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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2014

 

OR

 

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

 

For the transition period           to          

 

Commission File No. 814-00663

 

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

Maryland

 

33-1089684

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

245 Park Avenue, 44th Floor, New York, NY 10167

(Address of principal executive office)   (Zip Code)

 

(212) 750-7300

(Registrant’s telephone number, including area code)

 


 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

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 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  o

 

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 o  No o

 

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at November 4, 2014

Common stock, $0.001 par value

 

314,108,062

 

 

 


 


Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of September 30, 2014 (unaudited) and December 31, 2013

2

 

 

 

 

Consolidated Statement of Operations for the three and nine months ended September 30, 2014 (unaudited) and September 30, 2013 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of September 30, 2014 (unaudited) and December 31, 2013

5

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2014 (unaudited)

46

 

 

 

 

Consolidated Statement of Cash Flows for the nine months ended September 30, 2014 (unaudited) and September 30, 2013 (unaudited)

47

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

48

 

 

 

Item 2.

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

76

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

104

 

 

 

Item 4.

Controls and Procedures

105

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

106

 

 

 

Item 1A.

Risk Factors

106

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

106

 

 

 

Item 3.

Defaults Upon Senior Securities

106

 

 

 

Item 4.

Mine Safety Disclosures

106

 

 

 

Item 5.

Other Information

106

 

 

 

Item 6.

Exhibits

107

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

September 30, 2014

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

 6,090,210

 

$

 5,136,612

 

Non-controlled affiliate company investments

 

196,572

 

260,484

 

Controlled affiliate company investments

 

2,496,798

 

2,235,801

 

Total investments at fair value (amortized cost of $8,600,794 and $7,537,403, respectively)

 

8,783,580

 

7,632,897

 

Cash and cash equivalents

 

107,878

 

149,629

 

Interest receivable

 

167,984

 

123,981

 

Receivable for open trades

 

28,244

 

128,566

 

Other assets

 

115,373

 

106,431

 

Total assets

 

$

 9,203,059

 

$

 8,141,504

 

LIABILITIES

 

 

 

 

 

Debt

 

$

 3,679,201

 

$

 2,986,275

 

Base management fees payable

 

32,685

 

29,270

 

Income based fees payable

 

31,345

 

29,001

 

Capital gains incentive fees payable

 

87,702

 

80,937

 

Accounts payable and other liabilities

 

81,505

 

68,649

 

Interest and facility fees payable

 

40,667

 

42,828

 

Payable for open trades

 

306

 

100

 

Total liabilities

 

3,953,411

 

3,237,060

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $0.001 per share, 500,000 common shares authorized 314,108 and 297,971 common shares issued and outstanding, respectively

 

314

 

298

 

Capital in excess of par value

 

5,250,934

 

4,982,477

 

Accumulated overdistributed net investment income

 

(59,999

)

(8,785

)

Accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets

 

(124,980

)

(165,040

)

Net unrealized gains on investments and foreign currency transactions

 

183,379

 

95,494

 

Total stockholders’ equity

 

5,249,648

 

4,904,444

 

Total liabilities and stockholders’ equity

 

$

 9,203,059

 

$

 8,141,504

 

NET ASSETS PER SHARE

 

$

 16.71

 

$

 16.46

 

 

See accompanying notes to consolidated financial statements.

 

2



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

 

 

 

For the three months ended
September 30,

 

For the nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

$

114,552

 

$

102,222

 

$

314,763

 

$

281,734

 

Capital structuring service fees

 

21,196

 

18,257

 

47,890

 

35,888

 

Dividend income

 

8,345

 

4,486

 

21,922

 

13,583

 

Management and other fees

 

 

286

 

 

949

 

Other income

 

3,938

 

3,612

 

13,840

 

12,944

 

Total investment income from non-controlled/non-affiliate company investments

 

148,031

 

128,863

 

398,415

 

345,098

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

2,706

 

4,097

 

8,901

 

15,748

 

Capital structuring service fees

 

369

 

 

1,019

 

 

Dividend income

 

1,071

 

5,258

 

4,569

 

6,421

 

Other income

 

69

 

37

 

472

 

166

 

Total investment income from non-controlled affiliate company investments

 

4,215

 

9,392

 

14,961

 

22,335

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

73,554

 

63,304

 

