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EX-32.2 - EXHIBIT 32.2 - WhiteHorse Finance, Inc.tm2118591d1_ex32-2.htm
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EX-31.2 - EXHIBIT 31.2 - WhiteHorse Finance, Inc.tm2118591d1_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - WhiteHorse Finance, Inc.tm2118591d1_ex31-1.htm

 

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, DC 20549

 

Form 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2021

 

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)

 

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)

 

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 ☒ 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 ¨
       
Non-accelerated filer x 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

 

As of August 4, 2021 the Registrant had 20,841,977 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, 2021 (Unaudited) and December 31, 2020 3
  Consolidated Statements of Operations for the three and six months ended June 30, 2021 (Unaudited) and 2020 (Unaudited) 4
  Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2021 (Unaudited) and 2020 (Unaudited) 5
  Consolidated Statements of Cash Flows for the six months ended June 30, 2021 (Unaudited) and 2020 (Unaudited) 6
  Consolidated Schedules of Investments as of June 30, 2021 (Unaudited) and December 31, 2020 7
  Notes to the Consolidated Financial Statements (Unaudited) 19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49
Item 3. Quantitative and Qualitative Disclosures about Market Risk 65
Item 4. Controls and Procedures 65
Part II. Other Information 66
Item 1. Legal Proceedings 66
Item 1A. Risk Factors 66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 68
Item 3. Defaults Upon Senior Securities 68
Item 4. Mine Safety Disclosures 68
Item 5. Other Information 68
Item 6. Exhibits 68

 

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, 2021   December 31, 2020 
   (Unaudited)     
Assets          
Investments, at fair value          
Non-controlled/non-affiliate company investments  $602,576   $623,777 
Non-controlled affiliate company investments   6,008    15,717 
Controlled affiliate company investments   61,891    51,241 
Total investments, at fair value (amortized cost $678,680 and $695,429, respectively)   670,475    690,735 
Cash and cash equivalents   10,329    8,062 
Restricted cash and cash equivalents   7,037    7,549 
Restricted foreign currency (cost of $378 and $319, respectively)   397    333 
Interest and dividend receivable   7,076    6,532 
Amounts receivable on unsettled investment transactions   1,021    4,717 
Escrow receivable   2,236     
Prepaid expenses and other receivables   1,154    1,061 
Total assets  $699,725   $718,989 
           
Liabilities          
Debt  $358,719   $384,880 
Distributions payable   7,357    7,294 
Management fees payable   3,357    3,354 
Incentive fees payable   6,994    6,117 
Amounts payable on unsettled investment transactions       497 
Interest payable   1,848    1,870 
Accounts payable and accrued expenses   1,437    1,708 
Advances received from unfunded credit facilities   392    372 
Total liabilities   380,104    406,092 
           
Commitments and contingencies (See Note 8)          
           
Net assets          
Common stock, 20,722,596 and 20,546,032 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 shares authorized   21    21 
Paid-in capital in excess of par   302,711    300,002 
Accumulated earnings   16,889    12,874 
Total net assets   319,621    312,897 
Total liabilities and total net assets  $699,725   $718,989 
           
Number of shares outstanding   20,722,596    20,546,032 
Net asset value per share  $15.42   $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,  
    2021     2020     2021     2020  
Investment income                                
From non-controlled/non-affiliate company investments                                
Interest income   $ 14,148     $ 12,145     $ 28,960     $ 25,284  
Fee income     350       539       1,121       830  
Dividend income     65       30       109       79  
From non-controlled affiliate company investments                                
Dividend income     717       263       967       538  
From controlled affiliate company investments                                
Interest income     738       606       1,457       1,231  
Dividend income     1,325       240       2,699       393  
Total investment income     17,343       13,823       35,313       28,355  
                                 
Expenses                                
Interest expense     3,811       3,223       7,613       6,891  
Base management fees     3,357       2,950       6,701       6,042  
Performance-based incentive fees     2,628       1,311       4,670       1,752  
Administrative service fees     170       171       341       342  
General and administrative expenses     875       730       1,696       1,610  
Total expenses     10,841       8,385       21,021       16,637  
Net investment income before excise tax     6,502       5,438       14,292       11,718  
Excise tax     402       198       592       376  
Net investment income after excise tax     6,100       5,240       13,700       11,342  
                                 
Realized and unrealized gains (losses) on investments and foreign currency transactions                                
Net realized gains (losses)                                
Non-controlled/non-affiliate company investments     (555 )     (77 )     7,605       433  
Non-controlled-affiliate company investments    

