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 June 30, 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 August 7, 2008

Common stock, $0.001 par value

 

97,152,820

 

 

 



 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements.

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2008 (unaudited) and December 31, 2007

1

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2008 (unaudited) and June 30, 2007 (unaudited)

2

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2008 (unaudited) and December 31, 2007

3

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three and six months ended June 30, 2008 (unaudited) and June 30, 2007 (unaudited)

32

 

 

 

 

Consolidated Statement of Cash Flows for the three and six months ended June 30, 2008 (unaudited) and June 30, 2007 (unaudited)

33

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

34

 

 

 

Item 2.

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

49

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

58

 

 

 

Item 4.

Controls and Procedures.

58

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings.

59

 

 

 

Item 1A.

Risk Factors.

59

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

59

 

 

 

Item 3.

Defaults Upon Senior Securities.

59

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders.

59

 

 

 

Item 5.

Other Information.

60

 

 

 

Item 6.

Exhibits.

60

 



 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(dollar amounts in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2008

 

December 31, 2007

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value (amortized cost of $2,161,978 and $1,795,621, respectively)

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

1,457,081

 

$

1,167,200

 

Non-controlled affiliate company investments

 

436,639

 

430,371

 

Controlled affiliate company investments

 

196,732

 

176,631

 

Total investments at fair value

 

2,090,452

 

1,774,202

 

Cash and cash equivalents

 

77,047

 

21,142

 

Receivable for open trades

 

587

 

1,343

 

Interest receivable

 

24,588

 

23,730

 

Other assets

 

8,382

 

8,988

 

Total assets

 

$

2,201,056

 

$

1,829,405

 

LIABILITIES

 

 

 

 

 

Debt

 

$

847,734

 

$

681,528

 

Accounts payable and accrued expenses

 

5,439

 

5,516

 

Management and incentive fees payable

 

16,694

 

13,041

 

Interest and facility fees payable

 

2,641

 

4,769

 

Total liabilities

 

$

872,508

 

$

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, 97,152,820 and 72,684,090 common shares issued and outstanding, respectively

 

97

 

73

 

Capital in excess of par value

 

1,399,467

 

1,136,599

 

Accumulated undistributed net investment income

 

(624

)

7,005

 

Accumulated undistributed net realized gain on sale of investments and foreign currencies

 

17

 

1,471

 

Net unrealized loss on investments and foreign currencies

 

(70,409

)

(20,597

)

Total stockholders’ equity

 

1,328,548

 

1,124,551

 

Total liabilities and stockholders’ equity

 

$

2,201,056

 

$

1,829,405

 

NET ASSETS PER SHARE

 

$

13.67

 

$

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

 

For the six months ended

 

 

 

June 30, 2008

 

June 30, 2007

 

June 30, 2008

 

June 30, 2007

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

37,768

 

$

34,251

 

$

72,734

 

$

64,145

 

Capital structuring service fees

 

8,421

 

1,982

 

11,146

 

6,267

 

Interest from cash & cash equivalents

 

441

 

671

 

989

 

1,492

 

Dividend income

 

375

 

375

 

871

 

750

 

Other income

 

583

 

389

 

1,408

 

507

 

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

 

47,588

 

37,668

 

87,148

 

73,161

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

8,198

 

5,469

 

16,697

 

9,416

 

Capital structuring service fees

 

 

3,225

 

1,095

 

3,262

 

Dividend income

 

218

 

503

 

266

 

503

 

Other income

 

378

 

314

 

619

 

552

 

Total investment income from non-controlled affiliate company investments

 

8,794

 

9,511

 

18,677

 

13,733

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

3,758

 

55

 

6,180

 

55

 

Capital structuring service fees

 

2,900

 

165

 

3,000

 

165

 

Other income

 

424

 

 

666

 

 

Total investment income from controlled affiliate company investments

 

7,082

 

220

 

9,846

 

220

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

63,464

 

47,399

 

115,671

 

