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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2014

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                      to                     

Commission file number 814-00789

 

 

THL CREDIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware   27-0344947

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

100 Federal St., 31st Floor, Boston, MA   02110
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: 800-454-4424

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   x
Non-Accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  ¨    No  x

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding at August 11, 2014 was 33,905,202.

 

 

 


Table of Contents

THL CREDIT, INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2014

Table of Contents

 

    

INDEX

   PAGE
NO.
 

PART I.

  FINANCIAL INFORMATION   

Item 1.

  Financial Statements   
  Consolidated Statements of Assets and Liabilities as of June 30, 2014 (unaudited) and December 31, 2013      2   
  Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013 (unaudited)      3   
  Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2014 and 2013 (unaudited)      4   
  Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited)      5   
  Consolidated Schedules of Investments as of June 30, 2014 (unaudited) and December 31, 2013      6   
  Notes to Consolidated Financial Statements (unaudited)      18   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      39   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      62   

Item 4.

  Controls and Procedures      63   

PART II.

  OTHER INFORMATION   

Item 1.

  Legal Proceedings      63   

Item 1A.

  Risk Factors      63   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      63   

Item 3.

  Defaults Upon Senior Securities      63   

Item 4.

  Mine Safety Disclosures      63   

Item 5.

  Other Information      63   

Item 6.

  Exhibits      64   

SIGNATURES

       65   

 

1


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities

(in thousands, except per share data)

 

     June  30,
2014
(unaudited)
    December 31,
2013
 

Assets:

    

Investments at fair value:

    

Non-controlled, non-affiliated investments (cost of $731,689 and $645,911, respectively)

   $ 731,178      $ 648,860   

Controlled investments (cost of $11,218 and $0, respectively)

     11,218        —     

Non-controlled, affiliated investments (cost of $8 and $7, respectively)

     8        7   
  

 

 

   

 

 

 

Total investments at fair value (cost of $742,915 and $645,918, respectively)

   $ 742,404      $ 648,867   

Cash

     22,219        7,829   

Receivable for investments sold

     9,783        —     

Interest receivable

     9,131        7,225   

Deferred financing costs

     5,627        4,604   

Due from affiliate

     883        1,025   

Receivable for paydown of investments

     716        275   

Other deferred assets

     713        825   

Deferred offering costs

     184        —     

Prepaid expenses and other assets

     154        441   

Escrow receivable

     —          1,800   
  

 

 

   

 

 

 

Total assets

   $ 791,814      $ 672,891   
  

 

 

   

 

 

 

Liabilities:

    

Loans payable

   $ 313,801      $ 204,300   

Payable for investment purchased

     16,660        4,400   

Accrued incentive fees

     3,985        3,421   

Base management fees payable

     2,879        2,243   

Deferred tax liability

     1,303        2,414   

Accrued expenses

     1,187        1,617   

Accrued credit facility fees and interest

     891        567   

Interest rate derivative

     382        284   

Other deferred liabilities

     233        —     

Accrued administrator expenses

     147        158   

Due to affiliate

     113        474   

Income taxes payable

     82        71   
  

 

 

   

 

 

 

Total liabilities

     341,663        219,949   

Commitments and contingencies (Note 8)

    

Net Assets:

    

Preferred stock, par value $.001 per share, 100,000 preferred shares authorized, no preferred shares issued and outstanding

     —          —     

Common stock, par value $.001 per share, 100,000 common shares authorized, 33,905 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively

     34        34   

Paid-in capital in excess of par

     448,902        450,043   

Net unrealized appreciation on investments, net of provision for taxes of $1,429 and $2,414, respectively

     (1,940     535   

Net unrealized depreciation on interest rate derivative

     (382     (284

Interest rate derivative periodic interest payments, net

     (840     (613

Accumulated undistributed net realized gains

     —          2,023   

Accumulated undistributed net investment income

     4,377        1,204   
  

 

 

   

 

 

 

Total net assets

     450,151        452,942   
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 791,814      $ 672,891   
  

 

 

   

 

 

 

Net asset value per share

   $ 13.28      $ 13.36   
  

 

 

   

 

 

 

See accompanying notes to these consolidated financial statements

 

2


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Statements of Operations (unaudited)

(in thousands, except per share data)

 

     For the three months ended June 30,     For the six months ended June 30,  
     2014     2013     2014     2013  

Investment Income:

        

From non-controlled, non-affiliated investments:

        

Interest income

   $ 21,721      $ 16,888      $ 39,273      $ 30,779   

Dividend income

     637        4,527        2,785        4,527   

Other income

     588        510        1,030        545   

From non-controlled, affiliated investments:

        

Other income

     760        747        1,514        1,244   

From controlled investments:

        

Interest income

     39        —          39        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     23,745        22,672        44,641        37,095   

Expenses:

        

Base management fees

     2,879        1,673        5,402        3,196   

Credit facility interest and fees

     2,475        1,401        4,565        2,495   

Incentive fees

     2,321        3,728        5,066        6,040   

Administrator expenses

     947        761        1,874        1,650   

Other general and administrative expenses

     725        497        1,310        847   

Professional fees

     706        415        1,017        641   

Amortization of deferred financing costs

     328        269        635        765   

Directors’ fees

     143        159        292        286   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     10,524        8,903        20,161        15,920   

Income tax provision and excise tax

     334        496        891        496   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     12,887        13,273        23,589        20,679   

Realized Gain (Loss) and Change in Unrealized Appreciation on Investments:

        

Net realized (loss) gain on non-controlled, non-affiliated investments

     (573     2,782        (274     2,782   

Net change in unrealized appreciation on investments:

        

Non-controlled, non-affiliated investments

     (2,851     (681     (3,460     1,018   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized (loss) gain from investments

     (3,424     2,101        (3,734     3,800   

Benefit (provision) for taxes on realized gain on investments

     72        (1,097     (249     (1,097

Benefit (provision) for taxes on unrealized gain on investments

     14        596        984        67   

Interest rate derivative periodic interest payments, net

     (114     (104     (227     (208

Net change in unrealized (depreciation) appreciation on interest rate derivative

     (152     846        (99     988   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations

   $ 9,283      $ 15,615      $ 20,264      $ 24,229   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income per common share:

        

Basic and diluted

   $ 0.38      $ 0.49      $ 0.70      $ 0.78   

Net increase in net assets resulting from operations per common share:

        

