ARES CAPITAL CORP - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - ARES CAPITAL CORP	q1-17exhibit321.htm
EX-31.2 - EXHIBIT 31.2 - ARES CAPITAL CORP	q1-17exhibit312.htm
EX-31.1 - EXHIBIT 31.1 - ARES CAPITAL CORP	q1-17exhibit311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2017

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 ý 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, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth 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)
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

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

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 April 26, 2017
Common stock, $0.001 par value		426,299,165

ARES CAPITAL CORPORATION

INDEX



Part I.	Financial Information

Item 1.	Financial Statements
	Consolidated Balance Sheet as of March 31, 2017 (unaudited) and December 31, 2016	3

	Consolidated Statement of Operations for the three months ended March 31, 2017 and 2016 (unaudited)	4

	Consolidated Schedule of Investments as of March 31, 2017 (unaudited) and December 31, 2016	5

	Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2017 (unaudited)	49

	Consolidated Statement of Cash Flows for the three months ended March 31, 2017 and 2016 (unaudited)	50

	Notes to Consolidated Financial Statements (unaudited)	51

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	85

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	111

Item 4.	Controls and Procedures	112

Part II.	Other Information

Item 1.	Legal Proceedings	112

Item 1A.	Risk Factors	112

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	112

Item 3.	Defaults Upon Senior Securities	113

Item 4.	Mine Safety Disclosures	113

Item 5.	Other Information	113

Item 6.	Exhibits	114

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions, except per share data)



	As of
	March 31, 2017			December 31, 2016
	(unaudited)
ASSETS
Investments at fair value
Non-controlled/non-affiliate company investments	$	7,534		$	5,940
Non-controlled affiliate company investments	210			185
Controlled affiliate company investments	3,663			2,695
Total investments at fair value (amortized cost of $11,602 and $9,034, respectively)	11,407			8,820
Cash and cash equivalents	247			223
Interest receivable	128			112
Receivable for open trades	75			29
Other assets	133			61
Total assets	$	11,990		$	9,245
LIABILITIES
Debt	$	4,585		$	3,874
Base management fees payable	39			34
Income based fees payable	32			32
Capital gains incentive fees payable	54			38
Accounts payable and other liabilities	195			58
Interest and facility fees payable	42			44
Payable for open trades	8			—
Total liabilities	4,955			4,080
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Common stock, par value $0.001 per share, 500 common shares authorized; 426 and 314 common shares issued and outstanding, respectively	—			—
Capital in excess of par value	7,206			5,292
Accumulated undistributed (overdistributed) net investment income	(31		)	37
Accumulated net realized gains on investments, foreign currency transactions, extinguishment of debt and other assets	59			57
Net unrealized losses on investments, foreign currency and other transactions	(199		)	(221		)
Total stockholders' equity	7,035			5,165
Total liabilities and stockholders' equity	$	11,990		$	9,245
NET ASSETS PER SHARE	$	16.50		$	16.45

See accompanying notes to consolidated financial statements.

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in millions, except per share data)

(unaudited)



	For the Three Months Ended March 31,
	2017			2016
INVESTMENT INCOME:
From non-controlled/non-affiliate company investments:
Interest income from investments	$	168		$	140
Capital structuring service fees	12			15
Dividend income	6			6
Other income	4			4
Total investment income from non-controlled/non-affiliate company investments	190			165
From non-controlled affiliate company investments:
Interest income from investments	4			4
Total investment income from non-controlled affiliate company investments	4			4
From controlled affiliate company investments:
Interest income from investments	59			63
Capital structuring service fees	—			1
Dividend income	18			10
Management and other fees	3			5
Other income	1			—
Total investment income from controlled affiliate company investments	81			79
Total investment income	275			248
EXPENSES:
Interest and credit facility fees	55			50
Base management fees	39			35
Income based fees	32			29
Capital gain incentive fees	16			4
Administrative fees	3			4
Professional fees and other costs related to the American Capital Acquisition	26			1
Other general and administrative	8			7
Total expenses	179			130
NET INVESTMENT INCOME BEFORE INCOME TAXES	96			118
Income tax expense, including excise tax	2			5
NET INVESTMENT INCOME	94			113
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, FOREIGN CURRENCY AND OTHER TRANSACTIONS:
Net realized gains (losses):
Non-controlled/non-affiliate company investments	6			19
Controlled affiliate company investments	7			6
Foreign currency and other transactions	(11		)	2
Net realized gains	2			27
Net unrealized gains (losses):
Non-controlled/non-affiliate company investments	(14		)	(21		)
Non-controlled affiliate company investments	1			10
Controlled affiliate company investments	31			6
Foreign currency and other transactions	4			(3		)
Net unrealized gains (losses)	22			(8		)
Net realized and unrealized gains from investments, foreign currency and other transactions	24			19
NET INCREASE IN STOCKHOLDERS' EQUITY RESULTING FROM OPERATIONS	$	118		$	132
BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)	$	0.28		$	0.42
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)	422			314

See accompanying notes to consolidated financial statements.

