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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 September 30, 2015

 

OR

 

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

 

For the transition period           to         

 

Commission File No. 814-00663

 

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

Maryland

 

33-1089684

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

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

(Address of principal executive office)   (Zip Code)

 

(212) 750-7300

(Registrant’s telephone number, including area code)

 


 

N/A

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

 


 

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

 

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

 

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

 

Large accelerated filer x

 

Accelerated filer o

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

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

 

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

 

Class

 

Outstanding at November 4, 2015

Common stock, $0.001 par value

 

314,468,685

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

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

3

 

 

 

 

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

4

 

 

 

 

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

5

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2015 (unaudited)

52

 

 

 

 

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

53

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

54

 

 

 

Item 2.

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

86

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

114

 

 

 

Item 4.

Controls and Procedures

115

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

115

 

 

 

Item 1A.

Risk Factors

115

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

116

 

 

 

Item 3.

Defaults Upon Senior Securities

116

 

 

 

Item 4.

Mine Safety Disclosures

116

 

 

 

Item 5.

Other Information

116

 

 

 

Item 6.

Exhibits

117

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

6,004,141

 

$

6,270,075

 

Non-controlled affiliate company investments

 

176,252

 

228,716

 

Controlled affiliate company investments

 

2,512,087

 

2,529,588

 

Total investments at fair value (amortized cost of $8,632,775 and $8,875,095, respectively)

 

8,692,480

 

9,028,379

 

Cash and cash equivalents

 

247,123

 

194,555

 

Interest receivable

 

135,365

 

160,981

 

Receivable for open trades

 

 

859

 

Other assets

 

98,003

 

112,999

 

Total assets

 

$

9,172,971

 

$

9,497,773

 

LIABILITIES

 

 

 

 

 

Debt

 

$

3,653,304

 

$

3,924,482

 

Base management fees payable

 

33,284

 

34,497

 

Income based fees payable

 

31,842

 

33,070

 

Capital gains incentive fees payable

 

69,820

 

92,979

 

Accounts payable and other liabilities

 

61,395

 

81,892

 

Interest and facility fees payable

 

43,114

 

46,974

 

Payable for open trades

 

410

 

164

 

Total liabilities

 

3,893,169

 

4,214,058

 

Commitments and contingencies (Note 7)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

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

 

314

 

314

 

Capital in excess of par value

 

5,334,249

 

5,328,057

 

Accumulated overdistributed net investment income

 

(46,251

)

(32,846

)

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

 

(66,768

)

(166,668

)

Net unrealized gains on investments and foreign currency transactions

 

58,258

 

154,858

 

Total stockholders’ equity

 

5,279,802

 

5,283,715

 

Total liabilities and stockholders’ equity

 

$

9,172,971

 

$

9,497,773

 

NET ASSETS PER SHARE

 

$

16.79

 

$

16.82

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

For the Three Months Ended September 30,

 

For the Nine Months Ended September 30,

 

 

 

2015

 

2014

 

2015

 

2014

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

$

128,814

 

$

114,552

 

$

376,257

 

$

314,763

 

Capital structuring service fees

 

27,883

 

21,196

 

49,410

 

47,890

 

Dividend income

 

4,045

 

8,345

 

11,957

 

21,922

 

Other income

 

2,583

 

3,938

 

8,683

 

13,840

 

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

 

163,325

 

148,031

 

446,307

 

398,415

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

3,629

 

2,706

 

10,948

 

8,901

 

 

Capital structuring service fees

 

 

 

369

 

2,205

 

1,019

 

Dividend income

 

38

 

1,071

 

1,407

 

4,569

 

Other income

 

66

 

69

 

196

 

472

 

Total investment income from non-controlled affiliate company investments

 

3,733

 

4,215

 

14,756

 

14,961

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

75,494

 

73,554

 

220,660

 

216,822

 

 

Capital structuring service fees

 

 

1,885

 

10,147

 

21,416

 

25,433

 

Dividend income

 

10,000

 

10,271

 

40,099

 

