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, 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, 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 August 4, 2011

Common stock, $0.001 par value

 

205,129,966

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2011 (unaudited) and December 31, 2010

2

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2011 (unaudited) and June 30, 2010 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2011 (unaudited) and December 31, 2010

4

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2011 (unaudited)

47

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended June 30, 2011 (unaudited) and June 30, 2010 (unaudited)

48

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

49

 

 

 

Item 2.

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

71

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

91

 

 

 

Item 4.

Controls and Procedures

92

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

92

 

 

 

Item 1A.

Risk Factors

92

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

92

 

 

 

Item 3.

Defaults Upon Senior Securities

93

 

 

 

Item 4.

(Removed and Reserved)

93

 

 

 

Item 5.

Other Information

93

 

 

 

Item 6.

Exhibits

93

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2011

 

December 31, 2010

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

2,564,369

 

$

2,482,642

 

Non-controlled affiliate company investments

 

470,372

 

380,396

 

Controlled affiliate company investments

 

1,608,422

 

1,454,952

 

Total investments at fair value (amortized cost of $4,584,902 and $4,291,955, respectively)

 

4,643,163

 

4,317,990

 

Cash and cash equivalents

 

84,889

 

100,752

 

Receivable for open trades

 

26,492

 

8,876

 

Interest receivable

 

78,695

 

72,548

 

Other assets

 

78,292

 

62,380

 

Total assets

 

$

4,911,531

 

$

4,562,546

 

LIABILITIES

 

 

 

 

 

Debt

 

$

1,620,142

 

$

1,378,509

 

Management and incentive fees payable

 

89,883

 

52,397

 

Accounts payable and other liabilities

 

39,703

 

34,742

 

Interest and facility fees payable

 

25,579

 

21,763

 

Payable for open trades

 

1,943

 

24,602

 

Total liabilities

 

1,777,250

 

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, 205,130 and 204,419 common shares issued and outstanding, respectively

 

205

 

204

 

Capital in excess of par value

 

3,271,594

 

3,205,326

 

Accumulated overdistributed net investment income

 

(62,960

)

(11,336

)

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

 

(132,819

)

(169,696

)

Net unrealized gain on investments and foreign currency transactions

 

58,261

 

26,035

 

Total stockholders’ equity

 

3,134,281

 

3,050,533

 

Total liabilities and stockholders’ equity

 

$

4,911,531

 

$

4,562,546

 

NET ASSETS PER SHARE

 

$

15.28

 

$

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

 

For the six months ended

 

 

 

June 30, 2011

 

June 30, 2010

 

June 30, 2011

 

June 30, 2010

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

60,435

 

$

64,891

 

$

122,242

 

$

110,966

 

Capital structuring service fees

 

13,041

 

5,786

 

18,406

 

7,136

 

Dividend income

 

521

 

1,918

 

2,036

 

1,918

 

Management fees

 

474

 

2,347

 

628

 

2,675

 

Interest from cash & cash equivalents

 

41

 

17

 

94

 

28

 

Other income

 

880

 

1,759

 

2,116

 

2,554

 

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

 

75,392

 

76,718

 

145,522

 

125,277

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

8,759

 

15,375

 

18,891

 

19,995

 

Dividend income

 

1,255

 

88

 

3,631

 

191

 

Management fees

 

188

 

150

 

376

 

288

 

Other income

 

62

 

364

 

638

 

422

 

Total investment income from non-controlled affiliate company investments

 

10,264

 

15,977

 

23,536

 

20,896

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

42,079

 

23,796

 

80,700

 

34,637

 

Capital structuring service fees

 

7,113

 

1,906

 

12,706

 

2,657

 

Dividend income

 

4,901

 

1,418

 

9,801

 

1,796

 

Management fees

 

3,939

 

1,632

 

7,046

 

2,653

 

Other income

 

619

 

143

 

687

 

184

 

Total investment income from controlled affiliate company investments

 

58,651

 

28,895

 

110,940

 

41,927

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

144,307

 

121,590

 

279,998

 

188,100

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

28,593

 

23,110

 

58,768

 

31,698

 

Incentive management fees

 

41,746

 

14,973

 

72,687

 

23,117

 

Base management fees

 

17,414

 

11,682

 

34,144

 

20,138

 

Professional fees

 

4,781

 

3,454

 

7,246

 

5,958

 

Administrative fees

 

2,459

 

2,378

 

4,884

 

