ThZeal - The Zeal

10-Q

ROC

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File Number: 814-01684

Jefferies Credit Partners BDC Inc.

(Exact Name of Registrant as Specified in its Charter)


Maryland	92-1852483
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
520 Madison Avenue, 12th Floor New York, New York	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 284-3474

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act: None

    Title of each class

    Trading
Symbol(s)

    Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 10, 2024, the registrant had 12,071,594 shares of common stock, $0.001 par value per share, outstanding. Common stock outstanding excludes May 1, 2024 subscriptions since the issuance price is not yet finalized at the date of this filing.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Consolidated Financial Statements	1
	Consolidated Statements of Assets and Liabilities as of March 31, 2024 and December 31, 2023 (Unaudited)	1
	Consolidated Statement of Operations for the three months ended March 31, 2024 (Unaudited)	2
	Consolidated Statement of Changes in Net Assets for the three months ended March 31, 2024 (Unaudited)	3
	Consolidated Statement of Cash Flows for the three months ended March 31, 2024 (Unaudited)	4
	Consolidated Schedule of Investments as of March 31, 2024 (Unaudited)	5
	Consolidated Schedule of Investments as of December 31, 2023 (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION	34

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	36

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Statements of Assets and Liabilities (Unaudited)

(In thousands, except for share and per share data)


	March 31, 2024		December 31, 2023
Assets
Investments at fair value:
Non-controlled/non-affiliated investments (amortized cost of $266,097 and $240,879, at March 31, 2024 and December 31, 2023, respectively)	$	268,880	$	244,061
Cash and cash equivalents		54,630		71,898
Restricted cash		7,559		1,068
Interest receivable		2,042		1,179
Deferred financing costs		5,960		6,566
Deferred offering costs		1,248		1,703
Due from Investment Adviser		3,694		2,515
Prepaid expenses and other assets		243		415
Total assets	$	344,256	$	329,405
Liabilities
Debt	$	157,403	$	151,502
Distributions payable		1,537		—
Interest payable		2,811		856
Management fees payable		218		51
Due to Investment Adviser		3,804		3,849
Accrued expenses and other liabilities		998		1,039
Total liabilities	$	166,771	$	157,297
Commitments and contingencies (Note 9)
Total net assets	$	177,485	$	172,108
Net Assets
Common shares, par value $0.001 (11,870,941 and 11,670,594, shares issued and outstanding, at March 31, 2024 and December 31, 2023, respectively)	$	12	$	12
Additional paid in capital		170,426		167,426
Accumulated distributable earnings		7,047		4,670
Total net assets	$	177,485	$	172,108

Net Asset Value Per Share
Net assets	$	177,485	$	172,108
Common shares outstanding ($0.001 par value, 1,000,000,000 shares authorized at March 31, 2024 and December 31, 2023)		11,870,941		11,670,594
Net asset value per share	$	14.95	$	14.75

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Statement of Operations (Unaudited)

(In thousands, except for share and per share data)


	Three Months Ended March 31, 2024
Investment Income
Non-controlled/non-affiliated investments
Interest income	$	8,111
Other income		105
Total investment income		8,216
Operating Expenses
Interest and other financing expenses		3,253
Management fees		544
Income-based incentive fees		539
Capital gains incentive fees		(50	)
Other general and administrative expenses		1,596
Total expenses before fee waiver and expense support		5,882
Expense support		(1,164	)
Management fees waived		(326	)
Incentive fees waived		(489	)
Net expenses		3,903
Net investment income		4,313
Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation)
Net realized gain (loss):
Non-controlled/non-affiliated investments		—
Net realized gain		—
Net change in unrealized appreciation (depreciation):
Non-controlled/non-affiliated investments		(399	)
Net change in unrealized depreciation		(399	)
Net realized gain and change in unrealized depreciation		(399	)
Net Increase in Net Assets Resulting from Operations	$	3,914
Net Increase in Net Assets Per Share Resulting from Operations - Basic and Diluted (Note 8)	$	0.33
Weighted Average Common Stock Outstanding - Basic and Diluted (Note 8)		11,738,844

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Statement of Changes in Net Assets (Unaudited)

(In thousands, except for share and per share data)


	Three Months Ended March 31, 2024
Net Increase (Decrease) in Net Assets Resulting from Operations
Net investment income	$	4,313
Net realized gains in investments		—
Net change in unrealized depreciation		(399	)
Net increase in net assets resulting from operations		3,914

Distributions to Shareholders
Distributions declared		(1,537	)
Net decrease in net assets resulting from distributions to shareholders		(1,537	)

Capital Share Transactions
Issuance of common shares		3,000
Net increase in net assets resulting from share transactions		3,000

Net Assets
Total increase in net assets during the period		5,377
Net Assets, beginning of period		172,108
Net Assets at End of Period	$	177,485

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Statement of Cash Flows (Unaudited)

(In thousands, except for share and per share data)


	Three Months Ended March 31, 2024
Operating Activities
Net increase in net assets resulting from operations	$	3,914
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net realized gains on investments		—
Net change in unrealized depreciation on investments		399
Net accretion of discount and amortization of premium		(325	)
Amortization of deferred financing costs		315
Amortization of offering costs		455
Purchase of investments		(25,410	)
Proceeds from sale of investments and principal repayments		517
Changes in assets and liabilities:
Interest receivable		(863	)
Due from Investment Adviser		(1,179	)
Prepaid expenses and other assets		172
Management fees payable		167
Interest payable		1,955
Due to Investment Adviser		(45	)
Accrued expenses and other liabilities		269
Net Cash Used in Operating Activities		(19,659	)
Financing Activities
Borrowings on debt		71,901
Repayments on debt		(66,000	)
Financing costs paid and deferred		(19	)
Proceeds from issuance of common shares		3,000
Net Cash Provided by Financing Activities		8,882
Cash and Cash Equivalents and Restricted Cash
Net decrease in cash and cash equivalents and restricted cash		(10,777	)
Cash and cash equivalents and restricted cash, beginning of period		72,966
Cash and cash equivalents and restricted cash, end of period	$	62,189

Supplemental Disclosure of Non-Cash Information
Cash paid for interest	$	983
Cash paid for taxes	$	56
Distributions payable	$	1,537
Accrued but unpaid debt financing costs	$	36

The following table presents cash and cash equivalents and restricted cash by category within the Consolidated Statements of Assets and Liabilities (in thousands):


	March 31, 2024
Cash and cash equivalents	$	54,630
Restricted cash		7,559
Cash and cash equivalents and restricted cash	$	62,189

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Schedule of Investments (Unaudited)

March 31, 2024

(In thousands, except for share and per share data)


Portfolio Company	Investment Type	Reference Rate and Spread (1)	Maturity Date	Principal		Cost (2)			Fair Value (3)			% of Net Assets			Footnotes
Non-Controlled/Non-Affiliated Portfolio Company Investments (4)
First Lien Debt Investments
Aerospace & Defense
Qnnect, LLC	First Lien Term Loan	S + 7.00%	11/2/2029	$	2,918	$	2,833		$	2,918					6
Qnnect, LLC	First Lien Delayed Draw Term Loan	S + 7.00%	11/2/2029		362		122			362					5,6
					3,280		2,955			3,280			1.8	%
Banking, Finance, Insurance, and Real Estate
Galway Borrower, LLC	First Lien Delayed Draw Term Loan	S + 5.00%	9/29/2028		—		(71	)		(148	)				5
Galway Borrower, LLC	First Lien Revolver	S + 5.25%	9/29/2028		56		53			53					5,8
Higginbotham Insurance Agency, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	11/24/2028		10,289		9,971			10,289					7
Higginbotham Insurance Agency, Inc.	First Lien Delayed Draw Term Loan	S + 4.75%	11/24/2028		—		(66	)		(132	)				5
SG Acquisition, Inc.	First Lien Term Loan	S + 5.50%	1/27/2027		1,498		1,447			1,498					8
SitusAMC Holdings Corporation	First Lien Term Loan	S + 5.50%	12/22/2027		1,260		1,222			1,260					6
					13,103		12,556			12,820			7.2	%
Capital Equipment
Dwyer Instruments, LLC	First Lien Term Loan	S + 5.75%	7/21/2027		2,045		2,017			2,009					8
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	S + 5.75%	7/21/2027		4,844		4,776			4,759					8
Dwyer Instruments, LLC	First Lien Term Loan	S + 5.75%	7/21/2027		6,431		6,311			6,318					8
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	S + 5.75%	7/21/2027		—		(69	)		(131	)				5
					13,320		13,035			12,955			7.3	%
Chemicals, Plastic, & Rubber
ASP Meteor Acquisition Co LLC	First Lien Term Loan	S + 7.00%	9/1/2029		5,825		5,573			5,665					7
ASP Meteor Acquisition Co LLC	First Lien Delayed Draw Term Loan	S + 7.00%	9/1/2029		2,665		2,485			2,551					5,7
Aurora Plastics, LLC	First Lien Term Loan	S + 4.75%	8/10/2028		3,344		3,058			3,160					7
Aurora Plastics, LLC	First Lien Delayed Draw Term Loan	S + 4.75%	8/10/2028		2,246		2,054			2,122					7
					14,080		13,170			13,498			7.6	%
Healthcare & Pharmaceuticals
The GI Alliance Management, LLC	First Lien Term Loan	S + 5.50%	9/15/2028		14,040		13,773			13,759					8
The GI Alliance Management, LLC	First Lien Term Loan	S + 5.50%	9/15/2028		2,142		2,122			2,099					8
The GI Alliance Management, LLC	First Lien Delayed Draw Term Loan	S + 5.50%	9/15/2028		—		(88	)		(180	)				5
PerkinElmer U.S. LLC	First Lien Term Loan	S + 6.75%	3/13/2029		15,235		14,726			15,235					7
Petvet Care Centers, LLC	First Lien Term Loan	S + 6.00%	11/15/2030		22,208		21,777			21,763					7
Petvet Care Centers, LLC	First Lien Delayed Draw Term Loan	S + 6.00%	11/15/2030		—		(28	)		(58	)				5
Petvet Care Centers, LLC	First Lien Revolver	S + 6.00%	11/15/2029		—		(7	)		(7	)				5
					53,625		52,275			52,611			29.6	%
High Tech Industries
Aptean, Inc	First Lien Term Loan	S + 5.25%	1/30/2031		10,307		10,206			10,204					8
Aptean, Inc	First Lien Delayed Draw Term Loan	S + 5.25%	1/30/2031		91		81			72					5,8
Aptean, Inc	First Lien Revolver	S + 5.25%	1/30/2031		—		(3	)		(3	)				5
Brave Parent Holdings, Inc.	First Lien Term Loan	S + 5.00%	11/29/2030		21,544		21,335			21,329					8
Brave Parent Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 5.00%	11/29/2030		—		(18	)		(24	)				5
Brave Parent Holdings, Inc.	First Lien Revolver	S + 5.00%	11/29/2030		—		(3	)		(3	)				5
Enverus Holdings, Inc.	First Lien Term Loan	S + 5.50%	12/24/2029		17,036		16,789			16,781					7
Enverus Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	12/24/2029		—		(6	)		(13	)				5
Enverus Holdings, Inc.	First Lien Revolver	S + 5.50%	12/24/2029		—		(5	)		(5	)				5
GS AcquisitionCo, Inc.	First Lien Delayed Draw Term Loan	S + 5.00%	5/25/2028		—		(19	)		(39	)				5
GS AcquisitionCo, Inc.	First Lien Revolver	S + 5.00%	5/25/2028		—		(2	)		(2	)				5
Netwrix Corporation	First Lien Term Loan	S + 5.00%	6/11/2029		15,151		14,559			14,659					10
Netwrix Corporation	First Lien Delayed Draw Term Loan	S + 5.00%	6/11/2029		—		(12	)		(11	)				5
Rally Buyer, Inc.	First Lien Term Loan	S + 5.75%	7/19/2028		12,327		12,152			12,327					8
Rally Buyer, Inc.	First Lien Delayed Draw Term Loan	S + 5.75%	7/19/2028		2,818		2,763			2,818					5,8
Redwood Services Group, LLC	First Lien Term Loan	S + 6.25%	6/15/2029		12,857		12,549			12,857					8
Redwood Services Group, LLC	First Lien Delayed Draw Term Loan	S + 6.25%	6/15/2029		3,170		3,094			3,170					8
Redwood Services Group, LLC	First Lien Delayed Draw Term Loan	S + 5.75%	6/15/2029		731		629			538					5,8
					96,032		94,089			94,655			53.3	%

