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EX-32.2 - EXHIBIT 32.2 - Oaktree Specialty Lending Corpfsc-ex322_0630201710xq.htm
EX-32.1 - EXHIBIT 32.1 - Oaktree Specialty Lending Corpfsc-ex321_0630201710xq.htm
EX-31.2 - EXHIBIT 31.2 - Oaktree Specialty Lending Corpfsc-ex312_0630201710xq.htm
EX-31.1 - EXHIBIT 31.1 - Oaktree Specialty Lending Corpfsc-ex311_0630201710xq.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2017
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, a smaller reporting company, or an emerging growth company. See the 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  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
 
 
 
 
 
 
 
Emerging growth company  ¨

 
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 13(a) of the Exchange Act ¨

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 140,960,651 shares of common stock outstanding as of August 8, 2017.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2017
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)
 
 
June 30, 2017
 
September 30, 2016
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost June 30, 2017: $436,549; cost September 30, 2016: $456,493)
 
$
380,353

 
$
388,267

Affiliate investments (cost June 30, 2017: $34,036; cost September 30, 2016: $34,955)
 
37,349

 
39,769

Non-control/Non-affiliate investments (cost June 30, 2017: $1,419,423; cost September 30, 2016: $1,792,410)
 
1,372,836

 
1,737,455

Total investments at fair value (cost June 30, 2017: $1,890,008; cost September 30, 2016: $2,283,858)
 
1,790,538

 
2,165,491

Cash and cash equivalents
 
143,622

 
117,923

Restricted cash
 
15,053

 
12,439

Interest, dividends and fees receivable
 
8,158

 
15,568

Due from portfolio companies
 
6,487

 
4,077

Receivables from unsettled transactions
 

 
5,346

Deferred financing costs
 
1,305

 
2,234

Insurance recoveries receivable
 

 
19,729

Other assets
 
1,941

 
478

Total assets
 
$
1,967,104

 
$
2,343,285

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,983

 
$
2,533

Base management fee and Part I incentive fee payable
 
9,085

 
15,958

Due to FSC CT
 
1,370

 
2,204

Interest payable
 
8,229

 
3,912

Amounts payable to syndication partners
 

 
754

Director fees payable
 
204

 
566

Payables from unsettled transactions
 
23,749

 
6,234

Legal settlements payable
 

 
19,500

Credit facilities payable
 
345,495

 
516,295

SBA debentures payable (net of $2,080 and $3,289 of unamortized financing costs as of June 30, 2017 and September 30, 2016, respectively)
 
145,920

 
210,011

Unsecured notes payable (net of $5,042 and $5,956 of unamortized financing costs as of June 30, 2017 and September 30, 2016, respectively)
 
405,744

 
404,630

Secured borrowings at fair value (proceeds June 30, 2017: $13,810; proceeds September 30, 2016: $18,929)
 
13,575

 
18,400

Total liabilities
 
956,354

 
1,200,997

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding at June 30, 2017; 143,259 shares issued and outstanding at September 30, 2016
 
1,409

 
1,433

Additional paid-in-capital
 
1,579,278

 
1,591,467

Net unrealized depreciation on investments and secured borrowings
 
(99,235
)
 
(117,838
)
Net realized loss on investments and secured borrowings
 
(457,517
)
 
(306,228
)
Accumulated overdistributed net investment income
 
(13,185
)
 
(26,546
)
Total net assets (equivalent to $7.17 and $7.97 per common share at June 30, 2017 and September 30, 2016, respectively) (Note 12)
 
1,010,750

 
1,142,288

Total liabilities and net assets
 
$
1,967,104

 
$
2,343,285

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
June 30, 2017
 
Three months ended
June 30, 2016
 
Nine months ended
June 30, 2017
 
Nine months ended
June 30, 2016
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
3,710

