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, 2014

 

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. 814-00663

 

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 May 5, 2014

Common stock, $0.001 par value

 

298,269,678

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of March 31, 2014 (unaudited) and December 31, 2013

2

 

 

 

 

Consolidated Statement of Operations for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of March 31, 2014 (unaudited) and December 31, 2013

4

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2014 (unaudited)

43

 

 

 

 

Consolidated Statement of Cash Flows for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

44

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

45

 

 

 

Item 2.

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

70

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

93

 

 

 

Item 4.

Controls and Procedures

94

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

94

 

 

 

Item 1A.

Risk Factors

95

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

95

 

 

 

Item 3.

Defaults Upon Senior Securities

95

 

 

 

Item 4.

Mine Safety Disclosures

95

 

 

 

Item 5.

Other Information

95

 

 

 

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, 2014

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

5,198,593

 

$

5,136,612

 

Non-controlled affiliate company investments

 

275,016

 

260,484

 

Controlled affiliate company investments

 

2,325,987

 

2,235,801

 

Total investments at fair value (amortized cost of $7,711,474 and $7,537,403 respectively)

 

7,799,596

 

7,632,897

 

Cash and cash equivalents

 

146,639

 

149,629

 

Interest receivable

 

141,248

 

123,981

 

Receivable for open trades

 

6,920

 

128,566

 

Other assets

 

105,120

 

106,431

 

Total assets

 

$

8,199,523

 

$

8,141,504

 

LIABILITIES

 

 

 

 

 

Debt

 

$

3,058,693

 

$

2,986,275

 

Management and incentive fees payable

 

122,849

 

139,208

 

Accounts payable and other liabilities

 

77,263

 

68,649

 

Interest and facility fees payable

 

41,383

 

42,828

 

Payable for open trades

 

769

 

100

 

Total liabilities

 

3,300,957

 

3,237,060

 

Commitments and contingencies (Note 7)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $0.001 per share, 500,000 common shares authorized 298,270 and 297,971 common shares issued and outstanding, respectively

 

298

 

298

 

Capital in excess of par value

 

4,987,734

 

4,982,477

 

Accumulated overdistributed net investment income

 

(24,576

)

(8,785

)

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

 

(152,995

)

(165,040

)

Net unrealized gain on investments and foreign currency transactions

 

88,105

 

95,494

 

Total stockholders’ equity

 

4,898,566

 

4,904,444

 

Total liabilities and stockholders’ equity

 

$

8,199,523

 

$

8,141,504

 

NET ASSETS PER SHARE

 

$

16.42

 

$

16.46

 

 

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, 2014

 

March 31, 2013

 

 

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

Interest income from investments

 

$

99,781

 

$

85,122

 

Capital structuring service fees

 

14,323

 

4,104

 

Dividend income

 

7,976

 

4,024

 

Management and other fees

 

 

314

 

Other income

 

7,048

 

6,195

 

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

 

129,128

 

99,759

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

2,900

 

6,016

 

Capital structuring service fees

 

650

 

 

Dividend income

 

2,672

 

603

 

Other income

 

327

 

91

 

Total investment income from non-controlled affiliate company investments

 

6,549

 

6,710

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

70,843

 

53,039

 

Capital structuring service fees

 

5,925

 

1,887

 

Dividend income

 

20,078

 

27,462

 

Management and other fees

 

5,952

 

4,184

 

Other income

 

1,244

 

2,014

 

Total investment income from controlled affiliate company investments

 

104,042

 

88,586

 

 

 

 

 

 

 

Total investment income

 

239,719

 

195,055

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

Interest and credit facility fees

 

52,493

 

39,347

 

Base management fees

 

30,084

 

23,218

 

Incentive fees

 

29,253

 

20,085

 

Administrative fees

 

3,743

 

2,592

 

Other general and administrative

 

6,430

 

6,912

 

Total expenses

 

122,003

 

92,154

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

117,716

 

102,901

 

 

 

 

 

 

 

Income tax expense, including excise tax

 

5,380

 

3,804

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

112,336

 

99,097

 

 

 

 

 

 

 

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

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

10,148

 

10,651

 

Non-controlled affiliate company investments

 

38

 

17

 

Controlled affiliate company investments

 

1,768

 

1,010

 

Foreign currency transactions

 

163

 

 

Net realized gains

 

12,117

 

