Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - WhiteHorse Finance, Inc.tm2020504d1_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - WhiteHorse Finance, Inc.tm2020504d1_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - WhiteHorse Finance, Inc.tm2020504d1_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - WhiteHorse Finance, Inc.tm2020504d1_ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

Form 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2020

 

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  
 1934 For the transition period from ______________ to ______________

 

Commission file number: 814-00967

 

WHITEHORSE FINANCE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware 45-4247759
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
   
1450 Brickell Avenue, 31st Floor  
Miami, Florida 33131
(Address of Principal Executive Offices) (Zip Code)

 

(305) 381-6999

(Registrant’s Telephone Number, Including Area Code)

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer x
       
Non-accelerated filer ¨ 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 Securities Exchange Act of 1934). Yes ¨ No x

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share WHF The Nasdaq Stock Market LLC
    (Nasdaq Global Select Market)
6.50% Notes due 2025 WHFBZ The Nasdaq Stock Market LLC
    (Nasdaq Global Select Market)

 

As of August 6, 2020 the Registrant had 20,546,032 shares of common stock, $0.001 par value, outstanding.

 

 

 

 

 

 

  WHITEHORSE FINANCE, INC.  
     
  TABLE OF CONTENTS  
    Page
Part I. Financial Information 3
Item 1. Financial Statements 3
  Consolidated Statements of Assets and Liabilities as of June 30, 2020 (Unaudited) and December 31, 2019 3
  Consolidated Statements of Operations for the three and six months ended June 30, 2020 (Unaudited) and 2019 (Unaudited) 4
  Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2020 (Unaudited) and 2019 (Unaudited) 5
  Consolidated Statements of Cash Flows for the six months ended June 30, 2020 (Unaudited) and 2019 (Unaudited) 7
  Consolidated Schedules of Investments as of June 30, 2020 (Unaudited) and December 31, 2019 8
  Notes to the Consolidated Financial Statements (Unaudited) 19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 47
Item 3. Quantitative and Qualitative Disclosures about Market Risk 62
Item 4. Controls and Procedures 62
Part II. Other Information 63
Item 1. Legal Proceedings 63
Item 1A. Risk Factors 63
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66
Item 3. Defaults Upon Senior Securities 66
Item 4. Mine Safety Disclosures 66
Item 5. Other Information 66
Item 6. Exhibits 66

 

2

 

 

Part I. Financial Information

 

Item 1. Financial Statements

 

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

 

   June 30, 2020   December 31, 2019 
   (Unaudited)     
Assets          
Investments, at fair value          
Non-controlled/non-affiliate company investments  $490,013   $546,744 
Non-controlled affiliate company investments   8,521    9,651 
Controlled affiliate company investments   48,863    33,293 
Total investments, at fair value (amortized cost $565,762 and $597,725, respectively)   547,397    589,688 
Cash and cash equivalents   2,263    4,294 
Restricted cash and cash equivalents   18,487    23,252 
Restricted foreign currency (cost of $143)   136     
Interest and dividend receivable   5,900    6,010 
Amounts receivable on unsettled investment transactions   297    360 
Prepaid expenses and other receivables   464    7,620 
Total assets  $574,944   $631,224 
           
Liabilities          
Debt  $252,671   $298,924 
Distributions payable   7,294    7,294 
Management and incentive fees payable   7,359    8,290 
Interest payable   1,315    1,674 
Accounts payable and accrued expenses   1,163    1,944 
Amounts payable on unsettled investment transactions   4,900     
Unrealized depreciation on foreign currency forward contracts   3     
Advances received from unfunded credit facilities   17    143 
Total liabilities   274,722    318,269 
           
Commitments and contingencies (See Note 8)          
           
Net assets          
Common stock, 20,546,032 and 20,546,032 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 authorized   21    21 
Paid-in capital in excess of par   300,744    300,744 
Accumulated earnings (deficit)   (543)   12,190 
Total net assets   300,222    312,955 
Total liabilities and total net assets  $574,944   $631,224 
           
Number of shares outstanding   20,546,032    20,546,032 
Net asset value per share  $14.61   $15.23 

 

See notes to the consolidated financial statements

 

3

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

 

   Three months ended June 30,   Six months ended June 30, 
   2020   2019   2020   2019 
Investment income                    
From non-controlled/non-affiliate company investments                    
Interest income  $12,145   $12,746   $25,284   $27,238 
Fee income   539    2,926    830    4,083 
Dividend income   30    -    79    - 
From non-controlled affiliate company investments                    
Dividend income   263    312    538    587 
From controlled affiliate company investments                    
Interest income   606    -    1,231    - 
Dividend income   240    -    393    - 
Total investment income   13,823    15,984    28,355    31,908 
                     