3,609

 

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

 

733

 

12,534

 

900

 

16,323

 

Other general and administrative

 

2,911

 

3,232

 

5,829

 

5,487

 

Total expenses

 

98,637

 

71,363

 

184,458

 

106,330

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

45,670

 

50,227

 

95,540

 

81,770

 

 

 

 

 

 

 

 

 

 

 

Income tax expense, including excise tax

 

1,907

 

686

 

3,954

 

524

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

43,763

 

49,541

 

91,586

 

81,246

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(14,223

)

7,512

 

58,189

 

9,773

 

Non-controlled affiliate company investments

 

1,580

 

3,925

 

(2,016

)

(3,734

)

Controlled affiliate company investments

 

6,269

 

870

 

22

 

1,302

 

Foreign currency transactions

 

 

 

 

85

 

Net realized gains (losses)

 

(6,374

)

12,307

 

56,195

 

7,426

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(7,372

)

65,107

 

(20,426

)

96,081

 

Non-controlled affiliate company investments

 

(9,453

)

7,243

 

(2,906

)

19,088

 

Controlled affiliate company investments

 

26,817

 

463

 

55,558

 

7,387

 

Foreign currency transactions

 

 

 

 

(152

)

Net unrealized gains

 

9,992

 

72,813

 

32,226

 

122,404

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains from investments and foreign currencies

 

3,618

 

85,120

 

88,421

 

129,830

 

 

 

 

 

 

 

 

 

 

 

GAIN ON THE ACQUISITION OF ALLIED CAPITAL CORPORATION

 

 

195,876

 

 

195,876

 

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

 

(10,458

)

(383

)

(19,318

)

(383

)

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

36,923

 

$

330,154

 

$

160,689

 

$

406,569

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 10)

 

$

0.18

 

$

1.73

 

$

0.79

 

$

2.57

 

 

 

 

 

 

 

 

 

 

 

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

 

204,752

 

191,045

 

204,586

 

157,978

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGILE Fund I, LLC (7)(9)

 

Investment partnership

 

Member interest (0.50% interest)

 

 

 

4/1/2010

 

$

252

 

$

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 unit)

 

 

 

9/7/2007

 

2,533

 

2,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

1,059

 

1,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 ($74,177 par due 12/2016)

 

1.00% PIK

 

12/31/2006

 

73,893

 

57,377

(4)

 

 

 

 

 

 

Class A common stock (10,000 shares)

 

 

 

12/31/2006

 

10,000

 

 

 

 

 

 

 

 

Class B common stock (30,000 shares)

 

 

 

12/31/2006

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

113,893

 

57,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

808

 

972

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment partnership

 

Limited partnership interest (80.00% 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)

 

15.00%

 

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)

 

9.29% (Libor + 9.00%/Q)

 

3/24/2010

 

14,852

 

18,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

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

 

7.75% (Libor + 7.50%/Q)

 

3/24/2010

 

14,400

 

14,400

 

 

 

 

 

 

 

Class D notes ($9,000 par due 6/2018)

 

8.75% (Libor + 8.50%/Q)

 

3/24/2010

 

9,000

 

9,000

 

 

 

 

 

 

 

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

 

5.25% (Libor + 5.00%/Q)

 

3/24/2010

 

13,596

 

13,844

 

 

 

 

 

 

 

 

 

 

 

 

 

36,996

 

37,244

 

 

 

 

4



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

Kodiak Funding, LP (9)

 

Investment partnership

 

Limited partnership interest (1.52% interest)

 

 

 

4/1/2010

 

891

 

817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment partnership

 

Limited partnership interest (2.47% interest)

 

 

 

4/1/2010

 

221

 

216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partnership Capital Growth Fund I, LP (9)

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

2,635

 

4,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior Secured Loan Fund LLC (7) (11) (17)

 

Co-investment vehicle

 

Subordinated certificates ($731,733 par due 12/2015)

 

8.29% (Libor + 8.00%/Q)

 

10/30/2009

 

721,010

 

740,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

975

 

975

 

 

 

 

 

 

 

 

 

 

 

 

 

963,105

 

928,712

 

29.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Axium Healthcare Pharmacy, Inc.

