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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 September 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 November 6, 2014 was 33,905,202.

 

 

 


Table of Contents

THL CREDIT, INC.

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

Table of Contents

 

    

INDEX

   PAGE
NO.
 

PART I.

  FINANCIAL INFORMATION   

Item 1.

  Financial Statements   
  Consolidated Statements of Assets and Liabilities as of September 30, 2014 (unaudited) and December 31, 2013      2   
  Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (unaudited)      3   
  Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2014 and 2013 (unaudited)      4   
  Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (unaudited)      5   
  Consolidated Schedules of Investments as of September 30, 2014 (unaudited) and December 31, 2013      6   
  Notes to Consolidated Financial Statements (unaudited)      19   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      42   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      66   

Item 4.

  Controls and Procedures      67   

PART II.

  OTHER INFORMATION   

Item 1.

  Legal Proceedings      67   

Item 1A.

  Risk Factors      67   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      69   

Item 3.

  Defaults Upon Senior Securities      69   

Item 4.

  Mine Safety Disclosures      69   

Item 5.

  Other Information      69   

Item 6.

  Exhibits      70   

SIGNATURES

       71   

 

1


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities

(in thousands, except per share data)

 

     September 30,
2014
(unaudited)
    December 31,
2013
 

Assets:

    

Investments at fair value:

    

Non-controlled, non-affiliated investments (cost of $693,653 and $645,911, respectively)

   $ 693,349      $ 648,860   

Controlled investments (cost of $24,376 and $0, respectively)

     24,675        —     

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

     8        7   
  

 

 

   

 

 

 

Total investments at fair value (cost of $718,037 and $645,918, respectively)

   $ 718,032      $ 648,867   

Cash

     7,105        7,829   

Interest receivable

     9,636        7,225   

Deferred financing costs

     5,287        4,604   

Due from affiliate

     763        1,025   

Receivable for paydown of investments

     716        275   

Other deferred assets

     656        825   

Deferred offering costs

     292        —     

Prepaid expenses and other assets

     630        441   

Escrow receivable

     —          1,800   
  

 

 

   

 

 

 

Total assets

   $ 743,117      $ 672,891   
  

 

 

   

 

 

 

Liabilities:

    

Loans payable

   $ 281,601      $ 204,300   

Payable for investment purchased

     —          4,400   

Accrued incentive fees

     3,973        3,421   

Base management fees payable

     2,931        2,243   

Deferred tax liability

     1,721        2,414   

Accrued expenses

     1,307        1,617   

Accrued credit facility fees and interest

     651        567   

Interest rate derivative

     116        284   

Other deferred liabilities

     219        —     

Accrued administrator expenses

     151        158   

Due to affiliate

     14        474   

Income taxes payable

     —          71   
  

 

 

   

 

 

 

Total liabilities

     292,684        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 September 30, 2014 and December 31, 2013, respectively

     34        34   

Paid-in capital in excess of par

     448,776        450,043   

Net unrealized appreciation (depreciation) on investments, net of provision for taxes of $1,721 and $2,414, respectively

     (1,726     535   

Net unrealized depreciation on interest rate derivative

     (116     (284

Interest rate derivative periodic interest payments, net

     (957     (613

Accumulated undistributed net realized (losses) gains

     (126     2,023   

Accumulated undistributed net investment income

     4,548        1,204   
  

 

 

   

 

 

 

Total net assets

     450,433        452,942   
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 743,117      $ 672,891   
  

 

 

   

 

 

 

Net asset value per share

   $ 13.29      $ 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 September 30,     For the nine months ended September 30,  
     2014     2013     2014     2013  

Investment Income:

        

From non-controlled, non-affiliated investments:

        

Interest income

   $ 21,659      $ 17,694      $ 60,932      $ 48,472   

Dividend income

     229        356        3,014        4,884   

Other income

     265        142        1,296        687   

From non-controlled, affiliated investments:

        

Other income

     703        872        2,217        2,116   

From controlled investments:

        

Interest income

     236        —          276        —     

Other income

     53        —          53        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

     23,145        19,064        67,788        56,159   

Expenses:

        

