UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

x

 

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

 

 

 

For the quarterly period ended March 31, 2008

 

 

 

OR

 

 

 

o

 

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

 

For the transition period                   to

 

Commission File No. 000-50697

 

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

Maryland

 

33-1089684

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

280 Park Avenue, 22nd Floor, Building East, New York, NY 10017

(Address of principal executive office)   (Zip Code)

 

(212) 750-7300

(Registrant’s telephone number, including area code)

 


 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

Non-accelerated filer o

Accelerated filer o

Smaller reporting company o

 

(Do not check if a smaller reporting company)

 

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at May 8, 2008

Common stock, $0.001 par value

 

97,152,820

 

 



 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements.

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2008 (unaudited) and December 31, 2007

 

 

 

 

 

Consolidated Statement of Operations for the three months ended March 31, 2008 (unaudited) and March 31, 2007 (unaudited)

 

 

 

 

 

Consolidated Schedules of Investments as of March 31, 2008 (unaudited) and December 31, 2007

 

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2008 (unaudited) and March 31, 2007 (unaudited)

 

 

 

 

 

Consolidated Statement of Cash Flows for the three months ended March 31, 2008 (unaudited) and March 31, 2007 (unaudited)

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

 

 

 

Item 2.

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

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

 

 

 

Item 4.

Controls and Procedures.

 

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings.

 

 

 

 

Item 1A.

Risk Factors.

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

 

 

 

Item 3.

Defaults Upon Senior Securities.

 

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders.

 

 

 

 

Item 5.

Other Information.

 

 

 

 

Item 6.

Exhibits.

 

 



 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except per share data)

 

 

 

As of

 

 

 

March 31, 2008

 

December 31, 2007

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value (amortized cost of $1,973,112 and $1,795,621, respectively)

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

1,275,286

 

$

1,167,200

 

Non-controlled affiliate company investments

 

456,718

 

430,371

 

Controlled affiliate company investments

 

202,298

 

176,631

 

Total investments at fair value

 

1,934,302

 

1,774,202

 

Cash and cash equivalents

 

25,054

 

21,142

 

Receivable for open trades

 

975

 

1,343

 

Interest receivable

 

27,247

 

23,730

 

Other assets

 

8,784

 

8,988

 

Total assets

 

$

1,996,362

 

$

1,829,405

 

LIABILITIES

 

 

 

 

 

Debt

 

$

865,643

 

$

681,528

 

Payable for open trades

 

971

 

 

Accounts payable and accrued expenses

 

5,905

 

5,516

 

Management and incentive fees payable

 

13,580

 

13,041

 

Interest and facility fees payable

 

4,152

 

4,769

 

Total liabilities

 

$

890,251

 

$

704,854

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 200,000,000 and 100,000,000 common shares authorized, respectively, 72,924,790 and 72,684,090 common shares issued and outstanding, respectively

 

73

 

73

 

Capital in excess of par value

 

1,139,521

 

1,136,599

 

Accumulated undistributed net investment income

 

4,120

 

7,005

 

Accumulated net realized gain on sale of investments

 

 

1,471

 

Net unrealized loss on investments and foreign currencies

 

(37,603

)

(20,597

)

Total stockholders’ equity

 

1,106,111

 

1,124,551

 

Total liabilities and stockholders’ equity

 

$

1,996,362

 

$

1,829,405

 

NET ASSETS PER SHARE

 

$

15.17

 

$

15.47

 

 

See accompanying notes to consolidated financial statements.

 

1



 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(dollar amounts in thousands, except per share data)

 

 

 

For the Three Months Ended
March 31, 2008

 

For the Three Months Ended
March 31, 2007

 

 

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

Interest from investments

 

$

34,919

 

$

29,976

 

Capital structuring service fees

 

2,725

 

4,285

 

Interest from cash & cash equivalents

 

548

 

821

 

Dividend income

 

496

 

375

 

Other income

 

825

 

152

 

Total investment income from non-controlled/non-affiliate company investments

 

39,513

 

35,609

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

Interest from investments

 

8,546

 

3,487

 

Capital structuring service fees

 

1,095

 

38

 

Dividend income

 

48

 

 

Other income

 

241

 

228

 

Total investment income from non-controlled affiliate company investments

 

9,930

 

3,753

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

Interest from investments

 

2,422

 