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Schedule of Investments (Unaudited) - Continued

March 31, 2024

(In thousands, except for share and per share data)


Portfolio Company	Investment Type	Reference Rate and Spread (1)	Maturity Date	Principal		Cost (2)			Fair Value (3)			% of Net Assets			Footnotes
Non-Controlled/Non-Affiliated Portfolio Company Investments (4)
First Lien Debt Investments
Services: Business
Chartwell Cumming Holding Corporation	First Lien Term Loan	S + 5.25%	11/16/2027	$	15,425	$	14,848		$	15,425					7
Chartwell Cumming Holding Corporation	First Lien Delayed Draw Term Loan	S + 5.25%	11/16/2027		1,024		986			1,024					7
Foreside Financial Group, LLC	First Lien Term Loan	S + 5.25%	9/30/2027		847		818			830					8
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	S + 5.25%	9/30/2027		—		(22	)		(18	)				5
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	S + 5.25%	9/30/2027		—		(24	)		(49	)				5
IG Investments Holdings, LLC	First Lien Term Loan	S + 6.00%	9/22/2028		4,624		4,492			4,624					8
IG Investments Holdings, LLC	First Lien Term Loan	S + 6.00%	9/22/2028		170		165			170					8
IRI Group Holdings, Inc. (f/k/a The NPD Group L.P.)	First Lien Term Loan	S + 5.75%	12/1/2028		15,914		15,497			15,914					8
					38,004		36,760			37,920			21.4	%
Transportation: Cargo
Capstone Acquisition Holdings, Inc.	First Lien Term Loan	S + 4.75%	11/12/2027		1,494		1,411			1,494					7
Capstone Acquisition Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 4.75%	11/12/2027		1,283		1,211			1,283					7
Seko Global Logistics Network, LLC	First Lien Term Loan	S + 5.00%	12/30/2026		1,348		1,299			1,278					8
Seko Global Logistics Network, LLC	First Lien Delayed Draw Term Loan	S + 5.00%	12/30/2026		14,577		14,046			13,812					8
					18,702		17,967			17,867			10.1	%
Wholesale
Blackbird Purchaser, Inc.	First Lien Term Loan	S + 5.50%	12/19/2030		22,884		22,439			22,426					8
Blackbird Purchaser, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	12/19/2030		903		816			813					5,8
Blackbird Purchaser, Inc.	First Lien Revolver	S + 5.50%	12/19/2029		42		35			35					5,7
					23,829		23,290			23,274			13.1	%
Total non-controlled-non-affiliated portfolio company debt investments (9)				$	273,975	$	266,097		$	268,880			151.5	%

(1)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either the Secured Overnight Financing Rate (“SOFR” or “S”) or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement. SOFR based contracts may include a credit spread adjustment that is charged in addition to the base rate and the stated spread. The terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period.

(2)

Cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(3)

These investments were valued using unobservable inputs and are considered Level 3 investments.

(4)

Unless otherwise indicated, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company. As of March 31, 2024, all of the Company’s investments were non-controlled, non-affiliated.

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Schedule of Investments (Unaudited) - Continued

March 31, 2024

(In thousands, except for share and per share data)

(5)

All or a portion of the position is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may be subject to unused commitment fees. The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated. For investments in delayed draw term loans and revolvers, the cost basis is adjusted for any market discount or original issue discount received on the total balance committed. As a result, the purchase of commitments not fully funded may result in a negative cost and fair value until funded. See below for more information on the Company’s unfunded commitments:

The following table is a listing of the Company’s unfunded commitments as of March 31, 2024 (in thousands):


Portfolio Company	Investment Type	Commitment Expiration Date	Unfunded Commitment		Fair Value (3)
Aptean, Inc	First Lien Delayed Draw Term Loan	1/30/2026	$	1,772	$	(18	)
Aptean, Inc	First Lien Revolver	1/30/2031		348		(3	)
ASP Meteor Acquisition Co LLC	First Lien Delayed Draw Term Loan	9/1/2024		1,474		(41	)
Blackbird Purchaser, Inc.	First Lien Delayed Draw Term Loan	12/19/2025		3,622		(72	)
Blackbird Purchaser, Inc.	First Lien Revolver	12/19/2029		306		(6	)
Brave Parent Holdings, Inc.	First Lien Delayed Draw Term Loan	5/28/2025		2,448		(24	)
Brave Parent Holdings, Inc.	First Lien Revolver	11/29/2030		348		(3	)
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	12/22/2025		7,478		(131	)
Enverus Holdings, Inc.	First Lien Delayed Draw Term Loan	12/22/2025		852		(13	)
Enverus Holdings, Inc.	First Lien Revolver	12/24/2029		348		(5	)
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	5/26/2024		880		(18	)
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	3/13/2026		2,466		(49	)
Galway Borrower, LLC	First Lien Delayed Draw Term Loan	2/9/2026		14,745		(147	)
Galway Borrower, LLC	First Lien Revolver	9/29/2028		292		(3	)
The GI Alliance Management, LLC	First Lien Delayed Draw Term Loan	3/6/2026		8,978		(180	)
GS AcquisitionCo, Inc.	First Lien Delayed Draw Term Loan	3/26/2026		7,749		(39	)
GS AcquisitionCo, Inc.	First Lien Revolver	5/25/2028		352		(2	)
Higginbotham Insurance Agency, Inc.	First Lien Delayed Draw Term Loan	3/27/2026		13,213		(132	)
Netwrix Corporation	First Lien Delayed Draw Term Loan	6/9/2024		344		(11	)
Petvet Care Centers, LLC	First Lien Delayed Draw Term Loan	11/17/2025		2,904		(58	)
Petvet Care Centers, LLC	First Lien Revolver	11/15/2029		348		(7	)
Qnnect, LLC	First Lien Delayed Draw Term Loan	11/1/2024		7,945		—
Rally Buyer, Inc.	First Lien Delayed Draw Term Loan	7/19/2024		540		—
Redwood Services Group, LLC	First Lien Delayed Draw Term Loan	8/29/2026		9,701		(180	)
Total Unfunded Portfolio Company Commitments			$	89,453	$	(1,142	)

(6)

The interest rate on these loans is subject to 6-month SOFR, which as of March 31, 2024 was 5.22%.

(7)

The interest rate on these loans is subject to 1-month SOFR, which as of March 31, 2024 was 5.33%.

(8)

The interest rate on these loans is subject to 3-month SOFR, which as of March 31, 2024 was 5.30%.

(9)

All funded debt investments are income producing. As of March 31, 2024, there were no investments on non-accrual.

(10)

The interest rate on $11.9 million of principal loans is subject to 6-month SOFR, which as of March 31, 2024 was 5.22% and the interest rate on $3.3 million of principal loans is subject to 3-month SOFR, which as of March 31, 2024 was 5.30%.

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Schedule of Investments (Unaudited)

December 31, 2023

(In thousands, except for share and per share data)


Portfolio Company	Investment Type	Reference Rate and Spread (1)	Maturity Date	Principal		Cost (2)			Fair Value (3)			% of Net Assets			Footnotes
Non-Controlled/Non-Affiliated Portfolio Company Investments (4)
First Lien Debt Investments
Aerospace & Defense
Qnnect, LLC	First Lien Term Loan	S + 7.00%	11/2/2029	$	2,925	$	2,838		$	2,910					8
Qnnect, LLC	First Lien Delayed Draw Term Loan	S + 7.00%	11/2/2029		363		116			322					5,8
					3,288		2,954			3,232			1.9	%
Banking, Finance, Insurance, and Real Estate
Higginbotham Insurance Agency, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	11/24/2028		10,315		9,983			10,237					7
SG Acquisition, Inc.	First Lien Term Loan	S + 5.50%	1/27/2027		1,498		1,443			1,491					8
SitusAMC Holdings Corporation	First Lien Term Loan	S + 5.50%	12/22/2027		1,260		1,220			1,260					8
					13,073		12,646			12,988			7.5	%
Capital Equipment
Dwyer Instruments, LLC	First Lien Term Loan	S + 5.75%	7/21/2027		2,050		2,020			2,009					8
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	S + 5.75%	7/21/2027		4,856		4,784			4,759					8
Dwyer Instruments, LLC	First Lien Term Loan	S + 5.75%	7/21/2027		6,415		6,287			6,286					8
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	S + 5.75%	7/21/2027		—		(74	)		(150	)				5
					13,321		13,017			12,904			7.5	%
Chemicals, Plastic, & Rubber
ASP Meteor Acquisition Co LLC	First Lien Term Loan	S + 7.00%	9/1/2029		5,840		5,579			5,650					7
ASP Meteor Acquisition Co LLC	First Lien Delayed Draw Term Loan	S + 7.00%	9/1/2029		2,671		2,486			2,537					5,7
Aurora Plastics, LLC	First Lien Term Loan	S + 4.75%	8/10/2028		3,351		3,053			3,134					7
Aurora Plastics, LLC	First Lien Delayed Draw Term Loan	S + 4.75%	8/10/2028		2,251		2,051			2,105					7
					14,113		13,169			13,426			7.8	%
Healthcare & Pharmaceuticals
The GI Alliance Management, LLC	First Lien Term Loan	S + 6.25%	9/15/2028		14,075		13,797			13,935					8
PerkinElmer U.S. LLC	First Lien Term Loan	S + 6.75%	3/13/2029		15,274		14,745			15,274					7
Petvet Care Centers, LLC	First Lien Term Loan	S + 6.00%	11/15/2030		22,263		21,821			21,818					7
Petvet Care Centers, LLC	First Lien Delayed Draw Term Loan	S + 6.00%	11/15/2030		—		(29	)		(58	)				5
Petvet Care Centers, LLC	First Lien Revolver	S + 6.00%	11/15/2029		—		(7	)		(7	)				5
					51,612		50,327			50,962			29.6	%
High Tech Industries
Brave Parent Holdings, Inc.	First Lien Term Loan	S + 5.00%	11/29/2030		21,544		21,330			21,329					7
Brave Parent Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 5.00%	11/29/2030		—		(18	)		(24	)				5
Brave Parent Holdings, Inc.	First Lien Revolver	S + 5.00%	11/29/2030		—		(3	)		(3	)				5
Enverus Holdings, Inc.	First Lien Term Loan	S + 5.50%	12/24/2029		17,036		16,782			16,781					7
Enverus Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	12/24/2029		—		(6	)		(13	)				5
Enverus Holdings, Inc.	First Lien Revolver	S + 5.50%	12/24/2029		—		(5	)		(5	)				5
Netwrix Corporation	First Lien Term Loan	S + 5.00%	6/11/2029		4,882		4,701			4,699					6
Netwrix Corporation	First Lien Delayed Draw Term Loan	S + 5.00%	6/11/2029		—		(393	)		(398	)				5
Rally Buyer, Inc.	First Lien Term Loan	S + 5.75%	7/19/2028		12,358		12,175			12,296					8
Rally Buyer, Inc.	First Lien Delayed Draw Term Loan	S + 5.75%	7/19/2028		2,133		2,083			2,116					5,8
Redwood Services Group, LLC	First Lien Term Loan	S + 6.25%	6/15/2029		12,890		12,570			12,890					7
Redwood Services Group, LLC	First Lien Delayed Draw Term Loan	S + 6.25%	6/15/2029		3,178		3,100			3,178					7
					74,021		72,316			72,846			42.3	%
Services: Business
Chartwell Cumming Holding Corporation	First Lien Term Loan	S + 5.75%	11/16/2027		15,464		14,855			15,232					7
Chartwell Cumming Holding Corporation	First Lien Delayed Draw Term Loan	S + 5.75%	11/16/2027		1,027		986			1,011					7
Foreside Financial Group, LLC	First Lien Term Loan	S + 5.50%	9/30/2027		122		119			122					8
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	S + 5.50%	9/30/2027		—		(43	)		—					5
IG Investments Holdings, LLC	First Lien Term Loan	S + 6.00%	9/22/2028		4,636		4,498			4,636					8
IG Investments Holdings, LLC	First Lien Term Loan	S + 6.00%	9/22/2028		170		165			170					8
The NPD Group L.P.	First Lien Term Loan	S + 5.75%	12/1/2028		15,954		15,521			15,954					7
					37,373		36,101			37,125			21.6	%
Transportation: Cargo
Capstone Acquisition Holdings, Inc.	First Lien Term Loan	S + 4.75%	11/12/2027		1,498		1,410			1,498					7
Capstone Acquisition Holdings, Inc.	First Lien Delayed Draw Term Loan	S + 4.75%	11/12/2027		1,287		1,211			1,287					7
Seko Global Logistics Network, LLC	First Lien Term Loan	S + 5.00%	12/30/2026		1,352		1,299			1,305					6
Seko Global Logistics Network, LLC	First Lien Delayed Draw Term Loan	S + 5.00%	12/30/2026		14,614		14,042			14,103					6
					18,751		17,962			18,193			10.6	%
Wholesale
Blackbird Purchaser, Inc.	First Lien Term Loan	S + 5.50%	12/19/2030		22,942		22,484			22,483					8
Blackbird Purchaser, Inc.	First Lien Delayed Draw Term Loan	S + 5.50%	12/19/2030		—		(90	)		(91	)				5
Blackbird Purchaser, Inc.	First Lien Revolver	S + 5.50%	12/19/2029		—		(7	)		(7	)				5
					22,942		22,387			22,385			13.0	%
Total non-controlled-non-affiliated portfolio company debt investments (9)				$	248,494	$	240,879		$	244,061			141.8	%

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Consolidated Schedule of Investments (Unaudited) - Continued

December 31, 2023

(In thousands, except for share and per share data)

(1)

Unless otherwise indicated, loan contains a variable rate structure, and may be subject to an interest rate floor. Variable rate loans bear interest at a rate that may be determined by reference to either SOFR or an alternate base rate (which can include the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement. SOFR based contracts may include a credit spread adjustment that is charged in addition to the base rate and the stated spread. The terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period.