87,114

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

7,155

 

7,565

 

17,078

 

16,114

 

Base management fees

 

7,679

 

5,814

 

14,766

 

10,903

 

Incentive management fees

 

9,015

 

6,229

 

15,508

 

10,983

 

Professional fees

 

1,653

 

1,524

 

2,871

 

2,489

 

Insurance

 

349

 

266

 

626

 

531

 

Administrative

 

365

 

235

 

900

 

445

 

Depreciation

 

102

 

102

 

204

 

203

 

Directors fees

 

66

 

63

 

140

 

128

 

Other

 

881

 

653

 

1,728

 

1,415

 

Total expenses

 

27,265

 

22,451

 

53,821

 

43,211

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

36,199

 

24,948

 

61,850

 

43,903

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit), including excise tax

 

138

 

(43

)

(184

)

(33

)

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

36,061

 

24,991

 

62,034

 

43,936

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

10

 

(8,113

)

217

 

(7,844

)

Non-controlled affiliate company investments

 

1

 

230

 

1

 

320

 

Controlled affiliate company investments

 

 

 

 

 

Foreign currency transactions

 

6

 

 

(2

)

 

Net realized gains (losses)

 

17

 

(7,883

)

216

 

(7,524

)

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(9,990

)

14,376

 

(28,594

)

12,284

 

Non-controlled affiliate company investments

 

(13,116

)

2,083

 

(23,858

)

8,460

 

Controlled affiliate company investments

 

(9,700

)

 

2,633

 

 

Foreign currency transactions

 

 

 

7

 

 

Net unrealized gains (losses)

 

(32,806

)

16,459

 

(49,812

)

20,744

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses) from investments and foreign currency transactions

 

(32,789

)

8,576

 

(49,596

)

13,220

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

3,272

 

$

33,567

 

$

12,438

 

$

57,156

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 4)

 

$

0.04

 

$

0.48

 

$

0.15

 

$

0.91

 

 

 

 

 

 

 

 

 

 

 

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

 

90,125,629

 

70,117,970

 

82,097,395

 

62,544,682

 

 

See accompanying notes to consolidated financial statements.

 

2



 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of June 30, 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
($1,803 par due 12/2010)

 

6.06% (Libor+ 3.25%/Q)

 

12/14/05

 

$

1,803

 

$

1,803

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($180 par due 12/2010)

 

6.75% (Base Rate + 1.75%/D)

 

12/14/05

 

180

 

180

 

$

1.00

(3)

 

 

 

 

 

 

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

 

6.06% (Libor+ 3.25%/Q)

 

12/14/05

 

5,738

 

5,738

 

$

1.00

(3)

 

 

 

 

 

 

Senior secured loan
($31 par due 12/2011)

 

6.75% (Base Rate + 1.75%/D)

 

12/14/05

 

31

 

31

 

$

1.00

(3)

 

 

 

 

 

 

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

 

6.06% (Libor+ 3.25%/Q)

 

12/14/05

 

262

 

262

 

$

1.00

(3)

 

 

 

 

 

 

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

 

5.94% (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%/A)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

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

 

9.65% (Libor + 5.00%/B)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

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

 

7.90% (Libor + 5.00%/B)

 

6/15/07

 

810

 

810

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($900 par due 3/2012)

 

9.00% (Base Rate + 4.00$/D)

 

6/15/07

 

900

 

900

 

$

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%/A)

 

6/15/07

 

6,771

 

6,448

 

$

0.95

 

 

 

 

 

 

 

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

 

7.98% (Libor + 5.00%/A)

 

6/15/07

 

1,963

 

1,864

 

$

0.95

(3)

 

 

 

 

 

 

Senior secured loan
($10,116 par due 3/2012)

 

8.09% (Libor + 5.00%/A)

 

6/15/07

 

10,066

 

9,610

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($2,925 par due 3/2012)

 

8.09% (Libor + 5.00%/A)

 

6/15/07

 

2,925

 

2,779

 

$

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 (6,925 shares)

 

14.00% PIK

 

6/15/07

 

6,925

 

6,925

 

$

1,000.00

(4)

 

 

 

 

 

 

Common stock (9,679 shares)

 

 

 

6/15/07

 

4,000

 

4,000

 

$

413.27

(5)

 

 

 

3



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage
of
Net Assets

 

 

 

 

 

Common stock (1,546 shares)

 

 

 

6/15/07

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSI Renal, Inc.

