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 March 31, 2011

 

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)

 

245 Park Avenue, 44th Floor, Building East, New York, NY 10167

(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 May 2, 2011

Common stock, $0.001 par value

 

204,752,336

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of March 31, 2011 (unaudited) and December 31, 2010

2

 

 

 

 

Consolidated Statement of Operations for the three months ended March 31, 2011 (unaudited) and March 31, 2010 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of March 31, 2011 (unaudited) and December 31, 2010

4

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2011 (unaudited)

45

 

 

 

 

Consolidated Statement of Cash Flows for the three months ended March 31, 2011 (unaudited) and March 31, 2010 (unaudited)

46

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

47

 

 

 

Item 2.

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

72

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

92

 

 

 

Item 4.

Controls and Procedures

93

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

93

 

 

 

Item 1A.

Risk Factors

93

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

94

 

 

 

Item 3.

Defaults Upon Senior Securities

94

 

 

 

Item 4.

(Removed and Reserved)

94

 

 

 

Item 5.

Other Information

94

 

 

 

Item 6.

Exhibits

95

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

March 31, 2011

 

December 31, 2010

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

2,174,715

 

$

2,482,642

 

Non-controlled affiliate company investments

 

502,816

 

380,396

 

Controlled affiliate company investments

 

1,585,502

 

1,454,952

 

Total investments at fair value (amortized cost of $4,214,764 and $4,291,955, respectively)

 

4,263,033

 

4,317,990

 

Cash and cash equivalents

 

246,233

 

100,752

 

Receivable for open trades

 

37,549

 

8,876

 

Interest receivable

 

72,824

 

72,548

 

Other assets

 

87,404

 

62,380

 

Total assets

 

$

4,707,043

 

$

4,562,546

 

LIABILITIES

 

 

 

 

 

Debt

 

$

1,428,044

 

$

1,378,509

 

Management and incentive fees payable

 

63,280

 

52,397

 

Accounts payable and other liabilities

 

32,339

 

34,742

 

Interest and facility fees payable

 

20,372

 

21,763

 

Payable for open trades

 

 

24,602

 

Total liabilities

 

1,544,035

 

1,512,013

 

Commitments and contingencies (Note 7)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 400,000 and 300,000 common shares authorized, respectively, 204,752 and 204,419 common shares issued and outstanding, respectively

 

205

 

204

 

Capital in excess of par value

 

3,265,581

 

3,205,326

 

Accumulated overdistributed net investment income

 

(35,060

)

(11,336

)

Accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets

 

(115,987

)

(169,696

)

Net unrealized gain on investments and foreign currency transactions

 

48,269

 

26,035

 

Total stockholders’ equity

 

3,163,008

 

3,050,533

 

Total liabilities and stockholders’ equity

 

$

4,707,043

 

$

4,562,546

 

NET ASSETS PER SHARE

 

$

15.45

 

$

14.92

 

 

See accompanying notes to consolidated financial statements.

 

2



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

 

 

 

For the three months ended

 

 

 

March 31, 2011

 

March 31, 2010

 

 

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

Interest from investments

 

$

61,807

 

$

46,075

 

Capital structuring service fees

 

5,365

 

1,350

 

Interest from cash & cash equivalents

 

53

 

11

 

Dividend income

 

1,515

 

 

Management fees

 

154

 

328

 

Other income

 

1,236

 

795

 

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

 

70,130

 

48,559

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

Interest from investments

 

10,132

 

4,620

 

Dividend income

 

2,376

 

103

 

Management fees

 

188

 

138

 

Other income

 

576

 

58

 

Total investment income from non-controlled affiliate company investments

 

13,272

 

4,919

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

Interest from investments

 

38,621

 

10,841

 

Capital structuring service fees

 

5,593

 

751

 

Dividend income

 

4,900

 

378

 

Management fees

 

3,107

 

1,021

 

Other income

 

68

 

41

 

Total investment income from controlled affiliate company investments

 

52,289

 

13,032

 

 

 

 

 

 

 

Total investment income

 

135,691

 

66,510

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

Interest and credit facility fees

 

30,175

 

8,588

 

Incentive management fees

 

30,941

 

8,144

 

Base management fees

 

16,730

 

8,456

 

Professional fees

 

2,465

 

2,504

 

Administrative fees

 

2,425

 

1,231

 

Professional fees related to the acquisition of Allied Capital Corporation

 

