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, 2015

 

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 4, 2015

Common stock, $0.001 par value

 

314,468,685

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of March 31, 2015 (unaudited) and December 31, 2014

3

 

 

 

 

Consolidated Statement of Operations for the three months ended March 31, 2015 and 2014 (unaudited)

4

 

 

 

 

Consolidated Schedule of Investments as of March 31, 2015 (unaudited) and December 31, 2014

6

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2015 and 2014 (unaudited)

52

 

 

 

 

Consolidated Statement of Cash Flows for the three months ended March 31, 2015 and 2014 (unaudited)

53

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

54

 

 

 

Item 2.

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

82

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

103

 

 

 

Item 4.

Controls and Procedures

104

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

104

 

 

 

Item 1A.

Risk Factors

104

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

104

 

 

 

Item 3.

Defaults Upon Senior Securities

104

 

 

 

Item 4.

Mine Safety Disclosures

104

 

 

 

Item 5.

Other Information

104

 

 

 

Item 6.

Exhibits

105

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

March 31, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

5,770,508

 

$

6,270,075

 

Non-controlled affiliate company investments

 

202,808

 

228,716

 

Controlled affiliate company investments

 

2,508,565

 

2,529,588

 

Total investments at fair value (amortized cost of $8,376,289 and $8,875,095, respectively)

 

8,481,881

 

9,028,379

 

Cash and cash equivalents

 

131,977

 

194,555

 

Interest receivable

 

140,202

 

160,981

 

Receivable for open trades

 

56,383

 

859

 

Other assets

 

107,016

 

112,999

 

Total assets

 

$

8,917,459

 

$

9,497,773

 

LIABILITIES

 

 

 

 

 

Debt

 

$

3,429,164

 

$

3,924,482

 

Base management fees payable

 

33,916

 

34,497

 

Income based fees payable

 

29,365

 

33,070

 

Capital gains incentive fees payable

 

64,766

 

92,979

 

Accounts payable and other liabilities

 

57,229

 

81,892

 

Interest and facility fees payable

 

47,044

 

46,974

 

Payable for open trades

 

558

 

164

 

Total liabilities

 

3,662,042

 

4,214,058

 

Commitments and contingencies (Note 7)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $0.001 per share, 500,000 common shares authorized; 314,469 and 314,108 common shares issued and outstanding, respectively

 

314

 

314

 

Capital in excess of par value

 

5,334,249

 

5,328,057

 

Accumulated overdistributed net investment income

 

(46,235

)

(32,846

)

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

 

(138,753

)

(166,668

)

Net unrealized gains on investments and foreign currency transactions

 

105,842

 

154,858

 

Total stockholders’ equity

 

5,255,417

 

5,283,715

 

Total liabilities and stockholders’ equity

 

$

8,917,459

 

$

9,497,773

 

NET ASSETS PER SHARE

 

$

16.71

 

$

16.82

 

 

See accompanying notes to consolidated financial statements.

 

3



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,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

Interest income from investments

 

$

124,827

 

$

99,781

 

Capital structuring service fees

 

12,765

 

14,323

 

Dividend income

 

3,831

 

7,976

 

Other income

 

2,494

 

7,048

 

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

 

143,917

 

129,128

 

From non-controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

2,595

 

2,900

 

Capital structuring service fees

 

 

650

 

Dividend income

 

625

 

2,672

 

Other income

 

62

 

327

 

Total investment income from non-controlled affiliate company investments

 

3,282

 

6,549

 

From controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

71,234

 

70,843

 

Capital structuring service fees

 

7,416

 

5,925

 

Dividend income

 

20,099

 

20,078

 

Management and other fees

 

6,038

 

5,952

 

Other income

 

1,261

 

1,244

 

Total investment income from controlled affiliate company investments

 

106,048

 

104,042

 

Total investment income

 

253,247

 

239,719

 

EXPENSES:

 

 

 

 

 

Interest and credit facility fees

 

58,575

 

52,493

 

Base management fees

 

33,916

 

30,084

 

Income based fees

 

29,365

 

28,318

 

Capital gain incentive fees

 

(4,220

)

935

 

Administrative fees

 

3,456

 

3,743

 

Other general and administrative

 

6,953

 

6,430

 

Total expenses

 

128,045

 

122,003

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

125,202

 

117,716

 

 

4



Table of Contents

 

