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EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex311_2014123110xq.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex322_2014123110xq.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex312_2014123110xq.htm
EX-10.1 - ADMINISTRATION AGREEMENT BY AND BETWEEN FSC AND FSC CT LLC - Oaktree Specialty Lending Corpfscadministrationagreement.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex321_2014123110xq.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2014
OR
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Fifth Street Finance Corp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     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. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(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 Act)    YES  ¨     NO  þ
The registrant had 153,340,371 shares of common stock outstanding as of February 6, 2015.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2014
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 




PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Fifth Street Finance Corp.
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
 
 
December 31, 2014
 
September 30, 2014
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost December 31, 2014: $381,275; cost September 30, 2014: $387,625)
 
$
378,053

 
$
394,872

Affiliate investments (cost December 31, 2014: $37,518; cost September 30, 2014: $37,757)
 
40,390

 
40,764

Non-control/Non-affiliate investments (cost December 31, 2014: $2,350,146; cost September 30, 2014: $2,069,301)
 
2,303,152

 
2,060,278

Total investments at fair value (cost December 31, 2014: $2,768,939; cost September 30, 2014: $2,494,683)
 
2,721,595

 
2,495,914

Cash and cash equivalents
 
64,259

 
86,731

Restricted cash
 
46,294

 
22,315

Interest, dividends and fees receivable
 
15,195

 
15,224

Due from portfolio companies
 
27,225

 
22,950

Receivables from unsettled transactions
 
55,853

 
4,750

Deferred financing costs
 
18,985

 
20,334

Other assets
 
94

 

Total assets
 
$
2,949,500

 
$
2,668,218

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
3,866

 
$
3,908

Base management fee payable
 
14,044

 
12,372

Part I incentive fee payable
 
8,715

 
9,309

Due to FSC CT
 
3,552

 
2,464

Interest payable
 
11,655

 
5,797

Amounts payable to syndication partners
 
61

 
3,817

Payables from unsettled transactions
 
112,114

 

Credit facilities payable
 
617,495

 
317,395

SBA debentures payable
 
225,000

 
225,000

Unsecured convertible notes payable
 
115,000

 
115,000

Unsecured notes payable
 
410,121

 
409,878

Secured borrowings at fair value (proceeds of $22,525 and $84,750 at December 31, 2014 and September 30, 2014, respectively)
 
22,246

 
84,803

Total liabilities
 
1,543,869

 
1,189,743

Commitments and contingencies (Note 3)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 153,340 shares issued and outstanding at December 31, 2014 and September 30, 2014
 
1,533

 
1,533

Additional paid-in-capital
 
1,649,086

 
1,649,086

Net unrealized appreciation (depreciation) on investments and secured borrowings
 
(47,065
)
 
1,178

Net realized loss on investments, secured borrowings and interest rate swap
 
(170,004
)
 
(152,416
)
Accumulated overdistributed net investment income
 
(27,919
)
 
(20,906
)
Total net assets (equivalent to $9.17 and $9.64 per common share at December 31, 2014 and September 30, 2014, respectively) (Note 12)
 
1,405,631

 
1,478,475

Total liabilities and net assets
 
$
2,949,500

 
$
2,668,218

See notes to Consolidated Financial Statements.

1


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months
ended
December 31, 2014
 
Three months
ended
December 31, 2013
Interest income:
 
 
 
 
Control investments
 
$
6,264

 
$
2,419

Affiliate investments
 
1,097

 
766

Non-control/Non-affiliate investments
 
45,170

 
45,296

Interest on cash and cash equivalents
 
10

 
3

Total interest income
 
52,541

 
48,484

PIK interest income:
 
 
 
 
Control investments
 
1,765

 
2,408

Affiliate investments
 
215

 
335

Non-control/Non-affiliate investments
 
2,424

 
2,870

Total PIK interest income
 
4,404

 
5,613

Fee income:
 
 
 
 
Control investments
 
623

 
567

Affiliate investments
 
12

 
170

Non-control/Non-affiliate investments
 
17,267

 
16,401

Total fee income
 
17,902

 
17,138

Dividend and other income:
 