167

 

3,789

 

Other general and administrative

 

2,918

 

2,255

 

Total expenses

 

85,821

 

34,967

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

49,870

 

31,543

 

 

 

 

 

 

 

Income tax expense (benefit), including excise tax

 

2,047

 

(162

)

 

 

 

 

 

 

NET INVESTMENT INCOME

 

47,823

 

31,705

 

 

 

 

 

 

 

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

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

72,412

 

2,261

 

Non-controlled affiliate company investments

 

(3,596

)

(7,659

)

Controlled affiliate company investments

 

(6,247

)

432

 

Foreign currency transactions

 

 

85

 

Net realized gains (losses)

 

62,569

 

(4,881

)

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(13,054

)

30,974

 

Non-controlled affiliate company investments

 

6,547

 

11,845

 

Controlled affiliate company investments

 

28,741

 

6,924

 

Foreign currency transactions

 

 

(152

)

Net unrealized gains

 

22,234

 

49,591

 

 

 

 

 

 

 

Net realized and unrealized gains from investments and foreign currencies

 

84,803

 

44,710

 

 

 

 

 

 

 

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

 

(8,860

)

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

123,766

 

$

76,415

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)

 

$

0.61

 

$

0.61

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING — BASIC AND DILUTED (see Note 10)

 

204,419

 

124,544

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2011 (unaudited)

(dollar amounts in thousands)

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGILE Fund I, LLC (7)(9)

 

Investment partnership

 

Member interest (0.50% interest)

 

 

 

4/1/2010

 

$

264

 

$

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BB&T Capital Partners/Windsor Mezzanine Fund, LLC (6)(9)

 

Investment company

 

Member interest (32.59% interest)

 

 

 

4/1/2010

 

10,108

 

13,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carador PLC (6)(8)(9)(16)

 

Investment company

 

Ordinary shares (7,110,525 shares)

 

 

 

12/15/2006

 

9,033

 

6,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 unit)

 

 

 

9/7/2007

 

2,553

 

2,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

1,059

 

1,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dynamic India Fund IV, LLC (9)

 

Investment company

 

Member interest (5.44% interest)

 

 

 

4/1/2010

 

4,822

 

4,728

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Firstlight Financial Corporation (6)(9)

 

Investment company

 

Senior subordinated loan ($73,993 par due 12/2016)

 

1.00% PIK

 

12/31/2006

 

73,708

 

56,670

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock (10,000 shares)

 

 

 

12/31/2006

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/31/2006

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

113,708

 

56,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCI Equity, LLC (7)(8)(9)

 

Investment company

 

Member interest (100% interest)

 

 

 

4/1/2010

 

808

 

943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Imperial Capital Private Opportunities, LP (6)(9)

 

Investment partnership

 

Limited partnership interest (80% interest)

 

 

 

5/10/2007

 

6,643

 

5,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

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

 

6.25% (Libor + 6.00%/Q)

 

11/20/2007

 

40,000

 

37,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated notes ($16 par due 11/2018)

 

15.50%

 

11/20/2007

 

15,515

 

16,000

 

 

 

 

 

 

 

 

 

 

 

 

 

55,515

 

53,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knightsbridge CLO 2007-1 Ltd. (7)(8)(9)

 

Investment company

 

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

 

9.30% (Libor + 9.00%/Q)

 

3/24/2010

 

14,852

 

17,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knightsbridge CLO 2008-1 Ltd. (7)(8)(9)

 

Investment company

 

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

 

7.81% (Libor + 7.50%/Q)

 

3/24/2010

 

14,400

 

14,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class D notes ($9,000 par due 6/2018)

 

8.81% (Libor + 8.50%/Q)

 

3/24/2010

 

9,000

 

9,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5.31% (Libor + 5.00%/Q)

 

3/24/2010

 

13,596

 

13,634

 

 

 

 

 

 

 

 

 

 

 

 

 

36,996

 

37,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kodiak Funding, LP (9)

 

Investment partnership

 

Limited partnership interest (1.52% interest)

 

 

 

4/1/2010

 

905

 

788

 

 

 

 

4



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Novak Biddle Venture Partners III, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.47% interest)

 

 

 

4/1/2010

 

221

 

265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnership Capital Growth Fund I, LP (9)

 

Investment partnership

 

Limited partnership interest (25% interest)

 

 

 

6/16/2006

 

2,700

 

2,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Secured Loan Fund LLC (7)(15)(17)

 

Investment company

 

Subordinated certificates ($671,435 par due 12/2015)

 

8.30% (Libor + 8.00%/Q)

 

10/30/2009

 

660,712

 

681,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trivergance Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (100% interest)

 

 

 

6/5/2008

 

3,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

975

 

975

 

 

 

 

 

 

 

 

 

 

 

 

 

925,460

 

885,858

 

28.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axium Healthcare Pharmacy, Inc.