     

     

     

 
Foreign currency transactions     (4 )     70       (3 )     67  
Foreign currency forward contracts     (4 )     (6 )     (4 )    

 
Net realized gains (losses)     (563 )     (13 )     7,598       500  
Net change in unrealized appreciation (depreciation)                                
Non-controlled/non-affiliate company investments     4,407       15,841       (2,568 )     (6,355 )
Non-controlled affiliate company investments     755       871       321       (1,130 )
Controlled affiliate company investments     (149 )     1,111       (269 )     (2,842 )
Translation of assets and liabilities in foreign currencies     (40 )     (237 )     (102 )     343  
Foreign currency forward contracts     1       (2 )    

      (3 )
Net change in unrealized appreciation (depreciation)     4,974       17,584       (2,618 )     (9,987 )
Net realized and unrealized gains (losses) on investments     4,411       17,571       4,980       (9,487 )
Net increase in net assets resulting from operations   $ 10,511     $ 22,811     $ 18,680     $ 1,855  
                                 
Per Common Share Data                                
Basic and diluted earnings per common share   $ 0.51     $ 1.11     $ 0.91     $ 0.09  
Dividends and distributions declared per common share   $ 0.36     $ 0.36     $ 0.71     $ 0.71  
Basic and diluted weighted average common shares outstanding     20,626,340       20,546,032       20,589,159       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)

 

           Paid-in   Accumulated     
           Capital in   Undistributed     
   Common Stock   Excess of   (Overdistributed)   Total Net 
   Shares   Par amount   Par   Earnings   Assets 
Balance at December 31, 2020   20,546,032   $21   $300,002   $12,874   $312,897 
Stock issued in connection with at-the-market offering   37,803        590        590 
Net increase in net assets resulting from operations:                         
Net investment income after excise tax       

        7,600    7,600 
Net realized gains (losses) on investments   

    

    

    8,161    8,161 
Net change in unrealized appreciation (depreciation) on investments   

    

    

    (7,592)   (7,592)

Distributions declared

   

    

    

    (7,307)   (7,307)
Balance at March 31, 2021   20,583,835   $21   $300,592   $13,736   $314,349 
Stock issued in connection with at-the-market offering   124,252        1,894        1,894 
Stock issued in connection with dividend reinvestment plan     14,509             225             225  
Net increase in net assets resulting from operations:                         
Net investment income after excise tax       

        6,100    6,100 
Net realized gains (losses) on investments   

    

    

    (563)   (563)
Net change in unrealized appreciation (depreciation) on investments   

    

        4,974    4,974 

Distributions declared

   

    

    

    (7,358)   (7,358)
Balance at June 30, 2021   20,722,596   $21   $302,711   $16,889   $319,621 

 

 

           Paid-in   Accumulated     
           Capital in   Undistributed     
   Common Stock   Excess of   (Overdistributed)   Total Net 
   Shares   Par amount   Par   Earnings   Assets 
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               6,102    6,102 
Net realized gains (losses) on investments   

    

    

    513    513 
Net change in unrealized appreciation (depreciation) on investments   

    

    

    (27,571)   (27,571)
Distributions declared   

        

    (7,294)   (7,294)
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 Cash Flows (Unaudited)

(in thousands)

 

    Six months ended June 30,  
    2021     2020  
Cash flows from operating activities                
Net increase in net assets resulting from operations   $ 18,680     $ 1,855  
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:                
Paid-in-kind income     (686 )     (483 )
Net realized gains on investments     (7,605 )     (433 )
Net unrealized (appreciation) depreciation on investments     2,517       10,328  
Net unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies     102       (343 )
Net unrealized depreciation on foreign currency forward contracts    

      3  
Accretion of discount     (3,505 )     (1,461 )
Amortization of deferred financing costs     661       511  
Acquisition of investments     (190,795 )     (66,942 )
Proceeds from principal payments and sales of portfolio investments     169,565       54,633  
Proceeds for sales of portfolio investments to STRS JV     49,774       46,651  
Net changes in operating assets and liabilities:                
Interest and dividend receivable     (544 )     110  
Escrow receivable     (1,241 )    

 
Prepaid expenses and other receivables     (93 )     7,156  
Amounts receivable on unsettled investment transactions     3,696       63  
Amounts payable on unsettled investment transactions     (497 )     4,899  
Management fees payable     3       (110 )
Incentive fees payable     877       (821 )
Accounts payable and accrued expenses     268       (598 )
Interest payable     (22 )     (359 )
Advances received from unfunded credit facilities     20       (125 )
Net cash provided by operating activities     40,635       54,534  
                 