Incentive fees

     2,944        2,053        8,010        8,093   

Base management fees

     2,931        2,081        8,333        5,278   

Credit facility interest and fees

     2,388        1,403        6,953        3,898   

Administrator expenses

     976        800        2,850        2,450   

Other general and administrative expenses

     677        508        1,988        1,354   

Professional fees

     373        311        1,390        953   

Amortization of deferred financing costs

     340        274        975        1,039   

Directors’ fees

     166        152        458        438   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     10,795        7,582        30,957        23,503   

Income tax provision (benefit) and excise tax

     127        (120     1,018        376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income

     12,223        11,602        35,813        32,280   

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

        

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

     (777     (390     (1,051     2,393   

Net change in unrealized appreciation (depreciation) on investments:

        

Non-controlled, non-affiliated investments

     206        (3,141     (3,254     (2,123

Controlled, non-affiliated investments

     299        —          299        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized (loss) gain from investments

     (272     (3,531     (4,006     270   

Benefit (provision) for taxes on realized gain on investments

     —          1,097        (249     —     

Benefit (provision) for taxes on unrealized gain on investments

     (292     (1,050     693        (981

Interest rate derivative periodic interest payments, net

     (116     (113     (344     (321

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

     267        (248     168        739   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in net assets resulting from operations

   $ 11,810      $ 7,757      $ 32,075      $ 31,987   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income per common share:

        

Basic and diluted

   $ 0.36      $ 0.34      $ 1.06      $ 1.11   

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

        

Basic and diluted

   $ 0.35      $ 0.23      $ 0.95      $ 1.10   

Dividends declared and paid

   $ 0.34      $ 0.42      $ 1.02      $ 1.09   

Weighted average shares of common stock outstanding:

        

Basic and diluted

     33,905        33,905        33,905        29,068   

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 nine months ended September 30,  
     2014     2013  

Increase in net assets from operations:

    

Net investment income

   $ 35,813      $ 32,280   

Interest rate derivative periodic interest payments, net

     (344     (321

Net realized (loss) gain on investments

     (1,051     2,393   

Income tax provision, realized gain

     (249     —     

Net change in unrealized appreciation (depreciation) on investments

     (2,955     (2,123

Benefit (provision) for taxes on unrealized gain on investments

     693        (981

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

     168        739   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     32,075        31,987   

Distributions to stockholders from net investment income

     (32,300     (31,871

Distributions to stockholders from net realized gain

     (2,284     —     

Capital share transactions:

    

Issuance of common stock

     —          110,966   

Less offering costs

     —          (4,788
  

 

 

   

 

 

 

Net increase in net assets from capital share transactions

     —          106,178   
  

 

 

   

 

 

 

Total (decrease) increase in net assets

     (2,509     106,294   

Net assets at beginning of period

     452,942        347,484   
  

 

 

   

 

 

 

Net assets at end of period

   $ 450,433      $ 453,778   
  

 

 

   

 

 

 

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 nine months ended September 30,  
     2014     2013  

Cash flows from operating activities

    

Net increase in net assets resulting from operations

   $ 32,075      $ 31,987   

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

    

Increase in payable for investment purchased

     —          9,100   

Net change in unrealized depreciation (appreciation) on investments

     2,955        2,123   

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

     (168     (739

Realized loss on investments

     879        —     

Increase in investments due to PIK

     (1,637     (2,590

Amortization of deferred financing costs

     975        1,039   

Accretion of discounts on investments and other fees

     (3,928     (3,346

Changes in operating assets and liabilities:

    

Purchases of investments, net of payable of investment purchased

     (239,477     (297,159

Proceeds from sale and paydown of investments

     167,204        123,142   

Increase in interest receivable

     (2,411     (5,692

Decrease (increase) in escrow receivable

     1,800        (2,000

Decrease (increase) in other deferred expenses

     169        —     

Decrease (increase) in due from affiliate

     261        (484

Decrease in prepaid expenses and other assets

     (189     (316

(Decrease) increase in accrued expenses

     (352     78   

Increase in accrued credit facility fees and interest

     84        398   

(Decrease) in income taxes payable

     (71     109   

(Decrease) increase in deferred tax liability

     (693     982   

Increase in base management fees payable

     688        567   

Decrease in accrued administrator expenses

     (7     (255

Increase in other deferred liabilities

     219        —     

Increase in incentive fees payable

     552        265   

(Decrease) increase in due to affiliate

     (460     580   

Decrease in dividend payable

     —          (1,316
  

 

