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EX-32.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex322_1231201510xq.htm
EX-31.2 - CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex312_1231201510xq.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 - Oaktree Specialty Lending Corpfsc-ex321_1231201510xq.htm
EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) - Oaktree Specialty Lending Corpfsc-ex311_1231201510xq.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 December 31, 2015
OR
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Fifth Street Finance Corp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 150,262,924 shares of common stock outstanding as of February 8, 2016.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2015
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
Item 5.




 



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)
 
 
December 31, 2015
 
September 30, 2015
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost December 31, 2015: $344,798; cost September 30, 2015: $333,520)
 
$
315,527

 
$
318,893

Affiliate investments (cost December 31, 2015: $35,355; cost September 30, 2015: $36,637)
 
39,782

 
40,606

Non-control/Non-affiliate investments (cost December 31, 2015: $2,107,095; cost September 30, 2015: $2,102,781)
 
1,970,450

 
2,042,996

Total investments at fair value (cost December 31, 2015: $2,487,248; cost September 30, 2015: $2,472,938)
 
2,325,759

 
2,402,495

Cash and cash equivalents
 
82,591

 
138,377

Restricted cash
 
12,624

 
5,107

Interest, dividends and fees receivable
 
15,553

 
15,687

Due from portfolio companies
 
2,350

 
2,641

Receivables from unsettled transactions
 

 
5,168

Deferred financing costs
 
14,761

 
16,051

Other assets
 
39

 
131

Total assets
 
$
2,453,677

 
$
2,585,657

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
8,695

 
$
5,006

Base management fee and Part I incentive fee payable
 
3,525

 
16,531

Due to FSC CT
 
3,265

 
2,965

Interest payable
 
11,148

 
4,300

Amounts payable to syndication partners
 

 
1,316

Payables from unsettled transactions
 
9,091

 
3,648

Credit facilities payable
 
385,295

 
427,295

SBA debentures payable
 
225,000

 
225,000

Unsecured convertible notes payable
 
115,000

 
115,000

Unsecured notes payable
 
410,387

 
410,320

Secured borrowings at fair value (proceeds December 31, 2015: $19,975; proceeds September 30, 2015: $21,787)
 
19,158

 
21,182

Total liabilities
 
1,190,564

 
1,232,563

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 150,263 and 150,668 shares issued and outstanding at December 31, 2015 and September 30, 2015, respectively
 
1,503

 
1,507

Additional paid-in-capital
 
1,628,989

 
1,631,523

Treasury stock, 423 shares at September 30, 2015
 

 
(2,538
)
Net unrealized depreciation on investments and secured borrowings
 
(160,673
)
 
(69,838
)
Net realized loss on investments and secured borrowings
 
(179,578
)
 
(180,945
)
Accumulated overdistributed net investment income
 
(27,128
)
 
(26,615
)
Total net assets (equivalent to $8.41 and $9.00 per common share at December 31, 2015 and September 30, 2015, respectively) (Note 12)
 
1,263,113

 
1,353,094

Total liabilities and net assets
 
$
2,453,677

 
$
2,585,657

See notes to Consolidated Financial Statements.

3


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months ended
December 31, 2015
 
Three months ended
December 31, 2014
(see Note 2)
Interest income:
 
 
 
 
Control investments
 
$
3,655

 
$
3,695

Affiliate investments
 
1,051

 
1,097

Non-control/Non-affiliate investments
 
46,397

 
49,211

Interest on cash and cash equivalents
 
63

 
10

Total interest income
 
51,166

 
54,013

PIK interest income:
 
 
 
 
Control investments
 
980

 
1,374

Affiliate investments
 
210

 
215

Non-control/Non-affiliate investments
 
2,104

 
2,424

Total PIK interest income
 
3,294

 
4,013

Fee income:
 
 
 
 
Control investments
 
842

 
623

Affiliate investments
 
8

 
12

Non-control/Non-affiliate investments
 
7,961

 
3,982

Total fee income
 
8,811

 
4,617

Dividend and other income:
 
 
 
 
Control investments
 
2,427

 
2,388

Non-control/Non-affiliate investments
 
(576
)
 
