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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

 

¨ 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 August 6, 2015, the Registrant had 74,117,977 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 June 30, 2015 (unaudited) and December  31, 2014

    F-1   
  

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

    F-2   
  

Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2015 (unaudited) and June 30, 2014 (unaudited)

    F-3   
  

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

    F-4   
  

Consolidated Schedules of Investments as of June 30, 2015 (unaudited) and December 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

    18   

Item 4.      Controls and Procedures

    19   

Part II.    Other Information

 

Item 1.      Legal Proceedings

    19   

Item 1A.  Risk Factors

    19   

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

    21   

Item 3.      Defaults Upon Senior Securities

    21   

Item 4.      Mine Safety Disclosures

    21   

Item 5.      Other Information

    21   

Item 6.      Exhibits

    22   

SIGNATURES

    25   


Table of Contents

Sierra Income Corporation

Consolidated Statements of Assets and Liabilities

 

     As of  
     June 30, 2015     December 31, 2014  
     (unaudited)        

ASSETS

    

Non-controlled/non-affiliated investments, at fair value (amortized cost of $878,334,995 and $620,968,517, respectively)

   $ 871,144,119      $ 616,915,093   

Cash collateral on total return swap (Note 5)

     61,458,766        56,877,928   

Cash and cash equivalents

     24,131,786        65,749,154   

Interest receivable

     7,172,380        5,213,605   

Due from affiliate (Note 7)

     6,378,866        6,995,930   

Deferred financing costs

     3,399,061        2,675,682   

Receivable due on total return swap (Note 5)

     2,395,990        1,095,582   

Unsettled trades receivable

     685,735        424,641   

Prepaid expenses and other assets

     618,273        118,017   
  

 

 

   

 

 

 

Total assets

   $ 977,384,976      $ 756,065,632   
  

 

 

   

 

 

 

LIABILITIES

    

Revolving credit facilities payable

   $ 320,500,000      $ 236,500,000   

Unrealized depreciation on total return swap (Note 5)

     6,960,429        7,651,597   

Management fee payable

     4,243,147        3,271,387   

Accounts payable and accrued expenses

     2,342,388        2,427,843   

Incentive fees

     2,122,395        —     

Interest payable

     1,075,374        648,497   

Administrator fees payable

     538,692        450,058   

Due to affiliate (Note 7)

     206,968        1,574,737   

Unsettled trades payable

     —          16,935,000   

Deferred tax liability

     371,449        86,600   
  

 

 

   

 

 

 

Total liabilities

   $ 338,360,842      $ 269,545,719   
  

 

 

   

 

 

 

Commitments (Note 11)

    

NET ASSETS

    

Common stock, par value $.001 per share, 350,000,000 common shares authorized, 71,353,239 and 54,260,324 common shares issued and outstanding, respectively

   $ 71,353      $ 54,260   

Capital in excess of par value

     648,354,921        494,060,576   

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

     (121,123     (5,408,243

Accumulated undistributed net investment income

     5,155,137        9,518,341   

Net unrealized appreciation/(depreciation) on investments and total return swap, net of provision for taxes of $(284,849) and $0, respectively

     (14,436,154     (11,705,021
  

 

 

   

 

 

 

Total net assets

     639,024,134        486,519,913   
  

 

 

   

 

 

 

Total liabilities and net assets

   $ 977,384,976      $ 756,065,632   
  

 

 

   

 

 

 

NET ASSET VALUE PER SHARE

   $ 8.96      $ 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
June 30,
    For the six months ended
June 30,
 
    2015     2014     2015     2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  

INVESTMENT INCOME

       

Interest from non-controlled/non-affiliated investments

  $ 16,956,876      $ 6,055,653      $ 31,289,217      $ 9,813,514   

Fee income

    5,020,430        653,728        6,347,504        1,488,377   

Payment-in-kind interest income

    323,005        104,443        670,158        108,147   

Interest from cash

    136        —          387        —     
 

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    22,300,447        6,813,824        38,307,266        11,410,038   
 

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES

       

Base management fee

    4,243,146        1,768,047        7,963,543        2,910,818   

Interest and financing expenses

    2,125,092        506,299        3,957,723        669,700   

Incentive fee

    2,122,395        326,458        2,392,892        438,949   

General and administrative expenses

    801,786        662,245        2,137,101        1,193,288   

Offering costs

    1,674,904        190,100        2,067,657        190,100   

Professional fees

    623,994        250,370        1,173,975        505,698   

Administrator expenses

    538,692        272,579        1,094,441        500,795   

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

    —          1,224,673        443,687        2,208,458   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total gross expenses

    12,130,009        5,200,771        21,231,019        8,617,806   

Net expense support reimbursement (Note 7)

    (1,941,494     (2,143,066     (3,935,012     (3,456,536
 

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

    10,188,515        3,057,705        17,296,007        5,161,270   
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INVESTMENT INCOME

    12,111,932        3,756,119        21,011,259        6,248,768   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gain/(loss) from investments

    412,436        861,569        (333,229     2,131,822   

Net realized gain on total return swap (Note 5)