Cash flows from financing activities                
Proceeds from sales of common stock, net of offering costs     2,483      

 
Borrowings     106,818       74,095  
Repayments of debt     (133,701 )     (120,694 )
Deferred financing costs     (46 )    

 
Distributions paid to common stockholders, net of distributions reinvested     (14,376 )     (14,588 )
Net cash used in financing activities     (38,822 )     (61,187 )
Effect of exchange rate changes on cash     4       (7 )
Net change in cash, cash equivalents and restricted cash     1,817       (6,660 )
Cash, cash equivalents and restricted cash at beginning of period     15,946       27,546  
Cash, cash equivalents and restricted cash at end of period   $ 17,763     $ 20,886  
                 
Supplemental disclosure of cash flow information:                
Interest paid   $ 6,979     $ 6,753  
Non-cash exchanges of investments     10,920       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, 
   2021   2020 
Cash and cash equivalents  $10,329   $2,263 
Restricted cash and restricted foreign currency   7,434    18,623 
Total cash, cash equivalents and restricted cash presented in consolidated statements of cash flows  $17,763   $20,886 

 

See notes to the consolidated financial statements

6

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 2021

(in thousands)

 

Issuer  Investment
Type(1)
  Floor  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                                      
SmartSign Holdings LLC  First Lien Secured Term Loan  1.00%  L+ 7.50%  8.50%  08/21/20  10/11/24   7,705   $7,583   $7,705    2.41%
                      7,705    7,583    7,705    2.41 
Air Freight & Logistics                                      
Access USA Shipping, LLC  First Lien Secured Term Loan  1.50%  L+ 8.00%  9.50%  02/08/19  02/08/24   5,083    5,043    5,083    1.59 
                      5,083    5,043    5,083    1.59 
Application Software                                      
Atlas Purchaser, Inc. (dba Aspect Software)  Second Lien Secured Term Loan  0.75%  L+ 9.00%  9.75%  05/06/21  05/06/29   15,000    14,558    14,558    4.55 
Connexity, Inc.  First Lien Secured Term Loan  1.50%  L+ 8.50%  10.00%  05/21/20  05/21/25   9,454    9,234    9,454    2.96 
Newscycle Solutions, Inc.  First Lien Secured Term Loan  1.00%  L+ 7.00%  8.00%  06/14/19  12/29/22   3,229    3,202    3,217    1.01 
Newscycle Solutions, Inc.(7)  First Lien Secured Revolving Loan  1.00%  L+ 7.00%  8.00%  06/14/19  12/29/22   169    168    168    0.05 
TaxSlayer LLC  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  12/31/20  12/31/26   6,779    6,655    6,655    2.08 
TaxSlayer LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.50%  7.50%  12/31/20  12/31/26   

    

    

    

 
                      34,631    33,817    34,052    10.65 
Automotive Retail                                      
Team Car Care Holdings, LLC(12)  First Lien Secured Term Loan 

1.02%

  Base rate+ 7.99%  9.01%  02/26/18  02/23/23   15,678    15,561    15,629    4.89 
                      15,678    15,561    15,629    4.89 
Building Products                                      
Drew Foam Companies Inc  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50% 

11/05/20

  11/05/25   7,244    7,115    7,118    2.23 
LHS Borrower, LLC  First Lien Secured Term Loan  1.00%  L+ 6.75%  7.75%  09/30/20  09/30/25   9,567    9,385    9,496    2.97 
LHS Borrower, LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.75%  7.75%  09/30/20  09/30/25   

    

    7    

 
                      16,811    16,500    16,621    5.20 
Cable & Satellite                                      
Bulk Midco, LLC(15)  First Lien Secured Term Loan  1.00%  L+ 7.34%  8.34%  06/08/18  06/08/23   15,000    14,913    14,250    4.46 
                      15,000    14,913    14,250    4.46 
Construction & Engineering                                      
SFP Holding, Inc. 

