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EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex311_201563010xq.htm
EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex322_201563010xq.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex312_201563010xq.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex321_201563010xq.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2015
OR
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Fifth Street Finance Corp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 153,340,371 shares of common stock outstanding as of August 7, 2015.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2015
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 




PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Fifth Street Finance Corp.
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
 
 
June 30, 2015
 
September 30, 2014
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost June 30, 2015: $281,808; cost September 30, 2014: $387,625)
 
$
268,884

 
$
394,872

Affiliate investments (cost June 30, 2015: $37,421; cost September 30, 2014: $37,757)
 
41,810

 
40,764

Non-control/Non-affiliate investments (cost June 30, 2015: $2,067,252; cost September 30, 2014: $2,069,301)
 
2,024,717

 
2,060,278

Total investments at fair value (cost June 30, 2015: $2,386,481; cost September 30, 2014: $2,494,683)
 
2,335,411

 
2,495,914

Cash and cash equivalents
 
180,576

 
86,731

Restricted cash
 
1,171

 
22,315

Interest, dividends and fees receivable
 
12,840

 
15,224

Due from portfolio companies
 
2,992

 
22,950

Receivables from unsettled transactions
 
60,946

 
4,750

Deferred financing costs
 
16,471

 
20,334

Other assets
 
317

 

Total assets
 
$
2,610,724

 
$
2,668,218

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
4,173

 
$
3,908

Base management fee payable
 
11,966

 
12,372

Part I incentive fee payable
 
8,095

 
9,309

Due to FSC CT
 
3,127

 
2,464

Interest payable
 
10,675

 
5,797

Amounts payable to syndication partners
 
10,269

 
3,817

Payables from unsettled transactions
 
74,301

 

Credit facilities payable
 
315,295

 
317,395

SBA debentures payable
 
225,000

 
225,000

Unsecured convertible notes payable
 
115,000

 
115,000

Unsecured notes payable
 
410,254

 
409,878

Secured borrowings at fair value (proceeds of $22,075 and $84,750 at June 30, 2015 and September 30, 2014, respectively)
 
21,944

 
84,803

Total liabilities
 
1,210,099

 
1,189,743

Commitments and contingencies (Note 3)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 153,340 shares issued and outstanding at June 30, 2015 and September 30, 2014
 
1,533

 
1,533

Additional paid-in-capital
 
1,649,086

 
1,649,086

Net unrealized appreciation (depreciation) on investments and secured borrowings
 
(50,940
)
 
1,178

Net realized loss on investments, secured borrowings and interest rate swap
 
(182,232
)
 
(152,416
)
Accumulated overdistributed net investment income
 
(16,822
)
 
(20,906
)
Total net assets (equivalent to $9.13 and $9.64 per common share at June 30, 2015 and September 30, 2014, respectively) (Note 12)
 
1,400,625

 
1,478,475

Total liabilities and net assets
 
$
2,610,724

 
$
2,668,218

See notes to Consolidated Financial Statements.

1


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months
ended
June 30, 2015
 
Three months
ended
June 30, 2014
 
Nine months
ended
June 30, 2015
 
Nine months
ended
June 30, 2014
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
6,152

 
$
3,741

 
$
18,631

 
$
9,354

Affiliate investments
 
1,085

 
1,108

 
3,254

 
2,971

Non-control/Non-affiliate investments
 
48,641

 
53,248

 
143,437

 
148,242

Interest on cash and cash equivalents
 
16

 
3

 
36

 
9

Total interest income
 
55,894

 
58,100

 
165,358

 
160,576

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,631

 
2,563

 
5,070

 
7,513

Affiliate investments
 
216

 
211

 
643

 
752

Non-control/Non-affiliate investments
 
1,582

 
3,523

 
5,675

 
9,115

Total PIK interest income
 
3,429

 
6,297

 
11,388

 
17,380

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
561

 
1,536

 
1,568

 
4,070

Affiliate investments
 
12

 
12

 
36

 
194

Non-control/Non-affiliate investments
 
7,600

 
8,135

 
30,132

 
35,044

Total fee income
 
8,173

 
9,683

 
31,736

 
39,308

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
2,274

 

 
5,250

 