11,678

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(14,879

)

5,949

 

Non-controlled affiliate company investments

 

14,919

 

(1,353

)

Controlled affiliate company investments

 

(7,414

)

(35,029

)

Foreign currency transactions

 

(15

)

 

Net unrealized losses

 

(7,389

)

(30,433

)

 

 

 

 

 

 

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

 

4,728

 

(18,755

)

 

 

 

 

 

 

REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

(72

)

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

116,992

 

$

80,342

 

 

 

 

 

 

 

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

 

$

0.39

 

$

0.32

 

 

 

 

 

 

 

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

 

297,972

 

248,658

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 units)

 

 

 

9/7/2007

 

$

811

 

$

3,561

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

487

 

838

(2)

 

 

Dynamic India Fund IV, LLC (8)(9)

 

Investment company

 

Member interest (5.44% interest)

 

 

 

4/1/2010

 

4,822

 

2,903

 

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

112

 

411

 

 

 

Imperial Capital Private Opportunities, LP (9)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

5,914

 

12,548

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

1,403

 

3,631

(2)

 

 

Partnership Capital Growth Investors III, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

1,843

 

1,999

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

828

 

767

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)

 

Co-investment vehicle

 

Subordinated certificates ($1,814,766 par due 12/2024)

 

8.23% (Libor + 8.00%/Q)(26)

 

10/30/2009

 

1,814,766

 

1,841,987

 

 

 

 

 

 

 

Membership interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,814,766

 

1,841,987

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

695

 

1,267

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,831,681

 

1,869,912

 

38.17

%

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alegeus Technologies Holdings Corp.

 

Benefits administration and transaction processing provider

 

Preferred stock (2,997 shares)

 

 

 

12/13/2013

 

3,087

 

2,702

 

 

 

 

 

 

 

Common stock (3 shares)

 

 

 

12/13/2013

 

3

 

27

 

 

 

 

 

 

 

 

 

 

 

 

 

3,090

 

2,729

 

 

 

ATI Phyiscal Therapy Holdings, LLC

 

Outpatient rehabilitation services provider

 

Class C common stock (51,005 shares)

 

 

 

12/13/2013

 

53

 

55

 

 

 

AxelaCare Holdings, Inc. and AxelaCare Investment Holdings, L.P.

 

Provider of home infusion services

 

First lien senior secured loan ($4,430 par due 4/2019)

 

5.75% (Libor + 4.50%/Q)

 

4/12/2013

 

4,430

 

4,430

(2)(25)

 

 

 

 

 

 

Preferred units (8,218,160 units)

 

 

 

4/12/2013

 

822

 

820

(2)

 

 

 

 

 

 

Common units (83,010 units)

 

 

 

4/12/2013

 

8

 

7

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,260

 

5,257

 

 

 

California Forensic Medical Group, Incorporated

 

Correctional facility healthcare operator

 

First lien senior secured loan ($53,504 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

53,504

 

53,504

(3)(25)

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

602

 

1,423

(2)

 

 

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

 

Healthcare analysis services provider

 

First lien senior secured revolving loan ($144 par due 10/2018)

 

6.25% (Base Rate + 3.00%/Q)

 

10/4/2013

 

144

 

144

(2)(25)

 

 

 

 

 

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

2,543

 

4,449

(2)

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

711

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,687

 

5,304

 

 

 

Dialysis Newco, Inc.

 

Dialysis provider

 

First lien senior secured loan ($1,823 par due 8/2020)

 

5.25% (Libor + 4.25%/Q)

 

8/16/2013

 

1,823

 

1,823

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($13,676 par due 8/2020)

 

5.25% (Libor + 4.25%/Q)

 

8/16/2013

 

13,676

 

13,676

(2)(25)

 

 

 

 

 

 

Second lien senior secured loan ($56,500 par due 2/2021)

 

9.75% (Libor + 8.50%/Q)

 

8/16/2013

 

56,500

 

58,195

(2)(25)

 

 

 

 

 

 

 

 

 

 

 

 

71,999

 

73,694

 

 

 

DNAnexus, Inc.

 

Bioinformatics company

 

First lien senior secured loan ($5,000 par due 10/2017)

 

9.25%

 

3/21/2014

 

4,752

 

5,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 454,546 units of Series C preferred stock

 

 

 

3/21/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,752

 

5,000

 

 

 

 

4



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Genocea Biosciences, Inc.