Basic and diluted

   $ 0.27      $ 0.58      $ 0.60      $ 0.91   

Dividends declared and paid

   $ 0.34      $ 0.34      $ 0.68      $ 0.67   

Weighted average shares of common stock outstanding:

        

Basic and diluted

     33,905        26,899        33,905        26,609   

See accompanying notes to these consolidated financial statements

 

3


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets (unaudited)

(in thousands, except per share data)

 

     For the six months ended June 30,  
     2014     2013  

Increase in net assets from operations:

    

Net investment income

   $ 23,589      $ 20,679   

Interest rate derivative periodic interest payments, net

     (227     (208

Net realized (loss) gain on investments

     (274     2,782   

Income tax provision, realized gain

     (249     (1,097

Net change in unrealized appreciation on investments

     (3,460     1,018   

Benefit for taxes on unrealized appreciation on investments

     984        67   

Net change in unrealized (depreciation) appreciation on interest rate derivative

     (99     988   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     20,264        24,229   

Distributions to stockholders from net investment income

     (20,771     (17,631

Distributions to stockholders from net realized gain

     (2,284     —     

Capital share transactions:

    

Issuance of common stock

     —          110,966   

Less offering costs

     —          (4,753
  

 

 

   

 

 

 

Net increase in net assets from capital share transactions

     —          106,213   
  

 

 

   

 

 

 

Total (decrease) increase in net assets

     (2,791     112,811   

Net assets at beginning of period

     452,942        347,484   
  

 

 

   

 

 

 

Net assets at end of period

   $ 450,151      $ 460,295   
  

 

 

   

 

 

 

Common shares outstanding at end of period

     33,905        33,905   
  

 

 

   

 

 

 

Capital share activity:

    

Shares sold

     —          7,590   

See accompanying notes to these consolidated financial statements

 

4


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     For the six months ended June 30,  
     2014     2013  

Cash flows from operating activities

    

Net increase in net assets resulting from operations

   $ 20,264      $ 24,229  

Adjustments to reconcile net increase in net assets resulting from operations to net cash used for operating activities:

    

Net change in unrealized appreciation on investments

     3,460        (1,018 )

Net change in unrealized depreciation (appreciation) on interest rate derivative

     99        (988 )

Realized loss on investments

     455        —     

Increase in investments due to PIK

     (1,126     (1,874 )

Amortization of deferred financing costs

     635        765  

Accretion of discounts on investments and other fees

     (2,748     (2,007 )

Changes in operating assets and liabilities:

    

Purchases of investments

     (183,746     (185,209 )

Proceeds from sale and paydown of investments

     92,204        91,893  

Increase in interest receivable

     (1,906     (5,311 )

Decrease in escrow receivable

     1,800        —     

Decrease (increase) in due from affiliate

     142        (123 )

Decrease in other deferred assets

     112        —     

Decrease in prepaid expenses and other assets

     287        —     

Decrease in accrued expenses

     (462     (63 )

Increase (decrease) in accrued credit facility fees and interest

     324        (58 )

Increase in income taxes payable

     11        1,548  

Decrease in deferred tax liability

     (1,111     (67 )

Increase in base management fees payable

     636        159  

Decrease in accrued administrator expenses

     (11     (284 )

Increase in other deferred liabilities

     233        —     

Increase in incentive fees payable

     564        1,915  

(Decrease) increase in due to affiliate

     (361     180  

Decrease in dividend payable

     —          (1,316 )
  

 

 

   

 

 

 

Net cash used in operating activities

     (70,245     (77,629 )

Cash flows from financing activities

    

Borrowings under credit facility

     210,750        228,700  

Repayments under credit facility

     (101,249     (208,700 )

Issuance of shares of common stock

     —          110,966  

Distributions paid to stockholders

     (23,055     (17,631 )

Financing and offering costs paid

     (1,811     (6,148 )
  

 

 

   

 

 

 

Net cash provided by financing activities

     84,635        107,187  
  

 

 

   

 

 

 

Net increase in cash

     14,390        29,558  

Cash, beginning of period

     7,829        4,819  
  

 

 

   

 

 

 

Cash, end of period

   $ 22,219      $ 34,377  
  

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

    

Cash interest paid

   $ 2,722      $ 1,609  

Income taxes paid

   $ 752      $ 45   

PIK income earned

   $ 1,162      $ 1,951  

See accompanying notes to these consolidated financial statements

 

5


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited)

June 30, 2014

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No.  of Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Non-controlled/non-affiliated
investments —162.43% of net asset value

             

20-20 Technologies Inc.

             

Senior Secured Term Loan(4)

  IT services   10.8% (5)     09/12/12        03/31/19      $ 32,000      $ 31,644      $ 31,680   
           

 

 

   

 

 

 
              31,644        31,680   

Adirondack Park CLO Ltd.

             

Subordinated Notes,
Residual Interest
(4)

 

Financial

services

  12.4% (12)     03/27/13        04/15/24        —        $ 8,455      $ 8,500   
           

 

 

   

 

 

 
              8,455        8,500   

Aerogroup International Inc.

             

Second Lien Term Loan

 

Consumer

products

  9.0% (LIBOR
+ 8.0%)
    06/09/14        12/09/19      $ 13,648      $ 13,377      $ 13,377   

Second Lien Term Loan Delayed Draw(10)(15)

    9.0% (LIBOR
+ 8.0%)
    06/09/14        12/09/14        —          (49     —     

Common stock(9)

        06/09/14        —          253,616        11        11   

Preferred stock(9)

        06/09/14        —          28,180        1,108        1,108   
           

 

 

   

 

 

 
              14,447        14,496   

AIM Media Texas Operating, LLC

             

Member interest(7)(8)

 

Media,

entertainment

and leisure

      06/21/12        —          0.763636      $ 764      $ 864   
           

 

 

   

 

 

 
              764        864   

Airborne Tactical Advantage Company, LLC

             

Senior Secured Note

 

Aerospace &

defense

  11.0%     09/07/11        03/07/16      $ 4,000      $ 3,916      $ 3,980   

CapEx Term Loan

    11.0%     06/24/14        03/07/16        2,600        2,548        2,587   

Class A Warrants(9)

        09/07/11        —          512        113        41   

Series A Preferred Stock(9)

        09/17/13        —          225        169        206   
           

 

 

   

 

 

 
              6,746        6,814   

Alex Toys, LLC

             

Second Lien Term Loan

 

Consumer

products

  11.0% (LIBOR
+ 10.0%)
    06/30/14        12/30/19      $ 17,000      $ 16,660      $ 16,660   
           

 

 

   

 

 

 
              16,660        16,660   

Allen Edmonds Corporation

             

Second Lien Term Loan

 

Consumer

products

  10% (LIBOR
+ 9.0%)
    11/26/13        05/27/19      $ 7,333      $ 7,199      $ 7,223   
           

 

 

   

 

 

 
              7,199        7,223   

Allied Wireline Services, LLC

             

Senior Secured Term Loan

 

Energy /

Utilities

  9.5% (LIBOR
+ 8.0%)
    02/28/14        02/28/19      $ 10,186      $ 9,732      $ 10,007   

Class A Common Equity (7)(8)(9)

            —          619        742   

Warrant for Common (7)(8)(9)

            —          175        232   
           

 

 

   

 

 

 
              10,526        10,981   

BeneSys Inc.