 

Dialysis provider

 

Senior subordinated note ($54,473 par due 4/2014)

 

12.00% Cash, 2.00% PIK

 

4/4/06

 

54,539

 

54,473

 

$

1.00

(4)

 

 

 

 

 

 

Senior subordinated note ($11,693 par due 4/2014)

 

12.00% Cash, 2.00% PIK

 

4/4/06

 

11,693

 

11,693

 

$

1.00

(4) (3)

 

 

 

 

 

 

Senior secured revolving loan
($122 par due 3/2013)

 

8.00% (Base Rate + 3.00%/D)

 

4/4/06

 

122

 

109

 

$

0.90

 

 

 

 

 

 

 

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

 

5.68% (Libor + 3.00%/Q)

 

4/4/06

 

1,600

 

1,440

 

$

0.90

 

 

 

 

 

 

 

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

 

5.67% (Libor + 3.00%/B)

 

4/4/06

 

1,920

 

1,728

 

$

0.90

 

 

 

 

 

 

 

Senior secured revolving loan
($1,120 par due 3/2013)

 

5.92% (Libor + 3.00%/Q)

 

4/4/06

 

1,120

 

1,008

 

$

0.90

 

 

 

 

 

 

 

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

 

5.92% (Libor + 3.00%/Q)

 

4/4/06

 

1,152

 

1,037

 

$

0.90

 

 

 

 

 

 

 

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

 

5.75% (Libor + 3.00%/Q)

 

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)

 

6.79% (Libor + 4.00%/Q)

 

12/14/07

 

22,354

 

21,930

 

$

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCP Acquisition Holdings, LLC (7)

 

Healthcare compliance advisory services

 

Class A units (8,100,000 units)

 

 

 

6/26/08

 

8,100

 

8,100

 

$

1.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare equipment services

 

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

 

9.19% (Libor + 6.25%/Q)

 

1/31/07

 

20,000

 

12,000

 

$

0.60

 

 

 

 

 

 

 

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

 

9.19% (Libor + 6.25%/Q)

 

1/31/07

 

12,000

 

7,200

 

$

0.60

(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)

 

9.13% (Libor + 6.25%/S)

 

5/3/07

 

5,000

 

4,500

 

$

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Senior subordinated note ($26,254 par due 8/2013)

 

11.00% Cash, 1.50% PIK

 

8/18/06

 

26,254

 

25,729

 

4  0.98

(4)

 

 

 

 

 

 

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

 

6.00% (Libor + 3.50%/M)

 

8/18/06

 

1,612

 

1,548

 

$

0.96

 

 

 

 

 

 

 

Common stock (857,143 shares)

 

 

 

8/18/06

 

3,000

 

3,000

 

$

3.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Passport Health Communications, Inc.

 

Healthcare technology provider

 

Senior secured loan ($25,000 par due 5/2014)

 

10.50% (Libor + 7.50%/S)

 

5/9/08

 

25,000

 

25,000

 

$

1.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PG Mergersub, Inc.

 

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

 

 

 

 

4



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage
of
Net Assets

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/08

 

333

 

333

 

$

1,000.00

(5)

 

 

 

 

 

 

Class A Common stock (16,667 shares)

 

 

 

3/12/08

 

167

 

167

 

$

10.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Triad Laboratory Alliance, LLC

 

Laboratory services

 

Senior subordinated note ($15,221 par due 12/2012)

 

12.00% cash, 1.75% PIK

 

12/21/05

 

15,221

 

15,221

 

$

1.00

(4)

 

 

 

 

 

 

Senior secured loan
($2,925 par due 12/2011)

 

6.05% (Libor + 3.25%/Q)

 

12/21/05

 

2,924

 

2,633

 

$

0.90

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VOTC Acquisition Corp.