 

Vaccine discovery technology company

 

First lien senior secured loan ($10,000 par due 4/2017)

 

8.00%

 

9/30/2013

 

9,818

 

10,000

(2)

 

 

 

 

 

 

Common stock (34,500 shares)

 

 

 

9/30/2013

 

 

654

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,818

 

10,654

 

 

 

GI Advo Opco, LLC

 

Residential behavioral treatment services provider

 

First lien senior secured loan ($14,523 par due 6/2017)

 

6.00% (Libor + 4.75%/Q)

 

12/13/2013

 

14,922

 

14,523

(25)

 

 

 

 

 

 

First lien senior secured loan ($280 par due 6/2017)

 

7.00% (Base Rate + 3.75%/Q)

 

12/13/2013

 

288

 

280

(25)

 

 

 

 

 

 

 

 

 

 

 

 

15,210

 

14,803

 

 

 

Global Healthcare Exchange, LLC and GHX Ultimate Parent Corp.

 

On-demand supply chain automation solutions provider

 

First lien senior secured loan ($125,000 par due 3/2020)

 

10.00% (Libor + 9.00%/Q)

 

3/11/2014

 

123,835

 

125,000

(2)(25)

 

 

 

 

 

 

Class A common stock (2,475 shares)

 

 

 

3/11/2014

 

2,475

 

2,475

(2)

 

 

 

 

 

 

Class B common stock (938 shares)

 

 

 

3/11/2014

 

25

 

25

(2)

 

 

 

 

 

 

 

 

 

 

 

 

126,335

 

127,500

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Common stock (1,410,000 shares)

 

 

 

9/27/2010

 

1,512

 

1,846

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

Second lien senior secured loan ($112,000 par due 6/2020)

 

9.25% (Libor + 8.25%/Q)

 

12/27/2012

 

112,000

 

112,000

(2)(25)

 

 

LM Acquisition Holdings, LLC (8)

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

1,000

 

1,024

(2)

 

 

MC Acquisition Holdings I, LLC

 

Healthcare professional provider

 

Class A units (1,000,000 units)

 

 

 

1/17/2014

 

1,000

 

1,000

(2)

 

 

Monte Nido Holdings, LLC

 

Outpatient eating disorder treatment provider

 

First lien senior secured loan ($44,750 par due 12/2019)

 

7.75% (Libor + 6.75%/Q)

 

12/20/2013

 

44,750

 

44,750

(2)(19)(25)

 

 

MW Dental Holding Corp.

 

Dental services provider

 

First lien senior secured loan ($1,000 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

1,000

 

1,000

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($35,004 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

35,004

 

35,004

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($48,609 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

48,609

 

48,609

(3)(25)

 

 

 

 

 

 

First lien senior secured loan ($9,771 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,771

 

9,771

(4)(25)

 

 

 

 

 

 

 

 

 

 

 

 

94,384

 

94,384

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

First lien senior secured loan ($66,734 par due 2/2019)

 

6.00% (Libor + 5.00%/Q)

 

4/15/2011

 

66,734

 

66,734

(2)(22)(25)

 

 

 

 

 

 

First lien senior secured loan ($33,266 par due 2/2019)

 

6.00% (Libor + 5.00%/Q)

 

4/15/2011

 

33,206

 

33,266

(3)(22)(25)

 

 

 

 

 

 

Common units (5,345 units)

 

 

 

4/15/2011

 

5,623

 

8,717

(2)

 

 

 

 

 

 

 

 

 

 

 

 

105,563

 

108,717

 

 

 

National Healing Corporation and National Healing Holding Corp.

 

Wound care service and equipment provider

 

Second lien senior secured loan ($10,000 par due 2/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2013

 

10,285

 

10,200

(25)

 

 

 

 

 

 

Preferred stock (869,565 shares)

 

 

 

12/13/2013

 

1,296

 

1,462

 

 

 

 

 

 

 

 

 

 

 

 

 

11,581

 

11,662

 

 

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

First lien senior secured loan ($2,817 par due 12/2017)

 

8.75% (Libor + 7.50%/Q)

 

12/18/2012

 

2,817

 

2,817

(2)(17)(25)

 

 

 

 

 

 

First lien senior secured loan ($36,027 par due 12/2017)

 

8.75% (Libor + 7.50%/Q)

 

12/18/2012

 

36,027

 

36,027

(2)(17)(25)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

3,715

(2)

 

 

 

 

 

 

 

 

 

 

 

 

41,344

 

42,559

 

 

 

New Trident Holdcorp, Inc.