    2,720,032        1,372,779        5,620,349        1,811,488   

Net change in unrealized appreciation/(depreciation) on investments

    (1,274,336     773,862        (3,137,452     572,778   

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

    (2,115,849     471,000        691,168        918,021   

Change in provision for deferred taxes on unrealized gain on investments

    (284,849     —          (284,849     —     
 

 

 

   

 

 

   

 

 

   

 

 

 

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

    (542,566     3,479,210        2,555,987        5,434,109   
 

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 11,569,366      $ 7,235,329      $ 23,567,246      $ 11,682,877   
 

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE — BASIC AND DILUTED EARNINGS PER COMMON SHARE

  $ 0.17      $ 0.25      $ 0.37      $ 0.47   

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

  $ 0.18      $ 0.13      $ 0.33      $ 0.25   

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

    67,418,067        29,185,996        62,912,383        24,802,153   

DIVIDENDS DECLARED PER COMMON SHARE

  $ 0.20      $ 0.20      $ 0.40      $ 0.40   

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 six months ended June 30,  
     2015     2014  
     (unaudited)     (unaudited)  

INCREASE FROM OPERATIONS

    

Net investment income

   $ 21,011,259      $ 6,248,768   

Net realized gain/(loss) on investments

     (333,229     2,131,822   

Net realized gain on total return swap (Note 5)

     5,620,349        1,811,488   

Net change in unrealized appreciation/(depreciation) on investments

     (3,137,452     572,778   

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

     691,168        918,021   

Change in provision for deferred taxes on unrealized gain on investments

     (284,849     —     
  

 

 

   

 

 

 

Net increase in net assets resulting from operations

     23,567,246        11,682,877   
  

 

 

   

 

 

 

SHAREHOLDER DISTRIBUTIONS

    

Distributions from net realized gains

     —          (3,943,310

Distributions from net investment income (Note 2)

     (25,374,463     (6,248,768
  

 

 

   

 

 

 

Net decrease in net assets from shareholder distributions

     (25,374,463     (10,192,078
  

 

 

   

 

 

 

COMMON SHARE TRANSACTIONS

    

Issuance of common shares, net of underwriting costs

     143,906,427        159,934,090   

Issuance of common shares pursuant to distribution reinvestment plan

     12,091,162        4,550,252   

Repurchase of common shares

     (1,686,151     (281,375
  

 

 

   

 

 

 

Net increase in net assets resulting from common share transactions

     154,311,438        164,202,967   
  

 

 

   

 

 

 

Total increase in net assets

     152,504,221        165,693,766   

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 $5,155,137 and $(249,177), respectively)

   $ 639,024,134      $ 318,696,039   
  

 

 

   

 

 

 

Net asset value per common share

   $ 8.96      $ 9.25   

Common shares outstanding, beginning of period

     54,260,324        16,663,500   

Issuance of common shares

     15,923,836        17,327,945   

Issuance of common shares pursuant to distribution reinvestment plan

     1,356,925        494,168   

Repurchase of common shares

     (187,846     (30,612
  

 

 

   

 

 

 

Common shares outstanding, end of period

     71,353,239        34,455,001   
  

 

 

   

 

 

 

 

See accompanying notes to the consolidated financial statements.

 

F-3


Table of Contents

Sierra Income Corporation

Consolidated Statements of Cash Flows

 

     For the six months ended
June 30,
 
     2015     2014  
     (unaudited)     (unaudited)  

Cash flows from operating activities

    

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 23,567,246      $ 11,682,877   

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

    

Payment-in-kind interest income

     (670,158     (108,147

Net amortization of premium on investments

     (369,238     4,497   

Amortization of deferred financing costs

     610,714        268,046   

Net realized (gain)/loss on investments

     333,229        (2,131,822

Net change in unrealized (appreciation)/depreciation on investments

     3,137,452        (572,778

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

     (691,168     (918,021

Purchases, Originations, and Participations

     (325,397,031     (261,077,040

Proceeds from sale of investments and principal repayments

     68,736,720        72,357,407   

(Increase)/decrease in operating assets:

    

Cash collateral on total return swap (Note 5)

     (4,580,838     (35,554,182

Unsettled trades receivable

     (261,095     (5,158,750

Due from affiliate

     617,065        (2,535,791

Interest receivable

     (1,958,775     (330,210

Receivable due on total return swap (Note 5)

     (1,300,408     (947,502

Prepaid expenses and other assets

     (216,576     (185,941

Increase/(decrease) in operating liabilities:

    

Unsettled trades payable

     (16,935,000     5,881,250   

Management fee payable

     971,760        953,391   

Accounts payable and accrued expenses

     (85,454     396,607   

Incentive fee payable

     2,122,394        439,577   

Administrator fees payable

     88,634        120,417   

Interest payable

     426,877        411,598   

Due to affiliate

     (1,367,769     21,442   

Deferred tax liability

     284,849        —     
  

 

 

   

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

     (252,936,570     (216,983,075
  

 

 

   

 

 

 

Cash flows from financing activities

    

