Table of Contents

 

 

 

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, 2010

 

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  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

 

Accelerated filer o

 

 

 

Non-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 5, 2010

Common stock, $0.001 par value

 

192,167,337

 

 

 


 


Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2010 (unaudited) and December 31, 2009

1

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2010 (unaudited) and June 30, 2009 (unaudited)

2

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2010 (unaudited) and December 31, 2009

3

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2010 (unaudited)

32

 

 

 

 

Consolidated Statement of Cash Flows for the three and six months ended June 30, 2010 (unaudited) and June 30, 2009 (unaudited)

33

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

34

 

 

 

Item 2.

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

54

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

 

 

 

Item 4.

Controls and Procedures

72

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

72

 

 

 

Item 1A.

Risk Factors

73

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

 

 

 

Item 3.

Defaults Upon Senior Securities

73

 

 

 

Item 4.

(Removed and Reserved)

73

 

 

 

Item 5.

Other Information

73

 

 

 

Item 6.

Exhibits

74

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(dollar amounts in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2010

 

December 31, 2009

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value (amortized cost of $3,875,476 and $2,376,384, respectively)

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

2,190,520

 

$

1,568,423

 

Non-controlled affiliate company investments

 

592,438

 

276,351

 

Controlled affiliate company investments

 

1,011,062

 

327,040

 

Total investments at fair value

 

3,794,020

 

2,171,814

 

Cash and cash equivalents

 

138,778

 

99,227

 

Interest receivable

 

78,690

 

28,019

 

Other assets

 

62,214

 

14,455

 

Total assets

 

$

4,073,702

 

$

2,313,515

 

LIABILITIES

 

 

 

 

 

Debt

 

$

1,244,938

 

$

969,465

 

Management and incentive fees payable

 

26,655

 

66,495

 

Accounts payable and accrued expenses

 

71,882

 

16,533

 

Interest and facility fees payable

 

18,899

 

2,645

 

Payable for open trades

 

 

489

 

Dividend payable

 

55

 

 

Total liabilities

 

1,362,429

 

1,055,627

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 300,000,000 common shares authorized, 192,167,337 and 109,944,674 common shares issued and outstanding, respectively

 

192

 

110

 

Capital in excess of par value

 

2,650,799

 

1,490,458

 

Accumulated undistributed (overdistributed) net investment income

 

(29,218

)

3,143

 

Accumulated net realized gain (loss) on investments, foreign currency transactions, extinguishment of debt and acquisitions

 

171,804

 

(31,115

)

Net unrealized loss on investments and foreign currency transactions

 

(82,304

)

(204,708

)

Total stockholders’ equity

 

2,711,273

 

1,257,888

 

Total liabilities and stockholders’ equity

 

$

4,073,702

 

$

2,313,515

 

NET ASSETS PER SHARE

 

$

14.11

 

$

11.44

 

 

See accompanying notes to consolidated financial statements.

 

1



Table of Contents

 

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, 2010

 

June 30, 2009

 

June 30, 2010

 

June 30, 2009

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

64,891

 

$

45,307

 

$

110,966

 

$

89,138

 

Capital structuring service fees

 

5,786

 

603

 

7,136

 

1,653

 

Management fees

 

2,347

 

 

2,675

 

 

Dividend income

 

1,918

 

617

 

1,918

 

1,043

 

Interest from cash & cash equivalents

 

17

 

57

 

28

 

210

 

Other income

 

1,759

 

1,748

 

2,554

 

2,697

 

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

 

76,718

 

48,332

 

125,277

 

94,741

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

15,375

 

6,528

 

19,995

 

12,103

 

Dividend income

 

88

 

123

 

191

 

137

 

Management fees

 

150

 

1,192

 

288

 

1,317

 

Other income

 

364

 

78

 

422

 

168

 

Total investment income from non-controlled affiliate company investments

 

15,977

 

7,921

 

20,896

 

13,725

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

23,796

 

2,155

 

34,637

 

5,093

 

Capital structuring service fees

 

1,906

 

 

2,657

 

194

 

Dividend income

 

1,418

 

 

1,796

 

 

Management fees

 

1,632

 

695

 

2,653

 

1,286

 

Other income

 

143

 

8

 

184

 

88

 

Total investment income from controlled affiliate company investments

 