 

   

 

 

 

Net cash used in operating activities

     (41,532     (143,527

Cash flows from financing activities

    

Borrowings under credit facility

     248,050        311,600   

Repayments under credit facility

     (170,749     (235,700

Issuance of shares of common stock

     —          110,966   

Distributions paid to stockholders

     (34,584     (31,871

Financing and offering costs paid

     (1,909     (6,279
  

 

 

   

 

 

 

Net cash provided by financing activities

     40,808        148,716   
  

 

 

   

 

 

 

Net (decrease) increase in cash

     (724     5,189   

Cash, beginning of period

     7,829        4,819   
  

 

 

   

 

 

 

Cash, end of period

   $ 7,105      $ 10,008   
  

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

    

Cash interest paid

   $ 5,203      $ 2,536   

Income Taxes Paid

   $ 1,070      $ 621   

PIK income earned

   $ 1,680      $ 2,597   

Non-cash Operating Activities:

For the nine months ended September 30, 2014, the Company converted the cost basis of a senior subordinated note, certain interest due and warrants of C&K Markets, Inc. totaling $14,272 to common and preferred equity. In connection with the extinguishment and conversion to equity, the Company recognized a loss of $1,000.

See accompanying notes to these consolidated financial statements

 

5


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidated Schedule of Investments (unaudited)

September 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 —153.93% of net asset value

             

20-20 Technologies Inc.

             

Senior Secured Term Loan(4)

  IT services   10.8%(5)     09/12/12        03/31/19      $ 31,800      $ 31,459      $ 31,641   
           

 

 

   

 

 

 
              31,459        31,641   

A10 Capital, LLC

             

Senior Subordinated Delayed Draw Note(10)

  Financial services   12.0%     08/25/14        01/25/21      $ 3,444      $ 3,410      $ 3,410   

Preferred stock(8)(9)(23)

    14.0%
(12.0% Cash
+ 2.0% PIK)
    08/25/14        —          26,889        6,830        6,830   
           

 

 

   

 

 

 
              10,240        10,240   

Adirondack Park CLO Ltd.

             

Subordinated Notes, Residual Interest(4)

  Financial services   12.4%(12)     03/27/13        04/15/24        —        $ 8,325      $ 8,527   
           

 

 

   

 

 

 
              8,325        8,527   

Aerogroup International Inc.

             

Second Lien Term Loan

  Consumer products   9.0% (LIBOR
+ 8.0%)
    06/09/14        12/09/19      $ 13,648      $ 13,387      $ 13,387   

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

    9.0% (LIBOR
+ 8.0%)
    06/09/14        12/09/14        —          (47     —     

Common stock(9)

        06/09/14        —          253,616        11        33   

Preferred stock(9)

        06/09/14        —          28,180        1,108        1,080   
           

 

 

   

 

 

 
              14,459        14,500   

AIM Media Texas Operating, LLC

             

Member interest(7)(8)

  Media, entertainment and leisure       06/21/12        —          0.763636      $ 764      $ 882   
           

 

 

   

 

 

 
              764        882   

Airborne Tactical Advantage Company, LLC

             

Senior Secured Note

  Aerospace & defense   11.0%     09/07/11        03/07/16      $ 4,000      $ 3,927      $ 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        56   

Series A Preferred Stock(9)

        09/17/13        —          225        169        219   
           

 

 

   

 

 

 
              6,757        6,842   

Alex Toys, LLC

             

Second Lien Term Loan

  Consumer products   11.0% (LIBOR
+ 10.0%)
    06/30/14        12/30/19      $ 17,000      $ 16,672      $ 16,672   
           

 

 

   

 

 

 
              16,672        16,672   

Allen Edmonds Corporation

             

Second Lien Term Loan

  Consumer products   10% (LIBOR
+ 9.0%)
    11/26/13        05/27/19      $ 7,333      $ 7,204      $ 7,223   
           

 

 

   

 

 

 
              7,204        7,223   

Allied Wireline Services, LLC

             

Senior Secured Term Loan

  Energy / Utilities   9.5% (LIBOR
+ 8.0%)
    02/28/14        02/28/19      $ 10,057      $ 9,628      $ 10,006   

Class A Common Equity(7)(8)(9)

            618,868        619        804   

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

            501,159        175        303   
           

 

 

   

 

 

 
              10,422        11,113   

BeneSys Inc.

