Investcorp Credit Management BDC Inc Aktie

Good morning, and thank you for joining today's Investcorp Credit Management BDC, Inc. Earnings Release Call for the first quarter ended March 31, 2026. It is now my pleasure to turn the floor over to Suhail.

Thank you. Andrew, why don't you please do the opening remarks, and then I'll take over.

Sure. Thanks, Suhail. Welcome, everyone, to Investcorp Credit Management BDC's Earnings Call for the quarter ended March 31, 2026. As you heard, I'm here with Suhail, President and Chief Executive Officer of the company.

I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com.

I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of the latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website.

The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I'll provide an overview of our results and summarize the financials.

At this time, I would like to turn the call back over to Suhail.

Thank you, Andrew. Good morning, everyone, and thank you for joining our earnings call for the quarter ended March 31, 2026. We will begin with a business update and review of our first quarter results and portfolio activity, after which Andrew will walk through our financials in greater detail.

As previously announced, the Board has formed a special committee of independent directors to evaluate strategic alternatives aimed at maximizing shareholder value. The special committee has retained Houlihan Multicapital Inc. as financial adviser to assist in this process. The Board and management team are committed to conducting a thorough and deliberate review. Given that the strategic review process is ongoing, we will not be taking questions on today's call.

We want to share 2 steps taken to help manage the company's liquidity. First, our investment adviser voluntarily agreed to raise 56% of our base management fees for the quarter, resulting in approximately $456,000 in savings. This voluntary waiver reflects the adviser's ongoing commitment to support the company.

Second, as noted in our 8-K filing on May 8, 2026, we amended our revolving credit facility to reduce the commitment from $100 million to $50 million. This better aligns the facility with our current needs and reduces our cost structure while maintaining adequate liquidity for our investment strategy. This will save the company approximately $401,000 in undrawn commitment fees annually.

Turning to our first quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share. Net assets declined approximately 14% sequentially with net asset value per share decreasing to $3.65 from $4.25 at December 31. This decline was primarily driven by the change in fair value adjustments, lower investment activity and higher repayments resulting in significant growth in NII.

Nonaccruals remained consistent with the prior quarter with 5 positions and nonaccruals representing approximately 6.1% of the portfolio fair value compared to 6.9% last quarter. The portfolio remains diversified across 17 GICS industries with our largest issuer representing 7.6% of fair value. I would also note that our software exposure remains relatively low at 3.1% of fair value at quarter end. Consistent with our near-term priorities of capital preservation and liquidity management, new investment activity remained muted during the quarter.

For the quarter ended March 31, we funded an incremental $79,000 under the first lien term loan C of American Nuts, an existing portfolio company to support the company's working capital requirements as it executes on its near-term growth initiives. American Nuts provides processing, packaging, sourcing and procurement services for nuts, seeds and dried fruits. Our yield on this position at cost is approximately 12.6%.

On the realization side, we fully exited 3 portfolio company investments during the quarter, generating total proceeds of approximately $12.7 million with a blended IRR of approximately 10.7%. This included the full repayment of our term loan investments in I&W Manufacturing, PDI Holdings and our position in insurance Term Loan B-debt.

I'll now turn the call back over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended March 31, 2026, the fair value of our portfolio was $151.4 million compared to $172.7 million on December 31. Our net assets were $52.7 million, a decrease of $8.6 million from the prior quarter. The quarterly change in net assets consisted of a $0.2 million increase from NII, offset by an $8.8 million decrease from net depreciation of portfolio assets. The weighted average yield of our portfolio -- our debt portfolio was 11.95% of fair value, an increase of 139 basis points from the December quarter.

