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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the Quarterly Period Ended March 31, 2015

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 814-00924

 

 

Sierra Income Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   45-2544432

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

375 Park Avenue, 33rd Floor

New York, NY 10152

(Address of principal executive offices)

(212) 759-0777

(Registrant’s telephone number, including area code)

 

 

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

 

 

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

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

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x  (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 Exchange Act).    Yes  ¨    No  x

As of May 7, 2015, the Registrant had 66,465,115 shares of common stock, $0.001 par value, outstanding.

 

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  

Part I.      Financial Information

 

Item 1.      Financial Statements

    F-1   
  

Consolidated Statements of Assets and Liabilities as of March 31, 2015 (unaudited) and December 31, 2014

    F-1   
  

Consolidated Statements of Operations for the three months ended March 31, 2015 (unaudited) and March 31, 2014 (unaudited)

    F-2   
  

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2015 (unaudited) and March 31, 2014 (unaudited)

    F-3   
  

Consolidated Statements of Cash Flows for the three months ended March 31, 2015 (unaudited) and March 31, 2014 (unaudited)

    F-4   
  

Consolidated Schedules of Investments as of March 31, 2015 (unaudited) and March 31, 2014 (unaudited)

    F-5   
  

Notes to Consolidated Financial Statements (unaudited)

    F-22   

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

    1   

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

    19   

Item 4.      Controls and Procedures

    20   

Part II.    Other Information

 

Item 1.      Legal Proceedings

    20   

Item 1A.  Risk Factors

    20   

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds

    22   

Item 3.      Defaults Upon Senior Securities

    22   

Item 4.      Mine Safety Disclosures

    22   

Item 5.      Other Information

    22   

Item 6.      Exhibits

    23   

SIGNATURES

    26   


Table of Contents

Sierra Income Corporation

Consolidated Statements of Assets and Liabilities

 

     As of  
     March 31, 2015     December 31, 2014  
     (unaudited)        

ASSETS

    

Non-controlled/non-affiliated investments, at fair value (amortized cost of $720,308,635 and $620,968,517, respectively)

   $ 714,392,095      $ 616,915,093   

Cash and cash equivalents

     66,473,033        65,749,154   

Cash collateral on total return swap (Note 5)

     57,726,340        56,877,928   

Interest receivable

     6,190,230        5,213,605   

Due from affiliate (Note 7)

     4,230,404        6,995,930   

Deferred financing costs

     3,979,305        2,675,682   

Receivable due on total return swap (Note 5)

     2,051,518        1,095,582   

Unsettled trades receivable

     387,431        424,641   

Prepaid expenses and other assets

     61,094        118,017   
  

 

 

   

 

 

 

Total assets

   $ 855,491,450      $ 756,065,632   
  

 

 

   

 

 

 

LIABILITIES

    

Revolving credit facilities payable

   $ 271,500,000      $ 236,500,000   

Unsettled trades payable

     5,880,000        16,935,000   

Unrealized depreciation on total return swap (Note 5)

     4,844,580        7,651,597   

Management fee payable

     3,720,397        3,271,387   

Accounts payable and accrued expenses

     2,480,134        2,427,843   

Interest payable

     985,146        648,497   

Administrator fees payable

     553,844        450,058   

Incentive fee payable

     270,497        —     

Due to affiliate (Note 7)

     —          1,574,737   

Deferred tax liability

     409,887        86,600   
  

 

 

   

 

 

 

Total liabilities

   $ 290,644,485      $ 269,545,719   
  

 

 

   

 

 

 

Commitments (Note 11)

    

NET ASSETS

    

Common shares, par value $.001 per share, 250,000,000 common shares authorized, 62,913,036 and 54,260,324 common shares issued and outstanding, respectively

   $ 62,913      $ 54,260   

Capital in excess of par value

     572,190,162        494,060,576   

Accumulated net realized gain/(loss) (distribution in excess of net realized gain/(loss)) from investments and total return swap

     (3,253,591     (5,408,243

Accumulated undistributed net investment income

     6,608,601        9,518,341   

Net unrealized appreciation/(depreciation) on investments and total return swap

     (10,761,120     (11,705,021
  

 

 

   

 

 

 

Total net assets

     564,846,965        486,519,913   
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 855,491,450      $ 756,065,632   
  

 

 

   

 

 

 

NET ASSET VALUE PER SHARE

   $ 8.98      $ 8.97   
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-1


Table of Contents

Sierra Income Corporation

Consolidated Statements of Operations

 

     For the three months ended
March 31,
 
     2015     2014  
     (unaudited)     (unaudited)  

INVESTMENT INCOME

    

Interest from non-controlled/non-affiliated investments

   $ 14,332,341      $ 3,757,861   

Fee income

     1,327,074        834,649   

Paid-in-kind interest income

     347,153        3,704   

Interest from cash

     251        —     
  

 

 

   

 

 

 

Total investment income

     16,006,819        4,596,214   
  

 

 

   

 

 

 

EXPENSES

    

Base management fee

     3,720,397        1,142,771   

Interest and financing expenses

     1,832,631        163,401   

General and administrative expenses

     1,335,315        531,043   

Administrator expenses

     555,749        228,216   

Professional fees

     549,981        255,328   

Organizational and offering costs reimbursed to SIC Advisors (Note 7)

     443,687        983,785   

Offering costs

     392,753        —     

Incentive fee

     270,497        112,491   
  

 

 

   

 

 

 

Total gross expenses

     9,101,010        3,417,035   

Net expense support reimbursement (Note 7)

     (1,993,518     (1,313,470
  

 

 

   

 

 

 

Net expenses

     7,107,492        2,103,565   
  

 

 

   

 

 

 

NET INVESTMENT INCOME

     8,899,327        2,492,649   
  

 

 

   

 

 

 

Net realized gain/(loss) from investments

     (745,665     1,270,253   

Net realized gain on total return swap (Note 5)

     2,900,317        438,709   

Net change in unrealized appreciation/(depreciation) on investments

     (1,863,116     (201,084

Net change in unrealized appreciation/(depreciation) on total return swap (Note 5)

     2,807,017        447,021   
  

 

 

   

 

 

 

Net gain/(loss) on investments and total return swap

     3,098,553        1,954,899   
  

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 11,997,880      $ 4,447,548   
  

 

 

   

 

 

 

WEIGHTED AVERAGE — BASIC AND DILUTED EARNINGS PER COMMON SHARE

   $ 0.21      $ 0.22   

WEIGHTED AVERAGE — BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE

   $ 0.15      $ 0.12   

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING — BASIC AND DILUTED (Note 10)

     58,356,637        20,369,602   

DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.20      $ 0.20   

See accompanying notes to the consolidated financial statements.

 

F-2


Table of Contents

Sierra Income Corporation

Consolidated Statements of Changes in Net Assets

 

     For the three months ended March 31,  
               2015                          2014             
     (unaudited)     (unaudited)  

INCREASE FROM OPERATIONS

    

Net investment income

   $ 8,899,327      $ 2,492,649   

Net realized gain/(loss) on investments

     (745,665     1,270,253   

Net realized gain on total return swap (Note 5)

     2,900,317        438,709   

Net change in unrealized appreciation/(depreciation) on investments

     (1,863,116     (201,084

Net change in unrealized appreciation/(depreciation) on total return swap (Note 5)

     2,807,017        447,021   
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     11,997,880        4,447,548   
  

 

 

   

 

 

 

SHAREHOLDER DISTRIBUTIONS

    

Distributions from net realized gains

     —          (1,708,962

Distributions from net investment income (Note 2)

     (11,809,067     (2,492,649
  

 

 

   

 

 

 

Net decrease in net assets from shareholder distributions

     (11,809,067     (4,201,611
  

 

 

   

 

 

 

COMMON SHARE TRANSACTIONS

    

Issuance of common shares, net of underwriting costs

     72,566,865        72,777,647   

Issuance of common shares pursuant to distribution reinvestment plan

     5,571,374        1,831,192   

Repurchase of common shares

     —          (27,540
  

 