353

 

Capital structuring service fees

 

100

 

 

Other income

 

242

 

 

Total investment income from controlled affiliate company investments

 

2,764

 

353

 

 

 

 

 

 

 

Total investment income

 

52,207

 

39,715

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

Interest and credit facility fees

 

9,923

 

8,549

 

Base management fees

 

7,087

 

5,089

 

Incentive management fees

 

6,493

 

4,755

 

Professional fees

 

1,218

 

966

 

Insurance

 

277

 

265

 

Administrative

 

535

 

210

 

Depreciation

 

102

 

101

 

Directors fees

 

74

 

65

 

Other

 

847

 

761

 

Total expenses

 

26,556

 

20,761

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

25,651

 

18,954

 

 

 

 

 

 

 

Income tax expense (benefit), including excise tax

 

(322

)

10

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

25,973

 

18,944

 

 

 

 

 

 

 

REALIZED AND UNREALIZED NET GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCIES:

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

207

 

269

 

Non-controlled affiliate company investments

 

 

 

Controlled affiliate company investments

 

 

90

 

Foreign currency transactions

 

(8

)

 

Net realized gains

 

199

 

359

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(18,604

)

(2,092

)

Non-controlled affiliate company investments

 

(10,742

)

5,300

 

Controlled affiliate company investments

 

12,333

 

1,078

 

Foreign currency transactions

 

7

 

 

Net unrealized gains (losses)

 

(17,006

)

4,286

 

 

 

 

 

 

 

Net realized and unrealized gains (losses) from investments and foreign currencies

 

(16,807

)

4,645

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

9,166

 

$

23,589

 

 

 

 

 

 

 

BASIC EARNINGS PER COMMON SHARE (see Note 4)

 

$

0.13

 

$

0.44

 

 

 

 

 

 

 

DILUTED EARNINGS PER COMMON SHARE (see Note 4)

 

$

0.12

 

$

0.44

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING – BASIC (see Note 4)

 

72,684,090

 

53,178,927

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING – DILUTED (see Note 4)

 

74,547,785

 

53,178,927

 

 

See accompanying notes to consolidated financial statements.

 

2



 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2008 (unaudited)

(dollar amounts in thousands, except per unit data)

 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

Healthcare— Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Renal Associates, Inc.

 

Dialysis provider

 

Senior secured loan
($1,967 par due 12/2010)

 

5.86% (Libor+ 3.25%/Q)

 

12/14/05

 

$

1,967

 

$

1,967

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($164 par due 12/2011)

 

8.50% (Base Rate + 3.25%/D)

 

12/14/05

 

164

 

164

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($33 par due 12/2010)

 

7.00% (Base Rate + 1.75%/D)

 

12/14/05

 

33

 

33

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($5,738 par due 12/2011)

 

5.86% (Libor+ 3.25%/Q)

 

12/14/05

 

5,738

 

5,738

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($46 par due 12/2011)

 

7.00% (Base Rate + 1.75%/D)

 

12/14/05

 

46

 

46

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($262 par due 12/2011)

 

5.86% (Libor+ 3.25%/Q)

 

12/14/05

 

262

 

262

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($2,620 par due 12/2011)

 

7.98% (Libor + 3.25% /Q)

 

12/14/05

 

2,620

 

2,620

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capella Healthcare, Inc.

 

Acute care hospital operator

 

Junior secured loan
($65,000 par due 2/2016)

 

13.00%

 

2/29/08

 

65,000

 

65,000

 

$

1.00

 

 

 

 

 

 

 

Junior secured loan
($30,000 par due 2/2016)

 

13.00%

 

2/29/08

 

30,000

 

30,000

 

$

1.00

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CT Technologies Intermediate Holdings, Inc. and  CT Technologies Holdings, LLC (6)

 

Healthcare analysis services

 

Senior secured revolving loan
($810 par due 3/2012)

 

7.98% (Libor + 5.00%/Q)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($810 par due 3/2012)

 

9.65% (Libor + 5.00%/S)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($810 par due 3/2012)

 

8.08% (Libor + 5.00%/Q)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($13,833 par due 3/2012)

 

9.65% (Libor + 5.00%/S)

 

6/15/07

 

13,800

 

13,142

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($4,000 par due 3/2012)

 

9.65% (Libor + 5.00%/S)

 

6/15/07

 