First Lien Secured Term Loan

  1.00%  L+ 6.25%  7.25%  06/22/21  09/01/23   2,295    2,246    2,272    0.71 
Tensar Corp.  First Lien Secured Term Loan  1.00%  L+ 6.75%  7.75%  11/20/20  08/20/25   6,965    6,813    6,930    2.17 
                      9,260    9,059    9,202    2.88 
Construction Materials                                      
Claridge Products and Equipment, LLC  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  12/30/20  12/29/25   7,960    7,817    7,846    2.45 
Claridge Products and Equipment, LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.50%  7.50%  12/30/20  12/29/25   

        3     
                      7,960    7,817    7,849    2.45 
Commodity Chemicals                                      
Flexitallic Group SAS  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  10/28/19  10/29/26   11,893    11,671    11,299    3.54 
                      11,893    11,671    11,299    3.54 
Consumer Finance                                      
Maxitransfers Blocker Corp  First Lien Secured Term Loan  1.00%  L+ 8.50%  9.50%  10/07/20  10/07/25   8,757    8,580    8,657    2.71 
Maxitransfers Blocker Corp(4)(7)  First Lien Secured Revolving Loan  1.00%  L+ 8.50%  9.50%  10/07/20  10/07/25           9     
                      8,757    8,580    8,666    2.71 
Data Processing & Outsourced Services                                      
Escalon Services Inc  First Lien Secured Term Loan  1.00%  L+ 13.50%  14.50% (13.00% Cash + 1.50% PIK)  12/04/20  12/04/25   8,024    7,394    7,661    2.40 
FPT Operating Company, LLC/ TLabs Operating Company, LLC  First Lien Secured Term Loan  1.00%  L+ 8.25%  9.25%  12/23/16  06/07/24   24,312    24,095    24,155    7.56 
Geo Logic Systems Ltd.(5)(12)(13)  First Lien Secured Term Loan  1.00%  C+ 6.50%  7.50%  12/19/19  12/19/24   6,623    4,982    5,236    1.64 
Geo Logic Systems Ltd. (5)(7)(13)  First Lien Secured Revolving Loan  1.00%  C+ 6.50%  7.50%  12/19/19  12/19/24           (2)    
E-Phoenix Acquisition Co. Inc. (dba Integreon)  First Lien Secured Term Loan  1.00%  L+ 5.75%  6.75%  06/23/21  06/23/27   9,000    8,888    8,888    2.78 
                      47,959    45,359    45,938    14.38 

 

See notes to the consolidated financial statements

 

7

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 2021

(in thousands) 

Issuer  Investment
Type(1)
  Floor  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
 
Department Stores                                      
Mills Fleet Farm Group, LLC  First Lien Secured Term Loan  1.00%  L+ 6.00%  7.00%  10/24/18  10/24/24   13,538    $13,308    $13,538    4.24
                      13,538    13,308    13,538    4.24 
Distributors                                      
Crown Brands, LLC(19)  Second Lien Secured Term Loan  1.50%  L+ 10.50%  12.00%  12/15/20  01/08/26   4,379    4,287    3,673    1.15 
Crown Brands, LLC(19)  Second Lien Secured Delayed Draw Loan  1.50%  L+ 10.50%  12.00%  12/15/20  01/08/26   650    650    545    0.17 
                      5,029    4,937    4,218    1.32 
Diversified Chemicals                                      
Sklar Holdings, Inc.  First Lien Secured Term Loan  1.00%  L+ 7.75%  8.75%  11/13/19  05/13/23   7,451    7,335    7,451    2.33 
                      7,451    7,335    7,451    2.33 
Diversified Support Services                                      
NNA Services, LLC  First Lien Secured Term Loan  1.50%  L+ 7.00%  8.50%  10/16/18  10/16/23   13,174    13,032    13,174    4.12 
                      13,174    13,032    13,174    4.12 
Education Services                                      
EducationDynamics, LLC  First Lien Secured Term Loan  1.00%  L+ 7.75%  8.75%  11/26/19  11/26/24   12,232    12,059    12,232    3.83 
                      12,232    12,059    12,232    3.83 
Electronic Equipment & Instruments                                      
LMG Holdings, Inc.  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  04/30/21  04/30/26   6,836    6,704    6,704    2.10 
LMG Holdings, Inc.(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.50%  7.50%  04/30/21  04/30/26   

    

    

    

 
                      6,836    6,704    6,704    2.10 
Health Care Facilities                                      
Epiphany Dermatology  First Lien Secured Term Loan  1.00%  L+ 7.50%  8.50%  12/04/20  06/22/23   3,483    3,415    3,431    1.07 
Epiphany Dermatology(7)  First Lien Secured Revolving Loan  1.00%  L+ 7.50%  8.50%  12/04/20  06/22/23   

    

    2    

 
Epiphany Dermatology(7)  First Lien Secured Delayed Draw Loan  1.00%  L+ 7.50%  8.50%  12/04/20  06/22/23   

    