 

Radiation oncology care provider

 

Senior secured loan
($2,946 par due 7/2012)

 

15.78% (Libor + 11.00% Cash, 2.00% PIK/Q)

 

6/30/08

 

2,946

 

2,946

 

$

1.00

(4)

 

 

 

 

 

 

 

 

 

 

 

 

401,179

 

378,214

 

 

 

28.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food and Tobacco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3091779 Nova Scotia Inc.

 

Baked goods manufacturer

 

Junior secured loan (Cdn$14,000 par due 11/2012)

 

11.50%

 

11/2/07

 

14,850

 

13,734

 

$

1.00

(12)

 

 

 

 

 

 

Warrants to purchase 57,545 shares

 

 

 

 

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apple & Eve, LLC and US Juice Partners, LLC (6)

 

Juice manufacturer

 

Senior secured revolving loan
($1,846 par due 10/2013)

 

8.92% (Libor + 6.00%/Q)

 

10/5/07

 

1,846

 

1,846

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($3,500 par due 10/2013)

 

10.00% (Base Rate + 5.00%/D)

 

10/5/07

 

3,500

 

3,500

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($1,000 par due 10/2013)

 

8.78% (Libor + 6.00%/Q)

 

10/5/07

 

1,000

 

1,000

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan ($33,660 par due 10/2013)

 

9.02% (Libor + 6.00%/S)

 

10/5/07

 

33,660

 

31,977

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan ($11,880 par due 10/2013)

 

9.02% (Libor + 6.00%/S)

 

10/5/07

 

11,880

 

11,286

 

$

0.95

(3)

 

 

 

 

 

 

Senior secured loan
($85 par due 10/2013)

 

8.80% (Libor + 6.00%/Q)

 

10/5/07

 

85

 

81

 

$

0.95

 

 

 

 

 

 

 

Senior secured loan
($30 par due 10/2013)

 

8.80% (Libor + 6.00%/Q)

 

10/5/07

 

30

 

29

 

$

0.95

(3)

 

 

 

 

 

 

Senior units (50,000 units)

 

 

 

10/5/07

 

5,000

 

5,000

 

$

100.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Best Brands Corporation

 

Baked goods manufacturer

 

Senior secured loan
($7,626 par due 12/2012)

 

9.70 (Libor + 7.00%/Q)

 

2/15/2008

 

7,033

 

7,680

 

$

1.00

 

 

 

 

 

 

 

Junior secured loan
($1,007 par due 6/2013)

 

16.73% (Libor + 5.00% Cash, 7.00% PIK/Q)

 

12/14/06

 

1,007

 

1,007

 

$

1.00

(4)

 

 

 

 

 

 

Junior secured loan
($27,801 par due 6/2013)

 

16.73% (Libor + 5.00% Cash, 7.00% PIK/Q)

 

12/14/06

 

27,802

 

27,800

 

$

1.00

(2)(4)

 

 

 

5



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage
of
Net Assets

 

 

 

 

 

Junior secured loan ($11,451 par due 6/2013)

 

16.73% (Libor + 5.00% Cash, 7.00% PIK/Q)

 

12/14/06

 

11,451

 

11,451

 

$

1.00

(3)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charter Baking Company, Inc.

 

Baked goods manufacturer

 

Senior subordinated note ($5,000 par due 2/2013)

 

12.00%

 

2/6/08

 

5,000

 

5,000

 

$

1.00

 

 

 

 

 

 

 

Preferred stock (6,258 shares)

 

 

 

9/1/06

 

2,500

 

2,500

 

$

399.48

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTG Management, Inc.