4,000

 

3,800

 

$

0.95

(3)

 

 

 

 

 

 

Senior secured loan
($6,787 par due 3/2012)

 

7.98% (Libor + 5.00%/Q)

 

6/15/07

 

6,771

 

6,448

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($1,963 par due 3/2012)

 

7.98% (Libor + 5.00%/Q)

 

6/15/07

 

1,963

 

1,864

 

$

0.95

(3)

 

 

 

 

 

 

Senior secured loan
($10,375 par due 3/2012)

 

8.08% (Libor + 5.00%/Q)

 

6/15/07

 

10,325

 

9,856

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($3,000 par due 3/2012)

 

8.08% (Libor + 5.00%/Q)

 

6/15/07

 

3,000

 

2,850

 

$

0.95

(3)

 

 

 

 

 

 

Senior secured loan
($10,245 par due 3/2012)

 

7.78% (Libor + 5.00%/A)

 

6/15/07

 

10,245

 

9,733

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($2,963 par due 3/2012)

 

7.78% (Libor + 5.00%/A)

 

6/15/07

 

2,963

 

2,814

 

$

0.95

(3)

 

 

 

 

 

 

Preferred stock (6,000 shares)

 

 

 

6/15/07

 

6,000

 

6,000

 

$

1,000.00

(5)

 

 

 

 

 

 

Common stock (9,679 shares)

 

 

 

6/15/07

 

4,000

 

4,000

 

$

413.27

(5)

 

 

 

 

 

 

Common stock (1,546 shares)

 

 

 

6/15/07

 

 

 

$

(5)

 

 

 

3



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

DSI Renal, Inc.

 

Dialysis provider

 

Senior subordinated note ($54,202 par due 4/2014)

 

12.00% Cash, 2.00% PIK

 

4/4/06

 

54,247

 

54,202

 

$

1.00

(4)

 

 

 

 

 

 

Senior subordinated note ($11,634 par due 4/2014)

 

12.00% Cash, 2.00% PIK

 

4/4/06

 

11,634

 

11,634

 

$

1.00

(4) (3)

 

 

 

 

 

 

Senior secured revolving loan
($1,344 par due 3/2013)

 

8.25% (Base Rate + 3.00%/D)

 

4/4/06

 

1,344

 

1,210

 

$

0.90

 

 

 

 

 

 

 

Senior secured revolving loan
($1,600 par due 3/2013)

 

9.13% (Libor + 3.00%/M)

 

4/4/06

 

1,600

 

1,440

 

$

0.90

 

 

 

 

 

 

 

Senior secured revolving loan
($1,920 par due 3/2013)

 

6.13% (Libor + 3.00%/B)

 

4/4/06

 

1,920

 

1,728

 

$

0.90

 

 

 

 

 

 

 

Senior secured revolving loan
($1,152 par due 3/2013)

 

6.11% (Libor + 3.00%/Q)

 

4/4/06

 

1,152

 

1,037

 

$

0.90

 

 

 

 

 

 

 

Senior secured revolving loan
($1,600 par due 3/2013)

 

6.13% (Libor + 3.00%/B)

 

4/4/06

 

1,600

 

1,440

 

$

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GG Merger Sub I, Inc.

 

Drug testing services

 

Senior secured loan
($23,330 par due 12/2014)

 

8.83% (Libor + 4.00%/B)

 

12/14/07

 

22,320

 

22,397

 

$

0.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MPBP Holdings, Inc., Cohr Holdings, Inc. and MPBP Acquisition Co., Inc.

 

Healthcare equipment services

 

Junior secured loan
($20,000 par due 1/2014)

 

9.35% (Libor + 6.25%/Q)

 

1/31/07

 

20,000

 

13,000

 

$

0.65

 

 

 

 

 

 

 

Junior secured loan
($12,000 par due 1/2014)

 

9.35% (Libor + 6.25%/Q)

 

1/31/07

 

12,000

 

7,800

 

$

0.65

(3)

 

 

 

 

 

 

Common stock (50,000 shares)

 

 

 

1/31/07

 

5,000

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MWD Acquisition Sub, Inc.