Borrowings under revolving credit facility

     234,000,000        80,000,000   

Repayments of revolving credit facility

     (150,000,000     (36,000,000

Proceeds from issuance of common stock, net of underwriting costs

     143,906,427        159,934,090   

Payment of cash dividends

     (13,283,301     (5,641,826

Financing costs paid

     (1,617,773     (424,674

Repurchase of common shares

     (1,686,151     (281,375
  

 

 

   

 

 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

     211,319,202        197,586,215   
  

 

 

   

 

 

 

TOTAL DECREASE IN CASH

     (41,617,368     (19,396,860

CASH AT BEGINNING OF PERIOD

     65,749,154        34,939,948   
  

 

 

   

 

 

 

CASH AT END OF PERIOD

   $ 24,131,786      $ 15,543,088   
  

 

 

   

 

 

 

Supplemental Information

    

Cash paid during the period for interest

   $ 3,530,846      $ 258,102   

Supplemental non-cash information

    

Payment-in-kind interest income

   $ 670,158      $ 108,147   

Amortization of deferred financing costs

   $ 610,714      $ 156,628   

Net amortization of premium on investments

   $ 369,238      $ 4,497   

Issuance of common shares in connection with distribution reinvestment plan

   $ 12,091,162      $ 4,550,252   

See accompanying notes to the consolidated financial statements.

 

F-4


Table of Contents

Sierra Income Corporation

Consolidated Schedule of Investments

As of June 30, 2015

(unaudited)

 

Company(1)

  Industry  

Type of Investment

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

Non-controlled/non-affiliated
investments — 136.3%

           

AAR Intermediate Holdings, LLC

  Energy: Oil & Gas   Senior Secured First Lien Term Loans LIBOR + 12.000%, 1.000% Floor(3)(4)     3/30/2019      $ 11,246,956      $ 10,666,649      $ 10,393,983        1.6
    Warrants to purchase 0.625% of outstanding company equity(4)(5)     3/30/2019        —          790,778        82,724        0.0
       

 

 

   

 

 

   

 

 

   
          11,246,956        11,457,427        10,476,707     

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        1.1
       

 

 

   

 

 

   

 

 

   
          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        1,961,838        1,932,284        1,966,410        0.3
       

 

 

   

 

 

   

 

 

   
          1,961,838        1,932,284        1,966,410     

Alpha Media LLC

  Media: Broadcasting
& Subscription
  Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(3)(7)     4/30/2021        11,179,687        11,179,687        11,179,687        1.8
       

 

 

   

 

 

   

 

 

   
          11,179,687        11,179,687        11,179,687     

AM3 Pinnacle Corporation

  Media: Broadcasting
& Subscription
  Senior Secured First Lien Term Loans 10.000%(4)     10/22/2018        6,930,526        6,930,526        6,166,721        1.0
       

 

 

   

 

 

   

 

 

   
          6,930,526        6,930,526        6,166,721     

American Beacon Advisors, Inc.(8)

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured Second Lien Term Loans LIBOR + 8.750%, 1.000% Floor(6)     4/30/2023        6,000,000        5,881,906        5,953,921        0.9
       

 

 

   

 

 

   

 

 

   
          6,000,000        5,881,906        5,953,921     

American Pacific Corp.

  Chemicals, Plastics &
Rubber
  Senior Secured First Lien Term Loans LIBOR + 6.000%, 1.000% Floor(6)     2/27/2019        7,900,000        7,854,144        7,959,250        1.2
       

 

 

   

 

 

   

 

 

   
          7,900,000        7,854,144        7,959,250     

Anaren, Inc.

  Aerospace & Defense   Senior Secured Second Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     8/18/2021        10,000,000        9,913,211        10,059,412        1.6
       

 

 

   

 

 

   

 

 

   
          10,000,000        9,913,211        10,059,412     

Aperture Group, LLC

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured First Lien Term Loans LIBOR + 6.250%, 1.000% Floor(3)     8/29/2019        7,443,750        7,412,522        7,443,750        1.2
       

 

 

   

 

 

   

 

 

   
          7,443,750        7,412,522        7,443,750     

 

See accompanying notes to consolidated financial statements.

 

F-5


Table of Contents

Company(1)

  Industry  

Type of Investment

  Maturity     Par
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        3,953,155        4,000,000        0.6
       

 

 

   

 

 

   

 

 

   
          4,000,000        3,953,155        4,000,000     

Associated Asphalt Partners, LLC

  Chemicals, Plastics &
Rubber
  Senior Secured First Lien Notes 8.500%(9)     2/15/2018        1,778,000        1,787,731        1,737,995        0.3
       

 

 

   

 

 

   

 

 

   
          1,778,000        1,787,731        1,737,995     

Asurion Corp.(8)

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)(10)     3/3/2021        7,000,000        6,938,368        7,122,500        1.1
       

 

 

   

 

 

   

 

 

   
          7,000,000        6,938,368        7,122,500     

Atrium Innovations, Inc.(11)

  Healthcare &
Pharmaceuticals
  Senior Secured Second Lien Term Loans LIBOR + 6.750%, 1.000% Floor(6)     8/13/2021        5,000,000        4,978,600        4,570,079        0.7
       

 

 

   

 

 

   

 

 

   
          5,000,000        4,978,600        4,570,079     

Backcountry.com, LLC

  Retail   Senior Secured First Lien Term Loans LIBOR + 7.250%, 1.000% Floor(4)(6)     6/30/2020        35,138,889        35,138,889        35,138,889        5.5
       

 

 

   

 

 

   

 

 

   
          35,138,889        35,138,889        35,138,889     

Bennu Oil & Gas, LLC

  Energy: Oil & Gas   Senior Secured Second Lien Term Loans LIBOR + 8.500%, 1.250% Floor, 2.500% PIK(6)     11/1/2018        5,507,122        5,503,163        4,479,849        0.7
       

 

 

   

 

 

   

 

 

   
          5,507,122        5,503,163        4,479,849     

Birch Communications, Inc.