Expenses                    
Interest expense   3,223    3,176    6,891    6,249 
Base management fees   2,950    2,818    6,042    5,407 
Performance-based incentive fees   1,311    2,055    1,752    3,806 
Administrative service fees   171    159    342    317 
General and administrative expenses   730    532    1,610    1,214 
Total expenses, before fees waived   8,385    8,740    16,637    16,993 
Base management fee waived   -    (220)   -    (397)
Total expenses, net of fees waived   8,385    8,520    16,637    16,596 
Net investment income before excise tax   5,438    7,464    11,718    15,312 
Excise tax   198    238    376    475 
Net investment income after excise tax   5,240    7,226    11,342    14,837 
                     
Realized and unrealized gains (losses) on investments and foreign currency transactions                    
Net realized gains (losses)                    
Non-controlled/non-affiliate company investments   (77)   -    433    (2,018)
Non-controlled-affiliate company investments   -    -    -    - 
Foreign currency transactions   70    -    67    - 
Foreign currency forward contracts   (6)   -    -    - 
Net realized gains (losses)   (13)   -    500    (2,018)
Net change in unrealized appreciation (depreciation)                    
Non-controlled/non-affiliate company investments   15,841    937    (6,355)   2,925 
Non-controlled affiliate company investments   871    56    (1,130)   (520)
Controlled affiliate company investments   1,111    -    (2,842)   - 
Translation of assets and liabilities in foreign currencies   (237)   -    343    - 
Foreign currency forward contracts   (2)   -    (3)   - 
Net change in unrealized appreciation (depreciation)   17,584    993    (9,987)   2,405 
Net realized and unrealized gains (losses) on investments   17,571    993    (9,487)   387 
Net increase in net assets resulting from operations  $22,811   $8,219   $1,855   $15,224 
                     
Per Common Share Data                    
Basic and diluted earnings per common share  $1.11   $0.41   $0.09   $0.74 
Dividends and distributions declared per common share  $0.36   $0.36   $0.71   $0.71 
Basic and diluted weighted average common shares outstanding   20,546,032    20,546,032    20,546,032    20,546,032 

 

See notes to the consolidated financial statements

 

4

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)

 

   Common Stock  

Paid-in

Capital in

Excess of

  

Accumulated

Undistributed

(Overdistributed)

   Total Net 
   Shares   Par amount   Par   Earnings   Assets 
Balance at March 31, 2019   20,546,032   $21   $301,557   $13,429   $315,007 
Net increase in net assets resulting from operations:                         
Net investment income after excise tax   -    -    -    7,226    7,226 
Net realized gains (losses) on investments   -    -    -    -    - 
Net change in unrealized appreciation (depreciation) on investments   -    -    -    993    993 
Distributions declared   -    -    -    (7,294)   (7,294)
Balance at June 30, 2019   20,546,032   $21   $301,557   $14,354   $315,932 
                          
Balance at March 31, 2020   20,546,032   $21   $300,744   $(16,060)  $284,705 
Net increase in net assets resulting from operations:                         
Net investment income after excise tax   -    -    -    5,240    5,240 
Net realized gains (losses) on investments   -    -    -    (13)   (13)
Net change in unrealized appreciation (depreciation) on investments   -    -    -    17,584    17,584 
Distributions declared   -    -    -    (7,294)   (7,294)
Balance at June 30, 2020   20,546,032   $21   $300,744   $(543)  $300,222 

 

See notes to the consolidated financial statements

 

5

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)

 

   Common Stock  

Paid-in

Capital in

Excess of

  

Accumulated

Undistributed

(Overdistributed)

   Total Net 
   Shares   Par amount   Par   Earnings   Assets 
Balance at December 31, 2018   20,546,032   $21   $301,557   $13,718   $315,296 
Net increase in net assets resulting from operations:                         
Net investment income after excise tax   -    -    -    14,837    14,837 
Net realized gains (losses) on investments   -    -    -    (2,018)   (2,018)
Net change in unrealized appreciation (depreciation) on investments   -    -    -    2,405    2,405 
Distributions declared   -    -    -    (14,588)   (14,588)
Balance at June 30, 2019   20,546,032   $21   $301,557   $14,354   $315,932 
                          
Balance at December 31, 2019   20,546,032   $21   $300,744   $12,190   $312,955 
Net increase in net assets resulting from operations:                         
Net investment income after excise tax   -    -    -    11,342    11,342 
Net realized gains (losses) on investments   -    -    -    500    500 
Net change in unrealized appreciation (depreciation) on investments   -    -    -    (9,987)   (9,987)
Distributions declared   -    -    -    (14,588)   (14,588)
Balance at June 30, 2020   20,546,032   $21   $300,744   $(543)  $300,222 