 

Dental services

 

Junior secured loan
($5,000 par due 5/2012)

 

9.40% (Libor + 6.25%/Q)

 

5/3/07

 

5,000

 

4,750

 

$

0.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Senior subordinated note ($26,155 par due 8/2013)

 

11.00% Cash, 1.50% PIK

 

8/18/06

 

26,155

 

26,155

 

$

1.00

(4)

 

 

 

 

 

 

Senior secured loan
($1,612 par due 8/2009)

 

6.63% (Libor + 3.50%/M)

 

8/18/06

 

1,612

 

1,612

 

$

1.00

 

 

 

 

 

 

 

Common stock (857,143 shares)

 

 

 

8/18/06

 

3,000

 

3,000

 

$

3.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PG MergerSub, Inc. and PG Holdco, LLC

 

Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system

 

Senior subordinated loan ($5,000 par due 3/2016)

 

12.50%

 

3/12/08

 

4,900

 

4,900

 

$

0.98

 

 

 

 

 

 

 

Preferred units  (333 units)

 

 

 

3/12/08

 

333

 

333

 

$

1,000.00

(5)

 

 

 

 

 

 

Class A common units (16,667 units)

 

 

 

3/12/08

 

167

 

167

 

$

10.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Triad Laboratory Alliance, LLC

 

Laboratory services

 

Senior subordinated note ($15,154 par due 12/2012)

 

12.00% cash, 1.75% PIK

 

12/21/05

 

15,154

 

15,154

 

$

1.00

(4)

 

 

 

 

 

 

Senior secured loan
($2,932 par due 12/2011)

 

5.95% (Libor + 3.25%/Q)

 

12/21/05

 

2,932

 

2,639

 

$

0.90

(3)

 

 

 

 

 

 

 

 

 

 

 

 

363,397

 

343,365

 

 

 

31.04

%

 

4



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Campus Management Corp. and Campus Management  Acquisition
Corp. (6)

 

Education software developer

 

Senior secured loan
($45,000 par due 8/2013)

 

11.00%

 

2/8/08

 

45,000

 

45,000

 

$

1.00

 

 

 

 

 

 

 

Convertible preferred stock (415,508 shares)

 

8.00% PIK

 

2/8/08

 

7,543

 

7,543

 

$

18.15

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELC Acquisition Corporation

 

Developer, manufacturer and retailer of educational products

 

Senior secured loan
($7 par due 11/2012)

 

6.77% (Libor + 3.75%/Q)

 

11/30/06

 

7

 

7

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($272 par due 11/2012)

 

6.77% (Libor + 3.75%/Q)

 

11/30/06

 

272

 

272

 

$

1.00

(3)

 

 

 

 

 

 

Junior secured loan
($8,333 par due 11/2013)

 

12.11% (Libor + 7.00%/Q)

 

11/30/06

 

8,333

 

8,333

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equinox EIC Partners, LLC and  MUA Management Company,
Ltd. (7) (8)

 

Medical school operator

 

Senior secured revolving loan
($1,000 par due 12/2012)

 

10.00% (Libor + 6.00%/Q)

 

4/3/07

 

1,000

 

1,000

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($6,838 par due 12/2012)

 

10.25% (Base Rate + 5.00%/D)

 

4/3/07

 

6,838

 

6,838

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($4,700 par due 12/2012)

 

10.25% (Base Rate + 5.00%/D)

 

4/3/07

 

4,700

 

4,700

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($1,400 par due 12/2012)

 

10.25% (Base Rate + 5.00%/D)

 

4/3/07

 

1,400

 

1,400

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($4,862 par due 12/2012)

 

8.61% (Libor + 6.00%/Q)

 

4/3/07

 

4,862

 

4,862

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan ($14,113 par due 12/2012)

 

8.54% (Libor + 6.00%/Q)

 

9/21/07

 

14,113

 

14,113

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($7,425 par due 12/2012)

 

10.00% (Libor + 6.00%/Q)

 

4/3/07

 

7,425

 

7,425

 

$

1.00

(3)

 

 

 

 

 

 

Common membership interest (26.27% interest)

 

 

 

9/21/07

 

15,000

 

20,000

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instituto de Banca y Comercio,
Inc. (8)

 

Private school operator

 

Senior secured loan
($7,500 par due 3/2014)

 

9.25% (Libor + 4.00%/D)

 

3/15/07

 

7,500

 

7,500

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($12,346 par due 3/2014)

 

8.24% (Libor + 5.00%/Q)

 

3/15/07

 

12,346

 

