Sixth Street Specialty Lending, Inc 8-K/A, filed Feb 17, 2023

Sixth Street Specialty Lending, Inc. (TSLX)

8-K/A 2023-02-17 For: 2023-02-16

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Added on April 08, 2026

About this 8-K/A

Sixth Street Specialty Lending, Inc filed this 8-K/A on February 17, 2023, reporting on events of February 16, 2023.

Items reported

Item 2.02: Financial results
Item 7.01: Regulation FD disclosure
Item 9.01: Financial statements and exhibits

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	TSLX	The New York Stock Exchange


Exhibit Number		Description

99.1		Press Release, dated February 16, 2023

104		The cover page of this Current Report on Form 8-K, formatted in Inline XBRL

	SIXTH STREET SPECIALTY LENDING, INC. (Registrant)

Date: February 16, 2023	By:	/s/ Ian Simmonds
		Ian Simmonds
		Chief Financial Officer

Post-quarter end, the Company satisfied the maturity of its $150 million January 2023 unsecured notes through utilization of undrawn capacity on its revolving credit facility. The settlement marginally decreased the Company’s weighted average cost of debt and had no impact on leverage.	Net Asset Value
	Q4 2022 ($MM):	$1,341.6
	Q4 2022 (per share):	$16.48
	Q4 2022 (per share, adj.):	$16.39

		Dividends (per share)
		Q4 2022 (Base):	$0.45
		2022 (Base):	$1.69
		2022 (Supp/Special):	$0.13
		2022 (Total):	$1.82

For the year ended December 31, 2022, new investment commitments totaled $1,084.2 million. This compares to $1,389.1 million for the year ended December 31, 2021. For the year ended December 31, 2022, the principal amount of new investments funded was $864.0 million in 24 new portfolio companies, 22 existing portfolio companies and 41 structured credit investments. For this period, the Company had $653.8 million aggregate principal amount in exits and repayments.	2022 Origination Activity
	Commitments:	$1,084.2MM
	Fundings:	$864.0MM
	Net Fundings:	$210.2MM

For the year ended December 31, 2021, the principal amount of new investments funded was $1,117.4 million in 25 new portfolio companies and 26 existing portfolio companies. For this period, the Company had $1,004.5 million aggregate principal amount in exits and repayments. Fourth Quarter For the quarter ended December 31, 2022, new investment commitments totaled $241.4 million. This compares to $384.6 million for the quarter ended September 30, 2022.	Q4 2022 Origination Activity
	Commitments:	$241.4MM
	Fundings:	$211.9MM
	Net Repayments:	$69.7MM

For the quarter ended December 31, 2022, the principal amount of new investments funded was $211.9 million across 7 new portfolio companies, 5 existing portfolio companies and 1 structured credit position. For this period, the Company had $281.6 million aggregate principal amount in exits and repayments. For the quarter ended September 30, 2022, the principal amount of new investments funded was $274.4 million across 7 new portfolio companies, 6 existing portfolio companies and 18 structured credit investments. For this period, the Company had $15.8 million aggregate principal amount in exits and repayments.		Average Investment Size¹
		$35.1MM (1.3% of the portfolio at fair value)

As of December 31, 2022 and September 30, 2022, the Company had investments in 78¹ and 75² portfolio companies, respectively, with an aggregate fair value of $2,787.9 million and $2,806.1 million, respectively. As of December 31, 2022, the average investment size in each portfolio company was $35.1¹ million based on fair value.		First Lien Debt Investments (% FV)
		90.3%

