Stellus Private Credit BDC Reports Results for its First Fiscal Quarter Ended March 31, 2025

PR Newswire

HOUSTON, May 14, 2025

HOUSTON, May 14, 2025 /PRNewswire/ -- Stellus Private Credit BDC ("Stellus PBDC", "we", or the "Company") today announced financial results for its fourth fiscal quarter ended March 31, 2025.

Robert T. Ladd, Chief Executive Officer of Stellus PBDC, stated "We are pleased to report solid operating results in the first quarter in which we generated $0.31 per share of net investment income and maintained a stable net asset value. During the quarter, we funded $37 million of investments and received $4 million of repayments, bringing the total portfolio to $335 million at fair value."

FINANCIAL HIGHLIGHTS
($ in millions, except data relating to per share amounts and shares outstanding)

	Three Months Ended
	March 31, 2025		March 31, 2024
	Amount	Per Share	Amount	Per Share
Net investment income	$3.31	$0.31	$3.55	$0.49
Net unrealized appreciation included in earnings	1.19	0.10	0.33	0.04
Benefit for taxes on net unrealized depreciation on investments	0.06	0.01	0.05	0.01
Net increase in net assets resulting from operations	$4.56	$0.42	$3.93	$0.54
Distributions	(3.88)	(0.36)	(3.61)	(0.50)
Other weighted average share adjustments⁽¹⁾	—	—	—	0.01
Net asset value	$165.48	$15.22	$112.25	$15.26
Weighted average shares outstanding		10,767,600		7,227,206

_______________________
(1)	Includes the impact of different share amounts as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of the period end.

PORTFOLIO ACTIVITY
($ in millions)

	As of	As of
	March 31, 2025	December 31, 2024
Investments at fair value	$334.7	$300.7
Total assets	$339.5	$304.8
Net assets	$165.5	$162.4
Shares outstanding	10,873,321	10,715,095
Net asset value per share	$15.22	$15.16

	Three Months Ended
	March 31, 2025	March 31, 2024
New investments	$36.8	$16.6
Repayments of investments	(4.3)	(9.4)
Net activity	$32.5	$7.2

	As of	As of
	March 31, 2025	December 31, 2024
Number of portfolio company investments	65	59
Number of debt investments	61	55

Weight average yield of debt and other income producing investments⁽²⁾
Cash	10.1 %	10.2 %
Payment-in-kind ("PIK")	0.1 %	0.2 %
Fee amortization	0.4 %	0.4 %
Total	10.6 %	10.8 %

Weighted average yield on total investments⁽³⁾
Cash	9.6 %	9.8 %
PIK	0.1 %	0.2 %
Fee amortization	0.3 %	0.3 %
Total	10.0 %	10.3 %

_______________________
(2)	The dollar-weighted average annualized effective yield is computed using the effective interest rate for the Company's debt investments and other income producing investments, including cash and PIK interest, as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective cost of the investments (as of the date presented) in calculating the weighted average effective yield of the portfolio. The dollar-weighted average annualized yield on the Company's investments for a given period will generally be higher than what investors of our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect the Company's expense or any sales load that may be paid by investors.
(3)	The dollar weighted average yield on total investments takes the same yields as calculated in the footnote above, but weights them to determine the weighted average effective yield as a percentage of the Company's total investments, including non-income producing equity positions and debt investments on non-accrual status.

Results of Operations

Investment income for the three months ended March 31, 2025 and 2024 totaled $8.1 million and $6.4 million, respectively, most of which was interest income from portfolio investments.

Gross operating expenses for the three months ended March 31, 2025 and 2024 totaled $5.3 million and $4.1 million, respectively. For the same periods, base management fees totaled $1.0 million and $0.8 million, income incentive fees totaled $0.6 million and $0.6 million, respectively; capital gains incentive fees of $0.2 million and $0.1 million, which are not currently payable, respectively; fees and expenses related to the Company's borrowings totaled $3.0 million and $2.1 million, respectively (including interest and amortization of deferred financing costs), respectively; administrative expenses totaled $0.1 million and $0.1 million, respectively and other expenses totaled $0.4 million and $0.4 million, respectively. For the three months ended March 31, 2025 and 2024, the Company's investment advisor, Stellus Private BDC Advisor, LLC (the "Advisor"), waived $0.3 million and $0.8 million of management fees, respectively; $0.2 million of income incentive fees for both periods (waived as our shares were not listed on a national exchange), and $0.1 million and $0.2 million of expenses pursuant to expense support and conditional reimbursements from the Advisor, respectively, for net operating expenses of $4.7 million and $2.9 million, respectively.