12,346

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($11,910 par due 3/2014)

 

8.24% (Libor + 5.00%/Q)

 

3/15/07

 

11,910

 

11,910

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lakeland Finance, LLC

 

Private school operator

 

Senior secured note
($18,000 par due 12/2012)

 

11.50%

 

12/13/05

 

18,000

 

18,000

 

$

1.00

 

 

 

 

 

 

 

Senior secured note
($15,000 par due 12/2012)

 

11.50%

 

12/13/05

 

15,000

 

15,000

 

$

1.00

(2)

 

 

 

 

 

 

 

 

 

 

 

 

181,249

 

186,249

 

 

 

16.84

%

 

5



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abingdon Investments Limited (6) (8) (9) 

 

Investment company

 

Ordinary shares (948,500 shares)

 

 

 

12/15/06

 

9,033

 

6,137

 

$

6.47

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Firstlight Financial Corporation  (6) (9)

 

Investment company

 

Senior subordinated loan ($66,577 par due 12/2016)

 

10.00% PIK

 

12/31/06

 

66,577

 

66,577

 

$

1.00

(4)

 

 

 

 

 

 

Common stock (10,000 shares)

 

 

 

12/31/06

 

10,000

 

7,500

 

$

750.00

(5) 

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/31/06

 

30,000

 

22,500

 

$

750.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Middle Market Credit Fund, Ltd. (7) (8) (9)

 

Investment company

 

Class B deferrable interest notes
($40,000 par due 11/2018)

 

9.08% (Libor + 6.00%/Q)

 

11/20/07

 

40,000

 

40,000

 

$

1.00

 

 

 

 

 

 

 

Subordinated notes
($16,000 par due 11/2018)

 

 

 

11/20/07

 

16,000

 

16,000

 

$

1.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imperial Capital Group, LLC (6) (9)

 

Investment banking services

 

Common units (7,710 units)

 

 

 

5/10/07

 

14,997

 

14,997

 

$

1,945.16

(5)

 

 

 

 

 

 

Common units (2,526 units)

 

 

 

5/10/07

 

3

 

3

 

$

1.00

(5)

 

 

 

 

 

 

Common units (315 units)

 

 

 

5/10/07

 

 

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnership Capital Growth Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (25% interest)

 

 

 

6/16/06

 

2,260

 

2,260

 

 

(5) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (4.63% interest)

 

 

 

1/24/08

 

31

 

31

 

 

(5) 

 

 

 

 

 

 

 

 

 

 

 

 

188,901

 

176,005

 

 

 

15.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apogee Retail, LLC

 

For-profit thrift retailer

 

Senior secured revolving loan
($780 par due 3/2012)

 

7.75% (Libor + 5.25%/S)

 

3/27/07

 

780

 

780

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($9,326 par due 3/2012)

 

7.75% (Libor + 5.25%/S)

 

3/27/07

 

9,326

 

9,326

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($19,750 par due 3/2012)

 

7.75% (Libor + 5.25%/S)

 

3/27/07

 

19,750

 

19,750

 

$

1.00

(2)

 

 

 

 

 

 

Senior secured loan
($11,850 par due 3/2012)

 

7.75% (Libor + 5.25%/S)

 

3/27/07

 

11,850

 

11,850

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($24 par due 3/2012)

 

7.85% (Libor + 5.25%/Q)

 

3/27/07

 

24

 

24

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($50 par due 3/2012)

 

7.85% (Libor + 5.25%/Q)

 

3/27/07

 

50

 

50

 

$

1.00

(2)

 

 

 

 

 

 

Senior secured loan
($30 par due 3/2012)

 

7.85% (Libor + 5.25%/Q)

 

3/27/07

 

30

 

30

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson Group, Inc. and Advent - Hudson, LLC

 

Retail newstand operator

 

Junior secured loan ($35,006 par due 3/2015)

 

11.50% Cash, 1.50% PIK

 

3/28/08

 

35,006

 

35,006

 

$

1.00

(4)

 

 

 

 

 

 

Membership units (6,057,983 units)

 

 

 

3/28/08

 

3,000

 

3,000

 

$

0.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savers, Inc. and SAI Acquisition Corporation

 

For-profit thrift retailer

 

Senior subordinated note ($28,078 par due 8/2014)

 

10.00% cash, 2.00% PIK

 