 

 

For the Three Months Ended March 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

 

Income tax expense, including excise tax

 

3,525

 

5,380

 

NET INVESTMENT INCOME

 

121,677

 

112,336

 

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

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

26,894

 

10,148

 

Non-controlled affiliate company investments

 

333

 

38

 

Controlled affiliate company investments

 

 

1,768

 

Foreign currency transactions

 

4,527

 

163

 

Net realized gains

 

31,754

 

12,117

 

Net unrealized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(34,411

)

(14,879

)

Non-controlled affiliate company investments

 

5,584

 

14,919

 

Controlled affiliate company investments

 

(18,863

)

(7,414

)

Foreign currency transactions

 

(1,326

)

(15

)

Net unrealized losses

 

(49,016

)

(7,389

)

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

 

(17,262

)

4,728

 

REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

(3,839

)

(72

)

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

100,576

 

$

116,992

 

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

 

$

0.32

 

$

0.39

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)

 

314,108

 

297,972

 

 

See accompanying notes to consolidated financial statements.

 

5



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

 

As of March 31, 2015

(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

 

$

 

$

250

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

487

 

1,863

(2)

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

 

97

 

 

 

Imperial Capital Private Opportunities, LP (9)(29)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

4,654

 

19,436

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

9

 

1,229

(2)

 

 

Partnership Capital Growth Investors III, L.P. (9)(29)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

3,030

 

3,217

(2)

 

 

PCG-Ares Sidecar Investment, L.P. (9)(29)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

5/22/2014

 

2,104

 

1,418

(2)

 

 

PCG-Ares Sidecar Investment II, L.P. (9)(29)

 

Investment partnership

 

Limited partnership interest (100.00% interest)

 

 

 

10/31/2014

 

6,500

 

7,726

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (9)(29)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

1,084

 

993

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)(30)

 

Co-investment vehicle

 

Subordinated certificates ($1,974,650 par due 12/2024)

 

8.27% (Libor + 8.00%/M)(24)

 

10/30/2009

 

1,974,650

 

2,004,269

 

 

 

 

 

 

 

Member interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,974,650

 

2,004,269

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

879

 

1,607

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,993,397

 

2,042,105

 

38.86

%

Healthcare Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alegeus Technologies Holdings Corp.

 

Benefits administration and transaction processing provider

 

Preferred stock (2,997 shares)

 

 

 

12/13/2013

 

3,087

 

1,820

 

 

 

 

 

 

 

Common stock (3 shares)

 

 

 

12/13/2013

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,090

 

1,820

 

 

 

American Academy Holdings, LLC

 

Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals

 

First lien senior secured loan ($8,810 par due 6/2019)

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

8,810

 

8,810

(2)(13)(23)

 

 

 

 

 

 

First lien senior secured loan ($52,039 par due 6/2019)

 

7.00% (Libor + 6.00%/Q)

 

6/27/2014

 

52,039

 

52,039

(3)(13)(23)

 

 

 

 

 

 

First lien senior secured loan ($3,920 par due 6/2019)

 

4.00% (Libor + 3.00%/Q)

 

6/27/2014

 

3,920

 

3,920

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

64,769

 

64,769

 

 

 

AwarePoint Corporation

 

Healthcare technology platform developer

 

First lien senior secured loan ($10,000 par due 6/2018)

 

9.50%

 

9/5/2014

 

9,914

 

9,900

(2)

 

 

 

 

 

 

Warrant to purchase up to 3,213,367 shares of Series 1 preferred stock

 

 

 

11/14/2014

 

 

609

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,914

 

10,509

 

 

 

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

 

Provider of home infusion services

 

Preferred units (8,218,160 units)

 

 

 

4/12/2013

 

866

 

617

(2)

 

 

 

 

 

 

Common units (83,010 units)

 

 

 

4/12/2013

 

17

 

6

(2)

 

 

 

 

 

 

 

 

 

 

 

 

883

 

623

 

 

 

California Forensic Medical Group, Incorporated (28)

 

Correctional facility healthcare operator

 

First lien senior secured loan ($48,495 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

48,495

 

48,495

(3)(23)

 

 

CCS Intermediate Holdings, LLC and CCS Group Holdings, LLC (28)

 

Correctional facility healthcare operator

 

First lien senior secured revolving loan ($2,625 par due 7/2019)

 