For the three months ended March 31, 2025 and 2024, net investment income was $3.3 million and $3.6 million, or $0.31 and $0.49 per common share based on weighted average common shares outstanding of 10,767,600 and 7,227,206, respectively.

The Company's investment portfolio had a net change in unrealized appreciation of $1.2 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.

For the three months ended March 31, 2025 and 2024, net increase in net assets resulting from operations totaled $4.6 million and $3.9 million, or $0.42 and $0.54 per common share, based on weighted average common shares outstanding of 10,767,600 and 7,227,206, respectively.

Liquidity and Capital Resources

On September 30, 2022, the Company entered into a senior secured revolving credit agreement with Zions Bancorporation, N.A., dba Amegy Bank and various other lenders (the "Credit Facility" and together with the Commitment Facility and SPV Facility, the "Credit Facilities"). The Credit Facility, as amended, provides for borrowings up to a maximum of $175.0 million on a committed basis with an accordion feature that allows the Company to increase the aggregate commitments up to $200.0 million, subject to new or existing lenders agreeing to participate in the increase and other customary conditions. As of March 31, 2025 and December 31, 2024, the Company had $121.8 million and $90.5 million in outstanding borrowings under the Credit Facility, respectively.

On August 1, 2024, the Company entered into a Loan Financing and Servicing Agreement (the "Loan Agreement") for the SPV Facility by and among Stellus Private Credit BDC SPV LLC ("PBDC SPV"), as borrower, the Company, as equityholder and servicer, Deutsche Bank AG, New York Branch, as facility agent, Citibank, N.A., as collateral agent and collateral custodian, Alter Domus (US) LLC, as collateral administrator, and the lenders that are party thereto from time to time. The SPV Facility provides for $50.0 million of initial commitments with an accordion feature that allows for an additional $50.0 million of total commitments from new and existing lenders on the same terms and conditions as the existing commitments. As of both March 31, 2025 and December 31, 2024, the Company had $50.0 million in outstanding borrowings under the SPV Facility.

Distributions

During the three months ended March 31, 2025 and 2024, the Company declared aggregate distributions of $0.36 per share and $0.50, respectively (million and $3.9 million and $3.6 million in the aggregate, respectively). Tax characteristics of all distributions are reported to stockholders on Form 1099-DIV. Tax characteristics of all distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year. None of these dividends are expected to include a return of capital

Recent Portfolio Activity

The Company invested in the following portfolio companies for the three months ended March 31, 2025:

Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
Add-On Investment	January 3, 2025	Service Minds Company, LLC*	Provider of residential electrical services	$	64,659	Revolver Commitment
New Investment	January 10, 2025	Pacific Shoring Products, LLC	Manufacturer of trench shoring and safety equipment sold to equipment rental companies	$	5,327,581	Senior Secured – First Lien
				$	2,301,368	Revolver Commitment
				$	430,662	Equity
New Investment	January 15, 2025	Environmental Remedies, LLC	Residential asbestos abatement provider	$	3,317,957	Senior Secured – First Lien
				$	2,330,762	Delayed Draw Term Loan Commitment
				$	1,383,237	Revolver Commitment
				$	113,419	Equity
New Investment	January 16, 2025	Plus Delta Partners, Inc.	Provider of fundraising training and tools for higher education institutions and other nonprofits	$	3,955,716	Senior Secured – First Lien
				$	3,279,635	Delayed Draw Term Loan Commitment
				$	2,561,362	Revolver Commitment
				$	277,974	Equity
New Investment	January 24, 2025	Strategus, LLC	Provider of connected television advertising services	$	6,013,663	Senior Secured – First Lien
				$	2,325,095	Delayed Draw Term Loan Commitment
				$	1,513,228	Revolver Commitment
				$	160,392	Equity
Add-On Investment	January 31, 2025	Monitorus Holding, LLC*	Provider of media monitoring and evaluation services	$	28,481	Unsecured Convertible Bond
Add-On Investment	January 3, 2025	Service Minds Company, LLC*	Provider of residential electrical services	$	200,442	Revolver Commitment
Add-On Investment	February 10, 2025	Florachem Corporation*	Distiller and supplier of natural citrus, pine, and specialty inputs	$	157,417	Senior Secured – First Lien
New Investment	February 28, 2025	Identity Theft Guard Solutions, Inc.	Cyber breach response and monitoring services	$	7,127,072	Senior Secured – First Lien
				$	1,092,978	Revolver Commitment
				$	330,747	Equity
New Investment	February 28, 2025	MoboTrex, LLC	Distributor and manufacturer of intelligent traffic solution equipment	$	2,092,568	Senior Secured – First Lien
				$	2,000,813	Delayed Draw Term Loan Commitment
				$	625,882	Revolver Commitment
Add-On Investment	March 14, 2025	The Hardenbergh Group, Inc.*	Provider of temporary professional staffing of Medical Services Professionals, external peer review, consulting and physician leadership solutions	$	695,831	Senior Secured – First Lien
Add-On Investment	March 31, 2025	FairWave Holdings, LLC*	Specialty coffee platform	$	559,491	Senior Secured – First Lien
				$	80,357	Delayed Draw Term Loan Commitment

