our debt maturity ladder. Before we conclude, I would like to take a moment to reflect on the progress we have made over the last eighteen months and reiterate our confidence in the transaction with SWK and its anticipated benefits. Prior to our acquisition by BC Partners, Runway Growth Finance Corp. was operating in a venture ecosystem facing a valuation reset and muted sponsor activity, so we intentionally looked for ways to strengthen our competitive position.

This included the BC Partners transaction, which has meaningfully widened our deal funnel. Now the SWK transaction will expand health care and life sciences exposure and widen our opportunity set further. Through this process, we have meaningfully enhanced the portfolio's earnings power, optimized portfolio composition, and navigated periods of elevated repayments. At the same time, we are reducing the risk profile of the portfolio. Following the close of the SWK transaction, which should be on or about April 6, we expect to reduce our average position size to $23.5 million, or 2.2% of the portfolio. This compares to $30.3 million, or 3.1% of the total portfolio before the BC Partners transaction, marking tangible progress against our portfolio enhancement initiatives.

As we have discussed before, other benefits of the transaction include enhancing our financial profile, expanding our shareholder base, generating run-rate net investment income accretion in the mid-single digits, and supporting modest ROE expansion as well as improved dividend coverage. In tandem with the enhanced earnings power and lower risk profile the deal brings, we are potentially expanding our access to new debt financing markets, including ABS and other secured lending markets. We look forward to the deal closing in early April. I will conclude with an update on our capital allocation initiatives.

Due to the pending acquisition of SWK, we were not able to utilize our stock repurchase program during the quarter and will not be able to do so until after the transaction closes and we are outside of our normal blackout periods. Our existing stock repurchase program will expire before the blackout window opens. However, in general, we continue to view stock repurchases as an important tool in delivering shareholder value. Finally, on February 25, 2026, our board declared a regular distribution for 2026 of $0.33 per share.

While we face some fluctuation in earnings quarter to quarter based on timing of the SWK deal and other factors, we are confident that our earnings power is aligned with the current distribution level on a full-year basis. With that, operator, please open the line for questions. We will now open for questions.

Operator: Thank you. To ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Erik Edward Zwick with Lucid Capital Markets. Your line is now open.

Erik Edward Zwick: Thank you. Good afternoon, guys. David, in your prepared comments, you noted that the pipeline is stronger than it was at this point last year. I am wondering if you or Greg, if you wanted to weigh in as well, just talk about maybe how it looks today in terms of new versus add-on opportunity, if there are any particular industries that are more, you know, kind of heavily weighted at this point, and then, I think you mentioned also in the back half of the year that you could see some additional growing or growth from the benefits of BC Partners and SWK and whether you would think that broadens kind of the mix.

I think you mentioned some new products as well. So just kind of curious an outlook there.

David R. Spreng: Yeah. Great. Thanks, Erik. I can start, and then Greg can add on. The comment really represents the impact that BC primarily is having on our deal flow. We are seeing a lot of really interesting opportunities from them. And we have done several deals together already, and I expect we will do at least one deal together per quarter going forward. And SWK represents a huge opportunity to upsize loans that they have to their base. And then on top of that, just our normal deal flow, excluding BC and SWK, is pretty strong. And so I think we do believe that we have got good momentum. That can change at any time.

And as I think all three of us said in prepared remarks, we are going to remain conservative in our approach to underwriting, and we are going to continue to look for the strongest companies. The problem is that when we like something, somebody else usually loves it and offers very, very aggressive terms. And, unfortunately, we just, at some point, have to back out and just say it is not worth it. But there are getting to be some really interesting opportunities with very juicy returns, particularly in software and in consumer. We have never been ones to chase after returns. We would rather have a slightly lower return that comes with a lot less risk.

But it is interesting to note that the competitive dynamic in those two sectors is offering pretty good returns. Greg, anything else you want to add?

Greg Greifeld: Yeah. I would definitely echo those sentiments. I think that our core pipe of the volume definitely increased year over year. And one thing I would point to is there has definitely been uncertainty in the public market, which for providers in the private market—that is a benefit. What I mean by that is going into the beginning of the year in terms of the potential for IPOs this year, you know, obviously, some big blockbuster maybe—but overall the IPO window for companies seems not to be opening widely, which leaves companies to look for a definitive solution themselves. With that option off the table, that has led to an increase in our core pipeline.