 

See notes to the consolidated financial statements

 

6

 

 

WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

   Six months ended 
   June 30, 
   2020   2019 
Cash flows from operating activities          
Net increase in net assets resulting from operations  $1,855   $15,224 
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:          
Paid-in-kind income   (483)   (1,312)
Net realized (gains) losses on investments   (433)   2,018 
Net unrealized (appreciation) depreciation on investments   10,328    (2,405)
Net unrealized appreciation on translation of assets and liabilities in foreign currencies   (343)   - 
Net unrealized depreciation on foreign currency forward contracts   3    - 
Accretion of discount   (1,461)   (1,957)
Amortization of deferred financing costs   511    498 
Acquisition of investments   (66,942)   (126,192)
Proceeds from principal payments and sales of portfolio investments   54,633    64,574 
Proceeds for sales of portfolio investments to STRS JV   46,651    - 
Net changes in operating assets and liabilities:          
Interest and dividend receivable   110    352 
Prepaid expenses and other receivables   7,156    31 
Amounts receivable on unsettled investment transactions   63    2,533 
Amounts payable on unsettled investment transactions   4,899    13,253 
Management and incentive fees payable   (931)   (3,764)
Accounts payable and accrued expenses   (598)   (995)
Interest payable   (359)   (55)
Advances received from unfunded credit facilities   (125)   82 
Net cash provided by (used in) operating activities   54,534    (38,115)
           
Cash flows from financing activities          
Borrowings   74,095    76,700 
Repayments of debt   (120,694)   (7,300)
Deferred financing costs   -    (33)
Distributions paid to common stockholders, net of distributions reinvested   (14,588)   (14,588)
Net cash provided by (used in) financing activities   (61,187)   54,779 
Effect of exchange rate changes on cash   (7)   - 
Net change in cash, cash equivalents and restricted cash   (6,660)   16,664 
Cash, cash equivalents and restricted cash at beginning of period   27,546    33,732 
Cash, cash equivalents and restricted cash at end of period  $20,886   $50,396 
           
Supplemental disclosure of cash flow information:          
Interest paid  $2,806   $5,805 
Non-cash exchanges of investments   18,411    - 

 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated statements of assets and liabilities that sum to the total of the same amounts presented in the consolidated statements of cash flows:

 

   June 30,
   2020   2019 
Cash and cash equivalents  $2,263   $16,586 
Restricted cash and restricted foreign currency   18,623    33,810 
           
Total cash, cash equivalents and restricted cash presented in consolidated statements of cash flows  $20,886   $50,396 

 

See notes to the consolidated financial statements

 

7

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) 

June 30, 2020 

(in thousands)

 

Investment Type(1)  Spread
Above
Index(2)
Interest
Rate(3)
  Acquisition Date(10)  Maturity
Date
  Principal/
Share
Amount
  Amortized
Cost
  Fair
Value(11)
  Fair Value
As A
Percentage
of Net
Assets
 