_______________________

* Existing portfolio company

Events Subsequent to March 31, 2025

The Company's management has evaluated subsequent events through May 14, 2025. There have been no subsequent events that require recognition or disclosure except for the following described below.

Investment Portfolio

The Company invested in the following portfolio companies subsequent to March 31, 2025:

Activity Type	Date	Company Name	Company Description	Investment Amount		Instrument Type
Add-On Investment	April 8, 2025	TriplePoint Acquisition Holdings LLC*	Provider of HVAC, plumbing, and other mechanical and industrial services	$	1,406,080	Senior Secured – First Lien
Add-On Investment	May 5, 2025	FairWave Holdings, LLC*	Specialty coffee platform	$	7,833	Equity

_______________________

* Existing portfolio company

The Company realized the following portfolio company investment subsequent to March 31, 2025:

Activity Type	Date	Company Name	Company Description	Proceeds Received		Realized Gain		Instrument Type
Full Repayment	April 8, 2025	Florachem Corporation	Distiller and supplier of natural citrus, pine, and specialty inputs	$	1,230,052	$	—	Senior Secured – First Lien
				$	523,653	$	—	Delayed Draw Term Loan Commitment
				$	1,871,955	$	—	Revolver Commitment
				$	228,778	$	67,495	Equity

Credit Facilities

The outstanding balance under the Credit Facility and SPV Facility as of May 14, 2025 was $119.8 million and $50.0 million, respectively.

Distributions Declared

On April 4, 2025, the Board declared a regular monthly dividend for each of April 2025, May 2025, and June 2025 as follows:

	Record	Payment	Amount per
Declared	Date	Date	Share
4/4/2025	4/8/2025	4/30/2025	$	0.12
4/4/2025	5/1/2025	5/30/2025	$	0.12
4/4/2025	6/2/2025	6/30/2025	$	0.12

Sale of Unregistered Securities

Since March 31, 2025, the Company sold 29,419 common shares of beneficial interest at a price of $15.23 per share for aggregate proceeds of $0.4 million which included less than $0.1 million of organizational expense allocation pursuant to subscription agreements entered into between the Company and investors.

Share Repurchases

On April 1, 2025, 22,609 common shares of beneficial interest were validly tendered and not withdrawn prior to the expiration of the tender offer. The Company purchased all common shares of beneficial interest validly tendered and not withdrawn at a price equal to $15.16 per Share for an aggregate purchase price of approximately $0.3 million.

About Stellus Private Credit BDC

The Company is an externally-managed, closed-end, non-diversified investment management company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. The Company's investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation by investing primarily in private lower middle-market companies (typically those with $5.0 million to $50.0 million of EBITDA (earnings before interest, taxes, depreciation and amortization)) through first lien (including unitranche) loans and second lien loans, with corresponding equity co-investments. The Company's investment activities are managed by its investment adviser, Stellus Private BDC Advisor, LLC.