 

Airport restaurant operator

 

Junior secured loan ($10,136 par due 6/2013)

 

18.00% (Libor + 11.00% Cash, 4.00% PIK/M)

 

6/19/08

 

10,136

 

10,136

 

$

1.00

(4)

 

 

 

 

Warrants to purchase up to 9 shares of common stock

 

 

 

 

 

 

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vistar Corporation and Wellspring Distribution Corp.

 

Foodservice distributor

 

Senior subordinated note ($73,625 par due 5/2015)

 

13.50%

 

5/23/08

 

73,625

 

73,625

 

$

1.00

 

 

 

 

 

 

 

Class A non-voting common stock (1,366,120 shares)

 

 

 

5/23/08

 

7,500

 

7,500

 

$

1.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

217,905

 

215,152

 

 

 

16.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education software developer

 

Senior secured loan ($44,888 par due 8/2013)

 

11.00%

 

2/8/08

 

44,888

 

44,888

 

$

1.00

 

 

 

 

 

 

 

Preferred stock (422,764 shares)

 

8.00% PIK

 

2/8/08

 

7,674

 

7,674

 

$

18.15

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELC Acquisition Corporation

 

Developer, manufacturer and retailer of educational products

 

Senior secured loan
($264 par due 11/2012)

 

6.27% (Libor + 3.25%/S)

 

11/30/06

 

264

 

264

 

$

1.00

(3)

 

 

 

 

 

 

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

 

9.80% (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
($3,350 par due 12/2012)

 

10.00% (Base Rate + 5.00%/D)

 

4/3/07

 

3,350

 

3,350

 

$

1.43

 

 

 

 

 

 

 

Senior secured revolving loan
($3,500 par due 12/2012)

 

8.80% (Libor + 6.00%/Q)

 

4/3/07

 

3,500

 

3,500

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan
($3,450 par due 12/2012)

 

10.00% (Base Rate + 5.00%/D)

 

4/3/07

 

3,450

 

3,450

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($3,637 par due 12/2012)

 

9.19% (Libor + 6.00%/S)

 

4/3/07

 

3,637

 

3,637

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($613 par due 12/2012)

 

8.81% (Libor + 6.00%/Q)

 

4/3/07

 

613

 

613

 

$

1.00

 

 

 

 

 

 

 

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

 

8.54% (Libor + 6.00%/S)

 

9/21/07

 

14,113

 

14,113

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan
($7,400 par due 12/2012)

 

8.72% (Libor + 6.00%/Q)

 

4/3/07

 

7,400

 

7,400

 

$

1.00

(3)

 

 

 

 

 

 

Common membership interest (26.27% interest)

 

 

 

9/21/07

 

15,000

 

20,000

 

 

(5)

 

 

 

6



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition

Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

Instituto de Banca y Comercio, Inc. (8)

 

Private school operator

 

Senior secured revolving loan ($1,500 par due 3/2014)

 

5.68% (Libor + 3.00%/Q)

 

3/15/07

 

1,500

 

1,500

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan ($1,643 par due 3/2014)

 

5.68% (Libor + 3.00%/Q)

 

3/15/07

 

1,643

 

1,643

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan ($821 par due 3/2014)

 

5.80% (Libor + 3.00%/Q)

 

3/15/07

 

821

 

821

 

$

1.00

 

 

 

 

 

 

 

Senior secured revolving loan ($1,125 par due 3/2014)

 

5.92% (Libor + 3.00%/Q)

 

3/15/07

 

1,125

 

1,125

 

$

1.00

 

 

 

 

 

 

 

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

 

7.87% (Libor + 5.00%/Q)

 

3/15/07

 

7,500

 

7,500

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan ($12,315 par due 3/2014)

 

7.87% (Libor + 5.00%/Q)

 

3/15/07

 

12,315

 

12,315

 

$

1.00

 

 

 

 

 

 

 

Senior secured loan ($11,880 par due 3/2014)

 

7.87% (Libor + 5.00%/Q)

 

3/15/07

 

11,880

 