 

   

 

 

 

Net increase in net assets resulting from common share transactions

     78,138,239        74,581,299   
  

 

 

   

 

 

 

Total increase in net assets

     78,327,052        74,827,236   

Net assets at beginning of period

     486,519,913        153,002,273   
  

 

 

   

 

 

 

Net assets at end of period (including accumulated undistributed net investment income of $6,608,601 and $(249,177), respectively)

   $ 564,846,965      $ 227,829,509   
  

 

 

   

 

 

 

Net asset value per common share

   $ 8.98      $ 9.20   

Common shares outstanding, beginning of period

     54,260,324        16,663,500   

Issuance of common shares

     8,033,670        7,907,676   

Issuance of common shares pursuant to distribution reinvestment plan

     619,042        199,476   

Repurchase of common shares

     —          (3,000
  

 

 

   

 

 

 

Common shares outstanding, end of period

     62,913,036        24,767,652   
  

 

 

   

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-3


Table of Contents

Sierra Income Corporation

Consolidated Statements of Cash Flows

 

    For the three months ended March 31,  
               2015                            2014              
    (unaudited)     (unaudited)  

Cash flows from operating activities

   

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 11,997,880      $ 4,447,548   

ADJUSTMENT TO RECONCILE NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH USED IN OPERATING ACTIVITIES

   

Paid-in-kind interest income

    (347,153     (3,704

Net amortization of premium on investments

    (191,008     14,561   

Amortization of deferred financing costs

    (1,303,623     (281,192

Net realized (gain)/loss on investments

    745,666        (1,270,253

Net change in unrealized (appreciation)/depreciation on investments

    1,863,116        201,084   

Net change in unrealized (appreciation)/depreciation on total return swap (Note 5)

    (2,807,017     (447,021

Purchases, Originations, and Participations

    (103,820,422     (122,821,433

Proceeds from sale of investments and principal repayments

    4,272,799        45,835,550   

(Increase)/decrease in operating assets:

   

Cash collateral on total return swap (Note 5)

    (848,412     (13,515,172

Unsettled trades receivable

    37,210        (5,914,375

Due from affiliate

    2,765,526        (346,329

Interest receivable

    (976,625     197,212   

Receivable due on total return swap (Note 5)

    (955,936     (143,240

Prepaid expenses and other assets

    56,923        (16,626

Increase/(decrease) in operating liabilities:

   

Unsettled trades payable

    (11,055,000     (9,445,539

Management fee payable

    449,010        328,116   

Accounts payable and accrued expenses

    52,291        91,970   

Provisional incentive fee

    270,497        112,491   

Administrator fees payable

    103,786        76,054   

Interest payable

    336,649        14,401   

Due to affiliate

    (1,574,737     (6,704

Deferred tax liability

    323,287        —     
 

 

 

   

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

    (100,605,293     (102,892,601
 

 

 

   

 

 

 

Cash flows from financing activities

   

Borrowings under revolving credit facility

    100,000,000        25,000,000   

Repayments of revolving credit facility

    (65,000,000     (16,000,000

Proceeds from issuance of common stock, net of underwriting costs

    72,566,865        72,777,647   

Payment of cash dividends

    (6,237,693     (2,370,419

Repurchase of common shares

    —          (27,540
 

 

 

   

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

    101,329,172        79,379,688   
 

 

 

   

 

 

 

TOTAL INCREASE/(DECREASE) IN CASH

    723,879        (23,512,913

CASH AT BEGINNING OF PERIOD

    65,749,154        34,939,948   
 

 

 

   

 

 

 

CASH AT END OF PERIOD

  $ 66,473,033      $ 11,427,035   
 

 

 

   

 

 

 

Supplemental Information

   

Cash paid during the period for interest

  $ 1,495,982      $ 149,000   

Supplemental non-cash information

   

Paid-in-kind interest income

  $ 347,153      $ 3,704   

Amortization of deferred financing costs

  $ 1,303,623      $ 281,192   

Net amortization of premium on investments

  $ 191,008      $ (14,561

Issuance of common shares in connection with distribution reinvestment plan

  $ 5,571,374      $ 1,831,192   

See accompanying notes to the consolidated financial statements.

 

F-4


Table of Contents

Sierra Income Corporation

Consolidated Schedule of Investments

As of March 31, 2015

(unaudited)

 

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

Non-controlled/non-affiliated
investments — 126.5%

            

AAR Intermediate Holdings, LLC

   Energy: Oil & Gas    Senior Secured First Lien Term Loans LIBOR + 12.000%, 1.000% Floor(3) (4)     6/30/2015      $ 1,006,234      $ 1,006,234      $ 1,003,369        0.2
      Senior Secured First Lien Term loans LIBOR + 12.000%, 1.000% Floor(3) (4)     3/30/2019        11,225,798        10,548,568        10,326,090        1.8
      Warrants to purchase 0.625% of outstanding company equity(4)(5)     3/30/2019        790,778        790,778        503,024        0.1
         

 

 

   

 

 

   

 

 

   
            13,022,810        12,345,580        11,832,483     

AESC Holding Corp, Inc.

   Retail    Senior Secured Second Lien Term Loans LIBOR + 9.000%, 1.000% Floor(3)(4)     5/27/2019        7,000,000        7,000,000        7,070,000        1.3
         

 

 

   

 

 

   

 

 

   
            7,000,000        7,000,000        7,070,000     

ALG USA Holdings, Inc.

   Hotel, Gaming &
Leisure
   Senior Secured Second Lien Term Loans LIBOR + 9.000%, 1.250% Floor(6)     2/28/2020        2,000,000        1,968,665        1,999,448        0.4
         

 

 

   

 

 

   

 

 

   
            2,000,000        1,968,665        1,999,448     

AM3 Pinnacle Corporation

   Media: Broadcasting
& Subscription
   Senior Secured First Lien Term Loans 10.000%(4)(7)     10/22/2018        6,566,527        6,566,527        6,481,555        1.1
         

 

 

   

 

 

   

 

 

   
            6,566,527        6,566,527        6,481,555     

American Beacon Advisors, Inc.(8)

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 8.750%, 1.000% Floor(6)     4/15/2023        6,000,000        5,880,000        5,880,000        1.0
         

 

 

   

 

 

   

 

 

   
            6,000,000        5,880,000        5,880,000     

American Pacific Corp.

   Chemicals, Plastics &
Rubber
   Senior Secured First Lien Term Loans LIBOR + 6.000%, 1.000% Floor(6)     2/27/2019        7,920,000        7,871,380        7,965,941        1.4
         

 

 

   

 

 

   

 

 

   
            7,920,000        7,871,380        7,965,941     

Anaren, Inc.

   Aerospace & Defense    Senior Secured Second Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     8/18/2021        10,000,000        9,910,684        9,818,870        1.7
         

 

 

   

 

 

   

 

 

   
            10,000,000        9,910,684        9,818,870     

Aperture Group, LLC

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured First Lien Term Loans LIBOR + 6.250%, 1.000% Floor(3)     8/29/2019        7,462,500        7,429,357        7,388,124        1.3
         

 

 

   

 

 

   

 

 

   
            7,462,500        7,429,357        7,388,124     

 

See accompanying notes to consolidated financial statements.

 

F-5


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

Ascensus, Inc.