Forward-Looking Statements

Statements included herein may contain "forward-looking statements" which relate to future performance or financial condition. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission including the final prospectus that will be filed with the Securities and Exchange Commission. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contacts

Stellus Private Credit BDC
W. Todd Huskinson, Chief Financial Officer
(713) 292-5414
thuskinson@stelluscapital.com

STELLUS PRIVATE CREDIT BDC CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
	March 31, 2025
	(unaudited)		December 31, 2024
ASSETS
Non-controlled, non-affiliated investments, at fair value (amortized cost of $330,520,503 and $297,791,269, respectively)	$	334,655,126	$	300,732,065
Cash and cash equivalents		2,490,153		2,144,116
Other receivable		—		4,340
Interest receivable		1,842,791		1,367,849
Expense reimbursement receivable from the Advisor (Note 2)		84,377		161,473
Deferred offering costs		119,101		127,983
Related party receivable		57,344		2,004
Prepaid expenses		136,647		164,350
Receivable for sales and repayments of investments		131,476		86,896
Total Assets	$	339,517,015	$	304,791,076
LIABILITIES
Credit Facilities payable	$	170,165,227	$	138,692,860
Unearned revenue		1,119,474		921,629
Management fees payable		690,553		648,149
Income incentive fee payable		453,470		452,186
Capital gains incentive fee payable		469,368		306,229
Interest payable		663,718		613,821
Administrative services payable		125,432		109,027
Income tax payable		33,776		51,427
Deferred tax liability		197,596		259,455
Other accrued expenses and liabilities		120,475		348,413
Total Liabilities	$	174,039,089	$	142,403,196
Commitments and contingencies (Note 7)
Net Assets	$	165,477,926	$	162,387,880
NET ASSETS
Common shares of beneficial interest, par value $0.01 per share (unlimited shares authorized; 10,873,321 and 10,715,095 issued and outstanding, respectively)	$	108,733	$	107,151
Paid-in capital		161,889,683		159,483,435
Total distributable earnings		3,479,510		2,797,294
Net Assets	$	165,477,926	$	162,387,880
Total Liabilities and Net Assets	$	339,517,015	$	304,791,076
Net Asset Value Per Share	$	15.22	$	15.16

STELLUS PRIVATE CREDIT BDC CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
	Three Months Ended
	March 31, 2025		March 31, 2024
INVESTMENT INCOME
Interest income	$	7,903,158	$	6,309,381
Other income		147,701		109,596
Total Investment Income	$	8,050,859	$	6,418,977
OPERATING EXPENSES
Management fees	$	1,035,829	$	800,654
Income incentive fees		578,315		598,401
Capital gains incentive fee		163,139		37,891
Professional fees		180,049		196,911
Amortization of deferred offering costs		69,834		46,728
Administrative services expenses		142,999		121,777
Trustees' fees		40,000		40,000
Insurance expense		21,884		20,196
Valuation fees		38,705		27,159
Interest expense and other fees		3,016,561		2,110,119
Income tax expense		2,349		21,589
Other general and administrative expenses		76,870		42,933
Total Operating Expenses	$	5,366,534	$	4,064,358
Expenses reimbursed/fees waived by Investment Advisor (Note 2)	$	(622,426)	$	(1,197,896)
Net Operating Expenses	$	4,744,108	$	2,866,462
Net Investment Income	$	3,306,751	$	3,552,515
Net realized gain on foreign currency translation	$	1,621	$	8,442
Net change in unrealized appreciation on non-controlled, non-affiliated investments		1,180,792		333,461
Net change in unrealized appreciation (depreciation) on foreign currency translations		13,034		(8,881)
Benefit for taxes on net unrealized loss on investments		61,859		45,885
Net Increase in Net Assets Resulting from Operations	$	4,564,057	$	3,931,422
Net Investment Income Per Share – basic and diluted	$	0.31	$	0.49
Net Increase in Net Assets Resulting from Operations Per Share – basic and diluted	$	0.42	$	0.54
Weighted Average Common Shares of Beneficial Interest Outstanding – basic and diluted		10,767,600		7,227,206
Distributions Per Share – basic and diluted	$	0.36	$	0.50