North America                           
Debt Investments                           
Advertising                           
Fluent, LLC                           
First Lien Secured Term Loan  L+ 7.00%  7.50%  03/26/18  03/27/23  8,645  $8,645  $8,619  2.87%
   (0.50% Floor)                        
Connexity, Inc.                           
First Lien Secured Term Loan  L+ 8.50%  10.00%  05/21/20  05/21/25  11,000  10,678  10,675  3.56
   (1.50% Floor)                        
               19,645   19,323   19,294  6.43 
Agricultural & Farm Machinery                           
Bad Boy Mowers Acquisition, LLC                           
First Lien Secured Term Loan  L+ 5.75%  6.75%  12/19/19  12/06/25  10,333  10,049  9,816  3.27 
   (1.00% Floor)                        
Air Freight & Logistics                           
Access USA Shipping, LLC                           
First Lien Secured Term Loan  L+ 8.00%  9.50%  02/08/19  02/08/24  5,505  5,446  5,441  1.81 
   (1.50% Floor)                        
Application Software                           
Newscycle Solutions, Inc.                           
First Lien Secured Term Loan  L+ 7.00%  8.00%  06/14/19  12/29/22  5,195  5,122  4,832  1.61 
   (1.00% Floor)                        
First Lien Secured Revolving Loan  L+ 7.00%  8.00%  06/14/19  12/29/22  301  298  280  0.09 
   (1.00% Floor)                        
               5,496   5,420   5,112  1.70 
Automotive Retail                           
Team Car Care Holdings, LLC                           
First Lien Secured Term Loan(12)  base rate+ 7.99%  9.40%  02/26/18  02/23/23  16,491  16,295  15,900  5.30 
   (1.00% Floor)                        
BW Gas & Convenience Holdings, LLC                           
First Lien Secured Term Loan  L+ 6.25%  6.43%  11/15/19  11/18/24  8,288  7,993  8,039  2.68 
   (0.00% Floor)                        
               24,779   24,288   23,939  7.98 
Broadcasting                           
Alpha Media, LLC                           
First Lien Secured Term Loan  L+ 6.00%  7.00%  08/14/18  02/25/22  5,155  5,077  4,923  1.64 
   (1.00% Floor)                        
Rural Media Group, Inc.                           
First Lien Secured Term Loan  L+ 8.75%  9.75%  12/29/17  12/29/22  3,391  3,358  3,391  1.13 
   (1.00% Floor)                        
               8,546   8,435   8,314  2.77 
Cable & Satellite                           
Bulk Midco, LLC                           
First Lien Secured Term Loan(15)  P+ 6.23%  9.48%  06/08/18  06/08/23  15,000  14,868  13,725  4.57 
   (0.75% Floor)                        
Communications Equipment                           
Sorenson Communications, LLC                           
First Lien Secured Term Loan  L+ 6.50%  6.81%  03/15/19  04/29/24  4,319  4,220  4,153  1.38 
   (0.00% Floor)                        
Construction & Engineering                           
Atlas Intermediate Holdings LLC                           
First Lien Secured Term Loan  L+ 6.25%  7.25%  05/26/20  02/14/26  15,464  14,547  14,553  4.85 
   (1.00% Floor)                        
Data Processing & Outsourced Services                           
FPT Operating Company, LLC/                           
TLabs Operating Company, LLC                           
First Lien Secured Term Loan  L+ 8.25%  9.25%  12/23/16  06/07/24  24,595  24,401  23,120  7.70 
   (1.00% Floor)                        
Geo Logic Systems Ltd. (5)                           
First Lien Secured Term Loan (13)  C +6.25%  7.25%  12/19/19  12/19/24  6,795  5,089  4,701  1.57 
   (1.00% Floor)                        
First Lien Secured Revolving Loan (7)(13)  C +6.25%  7.25%  12/19/19  12/19/24  -  -  (12) - 
   (1.00% Floor)                        
               31,390   29,490   27,809  9.27 
Department Stores                           
Mills Fleet Farm Group, LLC                           
First Lien Secured Term Loan  L+ 7.00%  8.59%  10/24/18  10/24/24  13,964  13,690  12,567  4.19 
   (1.00% Floor)  (0.75%PIK)                     
Distributors                           
Crown Brands, LLC                           
First Lien Secured Term Loan  L+ 8.00%  9.50%  01/28/19  01/25/24  5,727  5,625  5,164  1.72 
   (1.50% Floor)                        
First Lien Secured Delayed Draw Loan  L+ 8.00%  9.50%  06/10/20  01/25/24  850  850  766  0.26 
   (1.50% Floor)                        
               6,577   6,475   5,930  1.98 
Diversified Capital Markets                           
TOUR Intermediate Holdings, LLC                          
First Lien Secured Delayed Draw Loan  L+ 7.00%  8.00%  06/30/20  05/15/25  1,360  1,334  1,335  0.44 
   (1.00% Floor)                        
Diversified Chemicals                           
Sklar Holdings, Inc.                           
First Lien Secured Term Loan  L+ 7.00%  9.00%  11/13/19  05/13/23  8,903  8,713  8,643  2.88 
   (1.00% Floor)  (1.00%PIK)                     

 

See notes to the consolidated financial statements

 

8

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) - (continued) 

June 30, 2020 

(in thousands)

 

Diversified Support Services                              
ImageOne Industries, LLC                              
First Lien Secured Term Loan  L+ 10.00%  11.00%  01/11/18  01/11/23  7,218     $7,058     $7,073  2.36%
   (1.00% Floor)  (4.00%PIK)                           
First Lien Secured Revolving Loan(4)(7)  L+ 10.00%  11.00%  07/22/19  12/12/22  5     5     (11) - 
   (1.00% Floor)  (4.00%PIK)                           
NNA Services, LLC                                 
First Lien Secured Term Loan  L+ 7.00%  8.50%  10/16/18  10/16/23  9,757     9,629     9,635  3.21 
   (1.50% Floor)                              
               16,980      16,692      16,697  5.57 
Education Services                                 
EducationDynamics, LLC                                 
First Lien Secured Term Loan  L+ 7.50%  8.50%  11/26/19  11/26/24  11,406     11,205     11,349  3.78 
   (1.00% Floor)                              
Food Retail                                 
AG Kings Holdings, Inc.                                 
First Lien Secured Term Loan(4)(8)  P+ 11.00%  14.25%  08/10/16  08/10/21  35,693     17,737     21,280  7.09 
   (0.75% Floor)  (2.00%PIK)                          
Health Care Facilities                                 
Grupo HIMA San Pablo, Inc.                                 
First Lien Secured Term Loan A  L+ 9.00%  9.69%  05/15/19  04/30/19  3,855     3,855     2,891  0.96 
                                  