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 8.000%, 1.000% Floor(6)     12/2/2020        4,000,000        3,951,040        4,000,000        0.7
         

 

 

   

 

 

   

 

 

   
            4,000,000        3,951,040        4,000,000     

Associated Asphalt Partners, LLC

   Chemicals, Plastics &
Rubber
   Senior Secured First Lien Notes 8.500%(9)     2/15/2018        1,778,000        1,788,562        1,753,795        0.3
         

 

 

   

 

 

   

 

 

   
            1,778,000        1,788,562        1,753,795     

Asurion Corp.(8)

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)     3/3/2021        7,000,000        6,935,701        7,043,750        1.2
         

 

 

   

 

 

   

 

 

   
            7,000,000        6,935,701        7,043,750     

Atrium Innovations, Inc.(10)

   Healthcare &
Pharmaceuticals
   Senior Secured Second Lien Term Loans LIBOR + 6.750%, 1.000% Floor(6)     8/13/2021        5,000,000        4,977,941        4,690,230        0.8
         

 

 

   

 

 

   

 

 

   
            5,000,000        4,977,941        4,690,230     

Bennu Oil & Gas, LLC

   Energy: Oil & Gas    Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.250% Floor(6)     11/1/2018      $ 5,511,471      $ 5,507,216      $ 4,615,451        0.8
         

 

 

   

 

 

   

 

 

   
            5,511,471        5,507,216        4,615,451     

Birch Communications, Inc.

   Telecommunications    Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(3)(4)     7/18/2020        14,572,917        14,312,191        14,039,089        2.5
         

 

 

   

 

 

   

 

 

   
            14,572,917        14,312,191        14,039,089     

Brundage-Bone Concrete Pumping, Inc.

   Construction &
Building
   Senior Secured First Lien Notes 10.375%(9)(11)     9/1/2021        7,500,000        7,637,726        7,800,000        1.4
         

 

 

   

 

 

   

 

 

   
            7,500,000        7,637,726        7,800,000     

Capstone Nutrition

   Healthcare &
Pharmaceuticals
   Common Stock(4)(5)       288        300,000        446,946        0.1
      Senior Secured First Lien Term Loans LIBOR + 9.500%, 1.000% Floor(3)(4)     4/28/2019        15,000,000        15,000,000        15,079,176        2.7
         

 

 

   

 

 

   

 

 

   
            15,000,288        15,300,000        15,526,122     

Charming Charlie, Inc.

   Retail    Senior Secured First Lien Term Loans LIBOR + 8.000%, 1.000% Floor(6)     12/24/2019        8,922,710        8,940,507        9,011,937        1.6
         

 

 

   

 

 

   

 

 

   
            8,922,710        8,940,507        9,011,937     

Collective Brands Finance, Inc.(8)(10)

   Retail    Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)     3/11/2022        6,000,000        6,018,194        5,604,145        1.0
         

 

 

   

 

 

   

 

 

   
            6,000,000        6,018,194        5,604,145     

ContMid Intermediate, Inc.

   Automotive    Senior Secured Second Lien Term Loans LIBOR + 9.000%, 1.000% Floor(3)(4)     10/25/2019        14,317,924        14,317,924        14,189,754        2.5
         

 

 

   

 

 

   

 

 

   
            14,317,924        14,317,924        14,189,754     

 

See accompanying notes to consolidated financial statements.

 

F-6


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

ConvergeOne Holdings Corp.

   Telecommunications    Senior Secured Second Lien Term Loans LIBOR + 8.000%, 1.000% Floor(3)(4)     6/17/2021        12,500,000        12,384,841        12,171,698        2.2
         

 

 

   

 

 

   

 

 

   
            12,500,000        12,384,841        12,171,698     

Cornerstone Chemical Company

   Chemicals, Plastics &
Rubber
   Senior Secured First Lien Notes 9.375%(9)(11)     3/15/2018        2,500,000        2,582,102        2,600,000        0.5
         

 

 

   

 

 

   

 

 

   
            2,500,000        2,582,102        2,600,000     

CP OpCo, LLC

   Services: Consumer    Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(4)(6)     9/30/2020        8,000,000        8,000,000        7,911,763        1.4
         

 

 

   

 

 

   

 

 

   
            8,000,000        8,000,000        7,911,763     

CRGT, Inc.

   Services: Business    Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(4)(6)     12/19/2020        9,937,500        9,937,500        9,841,378        1.7
         

 

 

   

 

 

   

 

 

   
            9,937,500        9,937,500        9,841,378     

Deltek, Inc.

   High Tech Industries    Senior Secured Second Lien Term Loans LIBOR + 8.750%, 1.250% Floor(6)     10/10/2019        3,000,000        2,982,409        3,060,000        0.5
         

 

 

   

 

 

   

 

 

   
            3,000,000        2,982,409        3,060,000     

DHISCO Electronic Distribution, Inc.

   Hotel, Gaming &
Leisure
   Senior Secured First Lien Term Loans LIBOR + 9.000% PIK, 1.500% Floor(3)(4)(7)     2/10/2018        3,688,455        3,688,455        3,672,602        0.7
     

 

Senior Secured First Lien Term loans LIBOR + 9.000%, 1.500% Floor(3)(4)

    11/10/2019        19,523,810        19,523,810        19,359,515        3.4
     

 

Warrants to purchase 4.2% of the outstanding equity(4)(5)

    2/10/2018        769,231        769,231        1,108,268        0.2
         

 

 

   

 

 

   

 

 

   
            23,981,496        23,981,496        24,140,385     

Drew Marine Partners, LP

   Transportation: Cargo    Senior Secured Second Lien Term Loans LIBOR + 7.000%, 1.000% Floor(6)     5/19/2021        10,000,000        10,075,870        9,910,203        1.8
         

 

 

   

 

 

   

 

 

   
            10,000,000        10,075,870        9,910,203     

Dynamic Energy Services International LLC

   Energy: Oil & Gas    Senior Secured First Lien Term Loans LIBOR + 8.500%, 1.000% Floor(3)(4)     3/6/2018      $ 9,500,000      $ 9,500,000      $ 9,324,725        1.7
         

 

 

   

 

 

   

 

 

   
    9,500,000        9,500,000        9,324,725     

EarthLink, Inc.(10)

   Telecommunications    Senior Secured First Lien Notes 7.375%(9)(11)     6/1/2020        2,450,000        2,439,433        2,520,437        0.4
         

 

 

   

 

 

   

 

 

   
            2,450,000        2,439,433        2,520,437     

Encompass Digital Media, Inc.(8)

   Telecommunications    Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     6/6/2022        1,500,000        1,486,482        1,481,115        0.3
         

 

 

   

 

 

   

 

 

   
            1,500,000        1,486,482        1,481,115     

 

See accompanying notes to consolidated financial statements.

 

F-7


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

FKI Security Group LLC

   Capital Equipment    Senior Secured First Lien Term Loans LIBOR + 8.500%, 1.000% Floor(3)(4)     3/30/2020        15,000,000        15,000,000        15,000,000        2.7
         

 

 

   

 

 

   

 

 

   
            15,000,000        15,000,000        15,000,000     

Flexera Software, LLC(8)

   High Tech Industries    Senior Secured Second Lien Term Loans LIBOR + 7.000%, 1.000% Floor(6)     4/2/2021        5,000,000        5,017,949        4,798,172        0.9
         

 

 

   

 

 

   

 

 

   
            5,000,000        5,017,949        4,798,172     

Gastar Exploration USA, Inc.(10)

   Energy: Oil & Gas    Senior Secured First Lien Notes 8.625%(9)(11)     5/15/2018        5,400,000        5,412,750        4,981,500        0.9
         

 

 

   

 

 

   

 

 

   
            5,400,000        5,412,750        4,981,500     

Genex Holdings, Inc.(8)

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     5/30/2022        9,500,000        9,530,988        9,216,123        1.6
         

 

 

   

 

 

   

 

 

   
            9,500,000        9,530,988        9,216,123     

GK Holdings, Inc.

   Services: Business    Senior Secured Second Lien Term Loans LIBOR + 9.500%, 1.000% Floor(3)     1/20/2022        10,000,000        10,000,000        10,000,000        1.8
         

 

 

   

 

 

   

 

 

   
            10,000,000        10,000,000        10,000,000     

Green Field Energy Services, Inc.

   Energy: Oil & Gas    Senior Secured First Lien Notes 13.000%(4)(9)(12)     11/15/2016        766,616        755,049        237,651        0.0
     

 

Warrants/Equity(4)(5)

    11/15/2021        709        29,000               0.0
         

 

 

   

 

 

   

 

 

   
            767,325        784,049        237,651     

GTCR Valor Companies, Inc.

