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EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex322_201533110xq.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex311_201533110xq.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex321_201533110xq.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex312_201533110xq.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 March 31, 2015
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 May 8, 2015.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2015
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)
 
 
March 31, 2015
 
September 30, 2014
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost March 31, 2015: $405,500; cost September 30, 2014: $387,625)
 
$
394,794

 
$
394,872

Affiliate investments (cost March 31, 2015: $37,444; cost September 30, 2014: $37,757)
 
40,649

 
40,764

Non-control/Non-affiliate investments (cost March 31, 2015: $2,144,487; cost September 30, 2014: $2,069,301)
 
2,102,700

 
2,060,278

Total investments at fair value (cost March 31, 2015: $2,587,431; cost September 30, 2014: $2,494,683)
 
2,538,143

 
2,495,914

Cash and cash equivalents
 
108,747

 
86,731

Restricted cash
 
6,388

 
22,315

Interest, dividends and fees receivable
 
15,083

 
15,224

Due from portfolio companies
 
3,026

 
22,950

Receivables from unsettled transactions
 
38,485

 
4,750

Deferred financing costs
 
17,682

 
20,334

Other assets
 
409

 

Total assets
 
$
2,727,963

 
$
2,668,218

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
4,015

 
$
3,908

Base management fee payable
 
12,953

 
12,372

Part I incentive fee payable
 
7,340

 
9,309

Due to FSC CT
 
2,794

 
2,464

Interest payable
 
7,796

 
5,797

Amounts payable to syndication partners
 
561

 
3,817

Credit facilities payable
 
512,295

 
317,395

SBA debentures payable
 
225,000

 
225,000

Unsecured convertible notes payable
 
115,000

 
115,000

Unsecured notes payable
 
410,187

 
409,878

Secured borrowings at fair value (proceeds of $22,300 and $84,750 at March 31, 2015 and September 30, 2014, respectively)
 
22,248

 
84,803

Total liabilities
 
1,320,189

 
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 March 31, 2015 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
 
(49,237
)
 
1,178

Net realized loss on investments, secured borrowings and interest rate swap
 
(171,896
)
 
(152,416
)
Accumulated overdistributed net investment income
 
(21,712
)
 
(20,906
)
Total net assets (equivalent to $9.18 and $9.64 per common share at March 31, 2015 and September 30, 2014, respectively) (Note 12)
 
1,407,774

 
1,478,475

Total liabilities and net assets
 
$
2,727,963

 
$
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
March 31, 2015
 
Three months
ended
March 31, 2014
 
Six months
ended
March 31, 2015
 
Six months
ended
March 31, 2014
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
6,215

 
$
3,194

 
$
12,479

 
$
5,613

Affiliate investments
 
1,072

 
1,098

 
2,169

 
1,864

Non-control/Non-affiliate investments
 
49,626

 
49,699

 
94,796

 
94,995

Interest on cash and cash equivalents
 
10

 
3

 
20

 
6

Total interest income
 
56,923

 
53,994

 
109,464

 
102,478

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,674

 
2,542

 
3,439

 
4,950

Affiliate investments
 
212

 
207

 
427

 
542

Non-control/Non-affiliate investments
 
1,669

 
2,721

 
4,093

 
5,592

Total PIK interest income
 
3,555

 
5,470

 
7,959

 
11,084

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
384

 
1,967

 
1,007

 
2,534

Affiliate investments
 
12

 
12

 
24

 
181

Non-control/Non-affiliate investments
 
5,265

 
10,508

 
22,532

 
26,909

Total fee income
 
5,661

 
12,487

 
23,563

 
29,624

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
1,838

 

 
2,976

 

Non-control/Non-affiliate investments
 
173

 
181

 
480

 
276

Total dividend and other income
 
2,011

 
181

 
3,456

 
276

Total investment income
 
68,150

 
72,132

 
144,442

 
143,462

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
13,064

 
13,735

 
27,219

 
25,794

Part I incentive fee
 
7,340

 
8,500

 
16,054

 
17,554

Professional fees
 
982

 
887

 
2,146

 
1,912

Board of Directors fees
 
189

 
141

 
369

 
296

Interest expense
 
14,812

 
12,833

 
28,804

 
23,046

Administrator expense
 
748

 
538

 
1,995

 
1,391

General and administrative expenses
 
1,657

 
1,499

 
3,438

 
3,252

Total expenses
 
38,792

 
38,133

 
80,025

 
73,245

Base management fee waived
 
(111
)
 