As of March 31, our portfolio consists of 34 borrowers, approximately 83% of our investments were in first lien debt and the remaining 17% was invested in equity, warrants and other positions. 97.8% of our debt portfolio was invested in floating rate instruments and 2.2% in fixed rate investments. The weighted average cash spread on our floating rate debt investments was 4.5%, relatively unchanged from the prior quarter. The average investment size per portfolio company on a fair market value basis was approximately $4.4 million or approximately 2.9%. Our largest portfolio company investment on a fair market value basis was [indiscernible], $11.6 million or approximately 7.6% of our total fair market value. Our largest industry concentrations by fair market value were professional services at 15.7%, commercial services and supplies at 11.2%, diversified consumer services at 9.7%, IT services at 9.2% and specialty retail at 7.6%. Gross leverage was 2.05x and net leverage was 1.83x on March 31 compared to 2.2x gross and 1.78x that, respectively, for the previous quarter. With respect to our liquidity, as of March 31, we had approximately $11.6 million in cash, of which approximately $8.8 million was restricted cash. In addition, we had $55.1 million of unused commitment under our revolving credit facility with Capital One, of which $3.6 million was available under our borrowing base.

As discussed previously, subsequent to quarter end, we reduced our commitment from $100 million to $50 million, which leaves our borrowing base availability unchanged but reduces the ongoing cost as discussed, having a large undrawn fee associated with unneeded availability. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q. And with that, I'd like to turn the call back over to Suhail.

Thank you, Andrew. As we mentioned in the previous quarter, our priorities remain clear: preserving capital and actively managing the portfolio. To summarize, the special committee continues its work with Houlihan Multi to evaluate strategic alternatives focused on maximizing shareholder value. We appreciate your continued support and look forward to updating you on our progress next quarter. And with that, we would like to conclude the call.

This concludes today's conference call. Thank you, everyone, for attending.

Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's Quarter ended December 31, 2025 Earnings Call. It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer.

Thank you, operator. Welcome, everyone, to Investcorp Credit Management BDC's earnings call for the quarter ended December 31, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company.

I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com.

I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website.

The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I will provide an overview of our results, summarizing the financials. This will be followed by Q&A. Please note that today's discussion will focus on our financial results. As stated in our press release, we do not intend to comment further regarding the review unless or until it determines that further disclosure is appropriate or necessary. As such, we will not be taking questions on the strategic review process during today's call. Management will be pleased to address questions related to our quarterly financial statements and business operations.

At this time, I would like to turn the call over to Suhail.

Good morning, everyone, and thank you, Andrew, and thank you, everyone, for joining our December 31, 2025 quarter-ended earnings call. As a reminder, ICMB provides flexible capital solutions to middle-market companies, primarily through first lien senior secured debt. Our disciplined underwriting approach focuses on downside protection while generating income for shareholders. We will begin with an update on the business, a review of our fourth quarter results and portfolio activity, and then Andrew will walk you through our financials in greater detail.

Before we dive into the details, here are the key takeaways from the quarter. We formed a special committee of independent directors to review strategic alternatives and maximize value for shareholders. We successfully refinanced the $65 million notes due April 1 with new unsecured notes maturing in 2029. NAV per share declined to $4.25, primarily driven by fair value adjustments and dividend payout in excess of net investment income. Nonaccruals increased to 6.9% of the portfolio at fair value with Easy Way added to nonaccrual. We remain focused on liquidity, capital preservation and disciplined underwriting in a still uncertain market environment.

As announced in our earnings press release, the Board of the company has formed a special committee of independent directors to review strategic alternatives to maximize value for shareholders and in parallel has decided to not declare a quarterly dividend for the current quarter. In addition, on March 30, we successfully refinanced the $65 million 4.875% notes due April 1 with new $65 million unsecured notes provided by our advisers affiliate. The unsecured notes bear a floating rate coupon of SOFR plus 550 basis points and are due on July 1, 2029.

The market environment, macroeconomic and geopolitical uncertainty continues to shape the operating backdrop. Credit markets have remained open, but deal activity in our segment of the market has stayed below historical norms as sponsor-driven transaction volumes have yet to recover in a meaningful way. Our focus on disciplined underwriting and active portfolio management has not changed, and we remain in active dialogue with management teams and sponsors of our portfolio companies.

Turning to our fourth quarter results. ICMB reported net investment income before taxes of $0.3 million or $0.02 per share before taxes, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a reduction in income-producing assets, including the placement of Easy Way term loan on nonaccrual and an increase in professional fees and other expenses that is typically experienced in the December quarter. Nonaccruals increased to 6.9% of the portfolio at fair value compared to 4.4% last quarter, driven by the addition of Easy Way, as mentioned above. Easy Way is a manufacturer of customizable outdoor furniture products sold through retail channels.