   High Tech Industries    Senior Secured First Lien Term Loans LIBOR + 5.000%, 1.000% Floor(6)     5/30/2021        7,948,626        7,875,158        7,705,656        1.4
     

 

Senior Secured Second Lien Term Loans LIBOR + 8.500%, 1.000% Floor(6)

    11/30/2021        4,000,000        3,962,818        3,868,350        0.7
         

 

 

   

 

 

   

 

 

   
    11,948,626        11,837,976        11,574,006     

H.D. Vest, Inc.

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 8.000%, 1.250% Floor(3)     3/17/2021        16,500,000        16,500,000        16,500,000        2.9
         

 

 

   

 

 

   

 

 

   
    16,500,000        16,500,000        16,500,000     

HBC Holdings, LLC

   Wholesale    Senior Secured First Lien Term Loans LIBOR + 5.750%, 1.000% Floor(4)(6)     3/30/2020        14,925,000        14,925,000        14,925,005        2.6
         

 

 

   

 

 

   

 

 

   
    14,925,000        14,925,000        14,925,005     

Heligear Acquisition Co.

   Aerospace & Defense    Senior Secured First Lien Notes 10.250%(4)(9)     10/15/2019        15,000,000        15,000,000        14,681,250        2.6
         

 

 

   

 

 

   

 

 

   
    15,000,000        15,000,000        14,681,250     

Hill International, Inc.

   Construction &
Building
   Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(4)(6)     9/26/2020        16,915,000        16,915,000        16,915,023        3.0
         

 

 

   

 

 

   

 

 

   
    16,915,000        16,915,000        16,915,023     

 

See accompanying notes to consolidated financial statements.

 

F-8


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

Holland Acquisition Corp.

   Energy: Oil & Gas    Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.000% Floor(6)     5/29/2018      $ 5,000,000      $ 4,926,578      $ 4,651,396        0.8
         

 

 

   

 

 

   

 

 

   
    5,000,000        4,926,578        4,651,396     

Ignite Restaurant Group, Inc.

   Hotel, Gaming &
Leisure
   Senior Secured First Lien Term Loans LIBOR + 7.000%, 1.000% Floor(6)     2/13/2019        11,940,000        11,779,593        11,913,399        2.1
         

 

 

   

 

 

   

 

 

   
    11,940,000        11,779,593        11,913,399     

Integra Telecom Holdings, Inc.

   Telecommunications    Senior Secured Second Lien Term Loans LIBOR + 8.500%, 1.250% Floor(3)(4)     2/22/2020        735,455        733,850        722,158        0.1
         

 

 

   

 

 

   

 

 

   
    735,455        733,850        722,158     

Interface Security Systems, Inc.

   Services: Consumer    Senior Secured First Lien Notes 9.250%(9)     1/15/2018        3,417,000        3,460,320        3,429,813        0.6
         

 

 

   

 

 

   

 

 

   
    3,417,000        3,460,320        3,429,813     

IPS Corporation

   Wholesale    Senior Secured First Lien Term Loans LIBOR + 6.250%, 1.000% Floor(6)     2/5/2021        15,000,000        15,000,000        15,000,000        2.7
         

 

 

   

 

 

   

 

 

   
    15,000,000        15,000,000        15,000,000     

IronGate Energy Services, LLC

   Energy: Oil & Gas    Senior Secured First Lien Notes 11.000%(9)(11)     7/1/2018        3,000,000        2,959,115        2,028,750        0.4
         

 

 

   

 

 

   

 

 

   
    3,000,000        2,959,115        2,028,750     

Isola USA Corp.(8)

   High Tech Industries    Senior Secured First Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     11/29/2018        5,836,871        5,953,452        5,852,939        1.0
         

 

 

   

 

 

   

 

 

   
    5,836,871        5,953,452        5,852,939     

JAC Holding Corp.

   Automotive    Senior Secured First Lien Notes 11.500%(4)(9)(11)     10/1/2019        12,000,000        12,000,000        12,360,000        2.2
         

 

 

   

 

 

   

 

 

   
    12,000,000        12,000,000        12,360,000     

Jordan Reses Supply Company, LLC

   Healthcare &
Pharmaceuticals
   Senior Secured Second Lien Term Loans LIBOR + 11.000%, 1.000% Floor(3)(4)     4/24/2020        5,000,000        5,000,000        5,061,605        0.9
         

 

 

   

 

 

   

 

 

   
    5,000,000        5,000,000        5,061,605     

Kik Custom Products, Inc.

   Consumer Goods:
Non-durable
   Senior Secured Second Lien Term Loans LIBOR + 8.250%, 1.250% Floor(13)     10/29/2019        5,000,000        4,991,761        4,964,428       
0.9

         

 

 

   

 

 

   

 

 

   
    5,000,000        4,991,761        4,964,428     

Liquidnet Holdings, Inc.

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(6)     5/22/2019        6,737,500        6,650,613        6,635,224        1.2
         

 

 

   

 

 

   

 

 

   
    6,737,500        6,650,613        6,635,224     

Livingston International, Inc.(8)(10)

   Transportation: Cargo    Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.250% Floor(6)     4/18/2020        2,658,504        2,654,411        2,535,659        0.5
         

 

 

   

 

 

   

 

 

   
    2,658,504        2,654,411        2,535,659     

 

See accompanying notes to consolidated financial statements.

 

F-9


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

LTCG Holdings Corp.

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured First Lien Term Loans LIBOR + 5.000%, 1.000% Floor(6)     6/6/2020        3,850,000        3,833,174        3,825,617        0.7
         

 

 

   

 

 

   

 

 

   
    3,850,000        3,833,174        3,825,617     

Miller Heiman, Inc.

   Services: Business    Senior Secured First Lien Term Loans LIBOR + 5.750%, 1.000% Floor(6)     9/30/2019      $ 24,531,250      $ 24,531,250      $ 24,398,372        4.3
         

 

 

   

 

 

   

 

 

   
    24,531,250        24,531,250        24,398,372     

Nathan’s Famous, Inc.(10)

   Beverage, Food &
Tobacco
   Senior Secured First Lien Notes 10.000%(11)     3/15/2020        7,000,000        7,000,000        7,341,250        1.3
         

 

 

   

 

 

   

 

 

   
    7,000,000        7,000,000        7,341,250     

Nation Safe Drivers Holdings, Inc.

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured Second Lien Term Loans LIBOR + 8.000%, 2.000% Floor(4)(6)     9/29/2020        20,676,479        20,676,479        20,537,174        3.6
         

 

 

   

 

 

   

 

 

   
    20,676,479        20,676,479        20,537,174     

New Media Holdings II, LLC

   Media: Advertising,
Printing & Publishing
   Senior Secured First Lien Term Loans LIBOR + 6.250%, 1.000% Floor(6)     6/4/2020        22,381,213        22,381,213        22,151,757        3.9
         

 

 

   

 

 

   

 

 

   
    22,381,213        22,381,213        22,151,757     

Newpage Corp.

   Media: Advertising,
Printing & Publishing
   Senior Secured First Lien Term Loans LIBOR + 8.250%, 1.250% Floor(6)     2/11/2021        9,792,917        9,679,657        9,413,442        1.7
         

 

 

   

 

 

   

 

 

   
    9,792,917        9,679,657        9,413,442     

Northern Lights MIDCO, LLC

   Banking, Finance,
Insurance & Real
Estate
   Senior Secured First Lien Term Loans LIBOR + 9.500%, 1.500% Floor(3)(4)     11/21/2019        4,700,000        4,700,000        4,777,685        0.8
         

 

 

   

 

 

   

 

 

   
    4,700,000        4,700,000        4,777,685     

Omnitracs, Inc.