28,895

 

2,858

 

41,927

 

6,661

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

121,590

 

59,111

 

188,100

 

115,127

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

23,110

 

6,301

 

31,698

 

12,882

 

Base management fees

 

11,682

 

7,496

 

20,138

 

14,994

 

Incentive management fees

 

14,973

 

7,987

 

23,117

 

15,537

 

Professional fees

 

3,454

 

2,308

 

5,958

 

3,705

 

Professional fees and other costs related to the acquisition of Allied Capital Corporation

 

12,534

 

 

16,323

 

 

Administrative

 

2,378

 

1,092

 

3,609

 

2,096

 

Rent

 

1,341

 

577

 

2,094

 

1,156

 

Insurance

 

535

 

341

 

894

 

675

 

Depreciation

 

247

 

165

 

410

 

338

 

Directors fees

 

144

 

134

 

278

 

236

 

Other

 

965

 

684

 

1,811

 

1,251

 

Total expenses

 

71,363

 

27,085

 

106,330

 

52,870

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

50,227

 

32,026

 

81,770

 

62,257

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit), including excise tax

 

686

 

78

 

524

 

109

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

49,541

 

31,948

 

81,246

 

62,148

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

7,512

 

(857

)

9,773

 

(2,162

)

Non-controlled affiliate company investments

 

3,925

 

 

(3,734

)

(482

)

Controlled affiliate company investments

 

870

 

 

1,302

 

 

Foreign currency transactions

 

 

116

 

85

 

68

 

Net realized gains (losses)

 

12,307

 

(741

)

7,426

 

(2,576

)

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

65,107

 

11,333

 

96,081

 

1,888

 

Non-controlled affiliate company investments

 

7,243

 

(9,929

)

19,088

 

(11,272

)

Controlled affiliate company investments

 

463

 

2,175

 

7,387

 

(6,926

)

Foreign currency transactions

 

 

(33

)

(152

)

(18

)

Net unrealized gains (losses)

 

72,813

 

3,546

 

122,404

 

(16,328

)

 

 

 

 

 

 

 

 

 

 

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

 

85,120

 

2,805

 

129,830

 

(18,904

)

 

 

 

 

 

 

 

 

 

 

GAIN ON THE ACQUISITION OF ALLIED CAPITAL CORPORATION

 

195,876

 

 

195,876

 

 

REALIZED GAIN (LOSS) ON EXTINGUISHMENT OF DEBT

 

(383

)

 

(383

)

26,543

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

330,154

 

$

34,753

 

$

406,569

 

$

69,787

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 4)

 

$

1.73

 

$

0.36

 

$

2.57

 

$

0.72

 

 

 

 

 

 

 

 

 

 

 

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

 

191,045,239

 

97,152,820

 

157,978,337

 

97,152,820

 

 

See accompanying notes to consolidated financial statements.

 

2


 


Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of June 30, 2010 (unaudited)

(dollar amounts in thousands, except per unit data)

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair
Value

 

Fair
Value
Per Unit

 

Percentage
of Net
Assets

 

Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGILE Fund I, LLC

 

Investment company

 

Member interest (0.05% interest)

 

 

 

4/1/2010

 

$

264

 

$

 264

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AllBridge Financial, LLC

 

Real estate finance company

 

Equity interest

 

 

 

4/1/2010

 

11,370

 

12,088

 

$

0.30

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BB&T Capital Partners/Windsor Mezzanine Fund, LLC

 

Investment company

 

Member interest (9.90% interest)

 

 

 

4/1/2010

 

13,372

 

14,785

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Capital Corporation

 

Asset manager and finance company

 

Senior subordinated loan ($4,594 par due 8/2013)

 

 

 

4/1/2010

 

4,120

 

5,088

 

$

1.11

(13)(16)

 

 

 

 

 

 

Common stock (100 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CDO Fund I, Ltd.

 

Investment company

 

Class C notes ($22,438 par due 12/2013)

 

2.13%

 

4/1/2010

 

1,568

 

1,777

 

$

0.08

(16)

 

 

 

 

 

 

Class D notes ($9,400 par due 12/2013)

 

 

 

4/1/2010

 

 

 

$

(13)(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CLO Fund III, Ltd.