  Telecommunications   Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(3)(4)     7/18/2020        14,572,917        14,323,940        14,037,200        2.2
       

 

 

   

 

 

   

 

 

   
          14,572,917        14,323,940        14,037,200     

Black Angus Steakhouses LLC

  Hotel, Gaming &
Leisure
  Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.000% Floor(4)(6)(7)     4/24/2020        20,407,366        20,407,366        20,407,366        3.2
       

 

 

   

 

 

   

 

 

   
          20,407,366        20,407,366        20,407,366     

Brundage-Bone Concrete Pumping, Inc.

  Construction &
Building
  Senior Secured First Lien Notes 10.375%(9)     9/1/2021        7,500,000        7,633,326        7,792,741        1.2
       

 

 

   

 

 

   

 

 

   
          7,500,000        7,633,326        7,792,741     

Capstone Nutrition

  Healthcare &
Pharmaceuticals
  Common Stock(4)(5)       —          300,000        446,946        0.1
    Senior Secured First Lien Term Loans LIBOR + 9.500%, 1.000% Floor, 1.000% PIK(3)(4)     4/28/2019        15,025,427        15,025,427        15,125,549        2.4
       

 

 

   

 

 

   

 

 

   
          15,025,427        15,325,427        15,572,495     

Charming Charlie, Inc.

  Retail   Senior Secured First Lien Term Loans LIBOR + 8.000%, 1.000% Floor(6)     12/24/2019        8,900,177        8,917,211        8,855,677        1.4
       

 

 

   

 

 

   

 

 

   
          8,900,177        8,917,211        8,855,677     

 

See accompanying notes to consolidated financial statements.

 

F-6


Table of Contents

Company(1)

  Industry  

Type of Investment

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

Collective Brands Finance, Inc.(8)

  Retail   Senior Secured Second Lien Term Loans LIBOR + 7.500%, 1.000% Floor(6)     3/11/2022        6,000,000        6,017,709        5,400,000        0.8
       

 

 

   

 

 

   

 

 

   
          6,000,000        6,017,709        5,400,000     

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        14,262,505        2.2
       

 

 

   

 

 

   

 

 

   
          14,317,924        14,317,924        14,262,505     

ConvergeOne Holdings Corp.

  Telecommunications   Senior Secured Second Lien Term Loans LIBOR + 8.000%, 1.000% Floor(3)(4)     6/17/2021        12,500,000        12,388,299        12,305,848        1.9
       

 

 

   

 

 

   

 

 

   
          12,500,000        12,388,299        12,305,848     

Cornerstone Chemical Company

  Chemicals, Plastics &
Rubber
  Senior Secured First Lien Notes 9.375%(9)(10)     3/15/2018        2,500,000        2,575,556        2,631,250        0.4
       

 

 

   

 

 

   

 

 

   
          2,500,000        2,575,556        2,631,250     

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        7,949,167        1.2
       

 

 

   

 

 

   

 

 

   
          8,000,000        8,000,000        7,949,167     

CRGT, Inc.

  High Tech Industries   Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(4)(6)     12/19/2020        9,875,000        9,875,000        9,822,322        1.5
       

 

 

   

 

 

   

 

 

   
          9,875,000        9,875,000        9,822,322     

DHISCO Electronic Distribution, Inc.

  Hotel, Gaming &
Leisure
  Senior Secured First Lien Term Loans LIBOR + 9.000% PIK, 1.500% Floor(3)(4)     2/10/2018        3,788,316        3,788,316        3,769,406        0.6
    Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.500% Floor(3)(4)(7)     11/10/2019        19,523,810        19,523,810        19,411,360        3.0
    Warrants to purchase 4.2% of the outstanding equity(4)(5)     2/10/2018        —          769,231        1,199,609        0.2
       

 

 

   

 

 

   

 

 

   
          23,312,126        24,081,357        24,380,375     

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        10,072,816        10,015,426        1.6
       

 

 

   

 

 

   

 

 

   
          10,000,000        10,072,816        10,015,426     

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        9,375,000        9,375,000        9,282,938        1.5
       

 

 

   

 

 

   

 

 

   
          9,375,000        9,375,000        9,282,938     

EarthLink, Inc.(11)

  Telecommunications   Senior Secured First Lien Notes 7.375%(9)(10)     6/1/2020        2,450,000        2,439,983        2,557,188        0.4
       

 

 

   

 

 

   

 

 

   
          2,450,000        2,439,983        2,557,188     

 

See accompanying notes to consolidated financial statements.

