As filed with the Securities and Exchange Commission on April 14, 2010

Securities Act File No. 333-163279

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-2

 

x		REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

x		Pre-effective Amendment No. 6
o		Post-effective Amendment No.

 

GOLUB CAPITAL BDC, INC.

(Exact Name of Registrant as Specified in Charter)

 

150 South Wacker Drive, Suite 800
Chicago, Illinois 60606

(Address of Principal Executive Offices)

(312) 205-5050

(Registrant’s Telephone Number, Including Area Code)

David B. Golub
Golub Capital BDC LLC
150 South Wacker Drive, Suite 800
Chicago, Illinois 60606

(Name and Address of Agent for Service)

 

Copies to:

Thomas J. Friedmann David J. Harris Dechert LLP 1775 I Street, N.W. Washington, D.C. 20006 (202) 261-3300		Jay L. Bernstein Andrew S. Epstein Clifford Chance US LLP 31 West 52nd Street New York, NY 10019 (212) 878-8000

 

Approximate date of proposed public offering: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. o

It is proposed that this filing will become effective (check appropriate box):

o when declared effective pursuant to section 8(c).

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS		SUBJECT TO COMPLETION APRIL 14, 2010

8,100,000 Shares

GOLUB CAPITAL BDC, INC.

Common Stock

We are an externally managed, closed-end, non-diversified management investment company that has filed an election to be treated as a business development company under the Investment Company Act of 1940. We were formed to continue and expand the business of Golub Capital Master Funding LLC, which commenced operations in July 2007 and is our direct, wholly owned subsidiary. Our investment objective is to provide our stockholders with current income and capital appreciation through debt and minority equity investments in middle-market companies.

GC Advisors LLC will serve as our investment adviser. GC Service Company, LLC will serve as our administrator. GC Advisors LLC and GC Service Company, LLC are affiliated with Golub Capital, a leading lender to middle-market companies that had over $4 billion of capital as of December 31, 2009.

This is an initial public offering of our shares of common stock. All of the 8,100,000 shares of common stock offered by this prospectus are being sold by us. After giving pro forma effect to our conversion to a Delaware corporation, the net asset value of our common stock on December 31, 2009 (the last date prior to the date of this prospectus on which we determined net asset value) was $15.00 per share.

Our shares of common stock have no history of public trading. We currently expect that the initial public offering price per share of our common stock will be between $15.00 per share and $16.00 per share after giving effect to the BDC Conversion described in this prospectus. Our common stock has been approved for quotation on The Nasdaq Global Select Market under the symbol “GBDC” subject to official notice of issuance. Assuming an initial public offering price of $15.50 per share (the midpoint of the estimated initial public offering price range), purchasers in this offering will experience immediate dilution of approximately $0.83 per share. See “Dilution” for more information. Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it will likely increase the risk of loss for purchasers in this offering.

Concurrently with the closing of this offering, we will sell to certain existing investors in entities advised by affiliates of Golub Capital and to certain of our officers and directors, their immediate family members or entities owned by, or family trusts for the benefit of, such persons in a separate private placement 1,322,581 shares of our common stock at the initial public offering price per share. No underwriting discounts or commissions will be paid in respect of these shares.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should read the discussion of the material risks of investing in our common stock, including the risk of leverage, in “Risk Factors” beginning on page 20 of this prospectus.

This prospectus contains important information you should know before investing in our common stock. Please read it before you invest and keep it for future reference. Upon completion of this offering, we will file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission, or the SEC. This information will be available free of charge by contacting us at 150 South Wacker Drive, Suite 800, Chicago, Illinois 60606, Attention: Investor Relations, or by calling us collect at (312) 205-5050. The SEC also maintains a website at http://www.sec.gov that contains such information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

		Per Share				Total
Public offering price		$				$
Sales load (underwriting discounts and commissions)		$				$
Proceeds to us, before expenses(1)		$				$

In addition, the underwriters may purchase up to an additional 1,215,000 shares of our common stock at the public offering price, less the sales load payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total sales load will be $        , and total proceeds, before expenses, will be $        .

 

The underwriters are offering the common stock as set forth in “Underwriting.” Delivery of the shares will be made on or about       , 2010.

Wells Fargo Securities		UBS Investment Bank

Stifel Nicolaus
		BMO Capital Markets
		RBC Capital Markets
						Janney Montgomery Scott

The date of this prospectus is       , 2010

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You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, cash flows and prospects may have changed since that date. We will update these documents to reflect material changes only as required by law.

Through and including           , 2010 (25 days after the date of the prospectus), U.S. federal securities laws may require all dealers that effect transactions in our common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers’ obligations to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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		Page
Prospectus Summary			1
The Offering			10
Fees and Expenses			16
Risk Factors			20
Special Note Regarding Forward-Looking Statements			44
Use of Proceeds			45
Distributions			46
The BDC Conversion			47
Capitalization			48
Dilution			50
Selected Financial and Other Information			51
Management’s Discussion and Analysis of Financial Condition, Results of Operations and Cash Flows			53
The Company			70
Portfolio Companies			84
Management			90
Management Agreements			96
Related Party Transactions and Certain Relationships			105
Control Persons and Principal Stockholders			108
Determination of Net Asset Value			110
Dividend Reinvestment Plan			112
Material U.S. Federal Income Tax Considerations			114
Description of Our Capital Stock			121
Regulation			126
Shares Eligible for Future Sale			132
Custodian, Transfer and Dividend Paying Agent and Registrar			132
Brokerage Allocation and Other Practices			133
Underwriting			134
Legal Matters			141
Independent Registered Public Accounting Firm			141
Available Information			141
Index to Financial Statements			F-1

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PROSPECTUS SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read the more detailed information set forth under “Risk Factors” and the other information included in this prospectus carefully.

Except as otherwise indicated, the terms:

On April 13, 2010, we converted from a limited liability company into a corporation. In this conversion, Golub Capital BDC, Inc. succeeded to the business of Golub Capital BDC LLC and its consolidated subsidiaries, and the members of Golub Capital BDC LLC became stockholders of Golub Capital BDC, Inc. In this prospectus, we refer to such transactions as the “BDC Conversion.” Unless otherwise indicated, the disclosure in this prospectus gives effect to the BDC Conversion.

Golub Capital BDC

We are an externally managed, closed-end, non-diversified management investment company that filed an election to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. We were recently formed to continue and expand the business of our predecessor, GCMF, which commenced operations in July 2007, in making investments in senior secured, unitranche, mezzanine and second lien loans of middle-market companies that are, in most cases, sponsored by private equity investors. We have no experience operating as a business development company. In this prospectus, the term “middle-market” generally refers to companies having earnings before interest, taxes, depreciation and amortization, or EBITDA, of between $5 million and $40 million annually; “mezzanine loan” refers to a loan that ranks senior only to a borrower’s equity securities and ranks junior to all of such borrower’s other indebtedness in priority of payment; and “unitranche” refers to a loan that combines characteristics of traditional first-lien senior secured loans and second-lien or subordinated loans.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and minority equity investments. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom we have invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital, a leading lender to middle-market companies with over $4 billion of capital as of December 31, 2009.

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As of December 31, 2009, our portfolio primarily consisted of investments in senior secured loans ($219.4 million) and, to a lesser extent, unitranche loans ($93.7 million) and second-lien loans ($13.2 million), to middle-market companies organized and located primarily in the United States. While on the date of this prospectus our portfolio comprised primarily senior secured loans, going forward we intend to pursue a strategy focused on investing in unitranche, mezzanine and second lien loans and warrants and minority equity securities in U.S. middle-market companies. Accordingly, over time we expect that senior secured loans will represent a smaller percentage of our investment portfolio as these investments are repaid and we shift to a different mix of assets. We expect that our investments in loans will initially range between $10 million and $25 million each. In many cases, we anticipate that we will have opportunities to make equity co-investments or receive warrants to purchase equity securities of portfolio companies. We may also selectively invest more than $25 million in the securities of some portfolio companies, and we expect that the size of our individual investments will vary proportionally with the size of our capital base.

As discussed in the “Market Opportunity” section below, we believe unitranche, mezzanine and second lien loans represent particularly attractive investments when compared to similar loans originated in the 2006-2008 period due to what we expect to be more attractive pricing and more conservative borrowing terms and deal structures.

Our Adviser

Our investment activities are managed by our investment adviser, GC Advisors. GC Advisors is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. GC Advisors was organized in September 2008 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act. GC Advisors has no experience advising or administering a business development company. Under our investment advisory agreement with GC Advisors, or the Investment Advisory Agreement, we will pay GC Advisors a base management fee and an incentive fee for its services. See “The Offering — Investment Advisory Agreement” for a discussion of the base management fee and incentive fee payable by us to GC Advisors. Unlike most closed-end funds whose fees are based on net assets, our base management fee is based on our gross assets and, therefore, GC Advisors will benefit when we incur debt or use leverage. Additionally, under the incentive fee structure, GC Advisors may benefit when capital gains are recognized and, because it determines when a holding is sold, GC Advisors controls the timing of the recognition of capital gains. Our board of directors is charged with protecting our interests by monitoring how GC Advisors addresses these and other conflicts of interest associated with its management services and compensation. While not expected to review or approve each borrowing or incurrence of leverage, our independent directors will periodically review GC Advisors’ services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate. See “Management Agreements — Board Approval of the Investment Advisory Agreement.”

GC Advisors is an affiliate of Golub Capital and has entered into a staffing agreement, or the Staffing Agreement, with two Golub Capital affiliates, Golub Capital Incorporated and Golub Capital Management LLC. Under the Staffing Agreement, these companies will make experienced investment professionals available to GC Advisors and provide access to the senior investment personnel of Golub Capital and its affiliates. The Staffing Agreement provides GC Advisors with access to investment opportunities, which we refer to in the aggregate as deal flow, generated by Golub Capital and its affiliates in the ordinary course of their businesses and commits the members of GC Advisors’ investment committee to serve in that capacity. As our investment adviser, GC Advisors is obligated to allocate investment opportunities among us and its other clients fairly and equitably over time in accordance with its allocation policy; however, there can be no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. GC Advisors intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Golub Capital’s investment professionals.

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An affiliate of GC Advisors, GC Service, will provide the administrative services necessary for us to operate. See “The Offering — Administration Agreement” for a discussion of the fees and expenses we are required to reimburse to GC Service.

About Golub Capital

Golub Capital, founded in 1994, is a leading lender to middle-market companies, with a long track record of investing in unitranche and junior capital financings, which is our long-term investment focus. Golub Capital invested more than $1.8 billion in unitranche and mezzanine transactions across a variety of market environments and industries between 2001 and 2009. From 2004 through 2009, Golub Capital invested in more than 240 middle-market companies and, as of December 31, 2009, it held debt investments in more than 170 middle-market companies.

Golub Capital’s middle-market lending group is managed by a four member senior management team consisting of Lawrence E. Golub, David B. Golub, Gregory W. Cashman and Andrew H. Steuerman. As of December 31, 2009, Golub Capital’s 47 investment professionals had an average of over 12 years of investment experience and were supported by 49 administrative and back office personnel that focus on operations, finance, legal and compliance, accounting and reporting, marketing, information technology and office management.

Market Opportunity

We intend to pursue a strategy focused on investing in unitranche, mezzanine and second lien loans and warrants and minority equity securities in U.S. middle-market companies.

Specialized Lending Requirements.  We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to middle-market companies in the United States (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender.

Robust Demand for Debt Capital.  Private equity firms raised record amounts of equity commitments in 2006-2008, far in excess of the amount of equity they subsequently invested from this capital raised. As of December 31, 2009, there was approximately $740 billion of private equity capital available and uninvested in the United States. We expect the large amount of unfunded buyout commitments will drive demand for leveraged buyouts over the next several years, which should, in turn, create leveraged lending opportunities for us.

Significant Refinancing Requirements.  The debt associated with a large number of middle-market leveraged mergers and acquisitions completed from 2005 to 2008 should start to come due in the 2010-2013 time period. In many cases, this debt will need to be refinanced as the existing debt facilities mature. When combined with the decreased availability of debt financing for middle-market companies generally, these factors should increase lending opportunities for us.

Attractive Pricing.  Reduced access to, and availability of, debt capital typically increases the interest rates, or pricing, of loans for middle-market lenders. A recent survey of middle-market lenders conducted by Reuters Loan Pricing Corporation indicated interest rates charged on mezzanine credit facilities were at or above 15% per annum in many instances in 2009, versus typical rates of 11% to 13% in 2007. Recent mezzanine deals typically have included meaningful upfront fees, prepayment protections and, in some cases, warrants to purchase common stock, all of which should enhance the profitability to lenders of making new loans.

Conservative Deal Structures.  As a result of the credit crisis, many lenders are requiring less senior and total leverage, more equity and more comprehensive loan covenants than was customary in the years leading up to the credit crisis. Lower debt multiples on purchase prices suggest that the cash flow of borrowing companies should enable them to service their debt more easily, creating a greater buffer against a downturn. According to industry sources, average total debt multiples of middle-market leveraged buy-out loans are at their lowest levels in the 13 years such data have been tracked.

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Increased Equity Cushions.  As senior and total leverage has decreased, equity contributions to buyouts of middle-market companies have increased. Based on our review of a number of middle-market debt transactions completed in 2009, the equity component of the purchase price of buyouts of middle-market companies increased substantially in 2009. Lower senior and total leverage should reduce risk to providers of debt financing.

Competitive Strengths

Deep, Experienced Management Team.  We are managed by GC Advisors, which will have access through a staffing agreement with Golub Capital to the resources and expertise of Golub Capital’s 96 employees, led by our chairman, Lawrence E. Golub, and our chief executive officer, David B. Golub. Concurrently with the closing of this offering, certain existing investors in entities advised by affiliates of Golub Capital and certain of our officers and directors, their immediate family members or entities owned by, or family trusts for the benefit of, such persons will purchase in a separate private placement an aggregate of 1,322,581 shares of common stock at the initial public offering price per share. We refer to this private placement as the Concurrent Private Placement. As of December 31, 2009, the 47 investment professionals of Golub Capital had an average of over 12 years of investment experience and were supported by 49 administrative and back office personnel that focus on operations, finance, legal and compliance, accounting and reporting, marketing, information technology and office management. Golub Capital seeks to hire and retain high-quality investment professionals and reward those personnel based on investor returns. In 2008, Golub Capital’s expertise and leading position in the market was evidenced by its receipt of three major middle-market lender awards from leading industry publications and organizations, including: M&A Advisor’s “Financing Firm of the Year” and ACG Mergers & Acquisitions’ “M&A Lender of the Year.” In addition, Buyouts Magazine again named Golub Capital “Middle-Market Lender of the Year” and M&A Advisor named Golub Capital the “Mezzanine Financing Agent of the Year” in 2009. These awards do not constitute an endorsement by any such publication or organization of the securities being offered by this prospectus.

Leading U.S. Debt Platform Provides Access to Proprietary Relationship-Based Deal Flow.   GC Advisors gives us access to the deal flow of Golub Capital, one of the leading middle-market lenders in the United States. Reuters Loan Pricing Corporation ranked Golub Capital as the leading senior lender for middle-market leveraged buyouts (total debt financing of under $100 million) for 2009, based both on deal volume and number of deals. Since its inception, Golub Capital has completed at least one debt financing with over 110 sponsors and multiple debt financings with over 40 sponsors. We believe that Golub Capital receives relationship-based “early looks” and “last looks” at many investment opportunities in the U.S. middle-market market, allowing it to be highly selective in the transactions it pursues.

Disciplined Investment and Underwriting Process.  GC Advisors intends to utilize the established investment process of Golub Capital for reviewing lending opportunities, structuring transactions and monitoring investments. Using its disciplined approach to lending, GC Advisors will seek to minimize credit losses through effective underwriting, comprehensive due diligence investigations, structuring and the implementation of restrictive debt covenants.

Regimented Credit Monitoring.  Following each investment, GC Advisors implements a regimented credit monitoring system. This careful approach, which involves ongoing review and analysis by teams of professionals, should enable us to identify problems early and to assist borrowers before they face difficult liquidity constraints.

Concentrated Middle-Market Focus.  Because of our focus on the middle-market, we understand the following general characteristics of middle-market lending:

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Recent Developments

Our Formation.  Golub Capital BDC LLC was formed in November 2009 to continue and expand the business of our predecessor, GCMF, which commenced operations in July 2007 following a cash contribution by its initial owners. All of the outstanding limited liability company interests in GCMF, which directly owns all of our existing loan portfolio, were held initially by the Capital Companies. In November 2009, the Capital Companies formed Golub Capital BDC LLC, into which they contributed 100% of the limited liability company interests of GCMF and from which they received a proportionate number of the 805 limited liability company interests in Golub Capital BDC LLC based on the fair value of the interests contributed by them into Golub Capital BDC LLC. As a result of this transaction, GCMF became our wholly owned subsidiary. The loans in our current portfolio were either originated or purchased in the secondary market by Golub Capital and its affiliates using the same underwriting standards described in this prospectus. See “Portfolio Companies.”

On February 5, 2010, GEMS Fund, L.P., or GEMS, a limited partnership affiliated with GC Advisors, entered into an agreement to purchase 195 limited liability company interests in Golub Capital BDC LLC for cash, resulting in aggregate net cash proceeds to us of $25 million. We refer to this investment as the GC Private Placement in this prospectus. The cash settlement of the GC Private Placement occurred immediately after the execution of an amendment to a variable funding note indenture dated as of July 27, 2007, between GCMF, as issuer, and U.S. Bank National Association, as indenture trustee, permitting such investment by GEMS on March 15, 2010. In this prospectus, we refer to this variable funding note indenture, which matures on December 29, 2010 as the Existing Credit Facility. There were no placement fees or sales loads paid by the GEMS as part of the GC Private Placement, and no expenses related to the GC Private Placement were reimbursed to our affiliates or to the underwriters of this offering. Investors in GEMS, a privately held entity exempt from registration as an investment company under the 1940 Act, include some employees and management of Golub Capital and its affiliates as well as a limited number of long-time investors in funds sponsored by Golub Capital. The limited liability company interests in Golub Capital BDC LLC and, after giving effect to the BDC Conversion, the shares of common stock in Golub Capital BDC, Inc., to be indirectly issued to GEMS have not been registered under the Securities Act of 1933, as amended, or the Securities Act, and are, accordingly, subject to restrictions on transfer. In addition, such shares of common stock will be subject to a 180-day lock-up agreement with the underwriters of this offering. See “Capitalization,” “Management’s Discussion and Analysis of Financial Conditions, Results of Operations and Cash Flows — Recent Developments and Estimates,” “Related Party Transactions and Certain Relationships” and “Underwriting.”

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The following chart illustrates our ownership and the level at which this offering is expected to occur as of the date of this prospectus (and after giving effect to this offering):

BDC Conversion.  On April 13, 2010, Golub Capital BDC LLC converted into a Delaware corporation, Golub Capital BDC, Inc., and all of the outstanding limited liability company interests in Golub Capital BDC LLC were converted into 8,984,863 shares of common stock in Golub Capital BDC, Inc. In this prospectus, we refer to this conversion as the “BDC Conversion.” See “The BDC Conversion.” Following the BDC Conversion, GCMF remains a wholly owned subsidiary of Golub Capital BDC, Inc. As part of the BDC Conversion, the Capital Companies received an aggregate of 7,232,815 shares of our common stock in exchange for the 805 limited liability company interests they owned in Golub Capital BDC LLC, representing an estimated equivalent price of $15.18 per share based on the fair value of the assets contributed by the Capital Companies at the time of our formation in November 2009 as determined by GCMF’s investment adviser. In addition, as part of the BDC Conversion, GEMS received an aggregate of 1,752,048 shares of our common stock in exchange for the 195 limited liability company interests it owns in Golub Capital BDC LLC, representing an estimated equivalent price of $14.27 per share based on the $25 million cash investment made by it in the GC Private Placement in February 2010. Upon completion of this offering and the Concurrent Private Placement, the Capital Companies will own, collectively, an interest of approximately 39.3% in us, and GEMS will own an interest of approximately 9.5% in us, in each case assuming no exercise of the underwriters’ over-allotment option.

SBIC License.  Golub Capital has managed Small Business Investment Companies, or SBICs, licensed by the U.S. Small Business Administration, or SBA, for more than 14 years and currently operates two SBIC licensees. Both of these licenses are exempt from registration as investment companies under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act. After receiving a letter of invitation from the Investment Division of the SBA, Golub Capital has applied for a license to form a third SBIC. Shortly after the closing of the offering, Golub Capital intends to amend its pending application, or to submit a new application, so that one of our subsidiaries will be the applicant for the new SBIC license. If this application is approved, our SBIC subsidiary would be a wholly owned subsidiary and able to rely on an exclusion from the definition of “investment company” under the 1940 Act. As such, this subsidiary will not elect to be treated as a business development company under the 1940 Act. If this application is approved, our SBIC subsidiary will have an investment objective substantially similar to ours and will make similar types of investments in accordance with SBIC regulations.

To the extent that we receive an SBIC license, our SBIC subsidiary will be allowed to issue SBA-guaranteed debentures, subject to the required capitalization of the SBIC subsidiary. SBA guaranteed

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debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under the regulations applicable to SBICs, an SBIC may have outstanding debentures guaranteed by the SBA generally in an amount of up to twice its regulatory capital, which generally equates to the amount of its equity capital. The SBIC regulations currently limit the amount that an SBIC subsidiary may borrow to a maximum of $150 million, assuming that it has at least $75 million of equity capital. In addition, if we are able to obtain financing under the SBIC program, our SBIC subsidiary will be subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants.

Although Golub Capital is an experienced SBIC operator in the SBA program and has received an invitation from the SBA to complete an application, we cannot be certain of the timing of approval for an SBIC license or if Golub Capital or our subsidiary will be able to obtain such approval.

Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management is $250 million. If we are approved for an SBIC license, it is possible that our SBIC subsidiary would be constrained in its ability to issue SBA-guaranteed debentures in the future if other Golub Capital SBICs have already issued such debentures. As of December 31, 2009, Golub Capital operated two SBIC licensees with an aggregate of $146.6 million of SBA-guaranteed debentures outstanding, leaving borrowing capacity of a maximum of $103.4 million of SBA-guaranteed debentures for any of our future SBIC subsidiaries. The borrowing capacity of any such future subsidiary could be expanded if any other Golub Capital SBICs retire their SBA-guaranteed debentures.