 
 
 
Control investments
 
1,138

 

Non-control/Non-affiliate investments
 
307

 
96

Total dividend and other income
 
1,445

 
96

Total investment income
 
76,292

 
71,331

Expenses:
 
 
 
 
Base management fee
 
14,155

 
12,059

Part I incentive fee
 
8,715

 
9,054

Professional fees
 
1,164

 
1,025

Board of Directors fees
 
180

 
155

Interest expense
 
13,992

 
10,213

Administrator expense
 
1,247

 
853

General and administrative expenses
 
1,780

 
1,754

Total expenses
 
41,233

 
35,113

Base management fee waived
 
(111
)
 

Net expenses
 
41,122

 
35,113

Net investment income
 
35,170

 
36,218

Unrealized appreciation (depreciation) on investments:
 
 
 
 
Control investments
 
(10,469
)
 
420

Affiliate investments
 
(135
)
 
783

Non-control/Non-affiliate investments
 
(37,971
)
 
(6,921
)
Net unrealized depreciation on investments
 
(48,575
)
 
(5,718
)
Net unrealized appreciation on secured borrowings
 
332

 

Realized gain (loss) on investments and secured borrowings:
 
 
 
 
Affiliate investments
 
43

 

Non-control/Non-affiliate investments
 
(17,631
)
 
3,206

Net realized gain (loss) on investments and secured borrowings
 
(17,588
)
 
3,206

Net increase (decrease) in net assets resulting from operations
 
$
(30,661
)
 
$
33,706

Net investment income per common share — basic
 
$
0.23

 
$
0.26

Earnings (loss) per common share — basic
 
$
(0.20
)
 
$
0.24

Weighted average common shares outstanding — basic
 
153,340

 
139,126

Net investment income per common share — diluted
 
$
0.23

 
$
0.26

Earnings (loss) per common share — diluted
 
$
(0.20
)
 
$
0.24

Weighted average common shares outstanding — diluted
 
161,130

 
149,916

Distributions per common share
 
$
0.28

 
$
0.24

See notes to Consolidated Financial Statements.

2



Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
 
 
 
Three months
ended
December 31, 2014
 
Three months
ended
December 31, 2013
Operations:
 
 
 
 
Net investment income
 
$
35,170

 
$
36,218

Net unrealized depreciation on investments
 
(48,575
)
 
(5,718
)
Net unrealized appreciation on secured borrowings
 
332

 

Net realized gain (loss) on investments and secured borrowings
 
(17,588
)
 
3,206

Net increase (decrease) in net assets resulting from operations
 
(30,661
)
 
33,706

Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(42,183
)
 
(33,613
)
Net decrease in net assets from stockholder transactions
 
(42,183
)
 
(33,613
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
2,061

 
3,411

Repurchase of common stock under stock repurchase program
 

 
(406
)
Repurchase of common stock under dividend reinvestment program
 
(2,061
)
 
(2,002
)
Net increase (decrease) in net assets from capital share transactions
 

 
1,003

Total increase (decrease) in net assets
 
(72,844
)
 
1,096

Net assets at beginning of period
 
1,478,475

 
1,368,872

Net assets at end of period
 
$
1,405,631

 
$
1,369,968

Net asset value per common share
 
$
9.17

 
$
9.85

Common shares outstanding at end of period
 
153,340

 
139,138

See notes to Consolidated Financial Statements.