             

Senior Secured Term Loan

  Business services   10.8% (LIBOR
+ 9.8%)
    03/31/14        03/31/19      $ 8,715      $ 8,552      $ 8,584   

Senior Secured Delayed Draw Term Loan(10)(15)

    10.8% (LIBOR
+ 9.8%)
    08/01/14        03/31/19        —          (11     —     
           

 

 

   

 

 

 
              8,541        8,584   

Charming Charlie, LLC.

             

Senior Secured Term Loan

  Retail & grocery   9.0% (LIBOR
+ 8.0%)
    12/18/13        12/31/19      $ 26,865      $ 26,499      $ 26,968   
           

 

 

   

 

 

 
              26,499        26,968   

 

(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)

September 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      $ 21,597      $ 21,831   
           

 

 

   

 

 

 
              21,597        21,831   

Copperweld Bimetallics LLC

             

Senior Secured Term Loan

  Industrials   12.0%     12/11/13        12/11/18      $ 20,900      $ 20,166      $ 20,482   
           

 

 

   

 

 

 
              20,166        20,482   

Country Pure Foods, LLC

             

Subordinated Term Loan

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

 

 

   

 

 

 
              16,181        16,181   

CRS Reprocessing, LLC

             

Senior Secured Term Loan

  Manufacturing   12.5% (LIBOR
+ 11.5%)
    06/16/11        06/16/15      $ 15,461      $ 15,439      $ 14,687   
           

 

 

   

 

 

 
              15,439        14,687   

Dr. Fresh, LLC

             

Subordinated Term Loan

  Consumer products  

14.0%(6)
(12.0% Cash

+ 2.0% PIK)

    05/15/12        11/15/17      $ 14,668      $ 14,478      $ 14,668   
           

 

 

   

 

 

 
              14,478        14,668   

Dryden CLO, Ltd.

             

Subordinated Notes, Residual Interest(4)

  Financial services   13.6%(12)     09/12/13        11/15/25        —        $ 8,278      $ 8,811   
           

 

 

   

 

 

 
              8,278        8,811   

Duff & Phelps Corporation

             

Tax Receivable Agreement Payment Rights(11)

  Financial services   17.0%(12)     06/01/12        12/31/29        —        $ 12,163      $ 13,824   

Senior Secured Term Loan(11)

    4.5% (LIBOR
+ 3.5%)
    05/15/13        04/23/20      $ 247        250        246   
           

 

 

   

 

 

 
              12,413        14,070   

Embarcadero Technologies, Inc.

             

Senior Secured Term Loan

  IT services   10.6%(5)     02/15/13        12/28/17      $ 9,429      $ 9,329      $ 9,429   
           

 

 

   

 

 

 
              9,329        9,429   

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      $ 18,763      $ 18,991      $ 18,575   
           

 

 

   

 

 

 
              18,991        18,575   

Express Courier International, Inc.

             

Secured Subordinated Term Loan

  Business services   15.0%(13) (PIK)     01/17/12        07/17/16      $ 9,624      $ 7,652      $ 7,699   
           

 

 

   

 

 

 
              7,652        7,699   

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   14.2%(12)     12/18/13        01/20/26        —        $ 4,252      $ 4,617   
           

 

 

   

 

 

 
              4,252        4,617   

Food Processing Holdings, LLC

             

Senior Secured Term Loan(14)

  Food & beverage   10.5% (LIBOR
+9.5%)
    10/31/13        10/31/18      $ 22,202      $ 21,823      $ 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        221   

Class B Units(9)

        04/20/10        —          406.09        408        503   
           

 

 

   

 

 

 
              22,394        22,926   

Freeport Financial SBIC Fund LP

             

Member interest(16)

  Financial services       06/14/13        —          —        $ 2,085      $ 2,085   
           

 

 

   

 

 

 
              2,085        2,085   

 

(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)

September 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  

Gold, Inc.