The U.S. House of Representatives recently passed a bill that, it if becomes law, would increase the amount of SBA-guaranteed debentures that may be issued by a single licensee to $225 million and the total amount of such debentures that may be issued by multiple licensees under common management to $350 million. If our subsidiary is approved for an SBIC license, any available issue amounts of SBA-guaranteed debentures would be allocated among our SBIC subsidiary and Golub Capital’s existing SBIC subsidiaries in accordance with the allocation policies and procedures of GC Advisors. There is, however, no minimum amount of SBA-guaranteed debentures that must be allocated to us. See “Related Party Transactions and Certain Relationships.”

Operating and Regulatory Structure

Our investment activities will be managed by GC Advisors under the direction of our board of directors, a majority of whom are independent of Golub Capital BDC, GC Advisors and their respective affiliates.

As a business development company, we will be required to comply with certain regulatory requirements. For example, while we are permitted to finance investments using leverage, which may include the issuance of shares of preferred stock, or notes and other borrowings, our ability to use leverage is limited in significant respects. See “Regulation.” Any decision on our part to use leverage will depend upon our assessment of the attractiveness of available investment opportunities in relation to the costs and perceived risks of such leverage. The use of leverage to finance investments creates certain risks and potential conflicts of interest. See “Risk Factors — Risks Relating to our Business and Structure — Regulations governing our operation as a business development company affect our ability to and the way in which we raise additional capital. As a business development company, we will need to raise additional capital. As a business development company, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.” and “Risk Factors — Risks Relating to our Business and Structure — We intend to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.”

We have no prior history of operating as a business development company, and GC Advisors LLC has no prior experience managing or administering a business development company.

Also, as a business development company, we will be generally prohibited from acquiring assets other than “qualifying assets” unless, after giving effect to any acquisition, at least 70% of our total assets are qualifying assets. Qualifying assets generally include securities of “eligible portfolio companies,” cash, cash equivalents, U.S. government securities and high-quality debt instruments maturing in one year or less from the time of investment. Under the rules of the 1940 Act, “eligible portfolio companies” include (1) private

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domestic operating companies, (2) public domestic operating companies whose securities are not listed on a national securities exchange (e.g., the New York Stock Exchange, American Stock Exchange and The Nasdaq Global Market) or registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and (3) public domestic operating companies having a market capitalization of less than $250 million. Public domestic operating companies whose securities are quoted on the over-the-counter bulletin board and through Pink Sheets LLC are not listed on a national securities exchange and therefore are eligible portfolio companies. See “Regulation.”

We intend to elect to be treated for U.S. federal income tax purposes as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, or the Code. In order to be treated as a RIC, we must satisfy certain source of income, asset diversification and distribution requirements. See “Material U.S. Federal Income Tax Considerations.”

Conflicts of Interests

Subject to certain 1940 Act restrictions on co-investments with affiliates, GC Advisors will offer us the right to participate in all investment opportunities that it determines are appropriate for us in view of our investment objective, policies and strategies and other relevant factors. Such offers will be subject to the exception that, in accordance with GC Advisors’ code of ethics and allocation policies, we might not participate in each individual opportunity but will, on an overall basis, be entitled to participate equitably with other entities managed by GC Advisors and its affiliates.

To the extent that we compete with entities managed by GC Advisors or any of its affiliates for a particular investment opportunity, GC Advisors will allocate investment opportunities across the entities for which such opportunities are appropriate, consistent with (1) its internal conflict of interest and allocation policies, (2) the requirements of the Advisers Act and (3) certain restrictions under the 1940 Act regarding co-investments with affiliates. GC Advisors’ allocation policies are intended to ensure that we may generally share equitably with other investment funds managed by GC Advisors or its affiliates in investment opportunities, particularly those involving a security with limited supply or involving differing classes of securities of the same issuer which may be suitable for us and such other investment funds.

GC Advisors has historically managed, and currently manages, investment vehicles with similar or overlapping investment strategies and has put in place a conflict-resolution policy that addresses the co-investment restrictions set forth under the 1940 Act. GC Advisors seeks to ensure the equitable allocation of investment opportunities when we are able to invest alongside other accounts managed by our adviser and its affiliates. When we invest alongside such other accounts as permitted, such investments are made consistent with GC Advisors’ allocation policy. Under this allocation policy, a fixed percentage of each opportunity, which may vary based on asset class and from time to time, will be offered to us and similar eligible accounts, as periodically determined by GC Advisors and approved by our board of directors, including all of our independent directors. The allocation policy further provides that allocations among us and other accounts will generally be made pro rata based on each account’s capital available for investment, as determined, in our case, by our board of directors, including our independent directors. It is our policy to base our determinations as to the amount of capital available for investment on such factors as: the amount of cash on-hand, existing commitments and reserves, if any, the targeted leverage level, the targeted asset mix and diversification requirements and other investment policies and restrictions set by our board of directors or imposed by applicable laws, rules, regulations or interpretations. We expect that these determinations will be made similarly for other accounts. In situations where co-investment with other entities managed by GC Advisors or its affiliates is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer, GC Advisors will need to decide whether we or such other entity or entities will proceed with the investment. GC Advisors will make these determinations based on its policies and procedures, which generally require that such opportunities be offered to eligible accounts on a basis that will be fair and equitable over time, including, for example, through random or rotational methods. We and GC Advisors have submitted an exemptive application to the SEC to permit greater flexibility to negotiate the terms of co-investments if our board of directors determines that it would be advantageous for us to co-invest with other funds managed by GC Advisors or its affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors. See “Related Party Transactions and Certain Relationships.”

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GC Advisors and its affiliates have other clients with similar or competing investment objectives, including one private fund that is continuing to seek capital commitments and will pursue an investment strategy similar to our strategy. In serving these clients, GC Advisors may have obligations to other clients or investors in those entities. Our investment objective may overlap with such affiliated investment funds, accounts or other investment vehicles. GC Advisors’ allocation procedures are designed to allocate investment opportunities among the investment vehicles managed by GC Advisors and its affiliates in a manner consistent with its obligations under the Advisers Act. If two or more investment vehicles with similar investment strategies are actively investing, GC Advisors will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy. See “Risk Factors — Risks Relating to our Business and Structure — Conflicts related to obligations GC Advisors’ investment committee, GC Advisors or its affiliates have to other clients.” Additionally, under our incentive fee structure, GC Advisors may benefit when we recognize capital gains and, because GC Advisors determines when a holding is sold, GC Advisors controls the timing of the recognition of capital gains. See “Risk Factors —  Risks Relating to our Business and Structure — Our incentive fee structure may create incentives for GC Advisors that are not fully aligned with the interests of our stockholders.” In addition, because the base management fee that we will pay to GC Advisors is based on our average adjusted gross assets, GC Advisors may benefit when we incur indebtedness.

 

Our principal executive offices are located at 150 South Wacker Drive, Suite 800, Chicago, Illinois 60606, and our telephone number is (312) 205-5050. Our corporate website is located at www.golubcapitalbdc.com. Information on our website is not incorporated into or a part of this prospectus.

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THE OFFERING

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FEES AND EXPENSES

The following table is intended to assist you in understanding the costs and expenses that an investor in shares of our common stock will bear directly or indirectly. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you,” “us” or “Golub Capital BDC,” or that “we” will pay fees or expenses, common stockholders will indirectly bear such fees or expenses as investors in Golub Capital BDC.

Stockholder transaction expenses:
Sales load (as a percentage of offering price)			7.00	%(1)
Offering expenses (as a percentage of offering price)			1.59	%(2)
Dividend reinvestment plan expenses			—	(3)
Total stockholder transaction expenses (as a percentage of offering price)			8.59	%
Estimated annual expenses (as percentage of net assets attributable to common stock):
Management fees			1.78	%(4)
Incentive fees payable under the Investment Advisory Agreement (20%)			0.00	%(5)
Interest payments on borrowed funds			3.19	%(6)
Other expenses			1.09	%(7)
Total annual expenses (estimated)			6.06	%(8)

We caution you that some of the percentages indicated in the table above are estimates and may vary.

The SEC requires that the “Management fees” percentage be calculated as a percentage of net assets attributable to common stockholders, rather than total assets, including assets that have been funded with borrowed monies because common stockholders bear all of this cost. If the base management fee portion of the “Management fees” percentage were calculated instead as a percentage of our total assets, our base management fee portion of the “Management fees” percentage would be approximately 1.0% of total assets. The estimate of our base management fees assumes net assets of $270.0 million and leverage of $235.3 million, which reflects our net assets and leverage pro forma as of December 31, 2009 after giving effect to this offering, the Concurrent Private Placement and the GC Private Placement, the required repayment of $50.0 million of borrowings under the Existing Credit Facility upon completion of this offering and the BDC Conversion.

We accomplish this limitation by subjecting each quarterly incentive fee payable on the “Income and Capital Gain Incentive Fee Calculation” to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap in any quarter is equal to the difference between (a) 20.0% of Cumulative Pre-Incentive Fee Net Income and (b) cumulative incentive fees of any kind paid to GC Advisors by Golub Capital BDC since the date

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of our election to be treated as a business development company. To the extent the Incentive Fee Cap is zero or a negative value in any quarter, no incentive fee would be payable in that quarter. Cumulative Pre-Incentive Fee Net Income is equal to the sum of (a) Pre-Incentive Fee Net Investment Income for each period since the date of our election to be treated as a business development company and (b) cumulative aggregate realized capital gains, cumulative aggregate realized capital losses, cumulative aggregate unrealized capital depreciation and cumulative aggregate unrealized capital appreciation since the date of our election to be treated as a business development company.

The income and capital gain incentive fee calculation (the “Income and Capital Gain Incentive Fee Calculation”) has two parts. The income component is calculated quarterly in arrears based on our Pre-Incentive Fee Net Investment Income for the immediately preceding calendar quarter.

Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. Because of the structure of the income component, it is possible that an incentive fee may be calculated under this formula with respect to a period in which we have incurred a loss. For example, if we receive Pre-Incentive Fee Net Investment Income in excess of the hurdle rate (as defined below) for a calendar quarter, the income component will result in a positive value and an incentive fee will be paid unless the payment of such incentive fee would cause us to pay incentive fees on a cumulative basis that exceed 20.0% of our Cumulative Pre-Incentive Fee Income.

Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of our net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 2.0% quarterly. If market interest rates rise, we may be able to invest our funds in debt instruments that provide for a higher return, which would increase our Pre-Incentive Fee Net Investment Income and make it easier for GC Advisors to surpass the fixed hurdle rate and receive an incentive fee based on such net investment income. Our Pre-Incentive Fee Net Investment Income used to calculate this part of the incentive fee is also included in the amount of our total assets (other than cash and cash equivalents but including assets purchased with borrowed funds) used to calculate the 1.375% base management fee.

We calculate the income component of the Income and Capital Gain Incentive Fee Calculation with respect to our Pre-Incentive Fee Net Investment Income quarterly, in arrears, as follows:

The sum of these calculations yield the Income Incentive Fee. This amount is appropriately adjusted for any share issuances or repurchases during the quarter.

The second part of the Incentive Fee Calculation (the “Capital Gain Incentive Fee”) equals (a) 20.0% of our “Capital Gain Incentive Fee Base,” if any, calculated in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date), commencing with the year ending December 31, 2010, less (b) the aggregate amount of any previously paid Capital Gain Incentive Fees. Our Capital Gain Incentive Fee Base equals the sum of (1) our realized capital gains on a cumulative positive basis from the date of our election to be treated as a business development company through the end of each calendar year, (2) all realized capital losses on a cumulative basis, and (3) all unrealized capital depreciation on a cumulative basis.

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As described above, the incentive fee will not be paid at any time where after such payment the cumulative incentives fees paid to date would be greater than 20.0% of the Cumulative Pre-Incentive Net Income since our election to be treated as a business development company. For a more detailed discussion of the calculation of the incentive fee, see “Management Agreements — Management Fee.”

We executed a commitment letter with Wells Fargo Bank, N.A. on March 15, 2010 for the New Credit Facility which, as currently contemplated, would provide for borrowings of up to $175.0 million. If we are successful in securing the New Credit Facility we intend to use borrowings under the New Credit Facility to retire all debt outstanding under and terminate the Existing Credit Facility, to make additional investments and for other general corporate purposes.

Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown. These amounts are based upon payment by an investor of a 7.0% sales load (the underwriting discount paid by us with respect to our common stock sold in this offering), organizational and offering expenses of approximately $2.0 million and assume that our payment of annual operating expenses would remain at the levels set forth in the table above. For purposes of this table, we have assumed leverage of $235.3 million.

		1 year				3 years				5 years				10 years
You would pay the following expenses on a $1,000 investment, assuming a 5% annual return		$	147			$	255			$	362			$	619

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Advisory Agreement, which, assuming a 5% annual return, would either not be payable or have an immaterial impact on the expense amounts shown above, is not included in the example. Under our Investment Advisory Agreement, no incentive fee would be payable if we have a 5% annual return. This illustration assumes that we will not realize any capital gains computed net of all realized capital losses and unrealized capital depreciation in any

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of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on The Nasdaq Global Select Market on the date of distribution.

The amounts included in the table above for “Other expenses” represent our estimates for the fiscal year ending September 30, 2010 and total stockholder transaction expenses for this offering.

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RISK FACTORS

Investing in our common stock involves a number of significant risks. Before you invest in our common stock, you should be aware of various risks, including those described below. You should carefully consider these risk factors, together with all of the other information included in this prospectus, before you decide whether to make an investment in our common stock. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us may also impair our operations and performance. If any of the following events occur, our business, financial condition, results of operations and cash flows could be materially and adversely affected. In such case, our net asset value and the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business and Structure

Neither we nor GC Advisors has ever operated as a business development company or a RIC, and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.

We were formed in June 2007 and commenced operations in July 2007. During this period, we have not operated as a business development company or a RIC. As a result of our limited operating history, we are subject to the business risks and uncertainties associated with recently formed businesses, including the risk that we will not achieve our investment objective and that the value of your investment could decline substantially.

The 1940 Act and the Code impose numerous constraints on the operations of business development companies and RICs that do not apply to other investment vehicles managed by GC Advisors and its affiliates. Business development companies are required, for example, to invest at least 70% of their total assets primarily in securities of U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification and distribution requirements. Neither we nor GC Advisors has any experience operating under these constraints, which may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective.

In connection with our formation transactions, the Capital Companies contributed their interests in GCMF to us in consideration for the issuance of a proportional number of limited liability company interests in us. We can offer no assurance that the Capital Companies will not, at a later date, assert claims against us, and indirectly our stockholders, in connection with actual or alleged harm that they may experience in connection with the formation transactions. In addition, we cannot assure you that the beneficial holders of interests in the Capital Companies will not assert derivative claims against us and, indirectly our stockholders, on behalf of the Capital Companies as a result of the GCMF Asset Transactions.

We are dependent upon key personnel of GC Advisors for our future success and upon their access to the investment professionals and partners of Golub Capital and its affiliates.

We do not have any internal management capacity or employees. We will depend on the diligence, skill and network of business contacts of the senior professionals of GC Advisors to achieve our investment objective. We expect that GC Advisors will evaluate, negotiate, structure, close and monitor our investments in accordance with the terms of the Investment Advisory Agreement. We can offer no assurance, however, that senior professionals of GC Advisors will continue to provide investment advice to us. If these individuals do not maintain their existing relationships with Golub Capital and its affiliates and do not develop new relationships with other sources of investment opportunities, we may not be able to grow our investment portfolio. In addition, individuals with whom the senior professionals of GC Advisors have relationships are not obligated to provide us with investment opportunities. Therefore, we can offer no assurance that such relationships will generate investment opportunities for us.

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Advisory Agreement. GC Advisors will also depend upon Golub Capital to obtain access to deal flow generated by the professionals of Golub Capital and its affiliates. Under a Staffing Agreement between Golub Capital and GC Advisors, Golub Capital has agreed to provide GC Advisors with the resources necessary to fulfill these obligations. The Staffing Agreement provides that Golub Capital will make available to GC Advisors experienced investment professionals and access to the senior investment personnel of Golub Capital for purposes of evaluating, negotiating, structuring, closing and monitoring our investments. We are not a party to this Staffing Agreement and cannot assure you that Golub Capital will fulfill its obligations under the agreement. If Golub Capital fails to perform, we cannot assure you that GC Advisors will enforce the Staffing Agreement, that such agreement will not be terminated by either party or that we will continue to have access to the investment professionals of Golub Capital and its affiliates or their information and deal flow.

GC Advisors’ investment committee, which provides oversight over our investment activities, is provided by GC Advisors under the Investment Advisory Agreement. GC Advisors’ investment committee consists of two members of our board of directors and two employees of Golub Capital. The loss of any member of GC Advisors’ investment committee or of other senior professionals of GC Advisors and its affiliates would limit our ability to achieve our investment objective and operate as we anticipate. This could have a material adverse effect on our financial condition, results of operation and cash flows.

Our business model depends to a significant extent upon strong referral relationships with sponsors. Any inability of GC Advisors to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

We depend upon GC Advisors to maintain Golub Capital’s relationships with sponsors, and we intend to rely to a significant extent upon these relationships to provide us with potential investment opportunities. If GC Advisors fails to maintain such relationships, or to develop new relationships with other sponsors or sources of investment opportunities, we will not be able to grow our investment portfolio. In addition, individuals with whom the principals of GC Advisors have relationships are not obligated to provide us with investment opportunities, and, therefore, we can offer no assurance that these relationships will generate investment opportunities for us in the future.

We may not replicate the historical results achieved by our predecessor, GCMF, or other entities managed or sponsored by members of GC Advisors’ investment committee, or by GC Advisors or its affiliates.

Our primary focus in making investments may differ from those of our predecessor, GCMF, and existing investment funds, accounts or other investment vehicles that are or have been managed by members of GC Advisors’ investment committee or sponsored by affiliates of GC Advisors. For example, while GCMF’s portfolio consisted primarily of senior secured loans as of December 31, 2009, we intend to pursue an investment strategy that is focused on a more diverse range of assets, including unitranche, mezzanine and second lien loans and minority equity investments. In addition, other than an indirect interest in GCMF, investors in our common stock are not acquiring an interest in any such investment funds, accounts or other investment vehicles that are or have been managed by members of GC Advisors’ investment committee or sponsored by affiliates of GC Advisors. We may consider co-investing in portfolio investments with other investment funds, accounts or investment vehicles managed by members of the investment committee or sponsored by GC Advisors or its affiliates. Any such investments will be subject to regulatory limitations and approvals by directors who are not “interested persons,” as defined in the 1940 Act. We can offer no assurance, however, that we will obtain such approvals or develop opportunities that comply with such limitations. We also cannot assure you that we will replicate the historical results achieved by members of the investment committee, and we caution you that our investment returns could be substantially lower than the returns achieved by them in prior periods. Additionally, all or a portion of the prior results may have been achieved in particular market conditions which may never be repeated. Moreover, current or future market volatility and regulatory uncertainty may have an adverse impact on our future performance.

Our financial condition, results of operation and cash flows will depend on our ability to manage our business effectively.

Our ability to achieve our investment objective will depend on our ability to manage our business and to grow. This will depend, in turn, on GC Advisors’ ability to identify, invest in and monitor companies that meet our investment criteria. The achievement of our investment objectives on a cost-effective basis will

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depend upon GC Advisors’ execution of our investment process, its ability to provide competent, attentive and efficient services to us and, to a lesser extent, our access to financing on acceptable terms. GC Advisors will have substantial responsibilities under the Investment Advisory Agreement, as well as responsibilities in connection with the management of other investment funds, accounts and vehicles managed by members of GC Advisors or sponsored by Golub Capital and its affiliates. The personnel of GC Advisors and its affiliates, including GC Service, may be called upon to provide managerial assistance to our portfolio companies. These activities may distract them or slow our rate of investment. Any failure to manage our business and our future growth effectively could have a material adverse effect on our business, financial condition, results of operations and cash flows.

There are significant potential conflicts of interest that could affect our investment returns.

As a result of our arrangements with GC Advisors and its affiliates and GC Advisors’ investment committee, there may be times when GC Advisors or such persons have interests that differ from those of our stockholders, giving rising to a conflict of interest.

Conflicts related to obligations GC Advisors’ investment committee, GC Advisors or its affiliates have to other clients.

The members of GC Advisors’ investment committee serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment funds managed by GC Advisors or its affiliates. Similarly, GC Advisors or its affiliates may have other clients with similar, different or competing investment objectives. In serving in these multiple capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the best interests of us or our stockholders. For example, our chairman, Lawrence E. Golub, and our chief executive officer, David B. Golub, have and, following this offering, will continue to have management responsibilities for other investment funds, accounts or other investment vehicles managed by GC Advisors or sponsored by Golub Capital and its affiliates. Our investment objective may overlap with the investment objectives of such affiliated investment funds, accounts or other investment vehicles. For example, GC Advisors currently manages an entity that is seeking new capital commitments and will pursue an investment strategy similar to our strategy, and we may compete with this and other entities managed by GC Advisors and its affiliates for capital and investment opportunities. As a result, those individuals may face conflicts in the allocation of investment opportunities among us and other investment funds or accounts advised by or affiliated with GC Advisors. GC Advisors will seek to allocate investment opportunities among eligible accounts in a manner that is fair and equitable over time and consistent with its allocation policy. However, we can offer no assurance that such opportunities will be allocated to us fairly or equitably in the short-term or over time. GC Advisors has agreed with our board of directors that allocations among us and other investment funds managed by GC Advisors or its affiliates will generally be made based on capital available for investment in the asset class being allocated. We expect that available capital for our investments will be determined based on the amount of cash on-hand, existing commitments and reserves, if any, the targeted leverage level, targeted asset mix and diversification requirements and other investment policies and restrictions set by our board of directors or as imposed by applicable laws, rules, regulations or interpretations. However, there can be no assurance that we will be able to participate in all investment opportunities that are suitable to us.

GC Advisors’ investment committee, GC Advisors or its affiliates may, from time to time, possess material non-public information, limiting our investment discretion.

Principals of GC Advisors and its affiliates and members of GC Advisors’ investment committee may serve as directors of, or in a similar capacity with, companies in which we invest, the securities of which are purchased or sold on our behalf. In the event that material nonpublic information is obtained with respect to such companies, or we become subject to trading restrictions under the internal trading policies of those companies or as a result of applicable law or regulations, we could be prohibited for a period of time from purchasing or selling the securities of such companies, and this prohibition may have an adverse effect on us.

Our incentive fee structure may create incentives for GC Advisors that are not fully aligned with the interests of our stockholders.

