Carlyle Credit Solutions Converts to Delaware Trust, Moves to 150% Asset Coverage Limit

The non-traded BDC’s fee rates carry over unchanged, but its proxy projected higher first-year interest costs and incentive fees per share from heavier expected use of leverage.

November 9, 2026

Carlyle Credit Solutions, the non-traded business development company advised by Carlyle Global Credit Investment Management L.L.C., completed its reorganization from a Maryland corporation into a Delaware statutory trust on Nov. 4. The change also moves the fund from the 200% asset coverage requirement it operated under as a corporation to the 150% minimum the Investment Company Act allows BDCs that obtain the required approvals.

Under a reorganization agreement signed Sept. 8, Carlyle Credit Solutions, Inc. merged into New Carlyle Credit Solutions, a trust formed for the transaction. The trust survived, took the Carlyle Credit Solutions name and has elected BDC status in its own right, while the predecessor withdrew its election and ceased to exist. The successor reports under a new SEC file number. The predecessor operated as TCG BDC II, Inc. until 2022.

Stockholders approved the plan on Nov. 2 at a special meeting that had been adjourned on Oct. 27, with 62,698,368 shares voting for, 2,608,107 against and 4,509,149 abstaining.

Each share of common stock converted one-for-one into a common share of beneficial interest of the same class, fractional shares included, and the trust issued 95,669,817 shares to former stockholders. According to the joint proxy statement/prospectus, the exchange was structured so each holder's aggregate net asset value carried over unchanged, the reorganization is intended to be tax-free, and the adviser is paying its costs, estimated at about $1.9 million.

Room to Borrow More

The 150% requirement, permitted under the 2018 Small Business Credit Availability Act, lets a BDC carry debt of up to twice its equity, compared with a one-to-one maximum at 200%. Under the plan, the adviser or an affiliate was to hold a single share before closing and, as the trust's initial shareholder, approve the lower ratio, the new advisory agreement and the election of trustees.

The proxy projected first-year interest payments about 249 basis points higher per share than at the predecessor because of a higher expected leverage profile. It also projected incentive fees about 23 basis points higher per share, since added leverage can lift pre-incentive net investment income above the hurdle. The board said the extra capacity could add to net investment income and support higher distributions over time, and acknowledged that leverage magnifies losses as well as gains.

Same Fee Rates, New Agreements

The trust signed a new investment advisory agreement with the adviser and an administration agreement with Carlyle Global Credit Administration L.L.C., both dated Nov. 4. The proxy states the management and incentive fee rates are identical to the predecessor's. The advisory agreement sets three fees:

• Base management fee: 1.00% a year of net assets at the end of the prior quarter, adjusted for capital drawn from shareholders and reinvested distributions during the quarter, paid quarterly in arrears.
• Income incentive fee: a 1.25% quarterly hurdle, a full catch-up between 1.25% and 1.43%, and a 12.5% rate above 1.43%.
• Capital gains incentive fee: 12.5% of cumulative realized gains net of realized losses and unrealized depreciation, less fees already paid, payable only if cumulative total return exceeds 7% a year on weighted average cumulative capital called, less cumulative distributions classified as returned capital.

Under the administration agreement, the fund reimburses the administrator's costs, including an allocable share of overhead. Both agreements run for an initial two years and then renew annually with approval from a majority of the non-interested trustees, and either can be ended without penalty on 60 days' notice.

Governance and Liquidity

The board of trustees is made up of the same individuals who sat on the predecessor's board, and the management team is unchanged. The trust has no classified board and will not hold annual trustee elections, and its trustees can amend the declaration of trust without a shareholder vote in many circumstances.

The fund remains a privately offered BDC whose shares are not listed on any exchange, and it kept issuing shares ahead of the reorganization, including $5.9 million of Class I shares in June. It plans to keep running quarterly tender offers on the same terms, and shares received in the reorganization keep their original holding period for purposes of any early repurchase fee.