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2017

(dollar amounts in millions)

(unaudited)

Company(1)

Business Description

Investment

Interest(6)(12)

Acquisition
Date

Amortized
Cost

Fair

Value

Percentage
of Net
Assets

Investment Funds and Vehicles

ACAS CLO 2007-1, Ltd. (8)(9)(10)

Investment vehicle

Subordinated notes ($25.9 par due 4/2021)

1/3/2017

—

ACAS Equity Holdings Corporation (8)(10)

Investment company

Common stock (589 shares)

1/3/2017

0.5

0.4

Ares IIIR/IVR CLO Ltd. (9)(10)

Investment vehicle

Subordinated notes ($20.0 par due 4/2021)

10.80%

1/3/2017

5.7

5.4

Babson CLO Ltd. 2006-II (9)(10)

Investment vehicle

Income notes ($15.0 par due 10/2020)

1/3/2017

—

Babson CLO Ltd. 2013-II (9)(10)

Investment vehicle

Income notes ($5.0 par due 1/2025)

10.00%

1/3/2017

3.1

Babson CLO Ltd. 2014-I (9)(10)

Investment vehicle

Subordinated notes ($8.5 par due 7/2025)

13.20%

1/3/2017

4.7

5.1

Babson CLO Ltd. 2014-II (9)(10)

Investment vehicle

Subordinated notes ($25.0 par due 10/2026)

19.00%

1/3/2017

12.9

14.3

Blue Hill CLO, Ltd. (9)(10)

Investment vehicle

Subordinated notes ($23.1 par due 11/2023)

16.00%

1/3/2017

7.7

8.2

Subordinated notes ($0.3 par due 1/2026)

44.70%

1/3/2017

—

0.1

7.7

8.3

Blue Wolf Capital Fund II, L.P. (9)(10)

Investment partnership

Limited partnership interest (8.50% interest)

1/3/2017

8.0

8.1

Carlyle Global Market Strategies CLO 2015-3, Ltd. (9)(10)

Investment vehicle

Subordinated notes ($24.6 par due 7/2028)

11.60%

1/3/2017

20.0

19.5

Carlyle Global Market Strategies CLO 2013-3, Ltd. (9)(10)

Investment vehicle

Subordinated notes ($5.0 par due 7/2025)

12.50%

1/3/2017

2.8

2.6

Cent CDO 12 Limited (9)(10)

Investment vehicle

Income notes ($26.4 par due 11/2020)

10.00%

1/3/2017

27.3

26.4

Cent CLO 22 Limited (9)(10)

Investment vehicle

Subordinated notes ($45.4 par due 11/2026)

10.30%

1/3/2017

25.2

23.4

Cent CLO 24 Limited (9)(10)

Investment vehicle

Subordinated notes ($28.0 par due 10/2026)

10.30%

1/3/2017

22.0

21.4

Centurion CDO 8 Limited (9)(10)

Investment vehicle

Subordinated notes ($5.0 par due 3/2019)

1/3/2017

—

CoLTs 2005-1 Ltd. (8)(9)(10)

Investment vehicle

Preferred shares (360 shares)

1/3/2017

—

CoLTs 2005-2 Ltd. (8)(9)(10)

Investment vehicle

Preferred shares (34,170,000 shares)

1/3/2017

—

CREST Exeter Street Solar 2004-1 (9)(10)

Investment vehicle

Preferred shares (3,500,000 shares)

1/3/2017

—

Eaton Vance CDO X plc (9)(10)

Investment vehicle

Subordinated notes ($15.0 par due 2/2027)

11.30%

1/3/2017

4.7

5.6

European Capital UK SME Debt LP (8)(9)(10)(26)

Investment partnership

Limited partnership interest (45% interest)