    14    

 
Grupo HIMA San Pablo, Inc.(8)  First Lien Secured Term Loan A  N/A  L+ 9.00%  9.18%  05/05/19  04/30/19   3,855    3,855    2,146    0.67 
Grupo HIMA San Pablo, Inc.(8)  First Lien Secured Term Loan B  1.50%  L+ 9.00%  10.50%  02/01/13  04/30/19   13,511    13,511    7,521    2.35 
Grupo HIMA San Pablo, Inc.(8)  Second Lien Secured Term Loan  N/A  L+ 15.75%  15.75% (13.75% Cash + 2.00% PIK)  02/01/13  07/31/18   1,028    1,024    

    

 
                      21,877    21,805    13,114    4.09 
Health Care Services                                      
CHS Therapy, LLC  First Lien Secured Term Loan A  1.50%  L+ 8.50%  10.00%  06/14/19  06/14/24   7,326    7,244    7,325    2.29 
CHS Therapy, LLC  First Lien Secured Term Loan C  1.50%  L+ 8.50%  10.00%  10/07/20  06/14/24   901    886    901    0.28 
DCA Investment Holding, LLC  First Lien Secured Term Loan  0.75%  L+ 6.25%  7.00%  03/12/21  03/12/27   7,060    6,959    6,959    2.18 
DCA Investment Holding, LLC(7)  First Lien Secured Delayed Draw Loan  0.75%  L+ 6.25%  7.00%  03/12/21  03/12/27   

    

    

    

 
Ivy Rehab Holdings LLC  First Lien Secured Term Loan  1.00%  L+ 6.75%  7.75%  12/04/20  12/04/24   8,811    8,660    8,811    2.76 
Ivy Rehab Holdings LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.75%  7.75%  12/04/20  12/04/24   

    

    9    

 
Ivy Rehab Holdings LLC(7)  First Lien Secured Delayed Draw Loan  1.00%  L+ 6.75%  7.75%  12/04/20  12/04/24   377    370    398    0.12 
Lab Logistics, LLC  First Lien Secured Term Loan  1.00%  L+ 7.25%  8.25%  10/16/19  09/25/23   1,161    1,141    1,153    0.36 
Lab Logistics, LLC  First Lien Secured Delayed Draw Loan  1.00%  L+ 7.25%  8.25%  10/16/19  09/25/23   5,210    5,188    5,210    1.63 
PG Dental New Jersey Parent, LLC  First Lien Secured Term Loan  1.00%  L+ 7.75%  8.75%  11/25/20  11/25/25   16,089    15,770    15,903    4.98 
PG Dental New Jersey Parent, LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 7.75%  8.75%  11/25/20  11/25/25   

    

    10    

 
                      46,935    46,218    46,679    14.60 
Heavy Electrical Equipment                                      
PPS CR Acquisition, Inc. (dba Power Plant Services)  First Lien Secured Term Loan  1.00%  L+ 6.25%  7.25%  06/25/21  06/25/26   11,179    10,956    10,956    3.43 
PPS CR Acquisition, Inc. (dba Power Plant Services)(7)  First Lien Secured Revolving Loan  1.00%  L+ 7.25%  8.25%  06/25/21  06/25/24   104    102    102    0.03 
                      11,283    11,058    11,058    3.46 
Home Furnishings                                      
Sure Fit Home Products, LLC  First Lien Secured Term Loan  1.00%  L+ 9.75%  10.75%  04/12/21  07/13/23   4,982    4,868    4,434    1.39 
                      4,982    4,868    4,434    1.39 
Household Products                                      
The Kyjen Company, LLC (dba Outward Hound)  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  04/05/21  04/05/26   11,460    11,297    11,297    3.53 
The Kyjen Company, LLC (dba Outward Hound)(7) 

First Lien Secured Revolving Loan

  1.00%  L+ 6.50%  7.50%  04/05/21  04/05/26   385    379    379    0.12 
                      11,845    11,676    11,676    3.65 
Interactive Media & Services                                      
What If Media Group, LLC  First Lien Secured Term Loan  1.00%  L+ 7.00%  8.00%  10/02/19  10/02/24   17,448    17,194    17,356    5.43 
                      17,448    17,194    17,356    5.43 
Internet & Direct Marketing Retail                                      
BBQ Buyer, LLC  First Lien Secured Term Loan  1.50%  L+ 8.00%  9.50%  08/28/20  08/28/25   12,666    12,396    12,878    4.03 
Luxury Brand Holdings, Inc.  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  12/04/20  06/04/26   5,970    5,863    5,970    1.87 
Potpourri Group, Inc.  First Lien Secured Term Loan  1.50%  L+ 8.25%  9.75%  07/03/19  07/03/24   18,151    17,905    18,151    5.68 
                      36,787    36,164    36,999    11.58 