 
$
4,863

 
$
11,104

 
$
12,518

Affiliate investments
 
977

 
1,016

 
2,961

 
3,092

Non-control/Non-affiliate investments
 
33,892

 
43,650

 
106,409

 
134,265

Interest on cash and cash equivalents
 
214

 
111

 
497

 
262

Total interest income
 
38,793

 
49,640

 
120,971

 
150,137

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,523

 
1,517

 
5,445

 
3,577

Affiliate investments
 
195

 
203

 
592

 
618

Non-control/Non-affiliate investments
 
855

 
1,820

 
2,928

 
5,772

Total PIK interest income
 
2,573

 
3,540

 
8,965

 
9,967

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
307

 
1,183

 
929

 
2,402

Affiliate investments
 
12

 
37

 
741

 
308

Non-control/Non-affiliate investments
 
2,085

 
2,220

 
7,155

 
14,730

Total fee income
 
2,404

 
3,440

 
8,825

 
17,440

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
1,080

 
2,255

 
3,384

 
6,373

Non-control/Non-affiliate investments
 
67

 
5,151

 
87

 
4,795

Total dividend and other income
 
1,147

 
7,406

 
3,471

 
11,168

Total investment income
 
44,917

 
64,026

 
142,232

 
188,712

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
7,912

 
10,049

 
24,561

 
31,847

Part I incentive fee
 
3,482

 
7,864

 
10,713

 
15,689

Professional fees
 
952

 
1,971

 
3,739

 
13,395

Board of Directors fees
 
205

 
176

 
595

 
775

Interest expense
 
11,262

 
13,149

 
37,163

 
41,034

Administrator expense
 
407

 
488

 
1,557

 
1,602

General and administrative expenses
 
1,367

 
1,233

 
4,154

 
3,525

Loss on legal settlements
 

 
19,150

 
3

 
19,150

Total expenses
 
25,587

 
54,080

 
82,485

 
127,017

Base management fee waived
 
(60
)
 
(81
)
 
(182
)
 
(258
)
Insurance recoveries
 

 
(19,079
)
 
(1,259
)
 
(19,079
)
Net expenses
 
25,527

 
34,920

 
81,044

 
107,680

Net investment income
 
19,390

 
29,106

 
61,188

 
81,032

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
(2,479
)
 
(24,024
)
 
12,030

 
(42,872
)
Affiliate investments
 
(839
)
 
1,237

 
(1,501
)
 
901

Non-control/Non-affiliate investments
 
(9,953
)
 
33,651

 
8,368

 
(32,204
)
Net unrealized appreciation (depreciation) on investments
 
(13,271
)
 
10,864

 
18,897

 
(74,175
)
Net unrealized (appreciation) depreciation on secured borrowings
 
124

 
(374
)
 
(294
)
 
133

Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 
(13,058
)
 

 
(58,994
)
 
(8,148
)
Affiliate investments
 

 
3

 

 
3

Non-control/Non-affiliate investments
 
758

 
(44,817
)
 
(92,295
)
 
(61,968
)
Net realized loss on investments and secured borrowings
 
(12,300
)
 
(44,814
)
 
(151,289
)
 
(70,113
)
Net decrease in net assets resulting from operations
 
$
(6,057
)
 
$
(5,218
)
 
$
(71,498
)
 
$
(63,123
)
Net investment income per common share — basic
 
$
0.14

 
$
0.20

 
$
0.43

 
$
0.55

Loss per common share — basic
 
$
(0.04
)
 
$
(0.04
)
 
$
(0.50
)
 
$
(0.43
)
Weighted average common shares outstanding — basic
 
140,961

 
145,569

 
141,599

 
148,354

Net investment income per common share — diluted
 
$
0.14

 
$
0.20

 
$
0.43

 
$
0.53

Loss per common share — diluted (Note 5)
 
$
(0.04
)
 
$
(0.04
)
 
$
(0.50
)
 
$
(0.43
)
Weighted average common shares outstanding — diluted
 
140,961

 
145,569

 
141,599

 
153,585

Distributions per common share
 
$
0.02

 
$
0.18

 
$
0.34

 
$
0.54

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)

 
 
Nine months
ended
June 30, 2017
 
Nine months
ended
June 30, 2016
 
Operations:
 
 
 
 
 
Net investment income
 
$
61,188

 
$
81,032

 
Net unrealized appreciation (depreciation) on investments
 
18,897

 
(74,175
)
 
Net unrealized (appreciation) depreciation on secured borrowings
 
(294
)
 