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In the course of our investing activities, we will pay management and incentive fees to GC Advisors. These fees are based on our gross assets. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in a lower rate of return than one might achieve through direct investments. Because these fees are based on our gross assets, GC Advisors will benefit when we incur debt or use leverage. Additionally, under the incentive fee structure, GC Advisors may benefit when capital gains are recognized and, because GC Advisors determines when a holding is sold, GC Advisors controls the timing of the recognition of such capital gains. Our board of directors is charged with protecting our interests by monitoring how GC Advisors addresses these and other conflicts of interests associated with its management services and compensation. While it is not expected to review or approve each borrowing or incurrence of leverage, our independent directors will periodically review GC Advisors’ services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate. As a result of this arrangement, GC Advisors or its affiliates may from time to time have interests that differ from those of our stockholders, giving rise to a conflict.

The part of the incentive fee payable to GC Advisors that relates to our net investment income will be computed and paid on income that may include interest income that has been accrued but not yet received in cash. This fee structure may be considered to involve a conflict of interest for GC Advisors to the extent that it may encourage GC Advisors to favor debt financings that provide for deferred interest, rather than current cash payments of interest. GC Advisors may have an incentive to invest in deferred interest securities in circumstances where it would not have done so but for the opportunity to continue to earn the incentive fee even when the issuers of the deferred interest securities would not be able to make actual cash payments to us on such securities. This risk could be increased because GC Advisors is not obligated to reimburse us for any incentive fees received even if we subsequently incur losses or never receive in cash the deferred income that was previously accrued.

The valuation process for certain of our portfolio holdings creates a conflict of interest.

Many of our portfolio investments are expected to be made in the form of securities that are not publicly traded. As a result, our board of directors will determine the fair value of these securities in good faith as described below in “Many of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.” In connection with that determination, investment professionals from GC Advisors may provide our board of directors with portfolio company valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company. In addition, certain members of our board of directors, including Lawrence E. Golub and David B. Golub, have an indirect pecuniary interest in GC Advisors. The participation of GC Advisors’ investment professionals in our valuation process, and the indirect pecuniary interest in GC Advisors by certain members of our board of directors, could result in a conflict of interest as GC Advisors’ management fee is based, in part, on our gross assets and our incentive fees will be based, in part, on unrealized gains and losses.

Conflicts related to other arrangements with GC Advisors or its affiliates.

We have entered into a license agreement with Golub Capital Management LLC under which Golub Capital Management LLC has agreed to grant us a non-exclusive, royalty-free license to use the name “Golub Capital”. See “Management Agreements — License Agreement.” In addition, we will rent office space from GC Service, an affiliate of GC Advisors, and pay to GC Service our allocable portion of overhead and other expenses incurred by GC Service in performing its obligations under the Administration Agreement, such as rent and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs. This will create conflicts of interest that our board of directors must monitor.

The Investment Advisory Agreement with GC Advisors and the Administration Agreement with GC Service were not negotiated on an arm’s length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

The Investment Advisory Agreement and the Administration Agreement were negotiated between related parties. Consequently, their terms, including fees payable to GC Advisors, may not be as favorable to us as if

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they had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under these agreements because of our desire to maintain our ongoing relationship with GC Advisors, GC Service and their respective affiliates. Any such decision, however, would breach our fiduciary obligations to our stockholders.

Our ability to enter into transactions with our affiliates will be restricted, which may limit the scope of investments available to us.

We are prohibited under the 1940 Act from participating in certain transactions with our affiliates without the prior approval of our independent directors and, in some cases, of the SEC. Any person that owns, directly or indirectly, five percent or more of our outstanding voting securities will be our affiliate for purposes of the 1940 Act, and we are generally prohibited from buying or selling any security from or to such affiliate, absent the prior approval of our independent directors. We consider GC Advisors and its affiliates to be our affiliates for such purposes. The 1940 Act also prohibits certain “joint” transactions with certain of our affiliates, which could include investments in the same portfolio company, without prior approval of our independent directors and, in some cases, of the SEC. We are prohibited from buying or selling any security from or to any person who owns more than 25% of our voting securities or certain of that person’s affiliates, or entering into prohibited joint transactions with such persons, absent the prior approval of the SEC.

We may, however, invest alongside our manager’s, and its affiliates’ other clients in certain circumstances where doing so is consistent with applicable law and SEC staff interpretations. For example, we may invest alongside such accounts consistent with guidance promulgated by the SEC Staff permitting us and such other accounts to purchase interests in a single class of privately placed securities so long as certain conditions are met, including that our adviser, acting on our behalf and on behalf of other clients, negotiates no term other than price. We may also invest alongside our adviser’s other clients as otherwise permissible under regulatory guidance, applicable regulations and GC Advisors’ allocation policy. Under this allocation policy, a fixed percentage of each opportunity, which may vary based on asset class and from time to time, will be offered to us and similar eligible accounts, as periodically determined by GC Advisors and approved by our board of directors, including our independent directors. The allocation policy further provides that allocations among us and these other accounts will generally be made pro rata based on each account’s capital available for investment, as determined, in our case, by our board of directors. It is our policy to base our determinations as to the amount of capital available for investment based on such factors as: the amount of cash on-hand, existing commitments and reserves, if any, the targeted leverage level, the targeted asset mix and diversification requirements and other investment policies and restrictions set by our board of directors or imposed by applicable laws, rules, regulations or interpretations. We expect that these determinations will be made similarly for other accounts. However, we can offer no assurance that investment opportunities will be allocated to us fairly or equitably in the short-term or over time.

In situations where co-investment with other funds managed by GC Advisors or its affiliates is not permitted or appropriate, such as when there is an opportunity to invest in different securities of the same issuer or where the different investments could be expected to result in a conflict between our interests and those of other GC Advisors clients, GC Advisors will need to decide which client will proceed with the investment. Moreover, except in certain circumstances, we will be unable to invest in any issuer in which a fund managed by GC Advisors or its affiliates has previously invested. Similar restrictions limit our ability to transact business with our officers or directors or their affiliates. These restrictions may limit the scope of investment opportunities that would otherwise be available to us.

We may also be prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our board of directors who are not interested persons and, in some cases, prior approval by the SEC. The SEC has interpreted the business development company regulations governing transactions with affiliates to prohibit certain “joint transactions” between entities that share a common investment adviser.

We and GC Advisors intend to seek exemptive relief from the SEC to permit greater flexibility to negotiate the terms of co-investments if our board of directors determines that it would be advantageous for us to co-invest with other funds managed by GC Advisors or its affiliates in a manner consistent with our investment objectives, positions, policies, strategies and restrictions as well as regulatory requirements and

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other pertinent factors. We believe that co-investment by us and other funds managed by GC Advisors and its affiliates may afford us additional investment opportunities and an ability to achieve greater diversification. Accordingly, our application for exemptive relief seeks an exemptive order permitting us to invest with funds managed by GC Advisors or its affiliates in the same portfolio companies under circumstances in which such investments would otherwise not be permitted by the 1940 Act. We expect that such exemptive relief permitting co-investments, if granted, would apply only if our independent directors review and approve each co-investment.

We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.

A number of entities compete with us to make the types of investments that we plan to make. We will compete with public and private funds, commercial and investment banks commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some of our competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a business development company or the source of income, asset diversification and distribution requirements we must satisfy to maintain our RIC status. The competitive pressures we face may have a material adverse effect on our business, financial condition, results of operations and cash flows. As a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment objective.

With respect to the investments we make, we will not seek to compete based primarily on the interest rates we will offer, and we believe that some of our competitors may make loans with interest rates that will be lower than the rates we offer. In the secondary market for acquiring existing loans, we expect to compete generally on the basis of pricing terms. With respect to all investments, we may lose some investment opportunities if we do not match our competitors’ pricing, terms and structure. However, if we match our competitors’ pricing, terms and structure, we may experience decreased net interest income, lower yields and increased risk of credit loss. We may also compete for investment opportunities with accounts managed by GC Advisors or its affiliates. Although GC Advisors will allocate opportunities in accordance with its policies and procedures, allocations to such other accounts will reduce the amount and frequency of opportunities available to us and may not be in the best interests of us and our stockholders. Moreover, the performance of investments will not be known at the time of allocation. See “Risk Factors — Risks Relating to Our Business and Structure — There are significant potential conflicts of interest that could affect our investment returns,” “ — Conflicts related to obligations GC Advisors’ investment committee, GC Advisors or its affiliates have to other clients” and “Related Party Transactions and Certain Relationships.”

We will be subject to corporate-level income tax if we are unable to qualify as a RIC.

To qualify as a RIC under the Code, we must meet certain source-of-income, asset diversification and distribution requirements. The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis. We will be subject, to the extent we use debt financing, to certain asset coverage ratio requirements under the 1940 Act and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private or thinly traded public companies, any such dispositions could be made at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason and become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income

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available for distributions to stockholders and the amount of our distributions and the amount of funds available for new investments. Such a failure would have a material adverse effect on us and our stockholders. See “Material U.S. Federal Income Tax Considerations — Taxation as a RIC.”

We may need to raise additional capital to grow because we must distribute most of our income.

We may need additional capital to fund new investments and grow our portfolio of investments once we have fully invested the net proceeds of this offering. We intend to access the capital markets periodically to issue debt or equity securities or borrow from financial institutions in order to obtain such additional capital. Unfavorable economic conditions could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. A reduction in the availability of new capital could limit our ability to grow. In addition, we will be required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders to maintain our RIC status. As a result, these earnings will not be available to fund new investments. An inability to access the capital markets successfully could limit our ability to grow our business and execute our business strategy fully and could decrease our earnings, if any, which may have an adverse effect on the value of our securities.

We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income.

For U.S. federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as the accretion of original issue discount. This may arise if we receive warrants in connection with the making of a loan and in other circumstances, or through contracted PIK interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such original issue discount, which could be significant relative to our overall investment activities, or increases in loan balances as a result of contracted PIK arrangements, will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.

That part of the incentive fee payable by us that relates to our net investment income will be computed and paid on income that may include interest that has been accrued but not yet received in cash, such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities. If a portfolio company defaults on a loan that is structured to provide accrued interest, it is possible that accrued interest previously used in the calculation of the incentive fee will become uncollectible.

Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our status as a RIC. In such a case, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital or reduce new investment originations to meet these distribution requirements. If we are not able to obtain such cash from other sources, we may fail to qualify as a RIC and thus be subject to corporate-level income tax. See “Material U.S. Federal Income Tax Considerations —  Taxation as a RIC.”

Regulations governing our operation as a business development company affect our ability to and the way in which we raise additional capital. As a business development company, the necessity of raising additional capital may expose us to risks, including the typical risks associated with leverage.

We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as “senior securities,” up to the maximum amount permitted by the 1940 Act. Under the provisions of the 1940 Act, we will be permitted as a business development company to issue senior securities in amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 200% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous. Also, any

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amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss. As of December 31, 2009, we had $285.3 million outstanding under our Existing Credit Facility.

We executed a commitment letter with Wells Fargo Bank, N.A. on March 15, 2010 for the New Credit Facility and intend to enter into the New Credit Facility following completion of this offering. This lending commitment will be contingent upon the closing of this offering. If and when we close the New Credit Facility, we plan to borrow under the New Credit Facility to repay and terminate the Existing Credit Facility and finance additional investments. However, there can be no assurance that we will be able to close the New Credit Facility or obtain other financing. In the absence of an event of default, no person or entity from which we borrow money will have a veto right or voting power over our ability to set policy, make investment decisions or adopt investment strategies. If we issue preferred stock, which is another form of leverage, the preferred stock would rank “senior” to common stock in our capital structure, preferred stockholders would have separate voting rights on certain matters and might have other rights, preferences or privileges more favorable than those of our common stockholders, and the issuance of preferred stock could have the effect of delaying, deferring or preventing a transaction or a change of control that might involve a premium price for holders of our common stock or otherwise be in your best interest. Holders of our common stock will directly or indirectly bear all of the costs associated with offering and servicing any preferred stock that we issue. In addition, any interests of preferred stockholders may not necessarily align with the interests of holders of our common stock and the rights of holders of shares of preferred stock to receive dividends would be senior to those of holders of shares of our common stock. We do not, however, anticipate issuing preferred stock during the 12 months following our initial public offering.

We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset value per share of our common stock if our board of directors determines that such sale is in the best interests of us and our stockholders, and if our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). If we raise additional funds by issuing common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease, and you might experience dilution.

We may default under the Existing Credit Facility or be unable to amend, repay or refinance the Existing Credit Facility or enter into the New Credit Facility on commercially reasonable terms, or at all, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We executed a commitment letter with Wells Fargo Bank, N.A. on March 15, 2010 for the New Credit Facility and intend to enter into the New Credit Facility following completion of this offering. We cannot assure you that we will be able to enter into the New Credit Facility on commercially reasonable terms, or at all. In addition, our Existing Credit Facility is due on December 29, 2010. For so long as the Existing Credit Facility is outstanding, there is a risk that we may default on the Existing Credit Facility if we are unable to repay or refinance the Existing Credit Facility, and the value of your investment in us could decline substantially as a result. In addition, for so long as the Existing Credit Facility is outstanding, we are required by the terms of the Existing Credit Facility to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale of our current investments, net of payment of specified operating expenses, to repay amounts outstanding under the Existing Credit Facility, which could adversely affect our ability to grow our business and make distributions to our stockholders. In the event we are unable to enter into the New Credit Facility (or enter into a similar facility) or default under the Existing Credit Facility, our business could be adversely affected as we may be forced to sell a portion of our investments quickly and prematurely at what may be disadvantageous prices to meet our outstanding payment obligations under the Existing Credit Facility and/or support working capital requirements, any of which would have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, following execution of the New Credit Facility, we could default under the New Credit

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Facility, following which the agent for the lenders could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

Wells Fargo Securities, LLC faces a potential conflict of interest because its affiliate, Wells Fargo Bank, N.A., will be providing our New Credit Facility, and additional potential conflicts of interest may arise in determining the size or price of the offering because the closing of the New Credit Facility is contingent upon, among other things, this offering closing with minimum proceeds of $100 million. This transaction creates potential conflicts of interest because an affiliate of Wells Fargo Securities, LLC has, and potential other underwriters and their affiliates may have, an interest in the successful completion of the offering beyond the underwriting discounts and commissions they will receive.

Our ability to invest in public companies may be limited in certain circumstances.

To maintain our status as a business development company, we are not permitted to acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). Subject to certain exceptions for follow-on investments and distressed companies, an investment in an issuer that has outstanding securities listed on a national securities exchange may be treated as qualifying assets only if such issuer has a common equity market capitalization that is less than $250 million at the time of such investment.

We intend to finance our investments with borrowed money, which will magnify the potential for gain or loss on amounts invested and may increase the risk of investing in us.

The use of leverage magnifies the potential for gain or loss on amounts invested. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. We intend to borrow from, and issue senior debt securities, to banks, insurance companies and other lenders. Lenders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instruments we may enter into with lenders. In addition, under the terms of any credit facility or other debt instrument we enter into, we are likely to be required by its terms to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged, thereby magnifying losses or eliminating our equity stake in a leveraged investment. Similarly, any decrease in our revenue or income will cause our net income to decline more sharply than it would have had we not borrowed. Such a decline would also negatively affect our ability to make dividend payments on our common stock or preferred stock. Our ability to service our debt will depend largely on our financial performance and will be subject to prevailing economic conditions and competitive pressures. Moreover, as the management fee payable to GC Advisors is payable based on our gross assets, including those assets acquired through the use of leverage, GC Advisors will have a financial incentive to incur leverage which may not be consistent with our stockholders’ interests. In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the management fee payable to GC Advisors.

As a business development company, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200%. If this ratio declines below 200%, we cannot incur additional debt and could be required to sell a portion of our investments to repay some debt when it is disadvantageous to do so. This could have a material adverse effect on our operations, and we may not be able to make distributions. The amount of leverage that we employ will depend on GC Advisors’ and our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We cannot assure you that we will be able to obtain credit at all or on terms acceptable to us.

In addition, our debt facilities impose, and will in the future impose, financial and operating covenants that restrict our business activities, including limitations that hinder our ability to finance additional loans and

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investments or to make the distributions required to maintain our status as a RIC under the Code. As of December 31, 2009, we had $285.3 million outstanding under our Existing Credit Facility.

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

		Assumed Return on Our Portfolio (Net of Expenses)
		-10%				-5%				0%				5%				10%
Corresponding return to common stockholder(1)			-38	%			-20	%			-2	%			16	%			34	%

Based on our outstanding indebtedness of $285.3 million as of December 31, 2009 and the effective annual interest rate under the Existing Credit Facility of 0.9% as of that date, our investment portfolio must experience an annual return of at least 0.6% to cover annual interest payments on the Existing Credit Facility. We do not anticipate adding additional leverage through an offering of preferred stock during the 12 months following our initial public offering of shares of common stock.

To the extent we use debt to finance our investments, changes in interest rates will affect our cost of capital and net investment income.

To the extent we borrow money to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we can offer no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income in the event we use debt to finance our investments. In periods of rising interest rates, our cost of funds would increase, which could reduce our net investment income. We expect that our long-term fixed-rate investments will be financed primarily with issuances of equity and long-term debt securities. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations. Such techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act.

You should also be aware that a rise in the general level of interest rates typically leads to higher interest rates applicable to our debt investments. Accordingly, an increase in interest rates may result in an increase of the amount of incentive fees payable to GC Advisors.

Provisions in the Existing Credit Facility and the New Credit Facility may limit our discretion in operating our business.

The Existing Credit Facility is, and the New Credit Facility will be, backed by a revolving pool of loans on which the lenders have been and will continue to have a security interest. We may pledge up to 100% of our assets and may grant a security interest in all of our assets under the terms of any debt instrument we enter into with lenders. We expect that any security interests we grant will be set forth in a pledge and security agreement and evidenced by the filing of financing statements by the agent for the lenders. In addition, we expect that the custodian for our securities serving as collateral for such loan would include in its electronic systems notices indicating the existence of such security interests and, following notice of occurrence of an event of default and during its continuance, will only accept transfer instructions with respect to any such securities from the lender or its designee. If we default under the terms of any debt instrument, the agent for the applicable lenders would be able to assume control of the timing of disposition of any or all of our assets securing such debt, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, these security interests as well as negative covenants these facilities provide or may provide may limit our ability to create liens on assets to secure additional debt and may make it difficult for us to

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restructure or refinance indebtedness at or prior to maturity or obtain additional debt or equity financing. In addition, in the event that our borrowing base under the New Credit Facility decreases, we may be required to secure additional assets in an amount equal to any borrowing base deficiency. In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the New Credit Facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to pay dividends.

In addition, we expect that under the New Credit Facility, we will be subject to limitations as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage which may affect the amount of funding that may be obtained. There may also be certain requirements relating to portfolio performance, including required minimum portfolio yield and limitations on delinquencies and charge-offs, a violation of which could limit further advances and, in some cases, result in an event of default. An event of default under the New Credit Facility could result in the termination of the availability of further funds under the New Credit Facility and an accelerated maturity date for all amounts outstanding under the New Credit Facility, which could have a material adverse effect on our business and financial condition. This could reduce our revenues and, by delaying any cash payment allowed to us under the New Credit Facility until the lender has been paid in full, reduce our liquidity and cash flow and impair our ability to grow our business and maintain our qualification as a RIC.

We may enter into reverse repurchase agreements, which are another form of leverage.

We may enter into reverse repurchase agreements as part of our management of our temporary investment portfolio. Under a reverse repurchase agreement, we will effectively pledge our assets as collateral to secure a short-term loan. Generally, the other party to the agreement makes the loan in an amount equal to a percentage of the fair value of the pledged collateral. At the maturity of the reverse repurchase agreement, we will be required to repay the loan and correspondingly receive back our collateral. While used as collateral, the assets continue to pay principal and interest which are for the benefit of us.

Our use of reverse repurchase agreements, if any, involves many of the same risks involved in our use of leverage, as the proceeds from reverse repurchase agreements generally will be invested in additional securities. There is a risk that the market value of the securities acquired in the reverse repurchase agreement may decline below the price of the securities that we have sold but remain obligated to purchase. In addition, there is a risk that the market value of the securities retained by us may decline. If a buyer of securities under a reverse repurchase agreement were to file for bankruptcy or experience insolvency, we may be adversely affected. Also, in entering into reverse repurchase agreements, we would bear the risk of loss to the extent that the proceeds of such agreements at settlement are less than the fair value of the underlying securities being pledged. In addition, due to the interest costs associated with reverse repurchase agreements transactions, our net asset value would decline, and, in some cases, we may be worse off than if we had not used such instruments.

We are currently operating in a period of capital markets disruption and recession.

The U.S. capital markets have been experiencing extreme volatility and disruption for more than two years, and the U.S. economy was in a recession for several consecutive calendar quarters during the same period. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. A prolonged period of market illiquidity may have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could limit our investment originations, limit our ability to grow and negatively impact our operating results.

Adverse developments in the credit markets may impair our ability to enter into the New Credit Facility or to extend or refinance our Existing Credit Facility.

During the economic downturn in the United States that began in mid-2007, many commercial banks and other financial institutions stopped lending or significantly curtailed their lending activity. In addition, in an effort to stem losses and reduce their exposure to segments of the economy deemed to be high risk, some

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financial institutions limited routine refinancing and loan modification transactions and even reviewed the terms of existing facilities to identify bases for accelerating the maturity of existing lending facilities. As a result, it may be difficult for us to renew, extend or refinance our Existing Credit Facility, to enter into the New Credit Facility or to obtain other financing to finance the growth of our investments on acceptable economic terms, or at all.

If we do not invest a sufficient portion of our assets in qualifying assets, we could fail to qualify as a business development company or be precluded from investing according to our current business strategy.

As a business development company, we may not acquire any assets other than “qualifying assets” unless, at the time of and after giving effect to such acquisition, at least 70% of our total assets are qualifying assets. See “Regulation.”

We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be precluded from investing in what we believe are attractive investments if such investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to business development companies. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times in order to come into compliance with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes would have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we do not maintain our status as a business development company, we would be subject to regulation as a registered closed-end investment company under the 1940 Act. As a registered closed-end fund, we would be subject to substantially more regulatory restrictions under the 1940 Act which would significantly decrease our operating flexibility.

Many of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.