6.25% (Base Rate + 3.00%/Q)

 

7/23/2014

 

2,625

 

2,572

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($6,702 par due 7/2021)

 

5.00% (Libor + 4.00%/Q)

 

7/23/2014

 

6,672

 

6,568

(2)(23)

 

 

 

 

 

 

Second lien senior secured loan ($135,000 par due 7/2022)

 

9.38% (Libor + 8.38%/Q)

 

7/23/2014

 

133,764

 

133,650

(2)(23)

 

 

 

 

 

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

 

1,909

(2)

 

 

 

 

 

 

 

 

 

 

 

 

143,061

 

144,699

 

 

 

 

6



Table of Contents

 

As of March 31, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

DNAnexus, Inc.

 

Bioinformatics company

 

First lien senior secured loan ($4,980 par due 10/2017)

 

9.25%

 

3/21/2014

 

4,801

 

4,980

(2)

 

 

 

 

 

 

First lien senior secured loan ($5,000 par due 2/2018)

 

9.25%

 

3/21/2014

 

4,804

 

5,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 909,092 units of Series C preferred stock

 

 

 

3/21/2014

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,605

 

9,980

 

 

 

Genocea Biosciences, Inc.

 

Vaccine discovery technology company

 

Common stock (31,500 shares)

 

 

 

2/10/2014

 

 

377

(2)

 

 

Global Healthcare Exchange, LLC and GHX Ultimate Parent Corp. (28)

 

On-demand supply chain automation solutions provider

 

First lien senior secured loan ($230,672 par due 3/2020)

 

8.50% (Libor + 7.50%/Q)

 

3/11/2014

 

229,129

 

230,672

(2)(23)

 

 

 

 

 

 

Class A common stock (2,475 shares)

 

 

 

3/11/2014

 

2,991

 

2,991

(2)

 

 

 

 

 

 

Class B common stock (938 shares)

 

 

 

3/11/2014

 

30

 

2,235

(2)

 

 

 

 

 

 

 

 

 

 

 

 

232,150

 

235,898

 

 

 

Greenphire, Inc. and RMCF III CIV XXIX, L.P (28)

 

Software provider for clinical trial management

 

First lien senior secured loan ($4,000 par due 12/2018)

 

9.00% (Libor + 8.00%/M)

 

12/19/2014

 

4,000

 

4,000

(2)(23)

 

 

 

 

 

 

Limited partnership interest (99.90% interest)

 

 

 

12/19/2014

 

999

 

999

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,999

 

4,999

 

 

 

INC Research Mezzanine Co-Invest, LLC

 

Pharmaceutical and biotechnology consulting services

 

Common units (1,410,000 units)

 

 

 

9/27/2010

 

1,512

 

5,461

(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

 

110,880

(2)(23)

 

 

LM Acquisition Holdings, LLC (8)

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

660

 

1,405

(2)

 

 

MC Acquisition Holdings I, LLC

 

Healthcare professional provider

 

Class A units (1,338,314 shares)

 

 

 

1/17/2014

 

1,338

 

1,931

(2)

 

 

Monte Nido Holdings, LLC

 

Outpatient eating disorder treatment provider

 

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

 

8.50% (Libor + 7.50%/Q)

 

12/20/2013

 

44,750

 

42,512

(3)(17)(23)

 

 

MW Dental Holding Corp. (28)

 

Dental services provider

 

First lien senior secured revolving loan ($2,000 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

2,000

 

2,000

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($9,969 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,969

 

9,969

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($24,421 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

24,421

 

24,421

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($48,114 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

48,114

 

48,114

(3)(23)

 

 

 

 

 

 

First lien senior secured loan ($19,898 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

19,898

 

19,898

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

104,402

 

104,402

 

 

 

My Health Direct, Inc. (28)

 

Healthcare scheduling exchange software solution provider

 

First lien senior secured loan ($3,000 par due 1/2018)

 

10.75%

 

9/18/2014

 

2,916

 

3,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 4,548 shares of Series D preferred stock

 

 

 

9/18/2014

 

39

 

39

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,955

 

3,039

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

First lien senior secured loan ($36,734 par due 2/2019)

 

9.61% (Libor + 8.61%/Q)

 

4/15/2011

 

36,734

 

36,734

(2)(23)

 

 

 

 

 

 

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

 

9.61% (Libor + 8.61%/Q)

 

