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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 June 30, 2015

 

OR

 

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

 

For the transition period           to          

 

Commission File No. 814-00663

 

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

Maryland

 

33-1089684

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

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

(Address of principal executive office) (Zip Code)

 

(212) 750-7300

(Registrant’s telephone number, including area code)

 


 

N/A

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

 


 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   o   No   o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

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

 

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

 

Class

 

Outstanding at August 4, 2015

Common stock, $0.001 par value

 

314,468,685

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2015 (unaudited) and December 31, 2014

3

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2015 and 2014 (unaudited)

4

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2015 (unaudited) and December 31, 2014

5

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2015 and 2014 (unaudited)

50

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)

51

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

52

 

 

 

Item 2.

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

83

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

111

 

 

 

Item 4.

Controls and Procedures

112

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

112

 

 

 

Item 1A.

Risk Factors

112

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

113

 

 

 

Item 3.

Defaults Upon Senior Securities

113

 

 

 

Item 4.

Mine Safety Disclosures

113

 

 

 

Item 5.

Other Information

113

 

 

 

Item 6.

Exhibits

113

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

5,671,380

 

$

6,270,075

 

Non-controlled affiliate company investments

 

293,367

 

228,716

 

Controlled affiliate company investments

 

2,608,648

 

2,529,588

 

Total investments at fair value (amortized cost of $8,452,913 and $8,875,095, respectively)

 

8,573,395

 

9,028,379

 

Cash and cash equivalents

 

299,079

 

194,555

 

Interest receivable

 

138,738

 

160,981

 

Receivable for open trades

 

3,966

 

859

 

Other assets

 

109,683

 

112,999

 

Total assets

 

$

9,124,861

 

$

9,497,773

 

LIABILITIES

 

 

 

 

 

Debt

 

$

3,582,199

 

$

3,924,482

 

Base management fees payable

 

33,021

 

34,497

 

Income based fees payable

 

28,949

 

33,070

 

Capital gains incentive fees payable

 

72,448

 

92,979

 

Accounts payable and other liabilities

 

67,073

 

81,892

 

Interest and facility fees payable

 

58,350

 

46,974

 

Payable for open trades

 

380

 

164

 

Total liabilities

 

3,842,420

 

4,214,058

 

Commitments and contingencies (Note 7)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $0.001 per share, 500,000 common shares authorized; 314,469 and 314,108 common shares issued and outstanding, respectively

 

314

 

314

 

Capital in excess of par value

 

5,334,249

 

5,328,057

 

Accumulated overdistributed net investment income

 

(57,230

)

(32,846

)

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

 

(114,505

)

(166,668

)

Net unrealized gains on investments and foreign currency transactions

 

119,613

 

154,858

 

Total stockholders’ equity

 

5,282,441

 

5,283,715

 

Total liabilities and stockholders’ equity

 

$

9,124,861

 

$

9,497,773

 

NET ASSETS PER SHARE

 

$

16.80

 

$

16.82

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

For the Three Months Ended June 30,

 

For the Six Months Ended June 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

$

122,616

 

$

100,780

 

$

247,443

 

$

200,211

 

Capital structuring service fees

 

8,762

 

12,371

 

21,527

 

26,694

 

Dividend income

 

4,081

 

5,601

 

7,912

 

13,577

 

Other income

 

3,606

 

2,854

 

6,100

 

9,902

 

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

 

139,065

 

121,606

 

282,982

 

250,384

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

4,724

 

3,295

 

7,319

 

6,195

 

Capital structuring service fees

 

2,205

 

 

2,205

 

650

 

Dividend income

 

744

 

826

 

1,369

 

3,498

 

Other income

 

68

 

76

 

130

 

403

 

Total investment income from non-controlled affiliate company investments

 

7,741

 

4,197

 

11,023

 

10,746

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

73,932

 

72,075

 

145,166

 

143,268

 

Capital structuring service fees

 

12,115

 

9,361

 

19,531

 

15,286

 

Dividend income

 

10,000

 

10,322

 

30,099

 

30,400

 

Management and other fees

 

6,235

 

6,078

 

12,273

 

12,030

 

Other income

 

391

 

1,288

 

1,652

 

2,532

 

Total investment income from controlled affiliate company investments

 