40,671

 

Management and other fees

 

6,148

 

6,359

 

18,421

 

18,389

 

Other income

 

363

 

819

 

2,015

 

3,351

 

Total investment income from controlled affiliate company investments

 

93,890

 

101,150

 

302,611

 

304,666

 

Total investment income

 

260,948

 

253,396

 

763,674

 

718,042

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

56,618

 

54,096

 

171,614

 

159,740

 

Base management fees

 

33,284

 

32,685

 

100,221

 

93,500

 

Income based fees

 

31,842

 

31,345

 

90,156

 

85,203

 

Capital gain incentive fees

 

(2,628

)

13,087

 

834

 

24,190

 

Administrative fees

 

3,545

 

3,105

 

10,515

 

9,661

 

Other general and administrative

 

6,926

 

6,274

 

22,652

 

20,314

 

Total expenses

 

129,587

 

140,592

 

395,992

 

392,608

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

131,361

 

112,804

 

367,682

 

325,434

 

Income tax expense, including excise tax

 

884

 

7,514

 

7,025

 

15,817

 

NET INVESTMENT INCOME

 

130,477

 

105,290

 

360,657

 

309,617

 

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

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

19,378

 

21,800

 

71,182

 

32,467

 

Non-controlled affiliate company investments

 

25,897

 

58,560

 

26,230

 

58,598

 

Controlled affiliate company investments

 

 

(6,592

)

 

(52,780

)

Foreign currency transactions

 

2,462

 

2,764

 

6,327

 

1,847

 

Net realized gains

 

47,737

 

76,532

 

103,739

 

40,132

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(23,322

)

(9,590

)

(47,050

)

196

 

Non-controlled affiliate company investments

 

(29,859

)

(37,439

)

(13,463

)

9,607

 

Controlled affiliate company investments

 

(7,920

)

42,076

 

(34,535

)

77,486

 

Foreign currency transactions

 

(254

)

870

 

(1,552

)

596

 

Net unrealized gains (losses)

 

(61,355

)

(4,083

)

(96,600

)

87,885

 

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

 

(13,618

)

72,449

 

7,139

 

128,017

 

REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

 

 

(3,839

)

(72

)

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

116,859

 

$

177,739

 

$

363,957

 

$

437,562

 

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

 

$

0.37

 

$

0.57

 

$

1.16

 

$

1.45

 

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

 

314,469

 

310,564

 

314,350

 

302,315

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (10)

 

Investment partnership

 

Limited partnership units (0.94 units)

 

 

 

9/7/2007

 

$

 

$

263

(2)

 

 

Covestia Capital Partners, LP (10)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

487

 

1,863

(2)

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

 

128

 

 

 

Imperial Capital Private Opportunities, LP (10)(28)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

4,134

 

19,368

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

 

732

(2)

 

 

Partnership Capital Growth Investors III, L.P. (10)(28)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

2,722

 

2,900

(2)

 

 

PCG-Ares Sidecar Investment II, L.P. (10)(28)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

10/31/2014

 

6,516

 

8,828

(2)

 

 

PCG-Ares Sidecar Investment, L.P. (10)(28)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

5/22/2014

 

2,152

 

713

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (10)(28)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

1,250

 

1,332

(2)

 

 

Senior Secured Loan Fund LLC (8)(11)(29)

 

Co-investment vehicle

 

Subordinated certificates ($2,000,570 par due 12/2024)

 

8.33% (Libor + 8.00%/M)(23)

 

10/30/2009

 

2,000,570

 

2,000,570

 

 

 

 

 

 

 

Member interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000,570

 

2,000,570

 

 

 

VSC Investors LLC (10)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

879

 

1,661

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,018,710

 

2,038,358

 

38.61

%

Healthcare Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alegeus Technologies Holdings Corp.