First Lien Secured Term Loan B  L+ 9.00%  10.50%  02/01/13  04/30/19  13,511     13,511     10,133  3.38 
   (1.50% Floor)                              
Second Lien Secured Term Loan(8)  N/A  15.75%  02/01/13  07/31/18  1,028     1,024     -  - 
      (2.00%PIK)                           
               18,394      18,390      13,024  4.34 
Health Care Services                                 
CHS Therapy, LLC                                 
First Lien Secured Term Loan A  L+ 8.50%  10.00%  06/14/19  06/14/24  7,518     7,406     7,302  2.43 
   (1.50% Floor)                              
Lab Logistics, LLC                                 
First Lien Secured Term Loan  L+ 6.50%  7.56%  10/16/19  09/25/23  106     105     104  0.03 
   (1.00% Floor)                              
First Lien Secured Delayed Draw Loan  L+ 6.50%  7.73%  10/16/19  09/25/23  5,262     5,230     5,157  1.72 
   (1.00% Floor)                              
PMA Holdco, LLC                                 
First Lien Secured Term Loan  L+ 10.00%  11.00%  06/28/18  06/28/23  12,841     12,616     12,713  4.23 
   (1.00% Floor)                             
               25,727      25,357      25,276  8.41 
Home Furnishings                                 
Sure Fit Home Products, LLC                                 
First Lien Secured Term Loan(8)  L+ 9.75%  10.75%  10/26/18  07/13/22  5,215     5,157     4,206  1.40 
   (1.00% Floor)                              
Interactive Media & Services                                 
What If Media Group, LLC                                 
First Lien Secured Term Loan  L+ 6.50%  7.50%  10/02/19  10/02/24  12,756     12,539     12,692  4.23 
   (1.00% Floor)                             
Internet & Direct Marketing Retail                                 
Potpourri Group, Inc.                                 
First Lien Secured Term Loan  L+ 8.25%  9.75%  07/03/19  07/03/24  18,525     18,194     17,784  5.92 
   (1.50% Floor)                              
Investment Banking & Brokerage                                 
Arcole Acquisition Corp(5)                                 
First Lien Secured Term Loan A(4)(8)  L+ 10.25%  11.25%  11/29/18  11/30/23  5,231     5,159     4,185  1.39 
   (1.00% Floor)                              
First Lien Secured Term Loan B(4)(8)  L+ 16.50%  17.50%  11/29/18  11/30/23  1,819     1,785     1,455  0.48 
   (1.00% Floor)  (1.50%PIK)                           
JVMC Holdings Corp. (f/k/a RJO Holdings Corp)                                 
First Lien Secured Term Loan  L+ 6.50%  7.50%  02/28/19  02/28/24  14,032     13,930     13,892  4.63 
   (1.00% Floor)                              
               21,082      20,874      19,532  6.50 
IT Consulting & Other Services                                 
AST-Applications Software Technology LLC                                 
First Lien Secured Term Loan  L+ 8.00%  9.00%  01/10/17  01/10/23  4,049     4,010     4,009  1.34 
   (1.00% Floor)  (1.00%PIK)                           
Leisure Facilities                                 
Honors Holdings, LLC                                 
First Lien Secured Term Loan(16)  L+ 7.75%  8.75%  09/06/19  09/06/24  9,405     9,279     8,465  2.82 
   (1.00% Floor)                              
First Lien Secured Delayed Draw Loan(7)(16)  L+ 6.50%  8.11%  09/06/19  09/06/24  4,633      4,592      4,170  1.39 
   (1.00% Floor)                              
Lift Brands, Inc.                                 
First Lien Secured Term Loan A(8)  L+ 3.75%  4.75%  06/29/20  06/29/25  5,659      5,571      5,571  1.86 
   (1.00% Floor)                              
First Lien Secured Term Loan B(8)  N/A  9.50%  06/29/20  06/29/25  1,109     1,080     1,080  0.36 
                               