102,673

 

99,124

 

208,721

 

203,516

 

Total investment income

 

249,479

 

224,927

 

502,726

 

464,646

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

56,421

 

53,151

 

114,996

 

105,644

 

Base management fees

 

33,021

 

30,731

 

66,937

 

60,815

 

Income based fees

 

28,949

 

25,540

 

58,314

 

53,858

 

Capital gain incentive fees

 

7,682

 

10,168

 

3,462

 

11,103

 

Administrative fees

 

3,514

 

2,813

 

6,970

 

6,556

 

Other general and administrative

 

8,773

 

7,610

 

15,726

 

14,040

 

Total expenses

 

138,360

 

130,013

 

266,405

 

252,016

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

111,119

 

94,914

 

236,321

 

212,630

 

Income tax expense, including excise tax

 

2,616

 

2,923

 

6,141

 

8,303

 

NET INVESTMENT INCOME

 

108,503

 

91,991

 

230,180

 

204,327

 

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

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

24,910

 

519

 

51,804

 

10,667

 

Non-controlled affiliate company investments

 

 

 

333

 

38

 

Controlled affiliate company investments

 

 

(47,956

)

 

(46,188

)

Foreign currency transactions

 

(662

)

(1,080

)

3,865

 

(917

)

Net realized gains (losses)

 

24,248

 

(48,517

)

56,002

 

(36,400

)

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

10,683

 

13,031

 

(23,728

)

9,786

 

Non-controlled affiliate company investments

 

10,812

 

31,955

 

16,396

 

47,046

 

Controlled affiliate company investments

 

(7,752

)

54,630

 

(26,615

)

35,410

 

Foreign currency transactions

 

28

 

(259

)

(1,298

)

(274

)

Net unrealized gains (losses)

 

13,771

 

99,357

 

(35,245

)

91,968

 

Net realized and unrealized gains (losses) from investments and foreign currency transactions

 

38,019

 

50,840

 

20,757

 

55,568

 

REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

 

 

(3,839

)

(72

)

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

146,522

 

$

142,831

 

$

247,098

 

$

259,823

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)

 

$

0.47

 

$

0.48

 

$

0.79

 

$

0.87

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)

 

314,469

 

298,270

 

314,289

 

298,122

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (10)

 

Investment partnership

 

Limited partnership units (0.94 units)

 

 

 

9/7/2007

 

$

 

$

248

(2)

 

 

Covestia Capital Partners, LP (10)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

487

 

1,863

(2)

 

 

HCI Equity, LLC (8)(9)(10)

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

 

128

 

 

 

Imperial Capital Private Opportunities, LP (10)(29)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

4,214

 

20,380

(2)

 

 

Partnership Capital Growth Fund I, L.P. (10)

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

 

873

(2)

 

 

Partnership Capital Growth Investors III, L.P. (10)(29)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

2,722

 

2,861

(2)

 

 

PCG-Ares Sidecar Investment, L.P. (10)(29)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

5/22/2014

 

6,500

 

8,042

(2)

 

 

PCG-Ares Sidecar Investment II, L.P. (10)(29)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

10/31/2014

 

2,147

 

1,279

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (10)(29)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

1,240

 

1,342

(2)

 

 

Senior Secured Loan Fund LLC (8)(11)(30)

 

Co-investment vehicle

 

Subordinated certificates ($2,089,348 par due 12/2024)

 

8.27% (Libor + 8.00%/M)(24)

 

10/30/2009

 

2,089,348

 

2,099,796

 

 

 

 

 

 

 

Member interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,089,348

 

2,099,796

 

 

 

VSC Investors LLC (10)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

879

 

1,661

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,107,537

 

2,138,473

 

40.48

%

Healthcare Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alegeus Technologies Holdings Corp.