(234
)
 
(222
)
 
(234
)
Net expenses
 
38,681

 
37,899

 
79,803

 
73,011

Net investment income
 
29,469

 
34,233

 
64,639

 
70,451

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
(7,484
)
 
2,132

 
(17,953
)
 
2,552

Affiliate investments
 
333

 
182

 
198

 
965

Non-control/Non-affiliate investments
 
5,207

 
(4,897
)
 
(32,764
)
 
(11,818
)
Net unrealized depreciation on investments
 
(1,944
)
 
(2,583
)
 
(50,519
)
 
(8,301
)
Net unrealized appreciation (depreciation) on secured borrowings
 
(227
)
 
(10
)
 
105

 
(10
)
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Affiliate investments
 
29

 

 
72

 

Non-control/Non-affiliate investments
 
(1,921
)
 
(1,540
)
 
(19,552
)
 
1,666

Net realized gain (loss) on investments and secured borrowings
 
(1,892
)
 
(1,540
)
 
(19,480
)
 
1,666

Net increase (decrease) in net assets resulting from operations
 
$
25,406

 
$
30,100

 
$
(5,255
)
 
$
63,806

Net investment income per common share — basic
 
$
0.19

 
$
0.25

 
$
0.42

 
$
0.51

Earnings (loss) per common share — basic
 
$
0.17

 
$
0.22

 
$
(0.03
)
 
$
0.46

Weighted average common shares outstanding — basic
 
153,340

 
139,138

 
153,340

 
139,132

Net investment income per common share — diluted
 
$
0.19

 
$
0.24

 
$
0.42

 
$
0.50

Earnings (loss) per common share — diluted
 
$
0.17

 
$
0.21

 
$
(0.03
)
 
$
0.45

Weighted average common shares outstanding — diluted
 
161,130

 
146,928

 
161,130

 
146,922

Distributions per common share
 
$
0.15

 
$
0.25

 
$
0.43

 
$
0.49

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)
 
 
 
Six months
ended
March 31, 2015
 
Six months
ended
March 31, 2014
Operations:
 
 
 
 
Net investment income
 
$
64,639

 
$
70,451

Net unrealized depreciation on investments
 
(50,519
)
 
(8,301
)
Net unrealized appreciation (depreciation) on secured borrowings
 
105

 
(10
)
Net realized gain (loss) on investments and secured borrowings
 
(19,480
)
 
1,666

Net increase (decrease) in net assets resulting from operations
 
(5,255
)
 
63,806

Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(65,446
)
 
(68,383
)
Net decrease in net assets from stockholder transactions
 
(65,446
)
 
(68,383
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
3,096

 
6,189

Repurchase of common stock under stock repurchase program
 

 
(406
)
Repurchase of common stock under dividend reinvestment program
 
(3,096
)
 
(4,781
)
Net increase (decrease) in net assets from capital share transactions
 

 
1,002

Total decrease in net assets
 
(70,701
)
 
(3,575
)
Net assets at beginning of period
 
1,478,475

 
1,368,872

Net assets at end of period
 
$
1,407,774

 
$
1,365,297

Net asset value per common share
 
$
9.18

 
$
9.81

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)


 
 
Six months
ended
March 31, 2015
 
Six months
ended
March 31, 2014
Cash flows used in operating activities:
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
$
(5,255
)
 
$
63,806

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
 
 
 
 
Net unrealized depreciation on investments
 
50,519

 
8,301

Net unrealized appreciation (depreciation) on secured borrowings
 
(105
)
 
10

Net realized (gains) losses on investments and secured borrowings
 
19,480

 
(1,666
)
PIK interest income
 
(7,959
)
 
(11,084
)
Recognition of fee income
 
(23,563
)
 
(29,624
)
Accretion of original issue discount on investments
 
(711
)
 
(388
)
Accretion of original issue discount on unsecured notes payable
 
309

 

Amortization of deferred financing costs
 
2,652

 
3,441

Changes in operating assets and liabilities:
 
 
 
 
Fee income received
 
23,578

 
28,922

Decrease in restricted cash
 
15,927

 

Increase in interest, dividends and fees receivable
 
(610
)
 