First Lien Secured Term Loan C(8)(9)  N/A  9.50%  06/29/20  N/A  1,268     1,265     1,265  0.42 
                                
               22,074      21,787      20,551  6.85 
Office Services & Supplies                                 
Empire Office, Inc.                                 
First Lien Secured Term Loan  L+ 6.75%  8.25%  04/12/19  04/12/24  11,054     10,887     10,797  3.60 
   (1.50% Floor)                              
Packaged Foods & Meats                                 
Lenny & Larry's, LLC                                 
First Lien Secured Term Loan (17)  L+ 7.95%  8.95%  05/15/18  05/15/23  11,237     11,110     10,747  3.58 
   (1.00% Floor)  (1.17%PIK)                           
Property & Casualty Insurance                                 
Policy Services Company, LLC (5)                                 
First Lien Secured Term Loan  L+ 6.25%  7.32%  03/06/20  05/31/24  6,459     6,158     6,136  2.04 
   (1.00% Floor)                              

 

See notes to the consolidated financial statements

 

9

 

 

WhiteHorse Finance, Inc. 

Consolidated Schedule of Investments (Unaudited) - (continued) 

June 30, 2020 

(in thousands)

 

Research & Consulting Services                              
Nelson Worldwide, LLC                              

First Lien Secured Term Loan

 

 L+ 9.25%  10.56%  01/09/18  01/09/23  13,041     $12,876     $12,780      4.26%
   (1.00% Floor)                                   
ALM Media, LLC                                      
First Lien Secured Term Loan  L+ 6.50%  7.50%  11/25/19  11/25/24  15,356     15,086     14,482      4.82 
   (1.00% Floor)                                   
                28,397      27,962      27,262      9.08 
Restaurants                                      
LS GFG Holdings Inc.                                      
First Lien Secured Term Loan  L+ 6.00%  6.18%  11/30/18  11/19/25  10,177     9,940     8,548      2.85 
   (0.00% Floor)                                   
Specialized Consumer Services                                      
True Blue Car Wash, LLC                                      
First Lien Secured Term Loan  L+ 8.12%  9.12%  10/17/19  10/17/24  4,405     4,329     4,361      1.45 
   (1.00% Floor)                                   
First Lien Secured Delayed Draw Loan(7)  L+ 8.12%  9.12%  10/17/19  10/17/24  667      661      659      0.22 
   (1.00% Floor)            5,072      4,990      5,020      1.67 
Specialty Chemicals                                      
Flexitallic Group SAS                                      
First Lien Secured Term Loan  L+ 6.50%  7.57%  10/28/19  10/29/26  11,691     11,425     10,756      3.58 
   (1.00% Floor)                                   
Specialized Finance                                      
Golden Pear Funding Assetco, LLC(5)                                      
Second Lien Secured Term Loan  L+ 10.50%  11.50%  09/20/18  03/20/24  17,500     17,263     17,468      5.82 
   (1.00% Floor)                                   
Oasis Legal Finance, LLC(5)                                      
Second Lien Secured Term Loan  L+ 10.75%  11.75%  09/09/16  03/09/22  12,500     12,423     12,500      4.16 
   (1.00% Floor)                                   
WHF STRS Ohio Senior Loan Fund LLC                                      
Subordinated Note(4)(5)(7)(9)(14).  L+ 6.50%  6.68%  07/19/19  N/A  41,073     41,073     41,073      13.68 
                                       
                71,073      70,759      71,041      23.66 
Systems Software                                      
Vero Parent, Inc.                                      
First Lien Secured Term Loan  L+ 6.00%  7.00%  11/06/19  08/16/24  16,469     15,010     15,971      5.32 
   (1.00% Floor)                                   
                                       
Technology Hardware, Storage & Peripherals                                      
Source Code Midco, LLC                                      
First Lien Secured Term Loan  L+ 8.25%  9.25%  05/04/18  05/04/23  22,944      22,568      22,675      7.55 
   (1.00% Floor)                                   
                                       
Trading Companies & Distributors                                      
Vessco Holdings, LLC                                      
First Lien Secured Term Loan  L+ 7.25%  8.75%  08/22/19  08/22/24  8,891      8,744      8,778      2.92 
   (1.50% Floor)                                   
                                       
Total Debt Investments               566,646      537,793      524,762      174.80 
                                       
                                       
Equity Investments                                      
Diversified Support Services                                      
Quest Events, LLC Preferred Units(4)  N/A  N/A   12/28/18  12/08/25  317     317     -      - 
ImageOne Industries, LLC Common A Units(4)  N/A  N/A   09/20/19  N/A  149     -     61      0.02 
                                       