 

Benefits administration and transaction processing provider

 

Preferred stock (2,997 shares)

 

 

 

12/13/2013

 

3,087

 

1,913

 

 

 

 

 

 

 

Common stock (3 shares)

 

 

 

12/13/2013

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,090

 

1,913

 

 

 

American Academy Holdings, LLC

 

Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals

 

First lien senior secured loan ($8,810 par due 6/2019)

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

8,810

 

8,810

(2)(20)(23)

 

 

 

 

 

 

First lien senior secured loan ($52,039 par due 6/2019)

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

52,039

 

52,039

(3)(20)(23)

 

 

 

 

 

 

First lien senior secured loan ($3,540 par due 6/2019)

 

4.00% (Libor + 3.00%/Q)

 

6/27/2014

 

3,540

 

3,540

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

64,389

 

64,389

 

 

 

AwarePoint Corporation

 

Healthcare technology platform developer

 

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

 

9.50%

 

9/5/2014

 

9,920

 

9,900

(2)

 

 

 

 

 

 

Warrant to purchase up to 3,213,367 shares of Series 1 preferred stock

 

 

 

11/14/2014

 

 

609

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,920

 

10,509

 

 

 

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

 

Provider of home infusion services

 

Preferred units (8,664,072 units)

 

 

 

4/12/2013

 

866

 

726

(2)

 

 

 

 

 

 

Common units (87,514 units)

 

 

 

4/12/2013

 

17

 

7

(2)

 

 

 

 

 

 

 

 

 

 

 

 

883

 

733

 

 

 

California Forensic Medical Group, Incorporated (28)

 

Correctional facility healthcare operator

 

First lien senior secured loan ($44,707 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

44,707

 

44,707

(3)(23)

 

 

 

5



Table of Contents

 

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

CCS Intermediate Holdings, LLC and CCS Group Holdings, LLC (28)

 

Correctional facility healthcare operator

 

First lien senior secured revolving loan ($2,625 par due 7/2019)

 

6.25% (Base Rate + 3.00%/Q)

 

7/23/2014

 

2,625

 

2,572

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($6,685 par due 7/2021)

 

5.00% (Libor + 4.00%/Q)

 

7/23/2014

 

6,657

 

6,551

(2)(23)

 

 

 

 

 

 

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

 

9.38% (Libor + 8.38%/Q)

 

7/23/2014

 

133,805

 

129,600

(2)(23)

 

 

 

 

 

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

 

1,023

(2)

 

 

 

 

 

 

 

 

 

 

 

 

143,087

 

139,746

 

 

 

DNAnexus, Inc.

 

Bioinformatics company

 

First lien senior secured loan ($10,500 par due 10/2018)

 

9.25% (Libor + 8.25%/M)

 

3/21/2014

 

10,151

 

10,500

(2)(23)

 

 

 

 

 

 

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

 

 

 

3/21/2014

 

 

347

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,151

 

10,847

 

 

 

Global Healthcare Exchange, LLC and GHX Ultimate Parent Corp. (28)

 

On-demand supply chain automation solutions provider

 

First lien senior secured loan ($220,118 par due 3/2020)

 

8.50% (Libor + 7.50%/Q)

 

3/11/2014

 

218,762

 

220,118

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($9,975 par due 3/2020)

 

8.50% (Libor + 7.50%/Q)

 

3/11/2014

 

9,873

 

9,975

(4)(23)

 

 

 

 

 

 

Class A common stock (2,991 shares)

 

 

 

3/11/2014

 

2,991

 

2,991

(2)

 

 

 

 

 

 

Class B common stock (980 shares)

 

 

 

3/11/2014

 

30

 

3,027

(2)

 

 

 

 

 

 

 

 

 

 

 

 

231,656

 

236,111

 

 

 

Greenphire, Inc. and RMCF III CIV XXIX, L.P (28)

 

Software provider for clinical trial management

 

First lien senior secured loan ($4,000 par due 12/2018)

 

9.00% (Libor + 8.00%/M)

 

12/19/2014

 

4,000

 

4,000

(2)(23)

 

 

 

 

 

 

Limited partnership interest (99.90% interest)

 

 

 

12/19/2014

 

999

 

999

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,999

 

4,999

 

 

 

INC Research Mezzanine Co-Invest, LLC

 

Pharmaceutical and biotechnology consulting services

 

Common units (1,410,000 units)

 

 

 

9/27/2010

 

255

 

4,994

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

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

 

9.25% (Libor + 8.25%/Q)

 

12/27/2012

 

112,000

 

110,880

(2)(23)

 

 

LM Acquisition Holdings, LLC (9)

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

660

 

1,610

(2)

 

 

MC Acquisition Holdings I, LLC

 

Healthcare professional provider

 