             

Senior Secured Term Loan

 

Business

services

  10.8% (LIBOR
+ 9.8%)
    03/31/14        03/31/19      $ 8,333      $ 8,173      $ 8,173   
           

 

 

   

 

 

 
              8,173        8,173   

Blue Coat Systems, Inc.

             

Second Lien Term Loan

  IT services   9.5% (LIBOR
+ 8.5%)
    06/27/13        06/27/20      $ 5,000      $ 4,957      $ 5,100   
           

 

 

   

 

 

 
              4,957        5,100   

C&K Market, Inc.

             

Senior Subordinated Note

 

Retail &

grocery

  18.0%(18)     11/3/10        11/3/15      $ 17,067      $ 13,302      $ 10,920   

Warrant for Class B

        11/3/10        —          156,552        349        —     
           

 

 

   

 

 

 
              13,651        10,920   

Charming Charlie, LLC.

             

Senior Secured Term Loan

 

Retail &

grocery

  9.0% (LIBOR
+ 8.0%)
    12/18/13        12/31/19      $ 26,933      $ 26,555      $ 27,270   
           

 

 

   

 

 

 
              26,555        27,270   

 

(Continued on next page)

See accompanying notes to these consolidated financial statements

 

6


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) – (Continued)

June 30, 2014

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of  Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Connecture, Inc.

             

Second Lien Term Loan

  Healthcare   13.5% (LIBOR + 12.5%)     03/18/13        07/15/18      $ 21,831      $ 21,585      $ 21,831   
           

 

 

   

 

 

 
              21,585        21,831   

Copperweld Bimetallics LLC

             

Senior Secured Term Loan

  Industrials   12.0%     12/11/13        12/11/18      $ 21,175      $ 20,398      $ 20,753   
           

 

 

   

 

 

 
              20,398        20,753   

Country Pure Foods, LLC

             

Subordinated Term Loan

 

Food &

beverage

  13.0%     08/13/10        02/13/17      $ 16,181      $ 16,181      $ 16,100   
           

 

 

   

 

 

 
              16,181        16,100   

CRS Reprocessing, LLC

             

Senior Secured Term Loan

  Manufacturing   10.3% (LIBOR + 9.3%)     06/16/11        06/16/15      $ 15,461      $ 15,432      $ 15,383   
           

 

 

   

 

 

 
              15,432        15,383   

Dr. Fresh, LLC

             

Subordinated Term Loan

 

Consumer

products

 

14.0%(6)

(12.0% Cash

and 2.0% PIK)

    05/15/12        11/15/17      $ 14,593      $ 14,391      $ 14,520   
           

 

 

   

 

 

 
              14,391        14,520   

Dryden CLO, Ltd.

             

Subordinated Notes, Residual Interest(4)

 

Financial

services

  13.6%(12)     09/12/13        11/15/25        —        $ 8,460      $ 8,900   
           

 

 

   

 

 

 
              8,460        8,900   

Duff & Phelps Corporation

             

Tax Receivable Agreement Payment Rights(11)

 

Financial

services

  17.0%(12)     06/01/12        12/31/29        —        $ 12,163      $ 13,847   

Senior Secured Term Loan(11)

   

4.5% (LIBOR +

3.5%)

    05/15/13        04/23/20      $ 248        251        249   
           

 

 

   

 

 

 
              12,414        14,096   

Embarcadero Technologies, Inc.

             

Senior Secured Term Loan

  IT services   10.5% (5)     02/15/13        12/28/17      $ 9,558      $ 9,450      $ 9,558   
           

 

 

   

 

 

 
              9,450        9,558   

Expert Global Solutions, Inc.

             

Second Lien Term Loan

 

Business

services

 

12.5% (6) (LIBOR

+ 10.2% and
0.8% PIK)

    06/21/13        10/03/18      $ 18,727      $ 18,966      $ 18,165   
           

 

 

   

 

 

 
              18,966        18,165   

Express Courier International, Inc.

             

Secured Subordinated Term Loan

 

Business

services

  15.0% (13) (PIK)     01/17/12        07/17/16      $ 9,264      $ 7,652      $ 6,524   
           

 

 

   

 

 

 
              7,652        6,524   

Firebirds International, LLC

             

Common stock(9)

  Restaurants       05/17/11        —          1,906      $ 191      $ 255   
           

 

 

   

 

 

 
              191        255   

Flagship VII, Ltd.

             

Subordinated Notes, Residual Interest (4)

 

Financial

services

  14.2% (12)     12/18/13        01/20/26        —        $ 4,409      $ 4,450   
           

 

 

   

 

 

 
              4,409        4,450   

Food Processing Holdings, LLC

             

Senior Secured Term Loan (14)

 

Food &

beverage

  10.5% (LIBOR +9.5%)     10/31/13        10/31/18      $ 22,202      $ 21,804      $ 22,202   

Senior Secured Delayed Draw Loan(10)

    10.5% (LIBOR +9.5%)     10/31/13        10/31/18        —          —          —     

Class A Units(9)

        04/20/10        —          162.44        163        215   

Class B Units(9)

        04/20/10        —          406.09        408        423   
           

 

 

   

 

 

 
              22,375        22,840   

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

7


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) – (Continued)

June 30, 2014

(dollar amounts in thousands)

 

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of  Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Freeport Financial SBIC Fund LP

             

Member interest(16)

 

Financial

services

      06/14/13        —          —        $ 1,649      $ 1,650  
           

 

 

   

 

 

 
              1,649        1,650  

Gold, Inc.