1/3/2017

28.1

30.5

Flagship CLO V (9)(10)

Investment vehicle

Subordinated securities (15,000 shares)

1/3/2017

—

GoldenTree Loan Opportunities VII, Limited (9)(10)

Investment vehicle

Subordinated notes ($35.3 par due 4/2025)

11.50%

1/3/2017

21.6

Halcyon Loan Advisors Funding 2014-1 Ltd. (9)(10)

Investment vehicle

Subordinated notes ($1.3 par due 4/2026)

19.00%

1/3/2017

0.5

Halcyon Loan Advisors Funding 2015-2, Ltd. (9)(10)

Investment vehicle

Subordinated notes ($21.7 par due 7/2027)

14.80%

1/3/2017

15.4

14.5

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

Investment company

Member interest (100.00% interest)

4/1/2010

—

0.1

Herbert Park B.V. (9)(10)

Investment vehicle

Subordinated notes ($24.0 par due 10/2026)

13.80%

1/3/2017

19.8

19.7

Imperial Capital Private Opportunities, LP (10)

Investment partnership

Limited partnership interest (80.00% interest)

5/10/2007

4.1

16.4

(2)

LightPoint CLO VII, Ltd. (9)(10)

Investment vehicle

Subordinated notes ($9.0 par due 5/2021)

1/3/2017

—

Montgomery Lane, LLC and Montgomery Lane, Ltd. (8)(9)(10)

Investment company

Common stock (100 shares)

1/3/2017

2.0

3.7

Common stock (50,000 shares)

1/3/2017

—

2.0

3.7

NYLIM Flatiron CLO 2006-1 LTD. (9)(10)

Investment vehicle

Subordinated securities (10,000 shares)

1/3/2017

—

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
Octagon Investment Partners XVIII, Ltd. (9)(10)	Investment vehicle	Subordinated notes ($16.4 par due 12/2024)	13.30%	1/3/2017	7.4	8.1
Octagon Investment Partners XIX, Ltd. (9)(10)	Investment vehicle	Subordinated notes ($25.0 par due 4/2026)	11.50%	1/3/2017	11.9	11.6
OHA Credit Partners XI, Ltd. (9)(10)	Investment vehicle	Subordinated notes ($17.8 par due 10/2028)	11.70%	1/3/2017	14.8	14.3
Partnership Capital Growth Fund I, L.P. (10)	Investment partnership	Limited partnership interest (25.00% interest)		6/16/2006	—	0.1	(2)
Partnership Capital Growth Investors III, L.P. (10)(26)	Investment partnership	Limited partnership interest (2.50% interest)		10/5/2011	2.5	3.5	(2)
PCG-Ares Sidecar Investment II, L.P. (10)(26)	Investment partnership	Limited partnership interest (100.00% interest)		10/31/2014	7.5	12.8	(2)
PCG-Ares Sidecar Investment, L.P. (10)(26)	Investment partnership	Limited partnership interest (100.00% interest)		5/22/2014	4.1	4.1	(2)
Piper Jaffray Merchant Banking Fund I, L.P. (10)(26)	Investment partnership	Limited partnership interest (2.00% interest)		8/16/2012	1.6	1.5
Qualium Investissement (9)(10)	Investment company	Class A common stock (99,000 shares)		1/3/2017	7.3	7.0
		Class B common stock (100,000 shares)		1/3/2017	0.1	0.1
		Class C common stock (48,939 shares)		1/3/2017	0.1	—
					7.5	7.1
Sapphire Valley CDO I, Ltd. (9)(10)	Investment vehicle	Subordinated notes ($14.0 par due 12/2022)		1/3/2017	—	—
Senior Direct Lending Program, LLC (8)(10)(28)	Co-investment vehicle	Subordinated certificates ($269.2 par due 12/2036)	9.15% (Libor + 8.00%/Q)(22)	7/27/2016	269.2	269.2
		Member interest (87.50% interest)		7/27/2016	—	—
					269.2	269.2
Senior Secured Loan Fund LLC (8)(11)(27)	Co-investment vehicle	Subordinated certificates ($2,004.0 par due 12/2024)	6.50% (21)	10/30/2009	1,938.4	1,919.1
		Member interest (87.50% interest)		10/30/2009	—	—
					1,938.4	1,919.1
Vitesse CLO, Ltd. (9)(10)	Investment vehicle	Preferred shares (20,000,000 shares)		1/3/2017	—	—
Voya CLO 2014-4, Ltd. (9)(10)	Investment vehicle	Subordinated notes ($26.7 par due 10/2026)	12.50%	1/3/2017	18.1	17.2
VSC Investors LLC (10)	Investment company	Membership interest (1.95% interest)		1/24/2008	0.3	1.3	(2)
					2,519.4	2,520.5		35.89%
Business Services
Accruent, LLC and Athena Parent, Inc. (25)	Real estate and facilities management software provider	First lien senior secured revolving loan ($0.2 par due 5/2022)	8.25% (Base Rate + 4.25%/Q)	5/16/2016	0.2	0.2	(2)(20)
		Second lien senior secured loan ($53.0 par due 11/2022)	10.79% (Libor + 9.75%/Q)	9/19/2016	53.0	53.0	(2)(20)
		Series A preferred stock (778 shares)		9/19/2016	0.8	0.7	(2)
		Common stock (3,000 shares)		5/16/2016	3.0	2.9	(2)
					57.0	56.8
Acrisure, LLC, Acrisure Investors FO, LLC and Acrisure Investors SO, LLC	Retail insurance advisor and brokerage	Second lien senior secured loan ($9.7 par due 11/2024)	10.40% (Libor + 9.25%/Q)	11/22/2016	9.7	9.7	(2)(20)
		Second lien senior secured loan ($88.6 par due 11/2024)	10.25% (Libor + 9.25%/Q)	11/22/2016	88.6	88.6	(2)(20)
		Membership interests (8,502,697 units)		11/18/2016	9.7	9.7	(2)
		Membership interests (2,125,674 units)		11/18/2016	2.4	2.4	(2)
					110.4	110.4
BeyondTrust Software, Inc. (25)	Management software solutions provider	First lien senior secured loan ($29.5 par due 9/2019)	8.00% (Libor + 7.00%/Q)	1/3/2017	29.1	29.2	(3)(20)