(8,298
)
(Increase) decrease in due from portfolio companies
 
19,924

 
(4,281
)
Increase in receivables from unsettled transactions
 
(33,735
)
 
(14,788
)
(Increase) decrease in other assets
 
(409
)
 
187

Increase in accounts payable, accrued expenses and other liabilities
 
107

 
2,925

Increase in base management fee payable
 
581

 
3,876

Increase (decrease) in Part I incentive fee payable
 
(1,969
)
 
1,325

Increase in due to FSC CT
 
330

 
1,168

Increase in interest payable
 
1,999

 
1,968

Decrease in payables from unsettled transactions
 

 
(31,780
)
Increase (decrease) in amounts payable to syndication partners
 
(3,256
)
 
8,028

Increase in advances received from portfolio companies
 

 
7,729

Purchases of investments and net revolver activity
 
(920,700
)
 
(1,108,320
)
Principal payments received on investments (scheduled payments)
 
12,993

 
23,992

Principal payments received on investments (payoffs)
 
322,246

 
106,710

PIK interest income received in cash
 
1,102

 
5,714

Proceeds from the sale of investments
 
481,411

 
185,916

Net cash used in operating activities
 
(45,114
)
 
(756,211
)
Cash flows from financing activities:
 
 
 
 
Distributions paid in cash
 
(62,350
)
 
(62,194
)
Borrowings under SBA debentures payable
 

 
43,250

Borrowings under credit facilities
 
521,400

 
804,338

Repayments of borrowings under credit facilities
 
(326,500
)
 
(415,657
)
Proceeds from the issuance of unsecured notes
 

 
244,403

Proceeds from secured borrowings
 

 
47,750

Repayments of secured borrowings
 
(62,324
)
 

Repurchases of common stock under stock repurchase program
 

 
(406
)
Repurchases of common stock under dividend reinvestment plan
 
(3,096
)
 
(4,781
)
Deferred financing costs paid
 

 
(1,913
)
Offering costs paid
 

 
(542
)
Net cash provided by financing activities
 
67,130

 
654,248

Net increase (decrease) in cash and cash equivalents
 
22,016

 
(101,963
)
Cash and cash equivalents, beginning of period
 
86,731

 
147,359

Cash and cash equivalents, end of period
 
$
108,747

 
$
45,396

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
23,958

 
$
17,814

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
3,096

 
$
6,189

See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2015
(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
 
 
 
$
15,170

 
$
15,164

 
$
15,133

 LC Facility, 8.5% cash due 12/31/2016 (10)
 
 
 
 
 
(2
)
 

 746,114 Series A Preferred Units
 
 
 
 
 
15,359

 
18,464

 746,114 Common Stock Units
 
 
 
 
 
5,316

 
4,266

 
 
 
 
 
 
35,837

 
37,863

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

 
15,572

 
9,499

 First Lien Revolver, 8% cash due 5/31/2016
 
 
 
965

 
965

 
554

 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

 

 
 
 
 
 
 
25,737

 
10,053

 HFG Holdings, LLC (9)(16)
 
Specialized finance
 
 
 
 
 
 
 First Lien Term Loan, 6% cash 4% PIK due 6/10/2019
 
 
 
97,355

 
97,355

 
97,351

 875,933 Class A Units
 
 
 
 
 
22,347

 
20,769

 
 
 
 
 
 
119,702

 
118,120

 First Star Aviation, LLC
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
15,391

 
15,391

 
15,354

 10,104,401 Common Units
 
 
 
 
 
10,104

 
11,784

 
 
 
 
 
 
25,495

 
27,138

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

 
47,823

 
48,431

 2,058,411.64 Common Units
 
 
 
 
 
2,058

 
2,542

 
 
 
 
 
 
49,881

 
50,973

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

 
24,844

 
25,461

 4,256,042 Common Units
 
 
 
 
 
4,294

 
4,234

 
 
 
 
 
 
29,138

 
29,695

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
12,586

 
12,586

 
12,448

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,438

 
3,438

 
3,405

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

 
2,847

 
2,847

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

 
6,463

 
 
 
 
 
 
22,971

 
25,163

 Senior Loan Fund JV I, LLC (12)(17)
 
Multi-sector holdings
 
 
 
 
 
 
 Subordinated Notes, LIBOR+8% cash due 5/2/2021 (14)
 
 
 
80,985

 
80,985

 
80,934

 87.5% LLC equity interest (6)
 
 
 
 
 
8,998

 
9,024

 
 
 
 
 
 
89,983

 
89,958

 Miche Group, LLC
 
Apparel, accessories
& luxury goods
 
 
 
 
 
 
 First Lien Revolver, LIBOR+8% cash due 12/18/2016 (14)
 
 
 
1,450

 
1,450

 
1,450

 100 units in FSFC Miche, Inc.
 