 

See notes to the consolidated financial statements

 

8

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 2021

(in thousands)

 

Issuer  Investment
Type(1)
  Floor  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
 
Investment Banking & Brokerage                                     
JVMC Holdings Corp. (f/k/a RJO Holdings Corp)  First Lien Secured Term Loan  1.00%  L+ 7.25%  8.25%  02/28/19  02/28/24  13,163    $13,093    $13,163    4.12
                     13,163    13,093    13,163    4.12 
IT Consulting & Other Services                                     
AST-Applications Software Technology LLC  First Lien Secured Term Loan  1.00%  L+ 8.00%  9.00% (8.00% Cash + 1.00% PIK)  01/10/17  01/10/23  3,988    3,965    3,988    1.25 
Cennox Holdings Limited(5)(13)  First Lien Secured Term Loan  1.00%  L+ 6.00%  7.00%  05/04/21  05/04/26  2,880    3,928    3,906    1.22 
Cennox Holdings Limited(5)(7)(12)(13)  First lien Secured Revolving Loan 

2.50%

 

L+ 5.33%

 

7.83%

  05/04/21  05/04/26  432    588    586    0.18 
Core BTS, Inc.  First Lien Secured Term Loan  1.50%  L+ 6.75%  8.25%  02/01/21  08/30/25  3,325    3,264    3,289    1.03 
Core BTS, Inc.  First Lien Secured Delayed Draw Loan  1.50%  L+ 6.75%  8.25%  02/01/21  08/30/25  1,663    1,631    1,628    0.51 
                     12,288    13,376    13,397    4.19 
Leisure Facilities                                     
Honors Holdings, LLC(16)  First Lien Secured Term Loan  1.00%  L+ 7.81%  8.81% (8.31% Cash + 0.50% PIK)  09/06/19  09/06/24  9,440    9,300    9,156    2.86 
Honors Holdings, LLC(16)  First Lien Secured Delayed Draw Loan  1.00%  L+ 7.62%  8.62% (8.04% Cash + 0.58% PIK)  09/06/19  09/06/24  4,649    4,606    4,509    1.41 
Lift Brands, Inc. (aka Snap  Fitness Holdings, Inc.)  First Lien Secured Term Loan A  1.00%  L+ 7.50%  8.50%  06/29/20  06/29/25  5,659    5,589    5,571    1.74 
Lift Brands, Inc. (aka Snap  Fitness Holdings, Inc.)  First Lien Secured Term Loan B  N/A  9.50%  9.50% (0.00% Cash + 9.50% PIK)  06/29/20  06/29/25  1,219    1,196    1,187    0.37 
Lift Brands, Inc. (aka Snap  Fitness Holdings, Inc.)(9)  First Lien Secured Term Loan C  N/A  9.50%  9.50% (0.00% Cash + 9.50% PIK)  06/29/20  NA  1,268    1,265    1,218    0.38 
                     22,235    21,956    21,641    6.76 
Leisure Products                                     
PlayMonster LLC  First Lien Secured Term Loan  1.00%  L+ 6.00%  7.00%  06/07/21  06/07/26  6,000    5,882    5,882    1.84 
PlayMonster LLC(7)  First Lien Secured Delayed Draw Loan  1.00%  L+ 6.00%  7.00%  06/07/21  06/07/26 

    

    

    

 
                     6,000    5,882    5,882    1.84 
Office Services & Supplies                                     
American Crafts, L.C.  First Lien Secured Term Loan  1.00%  L+ 8.50%  9.50%  05/28/21  05/28/26  8,500    8,375    8,373    2.62 
Empire Office, Inc.  First Lien Secured Term Loan  1.50%  L+ 6.75%  8.25%  04/12/19  04/12/24  8,795    8,697    8,795    2.75 
                     17,295    17,072    17,168    5.37 
Packaged Foods & Meats                                     
Lenny & Larry's, LLC(17)  First Lien Secured Term Loan  1.00%  L+ 8.41%  9.41% (7.69% Cash + 1.72% PIK)  05/15/18  05/15/23  11,046    10,966    10,554    3.30 
                     11,046    10,966    10,554    3.30 
Personal Products                                     
Inspired Beauty Brands, Inc.  First Lien Secured Term Loan  1.00%  L+ 7.00%  8.00%  12/30/20  12/30/25  12,475    12,250    12,250    3.83 
Inspired Beauty Brands, Inc.(7)  First Lien Secured Revolving Loan  1.00%  L+ 7.00%  8.00%  12/30/20  12/30/25 