8/8/06

 

28,078

 

28,078

 

$

1.00

(2) (4)

 

 

 

 

 

 

Common stock (1,170,182 shares)

 

 

 

8/8/06

 

4,500

 

4,500

 

$

3.85

(5)

 

 

 

6



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

Things Remembered, Inc. and TRM Holdings Corporation

 

Personalized gifts retailer

 

Senior secured loan
($4,728 par due 9/2012)

 

7.61% (Libor + 4.75%/M)

 

9/28/06

 

4,728

 

4,728

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($14,000 par due 9/2012)

 

8.86% (Libor + 6.00%/M)

 

9/28/06

 

14,000

 

14,000

 

$

1.00

(2)

 

 

 

 

 

 

Senior secured loan
($14,000 par due 9/2012)

 

8.86% (Libor + 6.00%/M)

 

9/28/06

 

14,000

 

14,000

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($7,200 par due 9/2012)

 

8.86% (Libor + 6.00%/M)

 

9/28/06

 

7,200

 

7,200

 

$

1.00

(3)

 

 

 

 

 

 

Preferred stock (80 shares)

 

 

 

9/28/06

 

1,800

 

1,800

 

$

22,500.00

(5)

 

 

 

 

 

 

Common stock (800 shares)

 

 

 

9/28/06

 

200

 

200

 

$

250.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

154,322

 

154,322

 

 

 

13.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Printing, Publishing & Media

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canon Communications LLC

 

Print publications services

 

Junior secured loan
($7,525,000 par due 11/2011)

 

9.45% (Libor + 6.75%/M)

 

5/25/05

 

7,525

 

7,525

 

$

1.00

 

 

 

 

 

 

 

Junior secured loan
($4,250 par due 11/2011)

 

9.45% (Libor + 6.75%/M)

 

5/25/05

 

4,250

 

4,250

 

$

1.00

(2)

 

 

 

 

 

 

Junior secured loan
($12,000 par due 11/2011)

 

9.45% (Libor + 6.75%/M)

 

5/25/05

 

12,000

 

12,000

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Courtside Acquisition Corp.

 

Community newspaper publisher

 

Senior subordinated loan
($33,490 par due 6/2014)

 

15.00% PIK

 

6/29/07

 

33,490

 

30,143

 

$

0.90

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Daily Candy,
Inc. (6)

 

Internet publication provider

 

Senior secured loan
($497 par due 5/2009)

 

9.72% (Libor + 5.00%/S)

 

5/25/06

 

587

 

497

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($11,629 par due 5/2009)

 

9.72% (Libor + 5.00%/S)

 

5/25/06

 

13,733

 

11,629

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($5 par due 5/2009)

 

9.72% (Libor + 5.00%/S)

 

5/25/06

 

5

 

5

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($106 par due 5/2009)

 

9.72% (Libor + 5.00%/S)

 

5/25/06

 

125

 

106

 

$

1.00

(3)

 

 

 

 

 

 

Common stock (1,250,000 shares)

 

 

 

5/25/06

 

2,375

 

4,085

 

$

3.27

(5)

 

 

 

 

 

 

Warrants to purchase 1,381,578 shares

 

 

 

5/25/06

 

2,625

 

4,515

 

$

3.27

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LVCG Holdings LLC (7)

 

Commercial printer

 

Membership interest (56.53% interest)

 

 

 

10/12/07

 

6,600

 

6,600

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Print Group, Inc.

 

Printing management services

 

Senior secured revolving loan
($1,138 par due 3/2012)

 

7.75% (Base Rate + 2.50%/D)

 

3/2/06

 

1,138

 

1,138

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($2,054 par due 3/2012)

 

6.61% (Libor + 3.50%/M)

 

3/2/06

 

2,054

 

2,054

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($4,441 par due 3/2012)

 

6.20% (Libor + 3.50%/Q)

 

3/2/06

 

4,441

 

4,441

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($5,111 par due 3/2012)

 

6.60% (Libor + 3.50%/B)

 

3/2/06

 

5,111

 

5,111

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($406 par due 8/2012)

 

9.70% (Libor + 7.00%/M)

 

3/2/06

 

406

 

406

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($350 par due 8/2012)

 

10.09% (Libor + 7.00%/Q)

 

3/2/06

 

350

 

350

 

$

1.00

(3)

 

 

 