Class A units (1,338,314 shares)

 

 

 

1/17/2014

 

1,338

 

1,756

(2)

 

 

Monte Nido Holdings, LLC

 

Outpatient eating disorder treatment provider

 

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

 

8.50% (Libor + 7.50%/Q)

 

12/20/2013

 

44,750

 

44,302

(3)(16)(23)

 

 

MW Dental Holding Corp. (28)

 

Dental services provider

 

First lien senior secured revolving loan ($2,000 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

2,000

 

2,000

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($13,094 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

13,094

 

13,094

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($24,358 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

24,358

 

24,358

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($47,990 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

47,990

 

47,990

(3)(23)

 

 

 

 

 

 

First lien senior secured loan ($19,846 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

19,846

 

19,846

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

107,288

 

107,288

 

 

 

My Health Direct, Inc. (28)

 

Healthcare scheduling exchange software solution provider

 

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

 

10.75%

 

9/18/2014

 

2,924

 

3,000

(2)

 

 

 

 

 

 

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

 

 

 

9/18/2014

 

39

 

39

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,963

 

3,039

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

First lien senior secured loan ($36,734 par due 2/2019)

 

9.61% (Libor + 8.61%/Q)

 

4/15/2011

 

36,734

 

36,734

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($33,266 par due 2/2019)

 

9.61% (Libor + 8.61%/Q)

 

4/15/2011

 

33,221

 

33,266

(3)(23)

 

 

 

 

 

 

Common units (5,345 units)

 

 

 

4/15/2011

 

5,764

 

12,558

(2)

 

 

 

 

 

 

 

 

 

 

 

 

75,719

 

82,558

 

 

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

Second lien senior secured loan ($90,000 par due 8/2019)

 

10.50% (Libor + 9.50%/Q)

 

2/27/2015

 

90,000

 

90,000

(2)(23)

 

 

 

6



Table of Contents

 

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

760

 

2,970

(2)

 

 

 

 

 

 

 

 

 

 

 

 

90,760

 

92,970

 

 

 

New Trident Holdcorp, Inc.

 

Outsourced mobile diagnostic healthcare service provider

 

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

 

10.25% (Libor + 9.00%/Q)

 

8/6/2013

 

78,785

 

76,000

(2)(23)

 

 

Nodality, Inc.

 

Biotechnology company

 

First lien senior secured loan ($7,680 par due 2/2018)

 

8.90%

 

4/25/2014

 

7,494

 

7,680

(2)

 

 

 

 

 

 

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

 

8.90%

 

4/25/2014

 

2,916

 

3,000

(2)

 

 

 

 

 

 

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

 

 

 

4/25/2014

 

 

41

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,410

 

10,721

 

 

 

OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC (28)

 

Provider of technology-enabled solutions to pharmacies

 

First lien senior secured loan ($19,456 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

19,456

 

19,456

(2)(23)

 

 

 

 

 

 

Limited liability company membership interest (1.57)%

 

 

 

11/21/2013

 

1,000

 

1,238

(2)

 

 

 

 

 

 

 

 

 

 

 

 

20,456

 

20,694

 

 

 

PerfectServe, Inc. (28)

 

Communications software platform provider for hospitals and physician practices

 

First lien senior secured revolving loan ($1,500 par due 6/2016)

 

7.50%

 

12/26/2013

 

1,500

 

1,500

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,408 par due 10/2017)

 

10.00%

 

12/26/2013

 

2,392

 

2,408

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,855 par due 4/2017)

 

10.00%

 

12/26/2013

 

2,840

 

2,855

(2)

 

 

 

 

 

 

Warrant to purchase up to 34,113 units of Series C preferred stock

 

 

 

12/26/2013

 

 

106

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,732

 

6,869

 

 

 

PhyMED Management LLC

 

Provider of anesthesia services

 

First lien senior secured loan ($9,950 par due 11/2020)

 

5.25% (Libor + 4.25%/M)

 

11/18/2014

 

9,887

 

9,950

(2)(23)

 

 

Physiotherapy Associates Holdings, Inc.

 

Physical therapy provider

 

Class A common stock (100,000 shares)

 

 

 

12/31/2013

 

3,090

 

4,665

 

 

 

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

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

1,043

(2)

 

 

Press Ganey Holdings, Inc.