133

 
Net realized loss on investments and secured borrowings
 
(151,289
)
 
(70,113
)
 
Net decrease in net assets resulting from operations
 
(71,498
)
 
(63,123
)
 
Stockholder transactions:
 
 
 
 
 
Contributions from stockholders (Note 11)
 
287

 

 
Distributions to stockholders
 
(47,827
)
 
(80,503
)
 
Net decrease in net assets from stockholder transactions
 
(47,540
)
 
(80,503
)
 
Capital share transactions:
 
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
2,264

 
5,095

 
Repurchases of common stock under dividend reinvestment program
 
(2,264
)
 
(5,095
)
 
Repurchases of treasury shares under stock repurchase program
 
(12,500
)
 
(25,092
)
 
Net decrease in net assets from capital share transactions
 
(12,500
)
 
(25,092
)
 
Total decrease in net assets
 
(131,538
)
 
(168,718
)
 
Net assets at beginning of period
 
1,142,288

 
1,353,094

 
Net assets at end of period
 
$
1,010,750

 
$
1,184,376

 
Net asset value per common share
 
$
7.17

 
$
8.15

 
Common shares outstanding at end of period
 
140,961

 
145,304

 




See notes to Consolidated Financial Statements.


5

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

 
 
Nine months
ended
June 30, 2017
 
Nine months
ended
June 30, 2016
 
Operating activities:
 
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(71,498
)
 
$
(63,123
)
 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized (appreciation) depreciation on investments
 
(18,897
)
 
74,175

 
Net unrealized appreciation (depreciation) on secured borrowings
 
294

 
(133
)
 
Net realized loss on investments and secured borrowings
 
151,289

 
70,113

 
PIK interest income
 
(8,965
)
 
(9,967
)
 
Recognition of fee income
 
(8,825
)
 
(17,440
)
 
Accretion of original issue discount on investments
 
(10,077
)
 
(2,821
)
 
Accretion of original issue discount on unsecured notes payable
 
200

 
199

 
Amortization of deferred financing costs
 
3,234

 
3,706

 
Changes in operating assets and liabilities:
 

 
 
 
Fee income received
 
8,636

 
16,874

 
Increase in restricted cash
 
(2,614
)
 
(14,868
)
 
(Increase) decrease in interest, dividends and fees receivable
 
7,410

 
(2,982
)
 
Increase in due from portfolio companies
 
(2,410
)
 
(2,353
)
 
(Increase) decrease in receivables from unsettled transactions
 
5,346

 
(7,227
)
 
(Increase) decrease in insurance recoveries receivable
 
19,729

 
(19,079
)
 
Increase in other assets
 
(1,463
)
 
(746
)
 
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
450

 
(977
)
 
Increase (decrease) in base management fee and Part I incentive fee payable
 
(6,873
)
 
1,301

 
Decrease in due to FSC CT
 
(834
)
 
(1,059
)
 
Increase in interest payable
 
4,317

 
5,462

 
Increase (decrease) in payables from unsettled transactions
 
17,515

 
(3,648
)
 
Decrease in director fees payable
 
(362
)
 

 
Increase (decrease) in legal settlements payable
 
(19,500
)
 
19,150

 
Increase (decrease) in amounts payable to syndication partners
 
(754
)
 
13,292

 
Purchases of investments and net revolver activity
 
(400,295
)
 
(633,561
)
 
Principal payments received on investments (scheduled payments)
 
21,326

 
23,913

 
Principal payments received on investments (payoffs)
 
577,909

 
404,004

 
PIK interest income received in cash
 
3,999

 
1,480

 
Proceeds from the sale of investments
 
58,853

 
228,142

 
Net cash provided by operating activities
 
327,140

 
81,827

 
Financing activities:
 
 
 
 
 
Contributions received in cash
 
287

 

 
Distributions paid in cash
 
(45,563
)
 
(75,408
)
 
Repayments of borrowings under SBA debentures payable
 
(65,300
)
 

 
Borrowings under credit facilities
 
219,082

 
591,000

 
Repayments of borrowings under credit facilities
 
(389,882
)
 
(450,000
)
 
Repayments of secured borrowings
 
(5,119
)
 