 

Investment company

 

Preferred stock (23,600,000 shares)

 

13.72%

 

4/1/2010

 

4,985

 

8,151

 

$

0.37

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CLO Fund IV, Ltd.

 

Investment company

 

Class D notes ($3,000 par due 4/2020)

 

5.08% (Libor + 4.55%/Q)

 

4/1/2010

 

1,755

 

1,739

 

$

0.58

(16)

 

 

 

 

 

 

Subordinated notes ($21,668 par due 4/2020)

 

1.80%

 

4/1/2010

 

7,591

 

9,935

 

$

0.46

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CLO Fund V, Ltd.

 

Investment company

 

Subordinated notes ($13,062 par due 11/2020)

 

11.10%

 

4/1/2010

 

8,422

 

10,091

 

$

0.77

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CLO Fund VI, Ltd.

 

Investment company

 

Class D notes ($9,635 par due 10/2021)

 

6.53% (Libor + 6.00%/Q)

 

4/1/2010

 

4,484

 

4,243

 

$

0.44

(16)

 

 

 

 

 

 

Subordinated notes ($33,659 par due 10/2021)

 

4.30%

 

4/1/2010

 

9,276

 

14,227

 

$

0.42

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus Debt Partners CLO Fund VII, Ltd.

 

Investment company

 

Subordinated notes ($26,067 par due 1/2021)

 

18.16%

 

4/1/2010

 

10,517

 

14,516

 

$

0.56

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus MAPS CLO Fund I LLC

 

Investment company

 

Class E notes ($17,000 par due 12/2017)

 

5.80% (Libor + 5.53%/Q)

 

4/1/2010

 

11,289

 

11,274

 

$

0.66

(16)

 

 

 

 

 

 

Subordinated notes ($17,000 par due 12/2017)

 

14.84%

 

4/1/2010

 

14,500

 

19,031

 

$

0.47

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Callidus MAPS CLO Fund II, Ltd.

 

Investment company

 

Class D notes ($7,700 par due 7/2022)

 

4.78% (Libor + 4.25%/Q)

 

4/1/2010

 

3,280

 

4,035

 

$

0.52

(16)

 

 

 

 

 

 

Subordinated notes ($18,542 par due 7/2022)

 

8.40%

 

4/1/2010

 

8,608

 

12,298

 

$

0.66

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carador PLC(6)(8)(9)

 

Investment company

 

Ordinary shares (7,110,525 shares)

 

 

 

12/15/2006

 

9,033

 

3,982

 

$

0.56

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Catterton Partners VI, L.P.

 

Investment partnership

 

Limited partnership interest (0.05% interest)

 

 

 

4/1/2010

 

1,589

 

1,716

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP(9)

 

Investment partnership

 

Limited partnership units (0.94 unit)

 

 

 

9/7/2007

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ciena Capital LLC

 

Real estate secured small business lender

 

Senior secured revolving loan ($319,031 par due 3/2011)

 

 

 

4/1/2010

 

78,971

 

77,183

 

$

0.24

(13)

 

 

 

 

 

 

Senior secured loan ($4,969 par due 3/2011)

 

 

 

4/1/2010

 

5,041

 

4,969

 

$

1.00

(13)

 

 

 

 

 

 

Class B equity interest

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

Class B equity interest

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

Class C equity interest

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Credit Group, Inc.

 

Commercial equipment finance and leasing company

 

Senior subordinated loan ($6,000 par due 6/2015)

 

15.00%

 

4/1/2010

 

5,988

 

6,000

 

$

1.00

 

 

 

 

 

 

 

Senior subordinated loan ($4,000 par due 6/2015)

 

15.00%

 

4/1/2010

 

3,992

 

4,000

 

$

1.00

 

 

 

 

 

 

 

Senior subordinated loan ($9,500 par due 6/2015)

 

15.00%

 

4/1/2010

 

9,521

 

9,500

 

$

1.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compass Group Diversified Holdings, LLC

 

Middle market business manager

 

Senior secured revolving loan ($882 par due 12/2012)

 

3.04% (Libor + 2.50%/Q)

 

4/1/2010

 

882

 

882

 

$

1.00

(16)

 

 

 

 

 

 

Senior secured revolving loan ($37 par due 12/2012)

 

3.04% (Libor + 2.50%/Q)

 

4/1/2010

 

37

 

37

 

$

1.00

(16)

 

 

 

 

 

 

Senior secured revolving loan ($51 par due 12/2012)

 

4.75% (Base Rate + 1.50%/M)

 

4/1/2010

 

51

 

51

 

$

1.00

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cortec Group Fund IV, L.P.