307

Total dividend and other income
 
1,851

 
2,695

Total investment income
 
65,122

 
65,338

Expenses:
 
 
 
 
Base management fee
 
11,792

 
14,155

Part I incentive fee
 
3,651

 
6,524

Professional fees
 
6,969

 
1,164

Board of Directors fees
 
356

 
180

Interest expense
 
14,047

 
13,992

Administrator expense
 
600

 
1,247

General and administrative expenses
 
1,221

 
1,780

Total expenses
 
38,636

 
39,042

Base management fee waived
 
(96
)
 
(111
)
Net expenses
 
38,540

 
38,931

Net investment income
 
26,582

 
26,407

Unrealized appreciation (depreciation) on investments:
 
 
 
 
Control investments
 
(14,644
)
 
(8,760
)
Affiliate investments
 
458

 
(135
)
Non-control/Non-affiliate investments
 
(76,861
)
 
(29,958
)
Net unrealized depreciation on investments
 
(91,047
)
 
(38,853
)
Net unrealized depreciation on secured borrowings
 
212

 
332

Realized gain (loss) on investments and secured borrowings:
 
 
 
 
Control investments
 

 
43

Non-control/Non-affiliate investments
 
1,367

 
(16,399
)
Net realized gain (loss) on investments and secured borrowings
 
1,367

 
(16,356
)
Net decrease in net assets resulting from operations
 
$
(62,886
)
 
$
(28,470
)
Net investment income per common share — basic
 
$
0.18

 
$
0.17

Loss per common share — basic
 
$
(0.42
)
 
$
(0.19
)
Weighted average common shares outstanding — basic
 
150,263

 
153,340

Net investment income per common share — diluted
 
$
0.18

 
$
0.17

Loss per common share — diluted (Note 5)
 
$
(0.42
)
 
$
(0.19
)
Weighted average common shares outstanding — diluted
 
158,053

 
161,131

Distributions per common share
 
$
0.18

 
$
0.28

See notes to Consolidated Financial Statements.

4



Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
 
 
 
Three months ended
December 31, 2015
 
Three months ended
December 31, 2014
(see Note 2)
Operations:
 
 
 
 
Net investment income
 
$
26,582

 
$
26,407

Net unrealized depreciation on investments
 
(91,047
)
 
(38,853
)
Net unrealized depreciation on secured borrowings
 
212

 
332

Net realized gain (loss) on investments and secured borrowings
 
1,367

 
(16,356
)
Net decrease in net assets resulting from operations
 
(62,886
)
 
(28,470
)
Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(27,095
)
 
(42,183
)
Net decrease in net assets from stockholder transactions
 
(27,095
)
 
(42,183
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
1,846

 
2,061

Repurchase of common stock under dividend reinvestment program
 
(1,846
)
 
(2,061
)
Net increase in net assets from capital share transactions
 

 

Total decrease in net assets
 
(89,981
)
 
(70,653
)
Net assets at beginning of period
 
1,353,094

 
1,478,475

Net assets at end of period
 
$
1,263,113

 
$
1,407,822

Net asset value per common share
 
$
8.41

 
$
9.18

Common shares outstanding at end of period
 
150,263

 
153,340

See notes to Consolidated Financial Statements.


5

Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)


 
 
Three months ended
December 31, 2015
 
Three months ended
December 31, 2014
(see Note 2)
Operating activities:
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(62,886
)
 
$
(28,470
)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided (used) by operating activities:
 
 
 
 
Net unrealized depreciation on investments
 
91,047

 
38,853

Net unrealized depreciation on secured borrowings
 
(212
)
 
(332
)
Net realized (gain) loss on investments and secured borrowings
 
(1,367
)
 
16,356

PIK interest income
 
(3,294
)
 
(4,013
)
Recognition of fee income
 
(8,811
)
 
(4,617
)
Accretion of original issue discount on investments
 
(1,139
)
 
(4,299
)
Accretion of original issue discount on unsecured notes payable
 
66

 
244

Amortization of deferred financing costs
 
1,290

 
1,349

Changes in operating assets and liabilities:
 