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
BluePay Processing, LLC	Payment processing solutions provider	Second lien senior secured loan ($32.8 par due 8/2022)	9.54% (Libor + 8.50%/Q)	1/3/2017	32.8	32.8	(2)(20)
Brandtone Holdings Limited (9)	Mobile communications and marketing services provider	First lien senior secured loan ($4.7 par due 11/2018)		5/11/2015	4.5	—	(2)(19)
		First lien senior secured loan ($3.1 par due 2/2019)		5/11/2015	2.9	—	(2)(19)
		Warrant to purchase up to 184,003 units of participating convertible preferred shares (expires 8/2026)		5/11/2015	—	—	(2)
					7.4	—
CallMiner, Inc.	Provider of cloud-based conversational analytics solutions	Second lien senior secured loan ($1.7 par due 5/2018)	10.55% (Libor + 9.50%/M)	7/23/2014	1.7	1.7	(2)(20)
		Second lien senior secured loan ($1.0 par due 8/2018)	10.55% (Libor + 9.50%/M)	7/23/2014	1.0	1.0	(2)(20)
		Warrant to purchase up to 2,350,636 shares of Series 1 preferred stock (expires 7/2024)		7/23/2014	—	—	(2)
					2.7	2.7
Cast & Crew Payroll, LLC	Payroll and accounting services provider to the entertainment industry	Second lien senior secured loan ($26.7 par due 8/2023)	8.90% (Libor + 7.75%/Q)	1/3/2017	26.7	26.7	(2)(20)
CIBT Investment Holdings, LLC	Expedited travel document processing services	Class A shares (2,500 shares)		12/15/2011	2.5	6.4	(2)
Clearwater Analytics, LLC (25)	Provider of integrated cloud-based investment portfolio management, accounting, reporting and analytics software	First lien senior secured revolving loan ($1.2 par due 9/2022)	8.50% (Libor + 7.50%/Q)	9/1/2016	1.2	1.2	(2)(20)
CMW Parent LLC (fka Black Arrow, Inc.)	Multiplatform media firm	Series A units (32 units)		9/11/2015	—	—	(2)
Columbo Midco Limited, Columbo Bidco Limited and Columbo Topco Limited (8)(9)	Compliance, accounting and tax consulting services provider	Preferred stock (34,028,135 shares)		1/3/2017	2.3	2.6
		Preferred stock (17,653,253 shares)		1/3/2017	21.6	22.1
		Preferred stock (3,232,666 shares)		1/3/2017	4.0	4.1
					27.9	28.8
Command Alkon, Incorporated and CA Note Issuer, LLC	Software solutions provider to the ready-mix concrete industry	Second lien senior secured loan ($10.0 par due 8/2020)	9.25% (Libor + 8.25%/Q)	9/28/2012	10.0	10.0	(2)(20)
		Second lien senior secured loan ($11.5 par due 8/2020)	9.25% (Libor + 8.25%/Q)	9/28/2012	11.5	11.5	(2)(20)
		Second lien senior secured loan ($26.5 par due 8/2020)	9.25% (Libor + 8.25%/Q)	9/28/2012	26.5	26.5	(2)(20)
		Senior subordinated loan ($24.2 par due 8/2021)	14.00% PIK	8/8/2014	24.2	24.2	(2)
					72.2	72.2
Compusearch Software Systems, Inc.	Provider of enterprise software and services for organizations in the public sector	Second lien senior secured loan ($51.0 par due 11/2021)	9.78% (Libor + 8.75%/Q)	1/3/2017	51.0	51.0	(2)(20)
Compuware Parent, LLC	Web and mobile cloud performance testing and monitoring services provider	Class A-1 common stock (4,132 units)		12/15/2014	2.3	1.8	(2)
		Class B-1 common stock (4,132 units)		12/15/2014	0.5	0.4	(2)
		Class C-1 common stock (4,132 units)		12/15/2014	0.3	0.2	(2)
		Class A-2 common stock (4,132 units)		12/15/2014	—	—	(2)
		Class B-2 common stock (4,132 units)		12/15/2014	—	—	(2)