(2,498
)
 
Repayments of unsecured convertible notes
 

 
(115,000
)
 
Repurchases of common stock under stock repurchase program
 
(12,500
)
 
(25,092
)
 
Repurchases of common stock under dividend reinvestment plan
 
(2,264
)
 
(5,095
)
 
Deferred financing costs paid
 
(182
)
 

 
Net cash used by financing activities
 
(301,441
)
 
(82,093
)
 
Net increase (decrease) in cash and cash equivalents
 
25,699

 
(266
)
 
Cash and cash equivalents, beginning of period
 
117,923

 
138,377

 
Cash and cash equivalents, end of period
 
$
143,622

 
$
138,111

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
29,413

 
$
31,667

 
Non-cash operating activities:
 
 
 
 
 
Purchases of investments from restructurings
 
$
(165,759
)
 
$
(78,834
)
 
Proceeds from investment restructurings
 
$
165,759

 
$
78,834

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
2,264

 
$
5,095

 
See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2017
(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
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
 
 
$
36,468

 
$
36,427

 
$
36,468

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/1/2021 (13)
 
 
 
750

 
745

 
750

 LC Facility, 6% cash due 4/1/2021
 
 
 
3,518

 
3,512

 
3,518

 746,114 Series A Preferred Units
 
 
 
 
 
20,029

 
23,134

 746,114 Shares of Common Stock
 
 
 
 
 
5,316

 
2,284

 
 
 
 
 
 
66,029

 
66,154

 TransTrade Operators, Inc. (9)
 
Air freight & logistics
 
 
 
 
 
 
 First Lien Term Loan, 11% cash 3% PIK due 12/31/2017
 
 
 
15,973

 
15,574

 
5,530

 First Lien Revolver, 8% cash due 12/31/2017
 
 
 
7,582

 
7,582

 

 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

 

 
 
 
 
 
 
32,356

 
5,530

 First Star Speir Aviation 1 Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 
 
 
41,395

 
35,069

 
40,093

 2,058,411.64 Common Units (6)
 
 
 
 
 

 

 
 
 
 
 
 
35,069

 
40,093

 First Star Bermuda Aviation Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
11,868

 
11,868

 
11,868

 4,293,736 Common Units (6)
 
 
 
 
 
2,906

 
1,810

 
 
 
 
 
 
14,774

 
13,678

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 Earn-out (19)
 
 
 
 
 
7,851

 
7,851

 
 
 
 
 
 
7,851

 
7,851

 Senior Loan Fund JV I, LLC (11)(15)(17)(18)
 
Multi-sector holdings
 
 
 
 
 
 
 Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC (13)
 
 
 
101,030

 
101,030

 
101,030

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
26,642

 
26,642

 
26,642

 87.5% LLC equity interest (6)
 
 
 
 
 
16,172

 
13,235

 
 
 
 
 
 
143,844

 
140,907

 Ameritox Ltd.
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)
 
 
 
40,107

 
40,046

 
40,108

 14,090,126.4 Class A Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
14,090

 
14,194

 1,602,260.83 Class B Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
1,602

 

 4,930.03 Class A Units in Ameritox Holdings II, LLC
 
 
 
 
 
29,049

 

 
 
 
 
 
 
84,787

 
54,302

 New IPT, Inc.
 
 Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)
 
 
 
2,504

 
2,504

 
2,504

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 

 

 
 
 
 
 
 
7,620

 
7,620

 AdVenture Interactive, Corp.
 
Advertising
 
 
 
 
 
 
 9,073 shares of common stock
 
 
 
 
 
13,611

 
13,610

 
 
 
 
 
 
13,611

 
13,610

 Keypath Education, Inc. (20)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018
 
 
 
19,960

 
19,960

 
19,960

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

 

 

 9,073 Class A Units in FS AVI Holdco, LLC
 
 
 
 
 
10,648

 
10,648

 
 
 
 
 
 
30,608

 
30,608

 Total Control Investments (37.6% of net assets)
 
 
 
 
 
$
436,549

 
$
380,353

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
9,669

 
$
9,669

 
$
9,589

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

 
2,529

 
 
 
 
 
 
10,749

 
12,118

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2018
 
 
 