 
 
Fee income received
 
8,807

 
4,060

Increase in restricted cash
 
(7,517
)
 
(23,979
)
Decrease in interest, dividends and fees receivable
 
176

 
9

(Increase) decrease in due from portfolio companies
 
291

 
(4,275
)
(Increase) decrease in receivables from unsettled transactions
 
5,168

 
(51,103
)
(Increase) decrease in other assets
 
92

 
(94
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
3,688

 
(42
)
Decrease in base management fee and Part I incentive fee payable
 
(13,006
)
 
(1,113
)
Increase in due to FSC CT
 
300

 
1,088

Increase in interest payable
 
6,848

 
5,858

Increase in payables from unsettled transactions
 
5,443

 
112,114

Decrease in amounts payable to syndication partners
 
(1,316
)
 
(3,756
)
Purchases of investments and net revolver activity
 
(351,930
)
 
(709,043
)
Principal payments received on investments (scheduled payments)
 
5,693

 
5,790

Principal payments received on investments (payoffs)
 
235,472

 
251,802

PIK interest income received in cash
 
577

 
658

Proceeds from the sale of investments
 
101,640

 
178,665

Net cash provided (used) by operating activities
 
15,120

 
(218,290
)
Financing activities:
 
 
 
 
Distributions paid in cash
 
(25,249
)
 
(40,122
)
Borrowings under credit facilities
 
230,000

 
355,600

Repayments of borrowings under credit facilities
 
(272,000
)
 
(55,500
)
Repayments of secured borrowings
 
(1,811
)
 
(62,099
)
Repurchases of common stock under dividend reinvestment plan
 
(1,846
)
 
(2,061
)
Net cash provided (used) by financing activities
 
(70,906
)
 
195,818

Net decrease in cash and cash equivalents
 
(55,786
)
 
(22,472
)
Cash and cash equivalents, beginning of period
 
138,377

 
86,731

Cash and cash equivalents, end of period
 
$
82,591

 
$
64,259

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
5,843

 
$
6,601

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
1,846

 
$
2,061

See notes to Consolidated Financial Statements.

6

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
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
 
 
 
$
17,053

 
$
17,042

 
$
17,007

 LC Facility, 8.5% cash due 12/31/2016
 
 
 
1,444

 
1,440

 
1,444

 746,114 Series A Preferred Units
 
 
 
 
 
16,815

 
19,905

 746,114 Common Stock Units
 
 
 
 
 
5,316

 
2,739

 
 
 
 
 
 
40,613

 
41,095

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

 
15,572

 
9,717

 First Lien Revolver, 8% cash due 5/31/2016
 
 
 
6,115

 
6,115

 
3,720

 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

 

 
 
 
 
 
 
30,887

 
13,437

 First Star Aviation, LLC (16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
4,389

 
4,390

 
4,296

 10,104,401 Common Units (6)
 
 
 
 
 
10,104

 
9,406

 
 
 
 
 
 
14,494

 
13,702

 First Star Speir Aviation 1 Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 
 
 
56,145

 
54,642

 
55,171

 2,058,411.64 Common Units (6)
 
 
 
 
 
679

 
2,321

 
 
 
 
 
 
55,321

 
57,492

 First Star Bermuda Aviation Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
24,869

 
24,869

 
24,810

 4,293,736 Common Units (6)
 
 
 
 
 
2,652

 
1,694

 
 
 
 
 
 
27,521

 
26,504

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
13,376

 
13,376

 
13,284

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,657

 
3,657

 
3,634

 First Lien Revolver, 8% cash due 8/1/2016
 
 
 
1,913

 
1,913

 
1,913

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

 
6,025

 
 
 
 
 
 
23,046

 
24,856

 Senior Loan Fund JV I, LLC (11)(15)
 
Multi-sector holdings (17)
 
 
 
 
 
 
 Subordinated Notes, LIBOR+8% cash due 5/2/2021 (13)
 
 
 
129,879

 
129,879

 
125,200

 87.5% LLC equity interest (6)
 
 
 
 
 
14,431

 
6,648

 
 
 
 
 
 
144,310

 
131,848

 Miche Group, LLC
 
Apparel, accessories
& luxury goods
 
 
 
 
 
 
 First Lien Revolver, 8% cash due 12/18/2016
 
 
 
2,500

 
2,500

 
2,500

 100 units in FSFC Miche, Inc.
 
