Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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

Except as otherwise specified, references to the "Company,""we," "us," and "our" refer to First Eagle Private Credit Fund and its consolidated subsidiaries; "FEIM" and "Adviser" refer to First Eagle Investment Management, LLC, our investment adviser; and "FEAC," "Subadviser," and "Administrator" refer to First Eagle Alternative Credit, LLC, our investment sub-adviser (and, together with the Adviser, the "Advisers") and administrator.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q (the "Quarterly Report").

Overview

The Company is a Delaware statutory trust formed on October 20, 2021 to act as a non-diversified, closed-end management investment company. On May 31, 2023, the Company elected to be regulated as a BDC under the 1940 Act. In addition, the Company has elected to be treated as a RIC under Subchapter M of the Code and expects to qualify as a RIC annually.

The Company offers on a continuous basis up to $5.0 billion of common shares of beneficial interest ("Common Shares") pursuant to an offering registered with the SEC that commenced on March 11, 2025. The Company offers to sell any combination of three classes of shares, Class S shares, Class D shares and Class I shares, with a dollar value up to the maximum offering amount. The share classes have different ongoing shareholder servicing and/or distribution fees. The purchase price per share for each class of common shares equals the net asset value ("NAV") per share, as of the effective date of the monthly share purchase date.

Prior to the commencement of its public offering, the Company conducted a separate private offering (the "Private Offering") of Common Shares (i) to accredited investors (as defined in Regulation D under the Securities Act of 1933, as amended (the "Securities Act")) and (ii) in the case of shares sold outside the United States, to persons that are not "U.S. persons" (as defined in Regulation S under the Securities Act) in reliance on exemptions from the registration requirements of the Securities Act. The Company expects to continue to conduct a private offering to sell Common Shares outside of the United States to persons that are not "U.S. persons" (as defined in Regulation S under the Securities Act).

The Company commenced its loan origination process and investment activities contemporaneously with the initial closing (excluding the initial seed capital investment made by the Adviser) of the Private Offering of its Common Shares on June 12, 2023 and commenced operations following its first capital call on July 10, 2023.

The Company is externally managed by the Adviser. The Adviser oversees the management of the Company's activities and supervises the activities of the Subadviser. FEAC, an alternative credit adviser that is a wholly-owned subsidiary of FEIM, serves as the Company's investment subadviser and administrator.

The Company's investment objectives are to generate returns in the form of current income and, to a lesser extent, long-term capital appreciation of investments. Under normal circumstances, the Company expects that the majority of its total assets will be in private credit investments to U.S. private companies through (i) directly originated first lien senior secured cash flow loans, (ii) directly originated asset-based loans, (iii) club deals (directly originated first lien senior secured loans or asset-based loans in which the Company co-invests with a small number of third party private debt providers), (iv) second lien loans, and (v) broadly syndicated loans, Rule 144A high yield bonds and other debt securities (the investments described in this sentence, collectively, "Private Credit"). Under normal circumstances, the Company will invest at least 80% of its total assets (net assets plus borrowings for investment purposes) in private credit investments (loans and other credit instruments that are issued in private offerings or issued by private U.S. or non-U.S. companies). To a lesser extent, the Company will also invest in broadly syndicated loans of publicly traded issuers, publicly traded high yield bonds and equity securities. The Company expects that investments in broadly syndicated loans and high yield bonds will generally be more liquid than other Private Credit assets and will likely be used to initially deploy capital upon receipt of subscriptions and may also be used for the purposes of maintaining and managing liquidity for its share repurchase program and cash management, while also presenting an opportunity for attractive investment returns.

Key Components of Our Results of Operations

Revenues

We generate revenue in the form of interest income on debt investments, capital gains, and dividend income from our equity investments in our portfolio companies. Our debt investments will generally bear interest at a fixed or floating rate. Interest on debt securities is generally payable monthly, quarterly or semiannually. In some cases, some of our investments may provide for deferred interest payments or PIK interest. The principal amount of the debt securities and any accrued but unpaid PIK interest generally will become due at the maturity date. In addition, we may generate revenue in the form of commitment and other fees in connection with transactions. OIDs and market discounts or premiums will be capitalized, and we will accrete or amortize such amounts as interest income. We will record prepayment premiums on loans and debt securities as interest income. Dividend income, if any, will be recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses

Except as specifically provided below, all investment professionals and staff of the Advisers, when and to the extent engaged in providing investment advisory services to the Company, and the base compensation, bonuses and benefits of such personnel and the routine overhead expenses (including rent, office equipment and utilities) allocable to such services, will be provided and paid for by the Advisers.