             

Subordinated Term Loan

 

Consumer

products

  12.0%     12/31/12        06/30/19      $ 16,788      $ 16,788      $ 16,704  
           

 

 

   

 

 

 
              16,788        16,704  

Gryphon Partners 3.5, L.P.

             

Partnership interest(16)

 

Financial

services

      11/20/12        12/21/18        —        $ 199      $ 468  
           

 

 

   

 

 

 
              199        468  

Harrison Gypsum, LLC

             

Senior Secured Term Loan

  Industrials  

10.5%(6) (LIBOR
+ 8.5% and 0.5%

PIK)

    12/21/12        12/21/17      $ 23,858      $ 23,593      $ 23,739  
           

 

 

   

 

 

 
              23,593        23,739  

Hart InterCivic, Inc.

             

Senior Secured Term Loan

  IT services   11.5% (LIBOR
+ 9.0% and 1% PIK)
    07/01/11        07/01/16      $ 8,739      $ 8,658      $ 8,433  

Senior Secured Revolving Loan(10)

    10.5% (LIBOR
+ 9.0%)
    07/01/11        07/01/16        800        776        800  
           

 

 

   

 

 

 
              9,434        9,233  

HEALTHCAREfirst, Inc.

             

Senior Secured Term Loan

  Healthcare   12.5%(5)     08/31/12        08/30/17      $ 8,808      $ 8,623      $ 8,280  
           

 

 

   

 

 

 
              8,623        8,280  

Holland Intermediate Acquisition Corp.

             

Senior Secured Term Loan

 

Energy /

Utilities

  10.0% (LIBOR
+ 9.0%)
    05/29/13        05/29/18      $ 24,227      $ 23,794      $ 24,227  

Senior Secured Revolving Loan(10)

    10.0% (LIBOR
+ 9.0%)
    05/29/13        05/29/18        —          —          —     
           

 

 

   

 

 

 
              23,794        24,227  

Hostway Corporation

             

Second Lien Term Loan

  IT services   10.0% (LIBOR
+ 8.8%)
    12/27/13        12/13/20      $ 12,000      $ 11,772      $ 11,820  

Class A Common Equity(9)

        12/27/13        —          20,000        200        243  

Class A Preferred Equity(9)

        12/27/13        —          1,800        1,800        1,800  
           

 

 

   

 

 

 
              13,772        13,863  

Igloo Products Corp.

             

Senior Secured Term Loan

 

Consumer

products

  10.3% (LIBOR
+ 8.8%)
    03/28/14        03/28/20        24,922      $ 24,379      $ 24,379  

Common stock(8)(9)

        04/30/14        —          253,616        1,686        1,686  
           

 

 

   

 

 

 
              26,065        26,065  

Ingenio Acquisition, LLC

             

Senior Secured Term Loan

 

Media,

entertainment

and leisure

 

11.3% (10.3%

Cash + 1.0%

PIK)

    05/09/13        05/09/18      $ 9,169      $ 9,017      $ 9,169  
           

 

 

   

 

 

 
              9,017        9,169  

Key Brand Entertainment, Inc.

             

Senior Secured Term Loan

 

Media,

entertainment

and leisure

  9.8% (LIBOR
+ 8.5%)
    08/08/13        08/08/18      $ 13,178      $ 12,953      $ 13,112  

Senior Secured Revolving Loan(10)(15)

    9.8% (LIBOR
+ 8.5%)
    08/08/13        08/08/18        —          (24     —     

Secured Term Loan

    12.5% (LIBOR
+ 11.3%)
    05/29/14        08/08/18        2,874        2,817        2,817  

Secured Multi-draw Term Loan(15)

    12.5% (LIBOR
+ 11.3%)
    05/29/14        08/08/18        —          (62     —     
           

 

 

   

 

 

 
              15,684        15,929  

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

8


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) – (Continued)

June 30, 2014

(dollar amounts in thousands)

 

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of  Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Loadmaster Derrick & Equipment, Inc.

             

Senior Secured Term Loan

  Energy / Utilities   9.3% (LIBOR + 8.3%)     09/28/12        09/28/17      $ 8,828      $ 8,663      $ 8,828   

Senior Secured Revolving Loan(10)(14)

    9.3% (LIBOR + 8.3%)     09/28/12        09/28/17        4,000        4,000        4,000   

Senior Secured Delayed Draw Term Loans(10)

    9.3% (LIBOR + 8.3%)     09/28/12        09/28/17        —          —          —     
           

 

 

   

 

 

 
              12,663        12,828   

Martex Fiber Southern Corp.

             

Subordinated Term Loan

  Industrials  

13.5%(6)

(12.0% Cash and 1.5% PIK)

    04/30/12        10/31/19      $ 8,957      $ 8,852      $ 8,330   
           

 

 

   

 

 

 
              8,852        8,330   

Oasis Legal Finance Holding Company LLC

             

Second Lien Term Loan

  Financial services   10.5%     09/30/13        09/30/18      $ 13,943      $ 13,698      $ 13,943   
           

 

 

   

 

 

 
              13,698        13,943   

Octagon Income Note XIV, Ltd.

             

Income Notes, Residual Interest(4)

  Financial services   14.3%(12)     12/19/12        01/15/24        —        $ 7,985      $ 8,290   
           

 

 

   

 

 

 
              7,985        8,290   

OEM Group, Inc.

             

Senior Secured Subordinated Note

  Manufacturing  

15.0%(6)

(12.5% Cash and 2.5% PIK)

    10/07/10        10/07/15      $ 15,358      $ 15,220      $ 13,822   

Senior Secured Subordinated Bridge Loan

   

15.0%(6)

(12.5% Cash and 2.5% PIK)

    06/06/14        02/28/15        3,000        2,970        2,700   

Warrant for Common

        10/07/10        —          —          —          —     
           

 

 

   

 

 

 
              18,190        16,522   

Sheplers, Inc.

             

Senior Secured Second Lien Term Loan

  Retail & grocery   13.2% (LIBOR + 11.7%)     12/20/11        12/20/16      $ 11,426      $ 11,261      $ 11,484   

Subordinated Term Loan

    17.0%(17) (10.0% Cash and 7.0% PIK)     12/20/11        12/20/17        1,971        1,948        1,981   
           

 

 

   

 

 

 
              13,209        13,465   

Sheridan Square CLO, Ltd

             

Income Notes, Residual Interest(4)

  Financial services   13.2%(12)     03/12/13        04/15/25        —        $ 5,708      $ 5,954   
           

 

 

   

 

 

 
              5,708        5,954   

Specialty Brands Holdings, LLC

             

Second Lien Term Loan

  Restaurants   11.3% (LIBOR + 9.8%)     07/16/13        07/16/18      $ 20,977      $ 20,621      $ 20,558   
           

 

 

   

 

 

 
              20,621        20,558   

The Studer Group, L.L.C.