 

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

 

Common stock (47,987 shares)

 

 

 

5/27/2015

 

292

 

1,381

(2)

 

 

Reed Group Holdings, LLC

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

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

 

 

 

6/28/2012

 

38

 

28

(2)

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Second lien senior secured loan ($108,679 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

108,494

 

108,679

(2)(23)

 

 

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

 

Distributor of emergency medical service and respiratory products

 

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

 

8.75% (Libor + 8.00%/M)

 

6/30/2014

 

60,000

 

60,000

(2)(23)

 

 

SurgiQuest, Inc.

 

Medical device company

 

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

 

 

 

9/28/2012

 

 

(2)

 

 

Transaction Data Systems, Inc.

 

Pharmacy management software provider

 

Second lien senior secured loan ($27,500 par due 6/2022)

 

9.25% (Libor + 8.25%/M)

 

6/15/2015

 

27,500

 

27,500

(2)(23)

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

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

 

9.00% (Libor + 8.00%/Q)

 

9/24/2014

 

50,000

 

50,000

(2)(23)

 

 

Urgent Cares of America Holdings I, LLC

 

Operator of urgent care clinics

 

Preferred units (6,000,000 units)

 

 

 

6/11/2015

 

6,000

 

6,000

(2)

 

 

 

 

 

 

Series A common units (2,000,000 units)

 

 

 

6/11/2015

 

2,000

 

1,830

(2)

 

 

 

 

 

 

Series C common units (800,507 units)

 

 

 

6/11/2015

 

 

612

(2)

 

 

 

 

 

 

 

 

 

 

 

 

8,000

 

8,442

 

 

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

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

 

9.00% (Libor + 8.00%/Q)

 

5/30/2014

 

45,000

 

45,000

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

1,381,969

 

1,394,323

 

26.40

%

 

7



Table of Contents

 

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Other Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Residential Services L.L.C.

 

Heating, ventilation and air conditioning services provider

 

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

 

9.00% (Libor + 8.00%/Q)

 

6/30/2014

 

49,567

 

50,000

(2)(23)

 

 

Community Education Centers, Inc. and CEC Parent Holdings LLC (8)

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($13,657 par due 12/2017)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

13,657

 

13,657

(2)(13)(23)

 

 

 

 

 

 

First lien senior secured loan ($629 par due 12/2017)

 

7.50% (Base Rate + 4.25%/Q)

 

12/10/2010

 

629

 

629

(2)(13)(23)

 

 

 

 

 

 

Second lien senior secured loan ($21,985 par due 6/2018)

 

15.28% (Libor + 15.00%/Q)

 

12/10/2010

 

21,895

 

21,895

(2)

 

 

 

 

 

 

Class A senior preferred units (7,846 units)

 

 

 

3/27/2015

 

9,384

 

8,445

(2)

 

 

 

 

 

 

Class A junior preferred units (26,154 units)

 

 

 

3/27/2015

 

19,833

 

12,437

(2)

 

 

 

 

 

 

Class A common units (134 units)

 

 

 

3/27/2015

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

65,398

 

57,063

 

 

 

Competitor Group, Inc. and Calera XVI, LLC (28)

 

Endurance sports media and event operator

 

First lien senior secured revolving loan ($3,750 par due 11/2018)

 

9.00% (Libor + 7.75%/Q)

 

11/30/2012

 

3,750

 

3,375

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($24,506 par due 11/2018)

 

10.50% (Libor + 7.75% Cash, 1.50% PIK /Q)

 

11/30/2012

 

24,506

 

22,055

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($30,007 par due 11/2018)

 

10.50% (Libor + 7.75% Cash, 1.50% PIK /Q)

 

11/30/2012

 

30,007

 

27,006

(3)(23)

 

 

 

 

 

 

Membership units (2,500,000 units)

 

 

 

11/30/2012

 

2,523

 

198

(2)(10)

 

 

 

 

 

 

 

 

 

 

 

 

60,786

 

52,634

 

 

 

Crown Health Care Laundry Services, Inc. and Crown Laundry Holdings, LLC (7)(28)

 

Provider of outsourced healthcare linen management solutions

 

First lien senior secured revolving loan

 

 

 

3/13/2014

 