216,822

 

174,287

 

Capital structuring service fees

 

10,147

 

13,298

 

25,433

 

25,807

 

Dividend income

 

10,271

 

25,104

 

40,671

 

62,711

 

Management and other fees

 

6,359

 

5,098

 

18,389

 

13,926

 

Other income

 

819

 

1,742

 

3,351

 

3,815

 

Total investment income from controlled affiliate company investments

 

101,150

 

108,546

 

304,666

 

280,546

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

253,396

 

246,801

 

718,042

 

647,979

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

54,096

 

44,424

 

159,740

 

124,032

 

Base management fees

 

32,685

 

27,467

 

93,500

 

75,587

 

Income based fees

 

31,345

 

32,284

 

85,203

 

81,510

 

Capital gains incentive fees

 

13,087

 

2,915

 

24,190

 

7,148

 

Administrative fees

 

3,105

 

3,346

 

9,661

 

8,544

 

Other general and administrative

 

6,274

 

6,152

 

20,314

 

20,548

 

Total expenses

 

140,592

 

116,588

 

392,608

 

317,369

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

112,804

 

130,213

 

325,434

 

330,610

 

 

3



Table of Contents

 

 

 

For the three months ended
September 30,

 

For the nine months ended
September 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Income tax expense, including excise tax

 

7,514

 

3,991

 

15,817

 

11,714

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

105,290

 

126,222

 

309,617

 

318,896

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

21,800

 

7,877

 

32,467

 

24,305

 

Non-controlled affiliate company investments

 

58,560

 

63

 

58,598

 

208

 

Controlled affiliate company investments

 

(6,592

)

1,006

 

(52,780

)

4,759

 

Foreign currency transactions

 

2,764

 

 

1,847

 

 

Net realized gains

 

76,532

 

8,946

 

40,132

 

29,272

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(9,590

)

3,817

 

196

 

27,915

 

Non-controlled affiliate company investments

 

(37,439

)

(7,812

)

9,607

 

(9,745

)

Controlled affiliate company investments

 

42,076

 

9,624

 

77,486

 

(11,701

)

Foreign currency transactions

 

870

 

 

596

 

 

Net unrealized gains (losses)

 

(4,083

)

5,629

 

87,885

 

6,469

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains from investments and foreign currency transactions

 

72,449

 

14,575

 

128,017

 

35,741

 

 

 

 

 

 

 

 

 

 

 

REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

 

 

(72

)

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

177,739

 

$

140,797

 

$

437,562

 

$

354,637

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE

 

$

0.57

 

$

0.52

 

$

1.45

 

$

1.36

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING

 

310,564

 

268,312

 

302,315

 

261,120

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 units)

 

 

 

9/7/2007

 

$

 

$

186

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

487

 

1,962

(2)

 

 

HCI Equity, LLC (7)(8)(9)

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

 

399

 

 

 

Imperial Capital Private Opportunities, LP (9)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

5,134

 

18,868

(2)

 

 

Partnership Capital Growth Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

 

1,361

(2)

 

 

Partnership Capital Growth Investors III, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

2,260

 

2,332

(2)

 

 

PCG-Ares Sidecar Investment, L.P. (9)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

5/22/2014

 

2,042

 

2,151

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

1,034

 

931

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)

 

Co-investment vehicle

 

Subordinated certificates ($1,954,145 par due 12/2024)

 

8.23% (Libor + 8.00%/M)(27)

 

10/30/2009

 

1,954,145

 

1,983,457

 

 

 

 

 

 

 

Membership interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,954,145

 

1,983,457

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

877

 

1,505

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,965,979

 

2,013,152

 

38.35

%

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alegeus Technologies Holdings Corp.

 

Benefits administration and transaction processing provider

 

Preferred stock (2,997 shares)

 

 

 

12/13/2013

 

3,087

 

2,542

 

 

 

 

 

 

 

Common stock (3 shares)

 

 

 

12/13/2013

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,090

 

2,542

 

 

 

AwarePoint Corporation

 

Healthcare technology platform developer

 

First lien senior secured loan ($10,000 par due 6/2018)

 

9.50%

 

9/5/2014

 

9,900

 

10,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 547,046 shares of Series F preferred stock

 

 

 

9/5/2014

 

 

2

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,900

 

10,002

 

 

 

AxelaCare Holdings, Inc. and AxelaCare Investment Holdings, L.P.