 

Investment partnership

 

Limited partnership interest (2.53% interest)

 

 

 

4/1/2010

 

3,407

 

3,363

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covestia Capital Partners, LP(9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

1,059

 

1,021

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Capital Corporation

 

Commercial equipment finance and leasing company

 

Senior secured loan ($8,175 par due 1/2014)

 

 

 

4/1/2010

 

8,919

 

9,097

 

$

1.09

(13)

 

 

 

3



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair
Value

 

Fair
Value
Per Unit

 

Percentage
of Net
Assets

 

 

 

 

 

Senior subordinated loan ($36,632 par due 3/2013)

 

 

 

4/1/2010

 

1,190

 

1,017

 

$

0.03

(13)

 

 

 

 

 

 

Subordinated loan ($19,039 par due 3/2013)

 

 

 

4/1/2010

 

 

 

$

(13)

 

 

 

 

 

 

Common stock (2,317,020 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dryden XVIII Leveraged Loan 2007 Limited

 

Investment company

 

Class B notes ($8,637 par due 10/2019)

 

5.03% (Libor + 4.50%/Q)

 

4/1/2010

 

3,627

 

3,579

 

$

0.41

(16)

 

 

 

 

 

 

Subordinated notes ($38,686 par due 10/2019)

 

10.20%

 

4/1/2010

 

12,364

 

14,623

 

$

0.38

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dynamic India Fund IV

 

Investment company

 

Equity Interest

 

 

 

4/1/2010

 

4,822

 

4,822

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

eCentury Capital Partners, L.P.

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fidus Mezzanine Capital, L.P.

 

Investment partnership

 

Limited partnership interest (30.50% interest)

 

 

 

4/1/2010

 

9,206

 

10,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Pacific Company

 

Commercial finance leasing company

 

Senior subordinated loan ($20,255 par due 2/2012)

 

15.00% Cash, 2.00% PIK

 

4/1/2010

 

11,264

 

11,681

 

$

0.60

(4)(16)

 

 

 

 

 

 

Senior subordinated loan ($20,252 par due 2/2012)

 

15.00% Cash, 2.00% PIK

 

4/1/2010

 

11,263

 

11,679

 

$

0.60

(4)(16)

 

 

 

 

 

 

Senior subordinated loan ($18,640 par due 2/2012)

 

15.00% Cash, 2.00% PIK

 

4/1/2010

 

10,373

 

10,750

 

$

0.60

(4)(16)

 

 

 

 

 

 

Subordinated loan ($10,025 par due 8/2012)

 

18.00% Cash, 2.00% PIK

 

4/1/2010

 

 

 

$

(4)

 

 

 

 

 

 

Preferred stock (8,583 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

Preferred stock (424 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

Preferred stock (450 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

Common stock (12,711 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Firstlight Financial Corporation(6)(9)

 

Investment company

 

Senior subordinated loan ($73,440 par due 12/2016)

 

1.00% PIK

 

12/31/2006

 

73,313

 

48,295

 

$

 0.66

(4)(16)

 

 

 

 

 

 

Common stock (10,000 shares)

 

 

 

12/31/2006

 

10,000

 

 

$

 

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/31/2006

 

30,000

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCI Equity, LLC

 

Investment company

 

Member interest (1.00% interest)

 

 

 

4/1/2010

 

808

 

913

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment banking services

 

Common units (2,526 units)

 

 

 

5/10/2007

 

3

 

4,561

 

$

1,805.62

(16)

 

 

 

 

 

 

Common units (315 units)

 

 

 

5/10/2007

 

 

569

 

$

1,806.35

(16)

 

 

 

 

 

 

Common units (7,710 units)

 

 

 

5/10/2007

 

14,997

 

13,921

 

$

1,805.58

(16)

 

 

 

 

 

 

Limited partnership interest (80% interest)

 

 

 

5/10/2007

 

6,794

 

6,216

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Asset Management, L.P. (7)

 

Investment manager

 

Member interest

 

 

 