   High Tech Industries    Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     5/25/2021        7,000,000        7,014,232        6,946,444        1.2
         

 

 

   

 

 

   

 

 

   
    7,000,000        7,014,232        6,946,444     

Oxford Mining Company, LLC

   Metals & Mining    Senior Secured First Lien Term Loans LIBOR + 8.500%, 0.750% Floor, 3% PIK(4)(6)(7)     12/31/2018        11,953,390        11,953,390        11,857,365        2.1
         

 

 

   

 

 

   

 

 

   
    11,953,390        11,953,390        11,857,365     

Reddy Ice Corporation

   Beverage, Food &
Tobacco
   Senior Secured Second Lien Term Loans LIBOR + 9.500%, 1.250% Floor(3)(4)     10/1/2019        2,000,000        2,000,000        1,857,323        0.3
         

 

 

   

 

 

   

 

 

   
    2,000,000        2,000,000        1,857,323     

Research Now Group, Inc.

   Services: Business    Senior Secured Second Lien Term Loans LIBOR + 8.750%, 1.000% Floor(6)     3/18/2022        15,000,000        15,000,000        15,000,000        2.7
         

 

 

   

 

 

   

 

 

   
    15,000,000        15,000,000        15,000,000     

 

See accompanying notes to consolidated financial statements.

 

F-10


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

Response Team Holdings, LLC

   Construction &
Building
   Preferred Equity 12%(4) (5)     $ 3,138,480      $ 2,881,073      $ 3,110,679        0.6
     

 

Senior Secured First Lien Term Loans LIBOR + 8.000%, 2.000% Floor, 1% PIK(3)(4)

    3/28/2019        15,244,627        15,244,627        15,473,487        2.7
     

 

Warrants to purchase 3.70% of the outstanding common units (4)(5)

    3/28/2019        257,407        257,407        768,262        0.1
         

 

 

   

 

 

   

 

 

   
    18,640,514        18,383,107        19,352,428     

School Specialty, Inc.

   Wholesale    Senior Secured First Lien Term Loans LIBOR + 8.500%, 1.000% Floor(6)     6/11/2019        10,878,628        10,803,513        10,821,315        1.9
         

 

 

   

 

 

   

 

 

   
    10,878,628        10,803,513        10,821,315     

Sizzling Platter, LLC

   Hotel, Gaming &
Leisure
   Senior Secured First Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)     4/28/2019        15,000,000        15,000,000        15,130,610        2.7
         

 

 

   

 

 

   

 

 

   
    15,000,000        15,000,000        15,130,610     

Southwest Dealer Services, Inc.

   Automotive    Senior Secured First Lien Term Loans LIBOR + 6.000%, 1.000% Floor(3)(4)     3/16/2020        7,000,000        7,000,000        7,000,000        1.2
         

 

 

   

 

 

   

 

 

   
    7,000,000        7,000,000        7,000,000     

Survey Sampling International, LLC

   Services: Business    Senior Secured Second Lien Term Loans LIBOR + 9.000%, 1.000% Floor(6)     12/16/2021        24,000,000        24,000,000        23,708,520        4.2
         

 

 

   

 

 

   

 

 

   
    24,000,000        24,000,000        23,708,520     

Tempel Steel Company

   Metals & Mining    Senior Secured First Lien Notes 12.000%(4)(9)(11)     8/15/2016        1,115,000        1,109,706        943,569        0.2
         

 

 

   

 

 

   

 

 

   
    1,115,000        1,109,706        943,569     

TGI Friday’s, Inc.

   Hotel, Gaming &
Leisure
   Senior Secured Second Lien Term Loans LIBOR + 8.250%, 1.000% Floor(4)(6)     7/15/2021        15,000,000        14,794,289        14,767,131        2.6
         

 

 

   

 

 

   

 

 

   
    15,000,000        14,794,289        14,767,131     

Tourico Holidays, Inc.

   Hotel, Gaming &
Leisure
   Senior Secured First Lien Term Loans LIBOR + 7.500%, 1.000% Floor(3)     11/5/2018        14,812,500        14,812,500        14,724,488        2.6
         

 

 

   

 

 

   

 

 

   
    14,812,500        14,812,500        14,724,488     

TravelCLICK, Inc.(8)

   Hotel, Gaming &
Leisure
   Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     11/6/2021        6,000,000        5,917,326        5,740,809        1.0
         

 

 

   

 

 

   

 

 

   
    6,000,000        5,917,326        5,740,809     

True Religion Apparel, Inc.

   Retail    Senior Secured Second Lien Term Loans LIBOR + 10.000%, 1.000% Floor(13)     1/30/2020        4,000,000        3,859,078        3,745,482        0.7
         

 

 

   

 

 

   

 

 

   
    4,000,000        3,859,078        3,745,482     

 

See accompanying notes to consolidated financial statements.

 

F-11


Table of Contents

Company(1)

   Industry   

Type of Investment

  Maturity     Par/Share
Amount
   
Cost
    Fair Value     % of
Net Assets(2)
 

U.S. Well Services, LLC

   Energy: Oil & Gas    Warrants/Equity (5)     2/15/2019        1,731        173        227,107        0.0
         

 

 

   

 

 

   

 

 

   
    1,731        173        227,107     

Valence Surface Technologies, Inc.

   Aerospace & Defense    Senior Secured First Lien Term Loans LIBOR + 5.500%, 1.000% Floor(3)     6/13/2019        9,809,037        9,746,854        9,613,610        1.7
         

 

 

   

 

 

   

 

 

   
    9,809,037        9,746,854        9,613,610     

Velocity Pooling Vehicle, LLC

   Automotive    Senior Secured Second Lien Term Loans LIBOR + 7.250%, 1.000% Floor(3)(4)     5/14/2022      $ 20,625,000      $ 17,988,981      $ 17,910,463        3.2
         

 

 

   

 

 

   

 

 

   
    20,625,000        17,988,981        17,910,463     

Vestcom International, Inc.

   Services: Business    Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(13)     9/30/2022        5,000,000        5,000,000        4,930,554        0.9
         

 

 

   

 

 

   

 

 

   
    5,000,000        5,000,000        4,930,554     

YP LLC(8)

   Media: Advertising,
Printing & Publishing
   Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.250% Floor(6)     6/4/2018        4,130,435        4,167,201        4,128,667        0.7
         

 

 

   

 

 

   

 

 

   
    4,130,435        4,167,201        4,128,667     

Z Gallerie, LLC

   Retail    Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(13)     10/8/2020        10,000,000        9,893,779        9,884,414        1.8
         

 

 

   

 

 

   

 

 

   
    10,000,000        9,893,779        9,884,414     
           

 

 

   

 

 

   

Total non-controlled/non-affiliated investments

         $ 720,308,635      $ 714,392,095        126.5
           

 

 

   

 

 

   
Derivative Instrument — Long Exposure                    Notional
Amount
    Unrealized
Appreciation
(Depreciation)
       

Total return swap with Citibank, N.A. (Note 5)

      Total Return Swap       $ 229,558,619      $ (4,844,580  
           

 

 

   

 

 

   
    $ 229,558,619      $ (4,844,580  
           

 

 

   

 

 

   

 

(1) 

All of the Company’s investments are domiciled in the United States except for Atrium Innovations, Inc. and Livingston International, Inc. which are domiciled in Canada.

(2) 

Percentage is based on net assets of $564,846,965 as of March 31, 2015.

(3) 

The interest rate on these loans is subject to a base rate plus 1M LIBOR, which at March 31, 2015 was 0.18%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 1M LIBOR rate at March 31, 2015, the prevailing rate in effect at March 31, 2015 was the base rate plus the LIBOR floor.

(4) 

An affiliated fund that is managed by an affiliate of SIC Advisors LLC also holds an investment in this security.

(5) 

Security is non-income producing.

(6) 

The interest rate on these loans is subject to a base rate plus 3M LIBOR, which at March 31, 2015 was 0.27%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 3M LIBOR rate at March 31, 2015, the prevailing rate in effect at March 31, 2015 was the base rate plus the LIBOR floor.