 

Provider of home infusion services

 

Preferred units (8,218,160 units)

 

 

 

4/12/2013

 

822

 

681

(2)

 

 

 

 

 

 

Common units (83,010 units)

 

 

 

4/12/2013

 

8

 

6

(2)

 

 

 

 

 

 

 

 

 

 

 

 

830

 

687

 

 

 

California Forensic Medical Group, Incorporated

 

Correctional facility healthcare operator

 

First lien senior secured loan ($48,766 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

48,766

 

48,766

(3)(26)

 

 

CCS Intermediate Holdings, LLC and CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

First lien senior secured revolving loan ($750 par due 7/2019)

 

6.25% (Base Rate + 3.00%/Q)

 

7/23/2014

 

750

 

750

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($15,000 par due 7/2021)

 

5.00% (Libor + 4.00%/Q)

 

7/23/2014

 

14,927

 

15,000

(2)(26)

 

 

 

 

 

 

Second lien senior secured loan ($135,000 par due 7/2022)

 

9.38% (Libor + 8.38%/Q)

 

7/23/2014

 

133,678

 

135,000

(2)(26)

 

 

 

 

 

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

 

2,553

(2)

 

 

 

 

 

 

 

 

 

 

 

 

149,355

 

153,303

 

 

 

 

5



Table of Contents

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC (6)

 

Healthcare analysis services provider

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

2,543

 

2,820

(2)

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

450

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,543

 

3,270

 

 

 

DNAnexus, Inc.

 

Bioinformatics company

 

First lien senior secured loan ($5,000 par due 10/2017)

 

9.25%

 

3/21/2014

 

4,784

 

5,000

(2)

 

 

 

 

 

 

First lien senior secured loan ($5,000 par due 2/2018)

 

9.25%

 

3/21/2014

 

4,769

 

5,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 909,092 units of Series C preferred stock

 

 

 

3/21/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,553

 

10,000

 

 

 

Genocea Biosciences, Inc.

 

Vaccine discovery technology company

 

First lien senior secured loan ($9,788 par due 4/2017)

 

8.00%

 

9/30/2013

 

9,637

 

9,788

(2)

 

 

 

 

 

 

Common stock (31,500 shares)

 

 

 

2/10/2014

 

 

285

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,637

 

10,073

 

 

 

GI Advo Opco, LLC

 

Behavioral treatment services provider

 

First lien senior secured loan ($14,170 par due 6/2017)

 

6.00% (Libor + 4.75%/Q)

 

12/13/2013

 

14,498

 

14,170

(2)(26)

 

 

Global Healthcare Exchange, LLC and GHX Ultimate Parent Corp.

 

On-demand supply chain automation solutions provider

 

First lien senior secured loan ($125,000 par due 3/2020)

 

10.00% (Libor + 9.00%/Q)

 

3/11/2014

 

123,921

 

125,000

(2)(26)

 

 

 

 

 

 

Class A common stock (2,475 shares)

 

 

 

3/11/2014

 

2,475

 

2,475

(2)

 

 

 

 

 

 

Class B common stock (938 shares)

 

 

 

3/11/2014

 

25

 

335

(2)

 

 

 

 

 

 

 

 

 

 

 

 

126,421

 

127,810

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Common stock (1,410,000 shares)

 

 

 

9/27/2010

 

1,512

 

2,700

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

Second lien senior secured loan ($112,000 par due 6/2020)

 

9.25% (Libor + 8.25%/Q)

 

12/27/2012

 

112,000

 

112,000

(2)(26)

 

 

LM Acquisition Holdings, LLC (8)

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

1,000

 

1,638

(2)

 

 

MC Acquisition Holdings I, LLC

 

Healthcare professional provider

 

Class A units (1,338,314 shares)

 

 

 

1/17/2014

 

1,338

 

1,541

(2)

 

 

Monte Nido Holdings, LLC

 

Outpatient eating disorder treatment provider

 

First lien senior secured loan ($44,750 par due 12/2019)

 

7.75% (Libor + 6.75%/Q)

 

12/20/2013

 

44,750

 

43,855

(3)(19)(26)

 

 

MW Dental Holding Corp.