4/15/2011

 

33,218

 

33,266

(3)(23)

 

 

 

 

 

 

Common units (5,345 units)

 

 

 

4/15/2011

 

5,764

 

13,332

(2)

 

 

 

 

 

 

 

 

 

 

 

 

75,716

 

83,332

 

 

 

 

7



Table of Contents

 

As of March 31, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

Second lien senior secured loan ($90,000 par due 8/2019)

 

10.50% (Libor + 9.50%/Q)

 

2/27/2015

 

90,000

 

90,000

(2)(23)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

760

 

3,124

(2)

 

 

 

 

 

 

 

 

 

 

 

 

90,760

 

93,124

 

 

 

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

 

78,726

 

77,600

(2)(23)

 

 

Nodality, Inc.

 

Biotechnology company

 

First lien senior secured loan ($7,920 par due 2/2018)

 

8.90%

 

4/25/2014

 

7,709

 

7,920

(2)

 

 

 

 

 

 

First lien senior secured loan ($3,000 par due 8/2018)

 

8.90%

 

4/25/2014

 

2,909

 

3,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 164,179 shares of Series B preferred stock

 

 

 

4/25/2014

 

 

41

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,618

 

10,961

 

 

 

OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC (28)

 

Provider of technology-enabled solutions to pharmacies

 

First lien senior secured loan ($20,344 par due 11/2018)

 

8.50% (Libor + 7.50%/Q)

 

11/21/2013

 

20,344

 

20,344

(2)(23)

 

 

 

 

 

 

Limited liability company membership interest (1.57%)

 

 

 

11/20/2013

 

1,000

 

1,295

(2)

 

 

 

 

 

 

 

 

 

 

 

 

21,344

 

21,639

 

 

 

PerfectServe, Inc. (28)

 

Communications software platform provider for hospitals and physician practices

 

First lien senior secured revolving loan ($500 par due 6/2015)

 

7.50%

 

12/26/2013

 

500

 

500

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,500 par due 10/2017)

 

10.00%

 

12/26/2013

 

2,481

 

2,500

(2)

 

 

 

 

 

 

First lien senior secured loan ($3,179 par due 4/2017)

 

10.00%

 

12/26/2013

 

3,159

 

3,179

(2)

 

 

 

 

 

 

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

 

 

 

12/26/2013

 

 

91

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,140

 

6,270

 

 

 

PGA Holdings, Inc.

 

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

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

22

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

1,080

(2)

 

 

 

 

 

 

 

 

 

 

 

 

292

 

1,102

 

 

 

PhyMED Management LLC

 

Provider of anesthesia services

 

First lien senior secured loan ($9,975 par due 11/2020)

 

5.25% (Libor + 4.25%/M)

 

11/18/2014

 

9,906

 

9,975

(2)(23)

 

 

Physiotherapy Associates Holdings, Inc.

 

Physical therapy provider

 

Class A common stock (100,000 shares)

 

 

 

12/31/2013

 

3,090

 

2,465

 

 

 

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

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

1,034

(2)

 

 

Reed Group Holdings, LLC

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

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

 

 

 

6/28/2012

 

38

 

28

(2)

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Second lien senior secured loan ($120,000 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

119,785

 

120,000

(2)(23)

 

 

Sarnova HC, LLC, Tri-Anim Health Services, Inc., and BEMS Holdings, LLC

 

Distributor of emergency medical service and respiratory products

 

Second lien senior secured loan ($60,000 par due 9/2018)

 

8.75% (Libor + 8.00%/M)

 

6/30/2014

 

60,000

 

60,000

(2)(23)

 

 

SurgiQuest, Inc.

 

Medical device company

 

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

 

 

 

9/28/2012

 

 

(2)

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

First lien senior secured loan ($47,789 par due 12/2019)

 

6.00% (Libor + 5.00%/Q)

 

6/26/2014

 

47,789

 

47,789

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($1,812 par due 12/2019)

 

7.25% (Base Rate + 4.00%/Q)

 

6/26/2014

 

1,812

 

1,812

(2)(23)

 

 

 

 

 

 

Second lien senior secured loan ($50,000 par due 9/2020)

 

9.00% (Libor + 8.00%/Q)

 

9/24/2014

 

50,000

 

50,000

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

99,601

 

99,601

 

 

 

 

8



Table of Contents

 

As of March 31, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

Second lien senior secured loan ($45,000 par due 7/2019)

 

9.00% (Libor + 8.00%/Q)

 

5/30/2014

 

45,000

 

45,000

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

1,410,269

 

1,423,930

 

27.10

%

Other Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Residential Services L.L.C.