And while SWK has not closed yet, I would say that the general trend—and we have been involved in health care since 2020—but this deal should further augment our sourcing in that sector.

Erik Edward Zwick: Great color. Thanks, guys. And my question for Tom: do you have a pro forma leverage number after the first quarter actions, or is it materially different than it was at 12/31, and how are you thinking about the appropriate level of leverage today for the portfolio?

Thomas B. Raterman: Yeah. Thanks, Erik. Post SWK will be just under 1.2. We will each strike our NAV two days before the closing, which should be April 6. And so as we think about then moving forward, we still want to run between 1.2 and 1.3 and consider that our fully levered run rate, if you will. One of the things that we will consider, and a lot of it will depend on the economic environment and volatility in the capital markets. With the prepayments over the last, call it, eighteen to twenty four months, we have seen it is very difficult during a portfolio reconstruction period or reset period. We are putting up smaller amounts on a per deal basis.

So we might get $60 million back or $50 million back. We want to put that out in two or three deals. So we may, in the short term, as we have line of sight to either scheduled maturities or anticipated prepayments, run a little high one quarter knowing that in the coming quarter we are going to see a prepayment. We would not run generally, purposefully above 1.35 in that scenario. But we may, in the short term, try to protect the core earnings power of the portfolio from some of those prepayments.

If there is one thing that we have seen over the last eighteen to twenty four months, it is that it is harder to put that money to work in smaller pieces given the competitive environment and our overall level of picking us, choosing us in transactions.

Erik Edward Zwick: That is helpful. Thanks. And last one for me. Is there any new updates on the CADMA JV to communicate?

Thomas B. Raterman: So we continue to work actively with CADMA. We have got a couple of deals in the JV right now. It has been, again, a little difficult to build that up given the aggregate deal flow. But when we sat down just recently with our partners at CADMA, I think there is a renewed effort to really build that portfolio and juice up the earnings power there. We do expect the first distribution from the JV in Q2. So you will see that flow through the Q2 income statement.

Erik Edward Zwick: Great. Thanks for taking my questions today.

David R. Spreng: Thanks, Erik.

Operator: Our next question comes from the line of Casey Jay Alexander with Compass Point Research and Trading. Your line is now open.

Casey Jay Alexander: Good afternoon. Thanks for taking my questions. Tom, is there any way that you can update us as to changes in the SWK Holdings portfolio after you announced the deal, and what the balance of their loans and the number of loans you expect to have coming over on April 6 is going to be?

Thomas B. Raterman: Subject to a little bit of modification, there will be 13 loans with a fair value of around $235 million. There is equity in addition to that. So there is an equity portfolio of some stock positions, warrants, and there are a couple of remaining royalties that will come across. Those are generally not yielding right now, or are yielding very low. And the aggregate yield on that portfolio, the total portfolio, is about 14%. The debt-only portfolio is about 16%.

Casey Jay Alexander: Thank you for that. And, Greg, when you were answering the last question, at least to me, you were breaking up quite a bit. I do have a question for you. If I was a member of the media, I would just ask you: when are you going to mark the software portfolio at zero, right? Because that is what the media expectation is at this point in time. But you had one loan at the end of the third quarter that was marked at a reasonable discount to par, I think around 82%. And when I read the Las Vegas Sun, I see that Circadence closed a new investment round and is talking about strong revenue growth.

So I was wondering if you could update us on that particular credit because it seems as though things may have turned for the better.

Greg Greifeld: Yeah, and hopefully this is better sound-wise. As you pointed out, it successfully closed on an equity round as well as signed a substantial contract with the Defense Department. In combination, that should lead to an increase in performance for them. So it is one that we do continue to monitor closely.

Casey Jay Alexander: Alright. Great. Thank you for taking my questions.

Operator: Thank you. As a reminder, to ask a question at this time, please press 11 on your touch-tone telephone. Our next question comes from the line of Richard Shane with JPMorgan. Your line is now open.