 
 
 
 
5,306

 
4,381

 
 
 
 
 
 
6,756

 
5,831

 Total Control Investments (28.0% of net assets)
 
 
 
 
 
$
405,500

 
$
394,794

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
$
9,238

 
$
9,238

 
$
9,152

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

 
3,808

 
 
 
 
 
 
10,318

 
12,960

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 4/30/2016 (14)
 
 
 
490

 
479

 
504

 First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016
 
 
 
26,671

 
26,647

 
26,531

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
654

 
 
 
 
 
 
27,126

 
27,689

 Total Affiliate Investments (2.9% of net assets)
 
 
 
 
 
$
37,444

 
$
40,649

See notes to Consolidated Financial Statements.

5

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2015
(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

 
$
739

 
 
 
 
 
 
849

 
739

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

 
4,357

 
4,379

 First Lien Term Loan B, 12% cash 1% PIK due 12/31/15
 
 
 
11,580

 
11,580

 
11,517

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

 
2,266

 
2,266

 
 
 
 
 
 
18,203

 
18,162

 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
31,434

 
31,419

 
31,167

 414,419 Common Units
 
 
 
 
 
598

 
919

 
 
 
 
 
 
32,017

 
32,086

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

 
536

 
 
 
 
 
 
642

 
536

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

 
604

 
 
 
 
 
 
643

 
604

 JTC Education, Inc. (9)
 
Education services
 
 
 
 
 
 
 Subordinated Term Loan, 13% cash due 11/1/2017
 
 
 
16,006

 
14,446

 
9,014

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

 

 17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
14,946

 
9,014

 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)
 
 
 
4,454

 
4,441

 
4,455

 First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (14)
 
 
 
9,642

 
9,638

 
9,633

 
 
 
 
 
 
14,079

 
14,088

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

 
7,112

 
 
 
 
 
 
3,393

 
7,112

 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)
 
 
 
10,158

 
10,062

 
10,103

 
 
 
 
 
 
10,062

 
10,103

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

 
729

 
 
 
 
 
 
265

 
729

 Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016 (14)
 
 
 
2,038

 
2,012

 
1,973

 Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
34,263

 
31,431

 
17,914

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

 
3,186

 
3,214

 
 
 
 
 
 
36,629

 
23,101


See notes to Consolidated Financial Statements.


6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2015
(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)
 
 
 
$
34,922

 
$
34,321

 
$
16,821

 
 
 
 
 
 
34,321

 
16,821

 Maverick Healthcare Group, LLC
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
16,508

 
16,080

 
16,414

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
38,300

 
38,095

 
38,151

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (14)
 
 
 
1,253

 
1,176

 
1,251

 
 
 
 
 
 
55,351

 
55,816

 Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (14)
 
 
 
20,920

 
20,802

 
20,532

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (14)
 
 
 
33,762

 
33,517

 
32,782

 First Lien Term Loan C, 12% cash due 9/30/2018
 
 
 
3,416

 
3,416

 
3,384

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

 
1,562

 
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

 
480

 
 
 
 
 
 
60,602

 
58,778

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

 
698

 
 
 
 
 
 
847

 
698

 Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+9.75% cash due 11/4/2018 (14)
 
 
 
24,752

 
24,691

 
25,316

 Senior Revolver, LIBOR+6% cash due 11/4/2018 (14)
 
 
 
1,500

 
1,489

 
1,500

 Capex Line, LIBOR+7% cash due 11/4/2018 (14)
 
 
 
1,500

 
1,500

 
1,500

 
 
 
 
 
 
27,680

 
28,316

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (12)
 
 
 
 
 
1,335

 
1,329

 
 
 
 
 
 
1,335

 
1,329

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2017
 
 
 
29,981

 
29,871

 
29,818

 317,282.97 Class A Units
 
 
 
 
 
317

 
638

 
 
 
 
 
 
30,188

 
30,456

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (6)(12)
 
 
 
 
 
796

 
927

 
 
 
 
 
 
796

 
927

 Digi-Star Acquisition Holdings, Inc.
 