 

Heating, ventilation and air conditioning services provider

 

Second lien senior secured loan ($50,000 par due 12/2021)

 

9.00% (Libor + 8.00%/Q)

 

6/30/2014

 

49,550

 

50,000

(2)(23)

 

 

Community Education Centers, Inc. and CEC Parent Holdings LLC (7)

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($13,819 par due 12/2017)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

13,819

 

13,819

(2)(18)(23)

 

 

 

 

 

 

First lien senior secured loan ($467 par due 12/2017)

 

7.50% (Base Rate + 4.25%/Q)

 

12/10/2010

 

467

 

467

(2)(18)(23)

 

 

 

 

 

 

Second lien senior secured loan ($21,945 par due 6/2018)

 

15.27% (Libor + 15.00%/Q)

 

12/10/2010

 

21,945

 

21,945

(2)

 

 

 

 

 

 

Class A senior preferred units (7,846 units)

 

 

 

3/27/2015

 

9,405

 

8,465

(2)

 

 

 

 

 

 

Class A junior preferred units (26,154 units)

 

 

 

3/27/2015

 

19,761

 

12,602

(2)

 

 

 

 

 

 

Class A common units (134 units)

 

 

 

3/27/2015

 

0

 

0

(2)

 

 

 

 

 

 

 

 

 

 

 

 

65,397

 

57,298

 

 

 

Competitor Group, Inc. and Calera XVI, LLC (28)

 

Endurance sports media and event operator

 

First lien senior secured revolving loan ($3,750 par due 11/2018)

 

9.00% (Libor + 7.75%/Q)

 

11/30/2012

 

3,750

 

3,375

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($24,474 par due 11/2018)

 

10.50% (Libor + 7.75% Cash, 1.50% PIK /Q)

 

11/30/2012

 

24,474

 

22,027

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($29,968 par due 11/2018)

 

10.50% (Libor + 7.75% Cash, 1.50% PIK /Q)

 

11/30/2012

 

29,968

 

26,971

(3)(23)

 

 

 

 

 

 

Membership units (2,500,000 units)

 

 

 

11/30/2012

 

2,519

 

105

(2)(9)

 

 

 

 

 

 

 

 

 

 

 

 

60,711

 

52,478

 

 

 

Crown Health Care Laundry Services, Inc. and Crown Laundry Holdings, LLC (6)(28)

 

Provider of outsourced healthcare linen management solutions

 

First lien senior secured revolving loan

 

 

 

3/13/2014

 

 

(2)(25)

 

 

 

 

 

 

First lien senior secured loan ($24,255 par due 3/2019)

 

8.25% (Libor + 7.00%/Q)

 

3/13/2014

 

24,255

 

24,255

(2)(23)

 

 

 

 

 

 

Class A preferred units (2,475,000 units)

 

 

 

3/13/2014

 

2,475

 

3,414

(2)

 

 

 

 

 

 

Class B common units (275,000 units)

 

 

 

3/13/2014

 

275

 

379

(2)

 

 

 

 

 

 

 

 

 

 

 

 

27,005

 

28,048

 

 

 

Dwyer Acquisition Parent, Inc. and TDG Group Holding Company

 

Operator of multiple franchise concepts primarily related to home maintenance or repairs

 

Senior subordinated loan ($52,670 par due 2/2020)

 

11.00%

 

8/15/2014

 

52,670

 

52,670

(2)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

8/15/2014

 

3,000

 

3,651

(2)

 

 

 

 

 

 

 

 

 

 

 

 

55,670

 

56,321

 

 

 

GHS Interactive Security, LLC and LG Security Holdings, LLC (28)

 

Originates residential security alarm contracts

 

First lien senior secured loan ($6,385 par due 5/2018)

 

10.50% (Libor + 9.00%/Q)

 

12/13/2013

 

6,415

 

6,385

(23)

 

 

 

 

 

 

First lien senior secured loan ($3,148 par due 5/2018)

 

11.25% (Base Rate + 8.00%/Q)

 

12/13/2013

 

3,163

 

3,148

(23)

 

 

 

 

 