(7) 

The investment has an unfunded commitment as of March 31, 2015. For further details, see Note 11. Fair value includes an analysis of the unfunded commitment.

(8) 

Security is also held in the underlying portfolio of the total return swap with Citibank, N.A. (see Note 5). The Company’s total exposure to American Beacon Advisors, Inc., Asurion Corp., Collective Brands Finance, Inc., Encompass Digital Media, Inc., Flexera Software, LLC, Genex Holdings, Inc., Isola USA Corp., Livingston International, Inc., TravelCLICK, Inc., and YP LLC is $6,875,000 or 1.2%, $16,889,761 or 3.0%, $11,536,814 or 2.0%, $6,431,240 or 1.1%, $7,065,047 or 1.3%, $11,196,173 or 2.0%, $9,694,439 or 1.7%, $4,505,102 or 0.8%, $20,518,439 or 3.6%, $8,290,080 or 1.5%, respectively, of Net Assets as of March 31, 2015.

 

See accompanying notes to consolidated financial statements.

 

F-12


Table of Contents
(9) 

Securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities represent a fair value of $53,336,765 and 9.4% of net assets as of March 31, 2015 and are considered restricted.

(10) 

The investment is not a qualifying asset under Section 55 of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 3.9% of the Company’s portfolio at fair value.

(11) 

Represents securities in Level 2 in the ASC 820 table (see Note 4).

(12) 

The investment was on non-accrual status as of March 31, 2015.

(13) 

The interest rate on these loans is subject to a base rate plus 6M LIBOR, which at March 31, 2015 was 0.40%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 6M LIBOR rate at March 31, 2015, the prevailing rate in effect at March 31, 2015 was the base rate plus the LIBOR floor.

 

 

1M 1 Month
3M 3 Month
6M 6 Month

 

See accompanying notes to consolidated financial statements.

 

F-13


Table of Contents

Sierra Income Corporation

Consolidated Schedule of Investments

As of December 31, 2014

 

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

Non-controlled/non-affiliated
investments — 126.8%

           

AAR Intermediate Holdings, LLC

  Oil and Gas  

Senior Secured First

Lien Term Loans

         
   

LIBOR + 12.000%,

1.000% Floor(3)(4)

    6/30/2015      $ 1,006,234      $ 1,006,234      $ 997,872        0.2
   

 

Senior Secured First

Lien Term Loans

LIBOR + 12.000%,

1.000% Floor(3)(4)

    3/30/2019        11,697,470        10,938,261        10,703,771        2.2
   

Warrants to purchase

1.98% of outstanding

company equity(4)(5)

    3/30/2019        790,778        790,778        598,870        0.1
       

 

 

   

 

 

   

 

 

   
          13,494,482        12,735,273        12,300,513     

ALG USA Holdings, Inc.

  Leisure, Amusement,  

Senior Secured Second

Lien Term Loans

         
  Motion Pictures, and Entertainment  

LIBOR + 9.000%,

1.250% Floor(6)

    2/28/2020        2,000,000        1,967,491        2,011,269        0.4
       

 

 

   

 

 

   

 

 

   
          2,000,000        1,967,491        2,011,269     

Allen Edmonds Corp.

  Retail Stores  

Senior Secured Second

Lien Term Loans

         
   

LIBOR + 9.000%,

1.000% Floor(3)(4)

    5/27/2019        7,000,000        7,000,000        7,070,000        1.5
       

 

 

   

 

 

   

 

 

   
          7,000,000        7,000,000        7,070,000     

AM3 Pinnacle Corporation

  Telecommunications   Senior Secured First Lien Term Loans          
    10.000%(4)(7)     10/22/2018        6,533,857        6,533,857        6,533,857        1.3
       

 

 

   

 

 

   

 

 

   
          6,533,857        6,533,857        6,533,857     

American Pacific Corp.

  Chemicals, Plastics, and Rubber   Senior Secured First Lien Term Loans          
    LIBOR + 6.000%, 1.000% Floor(6)     2/27/2019        7,940,000        7,888,650        8,056,333        1.7
       

 

 

   

 

 

   

 

 

   
          7,940,000        7,888,650        8,056,333     

Anaren, Inc.

  Aerospace and Defense  

Senior Secured Second

Lien Term Loans

LIBOR + 8.250%,

1.000% Floor(6)

    8/18/2021        10,000,000        9,908,218        9,935,749        2.0
       

 

 

   

 

 

   

 

 

   
          10,000,000        9,908,218        9,935,749     

Ascensus, Inc.

  Finance  

Senior Secured Second

Lien Term Loans

LIBOR + 8.000%,

1.000% Floor(6)

    12/2/2020        4,000,000        3,948,926        4,000,000        0.8
       

 

 

   

 

 

   

 

 

   
          4,000,000        3,948,926        4,000,000     

Associated Asphalt Partners, LLC

  Chemicals, Plastics, and Rubber   Senior Secured First          
    Lien Notes 8.500%(8)     2/15/2018        2,000,000        2,013,443        1,993,534        0.4
       

 

 

   

 

 

   

 

 

   
          2,000,000        2,013,443        1,993,534     

Asurion Corp.(9)

  Insurance  

Senior Secured Second

Lien Term Loans

LIBOR + 7.500%,

1.000% Floor(6)

    3/3/2021        7,000,000        6,935,000        7,000,000        1.4
       

 

 

   

 

 

   

 

 

   
          7,000,000        6,935,000        7,000,000     

 

F-14


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

Atrium Innovations, Inc.(10)

 

Healthcare,

Education, and

Childcare

 

Senior Secured Second

Lien Term Loans

         
   

LIBOR + 6.750%,

1.000% Floor(6)

    8/13/2021        5,000,000        4,977,296        4,743,856        1.0
       

 

 

   

 

 

   

 

 

   
          5,000,000        4,977,296        4,743,856     

Bennu Oil & Gas, LLC

  Oil and Gas   Senior Secured Second Lien Term Loans          
    LIBOR + 7.500%, 1.250% Floor(6)     11/1/2018        5,525,389        5,520,837        4,570,180        0.9
       

 

 

   

 

 

   

 

 

   
          5,525,389        5,520,837        4,570,180     

Birch Communications, Inc.

  Telecommunications   Senior Secured First Lien Term Loans          
    LIBOR + 6.750%, 1.000% Floor(3)(4)     7/18/2020        14,572,917        14,300,451        14,042,615        2.9
       

 

 

   

 

 

   

 

 

   
          14,572,917        14,300,451        14,042,615     

Brundage-Bone Concrete Pumping, Inc.

 

Buildings and Real

Estate

  Senior Secured First          
    Lien Notes 10.375%(8)     9/1/2021        7,500,000        7,641,129        7,600,484        1.6
       

 

 

   

 

 

   

 

 

   
          7,500,000        7,641,129        7,600,484     

Charming Charlie, Inc.

  Retail Stores   Senior Secured First Lien Term Loans          
    LIBOR + 8.000%, 1.000% Floor(6)     12/24/2019        8,945,242        8,963,787        9,034,694        1.9
       

 

 

   

 

 

   

 

 

   
          8,945,242        8,963,787        9,034,694     

Collective Brands Finance, Inc.(9)(10)

  Retail Stores   Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)     3/11/2022        6,000,000        6,018,670        5,669,782        1.2
       

 

 

   

 

 

   

 

 

   
          6,000,000        6,018,670        5,669,782     

Contmid, Inc.