 

Outsourced mobile diagnostic healthcare service provider

 

Second lien senior secured loan ($80,000 par due 7/2020)

 

10.25% (Libor + 9.00%/Q)

 

8/6/2013

 

78,505

 

80,000

(2)(25)

 

 

OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC

 

Provider of technology-enabled solutions to pharmacies

 

First lien senior secured loan ($20,869 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

20,869

 

20,869

(2)(25)

 

 

 

 

 

 

Limited liability company membership interest (1.57%)

 

 

 

11/21/2013

 

1,000

 

1,031

(2)

 

 

 

 

 

 

 

 

 

 

 

 

21,869

 

21,900

 

 

 

 

5



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

PerfectServe, Inc.

 

Communications software platform provider for hospitals and physician practices

 

First lien senior secured loan ($3,500 par due 4/2017)

 

10.00%

 

12/26/2013

 

3,467

 

3,500

(2)

 

 

 

 

 

 

Warrants to purchase up to 34,113 units of Series C preferred stock

 

 

 

12/26/2013

 

 

70

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,467

 

3,570

 

 

 

PG Mergersub, Inc. and PGA Holdings, Inc.

 

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

 

Second lien senior secured loan ($2,368 par due 10/2018)

 

8.25% (Libor + 7.00%/M)

 

12/13/2013

 

2,435

 

2,368

(25)

 

 

 

 

 

 

Second lien senior secured loan ($21,316 par due 10/2018)

 

8.25% (Libor + 7.00%/M)

 

4/19/2012

 

21,316

 

21,316

(2)(25)

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

18

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

892

(2)

 

 

 

 

 

 

 

 

 

 

 

 

24,043

 

24,594

 

 

 

Physiotherapy Associates Holdings, Inc.

 

Outpatient rehabilitation physical therapy provider

 

Class A common stock (100,000 shares)

 

 

 

12/13/2013

 

3,090

 

3,090

 

 

 

POS I Corp. (fka Vantage Oncology, Inc.)

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

1,043

(2)

 

 

RCHP, Inc.

 

Operator of general acute care hospitals

 

First lien senior secured loan ($4,875 par due 11/2018)

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

4,875

 

4,875

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($60,365 par due 11/2018)

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

60,344

 

60,365

(3)(25)

 

 

 

 

 

 

First lien senior secured loan ($9,975 par due 11/2018)

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

9,975

 

9,975

(4)(25)

 

 

 

 

 

 

Second lien senior secured loan ($85,000 par due 5/2019)

 

11.50% (Libor + 10.00%/Q)

 

11/4/2011

 

85,000

 

85,850

(2)(25)

 

 

 

 

 

 

 

 

 

 

 

 

160,194

 

161,065

 

 

 

Reed Group, Ltd.

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

First lien senior secured loan ($3,200 par due 7/2015)

 

11.00%

 

6/28/2012

 

3,191

 

3,200

(2)

 

 

 

 

 

 

Warrants to purchase up to 99,094 shares of Series C preferred stock

 

 

 

6/26/2012

 

38

 

29

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,229

 

3,229

 

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Second lien senior secured loan ($75,000 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

75,000

 

75,000

(2)(25)

 

 

Sorbent Therapeutics, Inc.

 

Orally-administered drug developer

 

First lien senior secured loan ($6,370 par due 9/2016)

 

10.25%

 

4/23/2013

 

6,370

 

6,370

(2)

 

 

 

 

 

 

Warrant to purchase up to 727,272 shares of Series C Preferred Stock

 

 

 

4/23/2013

 

 

25

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,370

 

6,395

 

 

 

SurgiQuest, Inc.