 
 
 
 
6,106

 
4,093

 
 
 
 
 
 
8,606

 
6,593

 Total Control Investments (25.0% of net assets)
 
 
 
 
 
$
344,798

 
$
315,527

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
$
9,380

 
$
9,380

 
$
9,228

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

 
4,211

 
 
 
 
 
 
10,460

 
13,439

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016
 
 
 
24,895

 
24,895

 
24,926

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
1,417

 
 
 
 
 
 
24,895

 
26,343

 Total Affiliate Investments (3.1% of net assets)
 
 
 
 
 
$
35,355

 
$
39,782

See notes to Consolidated Financial Statements.

7

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

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

 
$
1,078

 
 
 
 
 
 
849

 
1,078

 HealthDrive Corporation (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 10% cash due 12/31/2016
 
 
 
$
4,358

 
4,358

 
4,390

 First Lien Term Loan B, 12% cash 1% PIK due 12/31/2016
 
 
 
11,758

 
11,758

 
11,740

 First Lien Revolver, 12% cash due 12/31/2016
 
 
 
865

 
865

 
865

 
 
 
 
 
 
16,981

 
16,995

 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
30,556

 
30,532

 
30,073

 414,419 Common Units
 
 
 
 
 
598

 
1,240

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 
300

 
 
 
 
 
 
31,430

 
31,613

 Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.78% limited partnership interest (11)
 
 
 
 
 
762

 
656

 
 
 
 
 
 
762

 
656

 Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest (6)(11)
 
 
 
 
 
643

 
604

 
 
 
 
 
 
643

 
604

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

 
14,435

 

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 5/1/2017 (13)
 
 
 
42,500

 
3,624

 
7,174

 First Lien Revolver, LIBOR+5% cash due 5/1/2017 (13)
 
 
 
10,276

 
876

 

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

 

 17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
19,435

 
7,174

 Mansell Group, Inc.
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2015 (13)
 
 
 
3,854

 
3,854

 
3,854

 First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (13)
 
 
 
9,753

 
9,753

 
9,753

 
 
 
 
 
 
13,607

 
13,607

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (11)
 
 
 
 
 
810

 
695

 
 
 
 
 
 
810

 
695

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

 
1,154

 
 
 
 
 
 
265

 
1,154

 Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016 (13)
 
 
 
1,608

 
1,607

 
1,609

 Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
38,736

 
31,388

 
5,150

 First Lien Revolver, LIBOR+5% (1.5% floor) cash due 1/31/2016 (13)
 
 
 
2,409

 
2,406

 
2,409

 
 
 
 
 
 
35,401

 
9,168


See notes to Consolidated Financial Statements.


8

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
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 (13)
 
 
 
$
35,458

 
$
34,259

 
$
17,059

 
 
 
 
 
 
34,259

 
17,059

 Maverick Healthcare Group, LLC (9)
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (13)
 
 
 
16,205

 
15,969

 
16,245

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (13)
 
 
 
38,193

 
38,072

 
38,080

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (13)
 
 
 
1,250

 
1,208

 
1,232

 
 
 
 
 
 
55,249

 
55,557

 Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
8,196

 
8,137

 
8,093

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (13)
 
 
 
34,047

 
33,875

 
33,545

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

 
3,416

 
3,349

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
1,600

 
1,594

 
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

 
391

 
 
 
 
 
 
48,327

 
46,978

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (6)(11)
 
 
 
 
 
1,000

 
859

 
 
 
 
 
 
1,000

 
859

 Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+7.5% cash due 11/4/2018 (13)
 
 
 
23,800

 
23,746

 
23,800

 Senior Revolver, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
1,500

 
1,493

 
1,500

 Capex Line A, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
1,000

 
1,000

 
1,000

 Capex Line B, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
750

 
750

 
750

 
 
 
 
 
 
26,989

 
27,050

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (6)(11)
 
 
 
 
 
1,727

 
1,886

 
 
 
 
 
 
1,727

 
1,886

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2020
 
 
 
30,349

 
30,272

 
29,736

 317,282.97 Class A Units
 
 
 
 
 
317

 
479

 
 
 
 
 
 
30,589

 
30,215

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (6)(11)
 
 
 
 
 
812

 
971

 
 
 
 
 
 
812

 
971

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)
 
 
 
 
 
976

 
976

 
 
 
 
 
 
976

 
976

See notes to Consolidated Financial Statements.