  Automobile   Senior Secured Second Lien Term Loans LIBOR + 9.000%, 1.000% Floor(3)(4)     10/25/2019        14,317,924        14,317,924        14,317,924        2.9
       

 

 

   

 

 

   

 

 

   
          14,317,924        14,317,924        14,317,924     

ConvergeOne Holdings Corporation

  Telecommunications   Senior Secured Second Lien Term Loans          
    LIBOR + 8.000%, 1.000% Floor(3)(4)     6/17/2021        12,500,000        12,381,463        12,312,750        2.5
       

 

 

   

 

 

   

 

 

   
          12,500,000        12,381,463        12,312,750     

Cornerstone Chemical Company

 

Chemicals, Plastics,

and Rubber

  Senior Secured First          
    Lien Notes(8)(11)     3/15/2018        2,500,000        2,587,841        2,550,000        0.5
       

 

 

   

 

 

   

 

 

   
          2,500,000        2,587,841        2,550,000     

CP Opco, LLC

  Leisure, Amusement, Motion Pictures, and Entertainment   Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(4)(6)     9/30/2020        8,000,000        8,000,000        8,000,000        1.6
       

 

 

   

 

 

   

 

 

   
          8,000,000        8,000,000        8,000,000     

CRGT, Inc.

  Diversified/Conglomerate Service   Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(4)(6)     12/19/2020        10,000,000        10,000,000        10,000,000        2.1
       

 

 

   

 

 

   

 

 

   
          10,000,000        10,000,000        10,000,000     

Deltek, Inc.

  Electronics   Senior Secured Second Lien Term Loans LIBOR + 8.750%, 1.250% Floor(6)     10/10/2019        3,000,000        2,981,523        3,060,000        0.6
       

 

 

   

 

 

   

 

 

   
          3,000,000        2,981,523        3,060,000     

 

F-15


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

Drew Marine Partners LP

  Cargo Transport   Senior Secured Second Lien Term Loans          
    LIBOR + 7.000%, 1.000% Floor(6)     5/19/2021        10,000,000        10,078,927        10,033,409        2.1
       

 

 

   

 

 

   

 

 

   
          10,000,000        10,078,927        10,033,409     

Dynamic Energy Services International, LLC

  Oil and Gas   Senior Secured First Lien Term Loans          
    LIBOR + 8.500%, 1.000% Floor(3)(4)     3/6/2018        9,625,000        9,625,000        9,338,439        1.9
       

 

 

   

 

 

   

 

 

   
          9,625,000        9,625,000        9,338,439     

EarthLink, Inc.(10)

  Telecommunications   Senior Secured First          
    Lien Notes 7.375%(8)(11)     6/1/2020        2,450,000        2,439,171        2,462,250        0.5
       

 

 

   

 

 

   

 

 

   
          2,450,000        2,439,171        2,462,250     

Encompass Digital Media, Inc.(9)

  Broadcasting and Entertainment   Senior Secured Second Lien Term Loans          
    LIBOR + 7.750%, 1.000% Floor(6)     6/6/2022        1,500,000        1,486,019        1,500,568        0.3
       

 

 

   

 

 

   

 

 

   
          1,500,000        1,486,019        1,500,568     

F.H.G. Corp.

 

Healthcare,

Education, and

  Senior Secured First Lien Term Loans          
  Childcare   LIBOR + 9.500%, 1.000% Floor(3)(4)     4/28/2019        15,000,000        15,000,000        14,880,354        3.1
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        14,880,354     

F.H.G. Corp. Cornerstone Research

 

Healthcare,

Education, and Childcare

  Common Stock(4)(5)          
          288        300,000        63,169        0.0
       

 

 

   

 

 

   

 

 

   
          288        300,000        63,169     

Flexera Software, Inc.(9)

  Electronics   Senior Secured Second Lien Term Loans          
    LIBOR + 7.000%, 1.000% Floor(6)     4/2/2021        5,000,000        5,018,504        4,852,592        1.0
       

 

 

   

 

 

   

 

 

   
          5,000,000        5,018,504        4,852,592     

Gastar Exploration USA, Inc.(10)

  Oil and Gas   Senior Secured First          
    Lien Notes 8.625%(8)(11)     5/15/2018        5,400,000        5,413,659        4,731,750        1.0
       

 

 

   

 

 

   

 

 

   
          5,400,000        5,413,659        4,731,750     

Genex Services, Inc.(9)

  Insurance   Senior Secured Second Lien Term Loans          
    LIBOR + 7.750%, 1.000% Floor(6)     5/30/2022        9,500,000        9,531,763        9,299,753        1.9
       

 

 

   

 

 

   

 

 

   
          9,500,000        9,531,763        9,299,753     

Green Field Energy Services, Inc.

  Oil and Gas   Senior Secured First Lien Notes 13.000%(4)(8)(12)     11/15/2016        766,616        755,260        237,651        0.1
   

Warrants/Equity(4)(5)

    11/15/2021        709        29,000        —          0.0
       

 

 

   

 

 

   

 

 

   
          767,325        784,260        237,651     

GTCR Valor Companies, Inc.

  Electronics   Senior Secured First Lien Term Loans          
    LIBOR + 5.000%, 1.000% Floor(6)     5/30/2021        7,968,616        7,892,569        7,788,079        1.6

 

F-16


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 
    Senior Secured Second Lien Term Loans LIBOR + 8.500%, 1.000% Floor(6)     11/30/2021        4,000,000        3,961,852        3,914,693        0.8
       

 

 

   

 

 

   

 

 

   
          11,968,616        11,854,421        11,702,772     

HBC Holdings, LLC

 

Diversified/

Conglomerate

  Senior Secured First Lien Term Loans          
  Service   LIBOR + 5.750%, 1.000% Floor(4)(6)     3/30/2020        14,962,500        14,962,500        14,962,500        3.1
       

 

 

   

 

 

   

 

 

   
          14,962,500        14,962,500        14,962,500     

Hill International, Inc.

 

Buildings and Real

Estate

  Senior Secured First Lien Term Loans          
    LIBOR + 6.750%, 1.000% Floor(4)(6)     9/25/2020        16,957,500        16,957,500        16,957,457        3.5
       

 

 

   

 

 

   

 

 

   
          16,957,500        16,957,500        16,957,457     

Holland Acquisition Corp.

  Oil and Gas   Senior Secured First Lien Term Loans          
    LIBOR + 9.000%, 1.000% Floor(6)     5/29/2018        5,000,000        4,921,900        4,599,148        0.9
       

 

 

   

 

 

   

 

 

   
          5,000,000        4,921,900        4,599,148     

Ignite Restaurant Group, Inc.

 

Personal, Food, and

Miscellaneous Services

  Senior Secured First Lien Term Loans          
    LIBOR + 7.000%, 1.000% Floor(6)     2/13/2019        11,970,000        11,799,221        11,970,000        2.5
       

 

 

   

 

 

   

 

 

   
          11,970,000        11,799,221        11,970,000     

Integra Telecom, Inc.

  Telecommunications   Senior Secured Second Lien Term Loans          
    LIBOR + 8.500%, 1.250% Floor(3)(4)     2/22/2020        735,455        733,682        728,204        0.2
       

 

 

   

 

 

   

 

 

   
          735,455        733,682        728,204     

Interface Security Systems, Inc.

  Electronics   Senior Secured First Lien Notes 9.250%(4)(8)     1/15/2018        3,417,000        3,463,712        3,484,637        0.7
       

 

 

   

 

 

   

 

 

   
          3,417,000        3,463,712        3,484,637     

IronGate Energy Services, LLC

  Oil and Gas   Senior Secured First Lien Notes 11.000%(8)     7/1/2018        3,000,000        2,957,768        2,588,307        0.5
       

 

 

   

 

 

   

 

 

   
          3,000,000        2,957,768        2,588,307     

Isola USA(9)

  Electronics   Senior Secured First          
    Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     11/29/2018        5,874,528        5,999,752        5,931,034        1.2
       

 

 

   

 

 

   

 

 

   
          5,874,528        5,999,752        5,931,034     

JAC Holdings Corp.