3

Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands, except per share amounts)
(unaudited)


 
 
Three months
ended
December 31, 2014
 
Three months
ended
December 31, 2013
Cash flows used in operating activities:
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
$
(30,661
)
 
$
33,706

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
 
 
 
 
Net unrealized depreciation on investments
 
48,575

 
5,718

Net unrealized appreciation on secured borrowings
 
(332
)
 

Net realized (gains) losses on investments and secured borrowings
 
17,588

 
(3,206
)
PIK interest income
 
(4,404
)
 
(5,613
)
Recognition of fee income
 
(17,902
)
 
(17,138
)
Accretion of original issue discount on investments
 
(258
)
 
(164
)
Accretion of original issue discount on unsecured notes payable
 
244

 

Amortization of deferred financing costs
 
1,349

 
1,405

Changes in operating assets and liabilities:
 
 
 
 
Fee income received
 
17,345

 
16,920

Increase in restricted cash
 
(23,979
)
 

(Increase) decrease in interest, dividends and fees receivable
 
9

 
(1,342
)
Increase in due from portfolio companies
 
(4,275
)
 
(1,280
)
Increase in receivables from unsettled transactions
 
(51,103
)
 

Increase in other assets
 
(94
)
 
(135
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
(42
)
 
1,982

Increase in base management fee payable
 
1,672

 
2,435

Increase (decrease) in Part I incentive fee payable
 
(594
)
 
1,879

Increase in due to FSC CT
 
1,088

 
1,293

Increase in interest payable
 
5,858

 
4,072

Increase (decrease) in payables from unsettled transactions
 
112,114

 
(35,716
)
Decrease in amounts payable to syndication partners
 
(3,756
)
 

Purchases of investments and net revolver activity
 
(722,328
)
 
(650,118
)
Principal payments received on investments (scheduled payments)
 
5,790

 
10,346

Principal payments received on investments (payoffs)
 
250,483

 
43,746

PIK interest income received in cash
 
658

 
4,226

Proceeds from the sale of investments
 
178,665

 
111,556

Net cash used in operating activities
 
(218,290
)
 
(475,428
)
Cash flows from financing activities:
 
 
 
 
Distributions paid in cash
 
(40,122
)
 
(30,202
)
Borrowings under SBA debentures payable
 

 
29,000

Borrowings under credit facilities
 
355,600

 
475,057

Repayments of borrowings under credit facilities
 
(55,500
)
 
(98,829
)
Repayments of secured borrowings
 
(62,099
)
 

Repurchases of common stock under stock repurchase program
 

 
(406
)
Repurchases of common stock under dividend reinvestment plan
 
(2,061
)
 
(2,002
)
Deferred financing costs paid
 

 
(1,432
)
Offering costs paid
 

 
(517
)
Net cash provided by financing activities
 
195,818

 
370,669

Net decrease in cash and cash equivalents
 
(22,472
)
 
(104,759
)
Cash and cash equivalents, beginning of period
 
86,731

 
147,359

Cash and cash equivalents, end of period
 
$
64,259

 
$
42,600

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
6,601

 
$
4,834

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
2,061

 
$
3,411

See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value
Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 Second Lien Term Loan, 12% cash 3% PIK due 12/31/2016
 
 
 
$
15,056

 
$
15,045

 
$
14,997

 LC Facility, 8.5% cash due 12/31/2016 (10)
 
 
 
 
 
(4
)
 

 746,114 Series A Preferred Units
 
 
 
 
 
14,909

 
18,013

 746,114 Common Stock Units
 
 
 
 
 
5,316

 
5,094

 
 
 
 
 
 
35,266

 
38,104

 TransTrade Operators, Inc. (9)
 
Air freight and logistics
 
 
 
 
 
 
 First Lien Term Loan, 11% cash 3% PIK due 5/31/2016
 
 
 
15,973

 
15,572

 
8,865

 First Lien Revolver, 8% cash due 5/31/2016
 
 
 
465

 
465

 
257

 596.67 Series A Common Units
 
 
 
 
 

 

 4,000,000 Series A Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
4,000

 

 5,200,000 Series B Preferred Units in TransTrade Holding LLC
 
 
 
 
 
5,200

 

 
 
 
 
 
 
25,237

 
9,122

 HFG Holdings, LLC (16)
 
Specialized finance
 
 
 
 
 
 
 First Lien Term Loan, 6% cash 4% PIK due 6/10/2019
 
 
 
96,871

 
96,871

 
95,812

 875,933 Class A Units
 
 
 
 
 
22,347

 
27,511

 
 