 

Specialty pharmacy provider

 

Senior subordinated loan ($3,160 par due 3/2015)

 

8.00%

 

4/1/2010

 

2,926

 

3,065

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (1,000,000 units)

 

 

 

8/19/2010

 

1,000

 

1,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings, LLC

 

Healthcare analysis services

 

Senior secured loan ($4,967 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

4,967

 

4,967

(14)

 

 

 

 

 

 

Senior secured loan ($5,016 par due 3/2017)

 

7.75% (Libor + 6.50%/S )

 

3/15/2011

 

5,016

 

5,016

(14)

 

 

 

 

 

 

Senior secured loan ($5,016 par due 3/2017)

 

7.75% (Libor + 6.50%/M)

 

3/15/2011

 

5,016

 

5,016

(14)

 

 

 

 

 

 

Common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

9,090

 

 

 

 

 

 

 

Common stock (1,546 shares)

 

 

 

6/15/2007

 

 

1,452

 

 

 

 

 

 

 

 

 

 

 

 

 

14,032

 

20,574

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSI Renal Inc. (6)

 

Dialysis provider

 

Senior secured loan ($9,333 par due 3/2013)

 

8.50% (Libor + 6.50%/M)

 

4/4/2006

 

9,266

 

9,333

(14)

 

 

 

 

 

 

Senior subordinated loan ($69,009 par due 4/2014)

 

6.00% Cash, 10.00% PIK

 

4/4/2006

 

68,522

 

69,011

(4)

 

 

 

 

 

 

Common units (19,726 units)

 

 

 

4/4/2006

 

19,684

 

43,125

 

 

 

 

 

 

 

 

 

 

 

 

 

97,472

 

121,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GG Merger Sub I, Inc.

 

Drug testing services

 

Senior secured loan ($11,330 par due 12/2014)

 

4.31% (Libor + 4.00%/Q)

 

12/14/2007

 

10,966

 

11,103

(2)

 

 

 

 

 

 

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

 

4.31% (Libor + 4.00%/Q)

 

12/14/2007

 

11,609

 

11,760

(2)

 

 

 

 

 

 

 

 

 

 

 

 

22,575

 

22,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCP Acquisition Holdings, LLC (7)

 

Healthcare compliance advisory services

 

Class A units (10,044,176 units)

 

 

 

6/26/2008

 

10,044

 

4,687

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Senior subordinated loan ($10,076 par due 9/2017)

 

13.50%

 

9/27/2010

 

10,076

 

10,076

 

 

 

 

 

 

 

Common stock (1,000,000 shares)

 

 

 

9/27/2010

 

1,000

 

628

 

 

 

 

 

 

 

 

 

 

 

 

 

11,076

 

10,704

 

 

 

 

5



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Magnacare Holdings, Inc., Magnacare Administrative Services, LLC, and Magnacare, LLC

 

Healthcare professional provider

 

Senior secured loan ($50,755 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/13/2010

 

50,755

 

50,755

(14)

 

 

 

 

 

 

Senior secured loan ($48,119 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/13/2010

 

48,119

 

48,119

(14)

 

 

 

 

 

 

Senior secured loan ($8,950 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/13/2010

 

8,950

 

8,950

(14)

 

 

 

 

 

 

 

 

 

 

 

 

107,824

 

107,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MWD Acquisition Sub, Inc.

 

Dental services

 

Junior secured loan ($5,000 par due 5/2013)

 

8.50% (Base Rate + 5.25%/Q )

 

5/3/2007

 

5,000

 

5,000

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NS Merger Sub. Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

Senior subordinated loan ($579 par due 6/2017)

 

13.50%

 

6/21/2010

 

579

 

579

 

 

 

 

 

 

 

Senior subordinated loan ($50,000 par due 6/2017)

 

13.50%

 

6/21/2010

 

50,000

 

50,000

 

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

2,525

 

 

 

 

 

 

 

 

 

 

 

 

 

53,079

 

53,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Common stock (857,143 shares)

 

 

 

8/18/2006

 

3,000

 

2,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Passport Health Communications, Inc., Passport Holding Corp. and Prism Holding Corp.