             

Subordinated Term Loan

  Consumer
products
  12.0%     12/31/12        06/30/19      $ 16,788      $ 16,788      $ 16,620   
           

 

 

   

 

 

 
              16,788        16,620   

Gryphon Partners 3.5, L.P.

             

Partnership interest(16)

  Financial
services
      11/20/12        12/21/18        —        $ 118      $ 290   
           

 

 

   

 

 

 
              118        290   

Harrison Gypsum, LLC

             

Senior Secured Term Loan

  Industrials   10.5%(6) (LIBOR + 8.5% Cash + 0.5% PIK)     12/21/12        12/21/17      $ 26,245      $ 25,959      $ 26,245   
           

 

 

   

 

 

 
              25,959        26,245   

Hart InterCivic, Inc.

             

Senior Secured Term Loan

  IT services   12.5% (LIBOR + 10.0% Cash + 1.0% PIK)     07/01/11        07/01/16      $ 8,535      $ 8,465      $ 8,279   

Senior Secured Revolving Loan(10)

    11.5% (LIBOR + 10.0%)     07/01/11        07/01/16        2,100        2,079        2,100   
           

 

 

   

 

 

 
              10,544        10,379   

HEALTHCAREfirst, Inc.

             

Senior Secured Term Loan

  Healthcare   13.4%(5)     08/31/12        08/30/17      $ 8,683      $ 8,513      $ 8,249   
           

 

 

   

 

 

 
              8,513        8,249   

Holland Intermediate Acquisition Corp.

             

Senior Secured Term Loan

  Energy/
Utilities
  10.0% (LIBOR + 9.0%)     05/29/13        05/29/18      $ 24,227      $ 23,817      $ 24,227   

Senior Secured Revolving Loan(10)

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

 

 

   

 

 

 
              23,817        24,227   

Hostway Corporation

             

Second Lien Term Loan

  IT services   10.0% (LIBOR + 8.8%)     12/27/13        12/13/20      $ 12,000      $ 11,779      $ 11,940   

Class A Common Equity(9)

        12/27/13        —          20,000        200        133   

Class A Preferred Equity(9)

        12/27/13        —          1,800        1,800        1,945   
           

 

 

   

 

 

 
              13,779        14,018   

Igloo Products Corp.

             

Senior Secured Term Loan

  Consumer
products
  10.3% (LIBOR + 8.8%)     03/28/14        03/28/20      $ 24,922      $ 24,396      $ 24,174   

Common stock(8)(9)

        04/30/14        —          253,616        1,686        1,336   
           

 

 

   

 

 

 
              26,082        25,510   

Ingenio Acquisition, LLC

             

Senior Secured Term Loan

  Media,
entertainment
and leisure
  11.3% (10.3% Cash+ 1.0% PIK)     05/09/13        03/14/19      $ 9,139      $ 8,994      $ 9,139   
           

 

 

   

 

 

 
              8,994        9,139   

Key Brand Entertainment, Inc.

             

Senior Secured Term Loan

  Media,
entertainment
and leisure
  9.8% (LIBOR + 8.5%)     08/08/13        08/08/18      $ 13,013      $ 12,802      $ 13,013   

Senior Secured Revolving Loan(10)(15)

    9.8% (LIBOR + 8.5%)     08/08/13        08/08/18        —          (23     —     

Secured Term Loan

    12.5% (LIBOR + 11.3%)     05/29/14        08/08/18        2,874        2,820        2,845   

Secured Multi-draw Term Loan(15)

    12.5% (LIBOR + 11.3%)     05/29/14        08/08/18        —          (58     —     
           

 

 

   

 

 

 
              15,541        15,858   

Loadmaster Derrick & Equipment, Inc.

             

Senior Secured Term Loan

  Energy /
Utilities
  9.3% (LIBOR + 8.3%)     09/28/12        09/28/17      $ 8,828      $ 8,674      $ 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        3,500        3,434        3,500   
           

 

 

   

 

 

 
              16,108        16,328   

 

(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)

September 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  

Martex Fiber Southern Corp.