 
 
 
 
119,218

 
123,323

 First Star Aviation, LLC
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
15,390

 
15,390

 
15,125

 10,104,401 Common Units
 
 
 
 
 
10,104

 
11,860

 
 
 
 
 
 
25,494

 
26,985

 First Star Speir Aviation 1 Limited (12)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2015
 
 
 
47,823

 
47,823

 
48,870

 2,058,411.64 Common Units
 
 
 
 
 
2,058

 
4,473

 
 
 
 
 
 
49,881

 
53,343

 First Star Bermuda Aviation Limited (12)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
24,844

 
24,844

 
25,228

 4,293,042 Common Units
 
 
 
 
 
4,294

 
5,469

 
 
 
 
 
 
29,138

 
30,697

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
12,337

 
12,337

 
12,127

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,370

 
3,370

 
3,317

 First Lien Revolver, 8% cash due 8/1/2016
 
 
 
2,847

 
2,847

 
2,847

 4,100,000 Class A Common Units
 
 
 
 
 
4,100

 
5,795

 
 
 
 
 
 
22,654

 
24,086

 Senior Loan Fund JV I, LLC (12)(17)
 
Multi-sector holdings
 
 
 
 
 
 
 Subordinated Notes, LIBOR+8% cash due 5/2/2021 (14)
 
 
 
61,723

 
61,723

 
61,831

 87.5% LLC equity interest (6)
 
 
 
 
 
6,858

 
4,756

 
 
 
 
 
 
68,581

 
66,587

 Miche Group, LLC
 
Apparel, accessories
& luxury goods
 
 
 
 
 
 
 First Lien Revolver, LIBOR+8% cash due 12/18/2016 (14)
 
 
 
500

 
500

 
500

 100 units in FSFC Miche, Inc.
 
 
 


 
5,306

 
5,306

 
 
 
 
 
 
5,806

 
5,806

 Total Control Investments (26.9% of net assets)
 
 
 
 
 
$
381,275

 
$
378,053

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
$
9,192

 
$
9,192

 
$
9,016

 1,080,399 shares of Series A Preferred Stock
 
 
 
 
 
1,080

 
3,935

 
 
 
 
 
 
10,272

 
12,951

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 4/30/2016 (14)
 
 
 
740

 
740

 
763

 First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016
 
 
 
26,506

 
26,506

 
26,213

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
463

 
 
 
 
 
 
27,246

 
27,439

 Total Affiliate Investments (2.9% of net assets)
 
 
 
 
 
$
37,518

 
$
40,390

See notes to Consolidated Financial Statements.

5

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 Thermoforming Technology Group LLC
 
Industrial machinery
 
 
 
 
 
 
 33,786 shares of Common Stock (6)
 
 
 
 
 
$
849

 
$
788

 
 
 
 
 
 
849

 
788

 HealthDrive Corporation (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 10% cash due 12/31/15
 
 
 
$
4,358

 
4,357

 
4,323

 First Lien Term Loan B, 12% cash 1% PIK due 12/31/15
 
 
 
11,522

 
11,522

 
11,461

 First Lien Revolver, 12% cash due 12/31/15
 
 
 
2,266

 
2,266

 
2,266

 
 
 
 
 
 
18,145

 
18,050

 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
31,726

 
31,703

 
31,166

 414,419 Common Units
 
 
 
 
 
598

 
1,011

 
 
 
 
 
 
32,301

 
32,177

 Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.78% limited partnership interest (12)
 
 
 
 
 
642

 
492

 
 
 
 
 
 
642

 
492

 Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest (12)
 
 
 
 
 
643

 
629

 
 
 
 
 
 
643

 
629

 JTC Education, Inc. (9)
 
Education services
 
 
 
 
 
 
 Subordinated Term Loan, 13% cash due 11/1/2017
 
 
 
15,823

 
14,441

 
12,727

 17,391 Shares of Series A-1 Preferred Stock
 
 
 
 
 
313

 

 17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
14,941

 
12,727

 Psilos Group Partners IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 2.35% limited partnership interest (11)(12)
 