The Company will bear all other costs and expenses of the Company's operations, administration and transactions. Our primary operating expenses include the payment of base management fees and incentive fees to the Adviser pursuant to the Advisory Agreement, the payment of fees to the Administrator for the Company's allocable portion of compensation and other expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement, interest expense on borrowing, and other operating costs. Refer to Note 3-"Agreements and Related Party Transactions" in the Notes to the Consolidated Financial Statements for additional information on our Advisory Agreement and Administration Agreement.

Expense Support and Conditional Reimbursement Agreement

The Company has entered into an Expense Support Agreement with the Adviser. For additional information, see Note 3-"Agreements and Related Party Transactions" in the Notes to the Consolidated Financial Statements.

Portfolio and Investment Activity

For the nine months ended September 30, 2025, the Company made new investments in 28 new portfolio companies and exited 59 positions (primarily through sale of Syndicated Loans). As of September 30, 2025, the Company had an aggregate principal commitment amount of $765.0 million (including $109.7 million of unfunded commitments).

The following summarizes our investment activity (information presented is at cost unless otherwise indicated) (dollar amounts in thousands):

As of September 30, 2025 and December 31, 2024, our portfolio companies had a weighted average annual adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") of approximately $42.1 million and $39.4 million, respectively. Amounts are weighted based on fair value of each respective investment. These calculations include all private debt investments for which fair value is determined by the Valuation Designee and excludes quoted assets and ABL investments, as well as companies with negative or de minimis EBITDA. Amounts were derived from the most recently available portfolio company financial statements, have not been independently estimated by us, and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information.

The following is a summary of the industry classifications in which we invested as of September 30, 2025 and December 31, 2024 (dollar amounts in thousands):

The following is a summary of the asset type breakdown of our investment portfolio as of September 30, 2025 and December 31, 2024:

(1) Direct Lending involves loans where the Company lends directly to the borrower and holds the loan generally on its own or only with affiliates and, in some cases, third-party lenders.

(2) Club Loans are directly originated first lien senior secured loans or asset-based loans in which the Company co-invests with a small number of third party private debt providers.

(3) Syndicated Loans are generally originated by a bank and then syndicated, or sold, in several pieces to other investors.

As of September 30, 2025 and December 31, 2024, ABL investments represented 9.6% and 3.4%, respectively, of the total fair market value of all of our investments.

Direct Lending

As of September 30, 2025 and December 31, 2024, the Direct Lending portfolio had the following characteristics:

(1) Weighted average spread above the applicable reference rate (i.e. SOFR, Base Rate, etc.) for the Direct Lending portfolio, weighted based on the fair value of each respective investment.

(2) 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 Direct Lending debt investments, divided by (b) total Direct Lending debt investments (at fair value or cost, as applicable). Actual yields earned over the life of each investment could differ materially from the yields presented above.

(3) Average adjusted EBITDA for the Direct Lending portfolio, weighted based on fair value of each respective investment. This calculation includes all Direct Lending investments for which fair value is determined by the Valuation Designee and excludes quoted assets and ABL investments, as well as companies with negative or de minimis EBITDA. Amounts are derived from the most recently available portfolio company financial statements, have not been independently estimated by us, and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information.

(4) Average LTV represents the net ratio of loan-to-value for each Direct Lending portfolio company, weighted based on the fair value of each respective investment. This calculation includes all Direct Lending investments for which fair value is determined by the Valuation Designee and excludes quoted assets and ABL investments. LTV is calculated as the current total net debt through each respective loan tranche divided by the estimated enterprise value of the portfolio company. Amounts were derived from the most recently available portfolio company financial statements, have not been independently verified by us, and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information.

(5) Average leverage ratio represents the leverage ratio for each Direct Lending portfolio company, weighted based on the fair value of each respective investment. This calculation includes all Direct Lending investments for which fair value is determined by the Valuation Designee and excludes quoted assets and ABL investments, as well as companies with negative or de minimis EBITDA. Company leverage is calculated as the current total debt as defined in the underlying applicable investment credit agreement through each respective loan tranche divided by the adjusted EBITDA as defined in the underlying applicable investment credit agreement of the portfolio company. Amounts were derived from the most recently available portfolio company financial statements, have not been independently verified by us, and may reflect a normalized or adjusted amount. Accordingly, we make no representation or warranty in respect of this information.