 

F-7


Table of Contents

Company(1)

  Industry  

Type of Investment

  Maturity     Par
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        15,056,508        2.4
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,056,508     

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        5,017,383        4,852,006        0.8
       

 

 

   

 

 

   

 

 

   
          5,000,000        5,017,383        4,852,006     

Gastar Exploration USA, Inc.(11)

  Energy: Oil & Gas   Senior Secured First Lien Notes 8.625%(9)(10)     5/15/2018        5,400,000        5,411,817        5,049,000        0.8
       

 

 

   

 

 

   

 

 

   
          5,400,000        5,411,817        5,049,000     

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        9,530,197        9,316,527        1.5
       

 

 

   

 

 

   

 

 

   
          9,500,000        9,530,197        9,316,527     

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        10,109,810        1.6
       

 

 

   

 

 

   

 

 

   
          10,000,000        10,000,000        10,109,810     

Green Field Energy Services, Inc.

  Energy: Oil & Gas   Senior Secured First Lien Notes 13.000%(4)(9)(12)     11/15/2016        766,616        755,025        237,651        0.0
    Warrants/Equity(4)(5)       —          29,000        —          0.0
       

 

 

   

 

 

   

 

 

   
          766,616        784,025        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        7,928,637        7,857,773        7,908,815        1.2
    Senior Secured Second Lien Term Loans LIBOR + 8.500%, 1.000% Floor(6)     11/30/2021        4,000,000        3,963,809        3,916,402        0.6
       

 

 

   

 

 

   

 

 

   
          11,928,637        11,821,582        11,825,217     

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        16,647,713        2.6
       

 

 

   

 

 

   

 

 

   
          16,500,000        16,500,000        16,647,713     

HBC Holdings, LLC

  Wholesale   Senior Secured First Lien Term Loans LIBOR + 5.750%, 1.000% Floor(4)(6)     3/30/2020        14,887,500        14,887,500        14,670,757        2.3
       

 

 

   

 

 

   

 

 

   
          14,887,500        14,887,500        14,670,757     

Heligear Acquisition Co.

  Aerospace & Defense   Senior Secured First Lien Notes 10.250%(4)(9)     10/15/2019        15,000,000        15,000,000        15,019,546        2.3
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,019,546     

 

See accompanying notes to consolidated financial statements.

 

F-8


Table of Contents

Company(1)

  Industry  

Type of Investment

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

Hill International, Inc.(11)

  Construction &
Building
  Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(4)(6)     9/26/2020        16,872,500        16,872,500        16,959,923        2.7
       

 

 

   

 

 

   

 

 

   
          16,872,500        16,872,500        16,959,923     

Holland Acquisition Corp.

  Energy: Oil & Gas   Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.000% Floor(6)     5/29/2018        4,832,381        4,766,064        4,512,247        0.7
       

 

 

   

 

 

   

 

 

   
          4,832,381        4,766,064        4,512,247     

Ignite Restaurant Group, Inc.

  Hotel, Gaming &
Leisure
  Senior Secured First Lien Term Loans LIBOR + 7.000%, 1.000% Floor(6)     2/13/2019        11,910,000        11,759,928        11,909,372        1.9
       

 

 

   

 

 

   

 

 

   
          11,910,000        11,759,928        11,909,372     

Interface Security Systems, Inc.

  Services: Consumer   Senior Secured First Lien Notes 9.250%(9)(10)     1/15/2018        3,417,000        3,456,849        3,434,085        0.5
       

 

 

   

 

 

   

 

 

   
          3,417,000        3,456,849        3,434,085     

Invision Diversified, LLC

  Services: Business   Senior Secured First Lien Term Loans LIBOR + 9.000%, 1.000% Floor(4)(6)     6/30/2020        28,571,429        28,571,429        28,571,429        4.5
       

 

 

   

 

 

   

 

 

   
          28,571,429        28,571,429        28,571,429     

IPS Corporation

  Wholesale   Senior Secured First Lien Term Loans LIBOR + 6.250%, 1.000% Floor(6)     2/5/2021        14,962,500        14,962,500        14,962,500        2.3
       

 

 

   

 

 

   

 

 

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

IronGate Energy Services, LLC

  Energy: Oil & Gas   Senior Secured First Lien Notes 11.000%(9)(10)     7/1/2018        3,000,000        2,962,783        2,103,750        0.3
       

 

 

   

 

 

   

 

 

   
          3,000,000        2,962,783        2,103,750     

Isola USA Corp.(8)

  High Tech Industries   Senior Secured First Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     11/29/2018        5,799,214        5,907,262        5,814,396        0.9
       

 

 

   

 

 

   

 

 

   
          5,799,214        5,907,262        5,814,396     

JAC Holding Corp.

  Automotive   Senior Secured First Lien Notes 11.500%(4)(9)     10/1/2019        12,000,000        12,000,000        12,321,694        1.9
       

 

 

   

 

 

   

 

 

   
          12,000,000        12,000,000        12,321,694     

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        5,091,186        0.8
       

 

 

   

 

 

   

 

 

   
          5,000,000        5,000,000        5,091,186     

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        4,992,099        5,050,000        0.8
       

 

 

   

 

 

   

 

 

   
          5,000,000        4,992,099        5,050,000     

 

See accompanying notes to consolidated financial statements.