 
 
 
 

 

 
 
 
 
 
 

 

 Mansell Group, Inc.
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2015 (14)
 
 
 
4,654

 
4,636

 
4,633

 First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (14)
 
 
 
9,604

 
9,592

 
9,561

 
 
 
 
 
 
14,228

 
14,194

 Enhanced Recovery Company, LLC
 
Diversified support services
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (2% floor) cash due 8/13/2015 (14)
 
 
 
10,500

 
10,456

 
10,445

 First Lien Term Loan B, LIBOR+10% (2% floor) cash 1% PIK due 8/13/2015 (14)
 
 
 
16,014

 
15,974

 
15,969

 First Lien Revolver, LIBOR+7% (2% floor) cash due 8/13/2015 (14)
 
 
 
1,500

 
1,486

 
1,500

 
 
 
 
 
 
27,916

 
27,914

 Welocalize, Inc.
 
Internet software & services
 
 
 
 
 
 
 3,393,060 Common Units in RPWL Holdings, LLC
 
 
 
 
 
3,393

 
5,988

 
 
 
 
 
 
3,393

 
5,988

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (12)
 
 
 
 
 
380

 
266

 
 
 
 
 
 
380

 
266

 Physicians Pharmacy Alliance, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+9% cash 1.5% PIK due 1/4/2016 (14)
 
 
 
10,492

 
10,422

 
10,446

 
 
 
 
 
 
10,422

 
10,446

 Cardon Healthcare Network, LLC
 
Diversified support services
 
 
 
 
 
 
 69,487 Class A Units
 
 
 
 
 
265

 
647

 
 
 
 
 
 
265

 
647

 Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016 (14)
 
 
 
2,261

 
2,227

 
2,167

 Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
32,914

 
31,410

 
19,908

 First Lien Revolver, LIBOR+5% (1.5% floor) cash due 1/31/2016 (14)
 
 
 
3,214

 
3,178

 
3,214

 
 
 
 
 
 
36,815

 
25,289


See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)


Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 CCCG, LLC (9)
 
Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8% (1.75% floor) cash 1% PIK due 12/29/2017 (14)
 
 
 
$
34,748

 
$
34,290

 
$
18,125

 First Lien Revolver, LIBOR+5.5% (1.75% floor) cash due 12/29/2017 (14)
 
 
 
 
 

 

 
 
 
 
 
 
34,290

 
18,125

 Maverick Healthcare Group, LLC
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
16,636

 
16,143

 
16,442

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
38,400

 
38,169

 
38,043

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (14)
 
 
 
1,256

 
1,168

 
1,248

 
 
 
 
 
 
55,480

 
55,733

 Refac Optical Group (9)
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (14)
 
 
 
22,006

 
21,908

 
21,610

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (14)
 
 
 
33,643

 
33,419

 
32,679

 First Lien Term Loan C, 12% cash due 9/30/2018
 
 
 
3,413

 
3,413

 
3,383

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (14)
 
 
 
1,600

 
1,567

 
1,600

 1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
 
 
 
 
 
1

 

 550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
305

 

 1,000 Series A Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
999

 
617

 
 
 
 
 
 
61,612

 
59,889

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (12)
 
 
 
 
 
847

 
775

 
 
 
 
 
 
847

 
775

 Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+9.75% cash due 11/4/2018 (14)
 
 
 
25,069

 
24,999

 
25,466

 Senior Revolver, LIBOR+6% cash due 11/4/2018 (14)
 
 
 
500

 
486

 
500

 Capex Line, LIBOR+7% cash due 11/4/2018 (14)
 
 
 
1,250

 
1,250

 
1,250

 
 
 
 
 
 
26,735

 
27,216

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (12)
 
 
 
 
 
1,334

 
1,322

 
 
 
 
 
 
1,334

 
1,322

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2017
 
 
 
29,862

 
29,740

 
29,502

 317,282.97 Class A Units
 
 
 
 
 
317

 
661

 
 
 
 
 
 
30,057

 
30,163

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (12)
 
 
 
 
 
656

 
787

 
 
 
 
 
 
656

 
787

 Digi-Star Acquisition Holdings, Inc.
 