Net assets declined approximately 16% sequentially from the prior quarter, with net asset value per share decreasing to $4.25 from $5.04 in the previous quarter. This was largely the result of fair value adjustments and the payment of a dividend in excess of NII. These fair value adjustments primarily reflect changes in market valuation levels and updated exit timing assumptions in the current environment rather than broad-based deterioration across the rest of the portfolio. The portfolio remains diversified across 18 industries with no single investment representing more than approximately 3% of fair value.

I would also like to note that our software exposure represented less than 3% of fair value at quarter end. Our focus during the quarter was on liquidity management. Hence, our new investment activity remained muted. During the quarter, ending December, we invested $1.5 million in the first lien term loan of Axiom Global, an existing portfolio company to fund the dividend to existing shareholders. Axiom is a leading provider of flexible expert legal talent for enterprise customers. We have been investing in Axiom across our platform since February 2021.

Our yield at cost is approximately 8.8%. In the same period, we fully realized 3 portfolio company investments totaling $8.2 million in proceeds with an IRR of approximately 10.6%. This included the full realization of 2 term loan investments in existing portfolio companies, CareerBuilder and LABL, L-A-B-L as well as our preferred equity investment in Advanced Solutions International, which was recapitalized during the quarter.

I'll now turn the call over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance. For the quarter ended December 31, 2025, the fair value of our portfolio was $172.7 million compared to $196.1 million on September 30. Our net assets were $61.3 million, a decrease of $11.4 million from the prior quarter. This quarterly change in net assets consisted of a $9.4 million decrease from operations and a $2 million decrease related to our dividend, which was paid in excess of NII for the quarter.

The weighted average yield of our debt portfolio was 10.6%, a small decrease of 31 basis points from the September quarter. As of December 31, our portfolio consisted of 37 borrowers, approximately 81% of these investments were in first lien debt and the remaining 19% was invested in equity, warrants and other positions. 98% of our debt portfolio was invested in floating rate instruments and 2% in fixed rate instruments. The weighted average spread on our floating rate debt investments was 4.5%, which is relatively unchanged from the prior quarter. The average investment size per portfolio company on a market value basis was approximately $4.7 million or 2.7% and our largest portfolio company investment on a fair market value basis, Bioplan at $11.4 million.

Our largest industry concentrations by fair market value were professional services at 14.5%, IT services at 9.2%, insurance at 8.9%, diversified consumer services at 8.6% and commercial services and supplies at 7.9%. Overall, our portfolio companies are spread among 18 GICS industries as of quarter end, including our equity and warrant positions. Gross leverage at the end of the quarter was 2.02x and net leverage was 1.78x compared to 1.75x gross and 1.59x net, respectively, for the previous quarter. We paid down approximately $14 million of debt in February. On a simple pro forma basis, had this pay down occurred on December 31, our net leverage would have been closer to 1.8x, while our reported year-end net leverage remains 1.78x. This pay down improved our asset coverage ratio from 150% to 155%.

With respect to liquidity, as of December 31, we had approximately $15 million in cash, of which approximately $10.4 million was restricted cash. In addition, we had $41.1 million of unused commitment under our revolving credit facility with Capital One, of which approximately $8.7 million was available under our borrowing base. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-K.

And with that, I would like to turn the call back over to Suhail.

Thank you, Andrew. As we reflect on the quarter, we are operating in an environment with elevated uncertainty both across both the macro backdrop and broader market sentiment. Our priorities are clear. preserving capital, maintaining disciplined underwriting and actively managing our nonaccrual positions. To summarize, we have formed a special committee to pursue strategic alternatives focused on maximizing shareholder value. We refinanced our April notes and extended our maturity profile, and our portfolio remains predominantly first seen with broad industry diversification.

While we expect market conditions to remain challenging in the near term, we believe our focus on liquidity and risk management positions ICMB to navigate this period and pursue opportunities as they arise. We appreciate your continued support and look forward to updating you on our progress next quarter. That concludes our prepared remarks. We will now open it up for questions regarding our quarterly financial performance and business operations. As noted earlier, we will not be commenting further on the strategic review.