Non-control/Non-affiliate investments
 
429

 
194

 
909

 
471

Total dividend and other income
 
2,703

 
194

 
6,159

 
471

Total investment income
 
70,199

 
74,274

 
214,641

 
217,735

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
12,145

 
13,345

 
39,364

 
39,139

Part I incentive fee
 
8,095

 
8,609

 
24,149

 
26,163

Professional fees
 
849

 
863

 
2,995

 
2,775

Board of Directors fees
 
175

 
135

 
544

 
431

Interest expense
 
14,191

 
14,737

 
42,995

 
37,782

Administrator expense
 
611

 
715

 
2,606

 
2,105

General and administrative expenses
 
1,822

 
1,434

 
5,260

 
4,688

Total expenses
 
37,888

 
39,838

 
117,913

 
113,083

Base management fee waived
 
(179
)
 
(229
)
 
(401
)
 
(463
)
Net expenses
 
37,709

 
39,609

 
117,512

 
112,620

Net investment income
 
32,490

 
34,665

 
97,129

 
105,115

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
(2,217
)
 
1,958

 
(20,170
)
 
4,510

Affiliate investments
 
1,184

 
(314
)
 
1,382

 
651

Non-control/Non-affiliate investments
 
(748
)
 
(15,330
)
 
(33,512
)
 
(27,148
)
Net unrealized depreciation on investments
 
(1,781
)
 
(13,686
)
 
(52,300
)
 
(21,987
)
Net unrealized appreciation (depreciation) on secured borrowings
 
79

 
(45
)
 
184

 
(55
)
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 
(4,384
)
 
(299
)
 
(4,384
)
 
(299
)
Affiliate investments
 

 

 
72

 

Non-control/Non-affiliate investments
 
(5,953
)
 
(348
)
 
(25,505
)
 
1,319

Net realized gain (loss) on investments and secured borrowings
 
(10,337
)
 
(647
)
 
(29,817
)
 
1,020

Net increase in net assets resulting from operations
 
$
20,451

 
$
20,287

 
$
15,196

 
$
84,093

Net investment income per common share — basic
 
$
0.21

 
$
0.25

 
$
0.63

 
$
0.76

Earnings per common share — basic
 
$
0.13

 
$
0.15

 
$
0.10

 
$
0.60

Weighted average common shares outstanding — basic
 
153,340

 
139,138

 
153,340

 
139,134

Net investment income per common share — diluted
 
$
0.21

 
$
0.25

 
$
0.63

 
$
0.74

Earnings per common share — diluted
 
$
0.13

 
$
0.15

 
$
0.10

 
$
0.60

Weighted average common shares outstanding — diluted
 
161,131

 
146,928

 
161,131

 
146,924

Distributions per common share
 
$
0.18

 
$
0.25

 
$
0.61

 
$
0.74

See notes to Consolidated Financial Statements.

2



Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
 
 
 
Nine months
ended
June 30, 2015
 
Nine months
ended
June 30, 2014
Operations:
 
 
 
 
Net investment income
 
$
97,129

 
$
105,115

Net unrealized depreciation on investments
 
(52,300
)
 
(21,987
)
Net unrealized appreciation (depreciation) on secured borrowings
 
184

 
(55
)
Net realized gain (loss) on investments and secured borrowings
 
(29,817
)
 
1,020

Net increase in net assets resulting from operations
 
15,196

 
84,093

Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(93,046
)
 
(103,154
)
Net decrease in net assets from stockholder transactions
 
(93,046
)
 
(103,154
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
4,334

 
8,364

Repurchase of common stock under stock repurchase program
 

 
(406
)
Repurchase of common stock under dividend reinvestment program
 
(4,334
)
 
(6,448
)
Net increase in net assets from capital share transactions
 

 
1,510

Total decrease in net assets
 
(77,850
)
 
(17,551
)
Net assets at beginning of period
 
1,478,475

 
1,368,872

Net assets at end of period
 
$
1,400,625

 
$
1,351,321

Net asset value per common share
 
$
9.13

 
$
9.71

Common shares outstanding at end of period
 
153,340

 
139,189

See notes to Consolidated Financial Statements.


3

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


 
 
Nine months
ended
June 30, 2015
 
Nine months
ended
June 30, 2014
Cash flows from operating activities:
 
 
 
 
Net increase in net assets resulting from operations
 
$
15,196

 
$
84,093

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
 
 
 
 
Net unrealized depreciation on investments
 
52,300

 
21,987

Net unrealized appreciation (depreciation) on secured borrowings
 
(184
)
 
55

Net realized (gains) losses on investments and secured borrowings
 
29,817

 
(1,020
)
PIK interest income
 
(11,388
)
 
(17,380
)
Recognition of fee income
 
(31,736
)
 
(39,308
)
Accretion of original issue discount on investments
 
(1,047
)
 