We expect that many of our portfolio investments will take the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable, and we will value these securities at fair value as determined in good faith by our board of directors, including to reflect significant events affecting the value of our securities. Most, if not all, of our investments (other than cash and cash equivalents) be classified as Level 3 under Statement of Financial Accounting Standards 157, Fair Value Measurement, or SFAS 157 (ASC Topic 820). This means that our portfolio valuations will be based on unobservable inputs and our own assumptions about how market participants would price the asset or liability in question. We expect that inputs into the determination of fair value of our portfolio investments will require significant management judgment or estimation. Even if observable market data are available, such information may be the result of consensus pricing information or broker quotes, which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We expect to retain the services of one or more independent service providers to review the valuation of these securities. The types of factors that the board of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such securities.

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We will adjust quarterly the valuation of our portfolio to reflect our board of directors’ determination of the fair value of each investment in our portfolio. Any changes in fair value are recorded in our statement of operations as net change in unrealized appreciation or depreciation.

We may experience fluctuations in our quarterly operating results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. In light of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

New or modified laws or regulations governing our operations may adversely affect our business.

We and our portfolio companies will be subject to regulation by laws at the U.S. federal, state and local levels. These laws and regulations, as well as their interpretation, may change from time to time, and new laws, regulations and interpretations may also come into effect. Any such new or changed laws or regulations could have a material adverse effect on our business.

Additionally, changes to the laws and regulations governing our operations related to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth in this prospectus and may shift our investment focus from the areas of expertise of GC Advisors to other types of investments in which GC Advisors may have little or no expertise or experience. Any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

Our board of directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval.

Our board of directors has the authority, except as otherwise provided in the 1940 Act, to modify or waive certain of our operating policies and strategies without prior notice and without stockholder approval. However, absent stockholder approval, we may not change the nature of our business so as to cease to be, or withdraw our election as, a business development company. Under Delaware law, we also cannot be dissolved without prior stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and the price value of our common stock. Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions.

Provisions of the General Corporation Law of the State of Delaware and our certificate of incorporation and bylaws could deter takeover attempts and have an adverse effect on the price of our common stock.

The General Corporation Law of the State of Delaware, or the DGCL, contains provisions that may discourage, delay or make more difficult a change in control of us or the removal of our directors. Our certificate of incorporation and bylaws contain provisions that limit liability and provide for indemnification of our directors and officers. These provisions and others also may have the effect of deterring hostile takeovers or delaying changes in control or management. We are subject to Section 203 of the DGCL, the application of which is subject to any applicable requirements of the 1940 Act. This section generally prohibits us from engaging in mergers and other business combinations with stockholders that beneficially own 15% or more of our voting stock, or with their affiliates, unless our directors or stockholders approve the business combination in the prescribed manner. Our board of directors has adopted a resolution exempting from Section 203 of the DGCL any business combination between us and any other person, subject to prior approval of such business combination by our board of directors, including approval by a majority of our directors who are not “interested persons.” If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, Section 203 of the DGCL may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.

We have also adopted measures that may make it difficult for a third party to obtain control of us, including provisions of our certificate of incorporation classifying our board of directors in three classes

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serving staggered three-year terms, and provisions of our certificate of incorporation authorizing our board of directors to classify or reclassify shares of our preferred stock in one or more classes or series, to cause the issuance of additional shares of our stock, and to amend our certificate of incorporation, without stockholder approval, to increase or decrease the number of shares of stock that we have authority to issue. These provisions, as well as other provisions of our certificate of incorporation and bylaws, may delay, defer or prevent a transaction or a change in control that might otherwise be in the best interests of our stockholders.

GC Advisors can resign on 60 days’ notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

GC Advisors has the right, under the Investment Advisory Agreement, to resign at any time upon not less than 60 days’ written notice, whether we have found a replacement or not. If GC Advisors resigns, we may not be able to find a new investment adviser or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and investment activities is likely to suffer if we are unable to identify and reach an agreement with a single institution or group of executives having the expertise possessed by GC Advisors and its affiliates. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

GC Service can resign from its role as our Administrator under the Administration Agreement, and we may not be able to find a suitable replacement, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations.

GC Service has the right to resign under the Administration Agreement, whether we have found a replacement or not. If GC Service resigns, we may not be able to find a new administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations as well as our ability to pay distributions are likely to be adversely affected and the market price of our shares may decline. In addition, the coordination of our internal management and administrative activities is likely to suffer if we are unable to identify and reach an agreement with a service provider or individuals with the expertise possessed by GC Service. Even if we are able to retain a comparable service provider or individuals to perform such services, whether internal or external, their integration into our business and lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows.

We will incur significant costs as a result of being a publicly traded company.

As a publicly traded company, we will incur legal, accounting and other expenses, including costs associated with the periodic reporting requirements applicable to a company whose securities are registered under the Exchange Act, as well as additional corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC.

Efforts to comply with Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our common stock.

Under current SEC rules, beginning with our fiscal year ending September 30, 2010, we will be required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and related rules and regulations of the SEC. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting.

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As a result, we expect to incur additional expenses in the near term that may negatively impact our financial performance and our ability to make distributions. This process also will result in a diversion of management’s time and attention. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations, and we may not be able to ensure that the process is effective or that our internal control over financial reporting is or will be effective in a timely manner. In the event that we are unable to maintain or achieve compliance with Section 404 of the Sarbanes-Oxley Act and related rules, we and the market price of our common stock may be adversely affected.

We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

Our business is highly dependent on the communications and information systems of GC Advisors and its affiliates. Any failure or interruption of such systems could cause delays or other problems in our activities. This, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.

Risks Related to Our Investments

Economic recessions or downturns could impair our portfolio companies and harm our operating results.

Many of our portfolio companies are susceptible to economic slowdowns or recessions and may be unable to repay our loans during these periods. Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions may decrease the value of collateral securing some of our loans and the value of our equity investments. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, lenders in certain cases can be subject to lender liability claims for actions taken by them when they become too involved in the borrower’s business or exercise control over a borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we render significant managerial assistance to the borrower. Furthermore, if one of our portfolio companies were to file for bankruptcy protection, even though we may have structured our investment as senior secured debt, depending on the facts and circumstances, including the extent to which we provided managerial assistance to that portfolio company, a bankruptcy court might re-characterize our debt holding and subordinate all or a portion of our claim to claims of other creditors.

Current market conditions have materially and adversely affected debt and equity capital markets in the United States and around the world.

Beginning in 2007 and continuing into 2009, the global capital markets have experienced a period of disruption resulting in increasing spreads between the yields realized on riskier debt securities and those realized on risk-free securities and a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector relating to subprime mortgages and the re-pricing of credit risk in the broadly syndicated market. These events, along with the deterioration of the housing market, illiquid market conditions, declining business and consumer confidence and the failure of major financial institutions in the United States, led to a decline general of economic conditions. This economic decline has materially and adversely affected the broader financial and credit markets and has reduced the availability of debt and equity capital for the market as a whole and to financial firms in particular. To the extent that we wish to use debt to

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fund our investments, the debt capital that will be available to us, if at all, may be at a higher cost, and on terms and conditions that may be less favorable, than what we expect, which could negatively affect our financial performance and results. A prolonged period of market illiquidity may cause us to reduce the volume of loans we originate and/or fund and adversely affect the value of our portfolio investments, which could have a material and adverse effect on our business, financial condition, results of operations and cash flows. The continuation or further deterioration of current market conditions could materially and adversely affect our business.

Our investments in leveraged portfolio companies may be risky, and you could lose all or part of your investment.

Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold. Such developments may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees that we may have obtained in connection with our investment. Smaller leveraged companies also may have less predictable operating results and may require substantial additional capital to support their operations, finance their expansion or maintain their competitive position.

Our investments in private and middle-market portfolio companies are risky, and you could lose all or part of your investment.

Investment in private and middle-market companies involves a number of significant risks. Generally, little public information exists about these companies, and we expect to rely on the ability of GC Advisors’ investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and we may lose money on our investments. Middle-market companies may have limited financial resources and may be unable to meet their obligations under their debt securities that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of our realizing any guarantees we may have obtained in connection with our investment. In addition, such companies typically have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns. Additionally, middle-market companies are more likely to depend on the management talents and efforts of a small group of persons. Therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us. Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and GC Advisors may, in the ordinary course of business, be named as defendants in litigation arising from our investments in the portfolio companies.

The lack of liquidity in our investments may adversely affect our business.

All of our assets may be invested in illiquid securities, and a substantial portion of our investments in leveraged companies will be subject to legal and other restrictions on resale or will otherwise be less liquid than more broadly traded public securities. The illiquidity of these investments may make it difficult for us to sell such investments if the need arises. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we, GC Advisors, Golub Capital or any of its affiliates have material nonpublic information regarding such portfolio company.

Price declines and illiquidity in the corporate debt markets may adversely affect the fair value of our portfolio investments, reducing our net asset value through increased net unrealized depreciation.

As a business development company, we are required to carry our investments at market value or, if no market value is ascertainable, at fair value as determined in good faith by our board of directors. As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments:

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When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we use the pricing indicated by the external event to corroborate our valuation. We record decreases in the market values or fair values of our investments as unrealized depreciation. Declines in prices and liquidity in the corporate debt markets may result in significant net unrealized depreciation in our portfolio. The effect of all of these factors on our portfolio may reduce our net asset value by increasing net unrealized depreciation in our portfolio. Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have not yet identified the portfolio company investments we will acquire using the proceeds of this offering.

While we currently hold a portfolio of investments, we have not yet identified additional potential investments for our portfolio that we will acquire with the proceeds of this offering. Privately negotiated investments in illiquid securities or private middle-market companies require substantial due diligence and structuring, and we cannot assure you that we will achieve our anticipated investment pace. As a result, you will be unable to evaluate any future portfolio company investments prior to purchasing our shares of common stock. Additionally, our investment adviser will select our investments subsequent to the closing of this offering, and our stockholders will have no input with respect to such investment decisions. These factors increase the uncertainty, and thus the risk, of investing in our common stock.

During this period, we will invest these amounts in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. We expect these temporary investments to earn yields substantially lower than the income that we expect to receive in respect of investments in senior, unitranche, mezzanine and second lien loans and equity securities. As a result, any distributions we make during this period may be substantially smaller than the distributions that we expect to pay when our portfolio is fully invested.

We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our asset diversification requirements as a RIC under the Code, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.

Our portfolio may be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or if there is a downturn in a particular industry.

Our portfolio may be concentrated in a limited number of portfolio companies and industries. Beyond the asset diversification requirements associated with our qualification as a RIC under the Code, we do not have fixed guidelines for diversification. As a result, the aggregate returns we realize may be significantly adversely

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affected if a small number of investments perform poorly or if we need to write down the value of any one investment. Additionally, while we are not targeting any specific industries, our investments may be concentrated in relatively few industries. As a result, a downturn in any particular industry in which we are invested could also significantly impact the aggregate returns we realize.

We may hold the debt securities of leveraged companies that may, due to the significant volatility of such companies, enter into bankruptcy proceedings.

Leveraged companies may experience bankruptcy or similar financial distress. The bankruptcy process has a number of significant inherent risks. Many events in a bankruptcy proceeding are the product of contested matters and adversary proceedings and are beyond the control of the creditors. A bankruptcy filing by an issuer may adversely and permanently affect the issuer. If the proceeding is converted to a liquidation, the value of the issuer may not equal the liquidation value that was believed to exist at the time of the investment. The duration of a bankruptcy proceeding is also difficult to predict, and a creditor’s return on investment can be adversely affected by delays until the plan of reorganization or liquidation ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and would be paid out of the debtor’s estate prior to any return to creditors. Because the standards for classification of claims under bankruptcy law are vague, our influence with respect to the class of securities or other obligations we own may be lost by increases in the number and amount of claims in the same class or by different classification and treatment. In the early stages of the bankruptcy process, it is often difficult to estimate the extent of, or even to identify, any contingent claims that might be made. In addition, certain claims that have priority by law (for example, claims for taxes) may be substantial.

Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.

Following an initial investment in a portfolio company, we may make additional investments in that portfolio company as “follow-on” investments, in seeking to:

We have discretion to make follow-on investments, subject to the availability of capital resources. Failure on our part to make follow-on investments may, in some circumstances, jeopardize the continued viability of a portfolio company and our initial investment, or may result in a missed opportunity for us to increase our participation in a successful operation. Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with business development company requirements or the desire to maintain our RIC status. Our ability to make follow-on investments may also be limited by GC Advisors’ allocation policy.

Because we generally do not hold controlling equity interests in our portfolio companies, we may not be able to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments.

Although we may do so in the future, we do not currently hold controlling equity positions in our portfolio companies. As a result, we are subject to the risk that a portfolio company may make business decisions with which we disagree, and that the management and/or stockholders of a portfolio company may take risks or otherwise act in ways that are adverse to our interests. Due to the lack of liquidity of the debt and equity investments that we typically hold in our portfolio companies, we may not be able to dispose of our investments in the event we disagree with the actions of a portfolio company and may therefore suffer a decrease in the value of our investments.

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Defaults by our portfolio companies will harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on its assets. This could trigger cross-defaults under other agreements and jeopardize such portfolio company’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

We intend to invest a portion of our capital in second lien and mezzanine loans issued by our portfolio companies. The portfolio companies usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying senior creditors, the portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt securities in which we invest, we would have to share any distributions on an equal and ratable basis with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

Additionally, certain loans that we make to portfolio companies may be secured on a second priority basis by the same collateral securing senior secured debt of such companies. The first priority liens on the collateral will secure the portfolio company’s obligations under any outstanding senior debt and may secure certain other future debt that may be permitted to be incurred by the portfolio company under the agreements governing the loans. The holders of obligations secured by first priority liens on the collateral will generally control the liquidation of, and be entitled to receive proceeds from, any realization of the collateral to repay their obligations in full before us. In addition, the value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of all of the collateral would be sufficient to satisfy the loan obligations secured by the second priority liens after payment in full of all obligations secured by the first priority liens on the collateral. If such proceeds were not sufficient to repay amounts outstanding under the loan obligations secured by the second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the portfolio company’s remaining assets, if any.

We may also make unsecured loans to portfolio companies, meaning that such loans will not benefit from any interest in collateral of such companies. Liens on such portfolio companies’ collateral, if any, will secure the portfolio company’s obligations under its outstanding secured debt and may secure certain future debt that is permitted to be incurred by the portfolio company under its secured loan agreements. The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations. If such proceeds were not sufficient to repay the outstanding secured loan obligations, then our unsecured claims would rank equally with the unpaid portion of such secured creditors’ claims against the portfolio company’s remaining assets, if any.

The rights we may have with respect to the collateral securing the loans we make to our portfolio companies with senior debt outstanding may also be limited pursuant to the terms of one or more intercreditor agreements that we enter into with the holders of such senior debt. Under a typical intercreditor agreement, at

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any time that obligations that have the benefit of the first priority liens are outstanding, any of the following actions that may be taken in respect of the collateral will be at the direction of the holders of the obligations secured by the first priority liens:

We may not have the ability to control or direct such actions, even if our rights are adversely affected.

If we make subordinated investments, the obligors or the portfolio companies may not generate sufficient cash flow to service their debt obligations to us.

We may make subordinated investments that rank below other obligations of the obligor in right of payment. Subordinated investments are subject to greater risk of default then senior obligations as a result of adverse changes in the financial condition of the obligor or in general economic conditions. If we make a subordinated investment in a portfolio company, the portfolio company may be highly leveraged, and its relatively high debt-to-equity ratio may create increased risks that its operations might not generate sufficient cash flow to service all of its debt obligations.

The disposition of our investments may result in contingent liabilities.

We currently expect that a significant portion of our investments will involve private securities. In connection with the disposition of an investment in private securities, we may be required to make representations about the business and financial affairs of the portfolio company typical of those made in connection with the sale of a business. We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to us.

Our base management fee may induce GC Advisors to incur leverage.

Our base management fee is payable based upon our gross assets, which include any borrowings that we make for investment purposes. This fee structure may encourage GC Advisors to borrow money to finance additional investments. Under certain circumstances, the use of borrowed money may increase the likelihood of default, which would disfavor holders of our common stock, including investors in the common stock offered by this prospectus. Given the subjective nature of the investment decisions made by GC Advisors on our behalf, our board of directors may not be able to monitor this potential conflict of interest effectively.

Our incentive fee may induce GC Advisors to make certain investments, including speculative investments.

The incentive fee payable by us to GC Advisors may create an incentive for GC Advisors to make investments on our behalf that are riskier or more speculative than would be the case in the absence of such compensation arrangement. The way in which the incentive fee payable to GC Advisors is determined may encourage GC Advisors to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would disfavor the holders of our common stock, including investors in this offering.

The incentive fee payable by us to GC Advisors also may create an incentive for GC Advisors to invest on our behalf in instruments that have a deferred interest feature. Under these investments, we would accrue the interest over the life of the investment but would not receive the cash income from the investment until the end of the term. Our net investment income used to calculate the income portion of our investment fee, however, includes accrued interest. Thus, a portion of this incentive fee would be based on income that we have not yet received in cash such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities.

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Additionally, the incentive fee payable by us to GC Advisors may create an incentive for GC Advisors to cause us to realize capital gains or losses that may not be in the best interests of us or our stockholders. Under the incentive fee structure, GC Advisors may benefit when capital gains are recognized and, because GC Advisors determines when a holding is sold, GC Advisors controls the timing of the recognition of capital gains. Our board of directors is charged with protecting our interests by monitoring how GC Advisors addresses these and other conflicts of interests associated with its management services and compensation. While it is not expected to review or approve each borrowing or incurrence of leverage, our independent directors will periodically review GC Advisors’ services and fees. In connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate.

GC Advisors’ liability will be limited under the Investment Advisory Agreement, and we have agreed to indemnify GC Advisors against certain liabilities, which may lead GC Advisors to act in a riskier manner on our behalf than it would when acting for its own account.

Under the Investment Advisory Agreement, GC Advisors will not assume any responsibility to us other than to render the services called for under that agreement, and it will not be responsible for any action of our board of directors in following or declining to follow GC Advisors’ advice or recommendations. GC Advisors maintains a contractual, as opposed to a fiduciary, relationship with us. Under the terms of the Investment Advisory Agreement, GC Advisors, its officers, members, personnel, any person controlling or controlled by GC Advisors will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Investment Advisory Agreement, except those resulting from acts constituting gross negligence, willful misconduct, bad faith or reckless disregard of GC Advisors’ duties under the Investment Advisory Agreement. In addition, we have agreed to indemnify GC Advisors and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the Investment Advisory Agreement, except where attributable to gross negligence, willful misconduct, bad faith or reckless disregard of such person’s duties under the Investment Advisory Agreement. These protections may lead GC Advisors to act in a riskier manner when acting on our behalf than it would when acting for its own account.

We may be subject to additional risks if we engage in hedging transactions and/or invest in foreign securities.

The 1940 Act generally requires that 70% of our investments be in issuers each of whom is organized under the laws of, and has its principal place of business in, any state of the United States, the District of Columbia, Puerto Rico, the Virgin Islands or any other possession of the United States. Our investment strategy does not presently contemplate investments in securities of non-U.S. companies. We are, however, currently invested in the securities of two non-U.S. companies and may make additional investments in non-U.S. companies, including emerging market issuers, to the limited extent such transactions and investments are permitted under the 1940 Act. We expect that these investments would focus on the same unitranche, mezzanine and second lien loans that we make in U.S. middle-market companies and accordingly would be complementary to our overall strategy and enhance the diversity of our holdings. Investing in securities of emerging market issuers involves many risks including economic, social, political, financial, tax and security conditions in the emerging market, potential inflationary economic environments, regulation by foreign governments, different accounting standards and political uncertainties. Economic, social, political, financial, tax and security conditions also could negatively affect the value of emerging market companies. These factors could include changes in the emerging market government’s economic and fiscal policies, the possible imposition of, or changes in, currency exchange laws or other laws or restrictions applicable to the emerging market companies or investments in their securities and the possibility of fluctuations in the rate of exchange between currencies.

Engaging in either hedging transactions or investing in foreign securities would entail additional risks to our stockholders. We could, for example, use instruments such as interest rate swaps, caps, collars and floors and, if we were to invest in foreign securities, we could use instruments such as forward contracts or currency

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options and borrow under a credit facility in currencies selected to minimize our foreign currency exposure. In each such case, we generally would seek to hedge against fluctuations of the relative values of our portfolio positions from changes in market interest rates or currency exchange rates. Hedging against a decline in the values of our portfolio positions would not eliminate the possibility of fluctuations in the values of such positions or prevent losses if the values of the positions declined. However, such hedging could establish other positions designed to gain from those same developments, thereby offsetting the decline in the value of such portfolio positions. Such hedging transactions could also limit the opportunity for gain if the values of the underlying portfolio positions increased. Moreover, it might not be possible to hedge against an exchange rate or interest rate fluctuation that was so generally anticipated that we would not be able to enter into a hedging transaction at an acceptable price.

While we may enter into such transactions to seek to reduce currency exchange rate and interest rate risks, unanticipated changes in currency exchange rates or interest rates could result in poorer overall investment performance than if we had not engaged in any such hedging transactions. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged could vary. Moreover, for a variety of reasons, we might not seek to establish a perfect correlation between the hedging instruments and the portfolio holdings being hedged. Any such imperfect correlation could prevent us from achieving the intended hedge and expose us to risk of loss. In addition, it might not be possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities would likely fluctuate as a result of factors not related to currency fluctuations.

We may not realize gains from our equity investments.

When we invest in unitranche, mezzanine and second lien loans, we may acquire warrants or other equity securities of portfolio companies as well. We may also invest in equity securities directly. To the extent we hold equity investments, we will attempt to dispose of them and realize gains upon our disposition of them. However, the equity interests we receive may not appreciate in value and, may decline in value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.

We may not be approved for a Small Business Investment Company license.

Golub Capital has submitted an application to the SBA to form a third SBIC. Shortly after the closing of this offering, Golub Capital intends to amend this pending application, or submit a new application, so that one of our subsidiaries will become the applicant for the new SBIC license. We cannot assure you that we will amend such application, or substitute a new application, or that we will be successful in receiving an SBIC license from the SBA. If we do receive an SBIC license, there is no minimum amount of SBA-guaranteed debentures that must be allocated to us.

Risks Relating to This Offering

We cannot assure you that we will be able to deploy the proceeds of our initial public offering, the Concurrent Private Placement and the GC Private Placement within the timeframe we have contemplated.

We anticipate that approximately $135.3 million of the net proceeds of our initial public offering (after expenses of the offering of approximately $2.0 million) and the Concurrent Private Placement together with all of the proceeds from the GC Private Placement that have not yet been invested as of the date of this prospectus will be invested in portfolio companies in accordance with our investment objective within three to six months after the completion of our initial public offering. We cannot assure you, however, that we will be able to locate a sufficient number of suitable investment opportunities to allow us to deploy those proceeds successfully in that timeframe. To the extent we are unable to invest those proceeds within our contemplated timeframe after the completion of our initial public offering, our investment income and, in turn, our results of operations, will likely be materially adversely affected.