Portfolio Asset Quality

We employ the use of board observation and information rights, regular dialogue with company management and sponsors, and detailed internally generated monitoring reports to actively monitor performance. Additionally, FEAC has developed a monitoring template that promotes compliance with these standards and that is used as a tool to assess investment performance relative to plan.

As part of the monitoring process, FEAC assesses the risk profile of each of our investments and assigns each portfolio investment a score of a 1, 2, 3, 4, or 5.

The investment performance scores are as follows:

1 - The portfolio investment is performing above our underwriting expectations.

2 - The portfolio investment is performing as expected at the time of underwriting. All new investments are initially scored a 2.

3 - The portfolio investment is operating below our underwriting expectations and requires closer monitoring. The company may be out of compliance with financial covenants, however, principal or interest payments are generally not past due.

4 - The portfolio investment is performing materially below our underwriting expectations and returns on our investment are likely to be impaired. Principal or interest payments may be past due, however, full recovery of principal and interest payments are expected.

5 - The portfolio investment is performing substantially below expectations and the risk of the investment has increased substantially. The company is in payment default and the principal and interest payments are not expected to be repaid in full.

For purposes of clarity, underwriting as referenced herein may be redetermined after the initial investment as a result of a transformative credit event or other material event whereby such initial underwriting is deemed by FEAC to be no longer appropriate for the purpose of assessing investment performance relative to plan. For any investment receiving a score of a 3 or lower, FEAC will increase their level of focus and prepare regular updates for the Investment Committee summarizing current operating results, material impending events and recommended actions.

FEAC monitors and, when appropriate, changes the investment scores assigned to each investment in our portfolio. In connection with our investment valuation process, the Adviser, the Subadviser and the Board review these investment scores on a quarterly basis. Our average portfolio company investment score was 1.92 and 1.99 at September 30, 2025 and December 31, 2024, respectively. The following is a distribution of the investment scores of our portfolio companies at September 30, 2025 and December 31, 2024 (dollar amounts in thousands):

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when it is no longer probable that principal or interest will be collected. However, we may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. As of September 30, 2025, we had one loan on non-accrual status, and non-accrual investments as a percentage of total debt investments at cost and fair value were 0.05% and 0.06%, respectively. As of December 31, 2024, we had one loan on non-accrual status, and non-accrual investments as a percentage of total debt investments at cost and fair value were 0.06% and 0.08%, respectively.

Results of Operations

The following table represents our operating results (in thousands):

Investment Income

The composition of our investment income was as follows (in thousands):

Total investment income increased to $18.4 million and $50.2 million, respectively, for the three and nine months ended September 30, 2025, an increase of $4.8 million or 35.37% and $22.9 million or 83.71%, respectively, compared to the same period in the prior year.

Interest income increased by $4.5 million and $25.4 million, respectively, for the three and nine months ended September 30, 2025, driven by our deployment of capital, offset by a decline in benchmark rates. The size of our investment portfolio at fair value was $644.6 million as of September 30, 2025, with a weighted average yield of 9.8%, compared to $507.8 million as of September 30, 2024, with a weighted average yield of 10.2%.

The increase in interest income was offset by a decrease in dividend income of $0.1 million and $2.8 million, respectively, for the three and nine months ended September 30, 2025, due to a decrease in cash equivalents resulting from continued deployment into investments.

Operating Expenses

The composition of our operating expenses was as follows (in thousands):

(1)For the three and nine months ended September 30, 2025, the Class D distribution and shareholder servicing fees were less than $1. There were no distribution and shareholder servicing fees for the three and nine months ended September 30, 2024.

For the three and nine months ended September 30, 2025, total expenses, net of expense support and fee waivers, were $8.5 million and $22.8 million, respectively. For the three and nine months ended September 30, 2024, total expenses, net of expense support and fee waivers, were $5.6 million and $9.9 million, respectively.

Interest Expense

Total interest expense (including unused fees and amortization of deferred financing costs) increased to $7.3 million for the three months ended September 30, 2025, an increase of $2.5 million compared to the same period in the prior year. This was driven by an increase in our average debt principal outstanding. Our average borrowings outstanding increased to $407.7 million for the three months ended September 30, 2025 from $197.1 million for the same period in the prior year.