(566
)
Accretion of original issue discount on unsecured notes payable
 
376

 

Amortization of deferred financing costs
 
3,863

 
4,759

Changes in operating assets and liabilities:
 
 
 
 
Fee income received
 
31,160

 
37,736

Decrease in restricted cash
 
21,144

 

(Increase) decrease in interest, dividends and fees receivable
 
1,658

 
(6,637
)
(Increase) decrease in due from portfolio companies
 
19,958

 
(113
)
Increase in receivables from unsettled transactions
 
(56,196
)
 

(Increase) decrease in other assets
 
(317
)
 
107

Increase in accounts payable, accrued expenses and other liabilities
 
265

 
2,761

Increase (decrease) in base management fee payable
 
(406
)
 
3,491

Increase (decrease) in Part I incentive fee payable
 
(1,214
)
 
1,434

Increase in due to FSC CT
 
663

 
1,374

Increase in interest payable
 
4,878

 
9,280

Increase (decrease) in payables from unsettled transactions
 
74,301

 
(25,716
)
Increase in amounts payable to syndication partners
 
6,452

 
4,193

Increase in advances received from portfolio companies
 

 
7,233

Purchases of investments and net revolver activity
 
(1,147,577
)
 
(1,306,141
)
Principal payments received on investments (scheduled payments)
 
20,998

 
41,440

Principal payments received on investments (payoffs)
 
575,070

 
287,385

PIK interest income received in cash
 
1,783

 
6,441

Proceeds from the sale of investments
 
641,723

 
234,169

Net cash provided (used) by operating activities
 
251,540

 
(648,943
)
Cash flows from financing activities:
 
 
 
 
Distributions paid in cash
 
(88,712
)
 
(94,790
)
Borrowings under SBA debentures payable
 

 
43,250

Borrowings under credit facilities
 
621,400

 
900,338

Repayments of borrowings under credit facilities
 
(623,500
)
 
(553,157
)
Proceeds from the issuance of unsecured notes
 

 
244,403

Proceeds from secured borrowings
 

 
47,750

Repayments of secured borrowings
 
(62,549
)
 
(2,000
)
Repurchases of common stock under stock repurchase program
 

 
(406
)
Repurchases of common stock under dividend reinvestment plan
 
(4,334
)
 
(6,448
)
Deferred financing costs paid
 

 
(2,153
)
Offering costs paid
 

 
(542
)
Net cash provided (used) by financing activities
 
(157,695
)
 
576,245

Net increase (decrease) in cash and cash equivalents
 
93,845

 
(72,698
)
Cash and cash equivalents, beginning of period
 
86,731

 
147,359

Cash and cash equivalents, end of period
 
$
180,576

 
$
74,661

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
33,992

 
$
23,979

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
4,334

 
$
8,364

See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value
Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 Second Lien Term Loan, 12% cash 3% PIK due 12/31/2016
 
 
 
$
16,794

 
$
16,794

 
$
16,778

 LC Facility, 8.5% cash due 12/31/2016
 
 
 
 
 

 

 746,114 Series A Preferred Units
 
 
 
 
 
15,826

 
18,930

 746,114 Common Stock Units
 
 
 
 
 
5,316

 
3,919

 
 
 
 
 
 
37,936

 
39,627

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

 
15,572

 
9,208

 First Lien Revolver, 8% cash due 5/31/2016
 
 
 
1,700

 
1,700

 
965

 596.67 Series A Common Units
 
 
 
 
 

 

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

 

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

 

 
 
 
 
 
 
26,472

 
10,173

 First Star Aviation, LLC
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
7,390

 
7,390

 
7,258

 10,104,401 Common Units
 
 
 
 
 
10,104

 
10,332

 
 
 
 
 
 
17,494

 
17,590

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

 
47,823

 
48,177

 2,058,411.64 Common Units
 
 
 
 
 
2,058

 
2,444

 
 
 
 
 
 
49,881

 
50,621

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

 
24,844

 
25,036

 4,256,042 Common Units
 
 
 
 
 
4,294

 
3,860

 
 
 
 
 
 
29,138

 
28,896

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
12,842

 
12,842

 
12,804

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,509

 
3,509

 
3,503

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

 
2,847

 
2,847

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

 
5,831

 
 
 
 
 
 
23,298

 
24,985

 Senior Loan Fund JV I, LLC (12)(16)
 
Multi-sector holdings
 
 
 
 
 
 
 Subordinated Notes, LIBOR+8% cash due 5/2/2021 (14)
 
 
 
80,985

 
80,985

 
81,012

 87.5% LLC equity interest (6)
 
 
 
 
 
8,998

 
9,430

 
 
 
 
 
 
89,983

 
90,442

 Miche Group, LLC
 
Apparel, accessories
& luxury goods
 
 
 
 
 
 
 First Lien Revolver, 8% cash due 12/18/2016
 
 
 
2,300

 
2,300

 
2,300

 100 units in FSFC Miche, Inc.
 