(2)

Cost represents the original cost adjusted for the amortization of discounts and premiums, as applicable, on debt investments using the effective interest method.

(3)

These investments were valued using unobservable inputs and are considered Level 3 investments.

(4)

Unless otherwise indicated, all investments are non-controlled, non-affiliated investments. Non-controlled, non-affiliated investments are defined as investments in which the Company owns less than 5% of the portfolio company’s outstanding voting securities and does not have the power to exercise control over the management or policies of such portfolio company. As of December 31, 2023, all of the Company’s investments were non-controlled, non-affiliated.

(5)

The following table is a listing of the Company’s unfunded commitments as of December 31, 2023 (in thousands):


Portfolio Company	Investment Type	Commitment Expiration Date	Unfunded Commitment		Fair Value (3)
ASP Meteor Acquisition Co LLC	First Lien Delayed Draw Term Loan	9/1/2024	$	1,474	$	(48	)
Blackbird Purchaser, Inc.	First Lien Delayed Draw Term Loan	12/19/2025		4,528		(91	)
Blackbird Purchaser, Inc.	First Lien Revolver	12/19/2029		348		(7	)
Brave Parent Holdings, Inc.	First Lien Delayed Draw Term Loan	5/28/2025		2,448		(24	)
Brave Parent Holdings, Inc.	First Lien Revolver	11/29/2030		348		(3	)
Dwyer Instruments, LLC	First Lien Delayed Draw Term Loan	12/22/2025		7,478		(150	)
Enverus Holdings, Inc.	First Lien Delayed Draw Term Loan	12/22/2025		852		(13	)
Enverus Holdings, Inc.	First Lien Revolver	12/24/2029		348		(5	)
Foreside Financial Group, LLC	First Lien Delayed Draw Term Loan	5/26/2024		1,607		—
Netwrix Corporation	First Lien Delayed Draw Term Loan	6/9/2024		10,626		(398	)
Petvet Care Centers, LLC	First Lien Delayed Draw Term Loan	11/17/2025		2,904		(58	)
Petvet Care Centers, LLC	First Lien Revolver	11/15/2029		348		(7	)
Qnnect, LLC	First Lien Delayed Draw Term Loan	11/1/2024		7,945		(40	)
Rally Buyer, Inc.	First Lien Delayed Draw Term Loan	7/19/2024		1,231		(6	)
Total Unfunded Portfolio Company Commitments			$	42,485	$	(850	)

(6)

The interest rate on these loans is subject to 6-month SOFR, which as of December 31, 2023 was 5.16%.

(7)

The interest rate on these loans is subject to 1-month SOFR, which as of December 31, 2023 was 5.35%.

(8)

The interest rate on these loans is subject to 3-month SOFR, which as of December 31, 2023 was 5.33%.

(9)

All funded debt investments are income producing. As of December 31, 2023, there were no investments on non-accrual.

See accompanying notes to consolidated financial statements

JEFFERIES CREDIT PARTNERS BDC INC.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization

Organization

Jefferies Credit Partners BDC Inc. (the “Company,” “we,” “our” or “us”) was formed as a Maryland corporation on August 10, 2022. The Company is a private, perpetually offered, externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company also intends to elect to be treated, and expects to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our fiscal year ends on December 31.

Jefferies Credit Management LLC (the “Investment Adviser”), an investment adviser that is registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), is our investment adviser. The Investment Adviser, subject to the overall supervision of our board of directors (the “Board of Directors”), will manage our day-to-day operations and provide investment advisory and management services to the Company.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 6 of Regulation S-X. In the opinion of management, all adjustments considered necessary for the fair statement of the consolidated financial statements for the interim period presented, have been included. These financial statements should be read in conjunction with the audited financial statements and accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

The Company follows the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies (“ASC 946”).

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income, expenses, gains and losses during the reported periods. Changes in the economic environment, financial markets, credit worthiness of our portfolio companies and any other parameters used in determining these estimates could cause actual results to differ materially.

Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company.

As of March 31, 2024 and December 31, 2023, the Company’s consolidated subsidiaries were JCP BDC SPV I LLC and JCP BDC SPV II LLC, which were both wholly-owned. The consolidated financial statements include the accounts of the Company as well as these subsidiaries. All intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents and Restricted Cash

Cash equivalents include highly liquid investments, including money market funds, not held for resale with original maturities of three months or less. The Company deems that certain money market funds, U.S. Treasury bills, repurchase agreements, and other high-quality, short-term debt securities would qualify as cash equivalents.

Restricted cash represents the amount of principal and interest collections received as well as amounts in reserve to fund draws on our credit facility that are all held at JCP BDC SPV I LLC.

Cash and cash equivalents and restricted cash are carried at cost, which approximates fair value. Cash and cash equivalents held as of March 31, 2024 and December 31, 2023 was $54.6 million and $71.9 million, respectively. Restricted cash held as of March 31, 2024 and December 31, 2023 was $7.6 million and $1.1 million, respectively.

Investments Transactions

Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains and losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Amounts for investments recognized or derecognized but not

yet settled are reported as a receivable for investments sold and a payable for investments purchased, respectively, in the Consolidated Statements of Assets and Liabilities.

Fair Value Measurements

The Company applies ASC Topic 820, Fair Value Measurements (“ASC 820”), as amended, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, not an entity specific measurement. For some assets and liabilities, observable market transactions or market information might be available data. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

ASC 820 establishes a hierarchal disclosure framework which ranks the observability of inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instruments and their specific characteristics. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, generally will have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value. The levels used for classifying investments are not necessarily an indication of the risk associated with investing in these securities.

The three-level hierarchy for fair value measurement is defined as follows:

Level 1: inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2: inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The type of financial instruments in this category includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level 3: inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the financial instrument.

Investment Valuation Process

The Board of Directors has designated the Investment Adviser as its “Valuation Designee” pursuant to Rule 2a-5 under the Investment Company Act, and in that role, the Investment Adviser is responsible for performing fair value determinations relating to all of the Company’s investments, including periodically assessing and managing any material valuation risks and establishing and applying fair value methodologies, in accordance with valuation policies and procedures that have been approved by the Company’s Board of Directors. Even though the Company’s Board of Directors designated the Company’s Investment Adviser as “Valuation Designee,” the Company’s Board of Directors continues to be responsible for overseeing the processes for determining fair valuation.

The majority of our investments fall within Level 3 of the fair value hierarchy, and as such, there is not readily available market values for most of the investments in our portfolio, and we value such investments at fair value as determined in good faith by the Valuation Designee under the direction of the Board of Directors using a documented valuation policy, described below, and a consistently applied valuation process. The factors that may be taken into account in pricing the investments at fair value include, as relevant, the nature and realizable value of any collateral, the Portfolio Company’s ability to make payments and its earnings and discounted cash flow, and the markets in which the Portfolio Company does business, comparison to publicly traded securities and other relevant factors. Available current market data are considered such as applicable market yields and multiples of publicly traded securities, comparison of financial ratios of peer companies, and changes in the interest rate environment and the credit markets that may affect the price at which similar investments would trade in their principal market, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Valuation Designee will consider the pricing indicated by the external event to corroborate or revise its valuation.

With respect to investments for which market quotations are not readily available, or for which market quotations are deemed not reflective of the fair value, the valuation procedures adopted by our Board of Directors contemplates a multi-step valuation process each quarter, as described below:

(1)

Our quarterly valuation process begins with each Portfolio Company or investment being initially valued by the investment professionals of our Investment Adviser, the Valuation Designee, responsible for the Portfolio Company or investment;

(2)

We engage an independent valuation firm (the “Independent Valuation Adviser”) to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Adviser independently values such investments using quantitative and qualitative information provided by the investment professionals of our Investment Adviser as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Adviser also provides analyses to support their valuation methodology and

calculations. The Independent Valuation Adviser provides an opinion on a final range of values on such investments to the Valuation Designee. The Independent Valuation Adviser defines fair value in accordance with ASC 820 and utilizes valuation techniques including the market approach, the income approach or both;

(3)

The Independent Valuation Adviser’s preliminary valuations are reviewed by our Investment Adviser, in its capacity as the Valuation Designee. The Independent Valuation Adviser’s ranges are compared to our Investment Adviser’s valuations to ensure our Investment Adviser’s valuations are reasonable;

(4)

The Valuation Designee determines the valuations of our investments in good faith, within the meaning of the Investment Company Act, based on the input of the Independent Valuation Adviser, and provides the valuation determinations to the Audit Committee of the Board of Directors;

(5)

The Audit Committee of our Board of Directors reviews valuation information provided by the Valuation Designee and the Independent Valuation Adviser. The Audit Committee then will discuss such valuation determinations; and

(6)

Our Board of Directors further discusses the valuation determinations of the Valuation Designee, based on the input of the Independent Valuation Adviser.

Valuation of Other Financial Assets and Financial Liabilities

ASC 825, Financial Instruments, permits an entity to choose, at specified election dates, to measure certain assets and liabilities at fair value (the “Fair Value Option”). We have not elected the Fair Value Option to report selected financial assets and financial liabilities. Debt issued by the Company is reported at amortized cost (see Note 6 to the consolidated financial statements). The carrying value of all other financial assets and liabilities approximates fair value due to their short maturities or their close proximity of the originations to the measurement date.

Realized Gains or Losses

Security transactions are accounted for on a trade date basis. Realized gains or losses on investments are calculated by using the specific identification method. Securities that have been called by the issuer are recorded at the call price on the call effective date.

Investment Income Recognition

Interest Income

Interest income is recorded on an accrual basis and includes the accretion of discounts and amortizations of premiums. Discounts from and premiums to par value on debt investments purchased are accreted/amortized into interest income over the life of the respective security using the effective interest method. The amortized cost of debt investments represents the original cost, including loan origination fees and upfront fees received that are deemed to be an adjustment to yield, adjusted for the accretion of discounts and amortization of premiums, if any.

PIK Income

The Company may have loans in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK represents interest that is accrued and recorded as interest income at the contractual rates, increases the loan principal on the respective capitalization dates, and is generally due at maturity. Such income is included in interest income in the Company’s statement of operations. If at any point the Company believes PIK is not expected to be realized, the investment generating PIK will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest is generally reversed through interest income. To maintain the Company’s status as a RIC, this non-cash source of income must be paid out to shareholders in the form of dividends, even though the Company has not yet collected cash. During the three months ended March 31, 2024, there were no loans generating PIK.

Fee Income

The Company may receive various fees in the ordinary course of business such as structuring, consent, waiver, amendment, syndication fees as well as fees for managerial assistance rendered by the Company to the portfolio companies. Such fees are recognized as income when earned or the services are rendered.