Total interest expense (including unused fees and amortization of deferred financing costs) increased to $20.1 million for the nine months ended September 30, 2025, an increase of $13.4 million compared to the same period in the prior year. This was driven by an increase in our average debt principal outstanding. Our average borrowings outstanding increased to $373.5 million for the nine months ended September 30, 2025 from $105.5 million for the same period in the prior year.

Base Management Fees

Management fees are payable monthly in arrears at an annual rate of 1.25% of the value of our net assets as of the beginning of the first calendar day of the applicable month.

Base management fees were $0.9 million and $2.8 million, respectively, for the three and nine months ended September 30, 2025, a decrease of $3 thousand or 0.32% and an increase of $0.1 million or 4.98%, respectively, compared to the same period in the prior year.

The Adviser has waived all base management fees through June 30, 2025 and 50% of base management fees for the period from July 1, 2025 through December 31, 2025.

Income Based Incentive Fees

Income based incentive fees increased to $1.1 million and $2.9 million, respectively, for the three and nine months ended September 30, 2025, an increase of $0.2 million and $1.1 million, respectively, compared to the three and nine months ended September 30, 2024. The increase in income based incentive fees was driven by the increase in pre-incentive fee net investment income to $8.7 million and $23.3 million, respectively, for the three and nine months ended September 30, 2025 from $7.0 million and $16.1 million, respectively, for the three and nine months ended September 30, 2024. The increase in pre-incentive fee net investment income was driven primarily by increased capital deployment.

The Adviser has waived income based incentive fees through December 31, 2025.

Capital Gains Incentive Fees

For both the three and nine months ended September 30, 2025, the Company accrued capital gains incentive fees of zero, compared to ($43) and ($25), respectively, for the three and nine months ended September 30, 2024.

The Adviser has waived capital gains incentive fees through December 31, 2025.

The accrual for any capital gains incentive fee under U.S. GAAP in a given period may result in an additional expense if such cumulative amount is greater than in the prior period or a reduction of previously recorded expense if such cumulative amount is less than in the prior period. If such cumulative amount is negative, then there is no accrual.

Other Expense

Organization costs and offering costs include expenses incurred in our initial formation and our continuous offering. Administrator expenses include fees due to the Administrator under the Administration Agreement, including the Company's allocable portion of the salaries of certain of our executive officers, their respective staff and other non-investment professionals that perform duties for the Company. Other expenses include professional fees (legal, audit and tax services), trustee fees, accounting and sub-administration fees, custodian fees, printing fees and other costs.

Total other expenses increased to $1.9 million and $6.3 million, respectively, for the three and nine months ended September 30, 2025, an increase of $0.1 million or 4.88% and $1.8 million or 39.45%, respectively, compared to the three and nine months ended September 30, 2024. The increase compared to the same period in the prior year was primarily driven by an increase in offering costs and administrator expense.

Income Taxes, Including Excise Taxes

The Company has elected to be treated as a RIC under Subchapter M of the Code, and we intend to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. To qualify for tax treatment as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and timely distribute to our shareholders in each taxable year generally at least 90% of the sum of our investment company taxable income, as defined by the Code (without regard to the deduction for dividends paid), and net tax-exempt income for that taxable year. To maintain our tax treatment as a RIC, we, among other things, intend to make the requisite distributions to our shareholders, which generally relieves us from corporate-level U.S. federal income taxes on the distributed income. The Company will be subject to U.S. federal income tax at regular corporate rates on any income or capital gain not distributed to our shareholders.

Depending on the level of taxable income earned in a tax year, we may carry forward taxable income (including net capital gains, if any) in excess of current year dividend distributions from the current tax year into the next tax year and pay a nondeductible 4% U.S. federal excise tax on the excess of such taxable income that was required to be distributed over actual distributions for such tax year. To the extent that we determine that our estimated current year annual required distributions will be in excess of estimated dividend distributions from such income, we will accrue excise tax on estimated excess taxable income.

For the three and nine months ended September 30, 2025, we accrued $149 and $227, respectively, of U.S. federal excise tax. For the three and nine months ended September 30, 2024, we accrued $38 of U.S. federal excise tax.

Net Realized Gains and Losses Investments

For the three and nine months ended September 30, 2025, the Company had net realized gains (losses) on investments of ($0.1) million and ($0.5) million, respectively, from the full or partial sale or restructurings of our debt investments.