             

Subordinated Term Loan

  Industrials   13.5%(6)(12.0% Cash and 1.5% PIK)     04/30/12        10/31/19      $ 8,991      $ 8,890      $ 8,362   
           

 

 

   

 

 

 
              8,890        8,362   

Oasis Legal Finance Holding Company LLC

             

Second Lien Term Loan

  Financial
services
  10.5%     09/30/13        09/30/18      $ 13,246      $ 13,024      $ 13,246   
           

 

 

   

 

 

 
              13,024        13,246   

Octagon Income Note XIV, Ltd.

             

Income Notes, Residual Interest(4)

  Financial
services
  14.3%(12)     12/19/12        01/15/24        —        $ 7,714      $ 8,240   
           

 

 

   

 

 

 
              7,714        8,240   

OEM Group, Inc.

             

Senior Secured Subordinated Note

  Manufacturing   15.0%(6)(12.5% Cash + 2.5% PIK)     10/07/10        10/07/15      $ 15,451      $ 15,336      $ 14,369   

Senior Secured Subordinated Bridge Loan

    15.0%(6)(12.5% Cash + 2.5% PIK)     06/06/14        10/07/15        3,024        3,002        2,934   

Warrant for Common

        10/07/10        —          —          —          —     
           

 

 

   

 

 

 
              18,338        17,303   

Sheplers, Inc.

             

Senior Secured Second Lien Term Loan

  Retail &
grocery
  13.2% (LIBOR + 11.7%)     12/20/11        12/20/16      $ 11,426      $ 11,276      $ 11,484   

Subordinated Term Loan

    17.0%(17)(10.0% Cash + 7.0% PIK)     12/20/11        12/20/17        2,005        1,984        2,015   
           

 

 

   

 

 

 
              13,260        13,499   

Sheridan Square CLO, Ltd

             

Income Notes, Residual Interest(4)

  Financial
services
  13.2%(12)     03/12/13        04/15/25        —        $ 5,574      $ 5,853   
           

 

 

   

 

 

 
              5,574        5,853   

Specialty Brands Holdings, LLC

             

Second Lien Term Loan

  Restaurants   11.3% (LIBOR + 9.8%)     07/16/13        07/16/18      $ 20,977      $ 20,638      $ 20,662   
           

 

 

   

 

 

 
              20,638        20,662   

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      $ 9,789      $ 10,200   

Member interest(8)(9)

        04/20/10        —          —          —          5,500   
           

 

 

   

 

 

 
              9,789        15,700   

Synarc-Biocore Holdings, LLC

             

Second Lien Term Loan

  Healthcare   9.3% (LIBOR + 8.3%)     03/13/14        03/13/22      $ 11,000      $ 10,895      $ 10,753   
           

 

 

   

 

 

 
              10,895        10,753   

Tri Starr Management Services, Inc.

             

Senior Subordinated Note

  IT services   15.8%(6)(12.5% Cash + 3.3% PIK)     03/04/13        03/04/19      $ 18,762      $ 18,469      $ 16,698   
           

 

 

   

 

 

 
              18,469        16,698   

Virtus Pharmaceuticals, LLC

             

Senior Secured Term Loan

  Healthcare   11.2%(5)     07/17/14        07/17/19      $ 17,344      $ 16,925      $ 16,925   
           

 

 

   

 

 

 
              16,925        16,925   

Vision Solutions, Inc.

             

Second Lien Term Loan

  IT services   9.5% (LIBOR + 8.0%)     03/31/11        07/23/17      $ 11,625      $ 11,573      $ 11,567   
           

 

 

   

 

 

 
              11,573        11,567   

 

(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)

September 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  

Washington Inventory Service

             

Senior Secured Term Loan

  Business
services
  10.3% (LIBOR + 9.0%)     12/27/12        06/20/19      $ 11,000      $ 10,880      $ 10,890   
           

 

 

   

 

 

 
              10,880        10,890   

Wheels Up Partners, LLC

             

Senior Secured Term Loan
(Class A-2)

  Transportation   9.6% (LIBOR + 8.6%)     01/31/14        10/15/22      $ 9,776      $ 9,651      $ 9,678   

Senior Secured Term Loan
(Class A-3)

  Transportation   9.6% (LIBOR + 8.6%)     08/27/14        07/15/23        645        645        638   

Common stock(7)(8)(9)

        01/31/14          1,000,000        1,000        983   
           

 

 

   

 

 

 
              11,296        11,299   

Wingspan Portfolio Holdings, Inc.