             

Senior Subordinated Note

  Healthcare   12.0%     09/29/11        01/31/19      $ 16,910      $ 16,910      $ 16,910   
           

 

 

   

 

 

 
              16,910        16,910   

Surgery Center Holdings, Inc.

             

Second Lien Term Loan

  Healthcare   9.8% (LIBOR + 8.5%)     04/19/13        04/11/20      $ 10,000      $ 9,782      $ 10,200   

Member interest(8)(9)

        04/20/10        —          469,673        —          2,200   
           

 

 

   

 

 

 
              9,782        12,400   

Synarc-Biocore Holdings, LLC

             

Second Lien Term Loan

  Healthcare   9.3% (LIBOR + 8.3%)     03/13/14        03/13/22      $ 11,000      $ 10,893      $ 10,893   
           

 

 

   

 

 

 
              10,893        10,893   

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

9


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) – (Continued)

June 30, 2014

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of  Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Tectum Holdings, Inc.

             

Second Lien Term Loan

  Transportation   9.0% (LIBOR + 8.0%)     03/12/14        03/12/19      $ 12,000      $ 11,943      $ 11,970  
           

 

 

   

 

 

 
              11,943        11,970  

Tri Starr Management Services, Inc.

             

Senior Subordinated Note

  IT services  

15.8%(6)

(12.5% Cash and 3.3% PIK)

    03/04/13        03/04/19      $ 18,607      $ 18,303      $ 18,049  
           

 

 

   

 

 

 
              18,303        18,049  

TriMark USA, LLC

             

Second Lien Term Loan

  Food & beverage   10.0% (LIBOR + 9.0%)     02/18/14        08/11/19      $ 20,000      $ 19,621      $ 20,000  
           

 

 

   

 

 

 
              19,621        20,000  

Trinity Services Group, Inc.

             

Senior Subordinated Note

  Food & beverage   14.5%(6) (12.0% Cash and 2.5% PIK)     03/29/12        09/29/17      $ 23,056      $ 22,797      $ 23,056  
           

 

 

   

 

 

 
              22,797        23,056  

Vision Solutions, Inc.

             

Second Lien Term Loan

  IT services   9.5% (LIBOR + 8.0%)     03/31/11        07/23/17      $ 11,625      $ 11,569      $ 11,625  
           

 

 

   

 

 

 
              11,569        11,625  

Washington Inventory Service

             

Senior Secured Term Loan

  Business services   10.3% (LIBOR + 9.0%)     12/27/12        06/20/19      $ 11,000      $ 10,873      $ 10,945  
           

 

 

   

 

 

 
              10,873        10,945  

Wheels Up Partners, LLC

             

Senior Secured Term Loan

  Transportation   9.6% (LIBOR + 8.6%)     01/31/14        10/15/20      $ 8,457      $ 8,326      $ 8,330  

Common stock(7)(8)(9)

        01/31/14          1,000,000        1,000        965  
           

 

 

   

 

 

 
              9,326        9,295  

Wingspan Portfolio Holdings, Inc.

             

Subordinated Term Loan

  Financial services   15.5%(19)     05/21/13        11/21/16      $ 18,768      $ 18,447      $ 12,762  
           

 

 

   

 

 

 
              18,447        12,762  

YP Equity Investors, LLC

             

Member interest(7)(8)

  Media, entertainment and leisure       05/08/12        —          —        $ —        $ 2,000  
           

 

 

   

 

 

 
              —          2,000  
           

 

 

   

 

 

 

Total non-controlled/non-affiliated investments—162.43% of net asset value

            $ 731,689      $ 731,178  
           

 

 

   

 

 

 

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

10


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited) – (Continued)

June 30, 2014

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)(20)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of  Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Controlled investments—2.49% of net asset value

             

Thibaut, Inc(22)

             

Senior Secured Term Loan

  Consumer products   12.0%     06/19/14        06/19/19      $ 6,553      $ 6,471      $ 6,553  

Series A Preferred Stock(8)(9)(21)

        06/19/14        —          4,747        4,747        4,665  

Common stock(8)(9)

        06/19/14        —          20,639        —          —     
           

 

 

   

 

 

 
              11,218        11,218  
           

 

 

   

 

 

 

Total controlled investments—2.49% of net asset value

            $ 11,218      $ 11,218  
           

 

 

   

 

 

 

Non-controlled/affiliated investments—0.00% of net asset value

             

THL Credit Greenway Fund LLC

             

Member interest(8)(16)

  Financial services       01/27/11        1/14/21        —        $ 5      $ 5  
           

 

 

   

 

 

 
              5        5  

THL Credit Greenway Fund II LLC

             

Member interest(8)(16)

  Financial services       03/01/13        10/10/21        —        $ 3      $ 3  
           

 

 

   

 

 

 
              3        3  
           

 

 

   

 

 

 

Total non-controlled/affiliated investments—0.00% of net asset value

            $ 8      $ 8  
           

 

 

   

 

 

 
             
           

 

 

   

 

 

 

Total investments—164.92% of net asset value

            $ 742,915      $ 742,404  
           

 

 

   

 

 

 

 

Derivative Instruments  
Counterparty   Instrument   Interest Rate    Expiration
Date
     # of Contracts    Notional      Cost      Fair Value  

ING Capital Markets, LLC

  Interest Rate Swap – Pay Fixed/Receive Floating   1.1425%/LIBOR      5/10/17       1    $ 50,000       $ —         $ (382 )
               

 

 

    

 

 

 

Total derivative instruments—0.08% of net asset value

            $ —         $ (382 )
               

 

 

    

 

 

 

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

11


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited)

June 30, 2014

(dollar amounts in thousands)

 