 

Dental services provider

 

First lien senior secured loan ($37,818 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

37,818

 

37,818

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($48,362 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

48,362

 

48,362

(3)(26)

 

 

 

 

 

 

First lien senior secured loan ($9,721 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,721

 

9,721

(4)(26)

 

 

 

 

 

 

 

 

 

 

 

 

95,901

 

95,901

 

 

 

My Health Direct, Inc.

 

Healthcare scheduling exchange software solution provider

 

First lien senior secured loan ($3,000 par due 1/2018)

 

10.75%

 

9/18/2014

 

2,901

 

2,970

(2)

 

 

 

 

 

 

Warrant to purchase up to 4,548 shares of Series D preferred stock

 

 

 

9/18/2014

 

39

 

39

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,940

 

3,009

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

First lien senior secured loan ($9,543 par due 2/2019)

 

7.25% (Base Rate + 4.00%/Q)

 

4/15/2011

 

9,543

 

9,543

(2)(21)(26)

 

 

 

 

 

 

First lien senior secured loan ($70,691 par due 2/2019)

 

6.00% (Libor + 5.00%/Q)

 

4/15/2011

 

70,691

 

70,691

(2)(21)(26)

 

 

 

 

 

 

First lien senior secured loan ($3,957 par due 2/2019)

 

7.25% (Base Rate + 4.00%/Q)

 

4/15/2011

 

3,950

 

3,957

(3)(21)(26)

 

 

 

 

 

 

First lien senior secured loan ($29,309 par due 2/2019)

 

6.00% (Libor + 5.00%/Q)

 

4/15/2011

 

29,261

 

29,309

(3)(21)(26)

 

 

 

 

 

 

Common units (5,345 units)

 

 

 

4/15/2011

 

5,764

 

9,973

(2)

 

 

 

 

 

 

 

 

 

 

 

 

119,209

 

123,473

 

 

 

 

6



Table of Contents

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

First lien senior secured loan ($2,778 par due 12/2017)

 

8.75% (Libor + 7.50%/Q)

 

12/18/2012

 

2,778

 

2,778

(2)(17)(26)

 

 

 

 

 

 

First lien senior secured loan ($35,144 par due 12/2017)

 

8.75% (Libor + 7.50%/Q)

 

12/18/2012

 

35,144

 

35,144

(2)(17)(26)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

4,780

(2)

 

 

 

 

 

 

 

 

 

 

 

 

40,422

 

42,702

 

 

 

New Trident Holdcorp, Inc.

 

Outsourced mobile diagnostic healthcare service provider

 

Second lien senior secured loan ($80,000 par due 7/2020)

 

10.25% (Libor + 9.00%/Q)

 

8/6/2013

 

78,607

 

78,400

(2)(26)

 

 

Nodality, Inc.

 

Biotechnology company

 

First lien senior secured loan ($8,000 par due 2/2018)

 

8.90%

 

4/25/2014

 

7,750

 

8,000

(2)

 

 

 

 

 

 

First lien senior secured loan ($3,000 par due 8/2018)

 

8.90%

 

4/25/2014

 

2,895

 

3,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 164,179 shares of Series B preferred stock

 

 

 

4/25/2014

 

 

41

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,645

 

11,041

 

 

 

OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC

 

Provider of technology-enabled solutions to pharmacies

 

First lien senior secured loan ($20,606 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

20,606

 

20,606

(2)(26)

 

 

 

 

 

 

Limited liability company membership interest (1.57%)

 

 

 

11/21/2013

 

1,000

 

1,112

(2)

 

 

 

 

 

 

 

 

 

 

 

 

21,606

 

21,718

 

 

 

PerfectServe, Inc.

 

Communications software platform provider for hospitals and physician practices

 

First lien senior secured loan ($2,500 par due 10/2017)

 

10.00%

 

12/26/2013

 

2,477

 

2,500

(2)

 

 

 

 

 

 

First lien senior secured loan ($3,500 par due 4/2017)

 

10.00%

 

12/26/2013

 

3,472

 

3,500

(2)

 

 

 

 

 

 

Warrants to purchase up to 34,113 units of Series C Preferred Stock

 

 

 

12/26/2013

 

 

75

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,949

 

6,075

 

 

 

PGA Holdings, Inc.