Industrial machinery
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 11/18/2017
 
 
 
16,762

 
16,703

 
16,299

 264.37 Class A Preferred Units
 
 
 
 
 
115

 
125

 2,954.87 Class A Common Units
 
 
 
 
 
36

 
464

 
 
 
 
 
 
16,854

 
16,888

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (12)
 
 
 
 
 
619

 
431

 
 
 
 
 
 
619

 
431

 World 50, Inc.
 
Research & consulting services
 
 
 
 
 
 
 Senior Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (14)
 
 
 
7,766

 
7,709

 
7,888

 Senior Term Loan B, 12.5% cash due 3/30/2017
 
 
 
7,000

 
6,963

 
6,901

 Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)(14)
 
 
 
 
 
(27
)
 

 
 
 
 
 
 
14,645

 
14,789

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
 
 
 
 
 
 
 
 0.13% limited partnership interest (12)
 
Multi-sector holdings
 
 
 
$
498

 
$
447

 
 
 
 
 
 
498

 
447

 BMC Acquisition, Inc.
 
Other diversified financial services
 
 
 
 
 
 
 500 Series A Preferred Shares
 
 
 
 
 
499

 
615

 50,000 Common Shares (6)
 
 
 
 
 
1

 
53

 
 
 
 
 
 
500

 
668

 Ansira Partners, Inc. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (10)(14)
 
 
 
 
 
(4
)
 

 250 Preferred Units & 250 Class A Common Units of Ansira Holdings, LLC
 
 
 
 
250

 
331

 
 
 
 
 
 
246

 
331

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.75% (1.5% floor) cash due 5/17/2019 (14)
 
 
 
$
17,000

 
17,000

 
6,800

 
 
 
 
 
 
17,000

 
6,800

 I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
 75,000 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
1,000

 
766

 
 
 
 
 
 
1,000

 
766

 Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
10,692

 
10,675

 
10,866

 First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK, due 6/15/2017 (14)
 
 
 
8,290

 
8,282

 
8,102

 First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (10)(14)
 
 
 
 
 
(6
)
 

 1,500 Common Stock Units of Yeti Holdings, Inc.
 
 
 
 
 
1,500

 
4,507

 
 
 
 
 
 
20,451

 
23,475

 Specialized Education Services, Inc.
 
Education services
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (1.5% floor) cash due 6/28/2017 (14)
 
 
 
8,193

 
8,193

 
7,932

 Subordinated Term Loan B, 11% cash 1.5% PIK due 6/28/2018
 
 
 
18,181

 
18,181

 
17,588

 
 
 
 
 
 
26,374

 
25,520

 Vitalyst Holdings, Inc. (formerly known as PC Helps Support, LLC)
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,165

 
19,165

 
18,671

 675 Series A Preferred Units of PCH Support Holdings, Inc.
 
 
 
 
 
675

 
816

 7,500 Class A Common Stock Units of PCH Support Holdings, Inc.
 
 
 
 
 
75

 

 
 
 
 
 
 
19,915

 
19,487

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (12)
 
 
 
 
 
567

 
515

 
 
 
 
 
 
567

 
515

 Deltek, Inc. (9)
 
IT consulting & other services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.75% (1.25% floor) cash due 10/10/2019 (14)
 
 
 
25,000

 
25,000

 
25,168

 First Lien Revolver, LIBOR+4.75% (1.25% floor) cash due 10/10/2017 (14)
 
 
 
 
 

 

 
 
 
 
 
 
25,000

 
25,168

 First American Payment Systems, LP
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (14)
 
 
 
23,304

 
23,304

 
23,159

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (14)
 
 
 
1,358

 
1,358

 
1,340

 
 
 
 
 
 
24,662

 
24,499

 Dexter Axle Company
 
Auto parts & equipment
 
 
 
 
 
 
 1,500 Common Shares in Dexter Axle Holding Company
 
 
 
 
 
1,500

 
3,116

 
 
 
 
 
 
1,500

 
3,116

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,416

 
14,416

 
14,171

 20,000 Common Shares in MCP CPS Group Holdings, Inc.
 