Non-Accrual Income

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. As of March 31, 2024 and December 31, 2023, there were no loans placed on non-accrual status.

Expenses

Expenses include management fees, performance-based incentive fees, interest expense, insurance expenses, administrative service fees, legal fees, Board of Directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis.

Organization Costs

Costs associated with the organization of the Company were expensed as incurred. These expenses consisted primarily of legal fees and other costs of organizing the Company.

Offering Costs

Costs associated with the offering of the Company’s shares are capitalized as “deferred offering costs” on the Consolidated Statements of Assets and Liabilities and amortized on a straight-line basis over a twelve-month period from incurrence. These expenses consist primarily of legal fees and other costs incurred in connection with the Company’s continuous offering.

Deferred Financing Costs

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. These expenses are deferred and amortized into interest expense over the life of the related debt instrument using the straight-line method. Deferred financing costs related to revolving credit facilities are presented separately as an asset on the Company’s Consolidated Statements of Assets and Liabilities.

Administration Agreement

On October 27, 2023, the Company entered into an administration agreement (the “Administration Agreement”), under which Alter Domus (US) LLC (the “Administrator”) is responsible for providing various accounting and administrative services to us. In particular, pursuant to the Administration Agreement, the Administrator is responsible for providing or overseeing the performance of required administrative services and professional services rendered by others, which includes (but is not limited to), accounting, payment of the Company’s expenses, legal, compliance, operations, technology and investor relations, preparation and filing of the Company’s tax returns, and preparation of financial reports provided to the Company’s stockholders and filed with the SEC.

Distributions

Distributions to common stockholders are recorded on the record date. The amount to be paid out as a distribution is determined by the Board of Directors and will depend on the Company’s earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such factors as the Board may deem relevant from time to time. On March 28, 2024, the Board of Directors declared a distribution of $0.1295 per share, which was paid on April 5, 2024 to shareholders of record as of March 28, 2024.

Share Repurchases

In connection with the Company’s share repurchase programs, the cost of shares repurchased is charged to net assets on the trade date. There were no share repurchases during the three months ended March 31, 2024.

Federal and State Income Taxes

We intend to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must (among other requirements) meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders at least 90% of its investment company taxable income as defined by the Code, for each year. The Company (among other requirements) intends to make the requisite distributions to its stockholders, which will generally relieve the Company from corporate-level income taxes. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders may include return of capital, however, the exact amount cannot be determined until we file Form 1099s. The character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP. Book and tax basis differences relating to stockholder dividend and distributions and other permanent book and tax difference are reclassified to Additional paid-in capital on the Consolidated Statements of Assets and Liabilities.

If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income for the calendar year and 98.2% of our capital gain net income for the 1-year period ending on October 31 in that calendar year, we will generally be required to pay excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated undistributed taxable income.

If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate rates. Distribution would generally be taxable to our individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits provided certain holding period and other requirements are met. Subject to certain limitation under the Code, corporate distributions would be eligible for the dividend-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our stockholders our accumulated earnings and profits attributable to non-RIC years. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.

We follow ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how unrecognized tax benefits should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority.

Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the consolidated financial statements. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. The Company’s federal tax returns are subject to examination by the Internal Revenue Service for a period of three fiscal years after they are filed.

Note 3. Agreements and Related Party Transactions

Investment Advisory Agreement

On September 25, 2023, the Company entered into an investment advisory agreement (the “Investment Advisory Agreement”) between the Company and the Investment Adviser. The Investment Adviser, subject to the overall supervision of the Board of Directors, manages our day-to-day operations and provides investment advisory and management services to the Company. The Investment Adviser is an indirect subsidiary of Jefferies Finance LLC (“JFIN”), a Delaware limited liability company, and a registered investment adviser under the Advisers Act. JFIN is wholly-owned by JFIN Parent LLC, which is a joint venture between (i) Jefferies Financial Group Inc. (a publicly traded company and the parent company for Jefferies LLC (“Jefferies”), a global securities and investment banking firm), and (ii) Massachusetts Mutual Life Insurance Company. The Investment Adviser, together with JFIN and its subsidiaries are referred to herein collectively as “Jefferies Finance.”

The Investment Advisory Agreement is effective for an initial two-year term and thereafter will continue for successive annual periods provided that such continuance is specifically approved annually by a majority of the Board of Directors or by the holders of a majority of the Company’s outstanding voting securities and, in each case, a majority of the independent directors. The Investment Advisory Agreement may, on 60 days’ written notice to the other party, be terminated in its entirety at any time without the payment of any penalty, by our Board of Directors, or by vote of a majority of our outstanding voting securities, on the one hand, or by the Investment Adviser, on the other hand. The Investment Advisory Agreement will automatically terminate in the event of its assignment within the meaning of the Investment Company Act and related SEC guidance and interpretations.

The Company will pay the Investment Adviser a fee for its services under the Investment Advisory Agreement consisting of two components: a management fee and an incentive fee. The cost of both the management fee and the incentive fee will ultimately be borne by the stockholders.

Management Fee

The management fee will be payable quarterly in arrears at an annual rate of 1.25% of our net assets. The management fee will be calculated based on the average value of our net assets at the end of the most recently completed calendar quarter. Net assets means the Company’s total assets less liabilities determined on a consolidated basis in accordance with U.S. GAAP. The Investment Adviser has voluntarily agreed to cap the management fee at an annual rate of 0.50% of the value of our net assets for the first twelve-month period following the Company’s initial closing through December 6, 2024.

Incentive Fee

The incentive fee will consist of two components that are independent of each other, with the result that one component may be payable even if the other is not. A portion of the incentive fee is based on a percentage of our income and a portion is based on a percentage of our capital gains, each as described below. The Investment Adviser has agreed to waive both components of the incentive fee for the first twelve-month period following the initial closing through December 6, 2024.

(1) Incentive Fee Based on Income

The portion of the incentive fee that is based on a percentage of our income is based on Pre-Incentive Fee Net Investment Income Returns. “Pre-Incentive Fee Net Investment Income Returns” means, as the context requires, either the dollar value of, or percentage rate of return on the value of our net assets at the end of the immediate preceding quarter from, interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses accrued for the quarter (including the management fee, expenses payable under our Administration Agreement with our Administrator, and any interest expense or fees on any credit facilities or outstanding debt and dividends paid on any issued and outstanding shares of preferred stock, but excluding the incentive fee and any stockholder servicing and/or distribution fees).

Pre-Incentive Fee Net Investment Income Returns include, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash.

Pre-Incentive Fee Net Investment Income Returns do not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The impact of expense support payments and recoupments are also excluded from Pre-Incentive Fee Net Investment Income Returns. Pre-Incentive Fee Net Investment Income Returns, expressed as a rate of return on the value of our net assets at the end of the immediate preceding quarter, is compared to a “hurdle rate” of return of 1.75% per quarter (7.0% annualized).

We will pay the Investment Adviser an incentive fee quarterly in arrears with respect to our Pre-Incentive Fee Net Investment Income Returns in each calendar quarter as follows:

•

No incentive fee based on Pre-Incentive Fee Net Investment Income Returns in any calendar quarter in which our Pre-Incentive Fee Net Investment Income Returns do not exceed the hurdle rate of 1.75% per quarter (7.0% annualized);

•

100% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns with respect to that portion of such Pre-Incentive Fee Net Investment Income Returns, if any, that exceeds the hurdle rate but is less than a rate of return of 2.00% (8.00% annualized). We refer to this portion of our Pre-Incentive Fee Net Investment Income Returns (which exceeds the hurdle rate but is less than 2.00%) as the

“catch-up.” The “catch-up” is meant to provide the Investment Adviser with approximately 12.5% of our Pre-Incentive Fee Net Investment Income Returns as if a hurdle rate did not apply if this net investment income exceeds 2.00% in any calendar quarter; and

•

12.5% of the dollar amount of our Pre-Incentive Fee Net Investment Income Returns, if any, that exceed a rate of return of 2.00% (8.00% annualized). This reflects that once the hurdle rate is reached and the catch-up is achieved, 12.5% of all Pre-Incentive Fee Net Investment Income Returns thereafter are allocated to the Investment Adviser.

These calculations are prorated for any period of less than three months and adjusted for any shares issued or repurchased during the relevant quarter.

(2) Incentive Fee Based on Capital Gains

The second component of the incentive fee, the capital gains incentive fee, is payable at the end of each calendar quarter in arrears. The amount payable equals:

•

12.5% of cumulative realized capital gains from inception through the end of such calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid incentive fee on capital gains as calculated in accordance with U.S. GAAP.

Each year, the fee paid for the capital gains incentive fee is net of the aggregate amount of any previously paid capital gains incentive fee for all prior periods. We will accrue, but will not pay, a capital gains incentive fee with respect to unrealized appreciation because a capital gains incentive fee would be owed to the Investment Adviser if we were to sell the relevant investment and realize a capital gain. In no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of the amount permitted by the Advisers Act, including Section 205 thereof.

The fees that are payable under the Investment Advisory Agreement for any partial period will be appropriately prorated. For the avoidance of doubt, the incentive fee will be calculated net of our expenses.

For the three months ended March 31, 2024, the Company recognized $0.5 million of management fees, and $0.5 million of incentive fees before the impact of waived fees. For the three months ended March 31, 2024, $0.3 million of management fees were waived, and $0.5 million of incentive fees were waived.

As of March 31, 2024 and December 31, 2023, management fees payable were $0.2 million and $0.1 million, respectively.

Expense Support and Conditional Reimbursement Agreement

On December 6, 2023, the Company entered into an expense support and conditional reimbursement agreement (the “Expense Support Agreement”) with the Investment Adviser, pursuant to which the Investment Adviser (i) has agreed to pay a portion of the Company’s Other Operating Expenses (as defined below) to the effect that such expenses do not exceed 1.00% (on an annualized basis) of the Company’s net asset value (“NAV”), and (ii) may elect to pay an additional portion of the Company’s expenses from time to time (together with (i), “Expense Payments”). “Other Operating Expenses” means the Company’s total organizational and offering expenses, including the organizational and offering expenses in connection with the formation of the Company and the initial closing of the private offering that were incurred prior to the commencement of operations, and all other costs and expenses relating to the Company’s operations and transactions, excluding the management fee and the incentive fee, interest, fees and other expenses of financings, taxes, and extraordinary expenses, such as litigation and other expenses not incurred in the ordinary course of the Company’s business.

Following any calendar month in which Available Operating Funds (as defined below) exceed the cumulative distributions accrued to the Company’s shareholders based on distributions declared with respect to record dates occurring in such calendar month (the amount of such excess referred to in the Expense Support Agreement as “Excess Operating Funds”), the Company will pay such Excess Operating Funds, or a portion thereof, to the Investment Adviser until such time as all Expense Payments made by the Investment Adviser to the Company within three years prior to the last business day of such calendar month have been reimbursed. Any payments required to be made by the Company under the Expense Support Agreement are referred to as a “Reimbursement Payment.” “Available Operating Funds” means the sum of (i) the Company’s net investment company taxable income (including net short-term capital gains reduced by net long-term capital losses), (ii) the Company’s net capital gains (including the excess of net long-term capital gains over net short-term capital losses) and (iii) dividends and other distributions paid to the Company on account of investments in portfolio companies (to the extent such amounts listed in clause (iii) are not included under clauses (i) and (ii) above).

The amount of the Reimbursement Payment for any calendar month will equal the lesser of (i) the Excess Operating Funds in such month and (ii) the aggregate amount of all Expense Payments made by the Investment Adviser to the Company within three years prior to the last business day of such calendar month that have not been previously reimbursed by the Company to the Investment Adviser; provided that the Investment Adviser may waive its right to receive all or a portion of any Reimbursement Payment in any particular calendar month, in which case such waived amount will remain unreimbursed Expense Payments reimbursable in future months pursuant to the terms of the Expense Support Agreement.

No Reimbursement Payment for any month shall be made if the Company’s Other Operating Expenses at the time of such Reimbursement Payment exceeds 1.00% (on an annualized basis, or 0.0833% monthly) of the Company’s NAV.

The Company’s obligation to make a Reimbursement Payment will automatically become a liability of the Company on the last business day of the applicable calendar month, except to the extent the Investment Adviser has waived its right to receive such payment for the applicable month.