$
23,309

 
$
23,287

 
$
23,280

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
1,951

 
 
 
 
 
 
23,287

 
25,231

 Total Affiliate Investments (3.7% of net assets)
 
 
 
 
 
$
34,036

 
$
37,349

 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
28,754

 
$
28,306

 
$
17,259

 First Lien Revolver, 15% cash due 9/30/2019
 
 
 
2,203

 
2,203

 
1,203

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
598

 

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 

 
 
 
 
 
 
31,407

 
18,462

 Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.78% limited partnership interest (11)
 
 
 
 
 
871

 
720

 
 
 
 
 
 
871

 
720

 Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest (11)
 
 
 
 
 
219

 
389

 
 
 
 
 
 
219

 
389

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (11)
 
 
 
 
 
817

 
896

 
 
 
 
 
 
817

 
896

 Maverick Healthcare Group, LLC (9) (21)
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
16,309

 
16,204

 
14,753

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
41,739

 
39,110

 
21,052

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 4/30/2017 (13)
 
 
 
1,272

 
1,261

 
1,041

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 4/30/2017 (13)
 
 
 
55

 
40

 
55

 
 
 
 
 
 
56,615

 
36,901

 Refac Optical Group (9)
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
4,473

 
4,429

 
4,471

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (13)
 
 
 
34,537

 
34,422

 
34,452

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

 
3,416

 
3,360

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
3,520

 
3,513

 
3,518

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

 

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

 

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

 
342

 
 
 
 
 
 
47,085

 
46,143

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (11)
 
 
 
 
 
994

 
601

 
 
 
 
 
 
994

 
601

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (11)
 
 
 
 
 
1,784

 
2,246

 
 
 
 
 
 
1,784

 
2,246

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (11)
 
 
 
 
 
517

 
817

 
 
 
 
 
 
517

 
817

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)
 
 
 
 
 
1,452

 
1,412

 
 
 
 
 
 
1,452

 
1,412


See notes to Consolidated Financial Statements.

8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2017
(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
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)
 
 
 
 
 
$
801

 
$
981

 
 
 
 
 
 
801

 
981

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

 
748

 50,000 Common Shares (6)
 
 
 
 
 
1

 
42

 
 
 
 
 
 
501

 
790

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
$
2,382

 
2,382

 
1,807

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
11,023

 
10,227

 
2,164

 Unsecured Revolver, 5% cash due 6/9/2020
 
 
 
2,664

 
2,664

 
2,664

 126,127.80 Class A Common Units
 
 
 
 
 
126

 

 
 
 
 
 
 
15,399

 
6,635

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

 

 
 
 
 
 
 
1,000

 

 Yeti Acquisition, LLC
 
Leisure products
 
 
 
 
 
 
 3,000,000 Common Stock Units of Yeti Holdings, Inc.
 
 
 
 
 

 
17,518

 
 
 
 
 
 

 
17,518

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,907

 
19,907

 
19,906

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

 
458

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

 

 
 
 
 
 
 
20,657

 
20,364

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)
 
 
 
 
 
1,014

 
1,264

 
 
 
 
 
 
1,014

 
1,264

 Dexter Axle Company
 
Auto parts & equipment
 
 
 
 
 
 
 1,547 Common Shares in Dexter Axle Holding Company
 
 
 
 
 
1,643

 
9,591

 
 
 
 
 
 
1,643

 
9,591

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,965

 
14,965

 
14,964

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

 
2,789

 
 
 
 
 
 
16,965

 
17,753

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 5/22/2020 (10)(13)
 
 
 

 

 
(8
)
 4,950,000 Preferred Units in GRG Holdings, LP
 
 
 
 
 
495

 
171

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
500

 
163

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1% floor) cash due 8/27/2023 (13)
 
 
 
33,500

 
33,500

 
33,944

 
 
 
 
 
 
33,500

 
33,944

 Omniplex World Services Corporation (9)
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 8/19/2021
 
 
 
11,424

 
11,424

 
9,682

 500 Class A Common Units in Omniplex Holdings Corp.
 
 
 
 
 
500

 
6

 64.041 Class A-1 Common Units in Omniplex Holdings Corp.
 
 
 
 
 
104

 

 
 
 
 
 
 
12,028

 
9,688

See notes to Consolidated Financial Statements.