 

Medical device company

 

First lien senior secured revolving loan ($2,200 par due 9/2014)

 

8.50%

 

9/28/2012

 

2,200

 

2,200

(2)

 

 

 

 

 

 

First lien senior secured loan ($5,726 par due 10/2017)

 

10.00%

 

9/28/2012

 

5,603

 

5,726

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,000 par due 10/2017)

 

10.69%

 

9/28/2012

 

1,957

 

2,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 54,672 shares of Series D-4 convertible preferred stock

 

 

 

9/28/2012

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,760

 

9,926

 

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

First lien senior secured loan ($29,925 par due 12/2019)

 

7.25% (Base Rate + 4.00%/Q)

 

12/31/2013

 

29,925

 

29,925

(2)(25)

 

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

First lien senior secured loan ($9,445 par due 1/2019)

 

5.75% (Libor + 4.50%/Q)

 

1/31/2013

 

9,445

 

9,445

(3)(25)

 

 

 

 

 

 

First lien senior secured loan ($8 par due 1/2019)

 

6.75% (Base Rate + 3.50%/Q)

 

1/31/2013

 

8

 

8

(3)(25)

 

 

 

6



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

First lien senior secured loan ($12,958 par due 1/2019)

 

5.75% (Libor + 4.50%/Q)

 

1/31/2013

 

12,958

 

12,958

(4)(25)

 

 

 

 

 

 

First lien senior secured loan ($12 par due 1/2019)

 

6.75% (Base Rate + 3.50%/Q)

 

1/31/2013

 

12

 

12

(4)(25)

 

 

 

 

 

 

 

 

 

 

 

 

22,423

 

22,423

 

 

 

 

 

 

 

 

 

 

 

 

 

1,148,989

 

1,160,025

 

23.68

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2329497 Ontario Inc. (8)

 

Provider of outsourced data center infrastructure and related services

 

Second lien senior secured loan ($45,000 par due 6/2019)

 

10.50% (Libor + 9.25%/M)

 

12/13/2013

 

43,496

 

41,557

(25)

 

 

Access CIG, LLC

 

Records and information management services provider

 

First lien senior secured loan ($988 par due 10/2017)

 

7.00% (Libor + 5.75%/M)

 

10/5/2012

 

988

 

988

(2)(25)

 

 

BlackArrow, Inc.

 

Advertising and data solutions software platform provider for the television and video industry

 

First lien senior secured loan ($8,000 par due 9/2017)

 

9.25%

 

3/13/2014

 

7,723

 

7,920

(2)

 

 

 

 

 

 

Warrants to purchase up to 517,386 shares of Series C preferred stock

 

 

 

3/13/2014

 

 

76

(2)

 

 

 

 

 

 

 

 

 

 

 

 

7,723

 

7,996

 

 

 

BluePay Processing, Inc.

 

Technology-enabled payment processing solutions provider

 

First lien senior secured loan ($5,970 par due 8/2019)

 

5.00% (Libor + 4.00%/Q)

 

8/30/2013

 

5,970

 

5,970

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($15 par due 8/2019)

 

6.25% (Base Rate + 3.00%/Q)

 

8/30/2013

 

15

 

15

(2)(25)

 

 

 

 

 

 

 

 

 

 

 

 

5,985

 

5,985

 

 

 

Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C. (6)

 

Payroll and accounting services provider to the entertainment industry

 

First lien senior secured loan ($12,934 par due 12/2017)

 

5.75% (Libor + 4.75%/Q)

 

12/24/2012

 

12,934

 

12,934

(2)(18)(25)

 

 

 

 

 

 

First lien senior secured loan ($44,671 par due 12/2017)

 

5.75% (Libor + 4.75%/Q)

 

12/24/2012

 

44,671

 

44,671

(3)(18)(25)

 

 

 

 

 

 

Class A membership units (2,500,000 units)

 

 

 

12/24/2012

 

2,500

 

4,634

(2)

 

 

 

 

 

 

Class B membership units (2,500,000 units)

 

 

 

12/24/2012

 

2,500

 

4,634

(2)

 

 

 

 

 

 

 

 

 

 

 

 

62,605

 

66,873

 

 

 

CIBT Investment Holdings, LLC

 

Expedited travel document processing services

 

Class A shares (2,500 shares)

 

 

 

12/15/2011

 

2,500

 

3,758

(2)

 

 

CitiPostal Inc. (7)

 

Document storage and management services

 

First lien senior secured revolving loan ($2,500 par due 12/2014)

 

6.50% (Libor + 4.50%/M)

 

4/1/2010

 

2,500

 

2,500

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($53,846 par due 12/2014)

 

 

 

4/1/2010

 

52,041

 

41,500

(2)(24)

 

 

 

 

 

 

Senior subordinated loan ($21,027 par due 12/2015)

 

 

 

4/1/2010

 

13,038

 

(2)(24)

 

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,579

 

44,000

 

 

 

Command Alkon, Inc.