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
		Class C-2 common stock (4,132 units)		12/15/2014	—	—	(2)
					3.1	2.4
Convergint Technologies LLC	Integrated services provider for security, fire and life safety	Second lien senior secured loan ($8.0 par due 12/2017)	9.82% (Libor + 8.50%/Q)	1/3/2017	8.0	8.0	(2)(20)
		Second lien senior secured loan ($11.0 par due 12/2017)	9.92% (Libor + 8.50%/Q)	1/3/2017	11.0	11.0	(2)(20)
		Second lien senior secured loan ($75.0 par due 12/2020)	9.32% (Libor + 8.00%/Q)	1/3/2017	75.0	75.0	(2)(20)
					94.0	94.0
Datapipe, Inc.	Data center provider	Second lien senior secured loan ($29.5 par due 9/2019)	9.00% (Libor + 8.00%/Q)	1/3/2017	28.4	28.6	(2)(20)
Directworks, Inc. and Co-Exprise Holdings, Inc.	Provider of cloud-based software solutions for direct materials sourcing and supplier management for manufacturers	First lien senior secured loan ($1.9 par due 4/2018)	10.34% (Libor + 9.25%/M)	12/19/2014	1.9	1.7	(2)(20)
		Warrant to purchase up to 1,875,000 shares of Series 1 preferred stock (expires 12/2024)		12/19/2014	—	—	(2)
					1.9	1.7
DTI Holdco, Inc. and OPE DTI Holdings, Inc. (25)	Provider of legal process outsourcing and managed services	First lien senior secured loan ($4.1 par due 9/2023)	6.29% (Libor + 5.25%/Q)	9/23/2016	4.1	4.1	(2)(20)
		Class A common stock (7,500 shares)		8/19/2014	7.5	6.8	(2)
		Class B common stock (7,500 shares)		8/19/2014	—	—	(2)
					11.6	10.9
Faction Holdings, Inc. and The Faction Group LLC (fka PeakColo Holdings, Inc.) (25)	Wholesaler of cloud-based software applications and services	First lien senior secured loan ($8.0 par due 1/2021)	10.26% (Libor + 9.25%/Q)	1/6/2017	8.0	7.8	(2)(20)
		Warrant to purchase up to 5,185 shares of Series A preferred stock (expires 1/2027)		1/6/2017	—	0.2	(2)
		Warrant to purchase up to 1,481 shares of Series A preferred stock (expires 12/2025)		12/3/2015	—	0.1	(2)
		Warrant to purchase up to 2,037 shares of Series A preferred stock (expires 11/2024)		11/3/2014	0.1	0.1	(2)
					8.1	8.2
First Insight, Inc.	Software company providing merchandising and pricing solutions to companies worldwide	Warrant to purchase up to 122,827 units of Series C preferred stock (expires 3/2024)		3/20/2014	—	—	(2)
Flexera Software LLC	Provider of software and software applications that manages application usage, compliance and security risk	Second lien senior secured loan ($5.0 par due 4/2021)	8.00% (Libor + 7.00%/Q)	1/3/2017	4.8	4.9	(2)(20)
GTCR Valor Companies, Inc.	Public relations software as service provider	Second lien senior secured loan ($100.0 par due 6/2024)	10.52% (Libor + 9.50%/Q)	1/3/2017	98.1	100.0	(2)(20)
IfByPhone Inc.	Voice-based marketing automation software provider	Warrant to purchase up to 124,300 shares of Series C preferred stock (expires 10/2022)		10/15/2012	0.1	0.1	(2)
Infogix, Inc. and Infogix Parent Corporation	Enterprise data analytics and integrity software solutions provider	First lien senior secured loan ($89.8 par due 12/2021)	7.90% (Libor + 6.75%/Q)	1/3/2017	89.8	89.8	(2)(17)(20)
		Series A preferred stock (2,475 shares)		1/3/2017	2.5	2.7
		Common stock (1,297,768 shares)		1/3/2017	—	1.3