(1) All debt investments are income-producing, unless otherwise noted. Equity and member interests are non-income-producing unless otherwise noted.
(2) Variable interest rate investments bear interest in reference to LIBOR or ABR, which are effective as of June 30, 2014. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates, at the borrower’s option, and ABR rates are typically indexed to the current prime rate or federal funds rate. Both LIBOR and ABR rates are subject to interest floors.
(3) Principal includes accumulated PIK, or paid-in-kind, interest and is net of repayments.
(4) Foreign company at the time of investment and, as a result, is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940.
(5) Unitranche investment; interest rate reflected represents the implied interest rate earned on the investment for the most recent quarter.
(6) At the option of the issuer, interest can be paid in cash or cash and PIK. The percentage of PIK shown is the maximum PIK that can be elected by the company.
(7) Interest held by a wholly owned subsidiary of THL Credit, Inc.
(8) Member interests of limited liability companies are the equity equivalents of the stock of corporations.
(9) Equity ownership may be held in shares or units of companies related to the portfolio company.
(10) Issuer pays 0.50% unfunded commitment fee on delayed draw term loan and revolving loan facility.
(11) Publicly-traded company with a market capitalization in excess of $250 million at the time of investment and, as a result, is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940.
(12) Income-producing security with no stated coupon; interest rate reflects an estimation of the effective yield to expected maturity as of June 30, 2014.
(13) Loan was on non-accrual status as of June 30, 2014. Issuer’s contractual rate was 15.0% PIK until December 31, 2013 and then for each of the quarters ending March 31, 2014 and June 30, 2014, the lesser of excess cash flow for the quarter or 12% paid in cash with the remainder amount paid in PIK up to a total rate of 15.0%.
(14) Debt investment interest held in companies related to the portfolio company.
(15) The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
(16) Non-registered investment company at the time of investment and, as a result, is not a qualifying asset under Section 55(a) of the Investment Company Act of 1940.
(17) Issuer has the option to increase its aggregate interest rate to 18.5% all PIK for a period of time under certain conditions in the credit agreement.
(18) C&K Market, Inc. filed for bankruptcy in November 2013. Loan was on non-accrual status as of June 30, 2014. Contractual default rate of interest is 18.0%. The senior subordinated note is expected to convert to equity upon C&K Market, Inc.’s emergence from bankruptcy.
(19) Contractual default rate of interest is 15.5%. Loan was on non-accrual status as of June 30, 2014. Previously accrued and unpaid interest totaling $1,391 was reversed during the six months ended June 30, 2014 against interest income in connection with the loan going on non-accrual status.
(20) All investments are pledged as collateral under the Revolving Facility and Term Loan Facility.
(21) Part of our preferred stock investment return is income producing with a stated rate of 3% due on a quarterly basis.
(22) As defined in Section 2(a)(9) of the Investment Company Act of 1940, the Company is deemed to control this portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities.

 

See accompanying notes to these consolidated financial statements

 

12


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments

December 31, 2013

(dollar amounts in thousands)

 

Portfolio company/Type of Investment (1)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Non-controlled/non-affiliated investments—143.26% of net asset value

             

20-20 Technologies Inc.

             

Senior Secured Term Loan(4)

  IT services   13.6%(5)     09/12/12        09/12/17      $ 13,650      $ 13,378      $ 13,582   
           

 

 

   

 

 

 
              13,378        13,582   

Adirondack Park CLO Ltd.

             

Subordinated Notes, Residual Interest(4)

 

Financial

services

  13.7%(12)     03/27/13        04/15/24        —        $ 9,171      $ 9,110   
           

 

 

   

 

 

 
              9,171        9,110   

AIM Media Texas Operating, LLC

             

Member interest(7)(8)

 

Media,

entertainment

and leisure

      06/21/12        —          0.763636      $ 764      $ 1,000   
           

 

 

   

 

 

 
              764        1,000   

Airborne Tactical Advantage Company, LLC

             

Senior Secured Note

 

Aerospace &

defense

  11.0%     09/07/11        03/07/16      $ 4,000      $ 3,894      $ 3,970   

Class A Warrants(9)

        09/07/11        —          512        113        135   

Series A Preferred Stock(9)

        09/17/13        —          225        169        255   
           

 

 

   

 

 

 
              4,176        4,360   

Allen Edmonds Corporation

             

Second Lien Term Loan

 

Consumer

products

  10% (LIBOR + 9.0%)     11/26/13        05/27/19      $ 7,333      $ 7,189      $ 7,189   
           

 

 

   

 

 

 
              7,189        7,189   

Blue Coat Systems, Inc.

             

Second Lien Term Loan

  IT services  

9.5% (LIBOR

+8.5%)

    06/27/13        06/27/20      $ 15,000      $ 14,860      $ 15,150   
           

 

 

   

 

 

 
              14,860        15,150   

C&K Market, Inc.

             

Senior Subordinated Note

 

Retail &

grocery

  18.0%(18)     11/3/2010        11/3/2015      $ 13,650      $ 13,303      $ 10,237   

Warrant for Class B

        11/3/2010        —          156,552        349        —     
           

 

 

   

 

 

 
              13,652        10,237   

Charming Charlie, LLC.

             

Senior Secured Term Loan

 

Retail &

grocery

 

9.0% (LIBOR

+8.0%)

    12/18/13        12/31/19      $ 27,000      $ 26,595      $ 26,595   
           

 

 

   

 

 

 
              26,595        26,595   

Connecture, Inc.

             

Second Lien Term Loan

  Healthcare  

10.0% (LIBOR

+9.0%)

    03/18/13        07/15/18      $ 7,000      $ 6,875      $ 7,000   
           

 

 

   

 

 

 
              6,875        7,000   

Copperweld Bimetallics LLC

             

Senior Secured Term Loan

  Industrials   12.0%     12/11/13        12/11/18      $ 21,725      $ 20,863      $ 20,863   
           

 

 

   

 

 

 
              20,863        20,863   

Country Pure Foods, LLC

             

Subordinated Term Loan

  Food & beverage   13.0%     08/13/10        02/13/17      $ 16,181      $ 16,181      $ 16,060   
           

 

 

   

 

 

 
              16,181        16,060   

CRS Reprocessing, LLC

             

Senior Secured Term Loan

  Manufacturing  

10.5% (LIBOR

+9.5%)

    06/16/11        06/16/15      $ 17,647      $ 17,588      $ 17,647   
           

 

 

   

 

 

 
              17,588        17,647   

Cydcor LLC

             

Senior Secured Term Loan(20)

 

Business

services

  9.8% (LIBOR + 7.3%)     06/17/13        06/12/17      $ 13,442      $ 13,442      $ 13,442   
           

 

 

   

 

 

 
              13,442        13,442   

 

(Continued on next page)

See accompanying notes to these consolidated financial statements

 

13


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments—(Continued)

December 31, 2013

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Dr. Fresh, LLC

             

Subordinated Term Loan

 

Consumer

products

 

14.0%(6)

(12.0%

Cash and 2.0% PIK)

    05/15/12        11/15/17      $ 14,447      $ 14,223      $ 14,375   
           

 

 

   

 

 

 
              14,223        14,375   

Dryden CLO, Ltd.