Operator, please open the line up for Q&A.

[Operator Instructions] Our first question comes from Justin Scott, [indiscernible] Research.

First of all, I'd like to applaud the forming of the special committee. I know you can't take any questions on it, but I think we can all see that, unfortunately, it's an economic necessity for the fund. Just back of the envelope, fees and expenses of running this fund have now $0.48 a share. The additional interest on the shift from the previous loan notes costing the fund 4.9% to the current ones, 9.1%, add another $0.19 per share. So $0.67 per share of fees and expenses and additional interest, which is 15.8% of the net assets or 42% of the share price. Obviously, no matter how hard your team tries, those are unattainable investment skills to generate a return for the fund. So I fully understand why you had to do it. Obviously, most of the investors are in here for income, but applaud the decision. And I know you can't comment about the options you're looking into.

One thing I'd like to ask is whether anything is being done to trying to put this tactically, closer align the interest of the manager with the shareholders, given that the fees that the manager takes and now with the new loan, the interest that the affiliate of the manager is earning is a very substantial part of the assets of the fund and whether during the interim period as you're doing the review, whether the manager will consider reducing their fees somewhat.

Justin, thank you for your question, and thank you for your opening remarks as well. Look, I think, as you can see from our financials, we have been [ waiting ] fees on an ongoing basis, even when the fund is performing slightly better in a slightly better environment. So that tool always exists for us and if we have to. But I think what I more importantly note is, you should think about the managers sort of alignment with the shareholders. If an affiliate of the manager just provided $65 million of capital to refinance the notes. Affiliate of the manager also owns about 25% of the shares. So I think we are -- we consider ourselves fully aligned with shareholders, and we'll use whatever means necessary to keep that alignment going. Hopefully, that answers your question.

It's just that you are earning a substantial amount of money during the period when the fund is open, and I just concerned about that affecting the motivation. Basically, the adviser is going to be earning about $10 million in interest and fees during this period. And I think time is not on your side, and I guess I'm saying don't dilly-dally, so to speak.

Understood.

[Operator Instructions] I currently don't see anyone with questions. [Operator Instructions].

If no more questions, Luke, I think we can conclude the call, and thank you again for everyone joining in. And we look forward to talking to you again next quarter, and we'll see you then. Thank you, Luke.

Thank you, everyone. And this concludes today's conference call. Thank you for attending.

Good morning, ladies and gentlemen, and welcome to today's Investcorp Credit Management BDC's quarter ended September 30, 2025 Earnings Call.

It is now my pleasure to turn the floor over to Andrew Muns, Chief Financial Officer.

Thank you, operator. Welcome, everyone to Investcorp Credit Management BDC's earnings call for the quarter ended September 30, 2025. I'm joined today by Suhail Shaikh, President and Chief Executive Officer of the company.

I would like to remind everyone that today's call is being recorded and that this call is the property of Investcorp Credit Management BDC. Any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on the Investor Relations page of our website at icmbdc.com.

I would also like to call your attention to the safe harbor disclosure in our press release regarding forward-looking information and remind everyone that today's call may include forward-looking statements and projections. Actual results may differ materially from these projections. We will not update forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit the company's registration statement on the SEC's EDGAR platform or our Investor Relations page on our website.

The format for today's call is as follows: Suhail will provide an overall business and portfolio summary, and then I'll provide an overview of our results, summarizing the financials. This will be followed by Q&A.

At this time, I would like to turn the call over to Suhail.

Good morning, everyone, and thank you for joining our third quarter earnings call. We'll start with an update followed by a review of our third quarter results, current market conditions, portfolio activity, and then Andrew will walk through our financials for the quarter.

I'm pleased to announce that the managers parent Company continues to provide strong support for the BDC. Our Board of Directors has approved Investcorp Capital, an affiliate of Investcorp Group to provide a backstop commitment to refinance our [ 4.78% ] new notes due April 1, 2026. When this commitment enhances our flexibility proactively addresses the near-term maturity and strengthens our balance sheet.