    

    

    

 
                     12,475    12,250    12,250    3.83 
Property & Casualty Insurance                                     
Policy Services Company, LLC (5)  First Lien Secured Term Loan  1.00%  L+ 6.00%  7.00%  03/06/20  05/31/24  6,062    5,851    5,940    1.86 
                     6,062    5,851    5,940    1.86 
Research & Consulting Services                                     
ALM Media, LLC  First Lien Secured Term Loan  1.00%  L+ 7.00%  8.00%  11/25/19  11/25/24  14,527    14,330    14,091    4.41 
Nelson Worldwide, LLC  First Lien Secured Term Loan  1.00%  L+ 10.25%  11.25% (10.25% Cash + 1.00% PIK)  01/09/18  01/09/23  10,639    10,558    10,533    3.30 
                     25,166    24,888    24,624    7.71 
Restaurants                                     
LS GFG Holdings Inc.  First Lien Secured Term Loan  1.00%  L+ 8.00%  9.00% (7.00% Cash + 2.00% PIK)  11/30/18  11/19/25  10,842    10,155    10,842    3.39 
                     10,842    10,155    10,842    3.39 
Specialized Consumer Services                                     
True Blue Car Wash, LLC  First Lien Secured Term Loan  1.00%  L+ 7.12%  8.12%  10/17/19  10/17/24  4,293    4,236    4,293    1.34 
True Blue Car Wash, LLC(7)  First Lien Secured Delayed Draw Loan  1.00%  L+ 7.12%  8.12%  10/17/19  10/17/24  2,943    2,913    2,942    0.92 
                     7,236    7,149    7,235    2.26 
Specialized Finance                                     
Golden Pear Funding Assetco, LLC(5)  Second Lien Secured Term Loan  1.00%  L+ 10.50%  11.50%  09/20/18  03/20/24  10,938    10,829    10,938    3.42 
WHF STRS Ohio Senior Loan Fund LLC(4)(5)(7)(9)(14)  Subordinated Note  N/A  L+ 6.50%  6.59%  07/19/19  N/A  49,809    49,809    49,809    15.58 
                     60,747    60,638    60,747    19.00 
Systems Software                                     
IDIG Parent LLC  First Lien Secured Term Loan  1.00%  L+ 6.50%  7.50%  02/17/21  12/15/26  4,263    4,224    4,223    1.32 
IDIG Parent LLC(7)  First Lien Secured Delayed Draw Loan  1.00%  L+ 6.50%  7.50%  02/17/21  12/15/26 

    

    

    

 
IDIG Parent LLC(7)  First Lien Secured Revolving Loan  1.00%  L+ 6.50%  7.50%  02/17/21  12/15/26 

    

    

    

 
                     4,263    4,224    4,223    1.32 

 

See notes to the consolidated financial statements

 

9

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 2021

(in thousands)

 

Issuer   Investment
Type(1)
  Floor     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
 
Technology Hardware, Storage & Peripherals                                                        

Arcstor Midco, LLC

 

First Lien Secured Term Loan

  1.00%   L+ 7.00%   8.00%   03/16/21   03/16/27     19,451      $ 19,081      $ 19,081       5.97

Source Code Midco, LLC

  First Lien Secured Term Loan   1.00%   L+ 8.25%   9.25%   05/04/18   05/04/23     21,700       21,470       21,700       6.79  
Telestream Holdings Corporation   First Lien Secured Term Loan   1.00%   L+ 8.75%   9.75%   10/15/20   10/15/25     15,155       14,738       14,882       4.66  
Telestream Holdings Corporation(7)   First Lien Secured Revolving Loan   1.00%   L+ 8.75%   9.75%   10/15/20   10/15/25    

     

      14      

 
                              56,306       55,289       55,677       17.42  
Trading Companies & Distributors                                                        
LINC Systems, LLC   First Lien Secured Term Loan   1.00%   L+ 6.50%   7.50%   02/24/21   02/24/26     4,167       4,090       4,090       1.28  
LINC Systems, LLC(7)   First Lien Secured Revolving Loan   1.00%   L+ 6.50%   7.50%   02/24/21   02/24/26    

     

     

     

 
                              4,167       4,090       4,090       1.28  
                                                         
Total Debt Investments                             659,445     $ 649,140     $ 642,360       200.95 %
                                                         