Industrial machinery
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 11/18/2017
 
 
 
16,825

 
16,771

 
16,825

 264.37 Class A Preferred Units
 
 
 
 
 
115

 
127

 2,954.87 Class A Common Units
 
 
 
 
 
36

 
380

 
 
 
 
 
 
16,922

 
17,332

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

 
619

 
 
 
 
 
 
619

 
619

 World 50, Inc.
 
Research & consulting services
 
 
 
 
 
 
 Senior Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (14)
 
 
 
7,584

 
7,527

 
7,580

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

 
6,963

 
6,990

 Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)(14)
 
 
 
 
 
(26
)
 

 
 
 
 
 
 
14,464

 
14,570

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2015
(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 (6)(12)
 
Multi-sector holdings
 
 
 
$
677

 
$
597

 
 
 
 
 
 
677

 
597

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

 
628

 50,000 Common Shares (6)
 
 
 
 
 
1

 
34

 
 
 
 
 
 
501

 
662

 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

 
7,219

 
 
 
 
 
 
17,000

 
7,219

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

 
1,015

 
 
 
 
 
 
1,000

 
1,015

 Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
10,378

 
10,371

 
10,355

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

 
8,287

 
8,294

 First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
10,000

 
9,997

 
10,000

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

 
5,724

 
 
 
 
 
 
30,155

 
34,373

 Specialized Education Services, Inc.
 
Education services
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (1.5% floor) cash due 6/28/2017 (14)
 
 
 
8,092

 
8,092

 
7,950

 Subordinated Term Loan B, 11% cash 1.5% PIK due 6/28/2018
 
 
 
18,249

 
18,249

 
17,970

 
 
 
 
 
 
26,341

 
25,920

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,237

 
19,237

 
19,078

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

 
716

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

 

 
 
 
 
 
 
19,987

 
19,794

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (12)
 
 
 
 
 
578

 
526

 
 
 
 
 
 
578

 
526

 Deltek, Inc. (9)
 
IT consulting & other services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4.75% (1.25% floor) cash due 10/10/2017 (14)
 
 
 
 
 

 

 
 
 
 
 
 

 

 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

 
23,158

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (14)
 
 
 
658

 
658

 
652

 
 
 
 
 
 
23,962

 
23,810

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

 
2,842

 
 
 
 
 
 
1,500

 
2,842

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,470

 
14,470

 
14,531

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

 
2,798

 
 
 
 
 
 
16,470

 
17,329

See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2015
(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
 
 
 
$
5,133

 
$
5,133

 
$
5,074

 First Lien Revolver, LIBOR+5% (1.25% floor) cash due 12/20/2017 (14)
 
 
 
44

 
44

 
43

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

 
534

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
5,677

 
5,651

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
8,033

 
8,028

 
8,029

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
 
 
1,199

 
1,200

 
 
 
 
 
 
9,227

 
9,229

 Omniplex World Services Corporation
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 12/21/2018
 
 
 
12,866

 
12,866

 
12,645

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

 
632

 
 
 
 
 
 
13,366

 
13,277

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 12/21/2018
 
 
 
16,071

 
16,071

 
15,994

 
 
 
 
 
 
16,071

 
15,994

 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

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)
 
 
 
96,955

 
96,911

 
96,757

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (10)(14)
 
 
 
 
 
(2
)
 

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

 
1,373

 
 
 
 
 
 
98,720

 
98,130

 CoAdvantage Corporation
 
Human resources & employment services
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.25% PIK due 12/31/2018
 
 
 
14,986

 
14,986

 
15,199

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

 
1,075

 
 
 
 
 
 
15,543

 
16,274

 EducationDynamics, LLC
 
Education services
 
 
 
 
 
 
 Mezzanine Term Loan, 12% cash 6% PIK due 1/16/2017
 
 
 
13,373

 
13,373

 
13,152

 
 
 
 
 
 
13,373

 
13,152

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (6)(12)
 
 
 
 
 
1,082

 
1,082

 
 
 
 
 
 
1,082

 
1,082

 RP Crown Parent, LLC
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (10)(14)
 
 
 
 
 
(397
)
 

 
 
 
 
 
 
(397
)
 

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