For both the three and nine months ended September 30, 2024, the Company had net realized gains on investments of $0.4 million from the full or partial sale or restructurings of our debt investments.

Net Change in Unrealized Appreciation (Depreciation) of Investments

Net change in unrealized appreciation (depreciation) reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized, if any.

For the three and nine months ended September 30, 2025, the Company had net unrealized depreciation on investments of $1.6 million and ($2.2) million, respectively.

For the three and nine months ended September 30, 2024, the Company had net unrealized depreciation on investments of ($2.0) million and ($2.2) million, respectively.

Financial Condition, Liquidity and Capital Resources

We generate our liquidity and capital resources primarily from (i) net proceeds from private offerings of our equity , (ii) cash flows from our operations (including interest and fees earned from our investments and principal repayments and proceeds from sales of our investments), and (iii) borrowings under our existing leverage facilities and any financing arrangements we may enter into in the future. These financings may come in the form of borrowings from banks and issuances of senior securities. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. Our primary uses of cash include (i) investments in portfolio companies in accordance with our investment strategy, (ii) general corporate operations (including payments to the Adviser and Subadviser), (iii) debt service of any borrowings, (iv) share repurchases under our share repurchase program, and (v) cash distributions to our shareholders. We believe our current cash position, available capacity on our Credit Facilities and net cash provided by operating activities will provide us with sufficient resources to meet our obligations and continue to support our investment objectives, including reserving for the capital needs which may arise at our portfolio companies.

As of September 30, 2025 and December 31, 2024, we had $50.6 million and $21.3 million, respectively, in cash and cash equivalents. Additionally, as of September 30, 2025, we had $46.0 million available for additional borrowings under the Credit Facilities, subject to borrowing base availability. As of December 31, 2024, we had $24.4 million available for additional borrowings under the MS Credit Facility, subject to borrowing base availability. See "Debt" below for additional information.

We are required to meet an asset coverage ratio, defined under the 1940 Act as the ratio of our total assets (less all liabilities and indebtedness not represented by senior securities) to our outstanding senior securities, of at least 150% after each issuance of senior securities. As of September 30, 2025, our asset coverage ratio was 174.9%.

Cash Flows

For the nine months ended September 30, 2025 and 2024, our operating activities used cash of $24.2 million and $406.5 million, respectively, primarily in connection with the purchase of portfolio investments and payment of Company expenses.

For the nine months ended September 30, 2025 and 2024, our financing activities included proceeds of $1.0 million and $50.0 million, respectively, from the issuance of Common Shares, and $201.9 million and $238.6 million, respectively, from borrowings under our Credit Facilities. Additionally, our financing activities included the payment of $23.1 million and $14.8 million, respectively, for distribution payments, $123.5 million and $5.0 million, respectively, of repayments of our Credit Facilities, $1.9 million and $2.2 million, respectively, for offering costs and $1.0 million and $1.3 million, respectively, for financing costs.

Share Issuances

The following table summarizes the issuance of shares pursuant to subscription agreements during the nine months ended September 30, 2025 (dollar amounts in thousands):

During the nine months ended September 30, 2025, the Company also issued 346 shares for an aggregate value of $9 under the Company's dividend reinvestment plan.

Distributions and Distribution Reinvestment

The following table presents distributions that were declared and payable during the nine months ended September 30, 2025 and 2024 (dollar amounts in thousands):

With respect to distributions, we have adopted an "opt out" dividend reinvestment plan for shareholders. As a result, in the event of a declared cash distribution or other distribution, each shareholder that has not "opted out" of the dividend reinvestment plan will have their dividends or distributions automatically reinvested in additional shares rather than receiving cash distributions. As of the commencement of the public offering, investors and clients of certain participating brokers in states that do not permit automatic enrollment in our dividend reinvestment plan will automatically receive their distributions in cash unless they elect to have their cash distributions reinvested in additional Common Shares. Shareholders who receive distributions in the form of shares will be subject to the same U.S. federal, state and local tax consequences as if they received cash distributions.

Share Repurchases

The Company has implemented a share repurchase program under which, at the discretion of the Board, the Company may repurchase, in each quarter, up to 5% of its Common Shares outstanding (either by number of shares or aggregate NAV) as of the close of the previous calendar quarter.