11,880

 

$

1.00

(3)

 

 

 

 

 

 

Senior subordinated loan ($19,302 par due 6/2014)

 

10.50% Cash, 3.50% PIK

 

6/4/08

 

19,302

 

19,302

 

$

1.00

(4)

 

 

 

 

 

 

Promissory note ($429 par due 9/2015)

 

6.00%

 

6/4/08

 

429

 

857

 

$

2.00

 

 

 

 

 

 

 

Preferred stock (214,286 shares)

 

 

 

6/4/08

 

1,018

 

2,036

 

$

9.50

(5)

 

 

 

 

 

 

Common stock (214,286 shares)

 

 

 

6/4/08

 

54

 

107

 

$

0.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

202,809

 

209,308

 

 

 

15.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

Ordinary shares (948,500 shares)

 

 

 

12/15/06

 

9,033

 

6,316

 

$

 6.66

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Firstlight Financial Corporation (6) (9)

 

Investment company

 

Senior subordinated loan ($68,214 par due 12/2016)

 

10.00% PIK

 

12/31/06

 

68,195

 

68,195

 

$

1.00

(4)

 

 

 

 

 

 

Common stock (10,000 shares)

 

 

 

12/31/06

 

10,019

 

6,269

 

$

625.00

(5)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/31/06

 

30,000

 

18,750

 

$

625.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

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

 

8.66% (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

 

14,400

 

$

0.90

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imperial Capital Group, LLC and Imperial Capital Private Opportunities, LP (6) (9)

 

Investment banking services

 

Limited partnership interest (80% interest)

 

 

 

5/10/07

 

584

 

584

 

$

1.00

 

 

 

 

7



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition

Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

 

 

 

 

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

 

290

 

290

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

191,381

 

172,064

 

 

 

13.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 ($7,331 par due 3/2012)

 

7.75% (Libor + 5.25%/S)

 

3/27/07

 

7,331

 

7,331

 

$

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 ($4,876 par due 3/2012)

 

8.03% (Libor + 5.25%/S)

 

3/27/07

 

4,876

 

4,876

 

$

 1.00

 

 

 

 

 

 

 

Senior secured loan ($10,739 par due 11/2012)

 

12.00% Cash, 4.00% PIK

 

5/28/08

 

10,739

 

10,739

 

$

 1.00

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson Group, Inc. and Advent - Hudson, LLC

 

Retail newstand operator

 

Junior secured loan ($35,139 par due 3/2015)

 

11.50% Cash, 1.50% PIK

 

3/28/08

 

35,139

 

35,139

 

$

 1.00

(4)

 

 

 

 

 

 

Membership units (6,057,000 units)

 

 

 

3/28/08

 

3,000

 

3,000

 

$

 0.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Savers, Inc. and SAI Acquisition Corporation

 

For-profit thrift retailer

 

Senior subordinated note ($28,000 par due 8/2014)

 

10.00% cash, 2.00% PIK

 

8/8/06

 

28,000

 

28,000

 

$

 1.00

(2) (4)

 

 

 

 

 

 

Common stock (1,170,182 shares)

 

 

 

8/8/06

 

4,500

 

5,800

 

$

 4.96

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Things Remembered, Inc. and TRM Holdings Corporation

 

Personalized gifts retailer

 

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

 

7.47% (Libor + 4.75%/M)

 

9/28/06

 

4,728

 

4,728

 

$

 1.00

(3)

 

 

 

 

 

 

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

 

8.48% (Libor + 6.00%/M)

 

9/28/06

 

14,000

 

14,000

 

$

 1.00

(2)

 

 

 

 

 

 

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

 

8.48% (Libor + 6.00%/M)

 

9/28/06

 

14,000

 

14,000

 

$

 1.00

 

 

 

 

 

 

 

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

 

8.48% (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)

 

 

 

 

 

 

 

 

 

 

 

 

167,893

 

169,193

 

 

 

12.72

%

 

8



 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition

Date