As of December 31, 2022, 98.9% of debt investments based on fair value in the portfolio bore interest at floating rates, with 100.0% of these subject to reference rate floors. The Company’s credit facilities also bear interest at floating rates. In connection with the Company’s Unsecured Notes, which bear interest at fixed rates, the Company has entered into fixed-to-floating interest rate swaps in order to align the nature of the interest rates of its liabilities with its investment portfolio. For the period ended December 31, 2022 and September 30, 2022, the weighted average total yield of debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 13.5% and 12.3%, respectively, and the weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 13.4% and 12.2%, respectively. As of December 31, 2022, non-accrual investments represented less than 0.01% of the portfolio at fair value.	Weighted Average Yield of Debt and Incoming-Producing Securities
	Yield at Fair Value:	13.5%
	Yield at Amortized Cost:	13.4%
	1. As of December 31, 2022, excludes 43 structured credit investments with a total fair value of $51.4 million. 2. As of September 30, 2022, excludes 43 structured credit investments with a total fair value of $52.0 million. 3. Calculation includes income earning debt investments only.

For the years ended December 31, 2022 and 2021, investment income totaled $309.3 million and $278.6 million, respectively. The increase in investment income was primarily the result of higher interest from investments driven by increased all-in yields. Net expenses totaled $140.4 million and $135.8 million for the years ended December 31, 2022 and 2021, respectively. The increase in net expenses was primarily due to the upward movement in reference rates which increased the Company’s weighted average interest rate on average debt outstanding.	2022
	Investment Income:	$309.3MM
	Net Expenses:	$140.4MM

For the three months ended December 31, 2022 and 2021, total investment income was $100.1 million and $78.3 million, respectively. The increase in total investment income was primarily the result of higher interest from investments driven by increased all-in yields.	Q4 2022
	Investment Income:	$100.1MM
	Net Expenses:	$46.4MM

Net expenses totaled $46.4 million and $32.5 million for the three months ended December 31, 2022 and 2021, respectively. The increase in expenses was primarily driven by higher interest expense resulting from an increase in the average debt outstanding and higher incentive fees due to an increase in pre-incentive fee net investment income.		Total Principal Debt Outstanding
		$1,516.8MM

As of December 31, 2022, the Company had $25.6 million in cash and cash equivalents (including $15.4 million of restricted cash), total principal value of debt outstanding of $1,516.8 million, and $865.7 million of undrawn capacity on its revolving credit facility, subject to borrowing base and other limitations. At year end, aggregate commitments under the Company’s revolving credit facility were $1.585 billion, in accordance with the accordion feature. The Company’s weighted average interest rate on debt outstanding was 5.6% and 4.3% for the three months ended December 31, 2022 and September 30, 2022, respectively. At December 31, 2022, the Company’s debt to equity ratio was 1.13x, compared to 1.16x at September 30, 2022. Average debt to equity was 1.14x and 1.15x during the three months ended December 31, 2022 and September 30, 2022, respectively.	Debt-to-Equity Ratio
	Q4 2022 Quarter End:	1.13x
	2022 Average¹:	1.03x
	Q4 2022 Average¹:	1.14x
	1. Daily average debt outstanding during the quarter divided by the daily average net assets during the quarter. Daily average net assets is calculated by starting with the prior quarter end net asset value and adjusting for capital activity during the quarter (adding common stock offerings / DRIP contributions).

Revolving Credit Facility		Unfunded Commitment Activity
Revolver Capacity	$1,585	Unfunded Commitments (See Note 8 in 9/30/22 10-Q)	$394
Drawn on Revolver	($719)	Extinguished Unfunded Commitments	($50)
Unrestricted Cash Balance	$10	New Unfunded Commitments	$30
Total Liquidity (Pre-Unfunded Commitments)	$876	Net Drawdown of Unfunded Commitments	($38)
Available Unfunded Commitments¹	($178)	Total Unfunded Commitments	$336
Total Liquidity (Burdened for Unfunded Commitments)	$698	Unavailable Unfunded Commitments¹	($158)
		Available Unfunded Commitments¹	$178

					Three Months Ended
					(unaudited)
	December 31, 2022				September 30, 2022				December 31, 2021
Investments at Fair Value	$		2,787.9		$		2,806.1		$		2,521.6
Total Assets	$		2,836.9		$		2,859.7		$		2,551.9
Net Asset Value Per Share	$		16.48		$		16.36		$		16.84
Supplemental Dividend Per Share	$		0.09		$		0.00		$		0.11
Special Dividend Per Share	$	—			$	—			$	—
Adjusted Net Asset Value Per Share ⁽¹⁾	$		16.39		$		16.36		$		16.73