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
					92.3	93.8
Inmar, Inc.	Technology-driven solutions provider for retailers, wholesalers and manufacturers	Second lien senior secured loan ($20.0 par due 1/2022)	8.15% (Libor + 7.00%/Q)	1/3/2017	20.0	20.0	(2)(20)
Interactions Corporation	Developer of a speech recognition software based customer interaction system	Second lien senior secured loan ($5.9 par due 3/2021)	9.85% (Libor + 8.85%/M)	6/16/2015	5.7	5.9	(2)(18)(20)
		Second lien senior secured loan ($19.1 par due 3/2021)	9.85% (Libor + 8.85%/M)	6/16/2015	18.9	19.2	(5)(18)(20)
		Warrant to purchase up to 68,187 shares of Series G-3 convertible preferred stock (expires 6/2022)		6/16/2015	0.3	0.3	(2)
					24.9	25.4
iParadigms Holdings, LLC	Anti-plagiarism software provider to the education market	Second lien senior secured loan ($39.5 par due 7/2022)	8.40% (Libor + 7.25%/Q)	1/3/2017	38.7	38.7	(2)(20)
iPipeline, Inc., Internet Pipeline, Inc. and iPipeline Holdings, Inc. (25)	Provider of SaaS-based software solutions to the insurance and financial services industry	First lien senior secured loan ($46.8 par due 8/2022)	8.25% (Libor + 7.25%/Q)	8/4/2015	46.8	46.8	(3)(20)
		First lien senior secured loan ($14.8 par due 8/2022)	8.25% (Libor + 7.25%/Q)	8/4/2015	14.8	14.8	(4)(20)
		Preferred stock (1,485 shares)		8/4/2015	1.5	3.1	(2)
		Common stock (647,542 shares)		8/4/2015	—	—	(2)
					63.1	64.7
IQMS	Provider of enterprise resource planning and manufacturing execution software for small and midsized manufacturers	First lien senior secured loan ($37.8 par due 3/2022)	9.25% (Libor + 8.25%/Q)	3/28/2017	37.8	37.8	(2)(20)
Iron Bow Technologies, LLC	Provider and value added reseller of information technology products and solutions	Second lien senior secured loan ($15.4 par due 2/2021)	12.53% (Libor + 11.75%/Q)	1/3/2017	15.4	15.4	(2)(20)
IronPlanet, Inc.	Online auction platform provider for used heavy equipment	Warrant to purchase to up to 133,333 shares of Series C preferred stock (expires 9/2023)		9/24/2013	0.2	0.4	(2)
Itel Laboratories, Inc. (25)	Data services provider for building materials to property insurance industry	Preferred units (1,798,391 units)		6/29/2012	1.0	1.4	(2)
LLSC Holdings Corporation (dba Lawrence Merchandising Services) (8)	Marketing services provider	Series A preferred stock (9,000 shares)		1/3/2017	19.2	19.6
		Common stock (1,000 shares)		1/3/2017	—	—
		Warrant to purchase up to 675 shares of common stock (expires 9/2017)		1/3/2017	—	—
					19.2	19.6
Market Track Holdings, LLC	Business media consulting services company	Preferred stock (1,685 shares)		12/13/2013	2.2	2.7
		Common stock (16,251 shares)		12/13/2013	2.2	5.1
					4.4	7.8
Maximus Holdings, LLC	Provider of software simulation tools and related services	Warrant to purchase up to 1,050,013 shares of common stock (expires 10/2019)		12/13/2013	—	2.4
Miles 33 (Finance) Limited (8)(9)	Software provider to the regional media industry and magazines	First lien senior secured loan ($2.2 par due 9/2018)	6.76% (Libor + 6.50%/Q)	1/3/2017	2.1	2.2
		First lien senior secured loan ($3.7 par due 9/2018)	6.76% (Libor + 6.50%/Q)	1/3/2017	3.6	3.7
		Senior subordinated loan ($15.7 par due 9/2021)	4.76% (Libor + 4.50%/Q)	1/3/2017	9.5	9.8
		Preferred stock (19,500,000 shares)		1/3/2017	—	—