Turning to our third quarter results. We reported net investment income before taxes of $0.6 million or $0.04 per share, a decrease of $0.02 per share from the previous quarter. The sequential decline in NII was primarily driven by a decline in income earning assets due to the loss of PIK dividend income from Fusion's preferred equity position which was placed on nonaccrual status as well as portfolio repayments and our continued discipline and not chasing lower-yielding investments.

Net assets declined by approximately 4% with net asset value per share increase -- decreasing to $5.04 per share from $5.27 last quarter. This was largely the result of fair value adjustments and 2 legacy borrowers and the payment of a dividend in excess of NII. Nonaccruals accounted for 4.4% of the portfolio for a fair value, up from 1.6% last quarter following the addition of Fusion's preferred equity position. Although modestly higher, sequentially, the level remains comparable to the 4.8% reported a year ago, underscoring the continued stability of the portfolio and our proactive management of underperforming credits especially legacy credits.

Overall, the portfolio remains healthy. Approximately 82% of assets at fair value are rated in the top 2 risk rating categories. Our weighted average interest coverage ratio improved to 2.3x compared to 2x a year ago, reflecting enhanced portfolio strength. Weighted average LTV remains approximately 41%, while weighted average leverage declined to 4.6x in the current period from 4.8x in the prior quarter as weighted average EBITDA increase.

The portfolio is broadly diversified across 18 industries with average exposure to any single company representing less than 3% of the portfolio's fair value. As we reflect on the quarter, we continue to operate in a backdrop of solid fundamentals but heightened caution. Deal flow and sponsor-led M&A remains slow with many transactions still working their way through the processes rather than closing. Refinancing and portfolio redeployment activity has also slowed compressing spreads and limiting opportunities for compelling new originations.

We remain highly selective in evaluating opportunities that meet our targeted yield and credit quality criteria. Approximately 57% of sponsor-backed private credit deals were priced with spreads below 500 basis points in the current quarter. While we actively manage the portfolio, we're not rotating into lower-yielding assets simply for growth of all deals entering our pipeline this quarter, fewer than 10% advanced to deeper diligence. Instead, our focus remains on credit quality and structural protections. We're not chasing the lowest yielding deals.

Approximately 73% of our investments are in covenanted to deals. Looking ahead, we expect NII to benefit from these -- from new fundings, and we remain committed to disciplined portfolio management to drive long-term shareholder value.

I will now turn to a summary of our investment activity for the quarter. This was a lighter quarter for sure for investment activity. During the quarter ending September, we invested approximately 25,000 in the preferred equity of 4L Technologies, an existing portfolio company to support an incremental equity raise and our existing position. We also fully realized 2 portfolio company investments, generating total proceeds of $6.5 million with an IRR of approximately 12.7%.

We realized our first lien term loan positions in PureStar listed on our SOI as AMCP Clean Acquisition Company and One Call Medical, both of which were refinanced during the quarter. Our realized IRRs from PureStar and One Call were 11.5% and 13.7%, respectively.

I'll now turn the call back over to Andrew to review our financial results in more detail.

Thanks, Suhail. Let me begin by providing you with highlights of our quarterly performance.

For the quarter ended September 30, 2025, the fair value of our portfolio was $196.1 million compared to $204.1 million on March 31. Our net assets were $72.7 million, a decrease of $3.3 million from the prior quarter. Our portfolio's net decrease in net assets from operations this quarter was approximately $1.3 million, and the remaining $2 million was due to distribution of cash dividends to shareholders. The weighted average yield of our portfolio from debt was 10.9%, slight increase from 10.6% in the previous quarter ended June 30.

As of September 30, our portfolio consisted of investments in 41 companies, approximately 78% of these investments was first lien debt and the remaining 22% was invested in equity warrants and other securities. 98.5% of our debt portfolio was invested in floating rate instruments and 1.5% in fixed rate investments. The weighted average spread on our floating rate debt investments was 4.6%, relatively unchanged from the prior quarter.