 

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

 

 

 

12/13/2013

 

1,607

 

576

 

 

 

 

 

 

 

 

 

 

 

 

 

11,185

 

10,109

 

 

 

Massage Envy, LLC (28)

 

Franchisor in the massage industry

 

First lien senior secured loan ($28,236 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

28,236

 

28,236

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($47,701 par due 9/2018)

 

8.50% (Libor + 7.25%/Q)

 

9/27/2012

 

47,701

 

47,701

(3)(23)

 

 

 

 

 

 

Common stock (3,000,000 shares)

 

 

 

9/27/2012

 

3,000

 

4,530

 

 

 

 

 

 

 

 

 

 

 

 

 

78,937

 

80,467

 

 

 

McKenzie Sports Products, LLC (28)

 

Designer, manufacturer and distributor of hunting-related supplies

 

First lien senior secured loan ($84,500 par due 9/2020)

 

6.75% (Libor + 5.75%/M)

 

9/18/2014

 

84,500

 

83,655

(2)(12)(23)

 

 

 

9



Table of Contents

 

As of March 31, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

OpenSky Project, Inc.

 

Social commerce platform operator

 

First lien senior secured loan ($3,000 par due 9/2017)

 

10.00%

 

6/4/2014

 

2,964

 

2,655

(2)

 

 

 

 

 

 

Warrant to purchase up to 46,996 shares of Series D preferred stock

 

 

 

6/4/2014

 

48

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,012

 

2,655

 

 

 

PODS, LLC

 

Storage and warehousing

 

Second lien senior secured loan ($17,500 par due 2/2023)

 

9.25% (Libor + 8.25%/Q)

 

2/2/2015

 

17,327

 

17,500

(2)(23)

 

 

Spin HoldCo Inc.

 

Laundry service and equipment provider

 

Second lien senior secured loan ($140,000 par due 5/2020)

 

8.00% (Libor + 7.00%/M)

 

5/14/2013

 

140,000

 

137,200

(2)(23)

 

 

Surface Dive, Inc.

 

SCUBA diver training and certification provider

 

Second lien senior secured loan ($72,000 par due 1/2022)

 

10.25% (Libor + 9.25%/Q)

 

1/29/2015

 

71,565

 

72,000

(2)(23)

 

 

TWH Water Treatment Industries, Inc., TWH Filtration Industries, Inc. and TWH Infrastructure Industries, Inc. (28)

 

Wastewater infrastructure repair, treatment and filtration holding company

 

First lien senior secured loan ($2,240 par due 10/2019)

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

2,240

 

2,240

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($36,400 par due 10/2019)

 

10.25% (Libor + 9.25%/Q)

 

10/10/2014

 

36,400

 

36,400

(3)(23)

 

 

 

 

 

 

 

 

 

 

 

 

38,640

 

38,640

 

 

 

United Road Towing, Inc.

 

Towing company

 

Warrants to purchase up to 607 shares

 

 

 

4/1/2010

 

 

 

 

 

Wash Multifamily Laundry Systems, LLC

 

Laundry service and equipment provider

 

Second lien senior secured loan ($52,000 par due 2/2020)

 

7.75% (Libor + 6.75%/M)

 

6/26/2012

 

52,000

 

52,000

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

755,499

 

738,371

 

14.05

%

Consumer Products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feradyne Outdoors, LLC and Bowhunter Holdings, LLC (28)

 

Provider of branded archery and bowhunting accessories

 

First lien senior secured loan ($50,100 par due 3/2019)

 

6.55% (Libor + 5.55%/Q)

 

4/24/2014

 

50,100

 

49,098

(2)(20)(23)

 

 

 

 

 

 

First lien senior secured loan ($6,904 par due 3/2019)

 

4.00% (Libor + 3.00%/Q)

 

4/24/2014

 

6,904

 

6,904

(2)(23)

 

 

 

 

 

 

Common units (300 units)

 

 

 

4/24/2014

 

3,000

 

2,624

(2)

 

 

 

 

 

 

 

 

 

 

 

 

60,004

 

58,626

 

 

 

Implus Footcare, LLC

 

Provider of footwear and other accessories

 

Preferred stock (455 shares)

 

6.00% PIK

 

10/31/2011

 

4,810

 

4,810

(2)

 

 

 

 

 

 

Common stock (455 shares)

 

 

 

10/31/2011

 

 

1,685

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,810

 

6,495

 

 

 

Indra Holdings Corp.

