OFS Capital Corporation reported its financial results for the third quarter of 2025, revealing a net investment income of $2.94 million, or $0.22 per share, down from $3.60 million, or $0.27 per share, in the same period last year. The company's total investment income for the quarter was $10.55 million, a slight increase from $10.48 million in the previous quarter, primarily driven by non-recurring interest and dividend income. However, the company experienced a net loss of $5.33 million for the quarter, attributed to a net realized loss of $4.65 million and net unrealized depreciation of $3.13 million on investments. As a result, the net asset value (NAV) per share decreased to $10.17 from $10.91 at the end of the previous quarter.
In terms of operational changes, OFS Capital's total outstanding debt decreased to $239.2 million from $243.4 million in the prior quarter. The weighted average interest cost on debt increased to 6.67%, reflecting the refinancing of a portion of its 4.75% Unsecured Notes due February 2026 with new notes at higher interest rates. The company also reported that as of September 30, 2025, it had non-accrual loans with a fair value of $23.1 million, representing 6.2% of total investments at fair value.
Strategically, OFS Capital has been active in managing its debt portfolio, including the redemption of $94 million of Unsecured Notes due February 2026 and the issuance of new Unsecured Notes due July 2028 and August 2029. The company also entered into a waiver agreement regarding non-compliance with certain provisions of its BNP Facility, which expired its reinvestment period on September 30, 2025. This waiver allows the company to continue its operations without immediate penalties.
Looking ahead, OFS Capital has declared a distribution of $0.17 per share for the fourth quarter of 2025, payable on December 31, 2025. The company maintains an unused commitment of $25 million under its Banc of California Credit Facility, which is expected to support its liquidity needs. However, the expiration of the BNP Facility's reinvestment period raises concerns about future investment capabilities, as the company will need to rely on cash flows from existing investments to meet its obligations. The company continues to monitor market conditions and its portfolio's performance closely, particularly in light of ongoing economic uncertainties.
About OFS Capital Corp
OFS Capital Corporation is a business development company that invests primarily in middle-market U.S. companies through debt and equity securities. Its portfolio includes senior secured loans, subordinated loans, preferred and common equity, and structured finance securities. Managed by OFS Advisor, it focuses on generating current income and capital appreciation via disciplined credit analysis, active portfolio monitoring, and strategic structuring within a competitive market.
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