 

Benefits administration and transaction processing provider

 

Preferred stock (2,997 shares)

 

 

 

12/13/2013

 

3,087

 

1,949

 

 

 

 

 

 

 

Common stock (3 shares)

 

 

 

12/13/2013

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,090

 

1,949

 

 

 

American Academy Holdings, LLC

 

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

 

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

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

8,810

 

8,810

(2)(19)(22)

 

 

 

 

 

 

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

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

52,039

 

52,039

(3)(19)(22)

 

 

 

 

 

 

First lien senior secured loan ($3,198 par due 6/2019)

 

4.00% (Libor + 3.00%/Q)

 

6/27/2014

 

3,198

 

3,198

(4)(22)

 

 

 

 

 

 

 

 

 

 

 

 

64,047

 

64,047

 

 

 

AwarePoint Corporation

 

Healthcare technology platform developer

 

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

 

9.50%

 

9/5/2014

 

9,927

 

10,000

(2)

 

 

 

 

 

 

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

 

 

 

11/14/2014

 

 

609

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,927

 

10,609

 

 

 

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

 

Provider of home infusion services

 

Preferred units (8,664,072 units)

 

 

 

4/12/2013

 

866

 

816

(2)

 

 

 

 

 

 

Common units (87,514 units)

 

 

 

4/12/2013

 

17

 

8

(2)

 

 

 

 

 

 

 

 

 

 

 

 

883

 

824

 

 

 

 

5



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

CCS Intermediate Holdings, LLC and CCS Group Holdings, LLC (27)

 

Correctional facility healthcare operator

 

First lien senior secured revolving loan ($1,350 par due 7/2019)

 

6.25% (Base Rate + 3.00%/Q)

 

7/23/2014

 

1,350

 

1,282

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($6,668 par due 7/2021)

 

5.00% (Libor + 4.00%/Q)

 

7/23/2014

 

6,641

 

6,335

(2)(22)

 

 

 

 

 

 

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

 

9.38% (Libor + 8.38%/Q)

 

7/23/2014

 

133,847

 

126,900

(2)(22)

 

 

 

 

 

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

 

698

(2)

 

 

 

 

 

 

 

 

 

 

 

 

141,838

 

135,215

 

 

 

Correctional Medical Group Companies, Inc. (27)

 

Correctional facility healthcare operator

 

First lien senior secured loan ($26,200 par due 9/2021)

 

6.25% (Base Rate + 3.00%/Q)

 

9/29/2015

 

26,200

 

26,200

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($3,738 par due 9/2021)

 

9.61% (Libor + 8.61%/Q)

 

9/29/2015

 

3,738

 

3,738

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($355 par due 9/2021)

 

10.87% (Base Rate + 7.62%/Q)

 

9/29/2015

 

355

 

355

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($40,833 par due 9/2021)

 

9.61% (Libor + 8.61%/Q)

 

9/29/2015

 

40,833

 

40,833

(3)(22)

 

 

 

 

 

 

First lien senior secured loan ($3,874 par due 9/2021)

 

10.87% (Base Rate + 7.62%/Q)

 

9/29/2015

 

3,874

 

3,874

(3)(22)

 

 

 

 

 

 

 

 

 

 

 

 

75,000

 

75,000

 

 

 

DCA Investment Holding, LLC (27)

 

Multi-branded dental practice management company

 

First lien senior secured loan ($25,137 par due 7/2021)

 

6.25% (Libor + 5.25%/Q)

 

7/2/2015

 

24,894

 

24,885

(2)(22)

 

 

DNAnexus, Inc.

 

Bioinformatics company

 

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

 

9.25% (Libor + 8.25%/M)

 

3/21/2014

 

10,178

 

10,500

(2)(22)

 

 

 

 

 

 

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

 

 

 

3/21/2014

 

 

240

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,178

 

10,740

 

 

 

Global Healthcare Exchange, LLC and GHX Ultimate Parent Corp.