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
		Preferred stock (900,000 shares)		1/3/2017	—	—
		Common stock (600,000 shares)		1/3/2017	—	—
					15.2	15.7
Ministry Brands, LLC and MB Parent HoldCo, L.P. (25)	Software and payment services provider to faith-based institutions	First lien senior secured revolving loan ($3.8 par due 12/2022)	6.00% (Libor + 5.00%/Q)	12/2/2016	3.8	3.8	(2)(20)
		Second lien senior secured loan ($16.6 par due 6/2023)	10.25% (Libor + 9.25%/Q)	12/2/2016	16.6	16.6	(2)(20)
		Second lien senior secured loan ($90.0 par due 6/2023)	10.25% (Libor + 9.25%/Q)	12/2/2016	89.2	90.0	(2)(20)
		Class A units (500,000 units)		12/2/2016	5.0	5.4	(2)
					114.6	115.8
Mitchell International, Inc.	Provider of mission-critical software and solutions to the property and casualty claims industry	Second lien senior secured loan ($17.0 par due 10/2021)	8.54% (Libor + 7.50%/Q)	1/3/2017	17.0	17.0	(2)(20)
MVL Group, Inc. (8)	Marketing research provider	Senior subordinated loan ($0.5 par due 7/2017)		4/1/2010	0.2	0.2	(2)(19)
		Common stock (560,716 shares)		4/1/2010	—	—	(2)
					0.2	0.2
NAS, LLC, Nationwide Marketing Group, LLC and Nationwide Administrative Services, Inc.	Buying and marketing services organization for appliance, furniture and consumer electronics dealers	Second lien senior secured loan ($24.1 par due 12/2021)	9.75% (Libor + 8.75%/Q)	6/1/2015	24.1	23.4	(2)(20)
Novetta Solutions, LLC	Provider of advanced analytics solutions for the government, defense and commercial industries	First lien senior secured loan ($12.8 par due 10/2022)	6.15% (Libor + 5.00%/Q)	1/3/2017	12.3	12.3	(2)(20)
		Second lien senior secured loan ($31.0 par due 10/2023)	9.65% (Libor + 8.50%/Q)	1/3/2017	28.3	28.2	(2)(20)
					40.6	40.5
Park Place Technologies, LLC	Provider of third party hardware maintenance and support services for IT data centers	Second lien senior secured loan ($41.5 par due 12/2022)	10.11% (Libor + 9.00%/Q)	1/3/2017	41.5	41.5	(2)(20)
PayNearMe, Inc.	Electronic cash payment system provider	First lien senior secured loan ($10.0 par due 9/2019)	9.50% (Libor + 8.50%/M)	3/11/2016	9.6	10.0	(5)(20)
		Warrant to purchase up to 195,726 shares of Series E preferred stock (expires 3/2023)		3/11/2016	0.2	—	(5)
					9.8	10.0
Pegasus Intermediate Holdings, LLC (25)	Plant maintenance and scheduling process software provider	First lien senior secured loan ($1.3 par due 11/2022)	7.25% (Libor + 6.25%/Q)	11/7/2016	1.3	1.3	(2)(20)
PHNTM Holdings, Inc. and Planview Parent, Inc.	Provider of project and portfolio management software	First lien senior secured loan ($36.9 par due 1/2023)	6.25% (Libor + 5.25%/Q)	1/27/2017	36.2	36.9	(2)(20)
		Second lien senior secured loan ($62.0 par due 7/2023)	10.75% (Libor + 9.75%/Q)	1/27/2017	61.1	62.0	(2)(20)
		Class A common shares (990 shares)		1/27/2017	1.0	1.0	(2)
		Class B common shares (168,329 shares)		1/27/2017	—	—	(2)
					98.3	99.9
Pillar Processing LLC and PHL Investors, Inc. (8)	Mortgage services	Class A common stock (576 shares)		7/31/2012	3.8	—	(2)
Poplicus Incorporated	Business intelligence and market analytics platform for companies that sell to the public sector	First lien senior secured loan ($5.4 par due 1/2018)		6/25/2015	4.7	2.9	(5)(19)
		Warrant to purchase up to 2,402,991 shares of Series C preferred stock (expires 6/2025)		6/25/2015	0.1	—	(5)
					4.8	2.9