Investment Income	$		100.1		$		77.8		$		78.3
Net Investment Income	$		52.6		$		37.2		$		46.2
Net Income	$		46.3		$		34.4		$		41.8
Accrued Capital Gains Incentive Fee Expense	$		(1.1	)	$		(0.0	)	$		(0.0	)
Adjusted Net Investment Income⁽²⁾	$		51.5		$		37.2		$		46.2
Adjusted Net Income ⁽²⁾	$		45.1		$		34.4		$		41.8

Net Investment Income Per Share	$	0.65			$	0.47			$		0.63
Net Income (Loss) Per Share	$		0.57		$		0.43		$		0.57
Accrued Capital Gains Incentive Fee Expense Per Share	$		(0.01	)	$		(0.00	)	$		(0.00	)
Adjusted Net Investment Income Per Share⁽²⁾	$		0.64		$		0.47		$		0.63
Adjusted Net Income (Loss) Per Share⁽²⁾	$		0.56		$		0.43		$		0.57

Annualized Return on Equity (Net Investment Income) ⁽³⁾			15.9	%			11.5	%			14.6	%
Annualized Return on Equity (Net Income) ⁽³⁾			14.0	%			10.7	%			13.2	%
Annualized Return on Equity (Adjusted Net Investment Income) ⁽²⁾⁽³⁾			15.5	%			11.5	%			14.6	%
Annualized Return on Equity (Adjusted Net Income) ⁽²⁾⁽³⁾			13.6	%			10.6	%			13.2	%

Weighted Average Yield of Debt and Income Producing Securities at Fair Value			13.5	%			12.3	%			10.0	%
Weighted Average Yield of Debt and Income Producing Securities at Amortized Cost			13.4	%			12.2	%			10.2	%
Percentage of Debt Investment Commitments at Floating Rates⁽⁴⁾			98.9	%			98.9	%			98.9	%

	December 31,			December 31,
	2022			2021
Assets
Investments at fair value
Non-controlled, non-affiliated investments (amortized cost of $2,707,442 and $2,354,984, respectively)	$	2,717,170		$	2,434,797
Non-controlled, affiliated investments (amortized cost of $0 and $12,666, respectively)		—			27,017
Controlled, affiliated investments (amortized cost of $67,284 and $64,362, respectively)		70,755			59,779
Total investments at fair value (amortized cost of $2,774,726 and $2,432,012, respectively)		2,787,925			2,521,593
Cash and cash equivalents (restricted cash of $15,437 and $14,399 respectively)		25,647			15,967
Interest receivable		18,846			10,775
Prepaid expenses and other assets		4,529			3,522
Total Assets	$	2,836,947		$	2,551,857
Liabilities
Debt (net of deferred financing costs of $17,760 and $19,147, respectively)	$	1,441,796		$	1,185,964
Management fees payable to affiliate		10,526			9,380
Incentive fees on net investment income payable to affiliate		10,918			9,789
Incentive fees on net capital gains accrued to affiliate		6,064			14,928
Dividends payable		—			30,926
Other payables to affiliate		3,265			3,149
Other liabilities		22,809			21,873
Total Liabilities		1,495,378			1,276,009
Commitments and contingencies (Note 8)
Net Assets
Preferred stock, $0.01 par value; 100,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.01 par value; 400,000,000 shares authorized, 82,053,537 and 76,067,586 shares issued, respectively; and 81,389,287 and 75,771,542 shares outstanding, respectively		821			761
Additional paid-in capital		1,294,751			1,189,275
Treasury stock at cost; 664,250 and 296,044 shares held, respectively		(10,459	)		(4,291	)
Distributable earnings		56,456			90,103
Total Net Assets		1,341,569			1,275,848
Total Liabilities and Net Assets	$	2,836,947		$	2,551,857
Net Asset Value Per Share	$	16.48		$	16.84