 

On-demand supply chain automation solutions provider

 

Class A common stock (2,991 shares)

 

 

 

3/11/2014

 

2,991

 

2,991

(2)

 

 

 

 

 

 

Class B common stock (980 shares)

 

 

 

3/11/2014

 

30

 

3,199

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,021

 

6,190

 

 

 

Greenphire, Inc. and RMCF III CIV XXIX, L.P (27)

 

Software provider for clinical trial management

 

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

 

9.00% (Libor + 8.00%/M)

 

12/19/2014

 

4,000

 

4,000

(2)(22)

 

 

 

 

 

 

Limited partnership interest (99.90% interest)

 

 

 

12/19/2014

 

999

 

999

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,999

 

4,999

 

 

 

INC Research Mezzanine Co-Invest, LLC

 

Pharmaceutical and biotechnology consulting services

 

Common units (1,410,000 units)

 

 

 

9/27/2010

 

 

3,945

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

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

 

9.25% (Libor + 8.25%/Q)

 

12/27/2012

 

112,000

 

110,880

(2)(22)

 

 

LM Acquisition Holdings, LLC (9)

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

660

 

1,617

(2)

 

 

MC Acquisition Holdings I, LLC

 

Healthcare professional provider

 

Class A units (1,338,314 shares)

 

 

 

1/17/2014

 

1,338

 

1,948

(2)

 

 

MW Dental Holding Corp. (27)

 

Dental services provider

 

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

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

2,000

 

2,000

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($17,762 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

17,762

 

17,762

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($24,295 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

24,295

 

24,295

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($47,867 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

47,867

 

47,867

(3)(22)

 

 

 

 

 

 

First lien senior secured loan ($19,795 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

19,795

 

19,795

(4)(22)

 

 

 

 

 

 

 

 

 

 

 

 

111,719

 

111,719

 

 

 

My Health Direct, Inc. (27)

 

Healthcare scheduling exchange software solution provider

 

First lien senior secured loan ($2,800 par due 1/2018)

 

10.75%

 

9/18/2014

 

2,736

 

2,800

(2)

 

 

 

 

 

 

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

 

 

 

9/18/2014

 

39

 

40

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,775

 

2,840

 

 

 

 

6



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

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

 

9.05% (Libor + 8.05%/Q)

 

4/15/2011

 

36,734

 

36,734

(2)(22)

 

 

 

 

 

 

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

 

9.05% (Libor + 8.05%/Q)

 

4/15/2011

 

33,224

 

33,266

(3)(22)

 

 

 

 

 

 

Common units (5,345 units)

 

 

 

4/15/2011

 

5,764

 

14,159

(2)

 

 

 

 

 

 

 

 

 

 

 

 

75,722

 

84,159

 

 

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

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

 

10.50% (Libor + 9.50%/Q)

 

2/27/2015

 

90,000

 

88,200

(2)(22)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

760

 

2,587

(2)

 

 

 

 

 

 

 

 

 

 

 

 

90,760

 

90,787

 

 

 

New Trident Holdcorp, Inc.

 

Outsourced mobile diagnostic healthcare service provider

 

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

 

10.25% (Libor + 9.00%/Q)

 

8/6/2013

 

78,846

 

76,000

(2)(22)

 

 

Nodality, Inc.

 

Biotechnology company

 

First lien senior secured loan ($7,269 par due 2/2018)

 

8.90%

 

4/25/2014

 

7,111

 

7,269

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,940 par due 8/2018)

 

8.90%

 

4/25/2014

 

2,864

 

2,940

(2)

 

 

 

 

 

 

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

 

 

 

4/25/2014

 

 

41

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,975

 

10,250

 

 

 

OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC (27)

 

Provider of technology-enabled solutions to pharmacies

 

First lien senior secured loan ($12,372 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

12,372

 

12,372

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($6,953 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

6,953

 

6,953

(4)(22)

 

 

 

 

 

 

Limited liability company membership interest (1.57%)

 

 

 

11/21/2013

 

1,000

 

1,188

(2)

 

 

 

 

 

 

 

 

 

 

 

 

20,325

 

20,513

 

 

 

Patterson Medical Supply, Inc.