 
 
 
 
2,000

 
2,549

 
 
 
 
 
 
16,416

 
16,720

See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.5% PIK due 6/20/2019
 
 
 
$
5,114

 
$
5,114

 
$
5,038

 First Lien Revolver, LIBOR+5% (1.25% floor) cash due 12/20/2017 (14)
 
 
 
609

 
609

 
603

 4,950,000 Preferred Units in GRG Holdings, LP
 
 
 
 
 
495

 
501

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
6,223

 
6,142

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
14,861

 
14,853

 
14,861

 Senior Delayed Draw Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
99

 
99

 
99

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (10)(14)
 
 
 
 
 
(1
)
 

 
 
 
 
 
 
14,951

 
14,960

 Omniplex World Services Corporation
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 12/21/2018
 
 
 
12,826

 
12,826

 
12,426

 500 units Class A Common Units in Omniplex Holdings Corp.
 
 
 
 
 
500

 
586

 
 
 
 
 
 
13,326

 
13,012

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 12/21/2018
 
 
 
16,031

 
16,031

 
15,931

 
 
 
 
 
 
16,031

 
15,931

 Affordable Care, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.25% (1.25% floor) cash due 12/26/2019 (14)
 
 
 
23,250

 
23,250

 
23,018

 
 
 
 
 
 
23,250

 
23,018

 Aderant North America, Inc.
 
Internet & software services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.75% (1.25% floor) cash due 6/20/2019 (14)
 
 
 
7,000

 
7,000

 
6,983

 
 
 
 
 
 
7,000

 
6,983

 AdVenture Interactive, Corp.
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)
 
 
 
107,863

 
107,855

 
107,282

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)
 
 
 
 
 

 

 2,000 Preferred Units of AVI Holdings, L.P.
 
 
 
 
 
1,811

 
1,349

 
 
 
 
 
 
109,666

 
108,631

 CoAdvantage Corporation
 
Human resources & employment services
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.25% PIK due 12/31/2018
 
 
 
14,939

 
14,939

 
14,939

 50,000 Class A Units in CIP CoAdvantage Investments LLC
 
 
 
 
 
557

 
924

 
 
 
 
 
 
15,496

 
15,863

 EducationDynamics, LLC (9)
 
Education services
 
 
 
 
 
 
 Mezzanine Term Loan, 12% cash 6% PIK due 1/16/2017
 
 
 
13,045

 
13,045

 
12,674

 
 
 
 
 
 
13,045

 
12,674

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (12)
 
 
 
 
 
874

 
761

 
 
 
 
 
 
874

 
761

 RP Crown Parent, LLC
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (10)(14)
 
 
 
 
 
(434
)
 

 
 
 
 
 
 
(434
)
 

 Advanced Pain Management
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (14)
 
 
 
24,000

 
24,000

 
23,712

 
 
 
 
 
 
24,000

 
23,712

 Rocket Software, Inc.
 
Internet & software services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.75% (1.5% floor) cash due 2/8/2019 (14)
 
 
 
10,475

 
10,444

 
10,481

 
 
 
 
 
 
10,444

 
10,481




See notes to Consolidated Financial Statements.


9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
December 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(15)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 TravelClick, Inc.
 
Internet software & services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 5/6/2019
 
 
 
$
4,976

 
$
4,976

 
$
4,920

 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/8/2021 (14)
 
 
 
10,000

 
10,000

 
9,650

 
 
 
 
 
 
14,976

 
14,570

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (12)
 
 
 
 
 
5,778

 
5,687

 
 
 
 
 
 
5,778

 
5,687

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2018
 
 
 
13,334

 
13,334

 
12,934

 
 
 
 
 
 
13,334

 
12,934

 2Checkout.com, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5% cash due 6/26/2016 (14)
 
 
 
2,150