Health Care Services                                      
Lab Logistics Preferred Units (4)  N/A  N/A   10/29/19  N/A  2     857      844      0.28 
PMA Holdco, LLC Warrants(4)  N/A  N/A   06/28/18  06/28/28  8     -     503      0.17 
                10      857      1,347      0.45 
Leisure Facilities                                      
 Lift Brands, Inc. Class A Common Stock (4)  N/A  N/A   06/29/20  N/A  2     1,955     282      0.09 
 Lift Brands, Inc. Warrants (4)  N/A  N/A   06/29/20  06/28/28  1     793     114      0.04 
                3      2,748      396      0.13 
                                       
Other Diversified Financial Services                                      
RCS Creditor Trust Class B Units(4)(6)  N/A  N/A   10/01/17  N/A  143     -     -      - 
                                       
SFS Global Holding Company Warrants(4)  N/A  N/A   06/28/18  12/28/25  -     -     -      - 
                                       
Sigue Corporation Warrants(4)  N/A  N/A   06/28/18  12/28/25  22     2,890     3,499      1.17 
                165      2,890      3,499      1.17 
Specialized Finance                                      
NMFC Senior Loan Program I LLC Units (4)(5)(6)  N/A  N/A   08/13/14  08/31/22  10,000     10,029     8,521      2.84 
                                       
WHF STRS Ohio Senior Loan Fund LLC Interests (4)(5)(7)(14)  N/A  N/A   07/19/19  N/A  10,268     10,268     7,789      2.59 
                20,268      20,297      16,310      5.43 
Trading Companies & Distributors                                      
Vessco Holdings, LLC Units(4)  N/A  N/A   08/22/19  N/A  506     860     993      0.33 
                                       
Trucking                                      
Europcar Mobility Group Earnout (4)(5)  N/A  N/A   10/31/19  12/31/22  -     -     29      0.01 
                                       
Total Equity Investments               21,418      27,969      22,635      7.54 
                                       
Total Investments               588,064     $565,762     $547,397      182.34%

 

See notes to the consolidated financial statements 

 

10

 

 

A summary of outstanding financial instruments at June 30, 2020 is as follows:

 

Forward Currency Contracts

 

   Currency to be  Currency to be     Unrealized   Unrealized 
Counterparty  sold  purchased  Settlement date  appreciation ($)   depreciation ($) 
Morgan Stanley   C$ 1,999 CAD  $ 1,468 USD  09/30/2020  $-   $(3)
            $-   $(3)

 

See notes to the consolidated financial statements

 

11

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited) - (continued)

June 30, 2020

(in thousands)

 

(1)Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

 

(2)The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Canadian Dollar Offered Rate (“CDOR” or “C”) or the U.S. Prime Rate as published by the Wall Street Journal (“Prime” or “P”). The one, three and six-month LIBOR were 0.2%, 0.3% and 0.4%, respectively, as of June 30, 2020. The Prime was 3.3% as of June 30, 2020. The CDOR was 0.6% as of June 30, 2020.

 

(3)The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.

 

(4)The investment or a portion of the investment does not provide collateral for the Company’s credit facility.

 

(5)Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 82% of total assets as of the date of the consolidated schedule of investments.

 

(6)Investment is a non-controlled/affiliate investment as defined by the 1940 Act.

 

(7)The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of June 30, 2020. See Note 8.

 

(8)The investment is on non-accrual status.

 

(9)Security is perpetual with no defined maturity date.

 

(10)Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 182% of the Company’s net assets or 95% of the Company’s total assets, are subject to legal restrictions on sales.

 

(11)The fair value of each investment was determined using significant unobservable inputs. See Note 5.

 

(12)The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

 

(13)Principal amount is denominated in Canadian dollars.

 

(14)Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.

 

(15)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

 

(16) In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.

 

(17)

In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder. 

 

See notes to consolidated financial statements

 

12

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments 

December 31, 2019 

(in thousands)

 