As of March 31, 2017

(dollar amounts in millions)

(unaudited)



Company(1)	Business Description	Investment	Interest(6)(12)	Acquisition Date	Amortized Cost	Fair Value		Percentage of Net Assets
PowerPlan, Inc. and Project Torque Ultimate Parent Corporation	Fixed asset financial management software provider	Second lien senior secured loan ($30.0 par due 2/2023)	10.00% (Libor + 9.00%/Q)	2/23/2015	29.8	30.0	(2)(20)
		Second lien senior secured loan ($50.0 par due 2/2023)	10.00% (Libor + 9.00%/Q)	2/23/2015	49.6	50.0	(3)(20)
		Class A common stock (1,980 shares)		2/23/2015	2.0	3.1	(2)
		Class B common stock (989,011 shares)		2/23/2015	—	—	(2)
					81.4	83.1
Powersport Auctioneer Holdings, LLC	Powersport vehicle auction operator	Common units (1,972 units)		3/2/2012	1.0	1.1	(2)
Professional Datasolutions, Inc. (25)	Provider of enterprise management software for the convenience retail and petroleum wholesale markets	First lien senior secured loan ($9.4 par due 5/2022)	6.50% (Libor + 5.50%/Q)	3/30/2017	9.4	9.4	(2)(20)
Project Alpha Intermediate Holding, Inc. and Qlik Parent, Inc.	Provider of data visualization software for data analytics	First lien senior secured loan ($50.2 par due 8/2022)	9.25% (Libor + 8.25%/Q)	8/22/2016	49.6	50.2	(2)(20)
		First lien senior secured loan ($59.7 par due 8/2022)	9.25% (Libor + 8.25%/Q)	8/22/2016	58.9	59.7	(3)(20)
		First lien senior secured loan ($19.9 par due 8/2022)	9.25% (Libor + 8.25%/Q)	8/22/2016	19.6	19.9	(4)(20)
		Class A common shares (7,445 shares)		8/22/2016	7.4	—	(2)
		Class B common shares (1,841,609 shares)		8/22/2016	0.1	10.6	(2)
					135.6	140.4
R2 Acquisition Corp.	Marketing services	Common stock (250,000 shares)		5/29/2007	0.3	0.2	(2)
Rocket Fuel Inc.	Provider of open and integrated software for digital marketing optimization	Common stock (11,405 units)		9/9/2014	—	—	(2)
Shift PPC LLC (25)	Digital solutions provider	First lien senior secured loan ($10.2 par due 12/2021)	7.00% (Libor + 6.00%/Q)	12/22/2016	10.2	10.2	(2)(20)
Sonian Inc.	Cloud-based email archiving platform	First lien senior secured loan ($7.5 par due 6/2020)	9.08% (Libor + 7.65%/M)	9/9/2015	7.4	7.5	(5)(18)(20)
		Warrant to purchase up to 169,045 shares of Series C preferred stock (expires 9/2022)		9/9/2015	0.1	0.1	(5)
					7.5	7.6
Sparta Systems, Inc. and Project Silverback Holdings Corp.	Provider of quality management software	First lien senior secured loan ($3.9 par due 7/2020)	6.65% (Libor + 5.50%/Q)	1/3/2017	3.9	3.9	(3)(20)
		First lien senior secured loan ($20.0 par due 7/2020)	6.65% (Libor + 5.50%/Q)	1/3/2017	20.0	20.0	(4)(20)
		Series A preferred stock (743 shares)		1/3/2017	0.9	0.9
		Class B common stock (308,224 shares)		1/3/2017	0.9	0.9
					25.7

ARES CAPITAL CORP - FORM 10-Q - May 3, 2017

Attached files