Under the Company's share repurchase program, to the extent the Company offers to repurchase Common Shares in any particular quarter, the Company expects to repurchase Common Shares pursuant to quarterly tender offers (such date of the offer, the "Repurchase Date") using a purchase price equal to the NAV per share as of the close of the last calendar day of the applicable quarter, except that Common 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 prospective repurchase date. The Early Repurchase Deduction will be retained by the Company for the benefit of remaining shareholders.

During the nine months ended September 30, 2025, 3,036 shares were repurchased. During the nine months ended September 30, 2024, zero shares were repurchased.

Borrowings

MS Credit Facility - On September 22, 2023, MS Credit Facility SPV, a wholly-owned financing subsidiary of the Company, as borrower, the Company, as transferor, and FEPC Fund Servicer, LLC, a wholly-owned subsidiary of the Company, as servicer, entered into the MS Credit Facility, as subsequently amended, which, as of September 30, 2025, allowed us to borrow up to $350.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of September 30, 2025 and December 31, 2024, we had outstanding debt under the MS Credit Facility of $304.0 million and $325.6 million, respectively. As of September 30, 2025 and December 31, 2024, subject to leverage and borrowing base restrictions, we had $46.0 million and $24.4 million, respectively, available for additional borrowings under the MS Credit Facility.

JPM Credit Facility- On April 9, 2025, JPM Credit Facility SPV, a wholly-owned financing subsidiary of the Company, as borrower, entered into the JPM Credit Facility, which, as of September 30, 2025, allowed us to borrow up to $100.0 million at any one time outstanding, subject to leverage and borrowing base restrictions. As of September 30, 2025, we had outstanding debt under the JPM Credit Facility of $100.0 million. As of September 30, 2025, subject to leverage and borrowing base restrictions, we had zero available for additional borrowings under the JPM Credit Facility.

For additional information on our debt obligations, refer to Note 6-"Borrowings" in the Notes to the Consolidated Financial Statements.

Commitments and Contingencies and Off-Balance Sheet Arrangements

As of September 30, 2025 and December 31, 2024, we had outstanding commitments to fund revolving lines of credit or delayed draw investments with an aggregate principal amount of $109.7 million and $66.0 million, respectively.

Related Party Transactions

Refer to Note 3-"Agreements and Related Party Transactions" in the Notes to the Consolidated Financial Statements.

Critical Accounting Policies

The preparation of the Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets, and any other parameters used in determining such estimates could cause actual results to differ. Our critical accounting policies and estimates should be read in connection with our risk factors described in our Annual Report on Form 10-K, as well as in our registration statement on Form N-2 and our other filings with the SEC that we make from time to time.

Revenue Recognition

Interest Income

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that the Company expects to collect such amounts. Discounts from and premiums to par value on debt investments, loan origination fees and upfront fees received that are deemed to be an adjustment to yield are accreted/amortized into interest income over the life of the respective security using the effective interest method. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees and unamortized discounts are recorded as interest income in the current period.

The Company will recognize any earned exit or back-end fees into income when it believes the amounts will ultimately become collected by using either the beneficial interest model or other appropriate income recognition frameworks.

PIK Income

PIK interest is computed at the contractual rate specified in each investment agreement, is added to the principal balance of the investment, and is recorded as income.

Dividend Income

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies.

Other Income

The Company may also generate revenue in the form of structuring, arranger or due diligence fees, amendment or consent fees, portfolio company administration fees, fees for providing significant managerial assistance and consulting fees. Such fees are recognized as income when earned or the services are rendered.

Valuation of Portfolio Investments

The Board designated FEIM as the Valuation Designee as that term is defined in Rule 2a-5. As the Valuation Designee, the Board designated FEIM to perform fair value determinations of the Company's assets by implementing valuation policies and procedures approved by the Board, subject to the oversight of the Board and the Audit Committee, and in compliance with the requirements of Rule 2a-5.

In calculating the value of our total assets, investments for which market quotations are readily available are valued using market quotations, which are generally obtained from an independent pricing service or one or more broker-dealers or market makers. Debt and equity securities for which market quotations are not readily available or are determined to be unreliable are valued at fair value as determined in good faith by the Valuation Designee.