             

Subordinated Notes, Residual Interest(4)

 

Financial

services

  13.6%(12)     09/12/13        11/15/25        —        $ 9,128      $ 9,300   
           

 

 

   

 

 

 
              9,128        9,300   

Duff & Phelps Corporation

             

Tax Receivable Agreement Payment Rights(11)

 

Financial

services

  16.2%(12)     06/01/12        12/31/29        —        $ 12,163      $ 13,844   

Senior Secured Term Loan(11)

   

4.5% (LIBOR

+ 3.5%)

    05/15/13        04/23/20      $ 249        252        249   
           

 

 

   

 

 

 
              12,415        14,093   

Embarcadero Technologies, Inc.

             

Senior Secured Term Loan

  IT services   10.7%(5)     02/15/13        12/28/17      $ 9,817      $ 9,692      $ 9,743   
           

 

 

   

 

 

 
              9,692        9,743   

Expert Global Solutions, Inc.

             

Second Lien Term Loan

 

Business

services

 

12.5%(6)

(LIBOR

+ 10.2% and

0.8% PIK)

    06/21/13        10/03/18      $ 18,727      $ 18,988      $ 18,821   
           

 

 

   

 

 

 
              18,988        18,821   

Express Courier International, Inc.

             

Secured Subordinated Term Loan

 

Business

services

 

15.0%(13)

(PIK)

    01/17/12        07/17/16      $ 8,595      $ 7,652      $ 6,601   
           

 

 

   

 

 

 
              7,652        6,601   

Firebirds International, LLC

             

Common stock(9)

  Restaurants       05/17/11          1,906      $ 191      $ 257   
           

 

 

   

 

 

 
              191        257   

Flagship VII, Ltd.

             

Subordinated Notes, Residual Interest(4)

 

Financial

services

  13.9%(12)     12/18/13        01/20/26        —        $ 4,400      $ 4,400   
           

 

 

   

 

 

 
              4,400        4,400   

Food Processing Holdings, LLC

             

Senior Secured Term Loan(14)

 

Food &

beverage

 

10.5% (LIBOR

+ 9.5%)

    10/31/13        10/31/18      $ 22,202      $ 21,770      $ 21,770   

Senior Secured Delayed Draw Loan(10)

   

10.5% (LIBOR

+ 9.5%)

    10/31/13        10/31/18        —          —          —     

Class A Units(9)

        04/20/10          162.44        163        202   

Class B Units(9)

        04/20/10          406.09        408        150   
           

 

 

   

 

 

 
              22,341        22,122   

Freeport Financial SBIC Fund LP

             

Member interest(16)

 

Financial

services

      06/14/13          —        $ 801      $ 801   
           

 

 

   

 

 

 
              801        801   

Gold, Inc.

             

Subordinated Term Loan

 

Consumer

products

  11.0%     12/31/12        06/30/19      $ 16,788      $ 16,788      $ 16,788   
           

 

 

   

 

 

 
              16,788        16,788   

Gryphon Partners 3.5, L.P.

             

Partnership interest(16)

 

Financial

services

      11/20/12        12/21/18        —        $ 199      $ 384   
           

 

 

   

 

 

 
              199        384   

Harrison Gypsum, LLC

             

Senior Secured Term Loan

  Industrials  

10.5%(6) (LIBOR + 8.5%

and 0.5% PIK)

    12/21/12        12/21/17      $ 24,369      $ 24,065      $ 24,247   
           

 

 

   

 

 

 
              24,065        24,247   

Hart InterCivic, Inc.

             

Senior Secured Term Loan

  IT services  

11.5% (LIBOR

+ 9.0% and 1% PIK)(6)

    07/01/11        07/01/16      $ 8,696      $ 8,597      $ 8,522   

Senior Secured Revolving Loan(10)

   

10.5% (LIBOR

+ 9.0%)

    07/01/11        07/01/16      $ 800        770        800   
           

 

 

   

 

 

 
              9,367        9,322   

HEALTHCAREfirst, Inc.

             

Senior Secured Term Loan

  Healthcare   11.9%(5)     08/31/12        08/30/17      $ 9,175      $ 8,958      $ 8,624   
           

 

 

   

 

 

 
              8,958        8,624   

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

14


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments—(Continued)

December 31, 2013

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of Shares /
No. of Units
    Amortized
Cost
    Fair Value  

Holland Intermediate Acquisition Corp.

             

Senior Secured Term Loan

 

Energy /

Utilities

 

10.0% (LIBOR + 9.0%)

10.0% (LIBOR

+ 9.0%)

    05/29/13        05/29/18      $ 24,227      $ 23,751      $ 24,227   

Senior Secured Revolving Loan(10)

        05/29/13        05/29/18        —          —          —     
           

 

 

   

 

 

 
              23,751        24,227   

Hostway Corporation

             

Senior Secured Term Loan

  IT services  

6.0% (LIBOR

+ 4.8%) 10.0%

(LIBOR

+ 8.8%)

    12/27/13        12/13/19      $ 10,000      $ 9,900      $ 9,900   

Second Lien Term Loan

        12/27/13        12/13/20      $ 12,000        11,760        11,760   

Class A Common Equity(9)

        12/27/13        —          20        200        200   

Class A Preferred Equity(9)

        12/27/13        —          2        1,800        1,800   
           

 

 

   

 

 

 
              23,660        23,660   

Ingenio Acquisition, LLC

             

Senior Secured Term Loan

 

Media,

entertainment

and leisure

 

12.8%(6)

(11.3% Cash and 1.5% PIK)

    05/09/13        05/09/18      $ 9,606      $ 9,433      $ 9,558   
           

 

 

   

 

 

 
              9,433        9,558   

Jefferson Management Holdings, LLC

             

Member interest(7)(8)

  Healthcare       04/20/10          1,393      $ 1,393      $ 938   
           

 

 

   

 

 

 
              1,393        938   

Key Brand Entertainment, Inc.