 

Distributor of rehabilitation supplies and equipment

 

Second lien senior secured loan ($19,000 par due 8/2023)

 

8.75% (Libor + 7.75%/Q)

 

9/2/2015

 

18,810

 

18,810

(2)(22)

 

 

PerfectServe, Inc. (27)

 

Communications software platform provider for hospitals and physician practices

 

First lien senior secured loan ($9,000 par due 3/2020)

 

9.00% (Libor + 8.00%/Q)

 

9/15/2015

 

8,640

 

9,000

(2)(22)

 

 

 

 

 

 

Warrant to purchase up to 28,428 units of Series C preferred stock

 

 

 

9/15/2015

 

180

 

180

(2)

 

 

 

 

 

 

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

 

 

 

12/26/2013

 

 

215

(2)

 

 

 

 

 

 

 

 

 

 

 

 

8,820

 

9,395

 

 

 

Physiotherapy Associates Holdings, Inc.

 

Physical therapy provider

 

Class A common stock (100,000 shares)

 

 

 

12/31/2013

 

3,090

 

4,944

 

 

 

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

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

1,011

(2)

 

 

Press Ganey Holdings, Inc.

 

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

 

Common stock (47,987 shares)

 

 

 

5/27/2015

 

292

 

1,425

(2)

 

 

Reed Group Holdings, LLC

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

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

 

 

 

6/28/2012

 

38

 

28

(2)

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

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

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

108,504

 

108,679

(2)(22)

 

 

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

 

Distributor of emergency medical service and respiratory products

 

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

 

8.75% (Libor + 8.00%/M)

 

6/30/2014

 

60,000

 

60,000

(2)(22)

 

 

SurgiQuest, Inc.

 

Medical device company

 

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

 

 

 

9/28/2012

 

 

(2)

 

 

Transaction Data Systems, Inc.

 

Pharmacy management software provider

 

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

 

9.25% (Libor + 8.25%/M)

 

6/15/2015

 

27,500

 

27,500

(2)(22)

 

 

 

7



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

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

 

9.00% (Libor + 8.00%/Q)

 

9/24/2014

 

50,000

 

50,000

(2)(22)

 

 

Urgent Cares of America Holdings I, LLC

 

Operator of urgent care clinics

 

Preferred units (6,000,000 units)

 

 

 

6/11/2015

 

6,000

 

6,000

 

 

 

 

 

 

 

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

 

 

 

6/11/2015

 

2,000

 

1,888

 

 

 

 

 

 

 

Series C common units (800,507 units)

 

 

 

6/11/2015

 

 

608

 

 

 

 

 

 

 

 

 

 

 

 

 

8,000

 

8,496

 

 

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

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

 

9.00% (Libor + 8.00%/Q)

 

5/30/2014

 

45,000

 

45,000

(2)(22)

 

 

 

 

 

 

 

 

 

 

 

 

1,176,721

 

1,184,404

 

22.43

%

Other Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Residential Services L.L.C.

 

Heating, ventilation and air conditioning services provider

 

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

 

9.00% (Libor + 8.00%/Q)

 

6/30/2014

 

49,583

 

50,000

(2)(22)

 

 

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

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($13,957 par due 12/2017)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

13,957

 

13,957

(2)(13)(22)

 

 

 

 

 

 

First lien senior secured loan ($329 par due 12/2017)

 

7.50% (Base Rate + 4.25%/Q)

 

12/10/2010

 

329

 

329

(2)(13)(22)

 

 

 

 

 

 

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

 

15.33% (Libor + 15.00%/Q)

 

12/10/2010

 

21,895

 

21,895

(2)

 

 

 

 

 

 

Class A senior preferred units (7,846 units)

 

 

 

3/27/2015

 

9,384

 

9,125

(2)

 

 

 

 

 

 

Class A junior preferred units (26,154 units)

 

 

 

3/27/2015

 

19,833

 

10,591

(2)

 

 

 

 

 

 

Class A common units (134 units)

 

 

 

3/27/2015

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

65,398

 

55,897

 

 

 

Competitor Group, Inc. and Calera XVI, LLC (27)

 

Endurance sports media and event operator

 

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

 