There is a risk that you may not receive distributions or that our distributions may not grow over time and a portion of our distributions may be a return of capital.

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specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this prospectus. Due to the asset coverage test applicable to us under the 1940 Act as a business development company, we may be limited in our ability to make distributions. In addition, for so long as the Existing Credit Facility is outstanding, we are required by the terms of the Existing Credit Facility to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale of our current investments, net of payment of specified operating expenses, to repay amounts outstanding under the Existing Credit Facility, which could adversely affect our ability to make distributions.

Investing in our common stock may involve an above average degree of risk.

The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive and, therefore, an investment in our common stock may not be suitable for someone with lower risk tolerance.

Shares of closed-end investment companies, including business development companies, often trade at a discount to their net asset value.

Shares of closed-end investment companies, including business development companies, often trade at a discount to net asset value. This characteristic of closed-end investment companies and business development companies is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value.

The market price of our common stock may fluctuate significantly.

The market price and liquidity of the market for shares of our common stock may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

We may allocate the net proceeds from this offering in ways with which you may disagree.

We will have significant flexibility in investing the net proceeds of this offering and may use the net proceeds from this offering in ways with which you may disagree or for purposes other than those contemplated at the time of the offering.

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Prior to this offering, there has been no public market for our common stock, and we cannot assure you that the market price of shares of our common stock will not decline following the offering.

We cannot assure you that a trading market will develop for our common stock after this offering or, if one develops, that such trading market can be sustained. Shares of companies offered in an initial public offering often trade at a discount to the initial offering price due to underwriting discounts and related offering expenses. Also, shares of closed-end investment companies, including business development companies, frequently trade at a discount from their net asset value. This characteristic of closed-end investment companies is separate and distinct from the risk that our net asset value per share of common stock may decline. We cannot predict whether our common stock will trade at, above or below net asset value.

Investors in this offering will experience immediate dilution upon the closing of the offering.

If you purchase shares of our common stock in this offering, you will experience immediate dilution of $0.83 per share because the price that you pay will be greater than the pro forma net asset value per share of the common stock you acquire. This dilution is in large part due to the expenses incurred by us in connection with the consummation of this offering. Investors in this offering will pay a price per share of common stock that exceeds the tangible book value per share after the closing of the offering.

Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock.

Upon expiration of any applicable lock-up periods, shares issued by us in the BDC Conversion and the Concurrent Private Placement will generally be freely tradable in the public market, subject to the provisions and applicable holding periods set forth in Rule 144 under the Securities Act. Sales of substantial amounts of our common stock, or the availability of such common stock for sale, could adversely affect the prevailing market prices for our common stock. If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities should we desire to do so.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus involve risks and uncertainties, including statements as to:

Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words.

We have based the forward-looking statements included in this prospectus on information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

You should understand that, under Sections 27A(b)(2)(B) of the Securities Act and Section 21E(b)(2)(B) of the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to statements made in connection with any offering of securities pursuant to this prospectus or in periodic reports we file under the Exchange Act.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of 8,100,000 shares of our common stock in this offering will be approximately $114.8 million (or approximately $132.3 million if the underwriters exercise their over-allotment option in full), assuming an initial public offering price of $15.50 per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus), after deducting the underwriting discounts and commissions and estimated organization and offering expenses of approximately $10.8 million payable directly or indirectly by investors in this offering.

We estimate that the net proceeds from this offering and the Concurrent Private Placement will be approximately $135.3 million (or approximately $152.8 million if the underwriters exercise their over-allotment option in full), in each case assuming an initial public offering price of $15.50 per share (the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus). In addition, we received net proceeds of $25.0 million from the GC Private Placement. We intend to use the net proceeds of this offering (after expenses of approximately $2.0 million) and the Concurrent Private Placement, together with all of the proceeds from the $25.0 million GC Private Placement which have not yet been invested on the date of this prospectus, to (1) repay at least $50.0 million of the outstanding principal of, and accrued and unpaid interest on, the Existing Credit Facility and (2) invest the balance of the net proceeds in portfolio companies in accordance with our investment objective and the strategies described in this prospectus and for general corporate purposes. We will also pay operating expenses, including management and administrative fees, and may pay other expenses such as due diligence expenses of potential new investments, from the net proceeds of this offering.

As of December 31, 2009, we had outstanding borrowings of $285.3 million under the Existing Credit Facility. The Existing Credit Facility has a stated maturity date of December 29, 2010. The interest rate on borrowings under the Existing Credit Facility is variable based on the amount outstanding under such facility, the diversity of our investments and the collateral securing such borrowings. With respect to borrowings under $300.0 million, the interest rate equals LIBOR plus a margin ranging from 0.65% to 0.80%, depending on such factors. For borrowings in excess of $300.0 million, the interest rate equals LIBOR plus a margin ranging from 1.15% to 1.45%, depending on the same factors. The weighted average annual interest cost for the quarter ended December 31, 2009 and the year ended September 30, 2009 was 0.9% and 1.5%, respectively, and the weighted average rate as of December 31, 2009 and September 30, 2009 was 1.4% and 0.9%, respectively. The Existing Credit Facility provides for customary borrowing conditions, restrictive covenants, events of default and remedies, including: (i) payment of principal and interest and other amounts, (ii) maintenance of an agency office, (iii) maintenance and preservation of liens and security interests, (iv) periodic reporting requirements, (v) limitations on dispositions of assets, (vi) limitations on investments, (vii) restrictions on fundamental changes and (viii) limitations on borrowings and loans. We anticipate that we will use substantially all of the net proceeds of this offering for the above purposes within three to six months, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. We cannot assure you we will achieve our targeted investment pace.

Pending such investments, we will invest the remaining net proceeds of this offering primarily in cash, cash equivalents, U.S. Government securities and high-quality debt investments that mature in one year or less from the date of investment. These temporary investments may have lower yields than our other investments and, accordingly, may result in lower distributions, if any, during such period. See “Regulation — Temporary Investments” for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.

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DISTRIBUTIONS

To the extent that we have income available, we intend to distribute quarterly dividends to our stockholders, beginning with our first full quarter after the completion of this offering. Our quarterly dividends, if any, will be determined by our board of directors. Any dividends to our stockholders will be declared out of assets legally available for distribution.

Our board of directors intends to declare a dividend of approximately $0.31 per share, payable at or near the end of the second calendar quarter of 2010. This dividend payment is contingent upon the completion of our initial public offering during the second calendar quarter of 2010. The amount of any such dividend will be proportionately reduced to reflect the number of days remaining in the quarter after the completion of this offering. Purchasers in this offering will be entitled to receive this dividend payment. We anticipate that this dividend will be paid from income primarily generated by interest and dividend income earned on our investment portfolio. The specific tax characteristics of the dividend will be reported to stockholders after the end of the calendar year.

We intend to elect to be treated, and intend to qualify annually thereafter, as a RIC under the Code, beginning with our first taxable year ending September 30, 2010. To obtain and maintain RIC tax treatment, we must distribute at least 90% of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses, if any. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of: (1) 98% of our net ordinary income for such calendar year; (2) 98% of our net capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year; and (3) any net ordinary income and net capital gains for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax.

We currently intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated for U.S. federal income tax purposes as if you had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See “Material U.S. Federal Income Tax Considerations.” We cannot assure you that we will achieve results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.

Unless you elect to receive your dividends in cash, we intend to make such distributions in additional shares of our common stock under our dividend reinvestment plan. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, investors participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes. If you hold shares of our common stock in the name of a broker or financial intermediary, you should contact such broker or financial intermediary regarding your election to receive distributions in cash in lieu of shares of our common stock. Any dividends reinvested through the issuance of shares through our dividend reinvestment plan will increase our gross assets on which the base management fee and the incentive fee are determined and paid to GC Advisors. See “Dividend Reinvestment Plan.”

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THE BDC CONVERSION

Substantially all of the investments that we expect to own upon the closing of this offering are held by our predecessor and direct, wholly owned subsidiary, GCMF. From its inception in July 2007 through November 2009, all of the outstanding limited liability company interests in GCMF were held by the Capital Companies. The Capital Companies are investment vehicles advised by GC Advisors or one of its affiliated persons. Prior to the filing of the registration statement of which this prospectus is a part, the Capital Companies caused to be formed a new Delaware limited liability company, Golub Capital BDC LLC, into which they contributed all of the limited liability company interests in GCMF in consideration for proportionate interests in Golub Capital BDC LLC.

On April 13, 2010, we completed a conversion pursuant to which, by operation of law, Golub Capital BDC, Inc. succeeded to the business of Golub Capital BDC LLC and its consolidated subsidiaries, and the members of Golub Capital BDC LLC became stockholders of Golub Capital BDC, Inc. The entity issuing and selling shares of common stock to investors in this offering is Golub Capital BDC, Inc. As part of the BDC Conversion, the Capital Companies received an aggregate of 7,232,815 shares of our common stock in exchange for the 805 limited liability company interests they owned in Golub Capital BDC LLC, representing an estimated equivalent price of $15.18 per share based on the fair value of the assets contributed by the Capital Companies at the time of our formation in November 2009, as determined by GCMF’s investment adviser. In addition, as part of the BDC Conversion, GEMS received an aggregate of 1,752,048 shares of our common stock in exchange for the 195 limited liability company interests it owned in Golub Capital BDC LLC, representing an estimated equivalent price of $14.27 per share based on the $25 million cash investment made by it in the GC Private Placement in February 2010. Upon completion of this offering and the Concurrent Private Placement, the Capital Companies will own an interest of approximately 39.3% in us, GEMS will own an interest of approximately 9.5% in us, and GCMF will remain a wholly owned subsidiary of Golub Capital BDC, Inc.

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CAPITALIZATION

The following table sets forth:

		As of December 31, 2009
		Golub Capital BDC LLC				Golub Capital BDC, Inc.
		Actual				Pro Forma(1)(2)				Pro Forma as Adjusted(3)
		(Unaudited)
		(Dollars in Thousands)
Assets:
Cash and cash equivalents		$	46,292			$	71,292			$	156,554
Investments at fair value			326,226				326,226				326,226
Other assets			22,937				22,937				22,937
Total assets		$	395,455			$	420,455			$	505,717
Liabilities:
Existing Credit Facility		$	285,341			$	285,341			$	235,341
New Credit Facility(4)			—				—
Other liabilities			341				341				341
Unitholders’ Equity:
Net assets		$	109,773			$	134,773			$	270,034
Stockholders’ equity:
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 0 shares issued and outstanding, actual; 8,984,863 shares issued and outstanding, pro forma; and 18,407,444 shares issued and outstanding, pro forma as adjusted			—			$	90			$	184
Capital in excess of par			—				134,683				269,850
Total stockholders’ equity			—				134,773				270,034
Pro forma net asset value per share			—				15.00				14.67

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DILUTION

The dilution to investors in this offering is represented by the difference between the offering price per share and the pro forma net asset value per share after this offering. Net asset value per share is determined by dividing our net asset value, which is our total tangible assets less total liabilities, by the number of outstanding shares of common stock.

After giving effect to the GC Private Placement, we had 1,000 limited liability company interests outstanding, and our net asset value was $134.8 million, or approximately $15.00 per share of common stock (giving pro forma effect to the BDC Conversion). After giving effect to the sale of the shares to be sold in this offering and the deduction of discounts and estimated expenses of this offering before stabilization and the sale of the shares to be sold in the Concurrent Private Placement, our pro forma net asset value would have been approximately $270.0 million, or $14.67 per share, representing an immediate decrease in net asset value of $0.83 per share, or 5.4%, to shares sold in this offering.

The following table illustrates the dilution to the shares on a per share basis:

Assumed initial public offering price per share		$	15.50
Net asset value upon completion of the GC Private Placement and BDC Conversion		$	15.00
Increase in net asset value attributable to this offering and the Concurrent Private Placement		$	0
Pro forma net asset value after this offering and the Concurrent Private Placement		$	14.67
Dilution to new stockholders (without exercise of the over-allotment option)		$	0.83

The following table sets forth information with respect to the shares prior to and following this offering and the Concurrent Private Placement (without exercise of the underwriters’ over-allotment option):

		Shares Purchased								Total Consideration								Average Price Per Share
		Number				%				Amount				%
Shares outstanding upon completion of GC Private Placement and BDC Conversion			8,984,863				48.8	%			134,772,946				48.0	%			15.00
Shares to be sold in this offering and the Concurrent Private Placement			9,422,581				51.2	%			146,050,006				52.0	%			15.50
Total			18,407,444				100	%			280,822,952				100.0	%

The pro forma net asset value upon completion of this offering and the Concurrent Private Placement (without exercise of the underwriters’ over-allotment option) is calculated as follows:

Numerator:
Net asset value upon completion of the GC Private Placement and BDC Conversion		$	134,772,946
Assumed proceeds from this offering and the Concurrent Private Placement (after deduction of certain estimated expenses of this offering as described in Use of Proceeds)		$	135,261,506
Denominator:
Shares outstanding upon completion of the GC Private Placement and BDC Conversion			8,984,863
Shares included in this offering and the Concurrent Private Placement			9,422,581

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SELECTED FINANCIAL AND OTHER INFORMATION

We have derived the selected historical balance sheet information of GCMF as of September 30, 2007, 2008 and 2009 and the selected statement of operations information of GCMF for the fiscal period from July 27, 2007 (inception) through September 30, 2007 and for the fiscal years ended September 30, 2008 and 2009 from our predecessor’s financial statements included elsewhere in this prospectus, which other than the balance sheet information of GCMF as of September 30, 2007, were audited by McGladrey & Pullen, LLP, an independent registered public accounting firm. We have derived the quarterly financial information of Golub Capital BDC LLC and subsidiary as of December 31, 2009 from unaudited consolidated financial data and, in the opinion of management, this information reflects all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the results of such interim period. Golub Capital BDC LLC has no interests or activities other than its investment in GCMF.

The financial and other information below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition, Results of Operations and Cash Flows” and our audited historical financial statements included elsewhere in this prospectus. For the period prior to September 30, 2009, the financial information below refers to the financial condition and results of operations of our predecessor, GCMF. For the three months ended December 31, 2009, the financial information below refers to the financial condition and results of operations of Golub Capital BDC LLC.

		Golub Capital BDC LLC				GCMF
		Three Months Ended December 31,				Three Months Ended December 31,				Years Ended September 30,								Period from July 27, (Inception) Through September 30, 2007
		2009				2008				2009				2008
		(Unaudited)				(Unaudited)
		(Dollars in Thousands)
Income Statement Data:
Total investment income		$	10,843			$	5,339			$	33,338			$	20,686			$	1,868
Total expenses			1,661				1,778				7,860				10,642				1,251
Net investment income			9,182				3,561				25,478				10,044				617
Net realized loss from investments			—				-795				-3,972				-4,503				—
Net unrealized depreciation on investments			-840				-3,916				-1,489				-8,957				-558
Net income (loss)		$	8,342			$	-1,150			$	20,017			$	-3,416			$	59
Other Data:
Weighted average annualized yield on income producing investments at fair value(1)			8.61	%			9.16	%			8.05	%			9.33	%			6.40	%
Number of portfolio companies (at period end)			85				97				95				60				56

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		Golub Capital BDC LLC				GCMF
		December 31,				September 30,
		2009				2009				2008				2007
		(Unaudited)												(Unaudited)
						(Dollars in Thousands)
Balance Sheet Data:
Total investment portfolio		$	326,226			$	376,294			$	135,476			$	201,147
Total cash and cash equivalents			46,292				30,614				4,252				4,237
Total assets			395,455				409,122				140,941				208,203
Net assets		$	109,773			$	92,752			$	16,853			$	33,481

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with “Selected Financial and Other Information” and the financial statements and the related notes thereto of us and our predecessor, GCMF, appearing elsewhere in this prospectus. For the period prior to September 30, 2009, the discussion and analysis contained in this section refers to the financial condition and results of operations of our predecessor, GCMF. For the three months ended December 31, 2009, the discussion and analysis contained in this section refers to the financial condition, results of operations and cash flows of Golub Capital BDC LLC. Golub Capital BDC LLC has no interests or activities other than its investment in GCMF. The information in this section contains forward-looking statements that involve risks and uncertainties. Prior to the completion of this offering, Golub Capital BDC LLC, which acquired all of the outstanding limited liability company interests of our predecessor, GCMF, in November 2009, converted into Golub Capital BDC, Inc. and filed an election to be treated as a business development company under the 1940 Act. Please see “Risk Factors” and “Special Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are an externally managed, closed-end, non-diversified management investment company that has filed an election to be regulated as a business development company under the 1940 Act. In addition, for tax purposes we intend to elect to be treated as a RIC under the Code. We were formed in November 2009 to continue and expand the business of GCMF, our wholly owned subsidiary and predecessor, which commenced operations in July 2007, in making investments in senior secured, unitranche, mezzanine and second lien loans of middle-market companies that are, in most cases, sponsored by private equity investors.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and minority equity investments. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, (2) selecting investments within our core middle-market company focus, (3) partnering with experienced private equity firms, or sponsors, in many cases with whom we have invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital, a leading lender to middle-market companies with over $4 billion of capital as of December 31, 2009.

Our investment activities are managed by GC Advisors and supervised by our board of directors, a majority of whom are independent of us, GC Advisors and its affiliates. Under our Investment Advisory Agreement, we have agreed to pay GC Advisors an annual base management fee based on our average adjusted gross assets as well as an incentive fee based on our investment performance. We have also entered into an Administration Agreement with GC Service. Under our Administration Agreement, we have agreed to reimburse GC Service for our allocable portion (subject to the review and approval of our independent directors) of overhead and other expenses incurred by GC Service in performing its obligations under the Administration Agreement.

While on the date of this prospectus our portfolio comprised primarily senior secured loans, we intend to pursue an investment strategy focused on investing in unitranche, mezzanine and second lien loans and warrants and minority equity co-investments in middle-market companies. Accordingly, over time we expect that senior secured loans will represent a smaller percentage of our investment portfolio as we grow our business, the senior secured loans amortize, and we invest in a different mix of assets.

We seek to create a diverse portfolio that includes senior secured, unitranche, mezzanine and second lien loans and warrants and minority equity securities by investing approximately $10 to $25 million of capital, on average, in the securities of middle-market companies. We may also selectively invest more than $25 million in the securities of some portfolio companies and generally expect that the size of our individual investments will vary proportionately with the size of our capital base.

As of December 31, 2009, on a pro forma basis after giving effect to the GC Private Placement and the BDC Conversion, our net asset value was $134.8 million, or approximately $15.00 per share, and we had

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long-term investments totaling $326.2 million. As of that date, our portfolio comprised debt in 85 portfolio companies, and our income producing assets, which represented 100% of our total portfolio, had a weighted average annualized interest income yield of approximately 8.61% and a weighted average annualized investment income (includes interest income and amortization of fees and discounts) yield of approximately 12.05%. The debt-to-EBITDA multiples of our portfolio, computed based on the weighted average leverage of our investments, has declined from 3.34 times at the time of origination to 3.01 times as of December 31, 2009.

Revenues.  We generate revenue in the form of interest income on debt investments and capital gains and distributions, if any, on investment securities that we acquire in portfolio companies. Our debt investments, whether in the form of senior secured, unitranche, mezzanine or second lien loans typically have a term of three-to-ten years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. The frequency or volume of these repayments may fluctuate significantly from period to period. Our portfolio activity also reflects the proceeds of sales of securities. In some cases, our investments provide for deferred interest payments or PIK interest. The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums on loans as interest income. When we receive principal payments on a loan in an amount that exceeds its carrying value, we also record the excess principal payment as interest income. Dividend income, if any, is recognized on an accrual basis to the extent that we expect to collect such amounts.

Expenses.  Our primary operating expenses include the payment of fees to GC Advisors under the Investment Advisory Agreement, our allocable portion of overhead expenses under the Administration Agreement and other operating costs described below. Additionally, we pay interest expense on outstanding debt under the Existing Credit Facility and expect to pay interest on any outstanding debt under the New Credit Facility. We bear all other out-of-pocket costs and expenses of our operations and transactions, including:

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Recent Developments and Estimates

Our Formation.  Golub Capital BDC LLC was formed in November 2009 to continue and expand the business of our predecessor, GCMF, which commenced operations in July 2007 following a cash contribution by its initial owners. All of the outstanding limited liability company interests in GCMF, which directly owns all of our existing loan portfolio, were held initially by the Capital Companies. In November 2009, the Capital Companies formed Golub Capital BDC LLC, into which they contributed 100% of the limited liability company interests of GCMF and from which they received a proportionate number of the 805 limited liability company interests in Golub Capital BDC LLC based on the fair value of the interests contributed by them into Golub Capital BDC LLC. As a result of this transaction, GCMF became our wholly owned subsidiary. The loans in our current portfolio were either originated or purchased in the secondary market by Golub Capital and its affiliates using the same underwriting standards described in this prospectus. See “Portfolio Companies.”

On February 5, 2010, GEMS entered into an agreement to purchase 195 limited liability company interests in Golub Capital BDC LLC for cash, resulting in aggregate net cash proceeds to us of $25 million, the cash settlement of the GC Private Placement occurred immediately after the execution of an amendment to the Existing Credit Facility on March 15, 2010. There were no placement fees or sales loads paid by GEMS as part of the GC Private Placement, and no expenses related to the GC Private Placement were reimbursed to our affiliates or to the underwriters of this offering. Investors in GEMS, a privately held entity exempt from registration as an investment company under the 1940 Act, include some employees and management of Golub Capital and its affiliates as well as a limited number of long-time investors in funds sponsored by Golub Capital. The limited liability company interests in Golub Capital BDC LLC and, after giving effect to the BDC Conversion, the shares of common stock in Golub Capital BDC, Inc., to be indirectly issued to GEMS have not been registered under the Securities Act and are, accordingly, subject to restrictions on transfer. In addition, such shares of common stock will be subject to a 180-day lock-up agreement with the underwriters of this offering. See “Capitalization,” “Related Party Transactions and Certain Relationships” and “Underwriting.”