As of March 31, 2024 and December 31, 2023, the Investment Adviser has provided a total of $3.7 million and $2.5 million, respectively, of expense support, which is all subject to future potential reimbursement. This is included as Due from Investment Adviser in the Consolidated Statements of Assets and Liabilities as of March 31, 2024 and December 31, 2023. Either the Company or the Investment Adviser may terminate the Expense Support Agreement at any time, with or without notice, without the payment of any penalty, provided that any Expense Payments that have not been reimbursed

by us to the Investment Adviser will remain the obligation of the Company following any such termination, subject to the terms of the Expense Support Agreement.

Co-Investment Exemptive Relief

Together with the Investment Adviser, we received an exemptive order from the SEC that permits us to participate in co-investment transactions with certain affiliates of the Investment Adviser and certain funds managed and controlled by the Investment Adviser and its affiliates in transactions that involve the negotiation of certain terms of the securities or loans to be purchased (in addition to price-related terms), subject to certain terms and conditions. Co-investment transactions involving the negotiation of only price-related terms will be entered into in reliance on SEC staff no-action letters. We intend to co-invest, from time to time, with other Accounts (as defined below) (including co-investment or other vehicles in which the Investment Adviser or its personnel invest and that co-invest with such other Accounts) in portfolio investments that are suitable for both the Company and such other Accounts. “Accounts” means Jefferies Finance’s own accounts, accounts of Jefferies Finance’s clients, including separately managed accounts (or separate accounts), pooled investment vehicles and collateralized loan obligations that are sponsored, managed or advised by Jefferies Finance or other Affiliate Investment Advisers (as defined below). “Affiliate Investment Advisers” means Accounts advised by our Investment Adviser or investment advisers that are affiliated with us. Even if the Company and such other Accounts invest in the same securities, conflicts of interest may still arise. For example, it is possible that as a result of legal, tax, political, regulatory, accounting or other considerations, the terms of such investment (including with respect to price and timing) for the Company and/or such other Accounts may not be the same. Additionally, the Company and/or such other Accounts may have different expected termination dates and/or investment objectives (including target return profiles) and the Investment Adviser, as a result, may have conflicting goals with respect to the price and timing of disposition opportunities.

We, together with the other entities relying on the entities relying on the exemptive relief, have applied for an amendment to such order to amend the term, “Follow-On Investment,” consistent with the temporary relief granted by the SEC on April 8, 2020.

Placement Agreement

On October 19, 2023, the Company entered into a placement agreement (as amended on April 25, 2024, the “Placement Agreement”) among the Company, the Investment Adviser, Jefferies Credit Partners LLC (“JCP”), the parent company of the Investment Adviser, and Jefferies (the “Placement Agent”), pursuant to which the Investment Adviser engaged Jefferies as the placement agent for the sale of the Company’s shares of common stock. The Placement Agent agreed to use its reasonable best efforts to solicit purchasers for shares of the Company’s common stock, subject to the terms and conditions set forth in the Placement Agreement. Any fees or expenses payable to the Placement Agent under the Placement Agreement are the sole responsibility of JCP or the Investment Adviser, as applicable. The Company and the Investment Adviser have each jointly and severally agreed to indemnify the Placement Agent under the Placement Agreement subject to the terms and conditions thereunder. The Placement Agreement also contains representations, warranties and other provisions customary for transactions of this nature.

Due to Investment Adviser

Prior to the commencement of operations on December 7, 2023, the Investment Adviser bore all organization and offering expenses in connection with the formation of the Company and the initial closing of the private offering. Following the commencement of operations, the Company will reimburse the Investment Adviser for these organization and offering costs up to a maximum aggregate amount of $4.0 million. Due to Investment Adviser of approximately $3.8 million and $3.8 million as of March 31, 2024 and December 31, 2023, respectively, in the Consolidated Statements of Assets and Liabilities includes primarily the reimbursement amount owed for organization and offering costs.

Trademark Sub-License Agreement

We have entered into a License Agreement with JFIN Parent LLC, a Delaware limited liability company, that grants us a non-exclusive, non-transferable, and non-sublicensable license to the use of the trademark, service mark and trade name “Jefferies” and all variations thereof.

Note 4. Investments

The composition of the Company’s investment portfolio as of March 31, 2024 at cost and fair value was as follows (in thousands):


	Amortized Cost		% of Total Investments at Amortized Cost			Fair Value		% of Total Investments at Fair Value
First Lien Debt (1)	$	266,097		100.0	%	$	268,880		100.0	%
Total	$	266,097		100.0	%	$	268,880		100.0	%

(1)

First lien debt consists of first lien term loans, first lien delayed draw term loans and first lien revolvers.

The composition of the Company’s investment portfolio as of December 31, 2023 at cost and fair value was as follows (in thousands):


	Amortized Cost		% of Total Investments at Amortized Cost			Fair Value		% of Total Investments at Fair Value
First Lien Debt (1)	$	240,879		100.0	%	$	244,061		100.0	%
Total	$	240,879		100.0	%	$	244,061		100.0	%

(1)

First lien debt consists of first lien term loans, first lien delayed draw term loans and first lien revolvers.

The industry composition of investments as of March 31, 2024 at amortized cost and fair value was as follows (in thousands):


	March 31, 2024
	Investments at Amortized Cost		% of Investments at Amortized Cost			Investments at Fair Value		% of Investments at Fair Value
High Tech Industries	$	94,089		35.4	%	$	94,655		35.2	%
Healthcare & Pharmaceuticals		52,275		19.6	%		52,611		19.6	%
Services: Business		36,760		13.8	%		37,920		14.1	%
Wholesale		23,290		8.8	%		23,274		8.7	%
Transportation: Cargo		17,967		6.8	%		17,867		6.6	%
Chemicals, Plastics, and Rubber		13,170		4.9	%		13,498		5.0	%
Capital Equipment		13,035		4.9	%		12,955		4.8	%
Banking, Finance, Insurance and Real Estate		12,556		4.7	%		12,820		4.8	%
Aerospace & Defense		2,955		1.1	%		3,280		1.2	%
Total	$	266,097		100.0	%	$	268,880		100.0	%

The industry composition of investments as of December 31, 2023 at amortized cost and fair value was as follows (in thousands):


	December 31, 2023
	Investments at Amortized Cost		% of Investments at Amortized Cost			Investments at Fair Value		% of Investments at Fair Value
High Tech Industries	$	72,316		30.0	%	$	72,846		29.8	%
Healthcare & Pharmaceuticals		50,327		20.9	%		50,962		20.9	%
Services: Business		36,101		15.0	%		37,125		15.2	%
Wholesale		22,387		9.3	%		22,385		9.2	%
Transportation: Cargo		17,962		7.5	%		18,193		7.5	%
Chemicals, Plastics, and Rubber		13,169		5.5	%		13,426		5.5	%
Capital Equipment		13,017		5.4	%		12,904		5.3	%
Banking, Finance, Insurance and Real Estate		12,646		5.2	%		12,988		5.3	%
Aerospace & Defense		2,954		1.2	%		3,232		1.3	%
Total	$	240,879		100.0	%	$	244,061		100.0	%

The geographic composition of investments as of March 31, 2024 at cost and fair value was as follows (in thousands):


	March 31, 2024
	Amortized Cost		Fair Value		% of Total Investments at Fair Value			Fair Value as % of Net Assets
United States	$	266,097	$	268,880		100.0	%		151.5	%
Total	$	266,097	$	268,880		100.0	%		151.5	%

The geographic composition of investments as of December 31, 2023 at cost and fair value was as follows (in thousands):


	December 31, 2023
	Amortized Cost		Fair Value		% of Total Investments at Fair Value			Fair Value as % of Net Assets
United States	$	240,879	$	244,061		100.0	%		141.8	%
Total	$	240,879	$	244,061		100.0	%		141.8	%

As of March 31, 2024 and December 31, 2023, there were no investments in the portfolio on non-accrual status.

As of March 31, 2024 and December 31, 2023, on a fair value basis, 100.0% of debt investments bore interest at a variable rate that may be determined by reference to either the SOFR or an alternative base rate.

Note 5. Fair Value Measurements

The following table presents the fair value of investments as of March 31, 2024, disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820 (in thousands):


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First Lien Debt (1)	$	—	$	—	$	268,880	$	268,880
Total	$	—	$	—	$	268,880	$	268,880

(1)

First lien debt consists of first lien term loans, first lien delayed draw term loans and first lien revolvers.

The following table presents the fair value of investments as of December 31, 2023, disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820 (in thousands):


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First Lien Debt (1)	$	—	$	—	$	244,061	$	244,061
Total	$	—	$	—	$	244,061	$	244,061

(1)

First lien debt consists of first lien term loans, first lien delayed draw term loans and first lien revolvers.

The following table presents change for the three months ended March 31, 2024 in the fair value of investments for which Level 3 inputs were used to determine fair value (in thousands):


	First Lien Debt			Total
Fair value, beginning of period	$	244,061		$	244,061
Purchases of investments		25,410			25,410
Proceeds from principal repayments and sales of investments		(517	)		(517	)
Accretion of discount/amortization of premium		325			325
Net realized gain		—			—
Net change in unrealized appreciation (depreciation)		(399	)		(399	)
Fair value, end of period	$	268,880		$	268,880
Net change in unrealized appreciation (depreciation) related to financial instruments still held as of March 31, 2024	$	(399	)	$	(399	)

Transfers between levels, if any, are recognized at the beginning of the period in which the transfers occur. For the three months ended March 31, 2023, there were no transfers into or out of Level 3.

The following tables present quantitative information about the significant unobservable inputs of the Company’s Level 3 financial instruments as of March 31, 2024 and December 31, 2023. The tables are not intended to be all-inclusive but instead capture the significant unobservable inputs relevant to the Company’s determination of fair value.


	March 31, 2024
					Range
	Fair Value (in thousands)		Valuation Technique	Unobservable Input	Low			High			Weighted Average (1)
Investments in first lien debt	$	268,880	Yield analysis	Discount rate		8.7	%		12.0	%		9.8	%


	December 31, 2023
					Range
	Fair Value (in thousands)		Valuation Technique	Unobservable Input	Low			High			Weighted Average (1)
Investments in first lien debt	$	244,061	Yield analysis	Discount rate		8.6	%		11.9	%		9.7	%

(1)

Weighted averages are calculated based on fair value of investments.

The significant unobservable input used in the yield analysis is the discount rate based on comparable market yields. Significant increases or decreases in discount rates would result in a significantly lower or higher fair value measurement.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, it could realize significantly less than the value at which the Company has recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized appreciation or depreciation reflected in the valuations currently assigned.

Note 6. Debt

In accordance with the Investment Company Act, with certain limitations, the Company is allowed to borrow amounts such that its asset coverage, as defined in the Investment Company Act, is at least 150% after such borrowing. As of March 31, 2024 and December 31, 2023, the Company’s asset coverage was 212.8% and 213.6%, respectively.

The Company’s outstanding debt obligations as of March 31, 2024 were as follows (in thousands):


	March 31, 2024
	Aggregate Principal Committed		Outstanding Principal		Carrying Value		Fair Value (1)		Unused Portion (2)		Amount Available (3)
Senior Secured Credit Facility	$	500,000	$	157,403	$	157,403	$	156,222	$	342,597	$	2,130
Total Debt Obligations	$	500,000	$	157,403	$	157,403	$	156,222	$	342,597	$	2,130

(1)

The fair value of these debt obligations would be categorized as Level 3 under ASC 820 as of March 31, 2024. The valuation is based on a yield analysis and discount rate.

(2)

The unused portion is the amount upon which commitment fees, if any, are based.

(3)

The amount available reflects any limitations related to each respective credit facility’s borrowing base.

The Company’s outstanding debt obligations as of December 31, 2023 were as follows (in thousands):


	December 31, 2023
	Aggregate Principal Committed		Outstanding Principal		Carrying Value		Fair Value (1)		Unused Portion (2)		Amount Available (3)
Senior Secured Credit Facility	$	500,000	$	151,502	$	151,502	$	149,987	$	348,498	$	327
Total Debt Obligations	$	500,000	$	151,502	$	151,502	$	149,987	$	348,498	$	327

(1)

The fair value of these debt obligations would be categorized as Level 3 under ASC 820 as of December 31, 2023. The valuation is based on a yield analysis and discount rate.

(2)

The unused portion is the amount upon which commitment fees, if any, are based.

(3)

The amount available reflects any limitations related to each respective credit facility’s borrowing base.

The following table summarizes the average and maximum debt outstanding, and the interest and debt issuance cost for the three months ended March 31, 2024 (in thousands):


	Three Months Ended March 31, 2024
Average debt outstanding	$	119,218
Maximum amount of debt outstanding	$	157,403

Weighted average annualized interest cost (1)		8.18	%

Average 1-month SOFR rate		5.32	%

(1)

The calculation of weighted average interest rate does not include facility unused fees or the amortization of deferred financing costs.

The components of interest expense for the three months ended March 31, 2024 were as follows (in thousands):


	Three Months Ended March 31, 2024
Borrowing interest expense	$	2,425
Facility unused fees		513
Amortization of financing costs and debt issuance costs		315
Total interest expense	$	3,253

Senior Secured Credit Facility

On December 7, 2023, the Company’s wholly owned, consolidated subsidiary, JCP BDC SPV I LLC (the “SPV”), entered into a loan and security agreement (the “Senior Secured Credit Facility”), with the SPV as borrower, JPMorgan Chase Bank, National Association, as the administrative agent, the lenders from time to time parties thereto (the “Lenders”), the Company as the portfolio manager, and The Bank of New York Mellon Trust Company, National Association, as the collateral administrator, the collateral agent and securities intermediary.

The aggregate lender commitments under the Senior Secured Credit Facility are $500 million with an additional $300 million committed beginning 12 months from the effective date, and an uncommitted accordion feature that would allow the SPV to borrow up to an additional $500 million. The Senior Secured Credit Facility matures on December 7, 2028, unless there is an earlier termination or an acceleration following an event of default. In connection with the Senior Secured Credit Facility, the Company has also entered into an equity commitment letter with the SPV, for the benefit of the Lenders, pursuant to which the Company may be required to contribute cash proceeds to the SPV upon the occurrence of a “Market Value Event” or an “Event of Default.”

Borrowings under the Senior Secured Credit Facility will bear interest at Term SOFR or a Base Rate, in each case plus an applicable margin equal to 2.70% for borrowings that reference Term SOFR and 1.70% for borrowings that reference the Base Rate. The Company will also pay a fee of 0.50% on average daily undrawn amounts under the Senior Secured Credit Facility for the first 12 months from the effective date, 0.65% from December 8, 2024 through June 7, 2025, and 0.75% thereafter.

The Senior Secured Credit Facility is secured by all of the SPV’s assets. The SPV assets and credit are not available to satisfy debts and obligations of Jefferies Credit Partners BDC Inc. Assets and liabilities of the SPV as of March 31, 2024 and December 31, 2023 are as follows (in thousands):


	March 31, 2024		December 31, 2023
Assets
Investments at fair value (1)	$	268,882	$	244,084
Restricted cash		7,559		1,068
Interest receivable		1,900		1,102
Deferred financing costs		5,924		6,239
Prepaid expenses and other assets		34		121
Total assets	$	284,299	$	252,614

Liabilities
Debt	$	157,403	$	151,502
Interest payable		2,811		856
Accrued expenses and other liabilities		58		66
Total liabilities	$	160,272	$	152,424

(1)

Investments at fair value do not include certain revolving and delayed draw terms loans which are held at Jefferies Credit Partners BDC Inc.

Both the SPV and the Company have made customary representations and warranties and are required to comply with various covenants, reporting requirements and other customary requirements for similar credit facilities. As of March 31, 2024 and December 31, 2023, the Company was in compliance with all covenants and other requirements of the Senior Secured Credit Facility.

Note 7. Net Assets

The Company is authorized to issue 1,000,000,000 shares of common stock, par value $0.001 per share and 100,000,000 shares of preferred stock, par value $0.001 per share.

On March 3, 2023, Jefferies Credit Partners LLC, an affiliate of the Investment Adviser, purchased 290,100 shares of common stock of the Company for $1,000 (100 shares of common stock of the Company prior to the forward stock split discussed below). On December 6, 2023, the Company’s Board of Directors approved a forward stock split of the Company’s issued and outstanding shares of common stock by way of a stock dividend. Each shareholder of record as of December 6, 2023 was entitled to receive 2,901 shares for each share of the Company held by such shareholder.

Shares of our common stock will be issued by us on a continuous basis at a price per share generally equal to our next calculated NAV per share.

The following table summarizes the total shares issued and proceeds received for the three months ended March 31, 2024 (in thousands, except share amounts):


Issuance Date	Number of Shares of Common Stock Issued		Aggregate Proceeds
March 1, 2024		200,347	$	3,000
Total		200,347	$	3,000

Net Asset Value per Share and Offering Price

The Company determines NAV for each class of shares as of the last day of each calendar month. Shares are issued at an offering price equivalent to the most recent NAV per share available, which will be the prior calendar day NAV per share. The following table summarizes each month-end NAV per share during the three months ended March 31, 2024:


For the Month Ended	NAV Per Share
January 31, 2024	$	14.87
February 29, 2024	$	14.97
March 31, 2024	$	14.95

Distributions

The Board authorizes and declares distribution amounts per share. On March 28, 2024, the Board of Directors declared a distribution of $0.1295 per share, which was paid on April 5, 2024 to shareholders of record as of March 28, 2024.

Dividend Reinvestment Plan

We have adopted a dividend reinvestment plan, pursuant to which we will reinvest all cash dividends or other distributions authorized by the Board of Directors and declared by the Company on behalf of stockholders who affirmatively elect to reinvest their dividends or other distributions. As a result, if the Board of Directors authorizes, and we declare, a cash dividend or other distribution, then stockholders who have elected to participate in our

dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash dividend or other distribution. Distributions on fractional shares will be credited to each participating shareholder’s account to three decimal places.

Note 8. Net Increase in Net Assets Per Share

The following sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2024 (in thousands, except share and per share data):


	Three Months Ended March 31, 2024
Net increase in net assets resulting from operations	$	3,914
Weighted average common stock outstanding		11,738,844
Net increase in net assets per share resulting from operations - basic and diluted	$	0.33

Diluted net increase in net assets per share resulting from operations is equal to basic net increase in net assets per share resulting from operations because there were no common stock equivalents outstanding during the period presented.

Note 9. Commitments and Contingencies

The Company has various commitments to fund various revolving and first lien senior secured delayed draw term loans. As of March 31, 2024 and December 31, 2023, the total unfunded commitments were $89.5 million and $42.5 million, respectively.

The Company has entered into an equity commitment letter with the SPV, in connection with the Company’s Senior Secured Credit Facility. See Note 6 to the consolidated financial statements for additional information.

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2024, management is not aware of any pending or threatened material litigation.

Note 10. Financial Highlights

The following are the financial highlights for the three months ended March 31, 2024 (in thousands, except share and per share data):


	Three Months Ended March 31, 2024
Per Share Data:
Net asset value at beginning of period	$	14.75
Net investment income (1)		0.37
Net realized gains (losses) and unrealized appreciation (depreciation) (2)		(0.04	)
Net increase (decrease) in net assets resulting from operations		15.08
Distribution declared (3)		(0.13	)
Net asset value at end of period	$	14.95

Total return based on net asset value (4)		2.2	%
Shares outstanding, end of period		11,870,941
Weighted average shares outstanding		11,738,844

Ratio/Supplemental Data:
Net assets at end of period	$	177,485
Annualized ratio of net expenses to average net assets (5)		8.6	%
Annualized ratio of net expenses before voluntary waivers to average net assets (5)(6)		12.5	%
Annualized ratio of net investment income to average net assets (5)		10.3	%
Portfolio turnover rate		0.0	%
Asset coverage ratio, end of period		212.8	%

Capital Commitments Data:
Capital commitments, end of period	$	715,000
Funded capital commitments, end of period	$	170,500
% of capital commitments funded		23.8	%

(1)

The per share data was derived by using the weighted average shares outstanding during the period.

(2)

The amount shown may not correspond with the aggregate amount for the period as it includes the effect of the timing of capital transactions.

(3)

The per share data for distributions was derived using the actual shares outstanding at the date of the relevant transaction (refer to Note 7).

(4)

Total return is calculated as the change in NAV per share during the period, plus distributions per share (assuming distributions are reinvested in accordance with the Company’s distribution reinvestment plan) divided by the beginning NAV per share.

(5)

Net expenses include interest expense and all other company operating expenses. Amounts are annualized with the exception of certain non-recurring expenses. Operating expenses may vary in the future based on the amount of capital raised and other unpredictable variables.

(6)

Voluntary waivers include expense support, management fees and incentive fees.

Note 11. Subsequent Events

Management has evaluated subsequent events through the date of issuance of these consolidated financial statements and has determined that, except as disclosed below, there are no subsequent events outside of the ordinary scope of business that require adjustment to, or disclosure in the consolidated financial statements.

The Company received $3.0 million of proceeds relating to the issuance of common stock for subscriptions effective April 1, 2024 and received $3.0 million of proceeds relating to the issuance of common stock for subscriptions effective May 1, 2024.

On May 13, 2024, the Company’s Board of Directors declared a distribution of $0.3566 per share, which is payable on June 6, 2024 to shareholders of record as of May 28, 2024.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in this section should be read in conjunction with “Item 1. Consolidated Financial Statements.” This discussion contains forward-looking statements, which relate to future events, our future performance or financial condition and involves numerous risks, uncertainties and other factors outside of our control including, but not limited to, those set forth in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and elsewhere in this report. Actual results could differ materially from those implied or expressed in any forward-looking statements.

This report contains forward-looking statements that involve substantial risks and uncertainties, which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology. Statements that contain these words should be read carefully because they discuss Jefferies Credit Partners BDC Inc. (the “Company,” “we,” “our,” or “us”) plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. The forward-looking statements include information in this report regarding general domestic and global economic conditions, our future financing plans, our ability to operate as a business development company (“BDC”) and the expected performance of, and the yield on, debt investments in our portfolio companies (the “Portfolio Companies”), each of which is a borrower or with which we have some other form of investment.

The following factors are among those that may cause actual results to differ materially from our forward-looking statements in this report:

•

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including the effects of inflation;

•

our future operating results;

•

our business prospects and the prospects of our Portfolio Companies;

•

the impact of investments that we expect to make;

•

the impact of increased competition;

•

our contractual arrangements and relationships with third parties;

•

the dependence of our future success on the general economy and its impact on the industries in which we invest;

•

the ability of our prospective Portfolio Companies to achieve their objectives;

•

any bankruptcy, insolvency or restructuring of a Portfolio Company;

•

the relative and absolute performance of Jefferies Credit Management LLC (the “Investment Adviser”);

•

our actual and future financings and investments;

•

our use of financial leverage;

•

the potential need for liquidity in the portfolio;

•

our ability to make distributions;

•

the adequacy of our cash resources and working capital;

•

the timing and amount of cash flows, distributions and dividends, if any, from investments in our Portfolio Companies;

•

changes in interest rates, including the Secured Overnight Financing Rate (“SOFR”);

•

changes to the fair value of our investments;

•

the impact of future acquisitions and divestitures at the Portfolio Companies in which we invest;

•

the effect of changes in tax laws and regulations and interpretations thereof;

•

the tax status of the enterprises in which we may invest;

•

our ability to maintain our qualification as a BDC and as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”);

•

actual and potential conflicts of interest with the Investment Adviser and its affiliates;

•

the ability of the Investment Adviser to attract and retain highly talented professionals;

•

the impact on our business from new or amended legislation or regulations;

•

the availability of credit and/or our ability to access equity and capital markets;

•

currency fluctuations, particularly to the extent that we receive payments denominated in currency other than U.S. dollars; and

•

impact of terrorism and armed conflicts around the world on the global economy (including the war in Ukraine and Russia and conflict in the Middle East).

Overview

We are a private, perpetually offered, externally managed, non-diversified, closed-end management investment company, which has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We are externally managed by the Investment Adviser, which is responsible for sourcing potential investments, conducting due diligence on prospective investments, analyzing investment opportunities, structuring investments and monitoring our portfolio on an ongoing basis. Our Investment Adviser is registered as investment adviser with the Securities and Exchange Commission (“SEC”). We also intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under the Code.

We have entered into an investment advisory agreement (the “Investment Advisory Agreement”) with the Investment Adviser, under which we have agreed to pay the Investment Adviser a management fee as well as an incentive fee based on our investment performance. We have entered into an administration agreement (the “Administration Agreement”) with Alter Domus (US) LLC (the “Administrator”), under which we pay the Administrator fees for its services in addition to reimbursing the Administrator for all reasonable expenses.

Our investment objective is to generate both current income and capital appreciation by investing primarily in senior secured loans to U.S. companies in the upper middle market. We generally use the term “upper middle market” to refer to large companies with annual earnings before interest expense, income tax expense, depreciation and amortization, or “EBITDA,” greater than $75 million. However, we may from time to time invest in smaller companies. We focus on companies backed by private equity sponsors and our capital is typically used by companies to support business growth, acquisitions, leveraged buyouts, refinancing or recapitalizations, and other related activity.

Investments

We focus primarily on senior secured first lien loans of private U.S. companies. Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the expected return on new investments, the amount of debt and equity capital available to private companies, the level of merger and acquisition activity for such companies, the general economic environment and the competitive environment for the types of investments we make.

Revenues

We generate revenues in the form of interest income from the debt securities we hold. In the future, we may generate revenue from dividends and capital appreciation on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. The debt we invest in will typically not be rated by any rating agency, but if it were, it is likely that such debt would be below investment grade. In addition, we may also generate revenue in the form of commitment, loan origination, structuring or diligence fees. Certain of these fees may be capitalized and amortized as additional interest income over the life of the related loan.

Expenses

Our primary operating expenses include the payment of the management fee and the incentive fee (each of which is described below) to our Investment Adviser, legal and professional fees, interest, fees and other expenses of financings and other operating and overhead related expenses. The management fee and incentive fees compensate our Investment Adviser for its work in identifying, evaluating, negotiating, closing and monitoring our investments. We bear all other costs and expenses relating to our operations and transactions, including:


(i)		our operational, offering and organizational expenses, subject to the preceding paragraph;

(ii)		fees and expenses, including travel expenses (up to an amount equal to the first-class air travel equivalent), incurred by our Investment Adviser or payable to third parties related to our investments, including, among others, professional fees (including, without limitation, the fees and expenses of consultants and experts) and fees and expenses from evaluating, monitoring, researching and performing due diligence on investments and prospective investments;

(iii)		interest, fees and other expenses payable on financings, if any, incurred by us;

(iv)		fees and expenses incurred by us in connection with membership in investment company organizations;

(v)		commissions or brokerage fees or similar charges incurred in connection with the purchase or sale of securities (including merger fees), but shall not include any placement or similar fees incurred in connection with the sale of shares of our common stock;

(vi)		fees and expenses associated with calculating our net asset value (“NAV”), including the costs and expenses of an independent valuation firm (the “Independent Valuation Adviser”);

(vii)		legal, auditing or accounting expenses;

(viii)		taxes or governmental fees;

(ix)		the fees and expenses of our Administrator, transfer agent and/or sub-transfer agent;



(x)		the cost of preparing stock certificates or any other expenses, including clerical expenses of issue, redemption or repurchase of the shares;

(xi)		the expenses of, and fees for, registering or qualifying common stock for sale, and maintaining our registration;

(xii)		the fees and expenses of our independent directors;

(xiii)		the fees or disbursements of custodians of our assets, including expenses incurred in the performance of any obligations enumerated by our organizational documents insofar as they govern agreements with any such custodian;

(xiv)		the cost of preparing and distributing reports, proxy statements, tender offer documents, and notices to holders of our equity interests, the SEC and other regulatory authorities;

(xv)		insurance premiums and fidelity bond costs;

(xvi)		costs of holding stockholder meetings;

(xvii)		listing fees, if any;

(xviii)		costs incurred in connection with any claim, litigation, arbitration, mediation, government investigation or dispute in connection with our business and the amount of any judgment or settlement paid in connection therewith, or the enforcement of our rights against any person and indemnification or contribution expenses payable by us to any person and other extraordinary expenses not incurred in the ordinary course of our business;

(xix)		expenses incurred by the Investment Adviser payable to third parties, including agents, consultants, attorneys or other advisors, relating to or associated with monitoring our financial and legal affairs, providing administrative services, monitoring or administering investments;

(xx)		expenses relating to the issue, repurchase and transfer of shares of common stock to the extent not borne by the relevant transferring stockholder and/or assignees;

(xxi)		costs and expenses attributable to normal and extraordinary investment banking, commercial banking, accounting, auditing, appraisal, valuation, administrative agent activities, custodial and registration services provided to us, including in each case services with respect to the proposed purchase or sale of securities by us that are not reimbursed by the issuer of such securities or others (whether or not such purchase or sale is consummated, including broken deal fees);

(xxii)		costs of amending, restating or modifying our charter, our amended and restated bylaws, the Investment Advisory Agreement or related documents of us or related entities;

(xxiii)		fees, costs, and expenses incurred in connection with the termination, liquidation or dissolution of us or related entities; and

(xxiv)		all other properly and reasonably chargeable expenses incurred by us or the Investment Adviser in connection with administering our business.

In addition, we shall bear the fees and expenses related to the preparation and maintaining of any necessary registrations with regulators in order to market the common stock of the Company in certain jurisdictions and fees and expenses associated with preparation and maintenance of any key information document or similar document required by law or regulation.

Prior to the commencement of operations on December 7, 2023, our Investment Adviser and its affiliates bore all organization and offering expenses in connection with our formation and the initial closing of the private offering. We will reimburse the Investment Adviser for all such expenses that it incurs on our behalf up to a maximum aggregate amount of $4.0 million in connection with our formation and the initial closing of the private offering, and the Investment Adviser has agreed to bear all such organization and offering expenses that were incurred prior to the commencement of operations in excess of $4.0 million. In all cases, placement or similar fees incurred in connection with the sales of our common stock are not considered organization or offering costs and will be borne by our Investment Adviser and its affiliates. Following the commencement of operations, we will be responsible for all organization and offering expenses. Organization and offering costs incurred prior to the commencement of operations totaled $3.6 million.

Upon commencement of operations, organization expenses incurred were expensed, and our initial offering costs (other than the organization expenses) are being amortized over a twelve-month period beginning with the commencement of our operations.

From time to time, our Investment Adviser, our Administrator, or their affiliates may pay third-party providers of goods or services. We will reimburse the Investment Adviser, the Administrator or such affiliates thereof for any such amounts paid on our behalf.

Expense Support and Conditional Reimbursement Agreement

We have entered into an Expense Support and Conditional Reimbursement Agreement with the Investment Adviser. For additional information see Note 3 of the consolidated financial statements.

Portfolio and Investment Activity

Our portfolio and investment activity during the three months ended March 31, 2024 is presented below (information at amortized cost unless otherwise indicated) (dollars in thousands):


	Three Months Ended March 31, 2024
Total investments, beginning of period	$	240,879
New investments purchased		25,410
Net accretion of discount on investments		325
Net realized gain on investments		—
Investments repaid		(517	)
Total investments, end of period	$	266,097

Portfolio companies at beginning of period		22
Number of new portfolio companies		3
Number of exited portfolio companies		—
Portfolio companies at end of period		25

Our portfolio composition and weighted average yields as of March 31, 2024 and December 31, 2023 was as follows (dollars in millions):


	March 31, 2024			December 31, 2023
Weighted average yield on debt investments, at amortized cost (1)		11.8	%		12.0	%
Weighted average yield on debt investments, at fair value (1)		11.7	%		11.8	%
Weighted average EBITDA (2)	$	205		$	209
Weighted average loan-to-value (“LTV”) (3)		37	%		37	%
Percentage of first lien secured debt portfolio investments, at fair value		100	%		100	%
Percentage of debt investments bearing a floating rate, at fair value		100	%		100	%

(1)

Computed as (a) the annual stated interest rate or yield plus the annual accretion of discounts or less the annual amortization of premiums, as applicable, on accruing debt included in such securities, divided by (b) total debt investments (at fair value or amortized cost, as applicable) included in such securities. Actual yields earned over the life of each investment could differ materially from the yields presented above.

(2)

Includes all private debt investments for which fair value is determined by the Investment Adviser. Figures are derived from the financial statements most recently obtained by the Investment Adviser. Weighted average EBITDA is weighted based on the fair value of our total applicable private debt investments.

(3)

Includes all private debt investments for which fair value is determined by the Investment Adviser. Figures are derived from the financial statements most recently obtained by the Investment Adviser. LTV is calculated as first lien net debt divided by estimated enterprise value. Weighted average LTV is based on the fair value of the total applicable private debt investments.

As of March 31, 2024 and December 31, 2023, there were no investments on non-accrual status.

Critical Accounting Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements.

Our critical accounting estimates should be read in conjunction with our risk factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and as described in Note 2 of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

Fair Value Measurements

We apply Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 820, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is a market-based measurement, not an entity-specific measurement. For some assets and liabilities, observable market transactions or market information might be available. For other assets and liabilities, observable market transactions and market information might not be available. However, the objective of a fair value measurement in both cases is the same—to estimate the price when an orderly transaction to sell the asset or transfer the liability would take place between market participants at the measurement date under current market conditions (that is, an exit price at the measurement date from the perspective of a market participant that holds the asset or owes the liability).

The three-level hierarchy for fair value measurement is defined as follows:

Level 1—inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments included in Level 1 include unrestricted securities, including equities and derivatives, listed in active markets.

Level 2—inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The type of financial instruments in this category includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level 3—inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Financial instruments that are included in this category include investments in privately held entities and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

The majority of our investments are expected to fall within Level 3 of the fair value hierarchy. We do not expect that there will be readily available market values for most of the investments which will be in our portfolio, and we will value such investments at fair value as determined in good faith by the Valuation Designee under the direction of the Board of Directors using a documented valuation policy, described below, and a consistently applied valuation process. The factors that may be taken into account in pricing the investments at fair value include, as relevant, the nature and realizable value of any collateral, the Portfolio Company’s ability to make payments and its earnings and discounted cash flow, and the markets in which the Portfolio Company does business, comparison to publicly traded securities and other relevant factors. Available current market data are considered such as applicable market yields and multiples of publicly traded securities, comparison of financial ratios of peer companies, and changes in the interest rate environment and the credit markets that may affect the price at which similar investments would trade in their principal market, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Valuation Designee will consider the pricing indicated by the external event to corroborate or revise its valuation.

(1)

(2)

We engage an Independent Valuation Adviser to provide independent valuations of the investments for which market quotations are not readily available, or are readily available but deemed not reflective of the fair value of an investment. The Independent Valuation Adviser independently values such investments using quantitative and qualitative information provided by the investment professionals of our Investment Adviser as well as any market quotations obtained from independent pricing services, brokers, dealers or market dealers. The Independent Valuation Adviser also provides analyses to support their valuation methodology and calculations. The Independent Valuation Adviser provides an opinion on a final range of values on such investments to the Valuation Designee. The Independent Valuation Adviser defines fair value in accordance with ASC 820 and utilize valuation techniques including the market approach, the income approach or both;

(3)

(4)

(5)

(6)

Our Board of Directors further discusses the valuation determinations of the Valuation Designee, based on the input of the Independent Valuation Adviser.

We do not intend to issue common stock at a purchase price below the then-current NAV per share, except as permitted by Section 23 under the Investment Company Act.

When our NAV is determined other than on a quarter-end (such as in connection with issuances of common stock on dates occurring mid-quarter), it is determined by our Investment Adviser, acting under delegated authority from, and subject to the supervision of, our Board of Directors and in accordance with procedures adopted by our Board of Directors.

Rule 2a-5 under the Investment Company Act was recently adopted by the SEC and establishes requirements for appointing a “valuation designee” and determining fair value in good faith for purposes of the Investment Company Act. Our valuation procedures comply with the new rule’s requirements.

Results of Operations

Operating results for the three months ended March 31, 2024 was as follows (in thousands):


	Three Months Ended March 31, 2024
Total investment income	$	8,216
Net expenses		3,903
Net investment income		4,313
Net realized gain		—
Net change in unrealized depreciation		(399	)
Net increase in net assets resulting from operations	$	3,914

Net increase in net assets resulting from operations can vary from period to period as a result of various factors, including acquisitions, the level of new investment commitments, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio. The Company completed its acquisition of initial loans and commitments and began operations on December 4, 2023. Accordingly, there is no activity in the comparable period to March 31, 2024.

Investment Income

Investment income, was as follows (in thousands):


	Three Months Ended March 31, 2024
Interest income	$	8,111
Other income		105
Total investment income	$	8,216

For the three months ended March 31, 2024, total investment income was $8.2 million, driven primarily by income earned on our investments. The size of our investment portfolio at fair value was $268.9 million at March 31, 2024 and the weighted average yield on the portfolio at fair value was 11.7%.

Expenses

Expenses were as follows (in thousands):


	Three Months Ended March 31, 2024
Interest and other financing expenses	$	3,253
Management fees		544
Income-based incentive fees		539
Capital gains incentive fees		(50	)
Other general and administrative expenses		1,596
Total expenses before fee waiver and expense support		5,882
Expense support		(1,164	)
Management fees waived		(326	)
Incentive fees waived		(489	)
Net expenses	$	3,903

For the three months ended March 31, 2024, net expenses were $3.9 million, primarily attributable to interest and other financing expenses as well as amortization of deferred offering costs, partially offset by expense support reimbursement from our Investment Adviser.

Interest and other financing expenses

Total interest expense (including unused fees and amortization of deferred financing and debt issuance costs) of $3.3 million for the three months ended March 31, 2024 was driven by $119.2 million of average borrowings under our credit facility.

Management fees

For the three months ended March 31, 2024, management fees were $0.5 million. Management fees are incurred at annual rate of 1.25% of the average value of our net assets at the end of the most recently completed calendar quarter. The Investment Adviser has agreed to cap the management fee at an annual rate of 0.50% of the value of our net assets for the first twelve-month period following the commencement of operations, which resulted in a waiver of $0.3 million for the three months ended March 31, 2024.

Incentive fees

For the three months ended March 31, 2024, total incentive fees were $0.5 million. The Investment Adviser has agreed to waive the incentive fee for the first twelve-month period following the commencement of operations, which resulted in a waiver of $0.5 million for the three months ended March 31, 2024.

Expense support

For the three months ended March 31, 2024, the Company received $1.2 million in expense support from the Investment Adviser. Such expenses may be subject to reimbursement from the Company in the future.

Net Realized Gain (Loss)

For the three months ended March 31, 2024, we had no realized gains (losses) on investments.

Net Unrealized Appreciation (Depreciation)

Net unrealized appreciation (depreciation) was comprised of the following (in thousands):


	Three Months Ended March 31, 2024
Non-controlled/non-affiliated investments
Net unrealized depreciation	$	(399	)

For the three months ended March 31, 2024, we recognized gross unrealized appreciation on investments of $0.6 million and gross unrealized depreciation on investments of $1.0 million, resulting in net change in unrealized depreciation of $0.4 million on investments.

Liquidity and Capital Resources

The Company’s liquidity and capital resources are generated and generally available through our continuous offering of common stock and debt offerings, our Senior Secured Credit Facility (as defined in Note 6 to the consolidated financial statements), as well as from cash flows from operations, investment sales of liquid assets and receipt of investment principal and interest.

As of March 31, 2024, we had one Senior Secured Credit Facility outstanding with a maximum available amount of $500 million that is committed to increase to $800 million on December 7, 2024. We may enter into additional credit facilities, increase the size of our existing credit facilities or issue additional debt securities, including debt securitizations and unsecured debt. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. In accordance with the Investment Company Act, with certain limited exceptions, we are only allowed to incur borrowings, issue debt securities or issue preferred stock, if immediately after the borrowing or issuance, the ratio of total assets (less total liabilities other than indebtedness) to total indebtedness is at least 150%.

We believe that our current cash and cash equivalents on hand, our available borrowing capacity under our Senior Secured Credit Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations in the near term.

Cash Equivalents

Cash equivalents include highly liquid investments, including money market funds, not held for resale with original maturities of three months or less.

Restricted Cash

Restricted cash includes the amount of principal and interest collections received as well as amounts in reserve to fund draws on our credit facility that are all held at JCP BDC SPV I LLC.

Debt

As of March 31, 2024, we had an aggregate principal amount of $157.4 million of debt outstanding under our Senior Secured Credit Facility. The Senior Secured Credit Facility matures on December 7, 2028, unless there is an earlier termination or an acceleration following an event of default.

See Note 6 to the consolidated financial statements for information on the Company’s debt.

Net Assets

See Note 7 to the consolidated financial statements for information on the Company’s common stock and related capital activities.

Distributions

On March 28, 2024, the Board of Directors declared a distribution of $0.1295 per share, which was paid on April 5, 2024 to shareholders of record as of March 28, 2024.

The Company adopted a dividend reinvestment plan, pursuant to which we will reinvest all cash dividends or other distributions authorized by the Board of Directors and declared by the Company on behalf of stockholders who affirmatively elect to reinvest their dividends or other distributions. As a result, if the Board of Directors authorizes, and we declare, a cash dividend or other distribution, then stockholders who have elected to participate in our dividend reinvestment plan will have their cash distributions automatically reinvested in additional shares of common stock, rather than receiving the cash dividend or other distribution.

To maintain our RIC status, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. Although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investments.

Share Repurchase Program

The Company intends to commence a share repurchase program in which it has the ability to repurchase the Company’s common stock outstanding as of the close of the previous calendar quarter. The Board of Directors may amend or suspend the share repurchase program if in its reasonable judgment it deems such action to be in the Company’s best interest and the best interest of our shareholders. As a result, share repurchases may not be available each quarter. Should the Board of Directors suspend the share repurchase program, the Board of Directors will consider whether the continued suspension of the program is in the best interests of the Company and shareholders on a quarterly basis. The Company intends to conduct such repurchase offers in accordance with the requirements of Rule 13e-4 promulgated under the Exchange Act and the Investment Company Act. All shares purchased by the Company pursuant to the terms of each tender offer will be retired and thereafter will be authorized and unissued shares.

Under the share repurchase plan, to the extent the Company offers to repurchase shares in any particular quarter, it is expected to repurchase shares pursuant to tender offers on or around the last business day of that quarter using a purchase price equal to the NAV per share as of the last calendar day of the applicable quarter, except that shares that have not been outstanding for at least one year will be repurchased at 98% of such NAV (an “Early Repurchase Deduction”). The one-year holding period is measured as of the subscription closing date immediately following the prospective repurchase date. The Early Repurchase Deduction may be waived in the case of repurchase requests arising from the death, divorce or qualified disability of the holder. The Early Repurchase Deduction will be retained by the Company for the benefit of remaining shareholders.

Equity

The Company is authorized to issue 1,000,000,000 shares of common stock, par value $0.001 per share and 100,000,000 shares of preferred stock, par value $0.001 per share.

Shares of our common stock will be issued by us on a continuous basis at a price per share generally equal to our next calculated NAV per share.

The following table summarizes the total shares issued and proceeds received for the three months ended March 31, 2024 (in thousands, except share amounts):


Issuance Date	Number of Shares of Common Stock Issued		Aggregate Proceeds
March 1, 2024		200,347	$	3,000
Total		200,347	$	3,000

Contractual Obligations

We have entered into the Investment Advisory Agreement with the Investment Adviser to provide us with investment advisory services and the Administration Agreement with the Administrator to provide us with administrative services. We have also entered into an expense support and conditional reimbursement agreement (the “Expense Support Agreement”) with the Investment Adviser to provide us with support with respect to certain expenses and subject to reimbursement. Payments for investment advisory services under the Advisory Agreements, reimbursements under the Administration Agreement and support and reimbursements under the Expense Support Agreement are described in Note 2 and Note 3 to the consolidated financial statements.

We have also entered into an equity commitment letter with our wholly owned, consolidated subsidiary, JCP BDC SPV I LLC, in connection with the Company’s Senior Secured Credit Facility. See Note 6 to the consolidated financial statements for additional information.

Off-Balance Sheet Arrangements

We may become a party to financial instruments with off-balance sheet risk in the normal course of our business to meet the financial needs of our Portfolio Companies. These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet.

Other Commitments and Contingencies

From time to time, we may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2024, management is not aware of any pending or threatened litigation.

Related-Party Transactions

We entered into a number of business relationships with affiliated or related parties, including the following:

•

Investment Advisory Agreement

•

Expense Support and Conditional Reimbursement Agreement

•

Co-Investment Exemptive Relief

•

Placement Agreement

•

Due to Investment Adviser

•

Trademark Sub-License Agreement

See Note 3 to the consolidated financial statements for additional information.

Recent Developments

See Note 11 to the consolidated financial statements for a summary of recent developments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. Uncertainty with respect to the economic effects of elevated interest rates in response to inflation and significant volatility in the financial markets due to the Russian/Ukraine and Middle East conflicts, has materially impacted and could continue to materially impact our market risks, including those listed below. For additional information concerning potential impact on our business and our operating results, see “Part II - Other Information, Item 1A. Risk Factors.”

Investment Valuation Risk

Because there is not a readily available market value for most of the investments in our portfolio, we value most of our portfolio investments at fair value based on, among other things, the input of our management and audit committee and the independent valuation firm that has been engaged at the direction of our Board of Directors to assist in the valuation of each portfolio investment without a readily available market quotation. The Board of Directors has designated the Investment Adviser as its “Valuation Designee” pursuant to Rule 2a-5 under the Investment Company Act, and in that role, the Investment Adviser is responsible for performing fair value determinations relating to all of the Company’s investments, including periodically assessing and managing any material valuation risks and establishing and applying fair value methodologies, in accordance with valuation policies and procedures that have been approved by the Company’s Board of Directors. Even though the Company’s Board of Directors designated the Company’s Investment Adviser as “Valuation Designee,” the Company’s Board of Directors continues to be responsible for overseeing the processes for determining fair valuation.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized appreciation or depreciation reflected in the valuations currently assigned. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” and “—Fair Value Measurements” as well as Notes 2 and 5 to our consolidated financial statements for the three months ended March 31, 2024, for more information relating to our investment valuation.

Interest Rate Risk

Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund, and continue to expect to fund, a portion of our investments with borrowings, our net investment income is, and is expected to continue to be, affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

As of March 31, 2024, 100.0% of our debt portfolio investments bore interest at variable rates, which are SOFR based and typically have durations of one to six months after which they reset to current market interest rates, and substantially all are subject to certain floors. Our Senior Secured Credit Facility bears interest at a Term SOFR or a Base Rate, in each case plus an applicable margin equal to 2.70% for borrowings that reference Term SOFR and 1.70% for borrowings that reference the Base Rate.

We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.

The following table shows the estimated annual impact on net investment income of base rate changes in interest rates (considering interest rate flows for variable rate instruments) to our loan portfolio and outstanding debt as of March 31, 2024, assuming no changes in our investment and borrowing structure (in thousands):


Basis Point Change	Interest Income			Interest Expense			Net Income
Up 200 basis points	$	5,480		$	(3,148	)	$	2,332
Up 100 basis points		2,740			(1,574	)		1,166
Up 50 basis points		1,370			(787	)		583
Down 50 basis points		(1,370	)		787			(583	)
Down 100 basis points		(2,740	)		1,574			(1,166	)

We may hedge against interest rate fluctuations from time-to-time by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the Investment Company Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio of investments.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired control objectives.

We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

(b) Changes in Internal Controls Over Financial Reporting

No changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material pending legal proceedings. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our Portfolio Companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company’s unregistered sales of equity securities to a third party investor for the quarter ended March 31, 2024 were previously disclosed in its Current Reports on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.


Exhibit Number		Description
3.1		Articles of Incorporation. (1)
3.2		Articles of Amendment and Restatement. (2)
3.3		Amended and Restated Bylaws. (3)
10.1		Amendment to Transfer Agency and Registrar Services Agreement, dated as of April 1, 2024.
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1)

Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10, filed on August 11, 2023.

(2)

Incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form 10, filed on October 3, 2023.

(3)

Incorporated by reference to Exhibit 3.4 to Amendment No. 1 to the Company’s Registration Statement on Form 10, filed on October 3, 2023.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Jefferies Credit Partners BDC Inc.

Date: May 13, 2024	By:	/s/ Jason Kennedy
		Jason Kennedy
		Chief Executive Officer and President
		(Principal Executive Officer)

Date: May 13, 2024	By:	/s/ John Dalton
		John Dalton
		Chief Financial Officer
		(Principal Financial Officer)