 

F-9


Table of Contents

Company(1)

  Industry  

Type of Investment

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

Liquidnet Holdings, Inc.

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.000% Floor(6)     5/22/2019        6,650,000        6,568,513        6,450,500        1.0
       

 

 

   

 

 

   

 

 

   
          6,650,000        6,568,513        6,450,500     

Livingston International, Inc.(8)(11)

  Transportation: Cargo   Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.250% Floor(6)     4/18/2020        2,658,504        2,654,558        2,555,258        0.4
       

 

 

   

 

 

   

 

 

   
          2,658,504        2,654,558        2,555,258     

LTCG Holdings Corp.

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured First Lien Term Loans LIBOR + 5.000%, 1.000% Floor(6)     6/6/2020        2,838,571        2,826,755        2,725,799        0.4
       

 

 

   

 

 

   

 

 

   
          2,838,571        2,826,755        2,725,799     

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        24,194,371        3.8
       

 

 

   

 

 

   

 

 

   
          24,531,250        24,531,250        24,194,371     

Nathan’s Famous, Inc.

  Beverage & Food   Senior Secured First Lien Notes 10.000%     3/15/2020        7,000,000        7,000,000        7,551,250        1.2
       

 

 

   

 

 

   

 

 

   
          7,000,000        7,000,000        7,551,250     

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        20,657,426        3.2
       

 

 

   

 

 

   

 

 

   
          20,676,479        20,676,479        20,657,426     

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        24,320,106        24,300,286        24,198,505        3.8
       

 

 

   

 

 

   

 

 

   
          24,320,106        24,300,286        24,198,505     

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        9,683,151        7,846,575        1.2
       

 

 

   

 

 

   

 

 

   
          9,792,917        9,683,151        7,846,575     

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        4,582,500        4,582,500        4,660,015        0.7
       

 

 

   

 

 

   

 

 

   
          4,582,500        4,582,500        4,660,015     

Omnitracs, Inc.

  High Tech Industries   Senior Secured Second Lien Term Loans LIBOR + 7.750%, 1.000% Floor(6)     5/25/2021        7,000,000        7,013,689        6,996,011        1.1
       

 

 

   

 

 

   

 

 

   
          7,000,000        7,013,689        6,996,011     

Oxford Mining Company, LLC

  Metals & Mining   Senior Secured First Lien Term Loans LIBOR + 8.500%, 0.750% Floor, 3.000% PIK(4)(6)(7)     12/31/2018        11,920,264        11,920,264        11,825,800        1.8
       

 

 

   

 

 

   

 

 

   
          11,920,264        11,920,264        11,825,800     

 

See accompanying notes to consolidated financial statements.

 

F-10


Table of Contents

Company(1)

  Industry  

Type of Investment

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

Physiotherapy Corporation

  Healthcare &
Pharmaceuticals
  Senior Secured First Lien Term Loans LIBOR + 4.750%, 1.000% Floor(6)     6/4/2021        12,500,000        12,500,000        12,500,000        2.0
       

 

 

   

 

 

   

 

 

   
          12,500,000        12,500,000        12,500,000     

Reddy Ice Corporation

  Beverage & Food   Senior Secured Second Lien Term Loans LIBOR + 9.500%, 1.250% Floor(3)(4)     10/1/2019        2,000,000        2,000,000        1,870,056        0.3
       

 

 

   

 

 

   

 

 

   
          2,000,000        2,000,000        1,870,056     

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        15,184,197        2.4
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,184,197     

Response Team Holdings, LLC

  Construction &
Building
 

Preferred Equity 12%(4)(5)

    3/28/2019        3,234,646        2,977,239        3,200,793        0.5
   

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

      —          257,407        1,030,186        0.2
    Senior Secured First Lien Term Loans LIBOR + 8.500%, 2.000% Floor, 1.000% PIK(3)(4)     3/28/2019        15,283,619        15,283,619        15,495,464        2.4
       

 

 

   

 

 

   

 

 

   
          18,518,265        18,518,265        19,726,443     

School Specialty, Inc.

  Wholesale   Senior Secured First Lien Term Loans LIBOR + 8.500%, 1.000% Floor(6)     6/11/2019        10,850,947        10,780,780        10,809,840        1.7
       

 

 

   

 

 

   

 

 

   
          10,850,947        10,780,780        10,809,840     

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        15,135,707        2.4
       

 

 

   

 

 

   

 

 

   
          15,000,000        15,000,000        15,135,707     

Software Paradigms International Group, LLC

  High Tech Industries   Senior Secured First Lien Term Loans LIBOR + 8.000%, 1.000% Floor(4)(6)(7)     5/22/2020        24,009,126        24,009,126        24,009,126        3.8
       

 

 

   

 

 

   

 

 

   
          24,009,126        24,009,126        24,009,126     

Southwest Dealer Services, Inc.