 

Software solutions provider to the ready-mix concrete industry

 

Second lien senior secured loan ($10,000 par due 3/2018)

 

8.75% (Libor + 7.50%/Q)

 

9/28/2012

 

10,000

 

10,000

(2)(25)

 

 

 

 

 

 

Second lien senior secured loan ($26,500 par due 5/2019)

 

8.75% (Libor + 7.50%/S)

 

9/28/2012

 

26,500

 

26,500

(2)(25)

 

 

 

 

 

 

 

 

 

 

 

 

36,500

 

36,500

 

 

 

Coverall North America, Inc.

 

Commercial janitorial services provider

 

Letter of credit facility

 

 

 

1/17/2013

 

 

(29)

 

 

First Insight, Inc.

 

SaaS company providing merchandising and pricing solutions to companies worldwide

 

First lien senior secured loan ($3,500 par due 4/2017)

 

9.50%

 

3/20/2014

 

3,396

 

3,465

(2)

 

 

 

 

 

 

Warrants to purchase up to 122,827 shares of Series C preferred stock

 

 

 

3/20/2014

 

 

7

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,396

 

3,472

 

 

 

GHS Interactive Security, LLC and LG Security Holdings, LLC

 

Originates residential security alarm contracts

 

First lien senior secured loan ($3,915 par due 5/2018)

 

7.50% (Libor + 6.00%/S)

 

12/13/2013

 

3,973

 

3,954

(25)

 

 

 

 

 

 

Class A membership units (1,560,000 units)

 

 

 

12/13/2013

 

1,607

 

432

 

 

 

 

 

 

 

 

 

 

 

 

 

5,580

 

4,386

 

 

 

HCPro, Inc. and HCP Acquisition Holdings, LLC (7)

 

Healthcare compliance advisory services

 

Senior subordinated loan ($9,100 par due 8/2014)

 

 

 

3/5/2013

 

2,691

 

(2)(24)

 

 

 

 

 

 

Class A units (14,293,110 units)

 

 

 

6/26/2008

 

12,793

 

(2)

 

 

 

7



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

 

 

 

 

 

 

15,484

 

 

 

 

IfByPhone Inc.

 

Voice-based marketing automation software provider

 

First lien senior secured loan ($1,333 par due 11/2015)

 

11.00%

 

10/15/2012

 

1,300

 

1,333

(2)

 

 

 

 

 

 

First lien senior secured loan ($733 par due 1/2016)

 

11.00%

 

10/15/2012

 

733

 

733

(2)

 

 

 

 

 

 

Warrant to purchase up to 124,300 shares of Series C preferred stock

 

 

 

10/15/2012

 

88

 

61

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,121

 

2,127

 

 

 

Investor Group Services, LLC (6)

 

Business consulting for private equity and corporate clients

 

Limited liability company membership interest (8.5% interest)

 

 

 

6/22/2006

 

 

630

 

 

 

IronPlanet, Inc.

 

Online auction platform provider for used heavy equipment

 

First lien senior secured revolving loan ($5,000 par due 9/2015)

 

8.00%

 

9/24/2013

 

5,000

 

5,000

(2)

 

 

 

 

 

 

First lien senior secured loan ($7,500 par due 7/2017)

 

9.25%

 

9/24/2013

 

7,172

 

7,350

(2)

 

 

 

 

 

 

Warrant to purchase to up to 133,333 shares of Series C preferred stock

 

 

 

9/24/2013

 

214

 

242

(2)

 

 

 

 

 

 

 

 

 

 

 

 

12,386

 

12,592

 

 

 

Itel Laboratories, Inc.

 

Data services provider for building materials to property insurance industry

 

Preferred units (1,798,391 units)

 

 

 

6/29/2012

 

1,000

 

1,143

(2)

 

 

Keynote Systems, Inc. and Hawaii Ultimate Parent Corp., Inc.