6/15/2009

 

85,424

 

105,044

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

Subordinated notes ($15,351 par due 11/2018)

 

15.50%

 

11/20/2007

 

15,351

 

14,737

 

$

0.96

(16)

 

 

 

 

 

 

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

 

6.25% (Libor + 6.00%/Q)

 

11/20/2007

 

40,000

 

37,600

 

$

0.94

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knightsbridge CLO 2007-1 Ltd. (7)

 

Investment company

 

Class E interest notes ($20,350 par due 1/2022)

 

9.53% (Libor + 9.00%/Q)

 

3/24/2010

 

14,852

 

11,347

 

$

0.56

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knightsbridge CLO 2008-1 Ltd. (7)

 

Investment company

 

Class C interest notes ($14,400 par due 6/2018)

 

8.03% (Libor + 7.50%/Q)

 

3/24/2010

 

14,400

 

14,400

 

$

1.00

(16)

 

 

 

 

 

 

Class D interest notes ($9,000 par due 6/2018)

 

9.03% (Libor + 8.50%/Q)

 

3/24/2010

 

9,000

 

9,000

 

$

1.00

(16)

 

 

 

 

 

 

Class E interest notes ($14,850 par due 6/2018)

 

5.53% (Libor + 5.00%/Q)

 

3/24/2010

 

13,596

 

9,954

 

$

0.67

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kodiak Fund LP

 

Investment partnership

 

Limited partnership interest (4.00% interest)

 

 

 

4/1/2010

 

941

 

962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Novak Biddle Venture Partners III, L.P.

 

Investment partnership

 

Limited partnership interest (2.46% interest)

 

 

 

4/1/2010

 

697

 

685

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pangaea CLO 2007-1 Ltd.

 

Investment company

 

Class D notes ($15,000 par due 1/2021)

 

5.28% (Libor + 4.75%/Q)

 

4/1/2010

 

8,889

 

7,722

 

$

0.51

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnership Capital Growth Fund I, LP(9)

 

Investment partnership

 

Limited partnership interest (25% interest)

 

 

 

6/16/2006

 

2,390

 

2,053

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Secured Loan Fund LLC (7)

 

Investment partnership

 

Subordinated certificates ($201,257 par due 12/2015)

 

15.94%

 

10/30/2009

 

190,535

 

202,800

 

$

1.01

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Slate Equity LLC

 

Investment company

 

Member interest (0.40% interest)

 

 

 

4/1/2010

 

7

 

7

 

 

(16)

 

 

 

4



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair
Value

 

Fair
Value
Per Unit

 

Percentage
of Net
Assets

 

SPP Mezzanine Funding II, L.P.

 

Investment partnership

 

Limited partnership interest (42.73% interest)

 

 

 

4/1/2010

 

5,904

 

5,649

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trivergance Capital Partners, LP(9)

 

Investment partnership

 

Limited partnership interest (100% interest)

 

 

 

6/5/2008

 

2,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VSC Investors LLC(9)

 

Investment company

 

Membership interest (4.63% interest)

 

 

 

1/24/2008

 

805

 

652

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Webster Capital II, L.P.

 

Investment partnership

 

Limited partnership interest (3.33% interest)

 

 

 

4/1/2010

 

687

 

690

 

 

(16)

 

 

 

 

 

 

 

 

 

 

 

 

850,065

 

831,789

 

 

 

30.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10th Street, LLC

 

Real estate holding company

 

Senior subordinated loan ($22,781 par due 11/2014)

 

8.93% Cash, 4.07% PIK

 

4/1/2010

 

22,781

 

22,781

 

$

1.00

(4)(16)

 

 

 

 

 

 

Member interest (10.00% interest)

 

 

 

4/1/2010

 

594

 

596

 

 

 

 

 

 

 

 

 

Option (25,000 shares)

 

 

 

4/1/2010

 

25

 

35

 

$

1.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avborne, Inc.

 

Aviation services

 

Common stock (27,500 shares)

 

 

 

4/1/2010

 

39

 

39

 

$

1.42

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation Properties Corporation

 

Aviation services

 

Common stock (100 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BenefitMall Holdings, Inc.