 

Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

18

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

922

(2)

 

 

 

 

 

 

 

 

 

 

 

 

292

 

940

 

 

 

Physiotherapy Associates Holdings, Inc.

 

Physical therapy provider

 

Class A common stock (100,000 shares)

 

 

 

12/13/2013

 

3,090

 

2,240

 

 

 

POS I Corp. (fka Vantage Oncology, Inc.)

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

548

(2)

 

 

Reed Group Holdings, LLC

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

First lien senior secured loan ($2,000 par due 7/2015)

 

11.00%

 

6/28/2012

 

1,997

 

2,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 99,094 shares of Series C preferred stock

 

 

 

6/28/2012

 

38

 

29

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,035

 

2,029

 

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Second lien senior secured loan ($75,000 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

75,000

 

75,000

(2)(26)

 

 

Sarnova HC, LLC, Tri-Anim Health Services, Inc., and BEMS Holdings, LLC

 

Distributor of emergency medical service and respiratory products

 

Second lien senior secured loan ($60,000 par due 9/2018)

 

8.75% (Libor + 8.00%/M)

 

6/30/2014

 

60,000

 

60,000

(2)(26)

 

 

SurgiQuest, Inc.

 

Medical device company

 

Warrants to purchase up to 54,672 shares of Series D-4 convertible preferred stock

 

 

 

9/28/2012

 

 

(2)

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

First lien senior secured loan ($49,850 par due 12/2019)

 

6.00% (Libor + 5.00%/Q)

 

6/26/2014

 

49,850

 

49,850

(2)(26)

 

 

 

 

 

 

Second lien senior secured loan ($50,000 par due 9/2020)

 

9.00% (Libor + 8.00%/Q)

 

9/24/2014

 

50,000

 

50,000

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

99,850

 

99,850

 

 

 

 

7



Table of Contents

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Wrigley Purchaser, LLC and Wrigley Management, LLC

 

Provider of outpatient rehabilitation services

 

First lien senior secured loan ($7,100 par due 5/2020)

 

6.13% (Libor + 5.38%/Q)

 

5/19/2014

 

7,100

 

7,100

(2)(26)

 

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

Second lien senior secured loan ($45,000 par due 7/2019)

 

9.00% (Libor + 8.00%/Q)

 

5/30/2014

 

45,000

 

45,000

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

1,207,509

 

1,217,383

 

23.19

%

Services-Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Residential Services L.L.C.

 

Heating, ventilation and air conditioning services provider

 

First lien senior secured loan ($17,456 par due 6/2021)

 

5.50% (Libor + 4.50%/Q)

 

6/30/2014

 

17,372

 

17,456

(2)(26)

 

 

 

 

 

 

Second lien senior secured loan ($50,000 par due 12/2021)

 

9.00% (Libor + 8.00%/Q)

 

6/30/2014

 

49,517

 

50,000

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

66,889

 

67,456

 

 

 

Capital Investments and Ventures Corp.

 

SCUBA diver training and certification provider

 

First lien senior secured loan ($66,035 par due 8/2020)

 

6.75% (Libor + 5.75%/Q)

 

8/9/2012

 

65,686

 

66,035

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($23,060 par due 8/2020)

 

6.75% (Libor + 5.75%/Q)

 

8/9/2012

 

23,060

 

23,060

(3)(26)

 

 

 

 

 

 

First lien senior secured loan ($8,203 par due 8/2020)

 

6.75% (Libor + 5.75%/Q)

 

8/9/2012

 

8,203

 

8,203

(4)(26)

 

 

 

 

 

 

 

 

 

 

 

 

96,949

 

97,298

 

 

 

Community Education Centers, Inc.

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($714 par due 12/2014)

 

7.50% (Base Rate + 4.25%/M)

 

12/10/2010

 

714

 

714

(2)(18)(26)

 

 

 

 

 

 

First lien senior secured loan ($13,571 par due 12/2014)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

13,571

 

13,571

(2)(18)(26)

 

 

 

 

 

 

Second lien senior secured loan ($47,767 par due 12/2015)

 

 

 

12/10/2010

 

47,169

 

42,233

(2)(25)

 

 

 

 

 

 

Warrants to purchase up to 654,618 shares

 

 

 

12/10/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

61,454

 

56,518

 

 

 

Competitor Group, Inc. and Calera XVI, LLC

 