 

Healthcare technology provider

 

Senior secured loan ($250 par due 5/2014)

 

8.25% (Libor + 7.00%/Q)

 

5/9/2008

 

250

 

250

(2)(14)

 

 

 

 

 

 

Senior secured loan ($10,877 par due 5/2014)

 

8.25% (Libor + 7.00%/Q )

 

5/9/2008

 

10,877

 

10,877

(2)(14)

 

 

 

 

 

 

Senior secured loan ($231 par due 5/2014)

 

8.25% (Libor + 7.00%/Q )

 

5/9/2008

 

231

 

231

(2)(14)

 

 

 

 

 

 

Senior secured loan ($10,041 par due 5/2014)

 

8.25% (Libor + 7.00%/Q )

 

5/9/2008

 

10,041

 

10,041

(2)(14)

 

 

 

 

 

 

Series A preferred stock (1,594,457 shares)

 

 

 

7/30/2008

 

11,156

 

8,191

(4)

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32,655

 

29,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PG Mergersub, Inc.

 

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

 

Senior secured loan ($1,097 par due 11/2015)

 

6.75% (Libor + 5.00%/Q)

 

11/3/2010

 

1,096

 

1,097

(3)(14)

 

 

 

 

 

 

Senior secured loan ($9,177 par due 11/2015)

 

6.75% (Libor + 5.00%/Q )

 

11/3/2010

 

9,150

 

9,177

(3)(14)

 

 

 

 

 

 

Senior subordinated loan ($4,000 par due 3/2016)

 

12.50%

 

3/12/2008

 

3,950

 

4,000

 

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

12

 

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

601

 

 

 

 

 

 

 

 

 

 

 

 

 

14,488

 

14,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reed Group, Ltd.

 

Medical disability management services provider

 

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

 

 

 

4/1/2010

 

1,097

 

1,063

(13)

 

 

 

 

 

 

Senior secured loan ($10,755 par due 12/2013)

 

 

 

4/1/2010

 

9,129

 

9,142

(13)

 

 

 

 

 

 

Senior subordinated loan ($19,625 par due 12/2013)

 

 

 

4/1/2010

 

15,918

 

10,725

(13)

 

 

 

 

 

 

Equity interests

 

 

 

4/1/2010

 

203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,347

 

20,930

 

 

 

 

6



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Regency Healthcare Group, LLC (6)

 

Hospice provider

 

Preferred member interest (1,293,960 units)

 

 

 

4/1/2010

 

2,007

 

2,310

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soteria Imaging Services, LLC  (6)

 

Outpatient medical imaging provider

 

Junior secured loan ($1,352 par due 11/2010)

 

 

 

4/1/2010

 

1,309

 

971

(13)

 

 

 

 

 

 

Junior secured loan ($1,955 par due 11/2010)

 

 

 

4/1/2010

 

1,894

 

1,404

(13)

 

 

 

 

 

 

Preferred member interest (1,823,179 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,203

 

2,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunquest Information Systems, Inc.

 

Laboratory software solutions provider

 

Junior secured loan ($38,000 par due 6/2017)

 

9.75% (Libor + 8.50%/Q)

 

12/16/2010

 

38,000

 

38,000

(14)

 

 

 

 

 

 

Junior secured loan ($57,000 par due 6/2017)

 

9.75% (Libor + 8.50%/M)

 

12/16/2010

 

57,000

 

57,000

(14)

 

 

 

 

 

 

Junior secured loan ($20,000 par due 6/2017)

 

9.75% (Libor + 8.50%/M)

 

12/16/2010

 

20,000

 

20,000

(2)(14)

 

 

 

 

 

 

Junior secured loan ($30,000 par due 6/2017)

 

9.75% (Libor + 8.50%/M)

 

12/16/2010

 

30,000

 

30,000

(2)(14)

 

 

 

 

 

 

 

 

 

 

 

 

145,000

 

145,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Renal Care, Inc.

 

Dialysis provider

 

Senior subordinated loan ($20,336 par due 5/2017)

 

11.25% Cash, 2.00% PIK

 

5/24/2010

 

20,336

 

20,336

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Univita Health Inc.