7



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

 

 

 

 

Preferred stock (9,344 shares)

 

 

 

3/2/06

 

2,000

 

1,000

 

$

107.02

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Teaching Company, LLC and The Teaching Company Holdings,
Inc.  (11)

 

Education publications provider

 

Senior secured loan
($28,000 par due 9/2012)

 

10.50%

 

9/29/06

 

28,000

 

28,000

 

$

1.00

 

 

 

 

 

 

 

Preferred stock (29,969 shares)

 

 

 

9/29/06

 

2,997

 

3,996

 

$

133.33

(5)

 

 

 

 

 

 

Common stock (15,393 shares)

 

 

 

9/29/06

 

3

 

4

 

$

0.27

(5)

 

 

 

 

 

 

 

 

 

 

 

 

129,815

 

127,855

 

 

 

11.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Group Services,
LLC (16)

 

Financial services

 

Senior secured loan
($200 par due 6/2011)

 

12.00%

 

6/22/06

 

200

 

200

 

$

1.00

(3)

 

 

 

 

 

 

Limited liability company membership interest (10.00% interest)

 

 

 

6/22/06

 

 

150

 

$

1,500.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Miller Heiman, Inc.

 

Sales consulting services

 

Senior secured loan
($1,163 par due 6/2010)

 

6.27% (Libor + 3.25%/Q)

 

6/20/05

 

1,163

 

1,163

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($3,967 par due 6/2012)

 

6.45% (Libor + 3.75%/M)

 

6/20/05

 

3,967

 

3,967

 

$

1.00

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pillar Holdings LLC and PHL Holding Co. (6)

 

Mortgage services

 

Senior secured revolving loan ($1,312 par due 11/2013)

 

8.18% (Libor + 5.50%/M)

 

11/20/07

 

1,312

 

1,312

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($24,129 par due 11/2013)

 

8.20% (Libor + 5.50%/Q)

 

11/20/07

 

24,129

 

24,129

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($11,940 par due 11/2013)

 

8.20% (Libor + 5.50%/Q)

 

11/20/07

 

11,940

 

11,940

 

$

1.00

(3)

 

 

 

 

 

 

Common stock (72 shares)

 

 

 

11/20/07

 

3,000

 

3,000

 

$

41,420.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Primis Marketing Group, Inc. and Primis Holdings, LLC (6)

 

Database marketing services

 

Senior subordinated note ($10,222 par due 2/2013)

 

11.00% Cash, 2.50% PIK

 

8/24/06

 

10,222

 

5,111

 

$

0.50

(4)

 

 

 

 

 

 

Preferred units (4,000 units)

 

 

 

8/24/06

 

3,600

 

 

$

(5)

 

 

 

 

 

 

Common units (4,000,000 units)

 

 

 

8/24/06

 

400

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prommis Solutions, LLC, E-Default Services, LLC, Statewide Tax and Title Services, LLC & Statewide Publishing Services, LLC (formerly known as MR Processing Holding Corp.)

 

Bankruptcy and foreclosure processing services

 

Senior subordinated note ($29,669 par due 2/2014)

 

11.50% Cash, 2.00% PIK

 

2/8/07

 

29,669

 

29,670

 

$

1.00

(2) (4)

 

 

 

 

 

 

Senior subordinated note ($21,664 par due 2/2014)

 

11.50% Cash, 2.00% PIK

 

2/8/07

 

21,664

 

21,666

 

$

1.00

(4)

 

 

 

 

 

 

Preferred stock (30,000 shares)

 

 

 

4/11/06

 

3,000

 

4,500

 

$

150.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R2 Acquisition Corp.

 

Marketing services

 

Common stock (250,000 shares)

 

 

 

5/29/07

 

250

 

250

 

$

1.00

(5)

 

 

 

8



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized Cost

 

Fair Value

 

Fair Value Per Unit

 

Percentage
of Net
Assets

 

Summit Business Media, LLC

 

Business media consulting services

 

Junior secured loan
($10,000 par due 11/2013)

 

9.71% (Libor + 7.00%/M)

 

8/3/07

 

10,000

 

9,500

 

$

0.95

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VSS-Tranzact Holdings, LLC (6)

 

Management consulting services

 

Common membership interest (8.51% interest)

 

 

 

10/26/07

 

10,000

 

10,000

 

 

(5)