 
 
 
 
5,306

 
4,250

 
 
 
 
 
 
7,606

 
6,550

 Total Control Investments (19.2% of net assets)
 
 
 
 
 
$
281,808

 
$
268,884

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
$
9,285

 
$
9,285

 
$
9,366

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

 
4,332

 
 
 
 
 
 
10,365

 
13,698

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 4/30/2016 (14)
 
 
 
240

 
232

 
256

 First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016
 
 
 
26,840

 
26,824

 
26,811

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
1,045

 
 
 
 
 
 
27,056

 
28,112

 Total Affiliate Investments (3.0% of net assets)
 
 
 
 
 
$
37,421

 
$
41,810

See notes to Consolidated Financial Statements.

5

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

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

 
$
729

 
 
 
 
 
 
849

 
729

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

 
4,357

 
4,397

 First Lien Term Loan B, 12% cash 1% PIK due 12/31/15
 
 
 
11,638

 
11,638

 
11,659

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

 
2,266

 
2,266

 
 
 
 
 
 
18,261

 
18,322

 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
31,141

 
31,135

 
31,408

 414,419 Common Units
 
 
 
 
 
598

 
803

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 
300

 
 
 
 
 
 
32,033

 
32,511

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

 
536

 
 
 
 
 
 
642

 
536

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

 
604

 
 
 
 
 
 
643

 
604

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

 
14,451

 
461

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

 

 17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
14,951

 
461

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

 

 
 
 
 
 
 

 

 Mansell Group, Inc.
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2015 (14)
 
 
 
4,254

 
4,245

 
4,253

 First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (14)
 
 
 
9,678

 
9,685

 
9,660

 
 
 
 
 
 
13,930

 
13,913

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (12)
 
 
 
 
 
602

 
488

 
 
 
 
 
 
602

 
488

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

 
794

 
 
 
 
 
 
265

 
794

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

 
2,020

 
2,036

 Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
35,683

 
31,453

 
15,646

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

 
3,195

 
3,214

 
 
 
 
 
 
36,668

 
20,896


See notes to Consolidated Financial Statements.


6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 CCCG, LLC (9)
 
Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8% (1.75% floor) cash 1% PIK due 12/29/2017 (14)
 
 
 
$
35,099

 
$
34,353

 
$
17,821

 
 
 
 
 
 
34,353

 
17,821

 Maverick Healthcare Group, LLC
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
16,380

 
16,015

 
16,294

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (14)
 
 
 
38,200

 
38,022

 
38,034

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (14)
 
 
 
1,250

 
1,185

 
1,248

 
 
 
 
 
 
55,222

 
55,576

 Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (14)
 
 
 
19,815

 
19,717

 
19,776

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (14)
 
 
 
33,856

 
33,635

 
33,699

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

 
3,416

 
3,401

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

 
1,573

 
1,600

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

 

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

 

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

 
1,065

 
 
 
 
 
 
59,646

 
59,541

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (12)
 
 
 
 
 
1,000

 
851

 
 
 
 
 
 
1,000

 
851

 Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+7.5% cash due 11/4/2018 (14)
 
 
 
24,435

 
24,383

 
24,879

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

 
1,242

 
1,250

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

 
1,500

 
1,500

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

 
250

 
250

 
 
 
 
 
 
27,375

 
27,879

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (12)
 
 
 
 
 
1,571

 
1,648

 
 
 
 
 
 
1,571

 
1,648

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2017
 
 
 
30,103

 
30,004

 
30,058

 317,282.97 Class A Units
 
 
 
 
 
317

 
612

 
 
 
 
 
 
30,321

 
30,670

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (6)(12)
 
 
 
 
 
800

 
988

 
 
 
 
 
 
800

 
988

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (12)
 
 
 
 
 
953

 
953

 
 
 
 
 
 
953

 
953

 World 50, Inc. (9)
 
Research & consulting services
 
 
 
 
 
 
 Senior Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (14)
 
 
 
24,688

 
24,640

 
24,703

 Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)(14)
 
 
 
 
 
(22
)
 

 
 
 
 
 
 