  Automotive   Senior Secured First Lien Term Loans LIBOR + 6.000%, 1.000% Floor(3)(4)     3/16/2020        6,912,500        6,912,500        6,912,500        1.1
       

 

 

   

 

 

   

 

 

   
          6,912,500        6,912,500        6,912,500     

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        23,986,378        3.8
       

 

 

   

 

 

   

 

 

   
          24,000,000        24,000,000        23,986,378     

Techniplas LLC

  Automotive   Senior Secured First Lien Notes 10.000%(9)     5/1/2020        6,000,000        6,000,000        6,037,500        0.9
       

 

 

   

 

 

   

 

 

   
          6,000,000        6,000,000        6,037,500     

 

See accompanying notes to consolidated financial statements.

 

F-11


Table of Contents

Company(1)

  Industry  

Type of Investment

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

Tempel Steel Company

  Metals & Mining   Senior Secured First Lien Notes 12.000%(4)(9)(10)     8/15/2016        1,115,000        1,110,535        1,057,856        0.2
       

 

 

   

 

 

   

 

 

   
          1,115,000        1,110,535        1,057,856     

The Garretson Resolution Group, Inc.

  Services: Business   Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(6)     5/22/2021        15,000,000        14,925,913        15,000,000        2.3
       

 

 

   

 

 

   

 

 

   
          15,000,000        14,925,913        15,000,000     

Touchtunes Interactive Networks, Inc.

  Media: Diversified &
Production
  Senior Secured Second Lien Term Loans LIBOR + 8.250%, 1.000% Floor(6)     5/29/2022        7,500,000        7,500,000        7,500,000        1.2
       

 

 

   

 

 

   

 

 

   
          7,500,000        7,500,000        7,500,000     

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        5,919,581        5,985,761        0.9
       

 

 

   

 

 

   

 

 

   
          6,000,000        5,919,581        5,985,761     

True Religion Apparel, Inc.

  Retail   Senior Secured Second Lien Term Loans LIBOR + 10.000%, 1.000% Floor(13)     1/30/2020        4,000,000        3,864,290        1,981,281        0.3
       

 

 

   

 

 

   

 

 

   
          4,000,000        3,864,290        1,981,281     

U.S. Auto Sales Inc.

  Banking, Finance,
Insurance & Real
Estate
  Senior Secured Second Lien Term Loans LIBOR + 10.500%, 1.000% Floor(3)(4)     6/8/2020        5,500,000        5,500,000        5,500,000        0.9
       

 

 

   

 

 

   

 

 

   
          5,500,000        5,500,000        5,500,000     

U.S. Well Services, LLC

  Energy: Oil & Gas   Warrants/Equity(5)     2/21/2019        —          173        227,107        0.0
       

 

 

   

 

 

   

 

 

   
          —          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        9,743,616        9,685,470        9,646,179        1.5
       

 

 

   

 

 

   

 

 

   
          9,743,616        9,685,470        9,646,179     

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        18,074,005        17,761,031        2.8
       

 

 

   

 

 

   

 

 

   
          20,625,000        18,074,005        17,761,031     

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        5,007,471        0.8
       

 

 

   

 

 

   

 

 

   
          5,000,000        5,000,000        5,007,471     

Watermill-QMC Midco, Inc.

  Automotive   Senior Secured First Lien Term Loans 12.000%, 1.000% PIK(4)(7)     6/30/2020        26,995,240        26,995,240        26,995,240        4.2
    Equity(4)(5)       514,195        514,195        514,195        0.1
       

 

 

   

 

 

   

 

 

   
          27,509,435        27,509,435        27,509,435     

 

See accompanying notes to consolidated financial statements.

 

F-12


Table of Contents

Company(1)

  Industry  

Type of Investment

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

YP LLC(8)

  Media: Advertising,
Printing & Publishing
  Senior Secured First Lien Term Loans LIBOR + 6.750%, 1.250% Floor(6)     6/4/2018        4,043,478        4,077,406        4,046,756        0.6
       

 

 

   

 

 

   

 

 

   
          4,043,478        4,077,406        4,046,756     

Z Gallerie, LLC

  Retail   Senior Secured First Lien Term Loans LIBOR + 6.500%, 1.000% Floor(13)     10/8/2020        9,975,000        9,873,626        9,975,000        1.6
       

 

 

   

 

 

   

 

 

   
          9,975,000        9,873,626        9,975,000     
         

 

 

   

 

 

   

Total non-controlled/non-affiliated investments

        $ 878,334,995      $ 871,144,119        136.3
         

 

 

   

 

 

   

Money market fund — 0.9%

           

Federated Prime Obligations Fund

    0.01%       5,683,213      $ 5,683,213      $ 5,683,213        0.9
         

 

 

   

 

 

   

Total money market fund

        $ 5,683,213      $ 5,683,213        0.9
         

 

 

   

 

 

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

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

    Total Return Swap       $ 236,785,234      $ (6,960,429  
         

 

 

   

 

 

   
          $ 236,785,234      $ (6,960,429  
         

 

 

   

 

 

   

 

(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 $639,024,134 as of June 30, 2015.