 

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($24,194 par due 3/2019)

 

7.75% (Libor + 6.50%/Q)

 

3/13/2014

 

24,194

 

24,194

(2)(23)

 

 

 

 

 

 

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

 

 

 

3/13/2014

 

2,475

 

3,592

(2)

 

 

 

 

 

 

Class B common units (275,000 units)

 

 

 

3/13/2014

 

275

 

399

(2)

 

 

 

 

 

 

 

 

 

 

 

 

26,944

 

28,185

 

 

 

Dwyer Acquisition Parent, Inc. and TDG Group Holding Company

 

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

 

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

 

11.00%

 

8/15/2014

 

52,670

 

52,670

(2)

 

 

 

 

 

 

Senior subordinated loan ($31,500 par due 2/2020)

 

11.00%

 

6/12/2015

 

31,500

 

31,500

(2)

 

 

 

 

 

 

Common stock (32,843 shares)

 

 

 

8/15/2014

 

3,378

 

3,797

(2)

 

 

 

 

 

 

 

 

 

 

 

 

87,548

 

87,967

 

 

 

Massage Envy, LLC (28)

 

Franchisor in the massage industry

 

First lien senior secured loan ($8,017 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

8,017

 

8,017

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($46,434 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

46,434

 

46,434

(3)(23)

 

 

 

 

 

 

First lien senior secured loan ($19,469 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

19,469

 

19,469

(4)(23)

 

 

 

 

 

 

Common stock (3,000,000 shares)

 

 

 

9/27/2012

 

3,000

 

4,742

 

 

 

 

 

 

 

 

 

 

 

 

 

76,920

 

78,662

 

 

 

McKenzie Sports Products, LLC (28)

 

Designer, manufacturer and distributor of hunting-related supplies

 

First lien senior secured loan ($84,500 par due 9/2020)

 

6.75% (Libor + 5.75%/M)

 

9/18/2014

 

84,500

 

84,500

(2)(14)(23)

 

 

OpenSky Project, Inc.

 

Social commerce platform operator

 

First lien senior secured loan ($2,700 par due 9/2017)

 

15.00%

 

6/4/2014

 

2,671

 

2,565

(2)

 

 

 

 

 

 

First lien senior secured loan ($200 par due 9/2017)

 

17.50%

 

6/4/2014

 

198

 

190

(2)

 

 

 

 

 

 

Warrant to purchase up to 159,496 shares of Series D preferred stock

 

 

 

6/29/2015

 

48

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,917

 

2,755

 

 

 

PODS, LLC

 

Storage and warehousing

 

Second lien senior secured loan ($17,500 par due 2/2023)

 

9.25% (Libor + 8.25%/Q)

 

2/2/2015

 

17,332

 

17,500

(2)(23)

 

 

Spin HoldCo Inc.

 

Laundry service and equipment provider

 

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

 

8.00% (Libor + 7.00%/M)

 

5/14/2013

 

140,000

 

138,600

(2)(23)

 

 

Surface Dive, Inc.

 

SCUBA diver training and certification provider

 

Second lien senior secured loan ($72,000 par due 1/2022)

 

10.25% (Libor + 9.25%/Q)

 

1/29/2015

 

71,580

 

72,000

(2)(23)

 

 

 

8



Table of Contents

 

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

TWH Water Treatment Industries, Inc., TWH Filtration Industries, Inc. and TWH Infrastructure Industries, Inc. (28)

 

Wastewater infrastructure repair, treatment and filtration holding company

 

First lien senior secured loan ($2,240 par due 10/2019)

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

2,240

 

2,240

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($36,400 par due 10/2019)

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

36,400

 

36,400

(3)(23)

 

 

 

 

 

 

 

 

 

 

 

 

38,640

 

38,640

 

 

 

United Road Towing, Inc.

 

Towing company

 

Warrant to purchase up to 607 shares

 

 

 

4/1/2010

 

 

 

 

 

Wash Multifamily Acquisition Inc. and Coinmatic Canada Inc.