 

Web and mobile cloud performance testing and monitoring services provider

 

First lien senior secured loan ($183,175 par due 2/2020)

 

9.50% (Libor + 8.50%/S)

 

8/22/2013

 

183,175

 

183,175

(2)(25)

 

 

 

 

 

 

Class A common stock (2,970 shares)

 

 

 

8/22/2013

 

2,970

 

3,924

(2)

 

 

 

 

 

 

Class B common stock (1,956,522 shares)

 

 

 

8/22/2013

 

30

 

40

(2)

 

 

 

 

 

 

 

 

 

 

 

 

186,175

 

187,139

 

 

 

Market Track Holdings, LLC

 

Business media consulting services company

 

Preferred stock (1,500 shares)

 

 

 

12/13/2013

 

1,982

 

2,097

 

 

 

 

 

 

 

Common stock (15,000 shares)

 

 

 

12/13/2013

 

1,982

 

2,097

 

 

 

 

 

 

 

 

 

 

 

 

 

3,964

 

4,194

 

 

 

MSC.Software Corporation and Maximus Holdings, LLC

 

Provider of software simulation tools and related services

 

First lien senior secured loan ($42,187 par due 11/2017)

 

8.50% (Libor + 7.25%/Q)

 

12/13/2013

 

43,357

 

43,242

(21)(25)

 

 

 

 

 

 

Warrants to purchase up to 1,050,013 shares of common stock

 

 

 

12/13/2013

 

424

 

1,506

 

 

 

 

 

 

 

 

 

 

 

 

 

43,781

 

44,748

 

 

 

Multi-Ad Services, Inc. (6)

 

Marketing services and software provider

 

Preferred units (1,725,280 units)

 

 

 

4/1/2010

 

788

 

2,178

 

 

 

 

 

 

 

Common units (1,725,280 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

788

 

2,178

 

 

 

MVL Group, Inc. (7)

 

Marketing research provider

 

Senior subordinated loan ($33,576 par due 7/2012)

 

 

 

4/1/2010

 

30,266

 

2,485

(2)(24)

 

 

 

 

 

 

Junior subordinated loan ($185 par due 7/2012)

 

 

 

4/1/2010

 

 

(2)(24)

 

 

 

 

 

 

Common stock (560,716 shares)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

30,266

 

2,485

 

 

 

NComputing, Inc.

 

Desktop virtualization hardware and software technology service provider

 

Warrant to purchase up to 462,726 shares of Series C preferred stock

 

 

 

3/20/2013

 

 

45

(2)

 

 

Pillar Processing LLC, PHL Investors, Inc., and PHL Holding Co. (6)

 

Mortgage services

 

First lien senior secured loan ($3,993 par due 11/2018)

 

 

 

7/31/2008

 

3,248

 

2,145

(2)(24)

 

 

 

 

 

 

First lien senior secured loan ($7,375 par due 5/2019)

 

 

 

11/20/2007

 

5,592

 

(2)(24)

 

 

 

 

 

 

Class A common stock (576 shares)

 

 

 

7/31/2012

 

3,768

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

12,608

 

2,145

 

 

 

Platform Acquisition, Inc.

 

Data center and managed cloud services provider

 

Common stock (48,604 shares)

 

 

 

12/13/2013

 

7,536

 

7,919

 

 

 

Powersport Auctioneer Holdings, LLC

 

Powersport vehicle auction operator

 

Common units (1,972 units)

 

 

 

3/2/2012

 

1,000

 

955

(2)

 

 

PSSI Holdings, LLC

 

Provider of mission-critical outsourced cleaning and sanitation

 

First lien senior secured loan ($956 par due 6/2018)

 

6.00% (Libor + 5.00%/S)

 

8/7/2013

 

956

 

956

(2)(25)

 

 

 

8



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

services to the food processing industry

 

 

 

 

 

 

 

 

 

 

 

 

 

R2 Acquisition Corp.

 

Marketing services

 

Common stock (250,000 shares)

 

 

 

5/29/2007

 

250

 

177

(2)

 

 

Rainstor, Inc.

 

Database solution provider designed to manage Big Data for large enterprises at the lowest total cost

 

First lien senior secured loan ($2,500 par due 4/2016)

 

11.25%

 

3/28/2013

 

2,446

 

2,500

(2)

 

 

 

 

 

 

Warrant to purchase up to 142,210 shares of Series C preferred stock

 

 

 

3/28/2013

 

88

 

70

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,534

 

2,570

 

 

 

Ship Investor & Cy S.C.A. (8)

 

Payment processing company

 

Common stock (936,693 shares)

 

 

 

12/13/2013

 

2,698

 

2,774

 

 

 

Summit Business Media Parent Holding Company LLC

 

Business media consulting services

 

Limited liability company membership interest (45.98% interest)

 

 

 

5/20/2011

 

 

1,620

(2)

 

 

TOA Technologies, Inc.