 

Outsourced services provider

 

Senior subordinated loan ($21,252 par due 12/2014)

 

12.00% Cash, 3.00% PIK

 

12/22/2009

 

21,252

 

21,252

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vantage Oncology, Inc.

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

6,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

602,953

 

621,136

 

19.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aviation Properties Corporation  (7)

 

Aviation services

 

Common stock (100 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BenefitMall Holdings Inc. (7)

 

Employee benefits broker services company

 

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

 

18.00%

 

4/1/2010

 

40,326

 

40,326

 

 

 

 

 

 

 

Common stock (39,274,290 shares)

 

 

 

4/1/2010

 

53,510

 

51,321

 

 

 

 

 

 

 

Warrants

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

93,836

 

91,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CitiPostal Inc. (7)

 

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

(14)

 

 

 

 

 

 

Senior secured revolving loan ($900 par due 12/2013)

 

6.50% (Libor + 4.50%/M )

 

4/1/2010

 

900

 

900

(14)

 

 

 

 

 

 

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

 

6.75% (Base Rate + 3.25%/M )

 

4/1/2010

 

1,250

 

1,250

(14)

 

 

 

 

 

 

Senior secured loan ($479 par due 12/2013)

 

11.00% Cash, 2.00% PIK

 

4/1/2010

 

479

 

479

(4)

 

 

 

 

 

 

Senior secured loan ($49,086 par due 12/2013)

 

11.00% Cash, 2.00% PIK

 

4/1/2010

 

49,086

 

49,086

(2)(4)

 

 

 

 

 

 

Senior subordinated loan ($13,038 par due 12/2015)

 

 

 

4/1/2010

 

13,038

 

6,971

(13)

 

 

 

7



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,444

 

59,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cook Inlet Alternative Risk, LLC

 

Risk management services

 

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

 

8.50%

 

4/1/2010

 

25,124

 

24,423

 

 

 

 

 

 

 

Senior secured loan ($44,346 par due 4/2013)

 

8.50%

 

4/1/2010

 

26,665

 

27,077

 

 

 

 

 

 

 

Member interest (3.17%)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,789

 

51,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coverall North America, Inc.

 

Commercial janitorial service provider

 

Senior subordinated loan ($9,291 par due 2/2016)

 

10.00% Cash, 2.00% PIK

 

2/22/2011

 

9,291

 

9,291

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Videostream, LLC

 

Media content supply chain services company

 

Senior secured loan ($253 par due 2/2012)

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

253

 

253

(4)

 

 

 

 

 

 

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

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

10

 

10

(2)(4)

 

 

 

 

 

 

Senior secured loan ($4,179 par due 2/2012)

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

4,159

 

4,179

(2)(4)

 

 

 

 

 

 

Convertible subordinated loan ($5,676 par due 2/2016)

 

10.00% PIK

 

4/1/2010

 

6,116

 

5,772

(4)

 

 

 

 

 

 

 

 

 

 

 

 

10,538

 

10,214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Collections Services, Inc.

 

Collections services

 

Senior secured loan ($6,921 par due 3/2012)

 

7.50% (Libor + 5.50%/Q)

 

4/1/2010

 

6,921

 

6,921

(3)(14)

 

 

 

 

 

 

Senior secured loan ($34,000 par due 9/2012)

 

13.75% (Libor + 11.75%/Q )

 

4/1/2010

 

34,000

 

34,000

(2)(14)

 

 

 

 

 

 

Senior secured loan ($2,000 par due 9/2012)

 

13.75% (Libor + 11.75%/Q)

 

4/1/2010

 

2,000

 

2,000

(3)(14)

 

 

 

 

 

 

Preferred stock (14,927 shares)

 

 

 

5/18/2006

 

169

 

294

 

 

 

 

 

 

 

Common stock (478,816 shares)

 

 

 

4/1/2010

 

1,478

 

1,537

 

 

 

 

 

 

 

Common stock (114,004 shares)

 

 

 

2/5/2005

 

295

 

426

 

 

 

 

 

 

 

 

 

 

 

 

 

44,863

 

45,178

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Mercury Communications, LLC

 

Business media consulting services

 

Senior secured loan ($1,590 par due 3/2013)

 

8.00% (Base Rate + 4.50%/Q)

 

4/1/2010

 

1,460

 

1,431

(14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact Innovations Group, LLC (7)