 

Laundry service and equipment provider

 

Second lien senior secured loan ($3,726 par due 5/2023)

 

8.00% (Libor + 7.00%/M)

 

5/14/2015

 

3,652

 

3,726

(2)(23)

 

 

 

 

 

 

Second lien senior secured loan ($21,274 par due 5/2023)

 

8.00% (Libor + 7.00%/M)

 

5/14/2015

 

20,853

 

21,274

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

24,505

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

746,637

 

733,506

 

13.89

%

Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feradyne Outdoors, LLC and Bowhunter Holdings, LLC

 

Provider of branded archery and bowhunting accessories

 

First lien senior secured loan ($13,500 par due 3/2019)

 

4.00% (Libor + 3.00%/Q)

 

4/24/2014

 

13,500

 

13,500

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($25,500 par due 3/2019)

 

6.55% (Libor + 5.55%/Q)

 

4/24/2014

 

25,500

 

25,500

(2)(19)(23)

 

 

 

 

 

 

First lien senior secured loan ($6,742 par due 3/2019)

 

4.00% (Libor + 3.00%/Q)

 

4/24/2014

 

6,742

 

6,742

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($50,100 par due 3/2019)

 

6.55% (Libor + 5.55%/Q)

 

4/24/2014

 

50,100

 

50,100

(2)(19)(23)

 

 

 

 

 

 

Common units (373 units)

 

 

 

4/24/2014

 

3,733

 

4,228

(2)

 

 

 

 

 

 

 

 

 

 

 

 

99,575

 

100,070

 

 

 

Implus Footcare, LLC

 

Provider of footwear and other accessories

 

First lien senior secured loan ($20,000 par due 4/2021)

 

7.00% (Libor + 6.00%/Q)

 

4/30/2015

 

19,888

 

20,000

(2)(23)

 

 

Indra Holdings Corp.

 

Designer, marketer, and distributor of rain and cold weather products

 

Second lien senior secured loan ($80,000 par due 11/2021)

 

8.50% (Libor + 7.50%/Q)

 

5/1/2014

 

78,900

 

76,800

(2)(23)

 

 

Matrixx Initiatives, Inc. and Wonder Holdings Acquisition Corp.

 

Developer and marketer of OTC healthcare products

 

Warrant to purchase up to 1,489 shares of preferred stock

 

 

 

7/27/2011

 

 

1,289

(2)

 

 

 

 

 

 

Warrant to purchase up to 1,654,678 shares of common stock

 

 

 

7/27/2011

 

 

86

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

1,375

 

 

 

Oak Parent, Inc.

 

Manufacturer of athletic apparel

 

First lien senior secured loan ($2,631 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

2,627

 

2,631

(3)(23)

 

 

 

 

 

 

First lien senior secured loan ($8,377 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

8,358

 

8,377

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

10,985

 

11,008

 

 

 

PG-ACP Co-Invest, LLC

 

Supplier of medical uniforms, specialized medical footwear and accessories

 

Class A membership units (1,000,0000 units)

 

 

 

8/29/2012

 

1,000

 

1,388

(2)

 

 

Plantation Products, LLC, Seed Holdings, Inc. and Flora Parent, Inc.

 

Provider of branded lawn and garden products

 

Second lien senior secured loan ($66,000 par due 6/2021)

 

9.94% (Libor + 8.94%/Q)

 

12/23/2014

 

65,651

 

66,000

(2)(23)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/23/2014

 

3,000

 

3,773

(2)

 

 

 

 

 

 

 

 

 

 

 

 

68,651

 

69,773

 

 

 

Shock Doctor, Inc. and Shock Doctor Holdings, LLC (7)

 

Developer, marketer and distributor of sports protection equipment and accessories

 

Second lien senior secured loan ($75,000 par due 10/2021)

 

11.50% (Libor + 10.50%/Q)

 

4/22/2015

 

75,000

 

75,000

(2)(23)

 

 

 

 

 

 

Class A preferred units (50,000 units)

 

 

 

3/14/2014

 

5,000

 

5,350

(2)

 

 

 

 

 

 

Class C preferred units (50,000 units)

 

 

 

4/22/2015

 

5,000

 

5,350

(2)

 

 

 

 

 

 

 

 

 

 

 

 

85,000

 

85,700

 

 

 

The Hygenic Corporation

 

Designer, manufacturer and marketer of branded wellness products

 

Second lien senior secured loan ($70,000 par due 4/2021)

 

9.75% (Libor + 8.75%/Q)