                           Fair Value
As A
 
   Spread            Principal/          Percentage 
   Above  Interest   Acquisition  Maturity  Share   Amortized  Fair   of Net 
Investment Type(1)  Index(2)  Rate(3)   Date(10)  Date  Amount   Cost  Value(11)   Assets 
North America                                 
Debt Investments                                 
Advertising                                 
Fluent, LLC                                 
First Lien Secured Term Loan  L+ 7.00%   8.80%  03/26/18  03/26/24   9,337   $9,337  $9,337    2.98%
   (0.50% Floor)                              
Agricultural & Farm Machinery                                 
Bad Boy Mowers Acquisition, LLC                                 
First Lien Secured Term Loan  L+ 5.75%   7.38%  12/19/19  12/06/25   10,385    10,073   10,073    3.22 
   (1.00% Floor)                              
Air Freight & Logistics                                 
Access USA Shipping, LLC                                 
First Lien Secured Term Loan  L+ 8.00%   9.80%  02/08/19  02/08/24   5,651    5,581   5,600    1.79 
   (1.00% Floor)                              
Application Software                                 
Newscycle Solutions, Inc.                                 
First Lien Secured Term Loan  L+ 7.00%   8.80%  06/14/19  12/29/22   5,263    5,174   5,136    1.64 
   (1.00% Floor)                              
First Lien Secured Revolving Loan(7)  L+ 6.50%   9.77%  06/14/19  12/29/22   265    262   259    0.08 
  (1.00% Floor)                              
                  5,528    5,436   5,395    1.72 
Automotive Retail                                 
Team Car Care Holdings, LLC                                 
First Lien Secured Term Loan(12)  base rate+ 7.99%   10.05%  02/26/18  02/26/23   16,722    16,485   16,722    5.34 
   (1.00% Floor)                              
BW Gas & Convenience Holdings, LLC                                 
First Lien Secured Term Loan  L+ 6.25%   8.00%  11/15/19  11/18/24   8,500    8,164   8,168    2.61 
   (1.00% Floor)                              
                  25,222    24,649   24,890    7.95 
Broadcasting                                 
Alpha Media, LLC                                 
First Lien Secured Term Loan  L+ 6.00%   7.87%  08/14/18  02/25/22   5,405    5,299   5,405    1.73 
   (1.50% Floor)                              
Rural Media Group, Inc.                                 
First Lien Secured Term Loan  L+ 7.71%   9.64%  12/29/17  12/29/22   7,133    7,050   6,991    2.23 
   (1.00% Floor)                              
                  12,538    12,349   12,396    3.96 
Cable & Satellite                                 
Bulk Midco, LLC                                 
First Lien Secured Term Loan  P+ 6.27%   11.02%  06/08/18  06/08/23   15,000    14,845   14,250    4.45 
   (2.25% Floor)                              
Communications Equipment                                 
Sorenson Communications, LLC                                 
First Lien Secured Term Loan  L+ 6.50%   8.44%  03/15/19  04/29/24   4,875    4,749   4,857    1.55 
   (0.00% Floor)                              
Data Processing & Outsourced Services                                 
FPT Operating Company, LLC/ TLabs                                 
Operating Company, LLC                                 
First Lien Secured Term Loan  L+ 8.25%   9.94%  06/07/19  06/07/24   24,907    24,685   24,284    7.76 
   (1.00% Floor)                              
Geo Logic Systems Ltd.(5)                                 
First Lien Secured Term Loan(13)  C+ 6.25%   8.26%  12/19/19  12/19/24   21,718    16,231   16,415    5.25 
   (1.00% Floor)                              
First Lien Secured Revolving Loan(7)(13)  C+ 6.25%                              
  (1.00% Floor)   8.26%  12/19/19  12/19/24   -    -   -    - 
                  46,625    40,916   40,699    13.01 

 

See notes to consolidated financial statements

 

13

 

 

Whitehorse Finance, Inc.

Consolidated Schedule of Investments - (Continued)

December 31, 2019

(in thousands)

 

                           Fair Value
As A
 
   Spread           Principal/           Percentage 
   Above  Interest  Acquisition  Maturity  Share   Amortized   Fair   of Net 
Investment Type(1)  Index(2)  Rate(3)  Date(10)  Date  Amount   Cost   Value(11)   Assets 
Department Stores                                
Mills Fleet Farm Group, LLC                                
First Lien Secured Term Loan  L+ 7.00%  9.04%  10/24/18   10/24/24   14,883   $14,591   $13,544    4.33%
   (1.00% Floor)  (0.75%PIK)                          
Distributors                                
Crown Brands, LLC                                
First Lien Secured Term Loan  L+ 8.00%  9.80%  01/28/19   01/25/24   5,727    5,610    5,596    1.79 
   (1.50% Floor)                             
First Lien Secured Delayed Draw Loan(7)  L+ 8.00%  9.80%  01/28/19   01/25/24           (2)    
  (1.50% Floor)                             
                5,727    5,610    5,594    1.79 
Diversified Chemicals                                
Sklar Holdings, Inc.                                
First Lien Secured Term Loan  L+ 6.00%  7.99%  11/13/19   05/13/23   8,902    8,731    8,731    2.79 
   (1.00% Floor)  (1.00%PIK)                          
First Lien Secured Revolving Loan(7)  L+ 6.00%  7.99%  11/13/19   05/13/20