Endurance sports media and event operator

 

First lien senior secured revolving loan ($2,850 par due 11/2018)

 

10.00% (Base Rate + 6.75%/Q)

 

11/30/2012

 

2,850

 

2,565

(2)(26)

 

 

 

 

 

 

First lien senior secured revolving loan ($900 par due 11/2018)

 

9.00% (Libor + 7.75%/Q)

 

11/30/2012

 

900

 

810

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($24,380 par due 11/2018)

 

10.00% (Libor + 7.75% Cash, 1.00% PIK /Q)

 

11/30/2012

 

24,380

 

21,942

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($29,853 par due 11/2018)

 

10.00% (Libor + 7.75% Cash, 1.00% PIK /Q)

 

11/30/2012

 

29,853

 

26,868

(3)(26)

 

 

 

 

 

 

Membership units (2,500,000 units)

 

 

 

11/30/2012

 

2,516

 

338

(2)(9)

 

 

 

 

 

 

 

 

 

 

 

 

60,499

 

52,523

 

 

 

Crown Health Care Laundry Services, Inc. and Crown Laundry Holdings, LLC (6)

 

Provider of outsourced linen management solutions to the healthcare industry

 

First lien senior secured revolving loan ($1,300 par due 3/2019)

 

8.25% (Libor + 7.00%/Q)

 

3/13/2014

 

1,300

 

1,300

(2)(26)(29)

 

 

 

 

 

 

First lien senior secured loan ($24,377 par due 3/2019)

 

8.25% (Libor + 7.00%/Q)

 

3/13/2014

 

24,377

 

24,377

(2)(26)

 

 

 

 

 

 

Class A preferred units (2,475,000 units)

 

 

 

3/13/2014

 

2,475

 

2,317

(2)

 

 

 

 

 

 

Class B common units (275,000 units)

 

 

 

3/13/2014

 

275

 

257

(2)

 

 

 

 

 

 

 

 

 

 

 

 

28,427

 

28,251

 

 

 

Dwyer Acquisition Parent, Inc. and TDG Group Holding Company

 

Operator of multiple franchise concepts primarily related to home maintenance or repairs

 

Senior subordinated loan ($52,670 par due 2/2020)

 

11.00%

 

8/15/2014

 

52,670

 

52,670

(2)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

8/15/2014

 

3,000

 

3,000

(2)

 

 

 

 

 

 

 

 

 

 

 

 

55,670

 

55,670

 

 

 

Fox Hill Holdings, Inc.

 

Third party claims administrator on behalf of insurance carriers

 

First lien senior secured loan ($20,622 par due 6/2018)

 

8.00% (Base Rate + 4.75%/Q)

 

10/31/2013

 

20,622

 

20,622

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($64,719 par due 6/2018)

 

6.75% (Libor + 5.75%/Q)

 

10/31/2013

 

64,719

 

64,719

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

85,341

 

85,341

 

 

 

 

8



Table of Contents

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

ISS #2, LLC

 

Provider of repairs, refurbishments and services to the broader industrial end user markets

 

First lien senior secured loan ($19,900 par due 6/2018)

 

7.75% (Base Rate + 4.50%/M)

 

6/5/2013

 

19,900

 

19,900

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($33,200 par due 6/2018)

 

6.50% (Libor + 5.50%/Q)

 

6/5/2013

 

33,200

 

33,200

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($4,913 par due 6/2018)

 

6.50% (Libor + 5.50%/Q)

 

6/5/2013

 

4,913

 

4,913

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($44,437 par due 6/2018)

 

6.50% (Libor + 5.50%/Q)

 

6/5/2013

 

44,437

 

44,437

(3)(26)

 

 

 

 

 

 

 

 

 

 

 

 

102,450

 

102,450

 

 

 

Massage Envy, LLC

 

Franchisor in the massage industry

 

First lien senior secured loan ($28,245 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

28,245

 

28,245

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($47,716 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

47,716

 

47,716

(3)(26)

 

 

 

 

 

 

Common stock (3,000,000 shares)

 

 

 

9/27/2012

 

3,000

 

3,944

(2)

 

 

 

 

 

 

 

 

 

 

 

 

78,961

 

79,905

 

 

 

McKenzie Sports Products, LLC

 

Designer, manufacturer and distributor of hunting-related supplies

 

First lien senior secured loan ($7,500 par due 9/2020)

 

4.75% (Libor + 3.75%/Q)

 

9/18/2014

 

7,500

 

7,500

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($88,500 par due 9/2020)

 

6.75% (Libor + 5.75%/Q)

 

9/18/2014

 

88,500

 

88,500

(2)(23)(26)

 

 

 

 

 

 

 

 

 

 

 

 

96,000

 

96,000

 

 

 

Spin HoldCo Inc.