 

Insurance general agency to small businesses

 

Senior subordinated loan ($40,326 par due 6/2014)

 

18.00%

 

4/1/2010

 

40,326

 

40,326

 

$

1.00

 

 

 

 

 

 

 

Common stock (39,274,290 shares)

 

 

 

4/1/2010

 

53,510

 

57,647

 

$

1.47

(16)

 

 

 

 

 

 

Warrants

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Booz Allen Hamilton, Inc.

 

Strategy and technology consulting services

 

Senior subordinated loan ($250 par due 7/2016)

 

13.00%

 

7/31/2008

 

221

 

250

 

$

1.00

(16)

 

 

 

 

 

 

Senior subordinated loan ($12,400 par due 7/2016)

 

13.00%

 

7/31/2008

 

12,311

 

12,400

 

$

1.00

(2)(16)

 

 

 

 

 

 

Senior secured loan ($737 par due 7/2015)

 

7.50% (Libor + 4.50%/Q)

 

7/31/2008

 

728

 

737

 

$

1.00

(3)(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CitiPostal Inc.

 

Document storage and management services

 

Senior secured revolving loan ($691 par due 12/2013)

 

6.50% (Libor + 4.50%/M)

 

4/1/2010

 

691

 

691

 

$

1.00

(14)(16)

 

 

 

 

 

 

Senior secured revolving loan ($1,250 par due 12/2013)

 

6.75% (Base Rate + 3.50%/Q)

 

4/1/2010

 

1,250

 

1,250

 

$

1.00

(16)

 

 

 

 

 

 

Senior secured loan ($487 par due 12/2013)

 

11.00% Cash, 2.00% PIK

 

4/1/2010

 

487

 

487

 

$

1.00

(4)(16)

 

 

 

 

 

 

Senior secured loan ($49,838 par due 12/2013)

 

11.00% Cash, 2.00% PIK

 

4/1/2010

 

49,838

 

49,838

 

$

1.00

(2)(4)

 

 

 

 

 

 

Senior subordinated loan ($11,566 par due 12/2015)

 

16.00% PIK

 

4/1/2010

 

11,566

 

11,566

 

$

1.00

(4)(16)

 

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cook Inlet Alternative Risk, LLC

 

Risk management services

 

Senior secured loan ($40,000 par due 4/2013)

 

 

 

4/1/2010

 

25,124

 

25,114

 

$

0.63

(13)(16)

 

 

 

 

 

 

Senior secured loan ($47,600 par due 4/2013)

 

 

 

4/1/2010

 

29,876

 

29,886

 

$

0.63

(13)(16)

 

 

 

 

 

 

Member interest (3.17% interest)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coverall North America, Inc.

 

Commercial janitorial service provider

 

Senior secured loan ($15,763 par due 7/2011)

 

12.00%

 

4/1/2010

 

15,763

 

15,763

 

$

1.00

(2)

 

 

 

 

 

 

Senior secured loan ($15,864 par due 7/2011)

 

12.00%

 

4/1/2010

 

15,864

 

15,864

 

$

1.00

(2)

 

 

 

 

 

 

Senior subordinated loan ($5,563 par due 7/2011)

 

15.00% Cash, 1.00% PIK

 

4/1/2010

 

5,563

 

5,563

 

$

1.00

(4)(16)

 

 

 

 

 

 

Common stock (763,333 shares)

 

 

 

4/1/2010

 

2,999

 

4,380

 

$

5.74

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital VideoStream, LLC

 

Media post production company

 

Senior secured loan ($262 par due 2/2012)

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

262

 

262

 

$

1.00

(2)(4)

 

 

 

 

 

 

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

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

7

 

7

 

$

0.94

(2)(4)

 

 

 

 

 

 

Senior secured loan ($10,817 par due 2/2012)

 

11.00% Cash, 1.00% PIK

 

4/1/2010

 

10,817

 

10,817

 

$

1.00

(2)(4)

 

 

 

 

 

 

Convertible subordinated loan ($5,271 par due 2/2016)

 

10.00% PIK

 

4/1/2010

 

5,706

 

5,271

 

$

1.00

(4)(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Mercury Communications, LLC

 

Business media consulting services

 

Senior secured loan ($2,141 par due 3/2013)

 

8.00% (Base Rate + 4.50%/Q)

 

4/1/2010

 

1,945

 

1,707

 

$

0.85

(14)(16)