BDC Conversion.  On April 13, 2010, Golub Capital BDC LLC converted into a Delaware corporation, Golub Capital BDC, Inc., and all of the outstanding limited liability company interests in Golub Capital BDC LLC were converted into 8,984,863 shares of common stock in Golub Capital BDC, Inc. See “BDC Conversion.” Following the BDC Conversion, GCMF remains a wholly owned subsidiary of Golub Capital BDC, Inc. As part of the BDC Conversion, the Capital Companies received an aggregate of 7,232,815 shares of our common stock in exchange for the 805 limited liability company interests they owned in Golub Capital BDC LLC, representing an estimated equivalent price of $15.18 per share based on the fair value of the assets contributed by the Capital Companies at the time of our formation in November 2009 as determined by GCMF’s investment adviser. In addition, as part of the BDC Conversion, GEMS received an aggregate of 1,752,048 shares of our common stock in exchange for the 195 limited liability company interests it owned in Golub Capital BDC LLC, representing an estimated equivalent price of $14.27 per share based on the $25 million cash investment made by it in the GC Private Placement in February 2010. Upon completion of this offering and the Concurrent Private Placement, the Capital Companies will own, collectively, an interest of approximately 39.3% in us, and GEMS will own an interest of approximately 9.5% in us, in each case assuming no exercise of the underwriters’ over-allotment option.

GCMF Asset Transactions.  On December 23, 2009, our wholly owned subsidiary and predecessor, GCMF, agreed to distribute investments in five portfolio companies to Golub Capital BDC LLC. These assets represented our investments in loans of Casedhole Solutions, Inc., Gray Wireline Service, Inc., McBride Electric Inc., TAC Materials, Inc. and PSI Services LLC. Golub Capital BDC LLC then distributed these portfolio assets to the three Capital Companies pro rata in accordance with the ownership interests in Golub Capital BDC LLC held by each of the Capital Companies. The Capital Companies made an aggregate cash contribution of $21.3 million to Golub Capital BDC LLC, which amount was subsequently contributed to GCMF. Under the terms of the Existing Credit Facility, we were required to complete the distribution of these assets based on their par value, and the $21.3 million aggregate cash contribution by the Capital Companies represented the par value of the distributed assets. At the time of the transfer, the aggregate fair value of such distributed assets was $13.5 million. We refer to this series of transactions as the GCMF Asset Transactions in this prospectus. We decided to

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undertake the GCMF Asset Transactions to remove from our portfolio certain loans that were not consistent with the investment strategy we intend to pursue after the completion of this offering. All of the funds contributed into GCMF in the GCMF Asset Transactions were used to repay outstanding borrowings under the Existing Credit Facility. Golub Capital had originated or purchased in the secondary market all of these loans. The GCMF Asset Transactions would have been subject to restrictions under the 1940 Act had they been completed after our election to become a business development company. The loans were transferred in the GCMF Asset Transactions to the Capital Companies without recourse to us and without any representations and warranties. Accordingly, we do not believe our affiliates will or would have claims or other recourse against us relating to the assets so transferred. We cannot assure you, however, that the beneficial holders of interests in the Capital Companies will not attempt to assert derivative claims against us and, indirectly our stockholders, on behalf of the Capital Companies as a result of the GCMF Asset Transactions.

New Credit Facility.  We executed a commitment letter with Wells Fargo Bank, N.A. on March 15, 2010 for the New Credit Facility. Wells Fargo Securities, LLC, an affiliate of Wells Fargo Bank, N.A., is acting as an underwriter in this offering. Prior to entering into the New Credit Facility with Wells Fargo Bank, N.A. or any other lender, our board of directors will make findings to the effect that the terms of the New Credit Facility were negotiated on an arm’s-length basis, are fair and reasonable to our stockholders and are consistent with the interests of our stockholders and our business strategy.

As currently contemplated, we anticipate the New Credit Facility will be a five-year facility consisting of a three-year reinvestment period and a two-year amortization period. We expect that the interest rate will be based on LIBOR plus a fixed margin. Similar to the Existing Credit Facility, the New Credit Facility is expected to be secured by liens on a portion of our assets. We expect that any security interests we grant will be set forth in a pledge and security agreement and evidenced by the filing of financing statements by the agent for the lenders. In addition, we expect that the custodian for the securities serving as collateral for such loan would include in its electronic systems notices indicating the existence of such security interests and, following notice of the occurrence of an event of default and during its continuance, will only accept transfer instructions with respect to any such securities from the lender or its designee. If we default under the terms of any debt instrument, the agent for the applicable lenders could assume control of the disposition of any or all of our assets, including the selection of such assets to be disposed and the timing of such disposition, which would have a material adverse effect on our business, financial condition, results of operations and cash flows. As currently contemplated, the New Credit Facility will provide for maximum borrowings of $175.0 million. Upon execution, we anticipate that we will be required to pay a structuring fee of approximately $2.6 million to Wells Fargo Bank, N.A. as well as all of the lender’s reasonable out-of-pocket expenses, including attorneys’ fees. We anticipate the terms of the New Credit Facility will require us to (i) make representations and warranties regarding the collateral as well as each of our businesses, (ii) agree to certain indemnification obligations and (iii) comply with various covenants, servicing procedures, limitations on acquiring and disposing of assets, reporting requirements and other customary requirements for similar credit facilities. Similar to the Existing Credit Facility, the New Credit Facility is also expected to contain customary event of default provisions covering payment defaults, change in control transactions, and failure to comply with both financial and operating covenants. Defaults under the New Credit Facility could result in the entire facility becoming due and payable, which would materially and adversely affect our liquidity, financial condition, results of operations and cash flows.

As currently contemplated, the closing of the New Credit Facility would be subject to a number of customary conditions, including the closing of this offering, the concurrent retirement of the Existing Credit Facility and negotiation of transaction documentation by June 15, 2010. If we are successful in securing the New Credit Facility, we intend to use borrowings under the New Credit Facility to retire all debt outstanding under and terminate the Existing Credit Facility, to make additional investments and for other general corporate purposes. We cannot assure you that we will be able to enter into the New Credit Facility on the terms contemplated by the commitment letter, or at all.

SBIC License.  Golub Capital has managed SBICs licensed by the SBA for more than 14 years and currently operates two SBIC licensees. Both of these licenses are exempt from registration as investment companies under Section 3(c)(1) or Section 3(c)(7) of the 1940 Act. After receiving a letter of invitation from the Investment Division of the SBA, Golub Capital has applied for a license to form a third SBIC. Shortly

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after the closing of the offering, Golub Capital intends to amend its pending application, or to submit a new application, so that one of our subsidiaries will be the applicant for the new SBIC license. If this application were approved, our SBIC subsidiary would be a wholly owned subsidiary and able to rely on an exclusion from the definition of “investment company” under the 1940 Act. As such, this subsidiary will not elect to be treated as a business development company under the 1940 Act. If this application is approved, our SBIC subsidiary will have an investment objective substantially similar to ours and will make similar types of investments in accordance with SBIC regulations.

To the extent that we receive an SBIC license, our SBIC subsidiary will be allowed to issue SBA-guaranteed debentures, subject to the required capitalization of the SBIC subsidiary. SBA guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under the regulations applicable to SBICs, an SBIC may have outstanding debentures guaranteed by the SBA generally in an amount of up to twice its regulatory capital, which generally equates to the amount of its equity capital. The SBIC regulations currently limit the amount that an SBIC subsidiary may borrow to a maximum of $150 million, assuming that it has at least $75 million of equity capital. In addition, if we are able to obtain financing under the SBIC program, our SBIC subsidiary will be subject to regulation and oversight by the SBA, including requirements with respect to maintaining certain minimum financial ratios and other covenants.

Although Golub Capital is an experienced SBIC operator in the SBA program and has received an invitation from the SBA to complete an application, we cannot be certain of the timing of approval for an SBIC license or if Golub Capital or our subsidiary will be able to obtain such approval.

Under present SBIC regulations, the maximum amount of SBA-guaranteed debentures that may be issued by multiple licensees under common management is $250 million. If we are approved for an SBIC license, it is possible that our SBIC subsidiary would be constrained in its ability to issue SBA-guaranteed debentures in the future if other Golub Capital SBICs have already issued such debentures. As of December 31, 2009, Golub Capital operated two SBIC licensees with an aggregate of $146.6 million of SBA-guaranteed debentures outstanding, leaving borrowing capacity of a maximum of $103.4 million of SBA-guaranteed debentures for any of our future SBIC subsidiaries. The borrowing capacity of any such future subsidiary could be expanded if any other Golub Capital SBICs retire their SBA-guaranteed debentures.

The U.S. House of Representatives recently passed a bill that, it if becomes law, would increase the amount of SBA-guaranteed debentures that may be issued by a single licensee to $225 million and the total amount of such debentures that may be issued by multiple licensees under common management to $350 million. If our subsidiary is approved for an SBIC license, any available issue amounts of SBA-guaranteed debentures would be allocated among our SBIC subsidiary and Golub Capital’s existing SBIC subsidiaries in accordance with the allocation policies and procedures of GC Advisors. There is, however, no minimum amount of SBA-guaranteed debentures that must be allocated to us. See “Related Party Transactions and Certain Relationships.”

Calculation of Net Asset Value.  As of December 31, 2009, our net asset value, on a pro forma basis after giving effect to the GC Private Placement and the BDC Conversion, was $134.8 million. In addition to obtaining input from GC Advisors, three asset-valuation firms, Duff & Phelps, LLC, Mercer Capital Management, Inc. and Murray, Devine & Co., Inc., have been hired to provide valuation assistance on our portfolio assets for which no market quotations were available consisting of certain limited procedures, or the Procedures, we identified and requested they perform. These firms collectively provided valuation assistance for 100% of our portfolio investments for which market quotations were not readily available as of September 30, 2009. Murray, Devine & Co. provided valuation assistance for 25% of our portfolio investments for which market quotations were not readily available as of December 31, 2009. Our board of directors intends to retain one or more independent valuation firms to review the valuation of each portfolio investment that does not have a readily available market quotation at least once during each 12-month period. We plan for the independent valuation firms retained by our board of directors to provide a valuation review on 25% of our loans for which market quotations are not readily available each quarter subsequent to September 30, 2009 to ensure that the fair value of each loan for which a market quote is not readily available is reviewed by an Independent valuation firm at least once during each 12-month period. However, our board of directors is

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ultimately and solely responsible for determining the fair value of our assets using a documented valuation policy and consistently applied valuation process. See “Determination of Net Asset Value.”

Portfolio Composition, Investment Activity and Yield

The total value of our investments was approximately $326.2 million at December 31, 2009, $376.3 million at September 30, 2009, $135.5 million at September 30, 2008 and $201.1 million at September 30, 2007. For the three months ended December 31, 2009 we originated zero new investments. For the year ended September 30, 2009, we originated approximately $357.6 million of new investment commitments in 86 portfolio companies. For the year ended September 30, 2008, we originated approximately $345.2 million of new investment commitments in 42 portfolio companies. From July 27, 2007 (inception) through September 30, 2007, which we refer to in this prospectus as the 2007 Operating Period, we originated approximately $402.5 million of new investment in 72 portfolio companies.

For the three months ended December 31, 2009, we had approximately $37.0 million in debt repayments in existing portfolio companies and sold zero securities, although we distributed assets in five portfolio companies aggregating approximately $21.3 million pursuant to the GCMF Asset Transactions. For the year ended September 30, 2009, we had approximately $52.1 million in debt repayments in existing portfolio companies and sales of securities in 42 portfolio companies aggregating approximately $154.0 million. For the year ended September 30, 2008, we had approximately $18.6 million of debt repayments and sales of securities in 70 portfolio companies aggregating approximately $403.1 million. For the 2007 Operating Period, we had approximately $2.4 million of debt repayments and sold zero securities.

In addition, during the three months ended December 31, 2009, we had unrealized appreciation on 28 portfolio company investments totaling approximately $3.6 million, which was offset by unrealized depreciation on 50 portfolio company investments totaling approximately -$4.4 million. During the year ended September 30, 2009, we had unrealized appreciation on 63 portfolio company investments totaling approximately $13.2 million, which was offset by unrealized depreciation on 52 portfolio company investments totaling approximately -$14.7 million. During the year ended September 30, 2008, we had unrealized appreciation on 12 portfolio company investments totaling approximately $702,000, which was offset by unrealized depreciation on 43 portfolio company investments totaling approximately -$9.7 million. During the 2007 Operating Period, we had unrealized appreciation on four portfolio company investment totaling approximately $505,000, which was more than offset by unrealized depreciation on 15 portfolio company investments totaling approximately -$1.1 million.

As of December 31, 2009, we had investments in 85 portfolio companies totaling approximately $326.2 million. As of September 30, 2009, we had investments in debt of 95 portfolio companies totaling approximately $376.3 million. As of September 30, 2008, we had investments in debt of 60 portfolio companies totaling approximately $135.5 million. As of September 30, 2007, we had investments in debt of 56 portfolio companies totaling approximately $201.1 million.

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The following table shows the cost and fair value of our portfolio of investments by asset class as of December 31, 2009, September 30, 2009, September 30, 2008 and September 30, 2007:

		As of December 31, 2009(1)								As of September 30,
										2009(1)								2008								2007
		Cost				Fair Value				Cost				Fair Value				Cost				Fair Value				Cost				Fair Value
		(Dollars in Thousands)
Senior Secured:
Performing		$	222,500			$	219,355			$	245,346			$	241,228			$	94,915			$	86,632			$	149,863			$	148,637
Non-accrual			—				—				10,295				7,252				—				—				—				—
Unitranche:
Performing			95,040				93,704				118,299				116,233				47,206				46,036				42,342				43,050
Non-accrual			—				—				2,771				1,124				—				—				—				—
Second Lien:
Performing			13,115				13,167				10,582				10,457				2,865				2,808				9,500				9,460
Non-accrual			—				—				—				—				—				—				—				—
Total		$	330,655			$	326,226			$	387,293			$	376,294			$	144,986			$	135,476			$	201,705			$	201,147

As of December 31, 2009 and September 30, 2009, 2008 and 2007, the weighted average interest income yield on the fair value of investments in our portfolio was approximately 8.61%, 8.05%, 9.33% and 6.40%, respectively. As of December 31, 2009, approximately 45.9% and 46.1% of our portfolio at fair value and at cost, respectively, had interest rate floors that limit minimum interest rates on such loans.

Results of Operations

The results of operations set forth below relates to the historical financial information of our predecessor, GCMF. We do not believe that GCMF’s historical operating performance is necessarily indicative of the results of operations that we expect to report in future periods. Prior to the completion of this offering, we completed several significant corporate transactions, including the GC Private Placement and the BDC Conversion. See “Capitalization.” Also, in future periods the management fee that we pay to GC Advisors under the Investment Advisory Agreement will be determined by reference to a formula that differs materially from the management fee paid by GCMF in prior periods. See “Capitalization,” “— Recent Developments and Estimates” and “Management Agreements — Management Fee.” In addition, GCMF’s portfolio consisted primarily of senior secured and unitranche loans as of December 31, 2009, and we intend to pursue a strategy that is focused on unitranche, mezzanine and second lien loans and warrants and minority equity securities. As a business development company and a RIC, we will also be subject to certain constraints on our operations, including limitations imposed by the 1940 Act and the Code, to which GCMF was not subject. For the reasons described above, the results of operations described below may not necessarily be indicative of, the results we expect to report in future periods.

Comparison of the three months ended December 31, 2009 and December 31, 2008, and the years ended September 30, 2009 and September 30, 2008 and the operating period from July 27, 2007 (Inception) through September 30, 2007 (the “2007 Operating Period”)

Revenue

		Three Months Ended December 31, 2009				Three Months Ended December 31, 2008				Year Ended September 30, 2009				Year Ended September 30, 2008				2007 Operating Period
		(Dollars in Thousands)
Investment income		$	10,843			$	5,339			$	33,338			$	20,686			$	1,868

Investment income increased by $5.5 million, or 103%, for the three months ended December 31, 2009 as compared to the three months ended December 31, 2008. The increase in investment income was primarily attributable to an increase in invested assets, the completion of amendments which increased the interest

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spread on several loans and the realization of discounts on loans that were paid off during the three months ended December 31, 2009. For the three months ended December 31, 2009, total investment income consisted of $7.8 million in interest income from investments and $3.1 million in income from the amortization of discounts and origination fees. For the three months ended December 31, 2008, total investment income consisted of $4.9 million in interest income and $400,000 in income from the amortization of discounts and origination fees. Investment income increased by $12.7 million, or 61%, for the year ended September 30, 2009 as compared to the year ended September 30, 2008. The increase in investment income was primarily due to an increase in invested assets. This factor was partially offset by the lower average LIBOR during the year ended September 30, 2009, as 94.4% of our portfolio comprises loans had interest rates based on LIBOR plus a margin. However, some of our loans have interest rate floors that limit how low applicable LIBOR, and hence the interest rate on such loans, can fall. Average par value of invested assets for the year ended September 30, 2009 was $369.6 million, an increase of 65% over the prior year. The average of one-month LIBOR for the year ended September 30, 2009 was 0.83%, a decrease of 253 basis points from the prior year’s average. For the year ended September 30, 2009, total investment income consisted of $27.7 million in interest income from investments and $5.6 million in income from the amortization of discounts and origination fees. For the year ended September 30, 2008, total investment income consisted of $20.2 million in interest income, $315,000 in income from the amortization of discounts and origination fees and $140,000 in interest on cash.

Investment income for the 2007 Operating Period was $1.9 million and was primarily attributable to senior loan investments. For the Operating Period ended September 30, 2007, total investment income consisted of $1.8 million in interest income from investments and $29,000 in income from the amortization of discounts and origination fees.

Operating Expenses

		Three Months Ended December 31, 2009				Three Months Ended December 31, 2008				Year Ended September 30, 2009				Year Ended September 30, 2008				2007 Operating Period
		(Dollars in Thousands)
Management fees		$	729			$	421			$	2,849			$	1,726			$	134
Interest and other credit facility expenses			690				1,297				4,546				8,596				1,114
Other general and administrative expenses			242				60				464				320				3
Total operating expenses		$	1,661			$	1,778			$	7,860			$	10,642			$	1,25l

Total operating expenses decreased by $117,000, or 7%, for the three months ended December 31, 2009 as compared to the three months ended December 31, 2008. Total management fees, which are calculated based on invested assets, were higher in the three months ended December 31, 2009 than in the three months ended December 31, 2008 due to an increase in invested assets. Following the completion of this offering, we will pay management fees under the Investment Advisory Agreement, which provides a different basis for the calculation of such fees as compared to amounts paid by GCMF. Accordingly, the operating expense amounts for GCMF will not be directly comparable to our operating expenses after the completion of this offering. Interest and other Existing Credit Facility expenses were lower in the three months ended December 31, 2009 than the three months ended December 31, 2008 due to lower interest expense on the Existing Credit Facility, which is calculated as a spread over LIBOR, resulting from a decrease in LIBOR during the three months ended December 31, 2009. Other general and administrative expenses increased during the three months ended December 31, 2009 primarily due to a change in the allocation methodology of shared services expense, which, instead of being charged to the Capital Companies, was charged to GCMF.

Total operating expenses decreased by $2.8 million, or 26%, for the year ended September 30, 2009 as compared to the prior year. Total management fees, which are calculated based on invested assets, were higher in the year ended September 30, 2009 than in the previous year due to an increase in invested assets. Interest and other credit facility expenses were lower in the year ended September 30, 2009 than the prior year

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primarily due to lower interest expense on the Existing Credit Facility, which is calculated as a spread over LIBOR, resulting from a decrease in LIBOR during the year ended September 30, 2009. Other general and administrative expenses increased during the year ended September 30, 2009 primarily due to higher legal costs related to the Existing Credit Facility.

Total operating expenses for the 2007 Operating Period were $1.3 million. Of the total operating expenses, $1.1 million, or 89%, was attributable to interest and other credit facility expenses.

Net Realized and Unrealized Gains and Losses

		Three Months Ended December 31,								Year Ended September 30,
		2009				2008				2009				2008				2007 Operating Period
		(Dollars in Thousands)
Net realized loss on investments		$	0				-795			$	-3,972			$	-4,503			$	—
Net unrealized loss on investments			-840				-3,916				-1,489				-8,957				-558
Total net realized and unrealized loss before taxes		$	-840			$	-4,711			$	-5,461			$	-13,460			$	-558

During the three months ended December 31, 2009, we had $0 in net realized loss and $3.6 million in unrealized appreciation on 28 portfolio company investments. This more than offset unrealized depreciation on 50 portfolio company investments totaling approximately -$4.4 million. Unrealized appreciation during the three months ended December 31, 2009 resulted from an increase in fair value primarily due to the rise in market prices and a reversal of prior period unrealized depreciation. Unrealized depreciation resulted from a reduction in fair value primarily due to market yield adjustments.

Net realized loss for the three months ended December 31, 2008 was primarily due to the sale of 9 assets that we sold at a loss in December 2008. During the three months ended December 31, 2008, we had unrealized appreciation on 33 portfolio company investments totaling approximately $6.8 million, which was more than offset by unrealized depreciation on 57 portfolio company investments totaling approximately $10.7 million. Unrealized appreciation during the three months ended December 31, 2008 resulted primarily from a reversal of prior period unrealized depreciation. Unrealized depreciation was a result of a reduction in fair value primarily due to market yield adjustments.

Net realized loss for the year ended September 30, 2009 was primarily due to the sale of 9 assets that we sold at a loss in December of 2008. During the year ended September 30, 2009, we had unrealized appreciation on 63 portfolio company investments totaling approximately $13.2 million, which was more than offset by unrealized depreciation on 52 portfolio company investments totaling approximately $14.7 million. Unrealized appreciation during the year ended September 30, 2009 resulted from an increase in fair value primarily due to the rise in market prices and a reversal of prior period unrealized depreciation. Unrealized depreciation on 49 of the 52 the portfolio companies during the year ended September 30, 2009 resulted from a reduction in fair value primarily due to market yield adjustments. Unrealized depreciation attributable to the three other portfolio companies during the year ended September 30, 2009 resulted from a reduction in fair value primarily due to credit deterioration. These three assets were on non-accrual status as of September 30, 2009.

Net realized loss for the year ended September 30, 2008 was primarily due to the sale of 35 assets that we sold at a loss in May of 2008. During the year ended September 30, 2008, we had unrealized appreciation on 12 portfolio company investments totaling approximately $702,000, which was more than offset by unrealized depreciation on 43 portfolio company investments totaling approximately -$9.7 million. Unrealized appreciation during the year ended September 30, 2008 resulted primarily from a reversal of prior period unrealized depreciation. Unrealized depreciation was a result of a reduction in fair value primarily due to market yield adjustments.

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more than offset by unrealized depreciation on 15 portfolio company investments totaling approximately -$1.1 million. Unrealized depreciation result from a reduction in fair value primarily due to market yield adjustments.