 

Cloud based, mobile workforce management applications provider

 

First lien senior secured loan ($12,242 par due 11/2016)

 

10.25%

 

10/31/2012

 

11,843

 

12,242

(2)

 

 

 

 

 

 

Warrant to purchase up to 2,509,770 shares of Series D preferred stock

 

 

 

10/31/2012

 

605

 

1,189

(2)

 

 

 

 

 

 

 

 

 

 

 

 

12,448

 

13,431

 

 

 

Tripwire, Inc.

 

IT security software provider

 

First lien senior secured loan ($84,950 par due 5/2018)

 

7.00% (Libor + 5.75%/Q)

 

5/23/2011

 

84,950

 

84,950

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($49,875 par due 5/2018)

 

7.00% (Libor + 5.75%/Q)

 

5/23/2011

 

49,875

 

49,875

(3)(25)

 

 

 

 

 

 

First lien senior secured loan ($9,975 par due 5/2018)

 

7.00% (Libor + 5.75%/Q)

 

5/23/2011

 

9,975

 

9,975

(4)(25)

 

 

 

 

 

 

Class B common stock (2,655,638 shares)

 

 

 

5/23/2011

 

30

 

84

(2)

 

 

 

 

 

 

Class A common stock (2,970 shares)

 

 

 

5/23/2011

 

2,970

 

8,348

(2)

 

 

 

 

 

 

 

 

 

 

 

 

147,800

 

153,232

 

 

 

Velocity Holdings Corp.

 

Hosted enterprise resource planning application management services provider

 

Common units (1,713,546 units)

 

 

 

12/13/2013

 

4,503

 

4,597

 

 

 

Venturehouse-Cibernet Investors, LLC

 

Financial settlement services for intercarrier wireless roaming

 

Equity interest

 

 

 

4/1/2010

 

 

(2)

 

 

VSS-Tranzact Holdings, LLC (6)

 

Management consulting services

 

Common membership interest (5.98% interest)

 

 

 

10/26/2007

 

10,204

 

8,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

X Plus Two Solutions, Inc. and X Plus One Solutions, Inc.

 

Provider of open and integrated software for digital marketing optimization

 

First lien senior secured revolving loan ($8,600 par due 9/2014)

 

8.50%

 

4/1/2013

 

8,600

 

8,600

(2)

 

 

 

 

 

 

First lien senior secured loan ($6,788 par due 3/2017)

 

10.00%

 

4/1/2013

 

6,470

 

6,788

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,000 par due 10/2017)

 

10.00%

 

3/28/2014

 

1,781

 

1,820

(2)

 

 

 

 

 

 

Warrant to purchase up to 586,178 shares of Series C preferred stock

 

 

 

3/28/2014

 

180

 

180

(2)

 

 

 

 

 

 

Warrant to purchase up to 999,167 shares of Series C preferred stock

 

 

 

4/1/2013

 

284

 

306

(2)

 

 

 

 

 

 

 

 

 

 

 

 

17,315

 

17,694

 

 

 

 

 

 

 

 

 

 

 

 

 

752,169

 

689,543

 

14.07

%

Services-Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Investments and Ventures Corp.

 

SCUBA diver training and certification provider

 

First lien senior secured loan ($24,080 par due 8/2018)

 

7.00% (Libor + 5.75%/Q)

 

8/9/2012

 

24,080

 

24,080

(3)(25)

 

 

 

 

 

 

First lien senior secured loan ($8,565 par due 8/2018)

 

7.00% (Libor + 5.75%/Q)

 

8/9/2012

 

8,565

 

8,565

(4)(25)

 

 

 

 

 

 

 

 

 

 

 

 

32,645

 

32,645

 

 

 

Community Education Centers, Inc.

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($13,571 par due 12/2014)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

13,571

 

13,571

(2)(15)(25)

 

 

 

 

 

 

First lien senior secured loan ($714 par due 12/2014)

 

7.50% (Base Rate + 4.25%/S)

 

12/10/2010

 

714

 

714

(2)(15)(25)

 

 

 

9



Table of Contents

 

As of March 31, 2014

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value