             

Senior Secured Term Loan

 

Media,

entertainment

and leisure

 

9.8% (LIBOR

+ 8.5%) 9.8%

(LIBOR

+ 8.5%)

    08/08/13        08/08/18      $ 13,178      $ 12,931      $ 12,947   

Senior Secured Revolving Loan(10)

        08/08/13        08/08/18      $ 1,478        1,451        1,478   
           

 

 

   

 

 

 
              14,382        14,425   

LCP Capital Fund LLC

             

Member interest(8)(15)(16)

 

Financial

services

  12.6%(12)     04/20/10        02/15/15      $ 8,354      $ 8,354      $ 8,354   
           

 

 

   

 

 

 
              8,354        8,354   

Loadmaster Derrick & Equipment, Inc.

             

Senior Secured Term Loan

 

Energy /

Utilities

 

9.3% (LIBOR

+ 8.3%)

9.3% (LIBOR

+ 8.3%)

9.3% (LIBOR

+ 8.3%)

    09/28/12        09/28/17      $ 8,828      $ 8,642      $ 8,608   

Senior Secured Revolving Loan(10)

        09/28/12        09/28/17        —          —          —     

Senior Secured Delayed Draw Term Loans(10)

        09/28/12        09/28/17        —          —          —     
           

 

 

   

 

 

 
              8,642        8,608   

Martex Fiber Southern Corp.

             

Subordinated Term Loan

  Industrials  

13.5%(6)

(12.0% Cash

and 1.5% PIK)

    04/30/12        10/31/19      $ 8,890      $ 8,778      $ 8,445   
           

 

 

   

 

 

 
              8,778        8,445   

NCM Group Holdings, LLC

             

Senior Secured Term Loan

  Industrials  

12.5% (LIBOR

+ 11.5%)

    08/29/13        08/29/18      $ 26,727      $ 25,711      $ 26,193   
           

 

 

   

 

 

 
              25,711        26,193   

Oasis Legal Finance Holding Company LLC

             

Second Lien Term Loan

 

Financial

services

  10.5%     09/30/13        09/30/18      $ 13,943      $ 13,676      $ 13,676   
           

 

 

   

 

 

 
              13,676        13,676   

Octagon Income Note XIV, Ltd.

             

Income Notes, Residual Interest(4)

 

Financial

services

  15.5%(12)     12/19/12        01/15/24        —        $ 8,579      $ 8,656   
           

 

 

   

 

 

 
              8,579        8,656   

OEM Group, Inc.

             

Senior Secured Note

  Manufacturing  

15.0%(6)

(12.5% Cash

and 2.5% PIK)

    10/07/10        10/07/15      $ 15,162      $ 14,974      $ 14,480   

Warrant for Common

        10/07/10        —          —          —          —     
           

 

 

   

 

 

 
              14,974        14,480   

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements

 

15


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments—(Continued)

December 31, 2013

(dollar amounts in thousands)

 

Portfolio company/Type of Investment(1)

 

Industry

 

Interest Rate(2)

  Initial
Acquisition
Date
    Maturity/
Dissolution
Date
    Principal(3)
No. of Shares /
No. of Units
    Amortized
Cost
    Fair Value  

SeaStar Solutions (f.k.a. Marine Acquisition Corp)

             

Senior Subordinated Note

  Manufacturing  

13.5%(6)

(11.5% Cash

and 2.0% PIK)

    09/18/12        05/18/17      $ 16,500      $ 16,209      $ 16,830   
           

 

 

   

 

 

 
              16,209        16,830   

Sheplers, Inc.

             

Senior Secured Second Lien Term Loan

 

Retail &

grocery

 

13.2% (LIBOR

+ 11.7%)

17.0%(17)

(10.0% Cash

and 7.0% PIK)

    12/20/11        12/20/16      $ 11,426      $ 11,233      $ 11,426   

Subordinated Term Loan

        12/20/11        12/20/17      $ 1,904        1,879        1,904   
           

 

 

   

 

 

 
              13,112        13,330   

Sheridan Square CLO, Ltd

             

Income Notes, Residual Interest(4)

 

Financial

services

  13.2%(12)     03/12/13        04/15/25        —        $ 6,064      $ 6,152   
           

 

 

   

 

 

 
              6,064        6,152   

Specialty Brands Holdings, LLC

             

Second Lien Term Loan

  Restaurants  

11.3% (LIBOR

+ 9.8%)

    07/16/13        07/16/18      $ 20,977      $ 20,587      $ 20,587   
           

 

 

   

 

 

 
              20,587        20,587   

The Studer Group, L.L.C.

             

Senior Subordinated Note

  Healthcare   12.0%     09/29/11        01/31/19      $ 16,910      $ 16,910      $ 16,910   
           

 

 

   

 

 

 
              16,910        16,910   

Surgery Center Holdings, Inc.

             

Second Lien Term Loan

  Healthcare  

9.8% (LIBOR

+ 8.5%)

    04/19/13        04/11/20      $ 15,000      $ 14,652      $ 15,000   

Member interest(8)(9)

        04/20/10          469,673        —          2,000   
           

 

 

   

 

 

 
              14,652        17,000   

Tri Starr Management Services, Inc.

             

Senior Subordinated Note

  IT services  

15.8%(6)

(12.5% Cash

and 3.3% PIK)

    03/04/13        03/04/19      $ 18,307      $ 17,981      $ 17,941   
           

 

 

   

 

 

 
              17,981        17,941   

Trinity Services Group, Inc.

             

Senior Subordinated Note

 

Food &

beverage

 

14.5%(6)

(12.0% Cash

and 2.5% PIK)

    03/29/12        09/29/17      $ 14,411      $ 14,252      $ 14,122   
           

 

 

   

 

 

 
              14,252        14,122   

Vision Solutions, Inc.

             

Second Lien Term Loan

  IT services  

9.5% (LIBOR

+ 8.0%)

    03/31/11        07/23/17      $ 11,625      $ 11,561      $ 11,625   
           

 

 

   

 

 

 
              11,561        11,625   

Washington Inventory Service

             

Senior Secured Term Loan

 

Business

services

 

10.3% (LIBOR

+ 9.0%)

    12/27/12        06/20/19      $ 11,000      $ 10,861      $ 11,165   
           

 

 

   

 

 

 
              10,861        11,165   

Wingspan Portfolio Holdings, Inc.

             

Subordinated Term Loan

 

Financial

services

  15.5%(19)     05/21/13        11/21/16      $ 18,768      $ 18,447      $ 15,765   
           

 

 

   

 

 

 
              18,447        15,765   

YP Equity Investors, LLC

             

Member interest(7)(8)

 

Media,

entertainment

and leisure

      05/08/12        —          —        $ —       $ 4,100