9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 10/8/2019
 
 
 
$
19,816

 
$
18,195

 
$
14,455

 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 4/8/2019 (13)
 
 
 
50,159

 
37,262

 
46,575

 First Lien Revolver, LIBOR+4.5% (1% floor) cash due 4/8/2019 (13)
 
 
 
 
 

 

 
 
 
 
 
 
55,457

 
61,030

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (11)
 
 
 
 
 
1,781

 
1,313

 
 
 
 
 
 
1,781

 
1,313

 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

 
18,226

 
 
 
 
 
 
24,000

 
18,226

 TravelClick, Inc.
 
Internet software & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (13)
 
 
 
2,697

 
2,461

 
2,710

 
 
 
 
 
 
2,461

 
2,710

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (11)
 
 
 
 
 
7,574

 
6,690

 
 
 
 
 
 
7,574

 
6,690

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2020
 
 
 
13,914

 
13,914

 
13,774

 
 
 
 
 
 
13,914

 
13,774

 HealthEdge Software, Inc.
 
Application software
 
 
 
 
 
 
 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918) expiration date 9/30/2023
 
 
 
 
 
213

 
726

 
 
 
 
 
 
213

 
726

 InMotion Entertainment Group, LLC
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
12,432

 
12,423

 
12,359

 First Lien Term Loan B, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,419

 
5,319

 
5,387

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,604

 
5,603

 
5,604

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
808

 
806

 
808

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

 
1,633

 
 
 
 
 
 
25,151

 
25,791

 Thing5, LLC (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 10/11/2020 (12)(13)
 
 
 
47,794

 
47,783

 
47,033

 First Lien Revolver, LIBOR+7% (1% floor) cash due 10/11/2020 (13)
 
 
 
1,000

 
999

 
1,000

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

 

 
 
 
 
 
 
50,782

 
48,033

 Kason Corporation
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 
 
 
5,980

 
5,980

 
5,760

 498.6 Class A Preferred Units in Kason Investment, LLC
 
 
 
 
 
499

 
430

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

 

 
 
 
 
 
 
6,534

 
6,190

 SPC Partners V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.571% limited partnership interest (11)
 
 
 
 
 
1,688

 
1,848

 
 
 
 
 
 
1,688

 
1,848

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

 
(167
)
 
 
 
 
 
 

 
(167
)
See notes to Consolidated Financial Statements.

10

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

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

 
$
39,144

 
$
39,178

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

 
5,902

 
 
 
 
 
 
40,102

 
45,080

 OmniSYS Acquisition Corporation
 
Diversified support services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 11/21/2018 (13)
 
 
 
5,500

 
5,485

 
5,459

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 11/21/2018 (10)(13)
 
 
 
 
 
(2
)
 
(18
)
 100,000 Common Units in OSYS Holdings, LLC
 
 
 
 
 
1,000

 
1,061

 
 
 
 
 
 
6,483

 
6,502

 Moelis Capital Partners Opportunity Fund I-B, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.0% limited partnership interest (11)
 
 
 
 
 
1,419

 
1,853

 
 
 
 
 
 
1,419

 
1,853

 Aden & Anais Merger Sub, Inc.
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
 51,645 Common Units in Aden & Anais Holdings, Inc.
 
 
 
 
 
5,165

 
3,230

 
 
 
 
 
 
5,165

 
3,230

 Lift Brands, Inc.
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 12/23/2019 (13)
 
 
 
21,521

 
21,487

 
21,455

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 12/23/2019 (10)(13)
 
 
 
 
 
(8
)
 
(46
)
 2,000,000 Class A Common Units in Snap Investments, LLC
 
 
 
 
 
2,004

 
2,797

 
 
 
 
 
 
23,483

 
24,206

 Tailwind Capital Partners II, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.3% limited partnership interest (11)
 
 
 
 
 
1,488

 
1,947

 
 
 
 
 
 
1,488

 
1,947

 Long's Drugs Incorporated (9)
 
Pharmaceuticals
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+11% cash due 2/19/2022 (13)