Income Tax

As a limited liability company, GCMF did not pay U.S. federal income taxes, and our limited liability company interest holders are not required to pay income taxes on our income.

After the completion of this offering, we intend to elect to be treated for income tax purposes as a RIC. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on ordinary income or capital gains that we distribute to our stockholders as dividends. See “Material U.S. Federal Income Tax Considerations.”

Liquidity and Capital Resources

Our predecessor, GCMF, was formed in June 2007 and commenced operations in July 2007. Prior to December of 2008, the primary business activity of GCMF was to acquire and transfer investments, in whole or in part, to its affiliates. After December 2008, GCMF initiated a buy and hold investment strategy, which significantly changed its financial position and cash flows.

As of December 31, 2009 and September 30, 2009, 2008 and 2007, we had cash and cash equivalents of $46.3 million, $30.6 million, $4.3 million and $4.2 million, respectively. Cash provided or used by operating activities for the three months ended December 31, 2009 and the years ended September 30, 2009 and September 30, 2008 was $37.0 million, -$221.4 million and $64.2 million, respectively. Cash provided by operations resulted primarily from income items described in “— Results of Operations” above.

As a business development company, we will have an ongoing need to raise additional capital for investment purposes. In the future, we expect to increase our liquidity and raise additional capital through offerings of debt or equity securities, sales of investments as well as borrowings under the New Credit Facility. Since the middle of 2007, global credit and other financial markets have suffered substantial stress, volatility, illiquidity and disruption. These events have significantly diminished overall confidence in the debt and equity markets and caused increasing economic uncertainty. A further deterioration in the financial markets or a prolonged period of illiquidity without improvement could materially impair our ability to raise equity capital or debt capital on commercially reasonable terms.

Credit Facilities.  On July 27, 2007, GCMF entered into the Existing Credit Facility with Citigroup. This facility, which matures December 29, 2010, is governed by a variable funding note indenture, dated as of July 27, 2007, between GCMF, as issuer, and U.S. Bank National Association, as indenture trustee. As a result of a series of amendments, the Existing Credit Facility provided for potential borrowings of up to $500.0 million. Under the terms of the Existing Credit Facility, we were permitted to borrow up to 85% of the balances outstanding of pledged loans and investments, depending on the mix of assets and the rating and diversification of such assets. For advances under $300.0 million, our borrowings generally bear interest at an annual rate of LIBOR plus a margin ranging from 0.65% to 0.80%, depending on the diversity of the portfolio and type of collateral then in the portfolio. For borrowings above $300.0 million, our annual interest rate equals LIBOR plus a margin of between 1.15% and 1.45%, also depending on the diversity of the portfolio and the type of collateral then in the portfolio. As of December 31, 2009, the effective interest rate payable on amounts outstanding under the Existing Credit Facility was 0.9%.

The Existing Credit Facility provides for customary borrowing conditions, restrictive covenants, events of default and remedies. The affirmative and restrictive covenants contained in the Existing Credit Facility include: (i) payment of principal and interest and other amounts, (ii) maintenance of an agency office, (iii) maintenance and preservation of liens and security interests, (iv) periodic reporting requirements, (v) limitations on dispositions of assets, (vi) limitations on investments, (vii) restrictions on fundamental changes and (viii) limitations on borrowings and loans. The Existing Credit Facility had a facility commitment termination date of December 29, 2008. As a result, we are no longer able to borrow under the Existing Credit Facility and are required to use all payments of interest and principal that we receive from our current investments as well as any proceeds received from the sale of investments, net of payment of specified operating expenses, to repay amounts outstanding under the Existing Credit Facility. As of December 31,

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2009, the Existing Credit Facility had approximately $285.3 million in outstanding borrowings. On March 15, 2010, we entered into an amendment and waiver to the Existing Credit Facility permitting us to complete this offering and the other transactions described in this prospectus. This amendment requires us to repay at least $50.0 million in outstanding borrowings under the Existing Credit Facility upon closing of this offering. Neither our sponsor nor any of our affiliates has any recourse under the Existing Credit Facility.

We executed a commitment letter with Wells Fargo Bank, N.A. on March 15, 2010 for a $175.0 million New Credit Facility. If we are successful in securing the New Credit Facility, we intend to use borrowings under the New Credit Facility to retire all debt outstanding under and terminate the Existing Credit Facility, to make additional investments and for other general corporate purposes. For a discussion of the anticipated material terms of the New Credit Facility, see “— Recent Developments and Estimates — New Credit Facility.” If we are unable to enter into the New Credit Facility or enter into a similar facility or we default under the Existing Credit Facility, we may be forced to sell a portion of our investments quickly and prematurely to meet our outstanding payment obligations under the Existing Credit Facility. If we are unable to enter into the New Credit Facility or we default under the Existing Credit Facility, it would have a material adverse effect on our business, financial condition, results of operations and cash flows.

On December 23, 2009, GCMF entered into a waiver and consent under the Existing Credit Facility pursuant to which it was permitted to distribute to Golub Capital BDC LLC the assets distributed in the GCMF Asset Transactions at par value, free and clear of liens under the Existing Credit Facility. Golub Capital BDC LLC then distributed these portfolio assets to the three Capital Companies pro rata in accordance with the ownership interests in Golub Capital BDC LLC held by each of the Capital Companies. The Capital Companies made a cash contribution of $21.3 million to us, which was subsequently contributed to GCMF. Under the terms of the Existing Credit Facility, we were required to complete the distribution of these assets based on their par value, and the $21.3 million aggregate cash contribution by the Capital Companies represented the par value of the distributed assets. At the time of the transfer, the aggregate fair value of such distributed assets was $13.5 million. The contribution received by GCMF from the GCMF Asset Transactions was used by GCMF to repay amounts outstanding under the Existing Credit Facility. As of December 31, 2009, we had $285.3 million outstanding under the Existing Credit Facility.

GC Private Placement. On February 5, 2010, GEMS entered into an agreement to purchase 195 limited liability company interests in Golub Capital BDC LLC for cash, resulting in aggregate net cash proceeds to us of $25 million. The cash settlement of the GC Private Placement occurred immediately after the execution of the amendment to the Existing Credit Facility permitting such investment by GEMS on March 15, 2010. See “Capitalization,” “Management’s Discussion and Analysis of Financial Conditions, Results of Operations and Cash Flows — Recent Developments and Estimates,” “Related Party Transactions and Certain Relationships” and “Underwriting” for additional information about the GC Private Placement.

Borrowings

We had borrowings of $285.3 million, $315.3 million, $123.1 million and $173.5 million as of December 31, 2009, September 30, 2009, September 30, 2008 and September 30, 2007, respectively, under the Existing Credit Facility. See “— Liquidity and Capital Resources — Credit Facilities” for a description of the Existing Credit Facility.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented in our financial statements. However, our portfolio companies have and may continue to experience the impact of inflation on their operating results.

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. As of December 31, 2009, September 30, 2009 and September 30, 2008, we had outstanding commitments to fund investments totaling $17.8 million, $18.6 million and $120.4 million,

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respectively, under various undrawn revolving credit and other credit facilities. We hold as restricted cash an amount equal to any outstanding commitments to fund investments.

Contractual Obligations

		Payments Due by Period (Millions)
		Total				Less Than 1 Year				1 – 3 Years				3 – 5 Years				More Than 5 Years
Existing Credit Facility(1)		$	285.3			$	285.3			$	0			$	0			$	0

We have certain contracts under which we have material future commitments. We have entered into the Investment Advisory Agreement with GC Advisors in accordance with the 1940 Act. The Investment Advisory Agreement will become effective upon the closing of this offering. Under the Investment Advisory Agreement, GC Advisors has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee equal to a percentage of the average adjusted value of our gross assets and (2) an incentive fee based on our performance. See “Management Agreements — Management Fee.”

We have also entered into the Administration Agreement with GC Service as our administrator. The Administration Agreement will become effective upon the closing of this offering. Under the Administration Agreement, GC Service has agreed to furnish us with office facilities and equipment, provide us clerical, bookkeeping and record keeping services at such facilities and provide us with other administrative services necessary to conduct our day-to-day operations. See “Management Agreements — Administration Agreement.”

If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under our Investment Advisory Agreement and our Administration Agreement. Any new investment advisory agreement would also be subject to approval by our stockholders.

Upon the completion of this offering, the existing management agreement of GCMF will terminate with no continuing payment or other obligations on the part of either party.

Distributions

In order to qualify as a RIC and to avoid corporate level tax on the income we distribute to our stockholders, we are required, under the Code, to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our net stockholders on an annual basis. Additionally, we must distribute at least 98% of our net income (both ordinary income and capital gains) to avoid a U.S. federal excise tax. We intend to distribute quarterly dividends to our stockholders. Our quarterly dividends will be determined by our board of directors.

We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our RIC status. We cannot assure stockholders that they will receive any distributions.

To the extent our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income

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tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read any written disclosure accompanying a dividend payment carefully and should not assume that the source of any distribution is our ordinary income or gains.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our dividend reinvestment plan. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes.

Distributions to Unitholders for the three months ended December 31, 2009 and December 31, 2008 totaled $13.5 million and $3.4 million, respectively. Distributions to Unitholders for the years ended September 30, 2009 and September 30, 2008 and for the 2007 Operating Period totaled $3.4 million, $44.5 million and $0, respectively.

Related Parties

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

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GC Advisors also manages, and may in the future manage, other accounts that have investment mandates that are similar, in whole and in part, with ours. GC Advisors and its affiliates may determine that an investment is appropriate for us and for one or more of those other accounts. In such event, depending on the availability of such investment and other appropriate factors, and pursuant to GC Advisors’ allocation policy, GC Advisors or its affiliates may determine that we should invest side-by-side with one or more other accounts. Such investments will not be made when impermissible by applicable law and interpretive positions of the SEC and its staff, or inconsistent with GC Advisors’ allocation procedures.

In addition, we have adopted a formal code of ethics that governs the conduct of our and GC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law.

Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. During the period covered by our predecessor’s financial statements, many of the loans in our portfolio had floating interest rates, and we expect that our loans in the future will also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a quarterly basis. In addition, the Existing Credit Facility has a floating interest rate provision based on LIBOR which resets monthly, and we expect that the New Credit Facility and any other credit facilities into which we enter in the future may have floating interest rate provisions.

Assuming that the balance sheet as of the periods covered by this analysis were to remain constant and that Management took no actions to alter our existing interest rate sensitivity, a hypothetical immediate 1% change in interest rates may affect net income by more than 1% over a one-year horizon. Although Management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the Existing Credit Facility or other borrowing, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above.

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. 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 the investments in our portfolio with fixed interest rates.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies.

Valuation of Portfolio Investments.

Investments for which market quotations are readily available are valued at such market quotations. We may also obtain indicative prices with respect to certain of our investments from pricing services or brokers or dealers in order to value such investments. We expect that there will not be a readily available market value for many of the investments; those debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the board of directors. We expect to value such investments at fair value as determined in good faith by our board of directors using a documented valuation policy and a consistently applied valuation process. We will employ independent third party valuation firms for all material unquoted assets.

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Valuation methods may include comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the company will consider the pricing indicated by the external event to corroborate the private equity 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 the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

Our board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination.

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

In following these approaches, the types of factors that are taken into account in fair value pricing investments include, as relevant, but are not limited to: available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values.

Determination of fair values involves subjective judgments and estimates not susceptible to substantiation by auditing procedures. Under current auditing standards, the notes to our financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

Revenue Recognition.  Our revenue recognition policies are as follows:

Investments and Related Investment Income.  We account for investment transactions on a trade-date basis. Our board of directors determines the fair value of our portfolio of investments. Interest is recognized on the accrual basis. For investments with contractual PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, we will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the cost basis of investment, without regard to unrealized gains or losses previously recognized. We report changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments in our statement of operations.

Non-accrual.  We place loans on non-accrual status when principal and interest payments are past due 90 days or more or when there is reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual

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loans are restored to accrual status when past due principal and interest is paid and, in our management’s judgment, are likely to remain current. The total fair value of our non-accrual loans were $0, $8.4 million and $0 as of December 31, 2009, September 30, 2009 and September 30, 2008, respectively.

Recent Accounting Pronouncements.

In September 2006, the Financial Accounting Standards Board, or FASB, issued Statement No. 157, Fair Value Measurements (Accounting Standards Codification, or ASC, Topic 820). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. In conjunction with the affiliated entities which hold its membership equity interests, GCMF adopted this statement on a prospective basis on January 1, 2008. This accounting statement requires us to assume that the portfolio investment is assumed to be sold in the principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with SFAS 157 (ASC Topic 820), the market in which we can exit portfolio investments with the greatest volume and level activity is considered our principal market.

In February 2007, the FASB issued statement No. 159, The Fair Value Option for Financial Assets and Liabilities — Including an Amendment of FASB Statement No. 115, or SFAS 159 (ASC Topic 825). The statement permits an entity to choose to measure many financial instruments and certain other items at fair value, with unrealized gains and losses in earnings at each reporting period. SFAS 159 (ASC Topic 825) applies to all reporting entities, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value as a consequence of the election. SFAS 159 (ASC Topic 825) is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We did not elect any new fair value measurements.

In October 2008, the FASB issued Staff Positions No. 157-3, Determining the Fair Value of a Financial Asset When the Market is Not Active, or FSP 157-3 (ASC Topic 820). FSP 157-3 (ASC Topic 820) provides an illustrative example of how to determine the fair value of financial instruments in an inactive market. FSP 157-3 (ASC Topic 820) does not change the fair value measurement principles set forth in SFAS 157 (ASC Topic 820). Since adopting SFAS 157 (ASC Topic 820) in January 2008, our process for determining the fair value of our investments has been, and continues to be, consistent with the guidance provided in FSP 157-3 (ASC Topic 820). As a result, the application of FSP 157-3 (ASC Topic 820) did not affect our process for determining the fair value of our investments and did not have a material impact on our financial position, results of operations or cash flows.

On April 9, 2009, the FASB issued FASB Staff Position No. FAS 157-4 (ASC Topic 820), Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, or FSP No. 157-4 (ASC Topic 820). FSP No. 157-4 (ASC Topic 820) requires entities to consider whether events and circumstances indicate whether the transaction is or is not orderly as opposed to a forced or distressed transaction. Entities would place more weight on observable transactions determined to be orderly and less weight on transactions for which there is insufficient information to determine whether the transaction is orderly. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities. FSP No. 157-4 (ASC Topic 820) provides additional guidance for making fair value measurements more consistent with the principles presented in SFAS No. 157 (ASC Topic 820). SFAS 157-4 (ASC Topic 820) is effective for interim and annual periods ending after June 15, 2009. We have applied the provisions of this FSP in determining the fair value of our portfolio investments as of December 31, 2009. The application of this pronouncement did not have a material impact on our financial position, results of operations or cash flows.

Senior Securities

Information about GCMF’s senior securities is shown in the following table as of December 31, 2009 and September 30 for the years indicated in the table. The information for the years indicated in the table covers the total amount of senior securities outstanding as of December 31, 2009. We have derived the

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information as of September 30, 2007 and December 31, 2009 from unaudited financial data. The information as of September 30, 2008 and September 30, 2009 has been derived from our financial statements, which have been audited by our independent registered public accounting firm and are included elsewhere in this prospectus.

Class and Year		Total Amount Outstanding Exclusive of Treasury Securities(1)				Asset Coverage per Unit(2)				Involuntary Liquidating Preference per Unit(3)				Average Market Value per Unit(4)
Existing Credit Facility
September 30, 2007(5)		$	173,540			$	1,193				—				N/A
September 30, 2008		$	123,083			$	1,137				—				N/A
September 30, 2009		$	315,306			$	1,294				—				N/A
December 31, 2009		$	285,341			$	1,385				—				N/A

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THE COMPANY

General

We are an externally managed, closed-end, non-diversified management investment company that has filed an election to be regulated as a business development company under the 1940 Act. We were recently formed to continue and expand the business of our predecessor, GCMF, which commenced operations in July 2007, in making investments in senior secured, unitranche, mezzanine and second lien loans of middle-market companies that are, in most cases, sponsored by private equity investors. We have no experience operating as a business development company.

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through debt and minority equity investments. We intend to achieve our investment objective by (1) accessing the established loan origination channels developed by Golub Capital, (2) selecting investments within our core middle-market company focus, (3) partnering with sponsors, in many cases with whom we have invested alongside in the past, (4) implementing the disciplined underwriting standards of Golub Capital and (5) drawing upon the aggregate experience and resources of Golub Capital, a leading lender to middle-market companies with over $4 billion of capital as of December 31, 2009.

As of December 31, 2009, our portfolio primarily consisted of investments in senior secured loans ($219.4 million) and, to a lesser extent, unitranche loans ($93.7 million) and second-lien loans ($13.2 million), to middle-market companies organized and located primarily in the United States. While on the date of this prospectus our portfolio comprised primarily senior secured loans, going forward we intend to pursue a strategy focused on investing in unitranche, mezzanine and second lien loans and warrants and minority equity securities in U.S. middle-market companies. Accordingly, over time we expect that senior secured loans will represent a smaller percentage of our investment portfolio as these investments are repaid and we shift to a different mix of assets. We expect that our investments in loans will initially range between $10 million and $25 million each. In many cases, we anticipate that we will have opportunities to make equity co-investments or receive warrants to purchase equity securities of portfolio companies. We may also selectively invest more than $25 million in the securities of some portfolio companies, and we expect that the size of our individual investments will vary proportionally with the size of our capital base but is expected to remain within the concentration limits imposed by the 1940 Act.

We believe unitranche, mezzanine and second lien loans represent particularly attractive investments when compared to similar loans originated in the 2006-2008 period due to what we expect to be more attractive pricing and more conservative borrowing terms and deal structures.

Our Adviser

Our investment activities are managed by our investment adviser, GC Advisors. GC Advisors is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments and portfolio companies on an ongoing basis. GC Advisors was organized in September 2008 and is a registered investment adviser under the Advisers Act. GC Advisors has no experience advising or administering a business development company. Under the Investment Advisory Agreement, we will pay GC Advisors a base management fee and an incentive fee for its services. See “Management Agreements —  Management Fee” for a discussion of the base management fee and incentive fee, including the cumulative income incentive fee and the income and capital gains incentive fee, payable by us to GC Advisors. Unlike most closed-end funds whose fees are based on net assets, our base management fee is based on our gross assets and, therefore, GC Advisors will benefit when we incur debt or use leverage. Additionally, under the incentive fee structure, GC Advisors may benefit when capital gains are recognized and, because it determines when a holding is sold, GC Advisors controls the timing of the recognition of capital gains. Our board of directors is charged with protecting our interests by monitoring how GC Advisors addresses these and other conflicts of interest associated with its management services and compensation. While not expected to review or approve each borrowing or incurrence of leverage, our independent directors will periodically review GC Advisors’ services and fees as well as its portfolio management decisions and portfolio performance. In

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connection with these reviews, our independent directors will consider whether our fees and expenses (including those related to leverage) remain appropriate. See “Management Agreements — Board Approval of the Investment Advisory Agreement.”

GC Advisors is an affiliate of Golub Capital and has entered into the Staffing Agreement with two Golub Capital affiliates, Golub Capital Incorporated and Golub Capital Management LLC. Under the Staffing Agreement, these companies will make experienced investment professionals available to GC Advisors and provide access to the senior investment personnel of Golub Capital and its affiliates. The Staffing Agreement provides GC Advisors with access to deal flow generated by Golub Capital and its affiliates in the ordinary course of their businesses and commits the members of GC Advisors’ investment committee to serve in that capacity. As our investment adviser, GC Advisors is obligated to allocate investment opportunities among us and its other clients fairly and equitably over time in accordance with its allocation policy; however, there can be no assurance that such opportunities will be allocated to us fairly or equitably in the short term or over time. GC Advisors intends to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Golub Capital’s investment professionals.

An affiliate of GC Advisors, GC Service, will provide the administrative services necessary for us to operate.

GC Service

GC Service, an affiliate of GC Advisors, will provide the administrative services necessary for us to operate. GC Service will furnish us with office facilities and equipment and clerical, bookkeeping and record-keeping services. GC Service will oversee our financial reporting as well as prepare our reports to stockholders and reports required to be filed with the SEC. GC Service will also manage the determination and publication of our net asset value and the preparation and filing of our tax returns and will generally monitor the payment of our expenses and the performance of administrative and professional services rendered to us by others. GC Service may retain third parties to assist in providing administrative services to us. To the extent that GC Service outsources any of its functions, we will pay the fees associated with such functions on a direct basis without incremental profit to GC Service.

About Golub Capital

Golub Capital, founded in 1994, is a leading lender to middle-market companies. Reuters Loan Pricing Corporation ranked Golub Capital as the leading senior lender for middle-market leveraged buyouts (defined as total debt financing of under $100 million) in 2009, based both on deal value and number of deals. In 2008, Golub Capital was presented with three major middle-market lender awards from leading industry publications and organizations, including: Buyouts Magazine’s “Middle-market Lender of the Year,” M&A Advisor’s “Financing Firm of the Year” and ACG Mergers & Acquisitions’ “M&A Lender of the Year.” In addition, M&A Advisor named Golub Capital the “Mezzanine Financing Agent of the Year” in 2009. These awards do not constitute an endorsement by any such publication or organization of the securities being offered by this prospectus. As of December 31, 2009, Golub Capital managed over $4 billion of capital, with a team of 47 investment professionals dedicated to U.S. middle-market lending in New York, Chicago and Atlanta.

Since its founding, Golub Capital has completed debt financings with more than 110 middle-market sponsors and closed multiple debt financings with more than 40 sponsors. We believe that Golub Capital enjoys robust deal flow. Golub Capital received notice of approximately 1,000 potential investments in 2009, many of which we believe were proprietary or relationship-based opportunities.

Golub Capital has a long track record of investing in unitranche and junior capital financings, which is our long-term investment focus. Golub Capital invested more than $1.8 billion in unitranche and mezzanine transactions across a variety of market environments and industries between 2001 and 2009. From 2004 through 2009, Golub Capital invested in more than 240 middle-market companies and as of December 31, 2009, it held debt investments in more than 170 middle-market companies. Golub Capital has developed expertise in industries such as business and consumer services, consumer products, defense, value-added distribution, healthcare services, manufacturing, media and restaurants.