 

Designer, marketer, and distributor of rain and cold weather products

 

Second lien senior secured loan ($80,000 par due 11/2021)

 

8.50% (Libor + 7.50%/Q)

 

5/1/2014

 

78,857

 

77,600

(2)(23)

 

 

Matrixx Initiatives, Inc. and Wonder Holdings Acquisition Corp.

 

Developer and marketer of OTC healthcare products

 

Warrants to purchase up to 1,489 shares of preferred stock

 

 

 

7/27/2011

 

 

1,119

(2)

 

 

 

 

 

 

Warrants to purchase up to 1,654,678 shares of common stock

 

 

 

7/27/2011

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

1,119

 

 

 

Oak Parent, Inc.

 

Manufacturer of athletic apparel

 

First lien senior secured loan ($2,638 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

2,633

 

2,638

(3)(23)

 

 

 

 

 

 

First lien senior secured loan ($8,399 par due 4/2018)

 

7.50% (Libor + 7.00%/Q)

 

4/2/2012

 

8,377

 

8,399

(4)(23)

 

 

 

 

 

 

 

 

 

 

 

 

11,010

 

11,037

 

 

 

PG-ACP Co-Invest, LLC

 

Supplier of medical uniforms, specialized medical footwear and accessories

 

Class A membership units (1,000,0000 units)

 

 

 

8/29/2012

 

1,000

 

1,369

(2)

 

 

Plantation Products, LLC, Seed Holdings, Inc. and Flora Parent, Inc.

 

Provider of branded lawn and garden products

 

Second lien senior secured loan ($66,000 par due 6/2021)

 

9.94% (Libor + 8.94%/Q)

 

12/23/2014

 

65,637

 

66,000

(2)(23)

 

 

 

 

 

 

Common stock (30,000 shares)

 

 

 

12/23/2014

 

3,000

 

3,225

(2)

 

 

 

 

 

 

 

 

 

 

 

 

68,637

 

69,225

 

 

 

Shock Doctor, Inc. and Shock Doctor Holdings, LLC (28)

 

Developer, marketer and distributor of sports protection equipment and accessories

 

First lien senior secured revolving loan ($4,200 par due 3/2020)

 

10.00% (Base Rate + 6.75%/Q)

 

3/14/2014

 

4,200

 

4,200

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($6,986 par due 3/2020)

 

8.75% (Libor + 7.75%/M)

 

3/14/2014

 

6,986

 

6,986

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($53,594 par due 3/2020)

 

8.75% (Libor + 7.75%/M)

 

3/14/2014

 

53,594

 

53,594

(3)(23)

 

 

 

10



Table of Contents

 

As of March 31, 2015

(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 ($19,899 par due 3/2020)

 

8.75% (Libor + 7.75%/M)

 

3/14/2014

 

19,899

 

19,899

(4)(23)

 

 

 

 

 

 

Class A preferred units (50,000 units)

 

 

 

3/14/2014

 

5,000

 

5,757

(2)

 

 

 

 

 

 

 

 

 

 

 

 

89,679

 

90,436

 

 

 

The Hygenic Corporation

 

Designer, manufacturer and marketer of branded wellness products

 

Second lien senior secured loan ($70,000 par due 4/2021)

 

9.75% (Libor + 8.75%/Q)

 

2/27/2015

 

70,000

 

70,000

(2)(23)

 

 

The Step2 Company, LLC (7)

 

Toy manufacturer

 

Second lien senior secured loan ($27,583 par due 9/2019)

 

10.00%

 

4/1/2010

 

27,468

 

27,583

(2)

 

 

 

 

 

 

Second lien senior secured loan ($4,500 par due 9/2019)

 

10.00%

 

3/13/2014

 

4,500

 

4,500

(2)

 

 

 

 

 

 

Second lien senior secured loan ($38,648 par due 9/2019)

 

 

 

4/1/2010

 

30,802

 

9,956

(2)(22)

 

 

 

 

 

 

Common units (1,116,879 units)

 

 

 

4/1/2011

 

24

 

 

 

 

 

 

 

 

Class B common units (126,278,000 units)

 

 

 

10/30/2014

 

 

(2)

 

 

 

 

 

 

Warrants to purchase up to 3,157,895 units

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62,794

 

42,039

 

 

 

Varsity Brands Holding Co., Inc., Hercules Achievement, Inc., Hercules Achievement Holdings, Inc. and Hercules VB Holdings, Inc.