Richard Shane: Hey, guys. Thanks for taking my questions this afternoon. First, when you announced the SWK transaction, you announced an accretion level from an NII per share perspective, I assume. Given the movements in the stock price and the relative performance, how should we be thinking about that? And are there any collars on the equity component? You are providing $75 million of stock consideration—how does that flex?

Thomas B. Raterman: Thanks, Richard, and welcome to your first earnings call with us. We are glad to have you as part of the coverage team. The amount of equity is set at $75.5 million. That will not change. The number of shares will change modestly, based on the calculation of NAV. There will still be meaningful accretion. There is some accounting that happens that actually increases the NII contribution as the SPAC declines. It is kind of counterintuitive, but it, in effect, increases the discount at which we are buying the portfolio and, as I said, it is fixed in terms of the dollar amount. The share count changes based on the NAV.

Richard Shane: Got it. But presumably, that means that the deal becomes more dilutive because you are issuing more shares in order to provide the $75 million of stock consideration?

Thomas B. Raterman: That is correct. But we are talking about an insignificant change in terms of the change in NAV. If you look at the 12/31 NAV versus the 9/30 NAV, it is 1%-ish. So it is not a meaningful amount, and at least at the moment, the preliminary calculations are that will largely be offset by the increase in the discount that we are purchasing at because of the decline in the stock price.

Richard Shane: Got it. Okay. Very helpful. And then, look, you guys have a history of repurchasing shares. You did not repurchase shares this quarter. You mentioned that you do see that as an attractive opportunity. Was the impact of the acquisition the reason to forestall that in the fourth quarter, and is that something that lifts post acquisition such that you will start to go back to the market and be repurchasing shares again?

Thomas B. Raterman: We have done that in the past, and that is our plan to discuss with the board. If history repeats itself, I would think the board would view it—and has consistently with the management team—that it is a good use of capital. But we were not legally able, with the pending acquisition. When we were under LOI, we could not use the stock repurchase program. When we had the N-14 pending, we could not use the stock repurchase program. In general, the first time we would be able to do it would be two days after the closing. However, that is in our blackout period for Q1.

So the first time that we can be back in the market is probably May. As we look at capital allocation, it is a balancing act between new deals and the long-term core earnings power that those bring to the table versus the immediate accretion from buying at such a discount. And we recognize the financial impact to our shareholders on that.

Richard Shane: Very helpful. And very briefly, last question. What is remaining under your repurchase authorization from before?

Thomas B. Raterman: There is effectively an amount remaining, but we cannot use it. We will revisit the whole number come April, early May when we have our board meeting, and we will have much better details on the portfolio.

Richard Shane: I appreciate that. A lot of moving parts for the new guy. I appreciate it very much, guys. Thank you.

Thomas B. Raterman: We are glad to have you on board.

David R. Spreng: Thanks. Fun to be here.

Operator: Thank you. Our next question comes from the line of Sean-Paul Aaron Adams with B. Riley Securities. Your line is now open.

Sean-Paul Aaron Adams: Hey, guys. On the merger, I understand that you have proxy deadlines and the shareholder meetings. But was there any reason that prevented the mail-outs from going out a little bit sooner in the quarter?

David R. Spreng: Yeah. Nothing to do with us.

Thomas B. Raterman: Technically, the SEC has 30 days to respond to your filing, and we filed November 19, which would have meant a December 19 date for the initial comments back. Unfortunately, with the shutdown and the backlog that the SEC had—and this was not a typical investment company to investment company transaction; it was the acquisition by an investment company of an operating company—there was a little more to digest for the SEC. The reality is it took 72 days to get the majority of the comments and 77 days for the last comments. They were not particularly difficult, and once we had them, we turned them and filed as quickly as possible. But there are absolutely no underlying business issues.

It was really just getting through the queue at the SEC. And I have to say, once they gave us their comments and they recognized that we had a deadline embedded in the merger agreement, they were very good to work with and very attentive.

Sean-Paul Aaron Adams: Got it. Appreciate the color.

Operator: Thank you. I am currently showing no further questions at this time. I would now like to turn the call back over to David R. Spreng for closing remarks.

David R. Spreng: Great. Thank you, operator, and thank you all for joining us today. We look forward to discussing our first quarter 2026 financial results with you in May.

Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.

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