 

Laundry service and equipment provider

 

Second lien senior secured loan ($140,000 par due 5/2020)

 

8.00% (Libor + 7.00%/M)

 

5/14/2013

 

140,000

 

140,000

(2)(26)

 

 

Wash Multifamily Laundry Systems, LLC

 

Laundry service and equipment provider

 

Second lien senior secured loan ($78,000 par due 2/2020)

 

7.75% (Libor + 6.75%/Q)

 

6/26/2012

 

78,000

 

78,000

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

950,640

 

939,412

 

17.89

%

Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alphabet Energy, Inc.

 

Technology developer to convert waste-heat into electricity

 

First lien senior secured loan ($2,000 par due 7/2017)

 

9.50%

 

2/26/2014

 

1,926

 

2,000

(2)

 

 

 

 

 

 

First lien senior secured loan ($3,000 par due 7/2017)

 

9.62%

 

12/26/2013

 

2,774

 

3,000

(2)

 

 

 

 

 

 

Series B preferred stock (74,449 shares)

 

 

 

2/26/2014

 

250

 

250

(2)

 

 

 

 

 

 

Warrant to purchase up to 59,524 units of Series B preferred stock

 

 

 

12/16/2013

 

146

 

126

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,096

 

5,376

 

 

 

Bicent (California) Holdings LLC

 

Gas turbine power generation facilities operator

 

Senior subordinated loan ($49,812 par due 2/2021)

 

8.25% (Libor + 7.25%/Q)

 

2/6/2014

 

49,812

 

49,812

(2)(26)

 

 

Brush Power, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($1,030 par due 8/2020)

 

7.50% (Base Rate + 4.25%/Q)

 

8/1/2013

 

1,030

 

1,030

(2)(26)

 

 

 

 

 

 

First lien senior secured loan ($87,084 par due 8/2020)

 

6.25% (Libor + 5.25%/Q)

 

8/1/2013

 

87,084

 

87,084

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

88,114

 

88,114

 

 

 

Centinela Funding, LLC

 

Solar power generation facility developer and operator

 

Senior subordinated loan ($55,542 par due 11/2020)

 

10.00% (Libor + 8.75%/Q)

 

11/14/2012

 

55,542

 

55,542

(2)(26)

 

 

CPV Maryland Holding Company II, LLC

 

Gas turbine power generation facilities operator

 

Senior subordinated loan ($42,305 par due 12/2020)

 

10.00%

 

8/8/2014

 

42,305

 

42,102

(2)

 

 

 

 

 

 

Warrant to purchase up to 4 units of common stock

 

 

 

8/8/2014

 

 

200

(2)

 

 

 

 

 

 

 

 

 

 

 

 

42,305

 

42,302

 

 

 

DESRI Wind Development Acquisition Holdings, L.L.C (6)

 

Wind and solar power generation facility operator

 

Senior subordinated loan ($14,750 par due 8/2021)

 

9.25%

 

8/26/2014

 

14,750

 

14,750

(2)

 

 

 

 

 

 

Membership interest (7.50% interest)

 

 

 

8/26/2014

 

806

 

806

(2)

 

 

 

 

 

 

 

 

 

 

 

 

15,556

 

15,556

 

 

 

Freeport LNG Expansion, L.P.