 

Specialty pharmacy provider

 

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

 

8.00%

 

4/1/2010

 

2,938

 

3,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

602

 

878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare analysis services

 

Senior secured loan ($7,281 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,281

 

7,281

(2)(16)

 

 

 

 

 

 

Senior secured loan ($7,681 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,681

 

7,681

(3)(16)

 

 

 

 

 

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

10,828

 

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

1,730

 

 

 

 

 

 

 

 

 

 

 

 

 

18,962

 

27,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSI Renal Inc. (6)

 

Dialysis provider

 

Senior secured loan ($9,307 par due 3/2013)

 

8.50% (Libor + 6.50%/M)

 

4/4/2006

 

9,248

 

9,307

(16)

 

 

 

 

 

 

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

 

16.00%

 

4/4/2006

 

68,523

 

69,009

 

 

 

 

 

 

 

Common units (19,726 units)

 

 

 

4/4/2006

 

19,684

 

43,125

 

 

 

 

 

 

 

 

 

 

 

 

 

97,455

 

121,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GG Merger Sub I, Inc.

 

Drug testing services

 

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

 

4.25% (Libor + 4.00%/Q)

 

12/14/2007

 

10,988

 

11,103

(2)

 

 

 

5



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

 

 

 

 

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

 

4.25% (Libor + 4.00%/Q)

 

12/14/2007

 

11,633

 

11,760

(3)

 

 

 

 

 

 

 

 

 

 

 

 

22,621

 

22,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCP Acquisition Holdings, LLC (7)

 

Healthcare compliance advisory services

 

Class A units (10,372,026 units)

 

 

 

6/26/2008

 

10,372

 

5,549

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Senior subordinated loan ($10,013 par due 9/2017)

 

13.50%

 

9/27/2010

 

10,113

 

11,125

 

 

 

 

 

 

 

Common stock (1,000,000 shares)

 

 

 

9/27/2010

 

1,000

 

611

 

 

 

 

 

 

 

 

 

 

 

 

 

11,113

 

11,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare professional provider

 

Senior secured loan ($50,342 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

50,342

 

50,342

(16)

 

 

 

 

 

 

Senior secured loan ($47,727 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

47,727

 

47,727

(2)(16)

 

 

 

 

 

 

Senior secured loan ($8,877 par due 9/2016)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

8,877

 

8,877

(3)(16)

 

 

 

 

 

 

 

 

 

 

 

 

106,946

 

106,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MW Dental Holding Corp.

 

Dental services

 

Senior secured revolving loan ($1,700 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

1,700

 

1,700

(16)

 

 

 

 

 

 

Senior secured loan ($30,800 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

30,800

 

30,800

(16)

 

 

 

 

 

 

Senior secured loan ($50,000 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

50,000

 

50,000

(2)(16)

 

 

 

 

 

 

Senior secured loan ($2,700 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

2,700

 

2,700

(3)(16)

 

 

 

 

 

 

 

 

 

 

 

 

85,200

 

85,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

Senior secured loan ($11,031 par due 4/2016)

 

8.50% (Libor + 7.00%/Q)

 

4/13/2011

 

10,656

 

11,031

(16)

 

 

 

 

 

 

Senior secured loan ($29,813 par due 4/2016)

 

8.50% (Libor + 7.00%/Q)

 

4/13/2011

 

29,813

 

29,813

(2)(16)

 

 

 

 

 

 

Senior secured loan ($7,851 par due 4/2016)

 

8.50% (Libor + 7.00%/Q)

 

4/13/2011

 

7,851

 

7,851

(3)(16)

 

 

 

 

 

 

Common units (5,000 units)

 

 

 

4/13/2011

 

5,000

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

53,320

 

53,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2)

 

 

 

6



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

2,338

 

 

 

 

 

 

 

 

 

 

 

 

 

53,079

 

52,917

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Common stock (857,143 shares)

 

 

 

8/18/2006

 

3,000

 

3,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare technology provider

 

Senior secured loan ($10,562 par due 5/2014)

 

8.25% (Libor + 7.00%/Q)

 

5/9/2008

 

10,562

 

10,562

(2)(16)

 

 

 

 

 

 

Senior secured loan ($9,750 par due 5/2014)

 

8.25% (Libor + 7.00%/Q)

 

5/9/2008

 

9,750

 

9,750

(3)(16)

 

 

 

 

 

 

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

 

 

 

7/30/2008

 

11,156

 

8,355

 

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,568

 

28,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PG Mergersub, Inc. and PGA Holdings, Inc.