 

2/27/2015

 

70,000

 

70,000

(2)(23)

 

 

The Step2 Company, LLC (8)

 

Toy manufacturer

 

Second lien senior secured loan ($27,583 par due 9/2019)

 

10.00%

 

4/1/2010

 

27,473

 

27,583

(2)

 

 

 

 

 

 

Second lien senior secured loan ($4,500 par due 9/2019)

 

10.00%

 

3/13/2014

 

4,500

 

4,500

(2)

 

 

 

9



Table of Contents

 

As of June 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Second lien senior secured loan ($40,082 par due 9/2019)

 

 

 

4/1/2010

 

30,802

 

12,005

(2)(22)

 

 

 

 

 

 

Common units (1,116,879 units)

 

 

 

4/1/2011

 

24

 

 

 

 

 

 

 

 

Class B common units (126,278,000 units)

 

 

 

10/30/2014

 

 

(2)

 

 

 

 

 

 

Warrant to purchase up to 3,157,895 units

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62,799

 

44,088

 

 

 

Varsity Brands Holding Co., Inc., Hercules Achievement, Inc., Hercules Achievement Holdings, Inc. and Hercules VB Holdings, Inc.

 

Leading manufacturer and distributor of textiles, apparel & luxury goods

 

Second lien senior secured loan ($91,697 par due 12/2022)

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

90,843

 

91,697

(2)(23)

 

 

 

 

 

 

Second lien senior secured loan ($55,576 par due 12/2022)

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

55,056

 

55,576

(2)(23)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

4,147

 

4,906

(2)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

3,353

 

3,967

(2)

 

 

 

 

 

 

 

 

 

 

 

 

153,399

 

156,146

 

 

 

 

 

 

 

 

 

 

 

 

 

650,197

 

636,348

 

12.05

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2329497 Ontario Inc. (9)

 

Outsourced data center infrastructure and related services provider

 

Second lien senior secured loan ($42,480 par due 6/2019)

 

10.50% (Libor + 9.25%/M)

 

12/13/2013

 

43,211

 

31,705

(2)(23)

 

 

BlackArrow, Inc.

 

Advertising and data solutions software platform provider

 

First lien senior secured loan ($6,545 par due 9/2017)

 

9.25%

 

3/13/2014

 

6,402

 

6,545

(2)

 

 

 

 

 

 

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

 

 

 

3/13/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,402

 

6,545

 

 

 

Brandtone Holdings Limited (9)(28)

 

Mobile communications and marketing services provider

 

First lien senior secured loan ($5,674 par due 11/2018)

 

9.50% (Libor + 8.50%/M)

 

5/11/2015

 

5,508

 

5,674

(2)(23)

 

 

 

 

 

 

Warrant to purchase up to 115,002 units of Series Three participating convertible preferred ordinary shares

 

 

 

5/11/2015

 

 

1

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,508

 

5,675

 

 

 

CallMiner, Inc.

 

Provider of cloud-based conversational analytics solutions

 

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

 

10.00%

 

7/23/2014

 

3,977

 

4,000

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,000 par due 9/2018)

 

10.00%

 

7/23/2014

 

1,988

 

2,000

(2)

 

 

 

 

 

 

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

 

 

 

7/23/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,965

 

6,000

 

 

 

Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C. (7)

 

Payroll and accounting services provider to the entertainment industry

 

First lien senior secured loan ($45,069 par due 10/2019)

 

7.00% (Libor + 6.00%/Q)

 

12/24/2012

 

45,069

 

45,069

(2)(18)(23)

 

 

 

 

 

 

First lien senior secured loan ($41,813 par due 10/2019)

 

7.00% (Libor + 6.00%/Q)

 

12/24/2012

 

41,813

 

41,813

(3)(18)(23)

 

 

 

 

 

 

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

 

 

 

12/24/2012

 

57

 

14,687

(2)

 

 

 

 

 

 

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

 

 

 

12/24/2012

 

57

 

14,687

(2)

 

 

 

 

 

 

 

 

 

 

 

 

86,996

 

116,256

 

 

 

CIBT Investment Holdings, LLC

 

Expedited travel document processing services

 

Class A shares (2,500 shares)

 

 

 

12/15/2011

 

2,500

 

4,411

(2)