 

Liquefied natural gas producer

 

First lien senior secured loan ($19,468 par due 11/2014)

 

8.65% (Libor + 8.50%/Q)

 

6/27/2014

 

19,199

 

19,468

(2)

 

 

 

9



Table of Contents

 

As of September 30, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest
(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Joule Unlimited Technologies, Inc. and Stichting Joule Global Foundation

 

Renewable fuel and chemical production developer

 

First lien senior secured loan ($6,591 par due 2/2017)

 

10.00%

 

7/25/2013

 

6,546

 

6,591

(2)

 

 

 

 

 

 

Warrant to purchase up to 32,051 shares of Series C-2 preferred stock

 

 

 

7/25/2013

 

 

39

(2)(8)

 

 

 

 

 

 

 

 

 

 

 

 

6,546

 

6,630

 

 

 

La Paloma Generating Company, LLC

 

Natural gas fired, combined cycle plant operator

 

Second lien senior secured loan ($10,000 par due 2/2020)

 

9.25% (Libor + 8.25%/Q)

 

2/20/2014

 

9,635

 

9,750

(2)(26)

 

 

Moxie Liberty LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($100,000 par due 8/2020)

 

7.50% (Libor + 6.50%/Q)

 

8/21/2013

 

98,890

 

100,000

(2)(26)

 

 

Panda Sherman Power, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($32,429 par due 9/2018)

 

9.00% (Libor + 7.50%/Q)

 

9/14/2012

 

32,429

 

32,429

(2)(26)

 

 

Panda Temple Power II, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($20,000 par due 4/2019)

 

7.25% (Libor + 6.00%/Q)

 

4/3/2013

 

19,843

 

20,000

(2)(26)

 

 

Panda Temple Power, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($60,000 par due 7/2018)

 

11.50% (Libor + 10.00%/Q)

 

7/17/2012

 

58,628

 

60,000

(2)(26)

 

 

Petroflow Energy Corporation

 

Oil and gas exploration and production company

 

First lien senior secured loan ($50,757 par due 7/2020)

 

12.00% (Libor + 8.00% Cash, 3.00% PIK /Q)

 

7/31/2014

 

49,775

 

50,757

(2)(26)

 

 

Sunrun Solar Owner Holdco X, LLC

 

Residential solar energy provider

 

First lien senior secured loan ($58,966 par due 6/2019)

 

9.50% (Libor + 8.25%/Q)

 

6/7/2013

 

58,966

 

58,966

(2)(26)

 

 

Sunrun Solar Owner Holdco XIII, LLC

 

Residential solar energy provider

 

First lien senior secured loan ($32,846 par due 12/2019)

 

9.50% (Libor + 8.25%/Q)

 

11/27/2013

 

32,648

 

32,846

(2)(26)

 

 

 

 

 

 

 

 

 

 

 

 

642,984

 

647,548

 

12.33

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2329497 Ontario Inc. (8)

 

Outsourced data center infrastructure and related services provider

 

Second lien senior secured loan ($45,000 par due 6/2019)

 

10.50% (Libor + 9.25%/M)

 

12/13/2013

 

43,380

 

40,562

(2)(26)

 

 

Access CIG, LLC

 

Records and information management services provider

 

First lien senior secured loan ($985 par due 10/2017)

 

8.00% (Base Rate + 4.75%/M)

 

10/5/2012

 

985

 

985

(2)(26)

 

 

BlackArrow, Inc.

 

Advertising and data solutions software platform provider

 

First lien senior secured loan ($8,000 par due 9/2017)

 

9.25%

 

3/13/2014

 

7,761

 

8,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 517,386 units of Series C preferred stock

 

 

 

3/13/2014

 

 

76

(2)

 

 

 

 

 

 

 

 

 

 

 

 

7,761

 

8,076

 

 

 

CallMiner, Inc.

 

Provider of cloud-based conversational analytics solutions

 

First lien senior secured loan ($4,000 par due 5/2018)

 

10.00%

 

7/23/2014

 

3,971

 

4,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 2,350,636 shares of Series 1 preferred stock

 

 

 

7/23/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,971

 

4,000

 

 

 

Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C. (6)

 

Payroll and accounting services provider to the entertainment industry

 

First lien senior secured loan ($12,107 par due 12/2017)

 

5.75% (Libor + 4.75%/M)

 

12/24/2012

 

12,107

 

12,107

(2)(16)(26)

 

 

 

 

 

 

First lien senior secured loan ($41,813 par due 12/2017)

 

5.75% (Libor + 4.75%/M)

 

12/24/2012

 

41,813

 

41,813

(3)(16)(26)

 

 

 

 

 

 

Class A membership units (2,500,000 units)

 

 

 

12/24/2012

 

2,500

 

5,743

(2)

 

 

 

 

 

 

Class B membership units (2,500,000 units)