 

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

 

Senior secured loan ($1,095 par due 11/2015)

 

6.75% (Libor + 5.00%/Q)

 

11/3/2010

 

1,093

 

1,095

(16)

 

 

 

 

 

 

Senior secured loan ($9,154 par due 11/2015)

 

6.75% (Libor + 5.00%/Q)

 

11/3/2010

 

9,128

 

9,154

(3)(16)

 

 

 

 

 

 

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

 

12.50%

 

3/12/2008

 

3,952

 

4,000

 

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

14

 

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

693

 

 

 

 

 

 

 

 

 

 

 

 

 

14,465

 

14,956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(15)

 

 

 

 

 

 

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

 

 

 

4/1/2010

 

9,129

 

9,142

(15)

 

 

 

 

 

 

Senior subordinated loan ($20,382 par due 12/2013)

 

 

 

4/1/2010

 

15,918

 

11,387

(15)

 

 

 

 

 

 

Equity interests

 

 

 

4/1/2010

 

203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26,347

 

21,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soteria Imaging Services, LLC  (6)

 

Outpatient medical imaging provider

 

Junior secured loan ($1,356 par due 11/2010)

 

14.50%

 

4/1/2010

 

1,205

 

973

 

 

 

 

 

 

 

Junior secured loan ($1,937 par due 11/2010)

 

12.50%

 

4/1/2010

 

1,744

 

1,391

 

 

 

 

 

 

 

Preferred member units (1,823,179 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,949

 

2,364

 

 

 

 

7



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

Sunquest Information Systems, Inc.

 

Laboratory software solutions provider

 

Junior secured loan ($75,000 par due 6/2017)

 

9.75% (Libor + 8.50%/Q)

 

12/16/2010

 

75,000

 

75,000

(16)

 

 

 

 

 

 

Junior secured loan ($50,000 par due 6/2017)

 

9.75% (Libor + 8.50%/Q)

 

12/16/2010

 

50,000

 

50,000

(2)(16)

 

 

 

 

 

 

 

 

 

 

 

 

125,000

 

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Renal Care, Inc.

 

Dialysis provider

 

Senior secured loan ($7,481 par due 12/2016)

 

5.50% (Libor + 4.00%/Q)

 

6/9/2011

 

7,444

 

7,481

 

 

 

 

 

 

 

Senior subordinated loan ($50,058 par due 6/2017)

 

11.25% Cash, 2.00% PIK

 

5/24/2010

 

50,058

 

50,058

(2)(4)

 

 

 

 

 

 

 

 

 

 

 

 

57,502

 

57,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vantage Oncology, Inc.

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

6,218

 

 

 

 

 

 

 

 

 

 

 

 

 

728,109

 

751,553

 

23.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

54,430

 

 

 

 

 

 

 

Warrants

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

93,836

 

94,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CitiPostal Inc. (7)

 

Document storage and management services

 

Senior secured revolving loan ($1,950 par due 12/2013)

 

6.50% (Libor + 4.50%/M)

 

4/1/2010

 

1,950

 

1,950

(16)

 

 

 

 

 

 

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

 

6.75% (Base Rate + 3.25%/M)

 

4/1/2010

 

1,250

 

1,250

(16)

 

 

 

 

 

 

Senior secured loan ($486 par due 12/2013)

 

8.50% Cash, 5.50% PIK

 

4/1/2010

 

486

 

486

(4)

 

 

 

 

 

 

Senior secured loan ($49,745 par due 12/2013)

 

8.50% Cash, 5.50% PIK

 

4/1/2010

 

49,745

 

49,745

(2)(4)

 

 

 

 

 

 

Senior subordinated loan ($13,560 par due 12/2015)

 

 

 

4/1/2010

 

13,038

 

5,897

(15)

 

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

66,469

 

59,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cook Inlet Alternative Risk, LLC

 

Risk management services

 

Senior secured loan ($87,000 par due 4/2013)

 

8.50%

 

4/1/2010

 

51,789

 

37,500

 

 

 

 

 

 

 

Member interest (3.17%)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51,789

 

37,500

 

 

 

 

8



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

Coverall North America, Inc. (7)

 

Commercial janitorial service provider

 

Subordinated notes ($9,338 par due 2/2016)

 

10.00% Cash, 2.00% PIK

 

2/22/2011

 

9,338

 

9,338

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Digital Videostream, LLC

 

Media content supply chain services company

 

Senior secured loan ($250 par due 2/2012)

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

250

 

250

(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 ($3,950 par due 2/2012)

 

10.00% Cash, 1.00% PIK

 

4/1/2010

 

3,939

 

3,950

(2)(4)

 

 

 

 

 

 

Convertible subordinated loan ($5,818 par due 2/2016)

 

10.00% PIK

 

4/1/2010

 

6,258

 

5,818

(4)

 

 

 

 

 

 

 

 

 

 

 

 

10,457

 

10,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Collections Services, Inc.