Equity Investments                                                        
Data Processing & Outsourced Services                                                        
Escalon Services Inc(4)   Warrants   N/A     N/A   N/A     12/04/20   N/A     709     $ 476     $ 482       0.15 %
                                      476       482       0.15  
Diversified Support Services                                                        
Quest Events, LLC(4)   Preferred Units   N/A     N/A   N/A     12/28/18   12/08/25     317       317      

     

 
ImageOne Industries, LLC(4)   Common A Units   N/A     N/A   N/A     09/20/19   N/A     225      

      164       0.05  
                                      317       164       0.05  
Health Care Services                                                        
Lab Logistics(4)   Preferred Units   N/A     N/A   N/A     10/29/19   N/A     2       857       905       0.28  
                                      857       905       0.28  
Internet & Direct Marketing Retail                                                        
BBQ Buyer, LLC(4)   Shares   N/A     N/A   N/A     08/28/20   N/A     1,100       1,100       2,728       0.85  
Ross-Simons Topco, LP(4)   Preferred Units   N/A     N/A   N/A     12/04/20   N/A     600       600       840       0.26  
                                      1,700       3,568       1.11  
Investment Banking & Brokerage                                                        
Arcole Holding Corp.(4)(5)(6)(18)   Shares   N/A     N/A   N/A     10/01/20   N/A    

      6,944       6,008       1.88  
                                      6,944       6,008       1.88  
IT Consulting & Other Services                                                        
CX Holdco LLC(4)   Common Units   N/A     N/A   N/A     05/04/21   N/A     660       660       660       0.21  
Keras Holdings, LLC(4)   Shares   N/A     N/A   N/A     12/31/20   N/A     496       496       496       0.16  
                                      1,156       1,156       0.37  
Leisure Facilities                                                        
 Lift Brands, Inc. (aka Snap Fitness Holdings, Inc.)(4)   Class A Common Stock   N/A     N/A   N/A     06/29/20   N/A     2       1,955       184       0.06  
 Lift Brands, Inc. (aka Snap Fitness Holdings, Inc.)(4)   Warrants   N/A     N/A   N/A     06/29/20   06/28/28     1       793       75       0.02  
                                      2,748       259       0.08  
Other Diversified Financial Services                                                        
SFS Global Holding Company(4)   Warrants   N/A     N/A   N/A     06/28/18   12/28/25    

     

     

     

 
Sigue Corporation(4)   Warrants   N/A     N/A   N/A     06/28/18   12/28/25     22       2,890       3,491       1.09  
                                      2,890       3,491       1.09  
Specialized Finance                                                        
WHF STRS Ohio Senior Loan Fund(4)(5)(7)(14)   LLC Interests   N/A     N/A   N/A     07/19/19   N/A     12,452       12,452       12,082       3.78  
                                      12,452       12,082       3.78  
                                                         
Total Equity Investments                                   $ 29,540     $ 28,115       8.79 %
                                                         
Total Investments                                   $ 678,680     $ 670,475       209.74 %

 

See notes to the consolidated financial statements

 

10

 

 

WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

June 30, 2021

(in thousands)

 

Forward Currency Contracts

 

    Currency to be    Currency to be         Unrealized    Unrealized 
Counterparty   sold    purchased    Settlement date    appreciation ($)    depreciation ($) 
Morgan Stanley  C$86 CAD   $67 USD    07/28/2021   $

   $

 
                  $

   $

 

 

(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 USD LIBOR were 0.1%, 0.1% and 0.2%, respectively, as of June 30, 2021. The one, three and six-month GBP LIBOR were all 0.1% as of June 30, 2021. The CDOR and Prime was 0.4% and 3.25%, respectively, as of June 30, 2021.

 

(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 86.5% 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, 2021. 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 209.8% of the Company’s net assets or 95.8% 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 Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.

 

(13)

Principal amount is non-USD denominated and is based in Canadian dollars or British Pounds.

 

(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 in the 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 in the 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 in the 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.

 

(18)On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.

 

(19)At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.

 

See notes to the consolidated financial statements

 

11

 

 

WHITEHORSE FINANCE, INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2020

(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%       7.50 %     03/26/18       03/27/23         7,453     $ 7,453     $ 7,453       2.38 %
    (0.50% Floor)                                                          
SmartSign Holdings LLC                                                              
First Lien Secured Term Loan   L+ 7.50%       8.50 %     08/21/20       10/11/24         7,744       7,603       7,706       2.46  
    (1.00% Floor)                                                          
                                    15,197       15,056       15,159       4.84  
Agricultural & Farm Machinery