With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

The types of factors that FEIM may take into account in fair value pricing the Company's investments 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 flows, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

U.S. Federal Income Taxes, Including Excise Tax

The Company has elected to be treated as a RIC under Subchapter M of the Code, and intends to operate in a manner so as to continue to qualify each year as a RIC under the Code. So long as the Company maintains its tax treatment as a RIC, it will not be subject to corporate-level federal income tax on the portion of its ordinary income and capital gains distributed to shareholders as dividends.

In order to qualify for favorable tax treatment as a RIC, the Company is required to, among other things, distribute annually to its shareholders at least 90% of the sum of (i) its investment company taxable income, as defined by the Code but determined without regard to the deduction for dividends paid, and (ii) its net tax-exempt income for such taxable year.

Recent Developments

On March 3, 2025, First Eagle Holdings, Inc. announced a definitive agreement under which funds managed by Genstar Capital would make a majority investment in First Eagle Holdings, Inc. (the "Transaction"). First Eagle Holdings, Inc. is the parent company to the Advisers, and Genstar Capital is a private equity firm focused on investments in targeted segments of the financial services, healthcare, industrials, and software industries. The Transaction, which involved the buyout of all interests in First Eagle Holdings, Inc. held by funds indirectly controlled by Blackstone Inc. and Corsair Capital LLC and certain related co-investors, closed on August 15, 2025.

As required under the 1940 Act, the closing of the Transaction was deemed an "assignment" of the prior investment advisory agreement between the Company and the Adviser, the prior subadvisory agreement between the Company, the Adviser and the Subadviser, and the prior intermediary manager agreement between the Company and FEF Distributors, LLC ("FEFD"), which resulted in automatic termination of the agreements. On April 17, 2025, the Board approved a new substantially identical investment advisory agreement with FEIM, a new substantially identical subadvisory agreement with FEAC (together, the "Advisory Agreements"), and a new substantially identical intermediary manager agreement with FEFD (the "Intermediary Manager Agreement"). On June 27, 2025, the Company's shareholders approved the Advisory Agreements. The Advisory Agreements and the Intermediary Manager Agreement took effect upon closing of the Transaction. The Transaction did not result in any change in the portfolio management of the Company or in the Company's investment objectives or policies.

On August 4, 2025, the Company and U.S. Bank Trust Company, National Association (the "Custodian") entered into a custody agreement (the "Custody Agreement"), pursuant to which the Custodian was appointed to serve as the Company's custodian to hold securities, loans, cash, and other assets on behalf of the Company. Either party may terminate the Custody Agreement at any time upon sixty (60) days' prior written notice. On August 4, 2025, in conjunction with entering into the Custody Agreement, the Company terminated its existing custody agreement with U.S. Bank, National Association (the "Prior Custody Agreement"), effective August 4, 2025. Other than ordinary course payments under the Prior Custody Agreement through the effective date of termination, no termination or other fees are payable in connection with the termination of the Prior Custody Agreement.

On August 12, 2025, the Company's Board appointed William Karim as Secretary of the Company following the resignation of Sabrina Rusnak-Carlson from her Secretary and other positions with the Company.

On September 5, 2025, FEAC appointed Robert O'Brien as a new portfolio manager of the Company, joining Michelle Handy, Larry Klaff, Garrett Stephen and Bryan Murphy on the Company portfolio management team. Robert Hickey no longer serves as a portfolio manager of the Company.

On October 24, 2025, the Company's Board declared a distribution of $0.210 per Class I share and $0.205 per Class D share, which are payable on November 26, 2025 to shareholders of record as of October 31, 2025.

On November 11, 2025, Seth Gelman resigned from his position as Interim Chief Compliance Officer of the Company, effective as of November 11, 2025. Mr. Gelman's decision to resign from his position as Interim Chief Compliance Officer of the Company was not due to a disagreement on any matter related to the Company's operations, policies or practices. Mr. Gelman will continue to serve as Chief Compliance Officer of FEIM.

On November 11, 2025, the Company's Board appointed Robert Marks to the position of Chief Compliance Officer of the Company, effective as of November 11, 2025. Mr. Marks will serve as Chief Compliance Officer of the Company until his successor has been duly elected and qualified, or until the earlier of his death, resignation or removal.

On November 11, 2025, the Company's Board appointed Laurence Paredes to the previously vacant position of General Counsel of the Company, effective as of November 11, 2025. Mr. Paredes will serve as General Counsel of the Company until his successor has been duly elected and qualified, or until the earlier of his death, resignation or removal.