9

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
 
 
 
 
 
 
 
 0.13% limited partnership interest (6)(11)
 
Multi-sector holdings
 
 
 
$
734

 
$
583

 
 
 
 
 
 
734

 
583

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

 
666

 50,000 Common Shares
 
 
 
 
 
1

 
134

 
 
 
 
 
 
501

 
800

 Ansira Partners, Inc.
 
Advertising
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 4/5/2021 (13)
 
 
 
$
38,000

 
38,000

 
37,890

 250 Preferred Units of Ansira Holdings, LLC (6)
 
 
 
 
209

 
214

 250 Class A Common Units of Ansira Holdings, LLC
 
 
 
 
 

 
159

 
 
 
 
 
 
38,209

 
38,263

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
2,096

 
2,096

 
1,995

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
9,487

 
9,487

 
9,000

 Unsecured Revolver, 5% cash due 6/9/2020 (10)
 
 
 
 
 

 

 126,127.80 Class A Common Units
 
 
 
 
 
126

 

 
 
 
 
 
 
11,709

 
10,995

 I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
125,079 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
1,000

 
661

 
 
 
 
 
 
1,000

 
661

 Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (13)
 
 
 
29,330

 
29,312

 
29,331

 First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK, due 6/15/2017 (13)
 
 
 
3,375

 
3,368

 
3,377

 First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (10)(13)
 
 
 
 
 
(6
)
 

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

 
15,246

 
 
 
 
 
 
34,174

 
47,954

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,458

 
19,458

 
18,726

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

 
368

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

 

 
 
 
 
 
 
20,208

 
19,094

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)
 
 
 
 
 
1,148

 
1,100

 
 
 
 
 
 
1,148

 
1,100

 First American Payment Systems, LP
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (13)
 
 
 
23,304

 
23,304

 
22,954

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (13)
 
 
 
583

 
583

 
543

 
 
 
 
 
 
23,887

 
23,497

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

 
3,145

 
 
 
 
 
 
1,500

 
3,145

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,633

 
14,633

 
14,135

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

 
1,537

 
 
 
 
 
 
16,633

 
15,672

See notes to Consolidated Financial Statements.


10

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
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 (13)
 
 
 
$
64

 
$
64

 
$
63

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

 
501

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
564

 
564

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (13)
 
 
 
7,518

 
7,510

 
7,355

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (10)(13)
 
 
 
 
 
(1
)
 

 
 
 
 
 
 
7,509

 
7,355

 Omniplex World Services Corporation (9)
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 12/21/2018
 
 
 
13,023

 
13,023

 
12,670

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

 
359

 64.041 units of Class A-1 Common Units in Omniplex Holdings Corp.
 
 
 
 
 
64

 
66

 
 
 
 
 
 
13,587

 
13,095

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 10/8/2019
 
 
 
16,195

 
16,195

 
4,750

 
 
 
 
 
 
16,195

 
4,750

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (13)
 
 
 
91,628

 
91,620

 
89,413

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (10)(13)
 
 
 
 
 

 

 2,419.7 Preferred Units of AVI Holdings, L.P.
 
 
 
 
 
1,625

 
824

 
 
 
 
 
 
93,245

 
90,237

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (11)
 
 
 
 
 
1,479

 
1,479

 
 
 
 
 
 
1,479

 
1,479

 RP Crown Parent, LLC
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (13)
 
 
 
9,091

 
8,782

 
7,773

 
 
 
 
 
 
8,782

 
7,773

 Advanced Pain Management
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (13)
 
 
 
24,000

 
24,000

 
23,607

 
 
 
 
 
 
24,000

 
23,607

 Rocket Software, Inc.
 