9.00% (Libor + 7.75%/Q)

 

11/30/2012

 

3,750

 

3,375

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($23,473 par due 11/2018)

 

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

 

11/30/2012

 

23,473

 

21,126

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($28,743 par due 11/2018)

 

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

 

11/30/2012

 

28,743

 

25,869

(3)(22)

 

 

 

 

 

 

Membership units (2,522,512 units)

 

 

 

11/30/2012

 

2,523

 

82

(2)(10)

 

 

 

 

 

 

 

 

 

 

 

 

58,489

 

50,452

 

 

 

Crown Health Care Laundry Services, Inc. and Crown Laundry Holdings, LLC (7)(27)

 

Provider of outsourced healthcare linen management solutions

 

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

 

7.25% (Libor + 6.00%/Q)

 

3/13/2014

 

500

 

500

(2)(22)(25)

 

 

 

 

 

 

First lien senior secured loan ($23,432 par due 3/2019)

 

7.25% (Libor + 6.00%/Q)

 

3/13/2014

 

23,432

 

23,432

(3)(22)

 

 

 

 

 

 

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

 

 

 

3/13/2014

 

2,475

 

3,587

(2)

 

 

 

 

 

 

Class B common units (275,000 units)

 

 

 

3/13/2014

 

275

 

399

(2)

 

 

 

 

 

 

 

 

 

 

 

 

26,682

 

27,918

 

 

 

Dwyer Acquisition Parent, Inc. and TDG Group Holding Company

 

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

 

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

 

11.00%

 

8/15/2014

 

52,670

 

52,670

(2)

 

 

 

 

 

 

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

 

11.00%

 

6/12/2015

 

31,500

 

31,500

(2)

 

 

 

 

 

 

Common stock (32,843 shares)

 

 

 

8/15/2014

 

3,378

 

3,727

(2)

 

 

 

 

 

 

 

 

 

 

 

 

87,548

 

87,897

 

 

 

Massage Envy, LLC (27)

 

Franchisor in the massage industry

 

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

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

8,017

 

8,017

(2)(22)

 

 

 

 

 

 

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

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

46,434

 

46,434

(3)(22)

 

 

 

 

 

 

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

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

19,469

 

19,469

(4)(22)

 

 

 

 

 

 

Common stock (3,000,000 shares)

 

 

 

9/27/2012

 

3,000

 

4,790

(2)

 

 

 

 

 

 

 

 

 

 

 

 

76,920

 

78,710

 

 

 

 

8



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

McKenzie Sports Products, LLC (27)

 

Designer, manufacturer and distributor of hunting-related supplies

 

First lien senior secured loan ($39,500 par due 9/2020)

 

6.75% (Libor + 5.75%/M)

 

9/18/2014

 

39,500

 

39,105

(2)(14)(22)

 

 

 

 

 

 

First lien senior secured loan ($45,000 par due 9/2020)

 

6.75% (Libor + 5.75%/M)

 

9/18/2014

 

45,000

 

44,550

(3)(14)(22)

 

 

 

 

 

 

 

 

 

 

 

 

84,500

 

83,655

 

 

 

OpenSky Project, Inc.

 

Social commerce platform operator

 

First lien senior secured loan ($2,400 par due 9/2017)

 

10.00%

 

6/4/2014

 

2,378

 

2,400

(2)

 

 

 

 

 

 

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

 

 

 

6/29/2015

 

48

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,426

 

2,400

 

 

 

Osmose Holdings, Inc.

 

Provider of structural integrity management services to transmission and distribution infrastructure

 

Second lien senior secured loan ($25,000 par due 8/2023)

 

10.00% (Base Rate + 6.75%/Q)

 

9/3/2015

 

24,505

 

24,750

(2)(22)

 

 

PODS, LLC

 

Storage and warehousing

 

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

 

9.25% (Libor + 8.25%/Q)

 

2/2/2015

 

17,338

 

17,500

(2)(22)

 

 

Spin HoldCo Inc.