STELLUS PRIVATE CREDIT BDC CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)
	Common Shares of
	Beneficial Interest					Total
	Number of	Par		Paid-in		distributable
	shares	value		capital		gain		Net Assets
Balances at December 31, 2023	7,102,136	$	71,021	$	104,810,048	$	3,140,953	$	108,022,022
Net investment income	—		—		—		3,552,515		3,552,515
Net realized gain on foreign currency translation	—		—		—		8,442		8,442
Net change in unrealized appreciation on non-controlled, non-affiliated investments	—		—		—		333,461		333,461
Net change in unrealized depreciation on foreign currency translations	—		—		—		(8,881)		(8,881)
Benefit for taxes on net unrealized loss on investments	—		—		—		45,885		45,885
Distributions from net investment income	—		—		—		(3,610,362)		(3,610,362)
Issuance of common shares of beneficial interest	255,902		2,559		3,901,680		—		3,904,239
Balances at March 31, 2024	7,358,038	$	73,580	$	108,711,728	$	3,462,013	$	112,247,321

Balances at December 31, 2024	10,715,095	$	107,151	$	159,483,435	$	2,797,294	$	162,387,880
Net investment income	—		—		—		3,306,751		3,306,751
Net realized gain on foreign currency translation	—		—		—		1,621		1,621
Net change in unrealized appreciation on non-controlled, non-affiliated investments	—		—		—		1,180,792		1,180,792
Net change in unrealized appreciation on foreign currency translations	—		—		—		13,034		13,034
Provision for taxes on net unrealized gain on investments	—		—		—		61,859		61,859
Distributions from net investment income	—		—		—		(3,881,841)		(3,881,841)
Issuance of common shares of beneficial interest	158,226		1,582		2,406,248		—		2,407,830
Balances at March 31, 2025	10,873,321	$	108,733	$	161,889,683	$	3,479,510	$	165,477,926

STELLUS PRIVATE CREDIT BDC CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
	Three Months Ended
	March 31, 2025		March 31, 2024
Cash Flows from Operating Activities
Net increase in net assets resulting from operations	$	4,564,057	$	3,931,422
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchases of investments		(36,779,535)		(16,534,629)
Proceeds from sales and repayments of investments		4,303,492		9,368,480
Net change in unrealized appreciation on investments		(1,180,792)		(333,461)
Net change in unrealized (appreciation) depreciation foreign currency translations		(13,034)		8,881
Increase in investments due to PIK		(67,674)		(159,943)
Amortization of premium and accretion of discount, net		(230,098)		(140,131)
Deferred tax benefit		(61,859)		(45,885)
Amortization of loan structure fees		128,346		94,108
Amortization of deferred offering costs		69,834		46,728
Changes in other assets and liabilities
Increase in interest receivable		(474,942)		(360,655)
Decrease in other receivable		4,340		—
(Increase) decrease in related party receivable		(55,340)		125,830
Decrease (increase) in expense reimbursements receivable from the Advisor		77,096		(71,236)
Decrease (increase) in prepaid expenses		27,703		(5,386)
Increase (decrease) in administrative services payable		16,405		(6,953)
Increase (decrease) in interest payable		49,897		(18,453)
Increase in income management fees payable		42,404		—
Increase (decrease) in income incentive fees payable		1,284		(32,847)
Increase in capital gains incentive fees payable		163,139		37,890
Increase (decrease) in unearned revenue		197,845		(113,054)
Decrease in income tax payable		(17,651)		(33,404)
Decrease in other accrued expenses and liabilities		(227,938)		(49,432)
Net Cash Used in Operating Activities	$	(29,463,021)	$	(4,292,130)
Cash Flows from Financing Activities
Proceeds from issuance of common shares of beneficial interest	$	2,407,830	$	3,904,239
Offering costs paid for common shares of beneficial interest issued		(60,952)		(46,729)
Stockholder distributions paid		(3,881,841)		(7,161,430)
Borrowings under Credit Facilities		36,500,000		20,400,000
Repayments of Credit Facilities		(5,150,000)		(13,100,000)
Financing costs paid on Credit Facilities		(5,979)		—
Net Cash Provided by Financing Activities	$	29,809,058	$	3,996,080
Net Increase (Decrease) in Cash and Cash Equivalents	$	346,037	$	(296,050)
Cash and Cash Equivalents Balance at Beginning of Period		2,144,116		593,685
Cash and Cash Equivalents Balance at End of Period	$	2,490,153	$	297,635
Supplemental and Non-Cash Activities
Cash paid for interest expense	$	2,838,318	$	2,034,464
Income and excise tax paid		20,000		54,993
Value of common shares of beneficial interest issued pursuant to Dividend Reinvestment Plan		1,185,787		354,239
Decrease in dividends payable		—		(3,551,068)

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SOURCE Stellus Private Credit BDC