(3) 

The interest rate on these loans is subject to a base rate plus 1M LIBOR, which at June 30, 2015 was 0.19%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 1M LIBOR rate at June 30, 2015, the prevailing rate in effect at June 30, 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 June 30, 2015 was 0.28%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 3M LIBOR rate at June 30, 2015, the prevailing rate in effect at June 30, 2015 was the base rate plus the LIBOR floor.

(7) 

The investment has an unfunded commitment as of June 30, 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., Flexera Software, LLC, Genex Holdings, Inc., Isola USA Corp., Livingston International, Inc., TravelCLICK, Inc., and YP LLC is $6,946,801 or 1.1%, $16,942,773 or 2.6%, $11,317,725 or 1.8%, $7,118,881 or 1.1%, $11,291,602 or 1.8%, $9,631,271 or 1.5%, $4,524,701 or 0.7%, $20,727,206 or 3.2%, $8,120,560 or 1.3%, respectively, of Net Assets as of June 30, 2015.

(9) 

Securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities represent a fair value of $59,980,256 and 9.4% of net assets as of June 30, 2015 and are considered restricted.

(10) 

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

(11) 

The investment is not a qualifying asset under Section 55 of the Investment Company Act of 1940, as amended. Non-qualifying assets represent 5.0% of the Company’s portfolio at fair value.

(12) 

The investment was on non-accrual status as of June 30, 2015.

(13) 

The interest rate on these loans is subject to a base rate plus 6M LIBOR, which at June 30, 2015 was 0.44%. As the interest rate is subject to a minimum LIBOR floor which was greater than the 6M LIBOR rate at June 30, 2015, the prevailing rate in effect at June 30, 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(14)

 

Type of Investment

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

Non-controlled/non-affiliated
investments — 126.8%

           

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      $ 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        598,870        0.1
       

 

 

   

 

 

   

 

 

   
          12,703,704        12,735,273        12,300,513     

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        1,967,491        2,011,269        0.4
       

 

 

   

 

 

   

 

 

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

Allen Edmonds Corp.

  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        1.5
       

 

 

   

 

 

   

 

 

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

AM3 Pinnacle Corporation

  Media: Broadcasting & Subscription   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 & 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 & 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.

  Banking, Finance, Insurance & Real Estate  

Senior Secured Second

Lien Term Loans

LIBOR + 8.000%,

1.000% Floor(6)

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

 

 

   

 

 

   

 

 

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

Associated Asphalt Partners, LLC

  Chemicals, Plastics & 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)

  Banking, Finance, Insurance & Real Estate  

Senior Secured Second

Lien Term Loans

LIBOR + 7.500%,

1.000% Floor(6)

    3/3/2021        7,000,000        6,935,000        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
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

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        4,977,296        4,743,856        1.0
       

 

 

   

 

 

   

 

 

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

Bennu Oil & Gas, LLC

  Energy: Oil & 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.

 

Construction & Building

  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   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   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.

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

  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        8,000,000        1.6
       

 

 

   

 

 

   

 

 

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

CRGT, Inc.

  High Tech Industries   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.

  High Tech Industries   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
Amount
    Cost     Fair Value     % of
Net Assets(2)
 

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        10,078,927        10,033,409        2.1
       

 

 

   

 

 

   

 

 

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

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        9,625,000        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)

  Telecommunications   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 & Pharmaceuticals   Senior Secured First Lien Term Loans          
    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 & Pharmaceuticals   Common Stock(4)(5)          
          —          300,000        63,169        0.0
       

 

 

   

 

 

   

 

 

   
          —          300,000        63,169     

Flexera Software, Inc.(9)

  High Tech Industries   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)

  Energy: Oil & 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)

  Banking, Finance, Insurance & Real   Senior Secured Second Lien Term Loans          
  Estate   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.

  Energy: Oil & 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        —          29,000        —          0.0
       

 

 

   

 

 

   

 

 

   
          766,616        784,260        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        7,968,616        7,892,569        7,788,079        1.6

 

F-16


Table of Contents

Company(1)

 

Industry

 

Type of Investment

  Maturity     Par
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

 

Wholesale

  Senior Secured First Lien Term Loans          
    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.

 

Construction & Building

  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.

  Energy: Oil & 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.

 

Hotel, Gaming & Leisure

  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.

  Services: Consumer   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

  Energy: Oil & 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)

  High Tech Industries   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.

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

 

 

   

 

 

   

 

 

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

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        4,991,433        5,006,500        1.0
       

 

 

   

 

 

   

 

 

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

Linc Energy Finance (USA), Inc.

  Energy: Oil & 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
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.

 

Banking, Finance, Insurance & Real Estate

  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)

 

Transportation: Cargo

  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.

 

Banking, Finance, Insurance & Real Estate

  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.

 

Services: Business

  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.

 

Banking, Finance, Insurance & Real Estate

  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

 

Media: Advertising, Printing & 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.

 

Media: Advertising, Printing & Publishing

  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

 

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        4,700,000        1.0
       

 

 

   

 

 

   

 

 

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

Northstar Aerospace, Inc.

 

Aerospace & Defense

  Senior Secured First Lien Notes 10.250%(4)(8)