 

Leading manufacturer and distributor of textiles, apparel & luxury goods

 

Second lien senior secured loan ($118,969 par due 12/2022)

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

117,818

 

118,969

(2)(23)

 

 

 

 

 

 

Second lien senior secured loan ($55,576 par due 12/2022)

 

9.75% (Libor + 8.75%/Q)

 

12/11/2014

 

55,037

 

55,576

(2)(23)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

4,147

 

4,353

(2)

 

 

 

 

 

 

Common stock (3,353,371 shares)

 

 

 

12/11/2014

 

3,353

 

3,520

(2)

 

 

 

 

 

 

 

 

 

 

 

 

180,355

 

182,418

 

 

 

Woodstream Corporation

 

Pet products manufacturer

 

First lien senior secured loan ($12 par due 8/2016)

 

7.00% (Base Rate + 3.75%/Q)

 

4/18/2012

 

12

 

12

(4)(23)

 

 

 

 

 

 

First lien senior secured loan ($4,792 par due 8/2016)

 

6.00% (Libor + 5.00%/Q)

 

4/18/2012

 

4,792

 

4,792

(4)(23)

 

 

 

 

 

 

Senior subordinated loan ($80,000 par due 2/2017)

 

11.50%

 

4/18/2012

 

78,388

 

80,000

(2)

 

 

 

 

 

 

Common stock (4,254 shares)

 

 

 

1/22/2010

 

1,222

 

2,127

(2)

 

 

 

 

 

 

 

 

 

 

 

 

84,414

 

86,931

 

 

 

 

 

 

 

 

 

 

 

 

 

711,560

 

697,295

 

13.27

%

Power Generation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alphabet Energy, Inc.

 

Technology developer to convert waste-heat into electricity

 

First lien senior secured loan ($1,813 par due 7/2017)

 

9.50%

 

12/16/2013

 

1,758

 

1,813

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,620 par due 7/2017)

 

9.62%

 

12/16/2013

 

2,460

 

2,620

(2)

 

 

 

 

 

 

Series B preferred stock (74,449 shares)

 

 

 

2/26/2014

 

250

 

405

(2)

 

 

 

 

 

 

Warrant to purchase up to 59,524 units of Series B preferred stock

 

 

 

12/16/2013

 

146

 

124

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,614

 

4,962

 

 

 

Bicent (California) Holdings LLC

 

Gas turbine power generation facilities operator

 

Senior subordinated loan ($49,587 par due 2/2021)

 

8.25% (Libor + 7.25%/Q)

 

2/6/2014

 

49,587

 

49,587

(2)(23)

 

 

Brush Power, LLC

 

Gas turbine power generation facilities operator

 

First lien senior secured loan ($171 par due 8/2020)

 

7.50% (Base Rate + 4.25%/Q)

 

8/1/2013

 

171

 

171

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($66,182 par due 8/2020)

 

6.25% (Libor + 5.25%/Q)

 

8/1/2013

 

66,182

 

66,182

(2)(23)

 

 

 

 

 

 

 

 

 

 

 

 

66,353

 

66,353

 

 

 

CPV Maryland Holding Company II, LLC

 

Gas turbine power generation facilities operator

 

Senior subordinated loan ($43,366 par due 12/2020)

 

5.00% Cash, 5.00% PIK

 

8/8/2014

 

43,366

 

43,366

(2)

 

 

 

 

 

 

Warrant to purchase up to 4 units of common stock

 

 

 

8/8/2014

 

 

200

(2)

 

 

 

 

 

 

 

 

 

 

 

 

43,366

 

43,566

 

 

 

DESRI VI Management Holdings, LLC

 

Wind power generation facility operator

 

Senior subordinated loan ($26,500 par due 12/2021)

 

9.75%

 

12/24/2014

 

26,500

 

26,500

(2)

 

 

 

11



Table of Contents

 

As of March 31, 2015

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Non-controlling units (10.0 units)

 

 

 

12/24/2014

 

1,483

 

1,483

(2)

 

 

 

 

 

 

 

 

 

 

 

 

27,983

 

27,983

 

 

 

DESRI Wind Development Acquisition Holdings, L.L.C