  Automobile   Senior Secured First Lien Notes 11.500%(4)(8)     10/1/2019        12,000,000        12,000,000        12,000,000        2.5
       

 

 

   

 

 

   

 

 

   
          12,000,000        12,000,000        12,000,000     

Jordan Reses Supply Company LLC

 

Healthcare,

Education, and Childcare

  Senior Secured Second Lien Term Loans          
    LIBOR + 11.000%, 1.000% Floor(3)(4)     4/24/2020        5,000,000        5,000,000        5,000,000        1.0
       

 

 

   

 

 

   

 

 

   
          5,000,000        5,000,000        5,000,000     

Kik Custom Products, Inc.

 

Healthcare,

Education, and Childcare

  Senior Secured Second Lien Term Loans          
    LIBOR + 8.250%, 1.250% Floor(13)     10/29/2019        5,000,000        4,991,433        5,006,500        1.0
       

 

 

   

 

 

   

 

 

   
          5,000,000        4,991,433        5,006,500     

Linc Energy Finance (USA), Inc.

  Oil and Gas   Senior Secured Second          
    Lien Notes 12.500%(4)(8)     10/31/2017        500,000        498,615        504,137        0.1

 

F-17


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 
    Senior Secured Second Lien Notes 12.500%(4)     10/31/2017        500,000        487,623        504,137        0.1
       

 

 

   

 

 

   

 

 

   
          1,000,000        986,238        1,008,274     

Liquidnet Holdings, Inc.

  Finance   Senior Secured First Lien Term Loans          
    LIBOR + 6.750%, 1.000% Floor(6)     5/22/2019        6,825,000        6,732,689        6,564,518        1.4
       

 

 

   

 

 

   

 

 

   
          6,825,000        6,732,689        6,564,518     

Livingston International, Inc.(9)(10)

  Cargo Transport   Senior Secured Second Lien Term Loans          
    LIBOR + 7.750%, 1.250% Floor(6)     4/18/2020        2,658,504        2,654,268        2,555,694        0.5
       

 

 

   

 

 

   

 

 

   
          2,658,504        2,654,268        2,555,694     

LTCG Holdings Corp.

 

Healthcare,

Education, and Childcare

  Senior Secured Second Lien Term Loans          
    LIBOR + 5.000%, 1.000% Floor(6)     6/6/2020        3,900,000        3,882,146        3,912,136        0.8
       

 

 

   

 

 

   

 

 

   
          3,900,000        3,882,146        3,912,136     

Miller Heiman, Inc.

  Diversified/Conglomerate Service   Senior Secured First Lien Term Loans LIBOR + 5.750%, 1.000% Floor(6)     9/30/2019        24,687,500        24,687,500        24,687,500        5.1
       

 

 

   

 

 

   

 

 

   
          24,687,500        24,687,500        24,687,500     

Nation Safe Drivers Holdings, Inc.

 

Insurance

  Senior Secured Second Lien Term Loans          
    LIBOR + 8.000%, 2.000% Floor(4)(6)(7)     9/29/2020        18,236,058        18,236,058        18,236,058        3.8
       

 

 

   

 

 

   

 

 

   
          18,236,058        18,236,058        18,236,058     

New Media Holdings II, LLC

 

Printing and

Publishing

  Senior Secured First Lien Term Loans          
    LIBOR + 6.250%, 1.000% Floor(6)     6/4/2020        12,437,500        12,437,500        12,437,500        2.6
       

 

 

   

 

 

   

 

 

   
          12,437,500        12,437,500        12,437,500     

Newpage Corp.

  Containers, Packaging, and Glass   Senior Secured First Lien Term Loans LIBOR + 8.250%, 1.250% Floor(6)     2/11/2021        10,000,000        9,879,551        10,059,144        2.1
       

 

 

   

 

 

   

 

 

   
          10,000,000        9,879,551        10,059,144     

Northern Lights Midco, LLC

  Finance   Senior Secured First Lien Term Loans          
    LIBOR + 9.500%, 1.500% Floor(3)(4)     11/21/2019        4,700,000        4,700,000        4,700,000        1.0
       

 

 

   

 

 

   

 

 

   
          4,700,000        4,700,000        4,700,000     

Northstar Aerospace, Inc.

  Aerospace and Defense   Senior Secured First Lien Notes 10.250%(4)(8)     10/15/2019        15,000,000        15,000,000        15,000,000        3.1
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,000,000     

OH Acquisition, LLC

  Finance   Senior Secured First Lien Term Loans          
    LIBOR + 6.250%, 1.000% Floor(3)     8/29/2019        7,481,250        7,446,184        7,443,844        1.5
       

 

 

   

 

 

   

 

 

   
          7,481,250        7,446,184        7,443,844     

Omnitracs, Inc.

  Electronics   Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     5/25/2021        7,000,000        7,014,550        7,007,467        1.4
       

 

 

   

 

 

   

 

 

   
          7,000,000        7,014,550        7,007,467     

 

F-18


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par/Share
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

Oxford Mining Company, LLC

 

Mining, Steel, Iron,

and Nonprecious Metals

  Senior Secured First Lien Term Loans          
    LIBOR + 8.500%, 0.750% Floor, 3% PIK(4)(6)(7)     12/31/2018        11,864,407        11,864,407        11,864,407        2.4
       

 

 

   

 

 

   

 

 

   
          11,864,407        11,864,407        11,864,407     

Pegasus Solutions, Inc.

 

Diversified/

Conglomerate Service

  Senior Secured First Lien Term Loans          
    LIBOR + 9.000%, 1.500% Floor(3)(4)(7)     5/10/2017        —          —          —          0.0
    Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.500% Floor(3)(4)     2/10/2018        3,593,304        3,593,304        3,593,304        0.7
    Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.500% Floor, PIK(3)(4)     11/10/2020        19,523,809        19,523,809        19,523,809        4.0
    Warrants to purchase 4.2% of the outstanding equity(4)(5)     02/10/2018        769,231        769,231        769,231        0.2
       

 

 

   

 

 

   

 

 

   
          23,886,344        23,886,344        23,886,344     

Reddy Ice Group, Inc.

 

Beverage, Food, and

Tobacco

  Senior Secured Second Lien Term Loans          
    LIBOR + 9.500%, 1.250% Floor(3)(4)     10/1/2019        2,000,000        2,000,000        1,866,703        0.4
       

 

 

   

 

 

   

 

 

   
          2,000,000        2,000,000        1,866,703     

Response Team Holdings, LLC

  Buildings and Real Estate   Preferred Equity 12%(4)(5)       3,046,179        2,788,771        2,906,831        0.6
    Senior Secured First Lien Term Loans LIBOR + 8.500%, 2.000% Floor, 1% PIK(3)(4)     3/28/2019        15,206,579        15,206,579        15,287,086        3.1
    Warrants to purchase 3.70% of the outstanding common units(4)(5)     3/28/2019        257,407        257,407        596,258        0.1
       

 

 

   

 

 

   

 

 

   
          18,510,165        18,252,757        18,790,175     

School Specialty, Inc.

 

Healthcare,

Education, and Childcare

  Senior Secured First Lien Term Loans          
    LIBOR + 8.500%, 1.000% Floor(6)     6/11/2019        10,895,272        10,815,266        10,901,620        2.2
       

 

 

   

 

 

   

 

 

   
          10,895,272        10,815,266        10,901,620     

Securus Technologies, Inc.

  Telecommunications   Senior Secured Second Lien Term Loans          
    LIBOR + 7.750%, 1.250% Floor(6)     4/30/2021        2,000,000        1,984,030        1,997,903        0.4
       

 

 

   

 

 

   

 

 

   
          2,000,000        1,984,030        1,997,903     

Sizzling Platter, LLC

 

Personal, Food, and

Miscellaneous Services

  Senior Secured Second Lien Term Loans          
    LIBOR + 7.500%, 1.000% Floor(6)     4/28/2019        15,000,000        15,000,000        15,303,157        3.1
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,303,157     

Survey Sampling International, LLC

 

Diversified/

Conglomerate Service

  Senior Secured Second Lien Term Loans          
    LIBOR + 9.000%, 1.000% Floor(6)     12/16/2021        24,000,000        24,000,000        24,000,000        5.0