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Golub Capital’s middle-market lending group is managed by a four member senior management team consisting of Lawrence E. Golub, David B. Golub, Gregory W. Cashman and Andrew H. Steuerman. As of December 31, 2009, Golub Capital’s 47 investment professionals had an average of over 12 years of investment experience and were supported by 49 administrative and back office personnel that focus on operations, finance, legal and compliance, accounting and reporting, marketing, information technology and office management.

Market Opportunity

We intend to pursue a strategy focused on investing in unitranche, mezzanine and second lien loans and warrants and minority equity securities in middle-market companies in the United States. We believe the economic recession and the recent dislocation in U.S. credit markets have provided excellent conditions for middle-market lending. We find the middle-market attractive for the following reasons:

Large Target Market.  According to the U.S. Census Bureau in its 2002 economic census, there were approximately 153,000 small and middle-market companies in the United States with annual revenues between $10 million and $2.5 billion, compared with 900 companies with revenues greater than $2.5 billion. We believe that these middle-market companies represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have generated a significant number of investment opportunities for investment funds managed or advised by Golub Capital, including approximately 1,000 lending opportunities in 2009, and we believe that this market segment will continue to produce significant investment opportunities for us.

Specialized Lending Requirements.  We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to private middle-market companies in the United States (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender. As a result, middle-market companies historically have been served by a limited segment of the lending community.

We also believe that the dislocation in the markets over the last 18 to 24 months has further reduced the amount of credit available to middle-market companies. Many participants in the second lien and mezzanine debt market over the past five years, such as hedge funds and managers of collateralized loan obligations, or CLOs, have contracted or eliminated their origination activities as investors’ credit concerns have reduced available funding. In addition, we believe several existing business development corporations are less active in the lending markets due to a lack of access to debt and equity financing. Moreover, many commercial banks face significant balance sheet constraints and increased regulatory scrutiny, which we believe restrict their ability to provide loans to middle-market companies.

Robust Demand for Debt Capital.  Private equity firms raised record amounts of equity commitments in 2006-2008, far in excess of the amount of equity they subsequently invested from this capital raised. As of December 31, 2009, there was approximately $740 billion of private equity capital available and uninvested in the United States. We expect the large amount of unfunded buyout commitments will drive demand for leveraged buyouts over the next several years, which should, in turn, create leveraged lending opportunities for us. The following chart illustrates the estimated amount of unfunded buyout commitments over the past nine years:

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Private Equity Commitments
($ in billions)

Source: Buyouts Magazine (US Buyout Fund Commitments) / Standard & Poor’s Leveraged Commentary Data (Equity Invested in US Sponsored Transactions).

Significant Refinancing Requirements.  The debt associated with a large number of middle-market leveraged mergers and acquisitions completed from 2005 to 2008 should start to come due in the 2010 – 2013 time period. In many cases, we expect that this debt will need to be refinanced as the existing debt facilities mature. When combined with the decreased availability of debt financing for middle-market companies generally, these factors should increase lending opportunities for us. The following chart illustrates the maturity of middle-market leveraged credit facilities through 2014, a majority of which we believe will need to be refinanced:

Middle-Market Leveraged Credit Facility Maturity Breakdown
($ in billions)

Source: LSTA/Standard & Poor’s (Middle-market (defined as issuers with EBITDA of less than $50 million) LBO Volume)

Attractive Pricing.  Reduced access to, and availability of, debt capital typically increases the interest rates, or pricing, of loans for middle-market lenders. A recent survey of middle-market lenders conducted by Reuters Loan Pricing Corporation indicated interest rates charged on mezzanine credit facilities were at or above 15% per annum in many instances in 2009, versus typical rates of 11% to 13% in 2007. Recent

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mezzanine deals typically have included meaningful upfront fees, prepayment protections and, in some cases, warrants, all of which should enhance the profitability to lenders of making new loans.

Conservative Deal Structures.  As a result of the credit crisis, many lenders are requiring less senior and total leverage, more equity and more comprehensive loan covenants than was customary in the years leading up to the credit crisis. Lower debt multiples on purchase prices suggest that the cash flow of borrowing companies should enable them to service their debt more easily, creating a greater buffer against a downturn. According to industry sources, average total debt multiples of middle-market leveraged buy-out loans are at their lowest levels in the 13 years such data have been tracked. We may, have, from time to time invest in entities having leverage that exceeds the average debt multiples set forth below. The following chart illustrates the average debt multiples for middle-market leveraged buyout loans over the past 13 years and highlights the decline in average total debt multiples since 2007:

Middle-Market Average Total Debt Multiples on LBO Loans

Source: Standard & Poor’s LCD: Issuers with EBITDA of less than $50 million.

Increased Equity Cushions.  As senior and total leverage has decreased, equity contributions to buyouts of middle-market companies have increased. Based on our review of a number of middle-market debt transactions completed in 2009, the equity component of the purchase price of buyouts of middle-market companies increased substantially in 2009. Lower senior and total leverage should reduce risk to providers of debt financing. The following chart illustrates the increasing average equity contribution to leveraged buyouts since 2007:

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U.S. Industry Middle-Market Average Equity Contribution to LBOs

Source: Standard and Poor’s Leverage Buyout Review – Issuers with EBITDA of less than $50 million. The 2009 numbers are an internal estimate based on the average equity contribution percentage of new deals Golub Capital completed in 2009.

Competitive Strengths

Deep, Experienced Management Team.  We are managed by GC Advisors, which will have access through a staffing agreement with Golub Capital to the resources and expertise of Golub Capital’s 96 employees, led by our chairman, Lawrence E. Golub, and our chief executive officer, David B. Golub. Concurrently with the closing of this offering, certain existing investors in entities advised by affiliates of Golub Capital and certain of our officers and directors, their immediate family members or entities owned by, or family trusts for the benefit of, such persons will purchase in a separate private placement an aggregate of 1,322,581 shares of common stock at the initial public offering price per share. As of December 31, 2009, the 47 investment professionals of Golub Capital had an average of over 12 years of investment experience and were supported by 49 administrative and back office personnel that focus on operations, finance, legal and compliance, accounting and reporting, marketing, information technology, and office management. Golub Capital seeks to hire and retain high-quality investment professionals and reward those personnel based on investor returns. In 2008, Golub Capital’s expertise and leading position in the market was evidenced by its receipt of three major middle-market lender awards from leading industry publications and organizations, including: M&A Advisor’s “Financing Firm of the Year” and ACG Mergers & Acquisitions’ “M&A Lender of the Year.” In addition, Buyouts Magazine again named Golub Capital “Middle-Market Lender of the Year” and M&A Advisor named Golub Capital the “Mezzanine Financing Agent of the Year” in 2009. These awards do not constitute an endorsement by any such publication or organization of the securities being offered by this prospectus.

Leading U.S. Debt Platform Provides Access to Proprietary Relationship-Based Deal Flow.  GC Advisors gives us access to the deal flow of Golub Capital, one of the leading middle-market lenders in the United States. Reuters Loan Pricing Corporation ranked Golub Capital as the leading senior lender for middle-market leveraged buyouts (total debt financing of under $100 million) for 2009, based both on deal volume and number of deals. We believe this market position makes Golub Capital the first choice lender to many sponsors, especially in the weak lending environment of 2009. Since its inception, Golub Capital has

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completed at least one debt financing with over 110 sponsors and multiple debt financings with over 40 sponsors. We believe that Golub Capital receives relationship-based “early looks” and “last looks” at many investment opportunities in the U.S. middle-market market, allowing it to be highly selective in the transactions it pursues.

Disciplined Investment and Underwriting Process.  GC Advisors intends to utilize the established investment process of Golub Capital for reviewing lending opportunities, structuring transactions and monitoring investments. Using its disciplined approach to lending, GC Advisors will seek to minimize credit losses through effective underwriting, comprehensive due diligence investigations, structuring and the implementation of restrictive debt covenants. We expect that GC Advisors will select borrowers whose businesses will retain significant value, even in a depressed market or a distressed sale. We intend to reduce risk further by focusing on proven, successful sponsors. While emphasizing thorough credit analysis, we intend to maintain strong relationships with sponsors by offering rapid initial feedback from senior investment professionals to each investment opportunity shown to us.

Regimented Credit Monitoring.  Following each investment, GC Advisors implements a regimented credit monitoring system. This careful approach, which involves ongoing review and analysis by teams of professionals, should enable us to identify problems early and to assist borrowers before they face difficult liquidity constraints. If necessary, GC Advisors can assume the role of deal sponsor in a work-out situation and has extensive restructuring experience, both in and out of bankruptcy. We believe in the need to prepare for possible negative contingencies in order to address them promptly should they arise.

Concentrated Middle-Market Focus.  Because of our focus on the middle-market, we understand the following general characteristics of middle-market lending:

Investment Criteria/Guidelines

Our investment objective is to generate current income and capital appreciation, by investing primarily in unitranche loans, second lien and mezzanine debt, warrants and minority equity co-investments in U.S. middle-market companies. We intend to generate strong risk-adjusted net returns by assembling a diversified portfolio of investments across a broad range of industries and private equity investors.

We plan to target U.S. middle-market companies controlled by private equity investors that require capital for growth, acquisitions, recapitalizations, refinancings and leveraged buyouts. We may also make opportunistic loans to independently owned and publicly held middle-market companies. We seek to partner with strong management teams executing long-term growth strategies. Target businesses will typically exhibit some or all of the following characteristics:

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While we believe that the criteria listed above are important in identifying and investing in prospective portfolio companies, not all of these criteria will be met by each prospective portfolio company.

Investment Process Overview

We view our investment process as consisting of four distinct phases described below:

Origination.  GC Advisors sources investment opportunities through access to a network of over 10,000 individual contacts developed in the financial services and related industries by Golub Capital and managed through proprietary customer relationship database. Among these contacts is an extensive network of private equity firms and relationships with leading middle-market senior lenders. The senior deal professionals of Golub Capital supplement these leads through personal visits and marketing campaigns. It is their responsibility to identify specific opportunities, to refine opportunities through candid exploration of the underlying facts and circumstances and to apply creative and flexible thinking to solve clients’ financing needs. Golub Capital’s origination personnel are located in three offices across the United States. Each originator maintains long-standing customer relationships and is responsible for covering a specified target market. We believe those originators’ strength and breadth of relationships across a wide range of markets generate numerous financing opportunities, which should enable GC Advisors to be highly selective in recommending investments to us.

Credit Evaluation.  We intend to utilize the systematic, consistent approach to credit evaluation developed by Golub Capital, with a particular focus on determining the value of a business in a downside scenario. The key criteria that we intend to consider include (1) strong and resilient underlying business fundamentals, (2) a substantial equity cushion in the form of capital ranking junior in right of payment to our investment and (3) a conclusion that overall “downside” risk is manageable. While the size of this equity cushion will vary over time and among industries, the equity cushion generally sought by GC Advisors today is between 45% and 60% of total portfolio capitalization. We expect to focus on the criteria developed by Golub Capital for evaluating prospective portfolio companies discussed above under “— Competitive Strengths.” In evaluating a particular company, we intend to put more emphasis on credit considerations (such as (1) loan-to-value ratio (which is the amount of our loan divided by the enterprise value of the company we are investing in), (2) the ability of the company to maintain a liquidity cushion through economic cycles and in downside scenarios, (3) the ability of the company to service its fixed charge obligations under a variety of scenarios and (4) its anticipated strategic value in a downturn) than on profit potential and loan pricing. Our due diligence process for middle-market credits will typically entail:

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The following chart illustrates the stages of Golub Capital’s evaluation and underwriting process:

ILLUSTRATIVE DEAL EVALUATION PROCESS

FUND INVESTMENTS

Execution.  In executing transactions for us, GC Advisors will utilize the due diligence process developed by Golub Capital. Through a consistent approach to credit evaluation and careful attention to the details of execution, it seeks to close deals as fast or faster than competitive financing providers while maintaining discipline with respect to credit, pricing and structure to ensure the ultimate success of the financing. Upon completion of due diligence, the investment team working on an investment delivers a memorandum to GC Advisors’ investment committee. Once an investment has been approved by the investment committee on a consensus basis, it moves through a series of steps, including initial documentation using standard document templates and the establishment of negotiating boundaries, final documentation, including resolution of business points and the execution of original documents held in escrow. Upon completion of final documentation, a loan is funded upon the execution of an investment committee memorandum by members of GC Advisors’ investment committee.

Monitoring.  We view active portfolio monitoring as a vital part of our investment process. We consider board observation rights, where appropriate, regular dialogue with company management and sponsors and detailed, internally generated monitoring reports to be critical to our performance. Golub Capital has developed a monitoring template that is designed to reasonably ensure compliance with these standards. This template is used as a tool by GC Advisors to assess investment performance relative to plan. In addition, our portfolio companies may rely on us to provide them with financial and capital markets expertise.

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As part of the monitoring process, GC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on the following categories, which we refer to as GC Advisors’ investment performance rating:

Risk Ratings Definition
Rating		Definition
Grade 5		Involves the least amount of risk in our portfolio. The borrower is performing above expectations and the trends and risk factors are generally favorable.
Grade 4		Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is generally performing as expected and the risk factors are neutral to favorable.
Grade 3		Involves a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination. The borrower may be out of compliance with debt covenants; however; loan payments are generally not past due.
Grade 2		Involves a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due). For loans graded 2, we will implement a plan to increase monitoring of the borrower.
Grade 1		Indicates that the borrower is performing substantially below expectations and the loan risk has substantially increased since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans graded 1 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount it anticipates will be recovered.

For any investment rated in grades 1, 2 or 3, GC Advisors will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions.

GC Advisors monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, GC Advisors reviews these investment ratings on a quarterly basis, and our board of directors reviews and affirms such ratings.

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of December 31, 2009:

		December 31, 2009
Investment Performance Rating		Investments at Fair Value (Dollars in Thousands)				Percentage of Total Portfolio
5		$	104,967				32.2	%
4		$	152,256				46.7	%
3		$	65,143				20.0	%
2		$	3,860				1.2	%
1			—				—
Total		$	326,226				100.0	%

Investment Committee

The purpose of GC Advisors’ investment committee, which is comprised of officers of GC Advisors and is provided under the Investment Advisory Agreement, is to evaluate and approve all of our investments, subject at all times to the oversight and approval of our board of directors. The investment committee process is intended to bring the diverse experience and perspectives of the committee’s members to the analysis and consideration of each investment. The investment committee currently consists of Lawrence E. Golub, David B. Golub, Andrew H. Steuerman and Gregory W. Cashman. The investment committee serves to provide

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investment consistency and adherence to our core investment philosophy and policies. The investment committee also determines appropriate investment sizing and suggests ongoing monitoring requirements.

In addition to reviewing investments, investment committee meetings serve as a forum to discuss credit views and outlooks. Potential transactions and deal flow are reviewed on a regular basis. Members of the investment team are encouraged to share information and views on credits with the investment committee early in their analysis. We believe this process improves the quality of the analysis and assists the deal team members to work more efficiently.

Each transaction is presented to the investment committee in a formal written report. All of our new investments must be approved by a consensus of the investment committee. Each member of the investment committee performs a similar role for other accounts managed by Golub Capital and its affiliates. In certain instances, our board of directors may also determine that its approval is required prior to the making of an investment.

Investment Structure

Once we have determined that a prospective portfolio company is suitable for investment, we work with the management of that company and its other capital providers to structure an investment. We negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in the portfolio company’s capital structure.

We anticipate structuring our investments which will typically have maturities of five years, as follows:

Senior Secured Loans.  We anticipate structuring these investments as senior secured loans. We intend to obtain security interests in the assets of the portfolio company borrowers that will serve as collateral in support of the repayment of such loans. This collateral will take the form of first-priority liens on the assets of the portfolio company borrower. Our senior secured loans may provide for moderate loan amortization in the early years of the loan, with the majority of the amortization deferred until loan maturity. Under market conditions as of the date of this prospectus, we expect that the interest rate on senior secured loans will range between 5% and 8% over applicable LIBOR.

Unitranche Loans.  We anticipate structuring our unitranche loans as senior secured loans. We will obtain security interests in the assets of these portfolio companies that will serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Unitranche loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases, we will be the sole lender, or we together with our affiliates will be the sole lender, of unitranche loans, which can afford us additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance. Under market conditions as of the date of this prospectus, we expect that the interest rate on unitranche loans will range between 6% and 10% (reflecting a blending of rates appropriate for the senior and junior debt exposures inherent in a unitranche loan) over applicable LIBOR.

Second Lien Loans.  We anticipate structuring these investments as junior, secured loans. We intend to obtain security interests in the assets of these portfolio companies that will serve as collateral in support of the repayment of such loans. This collateral may take the form of second priority liens on the assets of a portfolio company. These loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Under market conditions as of the date of this prospectus, we expect that the interest rate on second lien loans will generally range between 8% and 12% over applicable LIBOR.

Mezzanine Loans.  We anticipate structuring these investments as unsecured, subordinated loans that provide for relatively high, fixed interest rates that provide us with significant current interest income. These loans typically will have interest-only payments (often representing a combination of cash pay and PIK interest) in the early years, with amortization of principal deferred to maturity. Mezzanine loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity.

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Mezzanine investments are generally more volatile than secured loans and may involve a greater risk of loss of principal. Mezzanine loans often include a PIK feature, which effectively operates as negative amortization of loan principal, thereby increasing credit risk exposure over the life of the loan. Under market conditions as of the date of this prospectus, we expect the interest rate on mezzanine loans will generally range between 11% and 17%.

Warrants and Minority Equity Securities.  In some cases, we will also receive nominally priced warrants or options to buy a minority equity interest in the portfolio company in connection with such a loan. As a result, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We may structure such warrants to include provisions protecting our rights as a minority-interest holder, as well as a “put,” or right to sell such securities back to the issuer, upon the occurrence of specified events. In many cases, we may also seek to obtain registration rights in connection with these equity interests, which may include demand and “piggyback” registration rights.

We intend to tailor the terms of each investment to the facts and circumstances of the transaction and the prospective portfolio company, negotiating a structure that protects our rights and manages our risk while creating incentives for the portfolio company to achieve its business plan and improve its operating results. We will seek to limit the downside potential of our investments by:

We expect to hold most of our investments to maturity or repayment, but we may sell some of our investments earlier if a liquidity event occurs, such as a sale, recapitalization or worsening of the credit quality of the portfolio company.

Investments

We seek to create a diverse portfolio that includes senior secured, unitranche, mezzanine and second lien loans and warrants and minority equity securities by investing approximately $10 to $25 million of capital, on average, in the securities of middle-market companies. Set forth below is a list of our ten largest portfolio company investments as of December 31, 2009, as well as the top ten industries in which we were invested as of December 31, 2009, in each case calculated as a percentage of our total assets as of such date.

Portfolio Company		Investment Amounts (000’s)				Percentage of Total Investments
AGData, L.P.		$	16,013				4.9	%
DDC Center Inc.			12,444				3.8
Pillar Processing LLC			10,026				3.1
Tangent Rail Services, Inc.			9,336				2.9
ITEL Laboratories, Inc.			8,759				2.7
eVestment Alliance Holdings, LLC			8,663				2.7
Benetech, Inc.			8,314				2.5
Wall Street Systems Holdings, Inc.			8,214				2.5
Vintage Parts, Inc.			7,784				2.4
Cortz, Inc.			6,974				2.1

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Industry		Investment Amounts (000’s)				Percentage of Total Investments
Healthcare, education and childcare		$	50,673				15.5	%
Finance			31,951				9.8
Buildings and real estate			29,797				9.1
Diversified conglomerate service			27,058				8.3
Cargo transport			19,321				5.9
Retail stores			17,821				5.5
Diversified conglomerate manufacturing			16,434				5.0
Farming and agriculture			16,013				4.9
Leisure, amusement, motion pictures and entertainment			15,434				4.7
Utilities			12,591				3.9

Managerial Assistance

As a business development company, we will offer, and must provide upon request, managerial assistance to our portfolio companies. This assistance could involve monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial guidance. GC Service or an affiliate of GC Service will provide such managerial assistance on our behalf to portfolio companies that request this assistance. We may receive fees for these services and will reimburse GC Service or an affiliate of GC Service for its allocated costs in providing such assistance, subject to the review and approval by our board of directors, including our independent directors.

Competition

Our primary competitors in providing financing to middle-market companies include public and private funds, other business development companies, commercial and investment banks, commercial financing companies and, to the extent they provide an alternative form of financing, private equity and hedge funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, we believe some competitors may have access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a business development company or to the distribution and other requirements we must satisfy to maintain our RIC status.

We expect to use the expertise of the investment professionals of Golub Capital and its affiliates to which we will have access to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we expect that the relationships of the senior members of Golub Capital and its affiliates will enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest. For additional information concerning the competitive risks we face, see “Risk Factors — Risks Relating to our Business and Structure — We operate in a highly competitive market for investment opportunities, which could reduce returns and result in losses.”

Administration

We will not have any direct employees, and our day-to-day investment operations will be managed by GC Advisors. We have a chief executive officer, chief financial officer and chief compliance officer and, to the extent necessary, our board of directors may elect to hire additional personnel going forward. Our officers will be employees of GC Service, an affiliate of GC Advisors, and our allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs will be paid by us pursuant to the Administration Agreement. Some of our executive officers described under “Management” are also officers of GC Advisors. See “Management Agreements — Administration Agreement.”

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Properties

We do not own any real estate or other physical properties materially important to our operation. Our headquarters are located at 150 South Wacker Drive, Suite 800, Chicago, IL 60606 and are provided by GC Service pursuant to the Administration Agreement. We believe that our office facilities are suitable and adequate to our business as we contemplate conducting it.

Legal Proceedings

Golub Capital BDC, GC Advisors and GC Service are not currently subject to any material legal proceedings.

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PORTFOLIO COMPANIES

The following table sets forth certain information as of December 31, 2009 for each portfolio company in which we had an investment. The general terms of our equity investments are described in “The Company — Investment Structure.” Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance that we may provide upon request and the board observer or participation rights we may receive in connection with our investment. We do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would “control” a portfolio company if we owned more than 25.0% of its voting securities and would be an “affiliate” of a portfolio company if we owned five percent or more of its voting securities. The loans in our current portfolio were either originated or purchased in the secondary market by Golub Capital and its affiliates. There are no material differences in the underwriting standards that were used to originate or purchase in the secondary market our current portfolio securities and the underwriting standards described in this prospectus that we expect to implement.

Name and Address of Portfolio Company

Industry

Type of Investment

Interest(1)

Maturity

Fair Value (Dollars in Thousands)

Percentage of Class Held*

ABP Corporation 19 Fid Kennedy Ave Boston, MA 02210

Beverage, Food and Tobacco

Senior Secured Term Loan B