             

Subordinated Term Loan

  Financial
services
  15.5%(19)     05/21/13        11/21/16      $ 18,768      $ 18,447      $ 6,569   
           

 

 

   

 

 

 
              18,447        6,569   

YP Equity Investors, LLC

             

Member interest(7)(8)

  Media,
entertainment
and leisure
      05/08/12        —          —        $ —        $ 2,500   
           

 

 

   

 

 

 
              —          2,500   
           

 

 

   

 

 

 

Total non-controlled/non-affiliated investments—153.93% of net asset value

            $ 693,653      $ 693,349   
           

 

 

   

 

 

 

Controlled investments—5.48% of net asset value

             

C&K Market, Inc.

             

Preferred stock(18)

  Retail &
grocery
      11/03/10        —          1,952,604      $ 10,956      $ 10,956   

Common stock(18)

        11/03/10        —          1,952,604        2,271        2,271   
           

 

 

   

 

 

 
              13,227        13,227   

Thibaut, Inc(22)

             

Senior Secured Term Loan

  Consumer
products
  12.0%     06/19/14        06/19/19      $ 6,537      $ 6,458      $ 6,536   

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

        06/19/14        —          4,747        4,691        4,547   

Common stock(8)(9)

        06/19/14        —          20,639        —          365   
           

 

 

   

 

 

 
              11,149        11,448   
           

 

 

   

 

 

 

Total controlled investments—5.48% of net asset value

            $ 24,376      $ 24,675   
           

 

 

   

 

 

 

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

             

THL Credit Greenway Fund LLC

             

Member interest(8)(16)

  Financial
services
      01/27/11        01/14/21        —        $ 4      $ 4   
           

 

 

   

 

 

 
              4        4   

THL Credit Greenway Fund II LLC

             

Member interest(8)(16)

  Financial
services
      03/01/13        10/10/21        —        $ 4      $ 4   
           

 

 

   

 

 

 
              4        4   
           

 

 

   

 

 

 

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

            $ 8      $ 8   
           

 

 

   

 

 

 
             
           

 

 

   

 

 

 

Total investments—159.41% of net asset value

            $ 718,037      $ 718,032   
           

 

 

   

 

 

 

 

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       $ —         $ (116 )
               

 

 

    

 

 

 

Total derivative instruments—0.03% of net asset value

            $ —         $ (116 )
               

 

 

    

 

 

 

 

(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)

September 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 September 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 September 30, 2014.
(13) Loan was on non-accrual status as of September 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, June 30, 2014 and September 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., or C&K, filed for bankruptcy in November 2013. On August 12, 2014, the date C&K emerged from bankruptcy, the cost basis of the senior subordinated note, certain interest due and warrants totaling $14,272 were converted to common and preferred equity. In connection with the extinguishment and conversion to equity, the Company recognized a loss in the amount of $1,000.

See Note 4, Realized Gains and Losses on Investments for additional detail.

(19) Contractual default rate of interest is 15.5%. Loan was on non-accrual status as of September 30, 2014. Previously accrued and unpaid interest totaling $1,391 was reversed during the nine months ended September 30, 2014 against interest income in connection with the loan going on non-accrual status. On October 20, 2014, THL Credit restructured its investment in Wingspan Portfolio Holdings, Inc., or Wingspan. As part of the restructuring, THL Credit exchanged its subordinated term loan for a controlled equity position of an affiliated entity, Dimont Acquisition Inc., or Dimont. The fair value of the shares of the equity received in the exchange approximated the fair value of the subordinated debt reflected as of September 30, 2014.
(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.
(23) Preferred stock investment return is income producing with a stated rate of 12% cash and 2% PIK due on a monthly basis.

 

See accompanying notes to these consolidated financial statements.

 

11


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

 

12


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   

 

(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  

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         —           —           —     

 

(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  

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.

 

16


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   
                 

 

 

    

 

 

 
                    —           4,100   
                 

 

 

    

 

 

 

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

                  $ 645,911       $ 648,860   
                 

 

 

    

 

 

 

 

(Continued on next page)

 

See accompanying notes to these consolidated financial statements.

 

17


Table of Contents

THL Credit, Inc. and Subsidiaries

Consolidate