	Year Ended			Year Ended			Year Ended
	December 31, 2022			December 31, 2021			December 31, 2020
Income
Investment income from non-controlled, non-affiliated investments:
Interest from investments	$	292,442		$	261,782		$	237,260
Dividend income		2,159			3,426			1,816
Other income		9,502			7,751			22,174
Total investment income from non-controlled, non-affiliated investments		304,103			272,959			261,250
Investment income from non-controlled, affiliated investments:
Interest from investments		133			838			4,606
Dividend income	—				740		—
Other income	—			—				368
Total investment income from non-controlled, affiliated investments		133			1,578			4,974
Investment income from controlled, affiliated investments:
Interest from investments		5,064			4,039			3,809
Other income		5			17			4
Total investment income from controlled, affiliated investments		5,069			4,056			3,813
Total Investment Income		309,305			278,593			270,037
Expenses
Interest		62,991			38,825			39,402
Management fees		39,900			37,081			32,105
Incentive fees on net investment income		33,401			33,062			31,483
Incentive fees on net capital gains		(8,864	)		13,507			1,421
Professional fees		7,192			6,586			6,775
Directors’ fees		736			743			825
Other general and administrative		5,427			6,236			5,262
Total expenses		140,783			136,040			117,273
Management fees waived (Note 3)		(427	)		(190	)		—
Net Expenses		140,356			135,850			117,273
Net Investment Income Before Income Taxes		168,949			142,743			152,764
Income taxes, including excise taxes		2,622			384			5,760
Net Investment Income		166,327			142,359			147,004
Unrealized and Realized Gains (Losses)
Net change in unrealized gains (losses):
Non-controlled, non-affiliated investments		(70,085	)		17,938			10,304
Non-controlled, affiliated investments		(14,350	)		14,350			2,785
Controlled, affiliated investments		8,054			17,450			18,862
Translation of other assets and liabilities in foreign currencies		8,721			(591	)		(5,068	)
Interest rate swaps		(6,748	)		(6,699	)		6,812
Income tax provision		(561	)		(1,902	)	—

	For the Year Ended December 31,
($ in millions)	2022			2021			2020
New investment commitments:
Gross originations	$	4,240.9		$	4,269.9		$	3,296.8
Less: Syndications/sell downs		3,156.7			3,152.5			2,112.1
Total new investment commitments	$	1,084.2		$	1,117.4		$	1,184.7
Principal amount of investments funded:
First-lien	$	761.7		$	1,022.1		$	909.6
Second-lien		—			43.5			5.2
Mezzanine		—			6.1			4.1
Equity and other		44.8			—			7.2
Structured credit		57.5			45.7			12.9
Total	$	864.0		$	1,117.4		$	939.0
Principal amount of investments sold or repaid:
First-lien	$	645.4		$	962.6		$	922.1
Second-lien		—			5.8			4.4
Mezzanine		—			—			—
Equity and other		4.3			31.7			12.5
Structured credit		4.1			4.4			2.3
Total	$	653.8		$	1,004.5		$	941.3
Number of new investment commitments in new portfolio companies		65			25			31
Average new investment commitment amount in new portfolio companies	$	14.6		$	47.5		$	30.9
Weighted average term for new investment commitments in new portfolio companies (in years)		6.1			5.3			4.6
Percentage of new debt investment commitments at floating rates ⁽¹⁾		98.9	%		99.5	%		98.8	%
Percentage of new debt investment commitments at fixed rates		1.1	%		0.5	%		1.2	%
Weighted average interest rate of new investment commitments		11.9	%		9.2	%		10.2	%
Weighted average spread over reference rate of new floating rate investment commitments		7.8	%		9.0	%		10.0	%
Weighted average interest rate on investments sold or paid down		9.9	%		9.1	%		9.7	%