 

IT consulting and outsourcing services

 

Member interest (50% interest)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Group Services, LLC (6)

 

Business consulting for private equity and corporate clients

 

Limited liability company membership interest (10.00% interest)

 

 

 

6/22/2006

 

 

558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-Ad Services, Inc. (6)

 

Marketing services and software provider

 

Preferred stock (1,725,280 units)

 

 

 

4/1/2010

 

788

 

2,159

 

 

 

 

 

 

 

Common stock (1,725,280 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

788

 

2,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MVL Group, Inc. (7)

 

Marketing research provider

 

Senior secured loan ($22,772 par due 7/2012)

 

12.00%

 

4/1/2010

 

22,772

 

22,772

 

 

 

 

 

 

 

Senior subordinated loan ($35,180 par due 7/2012)

 

12.00% Cash, 2.50% PIK

 

4/1/2010

 

34,280

 

35,180

(4)

 

 

 

 

 

 

Junior subordinated loan ($144 par due 7/2012)

 

8.00%

 

4/1/2010

 

 

105

 

 

 

 

8



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Common stock (560,716 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,052

 

58,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PC Helps Support, LLC

 

Technology support provider

 

Senior secured loan ($6,106 par due 12/2013)

 

3.56% (Libor + 3.25%/Q)

 

4/1/2010

 

6,106

 

6,106

(3)

 

 

 

 

 

 

Senior subordinated loan ($19,956 par due 12/2013)

 

12.76%

 

4/1/2010

 

19,956

 

19,956

 

 

 

 

 

 

 

 

 

 

 

 

 

26,062

 

26,062

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pillar Processing LLC and PHL Holding Co. (6)

 

Mortgage services

 

Senior secured loan ($1,875 par due 5/2014)

 

14.50%

 

7/31/2008

 

1,875

 

1,875

 

 

 

 

 

 

 

Senior secured loan ($5,500 par due 5/2014)

 

14.50%

 

7/31/2008

 

5,500

 

5,500

 

 

 

 

 

 

 

Senior secured loan ($9,730 par due 11/2013)

 

5.81% (Libor + 5.50%/Q)

 

11/20/2007

 

9,730

 

9,730

(2)

 

 

 

 

 

 

Senior secured loan ($6,074 par due 11/2013)

 

5.81% (Libor + 5.50%/Q)

 

11/20/2007

 

6,074

 

6,074

(2)

 

 

 

 

 

 

Common stock (85 shares)

 

 

 

11/20/2007

 

3,768

 

4,256

 

 

 

 

 

 

 

 

 

 

 

 

 

26,947

 

27,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Database marketing services

 

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

 

 

 

8/24/2006

 

10,222

 

102

(13)

 

 

 

 

 

 

Preferred units (4,000 units)

 

 

 

8/24/2006

 

3,600

 

 

 

 

 

 

 

 

Common units (4,000,000 units)

 

 

 

8/24/2006

 

400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,222

 

102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prommis Solutions, LLC, E-Default Services, LLC, Statewide Tax and Title Services, LLC &

 

Bankruptcy and foreclosure processing services

 

Senior subordinated loan ($16,788 par due 2/2014)

 

 

 

2/8/2007

 

16,788

 

15,109

(13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statewide Publishing Services, LLC (formerly known as MR Processing Holding Corp.)

 

 

 

Senior subordinated loan ($27,032 par due 2/2014)

 

 

 

2/8/2007

 

27,032

 

24,328

(13)

 

 

 

 

 

 

Preferred units (30,000 units)

 

 

 

4/11/2006

 

3,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46,820

 

39,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Promo Works, LLC

 

Marketing services

 

Senior secured loan ($8,498 par due 12/2013)

 

 

 

4/1/2010

 

4,949

 

4,630

(13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R2 Acquisition Corp.

 

Marketing services

 

Common stock (250,000 shares)

 

 

 

5/29/2007

 

250

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summit Business Media, LLC

 

Business media consulting services

 

Junior secured loan ($11,930 par due 7/2014)

 

 

 

8/3/2007

 

10,276

 

239

(3)(13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summit Energy Services, Inc.

 

Energy management consulting services

 

Common stock (38,796 shares)

 

 

 

4/1/2010

 

222

 

2,088

 

 

 

 

 

 

 

Common stock (385,608 shares)

 

 

 

4/1/2010

 

2,336

 

1,897