Internet & software services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.75% (1.5% floor) cash due 2/8/2019 (13)
 
 
 
10,475

 
10,452

 
10,429

 
 
 
 
 
 
10,452

 
10,429




See notes to Consolidated Financial Statements.


11

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
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 (13)
 
 
 
$
4,450

 
$
3,956

 
$
4,183

 
 
 
 
 
 
3,956

 
4,183

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (6)(11)
 
 
 
 
 
9,684

 
9,613

 
 
 
 
 
 
9,684

 
9,613

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2018
 
 
 
13,561

 
13,561

 
12,792

 
 
 
 
 
 
13,561

 
12,792

 Bracket Holding Corp. (9)
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 2/15/2020 (13)
 
 
 
32,000

 
32,000

 
31,648

 50,000 Common Units in AB Group Holdings, LP
 
 
 
 
 
500

 
624

 
 
 
 
 
 
32,500

 
32,272

 HealthEdge Software, Inc.
 
Application software
 
 
 
 
 
 
 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918)
 
 
 
 
 
213

 
724

 
 
 
 
 
 
213

 
724

 InMotion Entertainment Group, LLC
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
13,468

 
13,441

 
12,937

 First Lien Term Loan B, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,871

 
5,639

 
5,670

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
4,904

 
4,899

 
4,904

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
872

 
866

 
872

 1,000,000 Class A Units in InMotion Entertainment Holdings, LLC
 
 
 
 
 
1,000

 
807

 
 
 
 
 
 
25,845

 
25,190

 BMC Software Finance, Inc.
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4% (1% floor) cash due 9/10/2018 (10)(13)
 
 
 
 
 

 

 
 
 
 
 
 

 

 Thing5, LLC (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 10/11/2018 (12)(13)
 
 
 
54,726

 
54,693

 
52,350

 First Lien Revolver, LIBOR+7% (1% floor) cash due 10/11/2018 (13)
 
 
 
1,000

 
996

 
1,000

 2,000,000 in T5 Investment Vehicle, LLC
 
 
 
 
 
2,000

 
250

 
 
 
 
 
 
57,689

 
53,600

 Epic Health Services, Inc.
 
 
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 8/17/2021 (13)
 
Healthcare services
 
24,667

 
24,262

 
24,165

 
 
 
 
 
 
24,262

 
24,165

See notes to Consolidated Financial Statements.

12

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

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Kason Corporation
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 
 
 
$
5,823

 
$
5,823

 
$
5,817

 498.6 Class A Preferred Units in Kason Investment, LLC
 
 
 
 
 
499

 
533

 5,540 Class A Common Units in Kason Investment, LLC
 
 
 
 
 
55

 
101

 
 
 
 
 
 
6,377

 
6,451

 SPC Partners V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.571% limited partnership interest (11)
 
 
 
 
 
1,013

 
908

 
 
 
 
 
 
1,013

 
908

 Systems Maintenance Services Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 10/18/2020 (13)
 
 
 
19,000

 
18,918

 
18,810

 
 
 
 
 
 
18,918

 
18,810

 P2 Upstream Acquisition Co.
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4% (1% floor) cash due 10/31/2018 (10)(13)
 
 
 
 
 

 

 
 
 
 
 
 

 

 Vandelay Industries Merger Sub, Inc.
 
Industrial machinery
 
 
 
 
 
 
 Second Lien Term Loan, 10.75% cash 1% PIK due 11/12/2019
 
 
 
39,265

 
39,065

 
37,879

 2,500,000 Class A Common Units in Vandelay Industries, L.P.
 
 
 
 
 
958

 
3,705

 
 
 
 
 
 
40,023

 
41,584

 Vitera Healthcare Solutions, LLC
 
Healthcare technology
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 11/4/2021 (13)
 
 
 
8,000

 
7,890

 
7,680

 
 
 
 
 
 
7,890

 
7,680

 The Active Network, Inc.
 
Internet software & services