24,618

 
24,703

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
 
 
 
 
 
 
 
 0.13% limited partnership interest (6)(12)
 
Multi-sector holdings
 
 
 
$
677

 
$
597

 
 
 
 
 
 
677

 
597

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

 
640

 50,000 Common Shares (6)
 
 
 
 
 
1

 
38

 
 
 
 
 
 
501

 
678

 Ansira Partners, Inc. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (10)(14)
 
 
 
 
 
(3
)
 

 250 Preferred Units of Ansira Holdings, LLC
 
 
 
 
250

 
360

 250 Class A Common Units of Ansira Holdings, LLC
 
 
 
 
 

 
113

 
 
 
 
 
 
247

 
473

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
$
2,008

 
2,008

 
2,008

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
9,019

 
9,019

 
9,019

 Unsecured Revolver, 5% cash due 6/9/2020
 
 
 
1,665

 
1,665

 
1,665

 126,127.80 Class A Common Units
 
 
 
 
 
126

 
126

 
 
 
 
 
 
12,818

 
12,818

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

 
870

 
 
 
 
 
 
1,000

 
870

 Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
39,907

 
39,869

 
39,865

 First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK, due 6/15/2017 (14)
 
 
 
3,379

 
3,363

 
3,403

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

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

 
7,625

 
 
 
 
 
 
44,718

 
50,893

 Specialized Education Services, Inc.
 
Education services
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% (1.5% floor) cash due 6/28/2017 (14)
 
 
 
7,991

 
7,991

 
7,991

 Subordinated Term Loan B, 11% cash 1.5% PIK due 6/28/2018
 
 
 
18,319

 
18,319

 
18,320

 
 
 
 
 
 
26,310

 
26,311

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,310

 
19,310

 
19,163

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

 
644

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

 

 
 
 
 
 
 
20,060

 
19,807

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

 
526

 
 
 
 
 
 
578

 
526

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

 
23,304

 
23,187

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (14)
 
 
 
1,492

 
1,492

 
1,478

 
 
 
 
 
 
24,796

 
24,665

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

 
3,276

 
 
 
 
 
 
1,500

 
3,276

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,524

 
14,524

 
14,634

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

 
2,203

 
 
 
 
 
 
16,524

 
16,837

See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 5/22/2020 (14)
 
 
 
 
 
$

 
$

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

 
556

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
500

 
556

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
$
7,982

 
7,980

 
7,974

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (14)
 
 
 
1,200

 
1,200

 
1,200

 
 
 
 
 
 
9,180

 
9,174

 Omniplex World Services Corporation
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 12/21/2018
 
 
 
12,906

 
12,906

 
12,696

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

 
451

 
 
 
 
 
 
13,406

 
13,147

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 12/21/2018
 
 
 
16,112

 
16,112

 
16,186

 
 
 
 
 
 
16,112

 
16,186

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

 
23,250

 
23,018

 
 
 
 
 
 
23,250

 
23,018

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (14)
 
 
 
96,048

 
96,016

 
95,706

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (10)(14)
 
 
 
 
 
(1
)
 

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

 
1,396

 
 
 
 
 
 
97,826

 
97,102

 CoAdvantage Corporation
 
Human resources & employment services
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.25% PIK due 12/31/2018
 
 
 
15,033

 
15,033

 
15,233

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

 
902

 
 
 
 
 
 
15,590

 
16,135

 EducationDynamics, LLC
 
Education services
 
 
 
 
 
 
 Mezzanine Term Loan, 12% cash 6% PIK due 1/16/2017
 
 
 
13,577

 
13,577

 
13,459

 
 
 
 
 
 
13,577

 
13,459

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (6)(12)
 
 
 
 
 
1,200

 
1,200

 
 
 
 
 
 
1,200

 
1,200

 RP Crown Parent, LLC
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (10)(14)
 
 
 
 
 
(360
)
 

 
 
 
 
 
 
(360
)
 

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

 
24,000

 
23,971

 
 
 
 
 
 
24,000

 
23,971

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

 
10,448

 
10,498

 
 
 
 
 
 
10,448

 
10,498




See notes to Consolidated Financial Statements.


9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2015
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 TravelClick, Inc.
 
Internet software & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/8/2021 (14)
 
 
 
$
4,450

 
$
4,450

 
$
4,428

 
 
 
 
 
 
4,450

 
4,428

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (12)
 
 
 
 
 
10,000

 
9,910

 
 
 
 
 
 
10,000

 
9,910

 Credit Infonet, Inc. (9)