 

Collections services

 

Senior secured loan ($6,175 par due 3/2012)

 

7.50% (Libor + 5.50%/Q)

 

6/25/2010

 

6,175

 

6,175

(3)(16)

 

 

 

 

 

 

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

 

13.75% (Libor + 11.75%/Q)

 

6/25/2010

 

34,000

 

34,000

(2)(16)

 

 

 

 

 

 

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

 

13.75% (Libor + 11.75%/Q)

 

6/25/2010

 

2,000

 

2,000

(3)(16)

 

 

 

 

 

 

Preferred stock (14,927 shares)

 

 

 

5/18/2006

 

169

 

299

 

 

 

 

 

 

 

Common stock (478,816 shares)

 

 

 

4/1/2010

 

1,478

 

1,980

 

 

 

 

 

 

 

Common stock (114,004 shares)

 

 

 

2/5/2005

 

295

 

555

 

 

 

 

 

 

 

 

 

 

 

 

 

44,117

 

45,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Mercury Communications, LLC

 

Business media consulting services

 

Senior secured loan ($1,407 par due 3/2013)

 

10.00% (Base Rate + 6.50%/Q)

 

4/1/2010

 

1,305

 

1,407

(16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact Innovations Group, LLC

 

IT consulting and outsourcing services

 

Member interest (50.00% interest)

 

 

 

4/1/2010

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interactive Technology Solutions, LLC

 

IT services provider

 

Senior secured loan ($7,451 par due 6/2015)

 

9.50% (Base Rate + 5.50%/Q)

 

10/21/2010

 

7,451

 

7,451

(16)

 

 

 

 

 

 

Senior secured loan ($8,348 par due 6/2015)

 

9.50% (Base Rate + 5.50%/Q)

 

10/21/2010

 

8,348

 

8,348

(3)(16)

 

 

 

 

 

 

 

 

 

 

 

 

15,799

 

15,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investor Group Services, LLC (6)

 

Business consulting for private equity and corporate clients

 

Limited liability company membership interest (10.00% interest)

 

 

 

6/22/2006

 

 

594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multi-Ad Services, Inc. (6)

 

Marketing services and software provider

 

Preferred units (1,725,280 units)

 

 

 

4/1/2010

 

788

 

1,827

 

 

 

 

 

 

 

Common units (1,725,280 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

788

 

1,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

9



Table of Contents

 

As of June 30, 2011

(dollar amounts in thousands)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(12)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net Assets

 

 

 

 

 

Senior subordinated loan ($35,395 par due 7/2012)

 

12.00% Cash, 2.50% PIK

 

4/1/2010

 

34,656

 

35,395

(4)

 

 

 

 

 

 

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

 

10.00%

 

4/1/2010

 

 

144

 

 

 

 

 

 

 

Common stock (560,716 shares)

 

 

 

4/1/2010

 

 

1,225

 

 

 

 

 

 

 

 

 

 

 

 

 

57,428

 

59,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(2)

 

 

 

 

 

 

Senior secured loan ($9,540 par due 11/2013)

 

5.75% (Libor + 5.50%/Q)

 

11/20/2007

 

9,540

 

9,540

(2)

 

 

 

 

 

 

Senior secured loan ($5,955 par due 11/2013)

 

5.75% (Libor + 5.50%/Q)

 

11/20/2007

 

5,955

 

5,955

(3)

 

 

 

 

 

 

Common stock (85 shares)

 

 

 

11/20/2007

 

3,768

 

3,814

 

 

 

 

 

 

 

 

 

 

 

 

 

26,638

 

26,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Database marketing services

 

Senior subordinated loan ($11,223 par due 2/2013)

 

 

 

8/24/2006

 

10,222

 

102

(15)

 

 

 

 

 

 

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 & Statewide Publishing Services, LLC

 

Bankruptcy and foreclosure processing services

 

Senior subordinated loan ($17,041 par due 2/2014)

 

 

 

2/9/2007

 

16,788

 

9,798

(15)