 

Laundry service and equipment provider

 

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

 

8.00% (Libor + 7.00%/M)

 

5/14/2013

 

140,000

 

135,800

(2)(22)

 

 

Surface Dive, Inc.

 

SCUBA diver training and certification provider

 

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

 

10.25% (Libor + 9.25%/Q)

 

1/29/2015

 

71,596

 

72,000

(2)(22)

 

 

 

 

 

 

Second lien senior secured loan ($53,686 par due 1/2022)

 

9.00% (Libor + 8.00%/Q)

 

7/28/2015

 

53,686

 

53,686

(2)(22)

 

 

 

 

 

 

 

 

 

 

 

 

125,282

 

125,686

 

 

 

TWH Water Treatment Industries, Inc., TWH Filtration Industries, Inc. and TWH Infrastructure Industries, Inc. (27)

 

Wastewater infrastructure repair, treatment and filtration holding company

 

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

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

2,240

 

2,240

(2)(22)

 

 

 

 

 

 

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

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

36,400

 

36,400

(3)(22)

 

 

 

 

 

 

 

 

 

 

 

 

38,640

 

38,640

 

 

 

Wash Multifamily Acquisition Inc. and Coinmatic Canada Inc.

 

Laundry service and equipment provider

 

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

 

8.00% (Libor + 7.00%/M)

 

5/14/2015

 

3,655

 

3,614

(2)(22)

 

 

 

 

 

 

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

 

8.00% (Libor + 7.00%/M)

 

5/14/2015

 

20,866

 

20,636

(2)(22)

 

 

 

 

 

 

 

 

 

 

 

 

24,521

 

24,250

 

 

 

 

 

 

 

 

 

 

 

 

 

821,832

 

803,555

 

15.22

%

Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feradyne Outdoors, LLC and Bowhunter Holdings, LLC

 

Provider of branded archery and bowhunting accessories

 

First lien senior secured loan ($4,500 par due 3/2019)

 

4.00% (Libor + 3.00%/Q)

 

4/24/2014

 

4,500

 

4,410

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($9,500 par due 3/2019)

 

6.55% (Libor + 5.55%/Q)

 

4/24/2014

 

9,500

 

9,215

(2)(18)(22)

 

 

 

 

 

 

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

 

4.00% (Libor + 3.00%/Q)

 

4/24/2014

 

6,742

 

6,607

(2)(22)

 

 

 

 

 

 

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

 

6.55% (Libor + 5.55%/Q)

 

4/24/2014

 

50,100

 

48,597

(3)(18)(22)

 

 

 

 

 

 

Common units (373 units)

 

 

 

4/24/2014

 

3,733

 

3,654

(2)

 

 

 

 

 

 

 

 

 

 

 

 

74,575

 

72,483

 

 

 

Implus Footcare, LLC

 

Provider of footwear and other accessories

 

First lien senior secured loan ($4,987 par due 4/2021)

 

7.00% (Libor + 6.00%/Q)

 

4/30/2015

 

4,912

 

4,912

(2)(22)

 

 

Indra Holdings Corp.

 

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

 

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

 

8.50% (Libor + 7.50%/Q)

 

5/1/2014

 

78,943

 

76,000

(2)(22)

 

 

Matrixx Initiatives, Inc. and Wonder Holdings Acquisition Corp.

 

Developer and marketer of OTC healthcare products

 

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

 

 

 

7/27/2011

 

 

396

(2)

 

 

 

 

 

 

Warrant to purchase up to 1,120 shares of preferred stock

 

 

 

7/27/2011

 

 

1,315

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

1,711

 

 

 

Oak Parent, Inc.

