Our objectives are to provide current income and, to a lesser extent, long-term capital appreciation.* In selecting our investments, we intend to employ a defensive approach focused on long-term credit performance and principal protection. We anticipate that our portfolio will comprise primarily investments in senior secured loans, second lien loans and mezzanine loans of U.S. small and middle market companies. We will seek to invest in companies with annual revenue between $10 million and $500 million and annual operating cash flow of at least $2 million at the time of investment. We do not intend to invest in start-up companies, turnaround situations or companies with speculative business plans.

Our targeted investments are part of a typical company’s capital structure whereby senior debt is situated at the top of the capital stack, and is followed in priority of cash flows and claims on the company’s assets by second lien debt, mezzanine debt, preferred equity and finally, common equity. Investors are usually compensated for the risk associated with this sliding scale of cash flows in the form of higher returns, either through higher interest payments or potentially higher capital appreciation. We intend to focus on components of the capital structure with higher priority of cash flows and claims on assets, and therefore less risk.