The average size per portfolio company on a fair market value basis was approximately $4.7 million or approximately 2.5% of total and our largest portfolio company investment on a fair market value basis was Bioplan at $13.4 million. Our largest industry concentrations by fair market value were professional services at 13.7%, insurance at 10.4%, containers and packaging at 8.9%, IT services at 8.5% and trading companies and distributors at 8.4%. Overall, our portfolio companies are spread among 18 GICS industries as of the quarter end, including our equity and warrant positions.

We're also pleased to announce that on November 10, 2025, the Board of Directors declared a distribution for the quarter ended December 31, 2025, of $0.12 per share and a supplemental distribution of $0.02 per share payable in cash on December 12, 2025 to stockholders of record as of December 1, 2025. Gross leverage was 1.75x and net leverage was 1.59x as of September 30, compared to 1.77x gross and 1.54x net, respectively, for the previous quarter.

With respect to our liquidity as of September 30, we had approximately $11.6 million of cash, of which approximately $7.8 million was restricted cash with $36.5 million of capacity under our revolving credit facility with Capital One. Additional information regarding the composition of our portfolio and quarterly financial results are included in our Form 10-Q.

With that, I would like to turn the call back over to Suhail.

Thank you, Andrew. To close, we remain focused on executing our strategy and positioning the portfolio for long-term value creation. We believe we are well positioned for the current environment with a robust portfolio of strong capital backing and a disciplined investment posture that prioritizes credit quality and income stability over yield.

As the broader backdrop remains uncertain, our emphasis continues to be on maintaining flexibility, protecting asset value and ensuring our dividend remains fully supported. The refinancing commitment from our parent affiliate, Investcorp Capital, underscores the confidence and ongoing support from our parent company. Further strengthening our balance sheet and providing additional financial flexibility as we navigate this environment, the $65 million commitment to refinance the [ 4.78% ] notes, coupled with approximately 3.6 million shares held by our parent are reflective of Investcorp's strong commitment to increasing shareholder value and aligning interest.

While market activity remains subdued, we continue to see solid underlying portfolio performance with strong coverage metrics and healthy diversification across sectors. We remain patient and selective, ready to deploy capital when attractive opportunities arise.

Thank you again for your time and continued support. We look forward to updating you on our progress next quarter. That concludes our prepared remarks. Operator, please open the line up for Q&A.

[Operator Instructions] Our first question comes from Christopher Nolan with Ladenburg Thalmann.

On the backstop, could you clarify whether or not that's to buy up the full refinance amount for the maturing $65 million bond? Or is that simply just to cover principal and coupon payments from the new bonds?

No, it's the former. So the backstop, Christopher, is to refinance the notes in the event that we have not refinanced them prior to the April 1, 2026 maturity debt.

Right. And is there any sort of parameters in terms of the coupons...

Yes, I believe the letter outlines it. We published and it's an exhibit to the 10-Q. We have agreed to SOFR plus 550 on a floating rate basis as the new coupon.

Great. Second question, I guess for Andrew, what was the spillover income in the quarter, please?

Well, I think as we said last time, we don't give the specific spillover income, but I think you probably noticed in the past that our dividend has been above NII. And obviously, the amount that we've chosen to pay out is reflective of the spillback amount that's required so you could make a similar assumption for the declared dividend to be paid in December of this year.

Right. And the final question I had is for Klein Hersh. This is nonaccrual, but the cost basis is 0 and the fair value is 0. So why keep it on the investment portfolio at all?

The sub notes?

We're required to -- under accounting rules, you have to put everything on there that has any chance of being paid at any time. You see the CareerBuilder warrants are on there also marked at 0. Those were not expected to and now that, obviously, the restructuring of that is complete. It certainly will not in the future, pay anything. So that's just something we're required to do and we have had things market 0 before.

Interestingly, the notes for client that are on nonaccrual actually have a 0 coupon to them. I think if they were on accrual status, we would theoretically have to amortize the 100% discount over time, which I think would distort the results pretty materially.

[Operator Instructions]

I don't see any other questions, sir.

Great. Excellent. Well, thank you, everyone, and we appreciate your time, and we look forward to speaking again next quarter. Thank you, Luke.

You're welcome, sir. And this concludes today's conference call. Thank you, everyone, for attending.