 

Manufacturer of athletic apparel

 

First lien senior secured loan ($2,624 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

2,621

 

2,624

(3)(22)

 

 

 

9



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

First lien senior secured loan ($8,355 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

8,338

 

8,355

(4)(22)

 

 

 

 

 

 

 

 

 

 

 

 

10,959

 

10,979

 

 

 

PG-ACP Co-Invest, LLC

 

Supplier of medical uniforms, specialized medical footwear and accessories

 

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

 

 

 

8/29/2012

 

1,000

 

1,379

(2)

 

 

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

 

Provider of branded lawn and garden products

 

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

 

9.54% (Libor + 8.54%/Q)

 

12/23/2014

 

65,667

 

66,000

(2)(22)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/23/2014

 

3,000

 

4,251

(2)

 

 

 

 

 

 

 

 

 

 

 

 

68,667

 

70,251

 

 

 

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

 

Developer, marketer and distributor of sports protection equipment and accessories

 

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

 

11.50% (Libor + 10.50%/Q)

 

4/22/2015

 

75,000

 

75,000

(2)(22)

 

 

 

 

 

 

Class A preferred units (50,000 units)

 

 

 

3/14/2014

 

5,000

 

5,249

(2)

 

 

 

 

 

 

Class C preferred units (50,000 units)

 

 

 

4/22/2015

 

5,000

 

5,249

(2)

 

 

 

 

 

 

 

 

 

 

 

 

85,000

 

85,498

 

 

 

The Hygenic Corporation

 

Designer, manufacturer and marketer of branded wellness products

 

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

 

9.75% (Libor + 8.75%/Q)

 

2/27/2015

 

70,000

 

69,300

(2)(22)

 

 

The Step2 Company, LLC (8)

 

Toy manufacturer

 

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

 

10.00%

 

4/1/2010

 

27,478

 

27,583

(2)

 

 

 

 

 

 

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

 

10.00%

 

3/13/2014

 

4,500

 

4,500

(2)

 

 

 

 

 

 

Second lien senior secured loan ($41,601 par due 9/2019)

 

 

 

4/1/2010

 

30,802

 

12,480

(2)(21)

 

 

 

 

 

 

Common units (1,116,879 units)

 

 

 

4/1/2011

 

24

 

 

 

 

 

 

 

 

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

 

 

 

10/30/2014

 

 

(2)

 

 

 

 

 

 

Warrant to purchase up to 3,157,895 units

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62,804

 

44,563

 

 

 

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

 

Leading manufacturer and distributor of textiles, apparel & luxury goods

 

Second lien senior secured loan ($91,698 par due 12/2022)

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

90,873

 

91,698

(2)(22)

 

 

 

 

 

 

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

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

55,073

 

55,576

(2)(22)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

4,147

 

5,238

(2)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

3,353

 

4,236

(2)

 

 

 

 

 

 

 

 

 

 

 

 

153,446

 

156,748

 

 

 

 

 

 

 

 

 

 

 

 

 

610,306

 

593,824

 

11.25

%

Power Generation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alphabet Energy, Inc.

 

Technology developer to convert waste-heat into electricity

 

First lien senior secured loan ($1,680 par due 7/2017)

 

9.50%

 

12/16/2013

 

1,640

 

1,680

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,420 par due 7/2017)

 

9.62%

 

12/16/2013

 

2,303

 

2,420

(2)

 

 

 

 

 

 

Series B preferred stock (74,449 shares)

 

 

 

2/26/2014

 

250

 

402

(2)

 

 

 

 

 

 

Warrant to purchase up to 59,524 shares of Series B preferred stock

 

 

 

12/16/2013

 

146

 

121

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,339

 

4,623

 

 

 

Bicent (California) Holdings LLC

 

Gas turbine power generation facilities operator

 

Senior subordinated loan ($49,523 par due 2/2021)

 

8.25% (Libor + 7.25%/Q)

 

2/6/2014

 

49,523

 

49,523

(2)(22)

 

 

Brush Power, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($801 par due 8/2020)

 

7.50% (Base Rate + 4.25%/Q)

 

8/1/2013

 

801

 

801

(2)(22)

 

 

 

 

 

 

First lien senior secured loan ($47,640 par due 8/2020)

 

6.25% (Libor + 5.25%/Q)

 

8/1/2013

 

47,640

 

47,640

(2)(22)

 

 

 

10



Table of Contents

 

As of September 30, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets