UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2017March 31, 2021

 

OR

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 814-00866

 

MONROE CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Maryland27-4895840

(State or Other Jurisdiction of


Incorporation or Organization)

(I.R.S. Employer


Identification No.)

  

311 South Wacker Drive, Suite 6400


Chicago, Illinois

60606
(Address of Principal Executive Office)(Zip Code)

 

(312) 258-8300

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share

MRCC

The Nasdaq Global Select Market

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  ¨

 

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 x  No  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”,filer,” “accelerated filer”,filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):

 

Large accelerated filer¨Accelerated filerx¨
    
Non-accelerated filer¨  (Do not check if a smaller reporting company)     xSmaller reporting company¨
    
Emerging growth companyx¨  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨   No x

 

As of November 7, 2017,May 3, 2021, the registrant had 20,239,95721,303,540 shares of common stock, $0.001 par value, outstanding.

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I. FINANCIAL INFORMATION3
   
Item 1.Consolidated Financial Statements3
   
 Consolidated Statements of Assets and Liabilities as of September 30, 2017March 31, 2021 (unaudited) and December 31, 201620203
   
 Consolidated Statements of Operations for the three and nine months ended September 30, 2017 (unaudited)March 31, 2021 and 20162020 (unaudited)4
   
 Consolidated Statements of Changes in Net Assets for the ninethree months ended September 30, 2017 (unaudited)March 31, 2021 and 20162020 (unaudited)5
   
 Consolidated Statements of Cash Flows for the ninethree months ended September 30, 2017 (unaudited)March 31, 2021 and 20162020 (unaudited)6
   
 Consolidated Schedules of Investments as of September 30, 2017March 31, 2021 (unaudited) and December 31, 201620207
   
 Notes to Consolidated Financial Statements (unaudited)1821
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations3643
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk5060
   
Item 4.Controls and Procedures5160
   
PART II. OTHER INFORMATION5161
   
Item 1.Legal Proceedings5161
   
Item 1A.Risk Factors5161
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds5163
   
Item 3.Defaults Upon Senior Securities5163
   
Item 4.Mine Safety Disclosures5163
   
Item 5.Other Information5163
   
Item 6.Exhibits5264
   
Signatures 5365

 

2

Part I. Financial Information

Item 1. Consolidated Financial Statements

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

 

 September 30, 2017  December 31, 2016  March 31, 2021  December 31, 2020 
 (unaudited)     (unaudited)     
ASSETS                
Investments, at fair value:                
Non-controlled/non-affiliate company investments $368,634  $353,980  $372,493  $398,040 
Non-controlled affiliate company investments  53,595   50,041   107,819   109,715 
Controlled affiliate company investments  8,868   8,899   41,067   39,284 
Total investments, at fair value (amortized cost of: $439,922 and $413,242, respectively)  431,097   412,920 
Total investments, at fair value (amortized cost of: $565,821 and $596,103, respectively)  521,379   547,039 
Cash  3,721   5,958   7,723   6,769 
Restricted cash  5,689   2,373   8,165   25,657 
Unrealized gain on foreign currency forward contracts  221   — 
Interest receivable  4,220   2,643   5,944   4,606 
Other assets  535   651   1,041   1,052 
Total assets  445,262   424,545   544,473   585,123 
                
LIABILITIES                
Debt:                
Revolving credit facility  60,612   129,000   92,891   126,559 
2023 Notes  —   109,000 
2026 Notes  130,000   — 
SBA debentures payable  92,100   51,500   86,900   115,000 
Total debt  152,712   180,500   309,791   350,559 
Less: Unamortized deferred financing costs  (4,524)  (3,945)  (7,715)  (7,052)
Total debt, less unamortized deferred financing costs  148,188   176,555   302,076   343,507 
Secured borrowings, at fair value (proceeds of: $0 and $1,320, respectively)  -   1,314 
Payable for open trades  7,425   - 
Interest payable  541   735   1,809   2,764 
Unrealized loss on foreign currency forward contracts  —   113 
Management fees payable  1,953   1,749   2,334   1,978 
Incentive fees payable  1,721   1,222   193   — 
Accounts payable and accrued expenses  1,855   2,120   1,863   2,327 
Directors' fees payable  37   -   35   — 
Total liabilities  161,720   183,695   308,310   350,689 
Net assets $283,542  $240,850  $236,163  $234,434 
                
Commitments and contingencies (See Note 10)        
Commitments and contingencies (See Note 11)        
                
ANALYSIS OF NET ASSETS                
Common stock, $0.001 par value, 100,000 shares authorized, 20,240 and 16,582 shares issued and outstanding, respectively $20  $17 
Common stock, $0.001 par value, 100,000 shares authorized, 21,304 and 21,304 shares issued and outstanding, respectively $21  $21 
Capital in excess of par value  286,269   233,526   294,897   294,897 
Undistributed net investment income (accumulated distributions in excess of net investment income)  6,081   7,037 
Accumulated net realized gain (loss) on investments and secured borrowings  81   587 
Accumulated net unrealized gain (loss) on investments, secured borrowings and foreign currency borrowings  (8,909)  (317)
Accumulated undistributed (overdistributed) earnings  (58,755)  (60,484)
Total net assets $283,542  $240,850  $236,163  $234,434 
                
Net asset value per share $14.01  $14.52  $11.08  $11.00 

 

See Notes to Consolidated Financial Statements.

3


MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

  Three months ended March 31, 
  2021  2020 
Investment income:        
Non-controlled/non-affiliate company investments:        
Interest income $8,233  $12,347 
Payment-in-kind interest income  654   71 
Dividend income  20   16 
Fee income  477   198 
Total investment income from non-controlled/non-affiliate company investments  9,384   12,632 
Non-controlled affiliate company investments:        
Interest income  1,562   190 
Payment-in-kind interest income  1,025   1,005 
Dividend income  42   25 
Total investment income from non-controlled affiliate company investments  2,629   1,220 
Controlled affiliate company investments:        
Dividend income  1,200   1,150 
Total investment income from controlled affiliate company investments  1,200   1,150 
Total investment income  13,213   15,002 
         
Operating expenses:        
Interest and other debt financing expenses  4,453   4,830 
Base management fees  2,334   2,551 
Incentive fees  830   — 
Professional fees  226   215 
Administrative service fees  356   338 
General and administrative expenses  260   231 
Directors' fees  35   35 
Expenses before incentive fee waiver  8,494   8,200 
Incentive fee waiver  (637)  — 
Total expenses, net of incentive fee waiver  7,857   8,200 
Net investment income before income taxes  5,356   6,802 
Income taxes, including excise taxes  30   20 
Net investment income  5,326   6,782 
         
Net gain (loss):        
Net realized gain (loss):        
Non-controlled/non-affiliate company investments  58   94 
Non-controlled affiliate company investments  (250)  — 
Extinguishment of debt  (2,774)  — 
Foreign currency forward contracts  (38)  (4)
Foreign currency and other transactions  (14)  (15)
Net realized gain (loss)  (3,018)  75 
         
Net change in unrealized gain (loss):        
Non-controlled/non-affiliate company investments  4,641   (20,355)
Non-controlled affiliate company investments  (1,802)  (13,707)
Controlled affiliate company investments  1,783   (11,087)
Foreign currency forward contracts  334   98 
Foreign currency and other transactions  (209)  1,344 
Net change in unrealized gain (loss)  4,747   (43,707)
         
Net gain (loss)  1,729   (43,632)
         
Net increase (decrease) in net assets resulting from operations $7,055  $(36,850)
         
Per common share data:        
Net investment income per share - basic and diluted $0.25  $0.33 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $0.33  $(1.81)
Weighted average common shares outstanding - basic and diluted  21,304   20,445 

 

  Three months ended September 30,  Nine months ended September 30, 
  2017  2016  2017  2016 
Investment income:                
Interest income:                
Non-controlled/non-affiliate company investments $10,887  $8,387  $30,995  $25,109 
Non-controlled affiliate company investments  1,470   1,117   3,777   3,282 
Controlled affiliate company investments  200   20   594   30 
Total interest income  12,557   9,524   35,366   28,421 
Dividend income:                
Non-controlled/non-affiliate company investments  251   251   751   751 
Non-controlled affiliate company investments  -   1,133   -   3,546 
Total dividend income  251   1,384   751   4,297 
Fee income:                
Non-controlled/non-affiliate company investments  661   220   1,626   1,067 
Total fee income  661   220   1,626   1,067 
Total investment income  13,469   11,128   37,743   33,785 
                 
Operating expenses:                
Interest and other debt financing expenses  1,907   1,523   6,101   4,987 
Base management fees  1,953   1,594   5,661   4,598 
Incentive fees  1,721   1,223   4,471   4,282 
Professional fees  277   237   854   682 
Administrative service fees  295   324   926   956 
General and administrative expenses  292   265   760   611 
Excise taxes  100   342   100   429 
Directors' fees  37   37   111   111 
Expenses before incentive fee waiver  6,582   5,545   18,984   16,656 
Incentive fee waiver  -   -   (250)  - 
Total expenses, net of incentive fee waiver  6,582   5,545   18,734  16,656 
Net investment income  6,887   5,583   19,009   17,129 
                 
Net gain (loss) on investments, secured borrowings and foreign currency borrowings:                
Net realized gain (loss):                
Non-controlled/non-affiliate company investments  (2,900)  -   (572)  587 
Secured borrowings  -   -   66   - 
Net realized gain (loss)  (2,900)  -   (506)  587 
                 
Net change in unrealized gain (loss):                
Non-controlled/non-affiliate company investments  3,099   200   3,788   (920)
Non-controlled affiliate company investments  454   618   (8,902)  3,814 
Controlled affiliate company investments  (1,155)  (2,666)  (3,389)  (3,741)
Secured borrowings  -   (123)  (6)  (36)
Foreign currency borrowings  (67)  -   (83)  - 
Net change in unrealized gain (loss)  2,331   (1,971)  (8,592)  (883)
                 
Net gain (loss) on investments, secured borrowings and foreign currency borrowings  (569)  (1,971)  (9,098)  (296)
                 
Net increase (decrease) in net assets resulting from operations $6,318  $3,612  $9,911  $16,833 
                 
Per common share data:                
Net investment income per share - basic and diluted $0.34  $0.36  $1.05  $1.24 
Net increase in net assets resulting from operations per share - basic and diluted $0.31  $0.23  $0.55  $1.21 
Weighted average common shares outstanding - basic and diluted  20,240   15,559   18,081   13,864 

See Notes to Consolidated Financial Statements.

4

 


MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

  Common Stock     Accumulated
undistributed		    
  Number of
shares		  Par
value		  Capital in excess
of par value		  (overdistributed)
earnings		  Total
net assets		 
Balances at December 31, 2019  20,445  $20  $288,850  $(39,513) $249,357 
Net investment income  —   —   —   6,782   6,782 
Net realized gain (loss)  —   —   —   75   75 
Net change in unrealized gain (loss)  —   —   —   (43,707)  (43,707)
Distributions to stockholders  —   —   —   (7,155)  (7,155)
Balances at March 31, 2020  20,445  $20  $288,850  $(83,518) $205,352 
                     
Balances at December 31, 2020  21,304  $21  $294,897  $(60,484) $234,434 
Net investment income  —   —   —   5,326   5,326 
Net realized gain (loss)  —   —   —   (3,018)  (3,018)
Net change in unrealized gain (loss)  —   —   —   4,747   4,747 
Distributions to stockholders  —   —   —   (5,326)  (5,326)
Balances at March 31, 2021  21,304  $21  $294,897  $(58,755) $236,163 

  Common Stock  Capital in excess  Undistributed net investment
income (accumulated distributions in excess of net		  Accumulated net
realized gain (loss) on investments and		  Accumulated net unrealized gain
(loss) on investments, secured borrowings and foreign		    
  Number of
shares		  Par
value		  of par
value		  

investment

income)

  secured
borrowings		  currency
borrowings		  Total
net assets		 
Balances at December 31, 2015  13,008  $13  $184,419  $1,692  $-  $(1,589) $184,535 
Net increase (decrease) in net assets resulting from operations  -   -   -   17,129   587   (883)  16,833 
Issuance of common stock, net of offering and underwriting costs  3,566   4   52,551   -   -   -   52,555 
Distributions to stockholders:                            
Stock issued in connection with dividend reinvestment plan  4   -   70   (70)  -   -   - 
Distributions from net investment income  -   -   -   (14,836)  -   -   (14,836)
Balances at September 30, 2016  16,578  $17  $237,040  $3,915  $587  $(2,472) $239,087 
                             
Balances at December 31, 2016  16,582  $17  $233,526  $7,037  $587  $(317) $240,850 
Net increase (decrease) in net assets resulting from operations  -   -   -   19,009  (506)  (8,592)  9,911 
Issuance of common stock, net of offering and underwriting costs  3,624   3   52,218   -   -   -   52,221 
Distributions to stockholders:                            
Stock issued in connection with dividend reinvestment plan  34   -   525   (525)  -   -   - 
Distributions from net investment income  -   -   -   (19,440)  -   -   (19,440)
Balances at September 30, 2017  20,240  $20  $286,269  $6,081  $81  $(8,909) $283,542 

See Notes to Consolidated Financial Statements.

 

5


MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

 Nine months ended September 30, 
 2017  2016  Three months ended March 31, 
      2021  2020 
Cash flows from operating activities:                
Net increase (decrease) in net assets resulting from operations $9,911  $16,833  $7,055  $(36,850)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:                
Net realized (gain) loss on investments  192   (94)
Net realized (gain) loss on extinguishment of debt  2,774   — 
Net realized (gain) loss on foreign currency forward contracts  38   4 
Net realized (gain) loss on foreign currency and other transactions  14   15 
Net change in unrealized (gain) loss on investments  8,503   847   (4,622)  45,149 
Net change in unrealized (gain) loss on secured borrowings  6   36 
Net change in unrealized (gain) loss on foreign currency borrowings  83   - 
Net realized (gain) loss on investments  572   (587)
Net realized (gain) loss on secured borrowings  (66)  - 
Net change in unrealized (gain) loss on foreign currency forward contracts  (334)  (98)
Net change in unrealized (gain) loss on foreign currency and other transactions  209   (1,344)
Payment-in-kind interest income  (1,363)  (1,430)  (1,679)  (1,076)
Net accretion of discounts and amortization of premiums  (1,278)  (1,137)  (352)  (344)
Proceeds from principal payments and sales of investments  144,445   62,459 
Purchases of investments  (169,056)  (95,717)  (43,744)  (71,088)
Proceeds from principal payments, sales of investments and settlement of forward contracts  75,827   52,843 
Amortization of deferred financing costs  760   603   601   484 
Changes in operating assets and liabilities:                
Interest receivable  (1,577)  (515)  (1,338)  (879)
Other assets  116   329   11  (264)
Payable for open trades  7,425   (4,693)
Interest payable  (194)  (369)  (955)  (956)
Management fees payable  204   91   356   (200)
Incentive fees payable  499   109   193   (1,374)
Accounts payable and accrued expenses  (265)  827   (464)  (320)
Directors' fees payable  37   (37)  35   35 
Net cash provided by (used in) operating activities  (1,238)  (22,351)  33,817   (16,357)
                
Cash flows from financing activities:                
Borrowings on revolving credit facility  93,529   64,000   113,600   51,700 
Repayments of revolving credit facility  (162,000)  (83,200)  (147,450)  (38,600)
SBA debentures borrowings  40,600   - 
Repayment of 2023 Notes  (109,000)  — 
Proceeds from 2026 Notes  130,000   — 
Repayment of SBA debentures  (28,100)  — 
Payments of deferred financing costs  (1,339)  (917)  (4,038)  — 
Repayments on secured borrowings  (1,254)  (902)
Proceeds from shares sold, net of offering and underwriting costs  52,221   52,555 
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $525 and $70, respectively  (19,440)  (14,836)
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $0 and $0, respectively  (5,326)  (7,155)
Net cash provided by (used in) financing activities  2,317   16,700   (50,314)  5,945 
                
Net increase (decrease) in Cash and Restricted Cash  1,079   (5,651)
Cash and Restricted Cash, beginning of period(1)  8,331   13,866 
Cash and Restricted Cash, end of period(2) $9,410  $8,215 
Net increase (decrease) in Cash and Restricted cash  (16,497)  (10,412)
Effect of foreign currency exchange rates  (41)  (19)
Cash and Restricted cash, beginning of period  32,426   29,643 
Cash and Restricted cash, end of period $15,888  $19,212 
                
Supplemental disclosure of cash flow information:                
Cash interest paid during the period $5,405  $4,545  $4,774  $5,294 
Cash paid for excise taxes during the period $495  $284 
Cash paid (refund received) for income taxes, including excise taxes during the period $400  $85 

 

The following tables provide a reconciliation of cash and restricted cash reported on the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts on the Consolidated Statements of Cash Flows:

(1)Represents cash and restricted cash of $5,958 and $2,373, respectively, from the consolidated statements of assets and liabilities as of December 31, 2016. Represents cash and restricted cash of $5,278 and $8,588, respectively, from the consolidated statements of assets and liabilities as of December 31, 2015.

 

(2)Represents cash and restricted cash of $3,721 and $5,689, respectively, from the consolidated statements of assets and liabilities as of September 30, 2017. Represents cash and restricted cash of $5,974 and $2,241, respectively, from the consolidated statements of assets and liabilities as of September 30, 2016.
  March 31, 2021  December 31, 2020 
Cash $7,723  $6,769 
Restricted cash  8,165   25,657 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $15,888  $32,426 

 

  March 31, 2020  December 31, 2019 
Cash $9,320  $2,234 
Restricted cash  9,892   27,409 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $19,212  $29,643 

See Notes to Consolidated Financial Statements.

6

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

September 30, 2017March 31, 2021

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest Rate  

Acquisition

Date (c) 

 Maturity  Principal  

Amortized

Cost

  

Fair

Value (d)

  % of
Net Assets (e)		 
Non-Controlled/Non-Affiliate Company Investments                        
Senior Secured Loans                        
Automotive                        
Hastings Manufacturing Company  L+7.75% 8.75% 4/24/2018 4/24/2023  2,783  $2,757  $2,783  1.2%
Magneto & Diesel Acquisition, Inc.  L+6.05% 7.10% 12/18/2018 12/18/2023  4,876   4,826   4,876  2.1%
Magneto & Diesel Acquisition, Inc.  L+6.05% 7.10% 7/6/2020 12/18/2023  1,918   1,888   1,944  0.8%
Magneto & Diesel Acquisition, Inc. (Revolver) (f)  L+5.50% 6.55% 12/18/2018 12/18/2023  500   —   —  0.0%
            10,077   9,471   9,603  4.1%
Banking, Finance, Insurance & Real Estate                        
J2 BWA Funding, LLC (Delayed Draw) (f) (g) (h)  n/a 9.00% 12/24/2020 12/24/2026  2,750   267   265  0.1%
Liftforward SPV II, LLC (g)  L+10.75% 11.25% 11/10/2016 6/30/2021  1,586   1,586   1,495  0.6%
NCBP Property, LLC (g)  L+9.50% 10.50% 12/18/2020 12/16/2022  1,950   1,934   1,942  0.8%
Oceana Australian Fixed Income Trust (g) (i) (j)  n/a 11.50% 2/25/2021 2/25/2026  8,165   8,460   8,165  3.5%
StarCompliance MidCo, LLC  L+6.75% 7.75% 1/12/2021 1/11/2027  2,000   1,962   1,998  0.8%
StarCompliance MidCo, LLC (Revolver) (f)  L+6.75% 7.75% 1/12/2021 1/11/2027  322   —   —  0.0%
US Claims Litigation Funding, LLC (Revolver) (f) (g)  L+8.75% 9.75% 11/30/2020 11/29/2024  1,500   1,200   1,190  0.5%
W3 Monroe RE Debt LLC (g)  n/a 10.00% 2/5/2021 2/4/2028  2,725   2,725   2,725  1.2%
            20,998   18,134   17,780  7.5%
Beverage, Food & Tobacco                        
LX/JT Intermediate Holdings, Inc. (k)  L+6.00% 7.50% 3/11/2020 3/11/2025  9,643   9,486   9,392  4.0%
LX/JT Intermediate Holdings, Inc. (Revolver) (f)  L+6.00% 7.50% 3/11/2020 3/11/2025  833   —   —  0.0%
Toojay's Management, LLC (l)  n/a n/a(m)  10/26/2018 10/26/2022  1,448   1,407   —  0.0%
Toojay's Management, LLC (l)  n/a n/a(m)  10/26/2018 10/26/2022  199   199   —  0.0%
Toojay's Management, LLC (Revolver) (l)  n/a n/a(m)  10/26/2018 10/26/2022  66   66   —  0.0%
            12,189   11,158   9,392  4.0%
Capital Equipment                        
MCP Shaw Acquisitionco, LLC (k)  L+6.50% 7.50% 2/28/2020 11/28/2025  9,899   9,736   9,800  4.1%
MCP Shaw Acquisitionco, LLC (Revolver) (f)  L+6.50% 7.50% 2/28/2020 11/28/2025  1,784   —   —  0.0%
            11,683   9,736   9,800  4.1%
Chemicals, Plastics & Rubber                        
Midwest Composite Technologies, LLC (k)  L+6.75% 7.75% 12/2/2019 8/31/2023  14,888   14,686   14,903  6.3%
Midwest Composite Technologies, LLC  L+6.75% 7.75% 8/31/2018 8/31/2023  884   875   885  0.4%
Midwest Composite Technologies, LLC  L+6.75% 7.75% 8/31/2018 8/31/2023  508   508   509  0.2%
Midwest Composite Technologies, LLC (Revolver) (f)  L+6.75% 7.75% 8/31/2018 8/31/2023  90   —   —  0.0%
Valudor Products, LLC  L+7.50% 

7.00% Cash/

1.50% PIK

  6/18/2018 6/19/2023  1,567   1,552   1,733  0.7%
Valudor Products, LLC (n)  L+7.50% 8.50% PIK  6/18/2018 6/19/2023  222   219   —  0.0%
Valudor Products, LLC (Revolver) (f)  L+9.50% 10.50% 6/18/2018 6/19/2023  818   669   641  0.3%
            18,977   18,509   18,671  7.9%
Construction & Building                        
Cali Bamboo, LLC  L+9.50% 

8.00% Cash/
2.50% PIK

  7/10/2015 3/31/2022  6,902   6,902   6,902  2.9%
Cali Bamboo, LLC (Revolver) (f)  L+9.50% 

8.00% Cash/

2.50% PIK

  7/10/2015 3/31/2022  2,165   —   —  0.0%
Dude Solutions Holdings, Inc.  L+7.50% 8.50% 6/14/2019 6/13/2025  9,963   9,793   9,953  4.2%
Dude Solutions Holdings, Inc. (Revolver) (f)  L+7.50% 8.50% 6/14/2019 6/13/2025  1,304   —   —  0.0%
            20,334   16,695   16,855  7.1%
Consumer Goods: Durable                        
Parterre Flooring & Surface Systems, LLC (k)  L+9.00% 10.00%(m) 8/22/2017 8/22/2022  6,936   6,203   475  0.2%
            6,936   6,203   475  0.2%
Consumer Goods: Non-Durable                        
Thrasio, LLC  L+7.00% 8.00% 12/18/2020 12/18/2026  1,496   1,461   1,498  0.6%
Thrasio, LLC (Delayed Draw) (f) (h)  L+7.00% 8.00% 12/18/2020 12/18/2026  990   —   —  0.0%
            2,486   1,461   1,498  0.6%
Environmental Industries                        
Quest Resource Management Group, LLC  L+8.50% 9.75% 10/19/2020 10/20/2025  997   931   1,027  0.4%
Quest Resource Management Group, LLC (Delayed Draw) (f) (h)  L+8.50% 9.75% 10/19/2020 10/20/2025  1,087   —   —  0.0%
StormTrap, LLC  L+5.50% 6.50% 12/10/2018 12/8/2023  7,820   7,739   7,820  3.3%
StormTrap, LLC (Revolver) (f)  L+5.50% 6.50% 12/10/2018 12/8/2023  432   —   —  0.0%
Synergy Environmental Corporation (k)  L+6.00% 7.00% 4/29/2016 9/29/2023  2,877   2,867   2,880  1.2%
Synergy Environmental Corporation (k)  L+6.00% 7.00% 4/29/2016 9/29/2023  481   479   481  0.2%
Synergy Environmental Corporation  L+6.00% 7.00% 4/29/2016 9/29/2023  820   820   821  0.4%
Synergy Environmental Corporation (Revolver) (f)  L+6.00% 7.00% 4/29/2016 9/29/2023  671   67   67  0.0%
            15,185   12,903   13,096  5.5%
                         
Healthcare & Pharmaceuticals                        
American Optics Holdco, Inc. (g) (j)  L+6.50% 7.50% 9/13/2017 9/13/2022  2,143  2,129  2,143  0.9%
American Optics Holdco, Inc. (g) (j)  L+6.50% 7.50% 9/13/2017 9/13/2022  1,616   1,604   1,616  0.7%
American Optics Holdco, Inc. (Revolver) (f) (g) (j)  L+6.50% 7.50% 9/13/2017 9/13/2022  220   —   —  0.0%
American Optics Holdco, Inc. (Revolver) (f) (g) (j)  L+6.50% 7.50% 9/13/2017 9/13/2022  440   —   —  0.0%
Apotheco, LLC  L+8.50% 

6.50% Cash/

3.00% PIK

  4/8/2019 4/8/2024  3,568   3,523   3,312  1.4%
Apotheco, LLC (Revolver)  L+8.50% 

6.50% Cash/

3.00% PIK

  4/8/2019 4/8/2024  934   934   867  0.4%
Brickell Bay Acquisition Corp.  L+7.00% 8.00% 2/12/2021 2/12/2026  4,000   3,922   3,980  1.7%
Brickell Bay Acquisition Corp. (Delayed Draw) (f) (h)  L+7.00% 8.00% 2/12/2021 2/12/2026  800   —   —  0.0%
Rockdale Blackhawk, LLC  n/a n/a(o)  3/31/2015 n/a(p)  —   —   1,592  0.7%
Seran BioScience, LLC  L+7.25% 8.25% 12/31/2020 12/31/2025  2,500   2,453   2,497  1.0%
Seran BioScience, LLC (Revolver) (f)  L+7.25% 8.25% 12/31/2020 12/31/2025  444   —   —  0.0%
            16,665   14,565   16,007  6.8%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest Rate  

Acquisition

Date (c) 

 Maturity  Principal  Amortized Cost  Fair
Value (d)		  % of
Net Assets (e)		 
High Tech Industries                        
Arcstor Midco, LLC  L+7.00% 8.00% 3/16/2021 3/16/2027  4,500   $4,410  $ 4,500  1.9%
MarkLogic Corporation  L+8.00% 9.00% 10/20/2020 10/20/2025  3,491   3,411   3,561  1.5%
MarkLogic Corporation (Revolver) (f)  L+6.00% 7.00% 10/20/2020 10/20/2025  269   —   —  0.0%
Mindbody, Inc.  L+8.50% 

8.00% Cash/

1.50% PIK

  2/15/2019 2/14/2025  6,413   6,327   6,201  2.6%
Mindbody, Inc. (Revolver) (f)  L+8.00% 9.00% 2/15/2019 2/14/2025  667   —   —  0.0%
Newforma, Inc. (k)  L+5.00% 6.00% 6/30/2017 6/30/2022  11,806   11,755   11,802  5.0%
Newforma, Inc. (Revolver) (f)  L+5.00% 6.00% 6/30/2017 6/30/2022  1,250   —   —  0.0%
Planful, Inc.  L+6.50% 7.50% 12/28/2018 12/30/2024  9,500   9,387   9,462  4.0%
Planful, Inc. (Delayed Draw) (f) (h)  L+6.50% 7.50% 1/11/2021 12/30/2024  1,325   442   440  0.2%
Planful, Inc. (Revolver) (f)  L+6.50% 7.50% 12/28/2018 12/30/2024  442   88   88  0.1%
RPL Bidco Limited (g) (j) (q)  L+7.00% 7.50% 11/9/2017 11/9/2023  14,488   13,821   14,485  6.1%
RPL Bidco Limited (g) (j) (q)  L+7.00% 7.50% 5/22/2018 11/9/2023  1,792   1,639   1,791  0.8%
RPL Bidco Limited (g) (j) (q)  L+7.00% 7.50% 3/3/2021 11/9/2023  1,240   1,256   1,240  0.5%
RPL Bidco Limited (Revolver) (f) (g) (j) (q)  L+7.00% 7.50% 11/9/2017 11/9/2023  551   —   —  0.0%
            57,734  52,536   53,570 22.7%
Hotels, Gaming & Leisure                        
Equine Network, LLC  L+8.00% 9.00% 12/31/2020 12/31/2025  1,750   1,713   1,754  0.8%
Equine Network, LLC  L+8.00% 9.00% 1/29/2021 12/31/2025  794   778   796  0.3%
Equine Network, LLC (Delayed Draw) (f) (h)  L+8.00% 9.00% 12/31/2020 12/31/2025  427   —   —  0.0%
Equine Network, LLC (Revolver) (f)  L+8.00% 9.00% 12/31/2020 12/31/2025  171   —   —  0.0%
            3,142   2,491   2,550  1.1%
Media: Advertising, Printing & Publishing                        
AdTheorent Holding Company, LLC  L+8.50% 9.00% 12/22/2016 12/22/2021  2,637   2,629   2,635  1.1%
Destination Media, Inc. (k)  L+5.50% 6.50% 4/7/2017 4/7/2022  4,225   4,209   4,225  1.8%
Destination Media, Inc. (Revolver) (f)  L+5.50% 6.50% 4/7/2017 4/7/2022  542   —   —  0.0%
North Haven USHC Acquisition, Inc.  L+6.50% 7.50% 10/30/2020 10/30/2025  2,494   2,449   2,519  1.1%
North Haven USHC Acquisition, Inc. (Delayed Draw) (f) (h)  L+6.50% 7.50% 3/12/2021 10/30/2025  721   —   —  0.0%
North Haven USHC Acquisition, Inc. (Revolver) (f)  L+6.50% 7.50% 10/30/2020 10/30/2025  240   —   —  0.0%
Relevate Health Group, LLC  L+6.25% 7.25% 11/20/2020 11/20/2025  1,500   1,472   1,530  0.6%
Relevate Health Group, LLC (Delayed Draw) (f) (h)  L+6.25% 7.25% 11/20/2020 11/20/2025  789   671   684  0.3%
Relevate Health Group, LLC (Revolver) (f)  L+6.25% 7.25% 11/20/2020 11/20/2025  316   —   —  0.0%
Stratus Unlimited, LLC  L+7.00% 8.00% 12/22/2017 8/30/2024  14,791   14,737   14,791  6.3%
Stratus Unlimited, LLC (Revolver) (f)  L+7.00% 8.00% 12/22/2017 8/30/2024  3,490   —   —  0.0%
XanEdu Publishing, Inc.  L+6.50% 7.50% 1/28/2020 1/28/2025  1,881   1,851   1,889  0.8%
XanEdu Publishing, Inc. (Revolver) (f)  L+6.50% 7.50% 1/28/2020 1/28/2025  495   —   —  0.0%
            34,121   28,018   28,273  12.0%
Media: Broadcasting & Subscription                        
Vice Group Holding, Inc.  L+12.00% 

5.50% Cash/

8.00% PIK

  5/2/2019 11/2/2022  1,438   1,432   1,438  0.6%
Vice Group Holding, Inc.  L+12.00% 

5.50% Cash/

8.00% PIK

  11/4/2019 11/2/2022  276   273   276  0.1%
Vice Group Holding, Inc.  L+12.00% 

5.50% Cash/

8.00% PIK

  5/2/2019 11/2/2022  451   451   451  0.2%
Vice Group Holding, Inc.  L+12.00% 

5.50% Cash/

8.00% PIK

  5/2/2019 11/2/2022  170   170   170  0.1%
            2,335   2,326   2,335  1.0%
                         
Media: Diversified & Production                        
Attom Intermediate Holdco, LLC  L+5.75% 6.75% 1/4/2019 1/4/2024  1,955   1,932   1,934  0.8%
Attom Intermediate Holdco, LLC  L+7.50% 8.75% 6/25/2020 1/4/2024  476   469   491  0.2%
Attom Intermediate Holdco, LLC (Revolver) (f)  L+5.75% 6.75% 1/4/2019 1/4/2024  320   —   —  0.0%
Crownpeak Technology, Inc.  L+6.25% 7.25% 2/28/2019 2/28/2024  4,000   3,951   3,998  1.7%
Crownpeak Technology, Inc.  L+6.25% 7.25% 2/28/2019 2/28/2024  60   60   60  0.0%
Crownpeak Technology, Inc. (Revolver) (f)  L+6.25% 7.25% 2/28/2019 2/28/2024  167   —   —  0.0%
            6,978   6,412   6,483  2.7%
Retail                        
BLST Operating Company, LLC  L+9.00% 

1.00% Cash/

9.00% PIK

(m)  8/28/2020 8/28/2025  1,259   1,223   1,039  0.4%
Forman Mills, Inc. (k)  L+9.50% 

8.50% Cash/

2.00% PIK

  1/14/2020 12/30/2022  1,336   1,336   1,320  0.6%
Forman Mills, Inc. (k)  L+9.50% 

8.50% Cash/

2.00% PIK

  10/4/2016 12/30/2022  760   758   751  0.3%
Forman Mills, Inc. (k)  L+9.50% 

8.50% Cash/

2.00% PIK

  10/4/2016 12/30/2022  7,623   7,605   7,047  3.0%
LuLu's Fashion Lounge, LLC  L+9.50% 

8.00% Cash/

2.50% PIK

  8/21/2017 8/29/2022  4,055   4,015   3,467  1.5%
The Worth Collection, Ltd. (k)  L+8.50% 9.00% (m) 9/29/2016 9/29/2021  10,587   10,248   120  0.0%
            25,620   25,185   13,744  5.8%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest Rate  

Acquisition

Date (c) 

 Maturity  Principal  Amortized Cost  

Fair

Value (d)

  % of
Net Assets (e)		 
Services: Business                        
Atlas Sign Industries of FLA, LLC (k)  L+11.50% 

11.50% Cash/

1.00% PIK

  5/14/2018 5/15/2023  3,572  $ 3,377  $ 3,561  1.5%
Burroughs, Inc. (k)  L+6.50% 7.50% 12/22/2017 12/22/2022  5,726   5,687   5,726  2.4%
Burroughs, Inc. (Revolver) (f)  L+6.50% 7.50% 12/22/2017 12/22/2022  1,220   —   —  0.0%
Certify, Inc.  L+5.75% 6.75% 2/28/2019 2/28/2024  9,000   8,916   9,000  3.8%
Certify, Inc.  L+5.75% 6.75% 2/28/2019 2/28/2024  1,227   1,227   1,227  0.5%
Certify, Inc. (Revolver) (f)  L+5.75% 6.75% 2/28/2019 2/28/2024  409   102   102  0.0%
HS4 Acquisitionco, Inc.  L+6.75% 7.75% 7/9/2019 7/9/2025  10,050   9,897   9,950  4.2%
HS4 Acquisitionco, Inc. (Revolver) (f)  L+6.75% 7.75% 7/9/2019 7/9/2025  817   —   —  0.0%
IT Global Holding, LLC  L+9.00% 10.00% 11/15/2018 11/10/2023  7,625   7,534   7,625  3.2%
IT Global Holding, LLC  L+9.00% 10.00% 7/19/2019 11/10/2023  2,843   2,801   2,843  1.2%
IT Global Holding, LLC (Revolver)  L+9.00% 10.00% 11/15/2018 11/10/2023  875   875   875  0.4%
RedZone Robotics, Inc.  L+7.25% 

7.75% Cash/

0.50% PIK

  6/1/2018 6/5/2023  220   217   220  0.1%
RedZone Robotics, Inc. (Revolver) (f)  L+7.25% 

7.75% Cash/

0.50% PIK

  6/1/2018 6/5/2023  158   —   —  0.0%
Security Services Acquisition Sub Corp. (k)  L+6.00% 7.00% 2/15/2019 2/15/2024  3,430   3,389   3,433  1.5%
Security Services Acquisition Sub Corp. (k)  L+6.00% 7.00% 2/15/2019 2/15/2024  2,467   2,467   2,470  1.1%
Security Services Acquisition Sub Corp. (k)  L+6.00% 7.00% 2/15/2019 2/15/2024  2,167   2,167   2,170  0.9%
Security Services Acquisition Sub Corp.  L+6.00% 7.00% 2/15/2019 2/15/2024  1,559   1,559   1,560  0.7%
VPS Holdings, LLC  L+7.00% 8.00% 10/5/2018 10/4/2024  3,601   3,553   3,411  1.4%
VPS Holdings, LLC  L+7.00% 8.00% 10/5/2018 10/4/2024  2,939   2,939   2,784  1.2%
VPS Holdings, LLC (Revolver) (f)  L+7.00% 8.00% 10/5/2018 10/4/2024  1,000   100   95  0.1%
            60,905   56,807   57,052  24.2%
Services: Consumer                        
Express Wash Acquisition Company, LLC  L+6.50% 7.50% 12/28/2020 12/26/2025  2,500   2,459   2,500  1.1%
Express Wash Acquisition Company, LLC (Revolver) (f)  L+6.50% 7.50% 12/28/2020 12/26/2025  1,000   150   150  0.1%
IDIG Parent, LLC  L+6.50% 7.50% 12/15/2020 12/15/2026  5,558   5,453   5,565  2.4%
IDIG Parent, LLC (Delayed Draw) (f) (h)   L+6.50% 7.50% 12/15/2020 12/15/2026  918   —   —  0.0%
IDIG Parent, LLC (Revolver) (f)  L+6.50% 7.50% 12/15/2020 12/15/2026  429   —   —  0.0%
Mammoth Holdings, LLC  L+6.00% 7.00% 10/16/2018 10/16/2023  1,955   1,933   1,957  0.8%
Mammoth Holdings, LLC  L+6.00% 7.00% 10/16/2018 10/16/2023  4,104   4,104   4,108  1.7%
Mammoth Holdings, LLC (Delayed Draw) (f) (h)  L+6.00% 7.00% 3/12/2021 10/16/2023  6,386   —   —  0.0%
Mammoth Holdings, LLC (Revolver) (f)  L+6.00% 7.00% 10/16/2018 10/16/2023  657   —   —  0.0%
            23,507   14,099   14,280  6.1%
Wholesale                        
Nearly Natural, Inc. (k)  L+6.75% 7.75% 12/15/2017 12/15/2022  6,598   6,547   6,598  2.8%
Nearly Natural, Inc.  L+6.75% 7.75% 2/16/2021 12/15/2022  3,095   3,039   3,095  1.3%
Nearly Natural, Inc. (k)  L+6.75% 7.75% 9/22/2020 12/15/2022  1,706   1,681   1,706  0.7%
Nearly Natural, Inc. (k)  L+6.75% 7.75% 8/28/2019 12/15/2022  1,858   1,858   1,858  0.8%
Nearly Natural, Inc. (Revolver) (f)  L+6.75% 7.75% 12/15/2017 12/15/2022  2,397   639   639  0.3%
            15,654   13,764   13,896  5.9%
Total Non-Controlled/Non-Affiliate Senior Secured Loans           365,526   320,473   305,360  129.3%
                         
Unitranche Secured Loans (r)                        
Chemicals, Plastics & Rubber                        
MFG Chemical, LLC (k)  L+9.00% 10.00% 6/23/2017 6/23/2022  9,232  9,192  9,232  3.9%
MFG Chemical, LLC  L+9.00% 10.00% 3/15/2018 6/23/2022  976   976   976  0.4%
            10,208   10,168   10,208  4.3%
Healthcare & Pharmaceuticals                        
Priority Ambulance, LLC (s)  L+5.75% 6.75% 7/18/2018 4/12/2022  10,015   10,015   9,965  4.2%
Priority Ambulance, LLC (t)  L+5.75% 6.75% 4/12/2017 4/12/2022  1,253   1,244   1,247  0.5%
Priority Ambulance, LLC  L+5.75% 6.75% 12/13/2018 4/12/2022  668   668   665  0.3%
Priority Ambulance, LLC (Delayed Draw) (f) (h)  L+5.75% 6.75% 10/22/2020 4/12/2022  1,009   —   —  0.0%
            12,945   11,927   11,877  5.0%
High Tech Industries                        
Energy Services Group, LLC  L+8.42% 9.42% 5/4/2017 5/4/2022  3,892   3,878   3,892  1.6%
Energy Services Group, LLC (g) (q)  L+8.42% 9.42% 5/4/2017 5/4/2022  4,832   4,639   4,832  2.0%
Energy Services Group, LLC  L+8.42% 9.42% 5/4/2017 5/4/2022  1,108   1,094   1,108  0.5%
WillowTree, LLC  L+5.50% 6.50% 10/9/2018 10/9/2023  7,790   7,713   7,716  3.3%
            17,622   17,324   17,548  7.4%
Telecommunications                        
VB E1, LLC (Delayed Draw) (f) (h)  L+8.50% 9.00% 11/18/2020 11/18/2026  2,250   1,100   1,102  0.5%
            2,250   1,100   1,102  0.5%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans           43,025   40,519   40,735  17.2%
                         
Junior Secured Loans                        
Beverage, Food & Tobacco                        
California Pizza Kitchen, Inc.  L+13.50% 

1.00% Cash/

14.00% PIK

(m)  8/19/2016 5/23/2025  1,264   1,264   1,235  0.5%
CSM Bakery Solutions, LLC  L+10.00% 11.00% 5/23/2013 2/4/2022  6,116   6,116   6,065  2.6%
            7,380   7,380   7,300  3.1%
Capital Equipment                        
ALTA Enterprises, LLC (g)  L+8.00% 9.80% 2/14/2020 8/13/2025  3,783   3,672   3,934  1.7%
            3,783   3,672   3,934  1.7%
Services: Consumer                        
Education Corporation of America  L+11.00% 

5.70% Cash/

5.50% PIK

(m)  9/3/2015 n/a(p)  833   831   765  0.3%
            833   831   765  0.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans           11,996   11,883   11,999  5.1%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest Rate  Acquisition Date (c)  Maturity  Principal  Amortized Cost  Fair
Value (d)		  % of
Net Assets (e)		 
Equity Securities (u) (ah)                        
Banking, Finance, Insurance & Real Estate                        
J2 BWA Funding, LLC (0.7% profit sharing) (g) (v) — —(w)  12/24/2020 —  —   $—   $—  0.0%
PKS Holdings, LLC (5,680 preferred units) (g)  n/a 5.00% PIK  11/30/2017 —  —   58   222  0.1%
PKS Holdings, LLC (5,714 preferred units) (g)  n/a 5.00% PIK  11/30/2017 —  —   9   34  0.0%
PKS Holdings, LLC (132 preferred units) (g)  n/a 5.00% PIK  11/30/2017 —  —   1   5  0.0%
PKS Holdings, LLC (916 preferred units) (g)  n/a 5.00% PIK  11/30/2017 —  —   9   34  0.0%
                77   295  0.1%
Beverage, Food & Tobacco                        
California Pizza Kitchen, Inc. (78,699 preferred units) — —(w)  8/19/2016 —  —   5,468   1,790  0.8%
                5,468   1,790  0.8%
Capital Equipment               ��        
MCP Shaw Acquisitionco, LLC (118,906 Class A-2 units) (v) — —(w)  2/28/2020 —  —   119   156  0.1%
                119   156  0.1%
Chemicals, Plastics & Rubber                        
Valudor Products, LLC (501,014 Class A-1 units) (v)  n/a 10.00% PIK(m)  6/18/2018 —  —   501   —  0.0%
                501   —  0.0%
Environmental Industries                        
Quest Resource Holding Corporation (warrant to purchase up to 0.2% of the equity) — —(w)  10/19/2020 3/19/2028  —  67  122  0.1%
                67   122  0.1%
Healthcare & Pharmaceuticals                        
Seran BioScience, LLC (33,333 common units) (v) — —(w)  12/31/2020 —  —   333   385  0.2%
                333   385  0.2%
High Tech Industries                        
Answers Finance, LLC (76,539 shares of common stock) — —(w)  4/14/2017 —  —   2,284   43  0.0%
MarkLogic Corporation (290,239 Class A units) — —(w)  10/20/2020 —  —   290   465  0.2%
Planful, Inc. (473,082 Class A units)  n/a  8.00% PIK   12/28/2018 —  —   473   591  0.2%
Recorded Future, Inc. (80,486 Class A units) (x) — —(w)  7/3/2019 —  —   81   158  0.1%
                3,128   1,257  0.5%
Hotels, Gaming & Leisure                        
Equine Network, LLC (99 Class A units) (v)  n/a  10.00% PIK   12/31/2020 —  —   99   101  0.0%
                99   101  0.0%
Media: Advertising, Printing & Publishing                        
AdTheorent Holding Company, LLC (128,866 Class A voting units) — —(w)  12/22/2016 —  —   129   537  0.2%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity) (g) (j) — —(w)  9/18/2015 9/18/2025  —   —   1,626  0.7%
Relevate Health Group, LLC (40 preferred units)  n/a  12.00% PIK   11/20/2020 —  —   40   40  0.0%
Relevate Health Group, LLC (40 Class B common units) — —(w)  11/20/2020 —  —   —   3  0.0%
Stratus Unlimited, LLC (686 shares of common units) — —(w)  8/30/2019 —  —   872   1,065  0.5%
XanEdu Publishing, Inc. (49,479 Class A units)  n/a 8.00% PIK  1/28/2020 —  —   49   79  0.0%
                1,090   3,350  1.4%
Media: Diversified & Production                        
Attom Intermediate Holdco, LLC (297,197 Class A units) (v) — —(w)  1/4/2019 —  —   297   406  0.2%
                297   406  0.2%
Retail                        
BLST Operating Company, LLC (139,883 Class A units) (v) — —(w)  8/28/2020 —  —   1,072   122  0.1%
Forman Mills, Inc. (warrant to purchase up to 2.6% of the equity)  — —(w)  1/14/2020 1/14/2029  —   —   82  0.0%
The Tie Bar Operating Company, LLC - Class A preferred units (1,275 units) — —(w)  6/25/2013 —  —   87   4  0.0%
The Tie Bar Operating Company, LLC - Class B preferred units (1,275 units) — —(w)  6/25/2013 —  —   —   —  0.0%
                1,159   208  0.1%
Services: Business                        
APCO Worldwide, Inc. (100 Class A voting common stock) — —(w)  11/1/2017 —  —   395   433  0.2%
Atlas Sign Industries of FLA, LLC (warrant to purchase up to 3.0% of the equity) — —(w)  5/14/2018 5/14/2026  —   125   179  0.1%
                520   612  0.3%
Services: Consumer                        
IDIG Parent, LLC (245,958 shares of common stock) (v) (y) — —(w)  1/4/2021 —  —   248   268  0.0%
Education Corporation of America - Series G Preferred Stock (8,333 shares)  n/a 12.00% PIK(m) 9/3/2015 —  —   7,492   5,117  2.2%
Express Wash Acquisition Company, LLC (100,000 Class A units) (v)  n/a  8.00% PIK  12/28/2020 —  —   100   126  0.1%
                7,840   5,511  2.3%
Wholesale                        
Nearly Natural, Inc. (152,174 Class A units) — —(w)  12/15/2017 —  —   152   206  0.1%
                152   206  0.1%
Total Non-Controlled/Non-Affiliate Equity Securities               20,850   14,399  6.1%
Total Non-Controlled/Non-Affiliate Company Investments              $393,725  $372,493  157.7%
                         
Non-Controlled Affiliate Company Investments (z)                        
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate                        
American Community Homes, Inc.  L+10.00% 11.50% PIK  7/22/2014 12/31/2021  9,585  $9,585  $9,585  4.1%
American Community Homes, Inc.  L+14.50% 16.00% PIK  7/22/2014 12/31/2021  4,212   4,212   4,212  1.8%
American Community Homes, Inc.  L+10.00% 11.50% PIK  5/24/2017 12/31/2021  581   581   581  0.3%
American Community Homes, Inc.  L+10.00% 11.50% PIK  8/10/2018 12/31/2021  2,136   2,136   3,131  1.3%
American Community Homes, Inc.  L+10.00% 11.50% PIK  3/29/2019 12/31/2021  3,955   3,955   3,997  1.7%
American Community Homes, Inc.  L+10.00% 11.50% PIK  9/30/2019 12/31/2021  19   19   19  0.0%
American Community Homes, Inc.  L+10.00% 11.50% PIK  12/30/2019 12/31/2021  91   91   91  0.0%
HFZ Capital Group, LLC (g) (aa)  L+12.50% 14.00% PIK 10/20/2017 n/a(p)  13,242   13,242   14,275  6.0%
HFZ Capital Group, LLC (g) (aa)  L+12.50% 14.00% PIK 10/20/2017 n/a(p)  4,758   4,758   5,129  2.2%
MC Asset Management (Corporate), LLC (g)  L+15.00% 16.00% PIK  1/26/2021 1/26/2024  6,423   6,423   6,423  2.7%
MC Asset Management (Industrial), LLC (g) (aa)  L+17.00% 18.00% PIK  6/11/2019 10/30/2024  10,799   10,793   11,579  4.9%
            55,801   55,795   59,022  25.0%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest Rate  

Acquisition

Date (c) 

 Maturity  Principal  Amortized Cost  Fair
Value (d)		  % of
Net Assets (e)		 
Beverage, Food & Tobacco                        
TJ Management HoldCo, LLC (Revolver) (f) (l)  L+5.50% 6.50% 9/9/2020 6/30/2024  795  $ —  $—  0.0%
            795   —   —  0.0%
Healthcare & Pharmaceuticals                        
Ascent Midco, LLC (k)  L+5.50% 6.50% 2/5/2020 2/5/2025  6,912   6,803   6,981  3.0%
Ascent Midco, LLC (Delayed Draw) (f) (h) (k)  L+5.50% 6.50% 2/5/2020 2/5/2025  2,838   —   —  0.0%
Ascent Midco, LLC (Revolver) (f)  L+5.50% 6.50% 2/5/2020 2/5/2025  1,129   —   —  0.0%
SHI Holdings, Inc. (k)  L+10.75% 10.90% PIK(m)   7/10/2014 n/a(p)  2,899   2,897   115  0.0%
SHI Holdings, Inc. (Revolver) (f)   L+10.75% 10.90% PIK(m)  7/10/2014 n/a(p)  4,667   4,585   182  0.1%
            18,445   14,285   7,278  3.1%
High Tech Industries                        
Mnine Holdings, Inc.  L+8.00% 

4.00% Cash/

5.00% PIK

  11/2/2018 12/30/2022  11,915   11,823   12,511  5.3%
            11,915   11,823   12,511  5.3%
Retail                        
Luxury Optical Holdings Co.  L+8.00% 9.00% PIK(m)  9/12/2014 12/15/2021  1,481   1,481   1,442  0.6%
Luxury Optical Holdings Co. (Delayed Draw) (f) (h)  L+11.50% 12.50%(m) 9/29/2017 12/15/2021  3,565   1,461   1,506  0.7%
Luxury Optical Holdings Co. (Revolver)  L+8.00% 9.00% PIK(m)  9/12/2014 12/15/2021  68   68   66  0.0%
            5,114   3,010   3,014  1.3%
Services: Business                        
Curion Holdings, LLC (k)  n/a 14.00% PIK(m)  5/2/2017 5/2/2022  4,226   4,189   3,585  1.5%
Curion Holdings, LLC (Revolver) (f)  n/a 14.00% PIK(m)  5/2/2017 5/2/2022  871   836   822  0.4%
            5,097   5,025   4,407  1.9%
Services: Consumer                        
NECB Collections, LLC (Revolver) (f)  L+11.00% 12.00% PIK(m)  6/25/2019 6/30/2021  1,356   1,312   807  0.4%
            1,356   1,312   807  0.4%
Total Non-Controlled Affiliate Senior Secured Loans           98,523   91,250   87,039  36.9%
                         
Unitranche Secured Loans (r)                        
Consumer Goods: Non-Durable                        
Incipio, LLC (ab)  L+8.50% 9.50% PIK(m)  12/26/2014 8/22/2022  14,701   14,677   —  0.0%
Incipio, LLC (ac)  L+8.50% 9.50% PIK(m)  3/9/2018 8/22/2022  4,326   4,326   2,088  0.9%
Incipio, LLC  L+8.50% 9.50% PIK(m)  7/6/2018 8/22/2022  1,833   1,833   1,741  0.7%
Incipio, LLC  L+8.50% 9.50% PIK(m)  1/15/2020 8/22/2022  1,543   1,543   1,465  0.6%
Incipio, LLC  L+8.50% 9.50% PIK(m)  4/17/2019 8/22/2022  772   772   734  0.3%
Incipio, LLC  L+8.50% 9.50% PIK(m)  7/8/2020 8/22/2022  1,615   1,615   1,535  0.7%
            24,790   24,766   7,563  3.2%
Total Non-Controlled Affiliate Unitranche Secured Loans           24,790   24,766   7,563  3.2%
                         
Junior Secured Loans                        
Consumer Goods: Non-Durable                        
Incipio, LLC (ad)  n/a 10.70% PIK(m)  6/18/2018 8/22/2022  3,766   —   —  0.0%
Incipio, LLC (ae)  n/a 10.70% PIK(m)  6/18/2018 8/22/2022  7,194   —   —  0.0%
            10,960   —   —  0.0%
Services: Business                        
Curion Holdings, LLC (k)  n/a 15.00% PIK(m)  8/17/2018 1/2/2023  1,720   1   —  0.0%
Curion Holdings, LLC (k)  n/a 15.00% PIK(m)  8/17/2018 1/2/2023  44   —   —  0.0%
            1,764   1   —  0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans           12,724   1   —  0.0%
                         
Equity Securities (z) (ah)                        
Banking, Finance, Insurance & Real Estate                        
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) — —(w)  10/9/2014 12/18/2024  —   —   286  0.1%
MC Asset Management (Corporate), LLC (15.9% of interests) (g) (v) (aa) — —(w)  6/11/2019 —  —   793   576  0.3%
                793   862  0.4%
Beverage, Food & Tobacco                        
TJ Management HoldCo, LLC (16 shares of common stock) (l) (v) — —(w)  9/9/2020 —  —   2,386   3,285  1.4%
                2,386   3,285  1.4%
Consumer Goods: Non-Durable                        
Incipio, LLC (1,774 shares of Series C common units) (v) — —(w)  7/6/2018 —  —   —   —  0.0%
                —   —  0.0%
Healthcare & Pharmaceuticals                        
Ascent Midco, LLC (2,032,258 Class A units) (v)  n/a 8.00% PIK  2/5/2020 —  —   2,032   3,282  1.4%
Familia Dental Group Holdings, LLC (1,052 Class A units) (v) (af) — —(w)  4/8/2016 —  —   3,602   3,350  1.4%
SHI Holdings, Inc. (24 shares of common stock) — —(w)  12/14/2016 —  —   27   —  0.0%
                5,661   6,632  2.8%
High Tech Industries                        
 Mnine Holdings, Inc. (6,400 Class B units) — —(w)  6/30/2020 —  —   —   —  0.0%
                —   —  0.0%
Retail                        
Luxury Optical Holdings Co. (91 preferred units)  n/a 15.00% PIK(m)  9/12/2014 —  —   3,631   2,438  1.0%
Luxury Optical Holdings Co. (86 shares of common stock) — —(w)  9/29/2017 —  —   —   —  0.0%
                3,631   2,438  1.0%
Services: Business                        
Curion Holdings, LLC (58,779 shares of common stock) — —(w)  8/17/2018 —  —   —   —  0.0%
                —   —  0.0%
Services: Consumer                        
NECB Collections, LLC (20.8% of units) (v) — —(w)  6/21/2019 —  —   1,458   —  0.0%
                1,458   —  0.0%
Total Non-Controlled Affiliate Equity Securities               13,929   13,217  5.6%
Total Non-Controlled Affiliate Company Investments              $129,946  $107,819  45.7%
                         
Controlled Affiliate Company Investments (ag)                        
Equity Securities                        
Investment Funds & Vehicles                        
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests) (g)  — —  10/31/2017 —  —  $42,150  $41,067  17.4%
Total Controlled Affiliate Equity Securities               42,150   41,067  17.4%
Total Controlled Affiliate Company Investments              $42,150  $41,067  17.4%
TOTAL INVESTMENTS              $565,821  $521,379  220.8%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

Derivative Instruments

Foreign currency forward contracts

  Notional Amount  Notional Amount    Settlement Unrealized Gain 
Description to be Purchased  to be Sold  Counterparty  Date (Loss) 
Foreign currency forward contract $103  £84  Bannockburn Global Forex, LLC 4/2/2021 $(13)
Foreign currency forward contract $271  £212  Bannockburn Global Forex, LLC 6/1/2021  (21)
Foreign currency forward contract $33  £26  Bannockburn Global Forex, LLC 6/1/2021  (3)
Foreign currency forward contract $23  £16  Bannockburn Global Forex, LLC 6/3/2021  — 
Foreign currency forward contract $103  £83  Bannockburn Global Forex, LLC 7/2/2021  (12)
Foreign currency forward contract $1,256  £900  Bannockburn Global Forex, LLC 7/2/2021  16 
Foreign currency forward contract $102  £83  Bannockburn Global Forex, LLC 10/4/2021  (12)
Foreign currency forward contract $101  £82  Bannockburn Global Forex, LLC 1/3/2022  (12)
Foreign currency forward contract $97  £79  Bannockburn Global Forex, LLC 4/4/2022  (12)
Foreign currency forward contract $36  £29  Bannockburn Global Forex, LLC 5/6/2022  (4)
Foreign currency forward contract $137   AUD        173  Bannockburn Global Forex, LLC 4/20/2021  5 
Foreign currency forward contract $75   AUD         95  Bannockburn Global Forex, LLC 5/18/2021  3 
Foreign currency forward contract $86   AUD       108  Bannockburn Global Forex, LLC 6/17/2021  3 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 7/16/2021  3 
Foreign currency forward contract $80   AUD       102  Bannockburn Global Forex, LLC 8/17/2021  3 
Foreign currency forward contract $85   AUD       108  Bannockburn Global Forex, LLC 9/16/2021  3 
Foreign currency forward contract $83   AUD       105  Bannockburn Global Forex, LLC 10/19/2021  3 
Foreign currency forward contract $75   AUD         95  Bannockburn Global Forex, LLC 11/16/2021  3 
Foreign currency forward contract $85   AUD       108  Bannockburn Global Forex, LLC 12/16/2021  3 
Foreign currency forward contract $91   AUD       115  Bannockburn Global Forex, LLC 1/19/2022  3 
Foreign currency forward contract $75   AUD         95  Bannockburn Global Forex, LLC 2/16/2022  3 
Foreign currency forward contract $75   AUD         95  Bannockburn Global Forex, LLC 3/16/2022  3 
Foreign currency forward contract $83   AUD       105  Bannockburn Global Forex, LLC 4/19/2022  3 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 5/17/2022  3 
Foreign currency forward contract $88   AUD       112  Bannockburn Global Forex, LLC 6/17/2022  3 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 7/18/2022  3 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 8/16/2022  2 
Foreign currency forward contract $88   AUD       112  Bannockburn Global Forex, LLC 9/16/2022  3 
Foreign currency forward contract $88   AUD       112  Bannockburn Global Forex, LLC 10/19/2022  3 
Foreign currency forward contract $74   AUD         95  Bannockburn Global Forex, LLC 11/16/2022  2 
Foreign currency forward contract $80   AUD       102  Bannockburn Global Forex, LLC 12/16/2022  2 
Foreign currency forward contract $87   AUD       112  Bannockburn Global Forex, LLC 1/18/2023  3 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 2/16/2023  2 
Foreign currency forward contract $74   AUD         95  Bannockburn Global Forex, LLC 3/16/2023  2 
Foreign currency forward contract $93   AUD       118  Bannockburn Global Forex, LLC 4/20/2023  3 
Foreign currency forward contract $63   AUD         81  Bannockburn Global Forex, LLC 5/16/2023  2 
Foreign currency forward contract $90   AUD       115  Bannockburn Global Forex, LLC 6/19/2023  2 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 7/18/2023  2 
Foreign currency forward contract $82   AUD       105  Bannockburn Global Forex, LLC 8/16/2023  2 
Foreign currency forward contract $82   AUD       105  Bannockburn Global Forex, LLC 9/18/2023  2 
Foreign currency forward contract $84   AUD       108  Bannockburn Global Forex, LLC 10/18/2023  2 
Foreign currency forward contract $77   AUD         98  Bannockburn Global Forex, LLC 11/16/2023  2 
Foreign currency forward contract $79   AUD       102  Bannockburn Global Forex, LLC 12/18/2023  2 
Foreign currency forward contract $84   AUD       108  Bannockburn Global Forex, LLC 1/17/2024  2 
Foreign currency forward contract $79   AUD       102  Bannockburn Global Forex, LLC 2/16/2024  2 
Foreign currency forward contract $76   AUD         98  Bannockburn Global Forex, LLC 3/18/2024  2 
Foreign currency forward contract $8,365   AUD   10,746  Bannockburn Global Forex, LLC 3/18/2024  200 
              $221 


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
Non-Controlled/Non-Affiliate Company Investments                        
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate                        
Bartlett Reserve Durham, LLC(e) L+9.00%  10.23% 6/1/2018  6,468  $6,385  $6,346   2.2%
Echelon Funding I, LLC (Delayed Draw) (e) (f) (g) L+10.25%  11.49% 2/24/2021  15,000   13,159   13,350   4.7%
Liftforward SPV II, LLC(e) (f) L+10.75%  11.99% 11/10/2020  10,000   5,177   5,251   1.8%
           31,468   24,721   24,947   8.7%
Beverage, Food & Tobacco                        
All Holding Company, LLC(h) L+7.00%  8.24% 11/15/2021  5,363   5,275   5,416   1.9%
California Pizza Kitchen, Inc. L+6.00%  7.24% 8/23/2022  6,930   6,864   6,884   2.4%
           12,293   12,139   12,300   4.3%
Construction & Building                        
Cali Bamboo, LLC L+8.00%  9.24% 7/10/2020  5,332   5,274   5,332   1.9%
Cali Bamboo, LLC (Revolver)(f) L+8.00%  9.24% 7/10/2020  2,165   823   823   0.3%
Cornerstone Detention Products, Inc.(i) L+9.50%  

9.74% Cash/

1.00% PIK

  4/8/2019  3,566   3,541   3,530   1.2%
Cornerstone Detention Products, Inc. (Revolver)(f) L+8.50%  9.83% 4/8/2019  400   200   198   0.1%
L.A.R.K. Industries, Inc. L+8.50%  9.74% 9/3/2019  8,038   7,939   8,050   2.8%
           19,501   17,777   17,933   6.3%
Consumer Goods: Durable                        
Parterre Flooring & Surface Systems LLC(h) L+7.25%  8.49% 8/22/2022  12,000   11,762   11,952   4.2%
Parterre Flooring & Surface Systems LLC (Revolver)(f) L+7.25%  8.49% 8/22/2022  2,400   -   -   0.0%
           14,400   11,762   11,952   4.2%
Consumer Goods: Non-Durable                        
Bluestem Brands, Inc. L+7.50%  8.74% 11/6/2020  2,637   2,620   1,870   0.7%
Solaray, LLC L+6.50%  7.82% 9/9/2023  3,264   3,235   3,264   1.2%
Solaray, LLC  (Delayed Draw) L+6.50%  7.83% 9/9/2023  701   701   701   0.2%
           6,602   6,556   5,835   2.1%
Energy: Oil & Gas                        
Landpoint, LLC L+12.75%  

12.00% Cash/

2.25% PIK

(j) 12/20/2019  2,394   2,376   2,346   0.8%
Landpoint, LLC (Revolver)(f) L+10.50%  12.00% 12/20/2019  313   -   -   0.0%
           2,707   2,376   2,346   0.8%
Environmental Industries                        
Synergy Environmental Corporation(h) L+8.00%  9.24% 4/29/2021  3,051   2,993   3,082   1.1%
Synergy Environmental Corporation(h) L+8.00%  9.24% 4/29/2021  510   501   515   0.2%
Synergy Environmental Corporation (Delayed Draw) (f) (g) L+8.00%  9.24% 4/29/2018  1,342   -   -   0.0%
Synergy Environmental Corporation (Revolver)(f) L+8.00%  9.24% 4/29/2021  671   47   47   0.0%
           5,574   3,541   3,644   1.3%
Healthcare & Pharmaceuticals                        
American Optics Holdco, Inc.(e) (k) L+8.00%  9.24% 9/13/2022  4,144   4,062   4,061   1.4%
American Optics Holdco, Inc. (Revolver)(e) (f) (k) L+8.00%  9.24% 9/13/2022  440   -   -   0.0%
American Optics Holdco, Inc.(e) (k) L+8.00%  9.24% 9/13/2022  762   747   747   0.3%
American Optics Holdco, Inc. (Revolver)(e) (f) (k) L+8.00%  9.24% 9/13/2022  440   -   -   0.0%
Beaver-Visitec International Holdings, Inc. L+5.00%  6.33% 8/19/2023  4,950   4,907   4,975   1.7%
Edge Systems Holdings Corp. L+7.75%  8.99% 12/1/2021  3,406   3,347   3,465   1.2%

(a)All of the Company's investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company's investments are issued by U.S. portfolio companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at March 31, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap. Certain investments contain a payment-in-kind (“PIK”) provision.
(c)Except as otherwise noted, all of the Company’s portfolio company investments, which as of March 31, 2021 represented 220.8% of the Company’s net assets or 95.8% of the Company’s total assets, are subject to legal restrictions on sales.
(d)Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by the Company's board of directors as required by the 1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(e)Percentages are based on net assets of $236,163 as of March 31, 2021.
(f)All or a portion of this commitment was unfunded at March 31, 2021. As such, interest is earned only on the funded portion of this commitment.
(g)This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2021, non-qualifying assets totaled 23.3% of the Company’s total assets.
(h)This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(i)This loan is denominated in Australian dollars and is translated into U.S. dollars as of the valuation date.
(j)This is an international company.
(k)All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(l)During the three months ended September 30, 2020, the senior secured lender group of Toojay’s Management, LLC (“Toojay’s OldCo”) established TJ Management HoldCo, LLC (“Toojay’s NewCo”) in order to acquire certain of the assets of Toojay’s OldCo as part of a bankruptcy restructuring. The Company owns 15.9% of the equity in Toojay’s NewCo. Toojay’s NewCo credit bid a portion of the senior secured debt in Toojay’s OldCo to acquire certain assets of Toojay’s OldCo which constitute the ongoing operations of the portfolio company. The Company’s portion of this credit bid was $2,386, and as such the Company's outstanding senior secured debt investment in Toojay’s OldCo was reduced by the amount of the credit bid and the Company’s cost basis of its new equity investment in Toojay’s NewCo was increased by the amount of the credit bid. While the Company still has loans outstanding at Toojay’s OldCo, the Company has valued these positions at zero as of March 31, 2021.
(m)This position was on non-accrual status as of March 31, 2021, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s accounting policies.
(n)This investment represents a note convertible to preferred shares of the borrower.
(o)In May 2020, an arbitrator issued a final award in favor of the estate of Rockdale Blackhawk, LLC (the “Estate”) in the legal proceeding between the Estate and a national insurance carrier. The Company's share of the net proceeds from the award exceeded the contractual obligations due to the Company as a result of the Company’s right to receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the Estate. As of March 31, 2021, the Company has this remaining investment in Rockdale associated with residual proceeds currently expected from the Estate. This investment is a non-income producing security.
(p)This is a demand note with no stated maturity.
(q)This loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.
(r)The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a "last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, are the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.

(s)A portion of this loan (principal of $9,258) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(t)A portion of this loan (principal of $525) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(u)Represents less than 5% ownership of the portfolio company’s voting securities.
(v)Investment is held by a taxable subsidiary of the Company. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s wholly-owned taxable subsidiaries.
(w)Represents a non-income producing security.
(x)As of March 31, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $16.
(y)As of March 31, 2021, the Company was party to a subscription agreement with a commitment to fund an equity investment of $43.
(z)As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).
(aa)The Company restructured its investments in HFZ Capital Group LLC (“HFZ”) and HFZ Member RB portfolio, LLC (“Member RB”) during the three months ended December 31, 2020. As part of the restructuring of HFZ, the Company obtained a 15.9% equity interest in MC Asset Management (Corporate), LLC (“Corporate”). As part of the Member RB restructuring, the Company exchanged its loan in Member RB for a promissory note in MC Asset Management (Industrial), LLC (“Industrial”). Corporate owns 100% of the equity of Industrial. In conjunction with these restructurings, the Company participated $4,758 of principal of its loan to HFZ as an equity contribution to Industrial. This participation did not qualify for sale accounting under ASC Topic 860 – Transfers and Servicing because the sale did not meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. As a result, the Company continues to reflect its full investment in HFZ but has split the loan into two investments.
(ab)A portion of this loan (principal of $5,390) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ac)A portion of this loan (principal of $55) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ad)A portion of this loan (principal of $1,015) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ae)A portion of this loan (principal of $1,938) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(af)As of March 31, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $611.
(ag)As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.
(ah) Ownership of certain equity investments may occur through a holding company or partnership.  
 7 
n/a - not applicable

 


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017December 31, 2020

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
Edge Systems Holdings Corp. (Revolver)(f) P+6.75%  11.00% 12/1/2021  260  $ 31  $ 31   0.0%
Familia Dental Group Holdings, LLC(h) L+8.00%  9.24% 4/8/2021  5,294   5,229   5,336   1.9%
Familia Dental Group Holdings, LLC L+8.00%  9.24% 4/8/2021  509   509   513   0.2%
Familia Dental Group Holdings, LLC (Revolver)(f) L+8.00%  9.24% 4/8/2021  573   229   229   0.1%
           20,778   19,061   19,357   6.8%
High Tech Industries                        
Answers Finance, LLC L+5.00%  6.24% 4/15/2021  254   251   248   0.1%
BCC Software, LLC(h) L+8.00%  9.24% 6/20/2019  3,139   3,109   3,150   1.1%
BCC Software, LLC (Revolver)(f) L+8.00%  9.24% 6/20/2019  469   -   -   0.0%
Corbett Technology Solutions, Inc.(h) L+7.00%  8.24% 11/7/2021  4,331   4,276   4,375   1.5%
Corbett Technology Solutions, Inc. (Revolver)(f) L+7.00%  8.24% 11/7/2021  868   217   217   0.1%
Energy Services Group, LLC L+9.82%  11.16% 5/4/2022  4,620   4,564   4,657   1.6%
Energy Services Group, LLC(e) (l) L+9.82%  10.82% 5/4/2022  2,474   2,360   2,485   0.9%
Energy Services Group, LLC (Delayed Draw)(f) (g) L+9.82%  11.16% 5/4/2022  1,313   1,096   1,121   0.4%
Newforma, Inc.(h) L+7.50%  8.83% 6/30/2022  15,000   14,782   15,060   5.3%
Newforma, Inc. (Revolver)(f) L+7.50%  8.83% 6/30/2022  1,250   175   175   0.1%
           33,718   30,830   31,488   11.1%
Hotels, Gaming & Leisure                        
BC Equity Ventures LLC L+6.50%  7.74% 8/31/2022  2,592   2,548   2,631   0.9%
Miles Partnership LLC L+11.00%  

10.33% Cash/

2.00% PIK

  3/24/2021  5,925   5,884   5,964   2.1%
Miles Partnership LLC (Delayed Draw)(f) (g) L+11.00%  

10.33% Cash/

2.00% PIK

  3/24/2021  1,417   1,071   1,076   0.4%
Miles Partnership LLC (Revolver)(f) L+11.00%  

10.33% Cash/

2.00% PIK

  3/24/2021  320   160   160   0.1%
TRG, LLC L+12.41%  

8.74% Cash/

4.91% PIK

(m) 3/31/2021  17,079   16,982   17,173   6.1%
TRG, LLC (CapEx)(f) L+9.50%  

8.73% Cash/

2.00% PIK

  3/31/2021  1,592   958   967   0.3%
TRG, LLC (Revolver)(f) L+9.50%  10.74% 3/31/2021  262   131   131   0.0%
Vacation Innovations, LLC(n) L+9.66%  

8.24% Cash/

2.66% PIK

(o) 8/20/2020  9,477   9,353   10,414   3.7%
Vacation Innovations, LLC (Delayed Draw)(f) (g) L+7.00%  8.24% 8/20/2020  2,037   -   -   0.0%
Vacation Innovations, LLC (Revolver)(f) L+7.00%  8.24% 8/20/2020  342   -   -   0.0%
           41,043   37,087   38,516   13.6%
Media: Advertising, Printing & Publishing                  
AdTheorent, Inc. L+8.50%  9.74% 12/22/2021  4,938   4,851   4,965   1.8%
Destination Media, Inc.(h) L+6.50%  7.74% 4/7/2022  7,900   7,791   8,034   2.8%
Destination Media, Inc. (Revolver)(f) L+6.50%  7.74% 4/7/2022  542   -   -   0.0%
           13,380   12,642   12,999   4.6%
Media: Broadcasting & Subscription                  
Jerry Lee Radio, LLC L+9.50%  10.74% 12/17/2020  11,927   11,719   11,927   4.2%
           11,927   11,719   11,927   4.2%
Retail                        
Forman Mills, Inc.(h) L+7.50%  8.74% 10/4/2021  8,500   8,358   8,415   3.0%
LuLu's Fashion Lounge, LLC L+7.00%  8.24% 8/23/2022  5,000   4,852   5,010   1.8%
The Worth Collection, Ltd.(h) L+8.50%  9.74% 9/29/2021  10,588   10,411   9,095   3.2%
Yandy Holding, LLC L+9.00%  10.24% 9/30/2019  4,884   4,851   4,748   1.7%
Yandy Holding, LLC (Revolver)(f) L+9.00%  10.24% 9/30/2019  907   -   -   0.0%
           29,879   28,472   27,268   9.7%
Services: Business                        
APCO Worldwide, Inc. L+8.00%  9.24% 6/30/2022  5,000   4,904   4,990   1.8%
EB Employee Solutions, LLC (h) L+8.50%  10.00% 2/28/2019  3,219   3,188   3,127   1.1%
First Call Resolution, LLC(h) L+8.00%  9.24% 9/22/2022  5,000   4,913   4,913   1.7%
Madison Logic, Inc.(h) L+8.00%  9.24% 11/30/2021  10,303   10,124   10,355   3.6%
Madison Logic, Inc. (Delayed Draw)(f) (g) L+8.00%  9.24% 11/30/2021  4,818   -   -   0.0%
Madison Logic, Inc. (Revolver)(f) L+8.00%  9.24% 11/30/2021  988   -   -   0.0%
Portfolio Company (a) Spread Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized Cost  Fair Value (d)  % of
Net Assets (e)		 
Non-Controlled/Non-Affiliate Company Investments                            
Senior Secured Loans                            
Automotive                            
Hastings Manufacturing Company  L+8.25%  9.25% 4/24/2018  4/24/2023   2,820  $2,790  $2,829   1.2%
Magneto & Diesel Acquisition, Inc.  L+6.05%  7.10% 12/18/2018  12/18/2023   4,876   4,820   4,876   2.1%
Magneto & Diesel Acquisition, Inc.  L+6.05%  7.10% 7/6/2020  12/18/2023   1,918   1,885   1,932   0.8%
Magneto & Diesel Acquisition, Inc. (Revolver) (f)  L+6.05%  7.10% 12/18/2018  12/18/2023   500   —   —   0.0%
               10,114   9,495   9,637   4.1%
Banking, Finance, Insurance & Real Estate                            
777 SPV I, LLC (g)  L+8.50%  10.25% 4/15/2019  4/14/2023   4,665   4,628   4,760   2.0%
J2 BWA Funding, LLC (Delayed Draw) (f) (g) (h)  n/a  10.00% 12/24/2020  12/24/2026   2,750   —   —   0.0%
Liftforward SPV II, LLC (g)  L+10.75%  11.25% 11/10/2016  6/30/2021   2,057   2,057   1,929   0.8%
NCBP Property, LLC (g)  L+9.50%  10.50% 12/18/2020  12/16/2022   1,950   1,931   1,931   0.8%
US Claims Litigation Funding, LLC (Revolver) (f) (g)  L+8.75%  9.75% 11/30/2020  11/29/2024   1,500   850   850   0.4%
               12,922   9,466   9,470   4.0%
Beverage, Food & Tobacco                            
LX/JT Intermediate Holdings, Inc. (j)  L+6.00%  7.50% 3/11/2020  3/11/2025   9,732   9,564   9,567   4.1%
LX/JT Intermediate Holdings, Inc. (Revolver) (f)  L+6.00%  7.50% 3/11/2020  3/11/2025   833   —   —   0.0%
Toojay’s Management, LLC (k)  n/a  n/a(l) 10/26/2018  10/26/2022   1,448   1,407   —   0.0%
Toojay’s Management, LLC (k)  n/a  n/a(l) 10/26/2018  10/26/2022   199   199   —   0.0%
Toojay’s Management, LLC (Revolver) (k)  n/a  n/a(l) 10/26/2018  10/26/2022   66   66   —   0.0%
               12,278   11,236   9,567   4.1%
Capital Equipment                            
MCP Shaw Acquisitionco, LLC (j)  L+6.50%  7.50% 2/28/2020  11/28/2025   9,924   9,752   9,721   4.2%
MCP Shaw Acquisitionco, LLC (Revolver) (f)  L+6.50%  7.50% 2/28/2020  11/28/2025   1,784   —   —   0.0%
               11,708   9,752   9,721   4.2%
Chemicals, Plastics & Rubber                            
Midwest Composite Technologies, LLC (j)  L+6.75%  7.75% 12/2/2019  8/31/2023   14,925   14,701   14,926   6.4%
Midwest Composite Technologies, LLC  L+6.75%  7.75% 8/31/2018  8/31/2023   887   876   887   0.4%
Midwest Composite Technologies, LLC (Delayed Draw) (f) (h)  L+6.75%  7.75% 8/31/2018  8/31/2023   509   179   179   0.1%
Midwest Composite Technologies, LLC (Revolver) (f)  L+6.75%  7.75% 8/31/2018  8/31/2023   90   —   —   0.0%
Valudor Products, LLC  L+7.50%  7.00% Cash / 1.50% PIK  6/18/2018  6/19/2023   1,561   1,543   1,702   0.7%
Valudor Products, LLC (m)  L+7.50%  8.50% PIK  6/18/2018  6/19/2023   217   214   —   0.0%
Valudor Products, LLC (Revolver) (f)  L+9.50%  10.50% 6/18/2018  6/19/2023   818   549   521   0.2%
               19,007   18,062   18,215   7.8%
Construction & Building                            
Cali Bamboo, LLC  L+9.50%  8.00% Cash/ 2.50% PIK  7/10/2015  3/31/2022   6,859   6,857   6,859   2.9%
Cali Bamboo, LLC (Revolver) (f)  L+9.50%  8.00% Cash/ 2.50% PIK  7/10/2015  3/31/2022   2,165   —   —   0.0%
Dude Solutions Holdings, Inc.  L+7.50%  8.50% 6/14/2019  6/13/2025   9,975   9,794   9,950   4.3%
Dude Solutions Holdings, Inc. (Revolver) (f)  L+7.50%  8.50% 6/14/2019  6/13/2025   1,304   —   —   0.0%
               20,303   16,651   16,809   7.2%
Consumer Goods: Durable                            
Franchise Group Intermediate Holdco, LLC  L+8.00%  9.50% 2/24/2020  2/14/2025   3,425   3,366   3,382   1.4%
Nova Wildcat Amerock, LLC  L+5.25%  6.25% 10/12/2018  10/12/2023   9,009   8,897   9,009   3.9%
Nova Wildcat Amerock, LLC (Revolver) (f)  L+5.25%  6.25% 10/12/2018  10/12/2023   931   —   —   0.0%
Parterre Flooring & Surface Systems, LLC (j)  L+9.00%  10.00%(l) 8/22/2017  8/22/2022   7,613   7,533   2,351   1.0%
Parterre Flooring & Surface Systems, LLC (Revolver)  L+9.00%  10.00%(l) 8/22/2017  8/22/2022   696   696   215   0.1%
               21,674   20,492   14,957   6.4%
Consumer Goods: Non-Durable                            
Thrasio, LLC  L+7.00%  8.00% 12/18/2020  12/18/2026   1,500   1,463   1,463   0.6%
Thrasio, LLC (Delayed Draw) (f) (h)  L+7.00%  8.00% 12/18/2020  12/18/2026   990   —   —   0.0%
               2,490   1,463   1,463   0.6%
Environmental Industries                            
Quest Resource Management Group, LLC  L+8.50%  9.75% 10/19/2020  10/20/2025   1,000   933   979   0.4%
Quest Resource Management Group, LLC (Delayed Draw) (f) (h)  L+8.50%  9.75% 10/19/2020  10/20/2025   1,087   —   —   0.0%
StormTrap, LLC  L+5.50%  6.50% 12/10/2018  12/8/2023   7,840   7,751   7,840   3.4%
StormTrap, LLC (Revolver) (f)  L+5.50%  6.50% 12/10/2018  12/8/2023   432   —   —   0.0%
Synergy Environmental Corporation (j)  L+6.00%  7.00% 4/29/2016  9/29/2023   2,885   2,874   2,888   1.2%
Synergy Environmental Corporation (j)  L+6.00%  7.00% 4/29/2016  9/29/2023   482   481   483   0.2%
Synergy Environmental Corporation  L+6.00%  7.00% 4/29/2016  9/29/2023   823   823   824   0.4%
Synergy Environmental Corporation (Revolver) (f)  L+6.00%  7.00% 4/29/2016  9/29/2023   671   67   67   0.0%
               15,220   12,929   13,081   5.6%

  

8


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)December 31, 2020

September 30, 2017(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized Cost  Fair Value (d)  % of
Net Assets (e)		 
Healthcare & Pharmaceuticals                       
American Optics Holdco, Inc. (g) (n)  L+6.50%  7.50% 9/13/2017  9/13/2022    2,165  $ 2,148  $ 2,165   0.9%
American Optics Holdco, Inc. (g) (n)  L+6.50%  7.50% 9/13/2017  9/13/2022   1,637   1,622   1,637   0.7%
American Optics Holdco, Inc. (Revolver) (f) (g) (n)  L+6.50%  7.50% 9/13/2017  9/13/2022   220   —   —   0.0%
American Optics Holdco, Inc. (Revolver) (f) (g) (n)  L+6.50%  7.50% 9/13/2017  9/13/2022   440   —   —   0.0%
Apotheco, LLC  L+8.50%  6.50% Cash / 3.00% PIK  4/8/2019  4/8/2024   3,541   3,491   3,315   1.4%
Apotheco, LLC (Revolver)  L+8.50%  6.50% Cash / 3.00% PIK  4/8/2019  4/8/2024   927   927   868   0.4%
Rockdale Blackhawk, LLC  n/a  n/a(o) 3/31/2015  n/a(i)  —   —   1,592   0.7%
Seran BioScience, LLC  L+7.25%  8.25% 12/31/2020  12/31/2025   2,500   2,450   2,450   1.0%
Seran BioScience, LLC (Revolver) (f)  L+7.25%  8.25% 12/31/2020  12/31/2025   444   —   —   0.0%
               11,874   10,638   12,027   5.1%
High Tech Industries                            
MarkLogic Corporation  L+8.00%  9.00% 10/20/2020  10/20/2025   3,500   3,415   3,544   1.5%
MarkLogic Corporation (Revolver) (f)  L+8.00%  9.00% 10/20/2020  10/20/2025   269   —   —   0.0%
Mindbody, Inc.  L+8.50%  8.00% Cash / 1.50% PIK  2/15/2019  2/14/2025   6,389   6,297   6,143   2.6%
Mindbody, Inc. (Revolver) (f)  L+8.00%  9.00% 2/15/2019  2/14/2025   667   —   —   0.0%
Newforma, Inc. (j)  L+5.00%  6.00% 6/30/2017  6/30/2022   11,899   11,836   11,899   5.1%
Newforma, Inc. (Revolver) (f)  L+5.00%  6.00% 6/30/2017  6/30/2022   1,250   —   —   0.0%
Planful, Inc. (fka Host Analytics, Inc.)  L+6.00%  7.00% 12/28/2018  12/28/2023   9,500   9,375   9,443   4.0%
Planful, Inc. (fka Host Analytics, Inc.) (Revolver) (f)  L+6.00%  7.00% 12/28/2018  12/28/2023   442   88   88   0.0%
RPL Bidco Limited (g) (n) (p)  L+7.50%  8.00% 11/9/2017  11/9/2023   14,429   13,867   14,429   6.2%
RPL Bidco Limited (g) (n) (p)  L+7.50%  8.00% 5/22/2018  11/9/2023   1,777   1,639   1,777   0.8%
RPL Bidco Limited (Revolver) (f) (g) (n) (p)  L+7.50%  8.00% 11/9/2017  11/9/2023   547   —   —   0.0%
               50,669   46,517   47,323   20.2%
Hotels, Gaming & Leisure                            
Equine Network, LLC  L+8.00%  9.00% 12/31/2020  12/31/2025   1,750   1,711   1,711   0.7%
Equine Network, LLC (Delayed Draw) (f) (h)  L+8.00%  9.00% 12/31/2020  12/31/2025   427   —   —   0.0%
Equine Network, LLC (Revolver) (f)  L+8.00%  9.00% 12/31/2020  12/31/2025   171   —   —   0.0%
               2,348   1,711   1,711   0.7%
Media: Advertising, Printing & Publishing                            
AdTheorent Holding Company, LLC  L+8.50%  9.00% 12/22/2016  12/22/2021   2,700   2,687   2,683   1.2%
Destination Media, Inc. (j)  L+5.50%  6.50% 4/7/2017  4/7/2022   4,324   4,304   4,315   1.8%
Destination Media, Inc. (Revolver)  L+5.50%  6.50% 4/7/2017  4/7/2022   542   542   542   0.2%
North Haven USHC Acquisition, Inc.  L+6.50%  7.50% 10/30/2020  10/30/2025   2,500   2,451   2,525   1.1%
North Haven USHC Acquisition, Inc. (Revolver) (f)  L+6.50%  7.50% 10/30/2020  10/30/2025   240   —   —   0.0%
Relevate Health Group, LLC  L+6.25%  7.25% 11/20/2020  11/20/2025   1,500   1,470   1,506   0.6%
Relevate Health Group, LLC (Delayed Draw) (f) (h)  L+6.25%  7.25% 11/20/2020  11/20/2025   789   671   674   0.3%
Relevate Health Group, LLC (Revolver) (f)  L+6.25%  7.25% 11/20/2020  11/20/2025   316   —   —   0.0%
Stratus Unlimited, LLC (fka MC Sign Lessor Corp.)  L+7.00%  8.00% 12/22/2017  8/30/2024   15,563   15,498   15,465   6.6%
Stratus Unlimited, LLC (fka MC Sign Lessor Corp.) (Revolver) (f)  L+7.00%  8.00% 12/22/2017  8/30/2024   3,490   —   —   0.0%
XanEdu Publishing, Inc.  L+6.50%  7.50% 1/28/2020  1/28/2025   1,886   1,854   1,890   0.8%
XanEdu Publishing, Inc. (Revolver) (f)  L+6.50%  7.50% 1/28/2020  1/28/2025   495   197   197   0.1%
               34,345   29,674   29,797   12.7%
Media: Broadcasting & Subscription                            
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/ 8.00% PIK  5/2/2019  11/2/2022   1,355   1,348   1,372   0.6%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/ 8.00% PIK  11/4/2019  11/2/2022   260   257   263   0.1%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/ 8.00% PIK  5/2/2019  11/2/2022   425   425   430   0.2%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/ 8.00% PIK  5/2/2019  11/2/2022   160   160   162   0.1%
               2,200   2,190   2,227   1.0%
Media: Diversified & Production                            
Attom Intermediate Holdco, LLC  L+5.75%  6.75% 1/4/2019  1/4/2024   1,960   1,935   1,927   0.8%
Attom Intermediate Holdco, LLC  L+7.50%  8.75% 6/25/2020  1/4/2024   478   469   492   0.2%
Attom Intermediate Holdco, LLC (Revolver) (f)  L+5.75%  6.75% 1/4/2019  1/4/2024   320   —   —   0.0%
Crownpeak Technology, Inc.  L+6.25%  7.25% 2/28/2019  2/28/2024   4,000   3,946   3,962   1.7%
Crownpeak Technology, Inc.  L+6.25%  7.25% 2/28/2019  2/28/2024   60   60   59   0.0%
Crownpeak Technology, Inc. (Revolver) (f)  L+6.25%  7.25% 2/28/2019  2/28/2024   167   —   —   0.0%
               6,985   6,410   6,440   2.7%
Retail                            
BLST Operating Company, LLC (fka Bluestem Brands, Inc.)  L+8.50%  1.00% Cash/ 9.00% PIK(l) 8/28/2020  8/28/2025   1,259   1,254   1,039   0.4%
Forman Mills, Inc. (j)  L+9.50%  8.50% Cash/ 2.00% PIK  1/14/2020  12/30/2022   1,308   1,308   1,292   0.5%
Forman Mills, Inc. (j)  L+9.50%  8.50% Cash/ 2.00% PIK  10/4/2016  12/30/2022   744   741   735   0.3%
Forman Mills, Inc. (j)  L+9.50%  8.50% Cash/ 2.00% PIK  10/4/2016  12/30/2022   7,459   7,429   6,944   3.0%
LuLu’s Fashion Lounge, LLC  L+9.50%  8.00% Cash/ 2.50% PIK  8/21/2017  8/29/2022   4,123   4,074   3,525   1.5%
The Worth Collection, Ltd. (j)  L+8.50%  9.00%(l) 9/29/2016  9/29/2021   10,587   10,248   120   0.1%
               25,480   25,054   13,655   5.8%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2020

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized Cost  Fair Value (d)  % of
Net Assets (e)		 
Services: Business                            
Arcserve (USA), LLC  L+6.00%  7.00% 5/1/2019  5/1/2024   4,634   $4,567   $4,644   2.0%
Atlas Sign Industries of FLA, LLC (j)  L+11.50%  11.50% Cash/ 1.00% PIK  5/14/2018  5/15/2023   3,563   3,368   3,324   1.4%
Burroughs, Inc. (j)  L+7.50%  8.50% 12/22/2017  12/22/2022   5,726   5,681   5,726   2.4%
Burroughs, Inc. (Revolver) (f)  L+7.50%  8.50% 12/22/2017  12/22/2022   1,220   170   170   0.1%
Certify, Inc.  L+5.75%  6.75% 2/28/2019  2/28/2024   9,000   8,907   9,000   3.8%
Certify, Inc.  L+5.75%  6.75% 2/28/2019  2/28/2024   1,227   1,227   1,227   0.5%
Certify, Inc. (Revolver) (f)  L+5.75%  6.75% 2/28/2019  2/28/2024   409   102   102   0.0%
HS4 Acquisitionco, Inc.  L+6.75%  7.75% 7/9/2019  7/9/2025   10,050   9,887   9,929   4.2%
HS4 Acquisitionco, Inc. (Revolver) (f)  L+6.75%  7.75% 7/9/2019  7/9/2025   817   —   —   0.0%
IT Global Holding, LLC  L+9.00%  10.00% 11/15/2018  11/10/2023   9,975   9,845   9,794   4.2%
IT Global Holding, LLC  L+9.00%  10.00% 7/19/2019  11/10/2023   3,719   3,661   3,651   1.6%
IT Global Holding, LLC (Revolver)  L+9.00%  10.00% 11/15/2018  11/10/2023   875   875   875   0.4%
Madison Logic, Inc. (j)  L+7.50%  8.00% 11/30/2016  11/30/2021   9,080   9,037   9,080   3.9%
Madison Logic, Inc. (Revolver) (f)  L+7.50%  8.00% 11/30/2016  11/30/2021   988   —   —   0.0%
RedZone Robotics, Inc.  L+7.25%  7.75% Cash/ 0.50% PIK  6/1/2018  6/5/2023   591   585   556   0.2%
RedZone Robotics, Inc. (Revolver) (f)  L+6.75%  7.75% 6/1/2018  6/5/2023   158   —   —   0.0%
Security Services Acquisition Sub Corp. (j)  L+6.00%  7.00% 2/15/2019  2/15/2024   3,439   3,394   3,442   1.5%
Security Services Acquisition Sub Corp. (j)  L+6.00%  7.00% 2/15/2019  2/15/2024   2,473   2,473   2,476   1.1%
Security Services Acquisition Sub Corp. (j)  L+6.00%  7.00% 2/15/2019  2/15/2024   2,180   2,180   2,182   0.9%
Security Services Acquisition Sub Corp.  L+6.00%  7.00% 2/15/2019  2/15/2024   1,563   1,563   1,564   0.7%
VPS Holdings, LLC  L+7.00%  8.00% 10/5/2018  10/4/2024   3,663   3,611   3,469   1.5%
VPS Holdings, LLC  L+7.00%  8.00% 10/5/2018  10/4/2024   2,989   2,989   2,831   1.2%
VPS Holdings, LLC (Revolver) (f)  L+7.00%  8.00% 10/5/2018  10/4/2024   1,000   100   95   0.0%
               79,339   74,222   74,137   31.6%
Services: Consumer                            
Express Wash Acquisition Company, LLC  L+6.50%  7.50% 12/28/2020  12/26/2025   2,500   2,456   2,456   1.0%
Express Wash Acquisition Company, LLC (Revolver) (f)  L+6.50%  7.50% 12/28/2020  12/26/2025   1,000   —   —   0.0%
IDIG Parent, LLC (q)  L+6.50%  7.50% 12/15/2020  12/15/2026   10,200   9,997   9,996   4.3%
IDIG Parent, LLC (Delayed Draw) (f) (h)  L+6.50%  7.50% 12/15/2020  12/15/2026   1,684   —   —   0.0%
IDIG Parent, LLC (Revolver) (f)  L+6.50%  7.50% 12/15/2020  12/15/2026   723   —   —   0.0%
Mammoth Holdings, LLC  L+6.00%  7.00% 10/16/2018  10/16/2023   1,960   1,936   1,949   0.8%
Mammoth Holdings, LLC  L+6.00%  7.00% 10/16/2018  10/16/2023   4,115   4,115   4,092   1.8%
Mammoth Holdings, LLC (Revolver) (f)  L+6.00%  7.00% 10/16/2018  10/16/2023   500   —   —   0.0%
               22,682   18,504   18,493   7.9%
Wholesale                            
Nearly Natural, Inc. (j)  L+6.75%  7.75% 12/15/2017  12/15/2022   6,685   6,625   6,650   2.9%
Nearly Natural, Inc. (j)  L+6.75%  7.75% 9/22/2020  12/15/2022   1,728   1,698   1,719   0.7%
Nearly Natural, Inc. (j)  L+6.75%  7.75% 8/28/2019  12/15/2022   1,882   1,882   1,872   0.8%
Nearly Natural, Inc. (Revolver) (f)  L+6.75%  7.75% 12/15/2017  12/15/2022   2,397   959   959   0.4%
               12,692   11,164   11,200   4.8%
Total Non-Controlled/Non-Affiliate Senior Secured Loans              374,330   335,630   319,930   136.5%
                             
Unitranche Secured Loans (r)                            
Banking, Finance, Insurance & Real Estate                            
Kudu Investment Holdings, LLC (g)  L+5.75%  6.75% 12/23/2019  12/23/2025   7,932   7,849   7,971   3.4%
Kudu Investment Holdings, LLC (Delayed Draw) (f) (g) (h)  L+5.75%  6.75% 12/23/2019  12/23/2025   2,357   448   451   0.2%
               10,289   8,297   8,422   3.6%
Chemicals, Plastics & Rubber                            
MFG Chemical, LLC (j)  L+6.00%  6.50% 6/23/2017  6/23/2022   9,232   9,184   8,627   3.7%
MFG Chemical, LLC  L+6.00%  6.50% 3/15/2018  6/23/2022   976   976   912   0.4%
               10,208   10,160   9,539   4.1%
Consumer Goods: Durable                            
RugsUSA, LLC  L+6.00%  7.00% 5/2/2018  4/28/2023   3,937   3,918   3,936   1.7%
               3,937   3,918   3,936   1.7%
Healthcare & Pharmaceuticals                            
Priority Ambulance, LLC (s)  L+6.50%  7.50% 7/18/2018  4/12/2022   10,015   10,015   9,930   4.2%
Priority Ambulance, LLC (t)  L+6.50%  7.50% 4/12/2017  4/12/2022   1,253   1,242   1,243   0.5%
Priority Ambulance, LLC  L+6.50%  7.50% 12/13/2018  4/12/2022   672   672   666   0.3%
Priority Ambulance, LLC (Delayed Draw) (f) (h)  L+6.50%  7.50% 10/22/2020  4/12/2022   1,009   —   —   0.0%
               12,949   11,929   11,839   5.0%
High Tech Industries                            
Energy Services Group, LLC  L+8.42%  9.42% 5/4/2017  5/4/2022   3,948   3,930   3,948   1.7%
Energy Services Group, LLC (g) (p)  L+8.42%  9.42% 5/4/2017  5/4/2022   4,861   4,699   4,861   2.0%
Energy Services Group, LLC  L+8.42%  9.42% 5/4/2017  5/4/2022   1,124   1,110   1,124   0.5%
WillowTree, LLC  L+5.50%  6.50% 10/9/2018  10/9/2023   7,840   7,755   7,707   3.3%
               17,773   17,494   17,640   7.5%
Telecommunications                            
VB E1, LLC (Delayed Draw) (f) (h)  L+8.50%  9.00% 11/18/2020  11/18/2026   2,250   1,100   1,100   0.5%
               2,250   1,100   1,100   0.5%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans              57,406   52,898   52,476   22.4%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2020

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized Cost  Fair Value (d)  % of
Net Assets (e)		 
Junior Secured Loans                        
Beverage, Food & Tobacco                        
California Pizza Kitchen, Inc.  L+12.50%  1.00% Cash/ 14.00% PIK(l)  8/19/2016  5/23/2025   1,264   $1,264   $1,011   0.4%
CSM Bakery Solutions, LLC  L+7.75%  8.75% 5/23/2013  2/4/2022   5,954   5,954   5,909   2.5%
               7,218   7,218   6,920   2.9%
Capital Equipment                            
ALTA Enterprises, LLC (g)  L+8.00%  9.80% 2/14/2020  8/13/2025   3,850   3,732   3,886   1.7%
               3,850   3,732   3,886   1.7%
High Tech Industries                            
Micro Holdings Corp.  L+7.50%  7.65% 8/16/2017  8/18/2025   3,000   2,981   3,024   1.3%
               3,000   2,981   3,024   1.3%
Services: Consumer                            
Education Corporation of America  L+11.00%  5.75% Cash/ 5.50% PIK(l)  9/3/2015  n/a(i)  833   831   762   0.3%
               833   831   762   0.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans              14,901   14,762   14,592   6.2%
                             
Equity Securities (u) (v)                            
Banking, Finance, Insurance & Real Estate                            
J2 BWA Funding, LLC (0.7% profit sharing) (g) —  —(w) 12/24/2020  —   —   —   —   0.0%
PKS Holdings, LLC (5,680 preferred units) (g)  n/a  5.00% PIK  11/30/2017  —   —   58   214   0.1%
PKS Holdings, LLC (5,714 preferred units) (g)  n/a  5.00% PIK  11/30/2017  —   —   9   33   0.0%
PKS Holdings, LLC (132 preferred units) (g)  n/a  5.00% PIK  11/30/2017  —   —   1   5   0.0%
PKS Holdings, LLC (916 preferred units) (g)  n/a  5.00% PIK  11/30/2017  —   —   9   33   0.0%
                   77   285   0.1%
Beverage, Food & Tobacco                            
California Pizza Kitchen, Inc. (78,699 preferred units) —  —(w) 8/19/2016  —   —   5,468   866   0.4%
                   5,468   866   0.4%
Capital Equipment                            
MCP Shaw Acquisitionco, LLC (118,906 Class A-2 units) —  —(w) 2/28/2020  —   —   119   143   0.1%
                   119   143   0.1%
Chemicals, Plastics & Rubber                            
Valudor Products, LLC (501,014 Class A-1 units)  n/a  10.00% PIK(l)  6/18/2018  —   —   501   —   0.0%
                   501   —   0.0%
Environmental Industries                            
Quest Resource Holding Corporation (warrant to purchase up to 0.2% of the equity) —  —(w) 10/19/2020  3/19/2028   —   67   87   0.0%
                   67   87   0.0%
Healthcare & Pharmaceuticals                            
Seran BioScience, LLC (33,333 common units) —  —(w) 12/31/2020  —   —   333   333   0.1%
                   333   333   0.1%
High Tech Industries                            
Answers Finance, LLC (76,539 shares of common stock) —  —(w) 4/14/2017  —   —   2,344   54   0.0%
MarkLogic Corporation (289,941 Class A units) —  —(w) 10/20/2020  —   —   290   286   0.1%
Planful, Inc. (fka Host Analytics, Inc.) (473,082 Class A units)  n/a   8.00% PIK  12/28/2018  —   —   473   603   0.3%
Recorded Future, Inc. (80,486 Class A units) (x) —  —(w) 7/3/2019  —   —   81   131   0.1%
                   3,188   1,074   0.5%
Hotels, Gaming & Leisure                            
Equine Network, LLC (60 Class A units)  n/a   10.00% PIK  12/31/2020  —   —   60   60   0.0%
                   60   60   0.0%
Media: Advertising, Printing & Publishing                            
AdTheorent Holding Company, LLC (128,866 Class A voting units) —  —(w) 12/22/2016  —   —   129   445   0.2%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity) (g) (n) —  —(w) 9/18/2015  9/18/2025   —   —   203   0.1%

Relevate Health Group, LLC (40 preferred units) 

  n/a   12.00% PIK  11/20/2020  —   —   40   40   0.0%
Relevate Health Group, LLC (40 Class B common units) —  —(w) 11/20/2020  —   —   —   1   0.0%
Stratus Unlimited, LLC (fka MC Sign Lessor Corp.) (686 shares of common units) —  —(w) 8/30/2019  —   —   872   996   0.4%
XanEdu Publishing, Inc. (49,479 Class A units)  n/a  8.00% PIK  1/28/2020  —   —   49   71   0.0%
                   1,090   1,756   0.7%
Media: Diversified & Production                            
Attom Intermediate Holdco, LLC (297,197 Class A units) —  —(w) 1/4/2019  —   —   297   371   0.2%
                   297   371   0.2%
Retail                            
BLST Operating Company, LLC (fka Bluestem Brands, Inc.) (139,883 Class A units) —  —(w) 8/28/2020  —    —   1,072   140   0.1%
Forman Mills, Inc. (warrant to purchase up to 2.6% of the equity) —  —(w) 1/14/2020  1/14/2029   —   —   48   0.0%
The Tie Bar Operating Company, LLC - Class A preferred units (1,275 units) —  —(w) 6/25/2013  —   —   87   4   0.0%
The Tie Bar Operating Company, LLC - Class B preferred units (1,275 units) —  —(w) 6/25/2013  —   —   —   —   0.0%
                   1,159   192   0.1%
Services: Business                            
APCO Worldwide, Inc. (100 Class A voting common stock) —  —(w) 11/1/2017  —   —   395   433   0.2%
Atlas Sign Industries of FLA, LLC (warrant to purchase up to 0.8% of the equity) —  —(w) 5/14/2018  5/14/2026   —   125   35   0.0%
                   520   468   0.2%
Services: Consumer                            
Education Corporation of America - Series G preferred stock (8,333 shares)  n/a  12.00% PIK(l)  9/3/2015  —   —   7,492   5,117   2.2%
Express Wash Acquisition Company, LLC (100,000 Class A units)  n/a   8.00% PIK  12/28/2020  —   —   100   100   0.0%
                   7,592   5,217   2.2%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2020

(in thousands, except for shares and units)

Portfolio Company (a) Spread Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized Cost  Fair Value (d)  % of
Net Assets (e)		 
Wholesale                            
Nearly Natural, Inc. (152,174 Class A units) —  —(w) 12/15/2017  —   —   $152   $190   0.1%
                   152   190   0.1%
Total Non-Controlled/Non-Affiliate Equity Securities                  20,623   11,042   4.7%
Total Non-Controlled/Non-Affiliate Company Investments                 $423,913  $398,040   169.8%
                             
Non-Controlled Affiliate Company Investments (y)                            
Senior Secured Loans                            
Banking, Finance, Insurance & Real Estate                            
American Community Homes, Inc.  L+10.00%  11.50% PIK  7/22/2014  2/26/2021   9,401  $9,401  $9,401   4.0%
American Community Homes, Inc.  L+14.50%  16.00% PIK  7/22/2014  2/26/2021   6,239   6,239   6,239   2.7%
American Community Homes, Inc.  L+14.50%  16.00% PIK  3/17/2016  2/26/2021   825   825   825   0.4%
American Community Homes, Inc.  L+10.00%  11.50% PIK  5/24/2017  2/26/2021   570   570   570   0.2%
American Community Homes, Inc.  L+14.50%  16.00% PIK  5/24/2017  2/26/2021   335   335   335   0.2%
American Community Homes, Inc.  L+10.00%  11.50% PIK  8/10/2018  2/26/2021   2,095   2,095   2,915   1.2%
American Community Homes, Inc.  L+10.00%  11.50% PIK  3/29/2019  2/26/2021   3,879   3,879   3,879   1.7%
American Community Homes, Inc.  L+10.00%  11.50% PIK  9/30/2019  2/26/2021   18   18   18   0.0%
American Community Homes, Inc.  L+10.00%  11.50% PIK  12/30/2019  2/26/2021   89   89   89   0.0%
HFZ Capital Group, LLC (g) (af)  L+12.50%  14.00% PIK 10/20/2017  n/a(i)  13,242   13,242   13,106   5.6%
HFZ Capital Group, LLC (g) (af)  L+12.50%  14.00% PIK 10/20/2017  n/a(i)  4,758   4,758   4,709   2.0%
MC Asset Management (Industrial), LLC (g) (af)  L+17.00%  18.00% PIK 6/11/2019  10/30/2024   10,702   10,695   11,579   4.9%
               52,153   52,146   53,665   22.9%
Beverage, Food & Tobacco                            
TJ Management HoldCo, LLC (Revolver) (f) (k)  L+5.50%  6.50% 9/9/2020  9/8/2023   795   —   —   0.0%
               795   —   —   0.0%
Containers, Packaging & Glass                            
Summit Container Corporation  L+8.00%  9.00% 12/5/2013  3/31/2021   3,259   3,269   3,204   1.4%
Summit Container Corporation (Revolver) (f)  L+8.00%  9.00% 6/15/2018  3/31/2021   6,015   1,657   1,654   0.7%
               9,274   4,926   4,858   2.1%
Healthcare & Pharmaceuticals                            
Ascent Midco, LLC (j)  L+5.50%  6.50% 2/5/2020  2/5/2025   6,930   6,814   6,997   3.0%
Ascent Midco, LLC (Delayed Draw) (f) (h) (j)  L+5.50%  6.50% 2/5/2020  2/5/2025   2,838   —   —   0.0%
Ascent Midco, LLC (Revolver) (f)  L+5.50%  6.50% 2/5/2020  2/5/2025   1,129   —   —   0.0%
SHI Holdings, Inc. (j)  L+10.75%  10.90% PIK(l) 7/10/2014  n/a(i)  2,899   2,897   188   0.1%
SHI Holdings, Inc. (Revolver) (f)  L+10.75%  10.90% PIK(l) 7/10/2014  n/a(i)  4,667   4,585   297   0.1%
               18,463   14,296   7,482   3.2%
High Tech Industries                            
Mnine Holdings, Inc.  L+8.00%  4.00% Cash/ 5.00% PIK  11/2/2018  12/30/2022   11,768   11,665   12,356   5.3%
               11,768   11,665   12,356   5.3%
Retail                            
Luxury Optical Holdings Co.  L+8.00%  9.00% PIK(l) 9/12/2014  12/15/2021   1,481   1,481   1,430   0.6%
Luxury Optical Holdings Co. (Delayed Draw) (f) (h)  L+11.50%  12.50%(l) 9/29/2017  12/15/2021   3,565   624   624   0.3%
Luxury Optical Holdings Co. (Revolver)  L+8.00%  9.00% PIK(l) 9/12/2014  12/15/2021   68   68   66   0.0%
               5,114   2,173   2,120   0.9%
Services: Business                            
Curion Holdings, LLC (j)  n/a  14.00% PIK(l) 5/2/2017  5/2/2022   4,226   4,189   3,159  ��1.4%
Curion Holdings, LLC (Revolver) (f)  n/a  14.00% PIK(l) 5/2/2017  5/2/2022   871   836   820   0.3%
               5,097   5,025   3,979   1.7%
Services: Consumer                            
NECB Collections, LLC (Revolver) (f)  L+11.00%  12.00% PIK(l) 6/25/2019  6/30/2021   1,356   1,312   834   0.3%
               1,356   1,312   834   0.3%
Total Non-Controlled Affiliate Senior Secured Loans              104,020   91,543   85,294   36.4%
                             
Unitranche Secured Loans (r)                            
Consumer Goods: Non-Durable                            
Incipio, LLC (z)  L+8.50%  9.50% PIK(l) 12/26/2014  8/22/2022   14,701   14,677   1,764   0.8%
Incipio, LLC (aa)  L+8.50%  9.50% PIK  3/9/2018  8/22/2022   4,278   4,278   4,227   1.8%
Incipio, LLC  L+8.50%  9.50% PIK  7/6/2018  8/22/2022   1,818   1,818   1,805   0.8%
Incipio, LLC  L+8.50%  9.50% PIK  1/15/2020  8/22/2022   1,530   1,530   1,519   0.6%
Incipio, LLC  L+8.50%  9.50% PIK  4/17/2019  8/22/2022   766   766   761   0.3%
Incipio, LLC (Delayed Draw) (f) (h)  L+8.50%  9.50% PIK  7/8/2020  8/22/2022   2,525   1,498   1,488   0.6%
               25,618   24,567   11,564   4.9%
Total Non-Controlled Affiliate Unitranche Secured Loans              25,618   24,567   11,564   4.9%
                             
Junior Secured Loans                            
Consumer Goods: Non-Durable                            
Incipio, LLC (ab)  n/a  10.70% PIK(l) 6/18/2018  8/22/2022   3,766   —   —   0.0%
Incipio, LLC (ac)  n/a  10.70% PIK(l) 6/18/2018  8/22/2022   7,194   —   —   0.0%
               10,960   —   —   0.0%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2020

(in thousands, except for shares and units)

Portfolio Company (a) Spread
Above
 Index (b)		 Interest
Rate		  Acquisition
Date (c)		 Maturity  Principal  Amortized
Cost		  Fair
Value (d)		  % of
Net Assets (e)		 
Services: Business                            
Curion Holdings, LLC (j)  n/a  15.00% PIK(l)  8/17/2018  1/2/2023   1,720   $1   $—   0.0%
Curion Holdings, LLC (j)  n/a  15.00% PIK(l)  8/17/2018  1/2/2023   44   —   —   0.0%
               1,764   1   —   0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans              12,724   1   —   0.0%
                             
Equity Securities (v) (y)                            
Banking, Finance, Insurance & Real Estate                            
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) —  —(w) 10/9/2014  12/18/2024   —   —   —   0.0%
MC Asset Management (Corporate), LLC (15.9% of interests) (g) (af) —  —(w) 6/11/2019  —   —   793   785   0.3%
                   793   785   0.3%
Beverage, Food & Tobacco                            
TJ Management HoldCo, LLC (16 shares of common stock) (k) —  —(w) 9/9/2020  —   —   2,386   3,323   1.4%
                   2,386   3,323   1.4%
Consumer Goods: Non-Durable                            
Incipio, LLC (1,774 shares of Series C common units) —  —(w) 7/6/2018  —   —   —   —   0.0%
                   —   —   0.0%
Containers, Packaging & Glass                            
Summit Container Corporation (warrant to purchase up to 19.5% of the equity) —  —(w) 1/6/2014  1/6/2024   —   —   139   0.1%
                   —   139   0.1%
Healthcare & Pharmaceuticals                            
Ascent Midco, LLC (2,032,258 Class A units)  n/a  8.00% PIK  2/5/2020  —   —   2,032   3,016   1.3%
Familia Dental Group Holdings, LLC (1,052 Class A units) (ad) —  —(w) 4/8/2016  —   —   3,602   3,118   1.3%
SHI Holdings, Inc. (24 shares of common stock) —  —(w) 12/14/2016  —   —   27   —   0.0%
                   5,661   6,134   2.6%
High Tech Industries                            
 Mnine Holdings, Inc. (6,400 Class B units) —  —(w) 6/30/2020  —   —   —   —   0.0%
                   —   —   0.0%
Retail                            
Luxury Optical Holdings Co. (91 preferred units)  n/a  15.00% PIK(l)  9/12/2014  —   —   3,631   2,476   1.1%
Luxury Optical Holdings Co. (86 shares of common stock) —  —(w) 9/29/2017  —   —   —   —   0.0%
                   3,631   2,476   1.1%
Services: Business                            
Curion Holdings, LLC (58,779 shares of common stock) —  —(w) 8/17/2018  —   —   —   —   0.0%
                   —   —   0.0%
Services: Consumer                            
NECB Collections, LLC (20.8% of units) —  —(w) 6/21/2019  —   —   1,458   —   0.0%
                   1,458   —   0.0%
Total Non-Controlled Affiliate Equity Securities                  13,929   12,857   5.5%
Total Non-Controlled Affiliate Company Investments                 $130,040  $109,715   46.8%
                             
Controlled Affiliate Company Investments (ae)                            
Equity Securities                            
Investment Funds & Vehicles                            
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests) (g) —  —  10/31/2017  —   —  $42,150  $39,284   16.7%
Total Controlled Affiliate Equity Securities                  42,150   39,284   16.7%
Total Controlled Affiliate Company Investments                 $42,150  $39,284   16.7%
                             
TOTAL INVESTMENTS                 $596,103  $547,039   233.3%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2020

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
Q-Tragon Holdings, LLC(h) L+7.00%  8.24% 5/2/2022  3,908  $ 3,854  $ 3,879   1.4%
Q-Tragon Holdings, LLC (Revolver)(f) L+7.00%  8.24% 5/2/2022  307   -   -   0.0%
           33,543   26,983   27,264   9.6%
Services: Consumer                        
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) L+5.50%  6.80% 7/1/2020  4,560   4,499   4,571   1.6%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) L+11.50%  12.80% 7/1/2020  4,780   4,712   4,758   1.7%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) (Revolver)(f) L+8.50%  9.80% 8/11/2018  236   -   -   0.0%
           9,576   9,211   9,329   3.3%
Telecommunications                        
Peerless Network, Inc.(h) L+9.25%  

9.74% Cash/

0.75% PIK

(p) 12/11/2020  3,325   3,268   3,333   1.2%
           3,325   3,268   3,333   1.2%
Utilities: Electric                        
CRCI Holdings, Inc. L+5.50%  6.83% 8/31/2023  2,782   2,758   2,801   1.0%
           2,782   2,758   2,801   1.0%
Wholesale                        
Mid-West Wholesale Hardware Co.(h) L+8.00%  9.24% 2/9/2022  11,910   11,697   11,803   4.2%
Mid-West Wholesale Hardware Co. (Revolver)(f) L+8.00%  9.24% 2/9/2022  4,421   505   501   0.2%
           16,331   12,202   12,304   4.4%
Total Non-Controlled/Non-Affiliate Senior Secured Loans    308,827   273,105   275,543   97.2%
                         
Unitranche Loans                        
Chemicals, Plastics & Rubber                        
MFG Chemical, LLC(h) L+6.00%  7.24% 6/23/2022  8,855   8,729   8,864   3.1%
           8,855   8,729   8,864   3.1%
Consumer Goods: Non-Durable                        
Incipio Technologies, Inc.(q) L+7.75%  8.99% 12/26/2019  13,728   13,546   13,371   4.7%
           13,728   13,546   13,371   4.7%
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC L+11.50%  13.00% 12/27/2017  6,120   6,071   5,955   2.1%
Collaborative Neuroscience Network, LLC L+15.00%  

12.00% Cash/

3.00% PIK

  12/26/2017  293   293   293   0.1%
Collaborative Neuroscience Network, LLC (Revolver) L+10.00%  11.24% 12/27/2017  200   191   195   0.1%
Priority Ambulance, LLC(h) L+6.50%  7.83% 4/12/2022  7,000   6,870   7,014   2.5%
           13,613   13,425   13,457   4.8%
Hotels, Gaming & Leisure                        
Playtime, LLC L+7.50%  9.00% 12/31/2021  4,409   4,405   4,189   1.5%
           4,409   4,405   4,189   1.5%
Wholesale                        
Gracelock Industries, LLC L+13.74%  

11.00% Cash/

4.24% PIK

(r) 5/7/2019  4,721   4,671   4,711   1.6%
           4,721   4,671   4,711   1.6%
Total Non-Controlled/Non-Affiliate Unitranche Loans    45,326   44,776   44,592   15.7%
                         
Junior Secured Loans                        
Aerospace & Defense                        
AIM Aerospace, Inc. L+9.00%  10.31% 8/2/2022  5,000   4,940   5,028   1.8%
           5,000   4,940   5,028   1.8%
Banking, Finance, Insurance & Real Estate                        
Confie Seguros Holdings II Co. L+9.75%  11.00% 5/8/2019  8,594   8,322   8,458   3.0%
           8,594   8,322   8,458   3.0%
Beverage, Food & Tobacco                        
CSM Bakery Supplies LLC L+7.75%  9.05% 7/3/2021  5,792   5,792   5,488   1.9%
           5,792   5,792   5,488   1.9%
Healthcare & Pharmaceuticals                        
Heartland Dental, LLC L+8.50%  9.82% 7/31/2024  3,000   2,956   3,034   1.1%
           3,000   2,956   3,034   1.1%

Derivative Instruments

Foreign currency forward contracts

  Notional Amount  Notional Amount      Unrealized Gain 
Description to be Purchased  to be Sold  Counterparty Settlement Date (Loss) 
Foreign currency forward contract $107  £87  Bannockburn Global Forex, LLC 1/4/2021 $(12)
Foreign currency forward contract $264  £206  Bannockburn Global Forex, LLC 3/3/2021  (18)
Foreign currency forward contract $33  £26  Bannockburn Global Forex, LLC 3/3/2021  (2)
Foreign currency forward contract $103  £84  Bannockburn Global Forex, LLC 4/2/2021  (12)
Foreign currency forward contract $271  £212  Bannockburn Global Forex, LLC 6/1/2021  (19)
Foreign currency forward contract $33  £26  Bannockburn Global Forex, LLC 6/1/2021  (2)
Foreign currency forward contract $103  £83  Bannockburn Global Forex, LLC 7/2/2021  (11)
Foreign currency forward contract $102  £83  Bannockburn Global Forex, LLC 10/4/2021  (11)
Foreign currency forward contract $101  £82  Bannockburn Global Forex, LLC 1/3/2022  (11)
Foreign currency forward contract $97  £79  Bannockburn Global Forex, LLC 4/4/2022  (11)
Foreign currency forward contract $36  £29  Bannockburn Global Forex, LLC 5/6/2022  (4)
              $(113)

 

9

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
High Tech Industries                        
Answers Finance, LLC P+7.90%  12.15% 9/15/2021  395  $ 393  $ 366   0.1%
Micro Holdings Corp.(s) L+7.50%  8.82% 8/18/2025  3,000   2,970   2,987   1.0%
           3,395   3,363   3,353   1.1%
Media: Broadcasting & Subscription                        
Mergermarket USA, Inc.(s) L+7.25%  8.49% 8/3/2025  4,500   4,455   4,539   1.6%
           4,500   4,455   4,539   1.6%
Media: Diversified & Production                        
SCP TPZ Acquisition, Inc. L+8.25%  9.57% 5/29/2022  5,000   4,945   5,006   1.8%
           5,000   4,945   5,006   1.8%
Services: Consumer                        
Education Corporation of America L+11.00%  12.33% 12/31/2018  625   618   625   0.2%
Pre-Paid Legal Services, Inc. (Legal Shield) L+9.00%  10.25% 7/1/2020  3,000   3,000   3,024   1.1%
           3,625   3,618   3,649   1.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans    38,906   38,391   38,555   13.6%
                         
Equity Securities(t)                        
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC (warrant to purchase up to 4 LLC units) -  -(u) 12/27/2022  -   -   -   0.0%
               -   -   0.0%
High Tech Industries                        
Answers Finance, LLC (76,539 shares of common stock) -  -(u) -  -   2,413   1,244   0.4%
               2,413   1,244   0.4%
Hotels, Gaming & Leisure                        
Playtime, LLC - Preferred Units (8,665 units) -  -(u) -  -   200   33   0.0%
               200   33   0.0%
Media: Advertising, Printing & Publishing                        
AdTheorent, Inc. (128,866 units) -  -(u) -  -   129   142   0.1%
InMobi Pte, Ltd. (represents the right to purchase 2.80% of the equity)(e) (k) -  -(u) 9/18/2025  -   -   215   0.1%
               129   357   0.2%
Retail                        
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units) -  -  -  -   86   118   0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) -  -  -  -   1   -   0.0%
               87   118   0.0%
Services: Consumer                        
Education Corporation of America - Series G Preferred Stock (8,333 shares)  n/a  12.00% -  -   8,125   8,192   2.9%
               8,125   8,192   2.9%
Total Non-Controlled/Non-Affiliate Equity Securities        10,954   9,944   3.5%
Total Non-Controlled/Non-Affiliate Company Investments       $367,226  $368,634   130.0%
                         
Non-Controlled Affiliate Company Investments(v)               
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate               
American Community Homes, Inc. L+8.00%  9.50% 7/22/2019  7,667  $7,581  $7,441   2.6%
American Community Homes, Inc. L+12.50%  

9.50% Cash/

4.50% PIK

  7/22/2019  4,363   4,320   4,269   1.5%
American Community Homes, Inc. L+12.50%  

9.50% Cash/

4.50% PIK

  n/a(w) 536   529   536   0.2%
American Community Homes, Inc. L+8.00%  9.50% 7/22/2019  444   433   430   0.2%
American Community Homes, Inc. L+12.50%  

9.50% Cash/

4.50% PIK

  7/22/2019  226   220   221   0.1%
American Community Homes, Inc. (Delayed Draw)(f) (g) L+8.00%  9.50% 7/22/2019  444   -   -   0.0%
American Community Homes, Inc. (Delayed Draw)(f) (g) L+12.50%  

9.50% Cash/

4.50% PIK

  7/22/2019  222   -   -   0.0%
           13,902   13,083   12,897   4.6%
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC n/a  12.00% PIK(x) 8/29/2019  1,157   1,157   -   0.0%

10

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
Rocket Dog Brands, LLC n/a  15.00% PIK(x) 8/29/2019  422  $416  $ 54   0.0%
Rocket Dog Brands, LLC n/a  17.00% PIK(x) 3/30/2018  235   235   202   0.1%
           1,814   1,808   256   0.1%
Containers, Packaging & Glass                        
Summit Container Corporation(h) L+12.00%  

12.00% Cash/

2.00% PIK

  1/6/2019  3,575   3,552   3,421   1.2%
Summit Container Corporation(h) L+12.00%  

12.00% Cash/

2.00% PIK

  9/27/2022  1,500   1,500   1,498   0.5%
           5,075   5,052   4,919   1.7%
Healthcare & Pharmaceuticals                        
Rockdale Blackhawk, LLC L+13.00%  14.24% 3/31/2020  10,922   10,302   10,797   3.8%
Rockdale Blackhawk, LLC (Capex) L+13.00%  14.24% 3/31/2020  549   549   542   0.2%
Rockdale Blackhawk, LLC (Revolver) L+13.00%  14.24% 3/31/2020  1,849   1,849   1,824   0.6%
Rockdale Blackhawk, LLC (Revolver) L+13.00%  14.24% 3/31/2020  3,236   3,236   3,192   1.1%
SHI Holdings, Inc.(h) L+9.75%  10.99% 7/10/2019  2,625   2,604   2,625   0.9%
SHI Holdings, Inc. (Revolver)(f) L+9.75%  10.99% 7/10/2019  2,046   2,024   2,035   0.7%
           21,227   20,564   21,015   7.3%
Retail                        
Luxury Optical Holdings Co. L+8.00%  9.24% PIK  9/12/2019  4,151   4,116   3,580   1.3%
Luxury Optical Holdings Co.  (Delayed Draw)(f)(g) L+11.50%  12.74% PIK  9/12/2019  1,176   741   741   0.3%
Luxury Optical Holdings Co. (Revolver) L+8.00%  9.24% PIK  9/12/2019  191   191   165   0.1%
           5,518   5,048   4,486   1.7%
Total Non-Controlled Affiliate Senior Secured Loans   47,536   45,555   43,573   15.4%
                         
Junior Secured Loans                        
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC n/a  15.00% PIK(x) 5/1/2020  2,011   2,011   -   0.0%
           2,011   2,011   -   0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans   2,011   2,011   -   0.0%
                         
Equity Securities                        
Banking, Finance, Insurance & Real Estate                 
American Community Homes, Inc. (warrant to purchase up to 9.0% of the equity) -  -(u) 10/9/2024  -   -   610   0.2%
               -   610   0.2%
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC - Common Units (75,502 units) -  -(u) -  -   -   -   0.0%
Rocket Dog Brands, LLC - Preferred Units (10 units)  n/a  15.00% PIK(y) -  -   967   -   0.0%
               967   -   0.0%
Containers, Packaging & Glass                        
Summit Container Corporation (warrant to purchase up to 19.50% of the equity) -  -(u) 1/6/2024  -   -   -   0.0%
               -   -   0.0%
Healthcare & Pharmaceuticals                        
Rockdale Blackhawk, LLC - LLC Units (11.56% of the LLC interest) -  -  -  -   1,093   8,620   3.0%
SHI Holdings, Inc. (24 shares of common stock) -  -(u) -  -   27   792   0.3%
               1,120   9,412   3.3%
Retail                        
Luxury Optical Holdings Co. (86 shares of common stock) -  -(u) -  -   -   -   0.0%
               -   -   0.0%
Total Non-Controlled Affiliate Equity Securities       2,087   10,022   3.5%
Total Non-Controlled Affiliate Company Investments      $49,653  $53,595   18.9%
                         
Controlled Affiliate Company Investments(z)               
Senior Secured Loans                        
Retail                        
TPP Operating, Inc. L+6.00%  7.50% PIK(x) 11/8/2018  9,370  $9,330  $-   0.0%
TPP Operating, Inc. L+6.00%  7.50%(x) 11/8/2018  6,885   6,885   5,295   1.9%

11

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
TPP Operating, Inc. L+9.61%  11.11%(x) 11/8/2018  3,573  $ 3,573  $ 3,573   1.2%
Total Controlled Affiliate Senior Secured Loans 19,828   19,788   8,868   3.1%
                
Equity Securities                        
Retail                        
TPP Acquisition, Inc. (829 shares of common stock) -  -(u) -  -   -   -   0.0%
TPP Operating, Inc. (40 shares of common stock) -  -(u) -  -   3,255   -   0.0%
Total Controlled Affiliate Equity Securities     3,255   -   0.0%
Total Controlled Affiliate Company Investments    $23,043  $8,868   3.1%
                         
TOTAL INVESTMENTS             $439,922  $431,097   152.0%

 
(a)All of the Company’s investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company’s investments are issued by U.S. portfolio companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap. Certain investments contain a payment-in-kind (“PIK”) provision.
(c)Except as otherwise noted, all of the Company’s portfolio company investments, which as of December 31, 2020 represented 233.3% of the Company’s net assets or 93.5% of the Company’s total assets, are subject to legal restrictions on sales.
(d)Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by the Company’s board of directors as required by the 1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(e)Percentages are based on net assets of $234,434 as of December 31, 2020.
(f)All or a portion of this commitment was unfunded at December 31, 2020. As such, interest is earned only on the funded portion of this commitment.
(g)This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2020, non-qualifying assets totaled 19.9% of the Company’s total assets.
(h)This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(i)This is a demand note with no stated maturity.
(j)All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(k)During the three months ended September 30, 2020, the senior secured lender group of Toojay’s Management, LLC (“Toojay’s OldCo”) established TJ Management HoldCo, LLC (“Toojay’s NewCo”) in order to acquire certain of the assets of Toojay’s OldCo as part of a bankruptcy restructuring. The Company owns 15.9% of the equity in Toojay’s NewCo. Toojay’s NewCo credit bid a portion of the senior secured debt in Toojay’s OldCo to acquire certain assets of Toojay’s OldCo which constitute the ongoing operations of the portfolio company. The Company’s portion of this credit bid was $2,386, and as such the Company’s outstanding senior secured debt investment in Toojay’s OldCo was reduced by the amount of the credit bid and the Company’s cost basis of its new equity investment in Toojay’s NewCo was increased by the amount of the credit bid. While the Company still has loans outstanding at Toojay’s OldCo, the Company has valued these positions at zero as of December 31, 2020.
(l)This position was on non-accrual status as of December 31, 2020, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s accounting policies.

(a) All of our investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of our investments are issued by U.S. portfolio companies unless otherwise noted.

(b) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at September 30, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c) Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by our board of directors as required by the Investment Company Act of 1940. (See Note 4 in the accompanying notes to the consolidated financial statements.)

(d) Percentages are based on net assets of $283,542 as of September 30, 2017.

(e) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2017, non-qualifying assets totaled 7.29% of the Company’s total assets.

(f) All or a portion of this commitment was unfunded at September 30, 2017. As such, interest is earned only on the funded portion of this commitment.

(g) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.

(h) All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(i) A portion of this loan (principal of $2,139) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(j) The PIK portion of the interest rate for Landpoint, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.25% per annum.

(k) This is an international company.

(l) This term loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.

(m) A portion of the PIK interest rate for TRG, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.91% per annum.

(n) A portion of this loan (principal of $4,185) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(o) A portion of the PIK interest rate for Vacation Innovations, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.16% per annum.

(p) The PIK portion of the interest rate for Peerless Network, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.75% per annum.

(q) A portion of this loan (principal of $5,034) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(r) The PIK portion of the interest rate for Gracelock Industries, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 4.24% per annum.

(s) Investment position or portion thereof unsettled as of September 30, 2017.

(t) Represents less than 5% ownership of the portfolio company’s voting securities.

(u) Represents a non-income producing security.

(v) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns five percent or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).

(w) This is a demand note with no stated maturity.

(x) This position was on non-accrual status as of September 30, 2017, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company's accounting policies.

(y) This position includes a PIK dividend and is currently on non-accrual status.

(z) As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% in company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.
(m)This investment represents a note convertible to preferred shares of the borrower.
(n)This is an international company.
(o)In May 2020, an arbitrator issued a final award in favor of the estate of Rockdale Blackhawk, LLC (the “Estate”) in the legal proceeding between the Estate and a national insurance carrier. The Company’s share of the net proceeds from the award exceeded the contractual obligations due to the Company as a result of the Company’s right to receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the Estate. In June 2020, the Company received $33,135 as an initial payment of proceeds from the legal proceedings from the Estate, of which $19,540 was recorded as a reduction in the cost basis of the Company’s investment in Rockdale, $3,878 was recorded as the collection of previously accrued interest, $7,378 was recorded as investment income for previously unaccrued interest and fees and $2,339 was recorded as realized gains. Additionally, as an offset, the Company recorded net change in unrealized (loss) of ($8,243) primarily as a result of the reversal associated with the collection of proceeds from the Estate. Total net income associated with the Company’s investment in Rockdale was $1,887 during the year ended December 31, 2020. As of December 31, 2020, the Company has this remaining investment in Rockdale associated with residual proceeds currently expected from the Estate. This investment is a non-income producing security.
(p)This loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.
(q)As of December 31, 2020, the Company was party to a subscription agreement with a commitment to fund an equity investment of $289.
(r)The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, are the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(s)A portion of this loan (principal of $9,258) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(t)A portion of this loan (principal of $525) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(u)Represents less than 5% ownership of the portfolio company’s voting securities.
(v)Ownership of certain equity investments may occur through a holding company or partnership.
(w)Represents a non-income producing security.
(x)As of December 31, 2020, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $16.
(y)As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).
(z)A portion of this loan (principal of $5,390) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(aa)A portion of this loan (principal of $54) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ab)A portion of this loan (principal of $1,015) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ac)A portion of this loan (principal of $1,938) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ad)As of December 31, 2020, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $611.
(ae)As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to control.
(af)

The Company restructured its investments in HFZ Capital Group LLC (“HFZ”) and HFZ Member RB portfolio, LLC (“Member RB”) during the three months ended December 31, 2020. As part of the restructuring of HFZ, the Company obtained a 15.9% equity interest in MC Asset Management (Corporate), LLC (“Corporate”). As part of the Member RB restructuring, the Company exchanged its loan in Member RB for a promissory note in MC Asset Management (Industrial), LLC (“Industrial”). Corporate owns 100% of the equity of Industrial. In conjunction with these restructurings, the Company participated $4,758 of principal of its loan to HFZ as an equity contribution to Industrial. This participation did not qualify for sale accounting under ASC Topic 860 – Transfers and Servicing because the sale did not meet the definition of a “participating interest”, as defined in the guidance, in order for sale treatment to be allowed. As a result, the Company continues to reflect its full investment in HFZ but has split the loan into two investments.

n/a - not applicable

 

See Notes to Consolidated Financial Statements.

  

12


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2016

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
Non-Controlled/Non-Affiliate Company Investments               
Senior Secured Loans                        
Aerospace & Defense                        
Cyalume Technologies Holdings, Inc.(e) L+9.00%  10.00% 5/18/2020  4,291  $4,204  $4,462   1.9%
Cyalume Technologies Holdings, Inc. (Delayed Draw) L+9.00%  10.00% 5/18/2020  387   387   402   0.2%
Cyalume Technologies Holdings, Inc. (Revolver)(f) L+9.00%  10.00% 5/18/2020  1,528   -   -   0.0%
           6,206   4,591   4,864   2.1%
Automotive                        
Inteva Products, LLC L+8.50%  9.75% 9/8/2021  1,978   1,967   1,998   0.8%
Tectum Holdings, Inc. L+4.75%  5.75% 8/24/2023  1,995   1,976   2,025   0.8%
           3,973   3,943   4,023   1.6%
Banking, Finance, Insurance & Real Estate                        
Liftforward SPV II, LLC(f) (g) L+10.75%  11.51% 11/10/2020  10,000   254   254   0.1%
Repay Holdings, LLC L+9.00%  9.76% 9/1/2021  12,000   11,802   11,934   5.0%
Repay Holdings, LLC (Revolver)(f) L+9.00%  9.76% 9/1/2021  1,200   -   -   0.0%
Shields Land Company of Georgia, LLC(g) L+9.50%  10.15% 12/28/2017  2,450   2,425   2,445   1.0%
           25,650   14,481   14,633   6.1%
Beverage, Food & Tobacco                        
All Holding Company, LLC(e) L+7.00%  7.76% 11/15/2021  5,466   5,363   5,493   2.3%
California Pizza Kitchen, Inc. L+6.00%  7.00% 8/23/2022  6,983   6,913   6,966   2.9%
           12,449   12,276   12,459   5.2%
Construction & Building                        
Cali Bamboo, LLC L+8.50%  9.26% 7/10/2020  5,423   5,350   5,531   2.3%
Cali Bamboo, LLC (Revolver)(f) L+8.50%  9.26% 7/10/2020  1,624   65   65   0.0%
Cornerstone Detention Products, Inc.(h) L+10.50%  

10.50% Cash/

1.00% PIK

  4/8/2019  3,784   3,747   3,599   1.5%
Cornerstone Detention Products, Inc. (Revolver)(f) L+9.50%  10.50% 4/8/2019  400   -   -   0.0%
G&M Opco LLC(e) L+7.50%  8.26% 6/23/2020  3,006   2,951   3,066   1.3%
L.A.R.K. Industries, Inc. L+7.00%  8.00% 9/3/2019  6,257   6,169   6,341   2.6%
           20,494   18,282   18,602   7.7%
Consumer Goods: Non-Durable                        
360 Holdings III Corp. L+9.00%  10.00% 10/1/2021  5,925   5,718   5,718   2.4%
Bluestem Brands, Inc. L+7.50%  8.50% 11/6/2020  2,758   2,737   2,404   1.0%
Solaray, LLC L+6.50%  7.50% 9/9/2023  3,297   3,265   3,280   1.4%
Solaray, LLC  (Delayed Draw)(f) (i) L+6.50%  7.50% 9/9/2023  703   -   -   0.0%
           12,683   11,720   11,402   4.8%
Energy: Oil & Gas                        
Diesel Direct Holdings, Inc.(e) L+7.00%  7.76% 2/17/2020  5,225   5,217   5,277   2.2%
Landpoint, LLC L+12.75%  

12.00% Cash/

2.25% PIK

(j)  12/20/2019  2,632   2,602   2,526   1.1%
Landpoint, LLC (Revolver)(f) L+10.50%  12.00% 12/20/2019  313   -   -   0.0%
           8,170   7,819   7,803   3.3%
Environmental Industries                        
Synergy Environmental Corporation(e) L+8.00%  8.76% 4/29/2021  3,130   3,068   3,148   1.3%
Synergy Environmental Corporation(e) L+8.00%  8.76% 4/29/2021  523   513   526   0.2%
Synergy Environmental Corporation (Delayed Draw)(f) (i) L+8.00%  8.76% 4/29/2018  1,342   -   -   0.0%
Synergy Environmental Corporation (Revolver)(f) L+8.00%  8.76% 4/29/2021  671   94   94   0.0%
           5,666   3,675   3,768   1.5%
Healthcare & Pharmaceuticals                        
Beaver-Visitec International Holdings, Inc. L+5.00%  6.00% 8/19/2023  4,988   4,939   4,988   2.1%
Edge Systems Holdings Corp. L+8.00%  9.00% 11/29/2021  3,740   3,667   3,665   1.5%
Edge Systems Holdings Corp. (Revolver)(f) L+8.00%  9.00% 11/29/2021  260   -   -   0.0%
Familia Dental Group Holdings, LLC(e) L+8.00%  8.76% 4/8/2021  5,397   5,327   5,480   2.3%
Familia Dental Group Holdings, LLC (Delayed Draw) L+8.00%  8.76% 4/8/2021  519   519   527   0.2%
Familia Dental Group Holdings, LLC (Revolver)(f) L+8.00%  8.76% 4/8/2021  573   57   57   0.0%
Precision Toxicology, LLC(e) L+11.50%  

10.26% Cash/

2.00% PIK

  3/24/2020  4,242   4,186   4,244   1.8%
           19,719   18,695   18,961   7.9%

13

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2016
(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of
Net Assets(d)		 
High Tech Industries                        
Answers Corporation P+6.25%  10.00%(k) 10/1/2021  2,903  $ 2,819  $ 1,495   0.6%
BCC Software, LLC(e) L+8.00%  9.00% 6/20/2019  2,204   2,186   2,203   0.9%
BCC Software, LLC (Revolver)(f) L+8.00%  9.00% 6/20/2019  469   -   -   0.0%
Corbett Technology Solutions, Inc.(e) L+7.00%  7.76% 11/7/2021  4,500   4,434   4,511   1.9%
Corbett Technology Solutions, Inc. (Revolver) (f) L+7.00%  7.76% 11/7/2021  867   -   -   0.0%
           10,943   9,439   8,209   3.4%
Hotels, Gaming & Leisure                        
BC Equity Ventures LLC L+6.50%  7.50% 8/31/2022  2,612   2,562   2,635   1.1%
BC Equity Ventures LLC L+6.50%  7.50% 8/31/2022  375   372   373   0.2%
Miles Media Group LLC L+11.00%  

10.00% Cash/

2.00% PIK

  3/24/2021  6,110   6,052   6,119   2.5%
Miles Media Group LLC (Delayed Draw) (f) (i) L+11.00%  

10.00% Cash/

2.00% PIK

  3/24/2021  1,455   -   -   0.0%
Miles Media Group LLC (Revolver) (f) L+11.00%  

10.00% Cash/

2.00% PIK

  3/24/2021  320   -   -   0.0%
TRG, LLC L+13.80%  

8.12% Cash/

6.30% PIK

(l)  3/31/2021  11,876   11,837   11,960   5.0%
TRG, LLC (Revolver) L+9.50%  10.12% 3/31/2021  131   131   131   0.1%
TRG, LLC (CapEx) (f) L+9.50%  

8.12% Cash/

2.00% PIK

  3/31/2021  1,609   943   946   0.4%
Vacation Innovations, LLC (m) L+9.40%  

7.76% Cash/

2.42% PIK

(n)  8/20/2020  10,553   10,382   10,848   4.5%
Vacation Innovations, LLC (Revolver) (f) L+8.50%  

7.76% Cash/

1.50% PIK

  8/20/2020  342   -   -   0.0%
Vacation Innovations, LLC (Delayed Draw) (f) (i) L+8.50%  

7.76% Cash/

1.50% PIK

  8/20/2020  2,037   -   -   0.0%
           37,420   32,279   33,012   13.8%
Media: Advertising, Printing & Publishing                        
AdTheorent, Inc. L+8.50%  9.26% 12/22/2021  5,000   4,908   4,900   2.0%
AdTheorent, Inc. (Revolver) (f) L+8.50%  9.26% 12/22/2021  515   77   77   0.0%
InMobi Pte, Ltd. (Delayed Draw) (f) (g) (i) L+10.17%  10.98% 9/1/2018  10,000   6,667   6,587   2.7%
           15,515   11,652   11,564   4.7%
Media: Broadcasting & Subscription                        
Jerry Lee Radio, LLC L+9.50%  10.26% 12/17/2020  13,407   13,127   13,675   5.7%
           13,407   13,127   13,675   5.7%
Metals & Mining                        
O'Brien Industrial Holdings, LLC L+7.75%  8.75% 5/13/2019  5,286   5,219   5,268   2.2%
           5,286   5,219   5,268   2.2%
Retail                        
Forman Mills, Inc. (e) L+7.50%  8.50% 10/4/2021  8,500   8,337   8,470   3.5%
Luxury Optical Holdings Co. L+11.50%  

9.00% Cash/

3.50% PIK

  9/12/2019  4,012   3,965   3,948   1.6%
Luxury Optical Holdings Co. (Revolver) (f) L+8.00%  9.00%  9/12/2019  273   -   -   0.0%
The Worth Collection, Ltd. (e) L+8.50%  9.26% 9/29/2021  11,000   10,789   11,132   4.6%
Yandy Holding, LLC L+9.00%  10.00% 9/30/2019  5,677   5,625   5,581   2.3%
Yandy Holding, LLC (Revolver) (f) L+9.00%  10.00% 9/30/2019  907   -   -   0.0%
           30,369   28,716   29,131   12.0%
Services: Business                        
EB Employee Solutions, LLC (e) L+8.50%  10.00% 2/28/2019  3,370   3,324   3,263   1.4%
Madison Logic, Inc. (e) L+8.00%  8.76% 11/30/2021  10,500   10,291   10,610   4.4%
Madison Logic, Inc. (Delayed Draw) (f) (i) L+8.00%  8.76% 11/30/2021  4,818   -   -   0.0%
Madison Logic, Inc. (Revolver) (f) L+8.00%  8.76% 11/30/2021  988   -   -   0.0%
SNI Companies (o) L+8.00%  9.00% 12/31/2018  5,357   5,299   5,378   2.2%
SNI Companies (Revolver) (f) L+8.00%  9.00% 12/31/2018  1,250   313   313   0.1%
           26,283   19,227   19,564   8.1%
Services: Consumer                        
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) L+5.50%  6.50% 7/1/2020  4,698   4,619   4,693   1.9%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) L+11.50%  12.50% 7/1/2020  4,849   4,765   4,805   2.0%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) (Revolver) (f) L+8.50%  9.50% 8/11/2017  236   -   -   0.0%
           9,783   9,384   9,498   3.9%
Telecommunications                        
Peerless Network, Inc. (e) L+8.50%  

9.18% Cash/

0.75% PIK

(p)  12/11/2020  3,500   3,431   3,430   1.4%
           3,500   3,431   3,430   1.4%
Utilities: Electric                   ��    
CRCI Holdings, Inc. L+5.50%  6.50% 8/31/2023  2,993   2,964   2,999   1.3%
           2,993   2,964   2,999   1.3%
Total Non-Controlled/Non-Affiliate Senior Secured Loans   270,509   230,920   232,865   96.7%
                         
Unitranche Loans                        
Automotive                        
Fabco Automotive Corporation L+11.25%  

8.00% Cash/

4.25% PIK

  4/3/2019  8,587   8,553   3,491   1.4%
           8,587   8,553   3,491   1.4%
Consumer Goods: Durable                        
MooreCo, Inc. L+14.50%  

13.50% Cash/

2.50% PIK

  12/27/2017  3,620   3,600   3,620   1.5%
           3,620   3,600   3,620   1.5%

14

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2016
(in thousands, except for shares and units)

Portfolio Company (a) Spread
Above
Index (b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value (c)		  % of
Net Assets (d)		 
Consumer Goods: Non-Durable                        
Incipio Technologies, Inc. (q) L+6.00%  7.00% 12/26/2019  14,291  $ 14,045  $ 14,219   5.9%
           14,291   14,045   14,219   5.9%
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC (r) L+11.50%  13.00% 12/27/2017  6,120   6,059   5,814   2.4%
Collaborative Neuroscience Network, LLC n/a  

12.00% Cash/

3.00% PIK

  12/27/2017  286   286   286   0.1%
           6,406   6,345   6,100   2.5%
Hotels, Gaming & Leisure                        
Playtime, LLC L+8.50%  

9.00% Cash/

1.00% PIK

  12/31/2021  5,405   5,381   4,797   2.0%
           5,405   5,381   4,797   2.0%
Services: Business                        
Output Services Group, Inc. L+9.00%  

9.50% Cash/

1.00% PIK

  12/17/2020  6,500   6,432   6,520   2.7%
Output Services Group, Inc. L+9.00%  

9.50% Cash/

1.00% PIK

  12/17/2020  8,296   8,189   8,391   3.5%
           14,796   14,621   14,911   6.2%
Wholesale                        
Gracelock Industries, LLC L+13.74%  

11.00% Cash/

4.24% PIK

(s)  5/7/2019  4,888   4,816   4,500   1.9%
           4,888   4,816   4,500   1.9%
Total Non-Controlled/Non-Affiliate Unitranche Loans   57,993   57,361   51,638   21.4%
                         
Junior Secured Loans                        
Aerospace & Defense                        
AIM Aerospace, Inc. L+9.00%  10.00% 8/2/2022  5,000   4,933   5,040   2.1%
           5,000   4,933   5,040   2.1%
Banking, Finance, Insurance & Real Estate                        
Confie Seguros Holdings II Co. L+9.00%  10.25% 5/8/2019  8,594   8,215   8,547   3.5%
           8,594   8,215   8,547   3.5%
Beverage, Food & Tobacco                        
CSM Bakery Supplies LLC L+7.75%  8.75% 7/3/2021  5,792   5,792   4,335   1.8%
           5,792   5,792   4,335   1.8%
Chemicals, Plastics & Rubber                        
New NSI Holdings, Inc. L+8.25%  9.25% 7/28/2022  4,000   3,949   4,040   1.7%
           4,000   3,949   4,040   1.7%
Consumer Goods: Non-Durable                        
Mud Pie, LLC n/a  

10.00% Cash/

1.50% PIK

  11/4/2020  5,221   5,145   5,325   2.2%
           5,221   5,145   5,325   2.2%
High Tech Industries                        
Hyland Software Inc. L+7.25%  8.25% 7/1/2023  5,000   4,832   5,100   2.1%
Micro Holdings Corp. L+7.50%  8.50% 7/8/2022  5,590   5,475   5,590   2.3%
           10,590   10,307   10,690   4.4%
Media: Broadcasting & Subscription                        
Mergermarket USA, Inc. L+6.50%  7.50% 12/19/2021  4,500   4,400   4,371   1.8%
           4,500   4,400   4,371   1.8%
Media: Diversified & Production                        
SCP TPZ Acquisition, Inc. L+8.25%  9.25% 5/29/2022  5,000   4,938   4,938   2.1%
           5,000   4,938   4,938   2.1%
Services: Business                        
Sterling Merger Sub Corp. L+7.75%  8.75% 6/19/2023  5,000   4,958   4,892   2.0%
           5,000   4,958   4,892   2.0%
Services: Consumer                        
Education Corporation of America L+11.00%  12.00% 12/31/2018  4,167   4,099   4,167   1.7%
Pre-Paid Legal Services, Inc. (Legal Shield) L+9.00%  10.25% 7/1/2020  3,000   3,000   3,021   1.3%
           7,167   7,099   7,188   3.0%
Total Non-Controlled/Non-Affiliate Junior Secured Loans   60,864   59,736   59,366   24.6%
                         
Equity Securities (t)                        
Aerospace & Defense                        
Cyalume Technologies Holdings, Inc. - Series D Preferred Stock (3.06 shares) -  -(u) -  -   -   697   0.3%
               -   697   0.3%
Automotive                        
Fabco Automotive Corporation (warrant to purchase up to 1.87% of the equity) -  -(u) -  -   -   -   0.0%
               -   -   0.0%
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC (warrant to purchase up to 4 LLC units) -  -(u) 12/27/2022  -   -   -   0.0%
               -   -   0.0%

15

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2016
(in thousands, except for shares and units)

Portfolio Company (a) Spread
Above
Index (b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value (c)		  % of
Net Assets (d)		 
Hotels, Gaming & Leisure                        
BookIt Operating LLC (warrant to purchase up to 3.0% of the equity) -  -(u) 12/21/2023  -  $ -  $ 201   0.1%
Playtime, LLC - Preferred Units (8,665 units) -  -(u) -  -   200   -   0.0%
               200   201   0.1%
Media: Advertising, Printing & Publishing                 
InMobi Pte, Ltd. (represents the right to purchase 0.42% of the equity) (g) -  -(u) 9/18/2025  -   -   49   0.0%
AdTheorent, Inc. (128,866 shares of common stock) -  -(u) -  -   129   129   0.1%
               129   178   0.1%
Metals & Mining                        
O'Brien Industrial Holdings, LLC (warrants to purchase up to 2.44% of certain affiliated entities of the company) -  -(u) 5/13/2024  -   -   -   0.0%
               -   -   0.0%
Retail                        
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units) -  -  -  -   86   117   0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) -  -  -  -   1   -   0.0%
               87   117   0.0%
Services: Business                        
Output Services Group, Inc. (warrant to purchase up to 3.89% of the common stock) -  -(u) 12/17/2022  -   -   797   0.3%
               -   797   0.3%
Services: Consumer                        
Education Corporation of America - Series G Preferred Stock (8,333 shares)  n/a  12.00% -  -   8,125   8,121   3.4%
               8,125   8,121   3.4%
Total Non-Controlled/Non-Affiliate Equity Securities       8,541   10,111   4.2%
Total Non-Controlled/Non-Affiliate Company Investments      $356,558  $353,980   146.9%
                         
Non-Controlled Affiliate Company Investments (v)                 
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate                 
American Community Homes, Inc. L+8.00%  9.50% 7/22/2019  7,667  $7,550  $7,816   3.3%
American Community Homes, Inc. L+12.50%  

9.50% Cash/

4.50% PIK

  7/22/2019  4,217   4,158   4,301   1.8%
American Community Homes, Inc. L+12.50%  

9.50% Cash/

4.50% PIK

  n/a(w)  518   508   518   0.2%
           12,402   12,216   12,635   5.3%
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC n/a  12.00% PIK  8/29/2019  1,124   1,125   464   0.2%
Rocket Dog Brands, LLC n/a  15.00% PIK  8/29/2019  407   402   365   0.2%
Rocket Dog Brands, LLC n/a  17.00% PIK  3/31/2017  225   225   225   0.1%
           1,756   1,752   1,054   0.5%
Containers, Packaging & Glass                        
Summit Container Corporation (e) L+12.00%  

12.00% Cash/

2.00% PIK

  1/6/2019  3,624   3,582   3,550   1.5%
           3,624   3,582   3,550   1.5%
Healthcare & Pharmaceuticals                        
Rockdale Blackhawk, LLC L+11.00%  12.00% 3/31/2020  10,923   10,155   10,933   4.5%
Rockdale Blackhawk, LLC (Revolver) (f) L+11.00%  12.00% 3/31/2020  1,849   924   924   0.4%
Rockdale Blackhawk, LLC (Capex) L+11.00%  12.00% 3/31/2020  565   565   565   0.2%
SHI Holdings, Inc. (e) L+9.25%  10.01% 7/10/2019  2,625   2,592   2,625   1.1%
SHI Holdings, Inc. (Revolver) (f) L+9.25%  10.01% 7/10/2019  1,773   1,188   1,203   0.5%
           17,735   15,424   16,250   6.7%
Total Non-Controlled Affiliate Senior Secured Loans   35,517   32,974   33,489   14.0%
                         
Junior Secured Loans                        
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC n/a  15.00% PIK  5/1/2020  1,938   1,938   -   0.0%
           1,938   1,938   -   0.0%
Total Non-Controlled Affiliate Junior Secured Loans 1,938   1,938   -   0.0%
                         
Equity Securities                        
Banking, Finance, Insurance & Real Estate                 
American Community Homes, Inc. (warrant to purchase up to 9.0% of the equity) -  -(u) 10/9/2024  -   -   1,315   0.6%
               -   1,315   0.6%

16

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2016
(in thousands, except for shares and units)

Portfolio Company (a) Spread
Above
Index (b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value (c)		  % of
Net Assets (d)		 
Consumer Goods: Non-Durable                        
Rocket Dog Brands, LLC - Common Units (75,502 units) -  -(u) -  -  $ -  $ -   0.0%
Rocket Dog Brands, LLC - Preferred Units (10 units) -  15.00% PIK(x)  -  -   967   -   0.0%
               967   -   0.0%
Containers, Packaging & Glass                        
Summit Container Corporation (warrant to purchase up to 19.50% of the equity) -  -(u) 1/6/2024  -   -   113   0.0%
               -   113   0.0%
Healthcare & Pharmaceuticals                        
Rockdale Blackhawk, LLC - LLC Units (11.56% of the LLC interest) -  -  -  -   1,093   14,655   6.1%
SHI Holdings, Inc. (24 shares of common stock) -  -(u) -  -   27   469   0.2%
               1,120   15,124   6.3%
Total Non-Controlled Affiliate Equity Securities       2,087   16,552   6.9%
Total Non-Controlled Affiliate Company Investments      $36,999  $50,041   20.9%
                         
Controlled Affiliate Company Investments (y)                 
Senior Secured Loans                        
Retail                        
TPP Operating, Inc. L+6.00%  7.50%(k) 11/8/2018  9,370  $9,330  $1,799   0.7%
TPP Operating, Inc. L+6.00%  7.50%(k) 11/8/2018  4,344   4,344   4,344   1.8%
TPP Operating, Inc. L+9.61%  11.11%(k) 11/8/2018  2,756   2,756   2,756   1.1%
           16,470   16,430   8,899   3.6%
Total Controlled Affiliate Senior Secured Loans   16,470   16,430   8,899   3.6%
                         
Equity Securities                        
Retail                        
TPP Acquisition, Inc. (829 shares of common stock) -  -(u) -  -   -   -   0.0%
TPP Operating, Inc. (40 shares of common stock) -  -(u) -  -   3,255   -   0.0%
Total Controlled Affiliate Equity Securities       3,255   -   0.0%
Total Controlled Affiliate Company Investments      $19,685  $8,899   3.6%
                         
TOTAL INVESTMENTS             $413,242  $412,920   171.4%

(a) All of our investments are issued by eligible U.S. portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of our investments are issued by U.S. portfolio companies except for InMobi Pte, Ltd. which is an international company headquartered in California.

(b) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2016. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c) Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by our board of directors as required by the Investment Company Act of 1940. (See Note 4 in the accompanying notes to the consolidated financial statements.)

(d) Percentages are based on net assets of $240,850 as of December 31, 2016.

(e) All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(f) All or a portion of this commitment was unfunded at December 31, 2016. As such, interest is earned only on the funded portion of this commitment.

(g) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2016, non-qualifying assets totaled 2.20% of the Company’s total assets.

(h) A portion of this loan (principal of $2,271) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(i) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.

(j) The PIK portion of the interest rate for Landpoint, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.25% per annum.

(k) This position was on non-accrual status as of December 31, 2016, meaning that the Company has ceased recognizing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company's accounting policies.

(l) A portion of the PIK interest rate for TRG, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 4.30% per annum.

(m) A portion of this loan (principal of $4,660) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(n) A portion of the PIK interest rate for Vacation Innovations, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.92% per annum.

(o) A portion of this loan (principal of $3,435) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(p) The PIK portion of the interest rate for Peerless Network, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.75% per annum.

(q) A portion of this loan (principal of $5,240) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(r) The sale of a portion of this loan does not qualify for sale accounting under ASC Topic 860 — Transfers and Servicing, and therefore, the entire unitranche loan asset remains in the Consolidated Schedule of Investments.

(s) The PIK portion of the interest rate for Gracelock Industries, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 4.24% per annum.

(t) Represents less than 5% ownership of the portfolio company’s voting securities.

(u) Represents a non-income producing security.

(v) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns five percent or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).

(w) This is a demand note with no stated maturity.

(x) This position includes a PIK dividend and is currently on non-accrual status.

(y) As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% in company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

n/a - not applicable

See Notes to Consolidated Financial Statements.

17

MONROE CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except share and per share data)

 

Note 1. Organization and Principal Business

 

Monroe Capital Corporation (“Monroe Capital” and together(together with its subsidiaries, the “Company”) was formed in February 2011 to act asis an externally managed, non-diversified, closed-end management investment company and has elected to be treatedregulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company had no substantive operating activities prior to October 24, 2012, the date of its initial public offering. Monroe Capital’sCompany’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through investment in senior secured, junior secured and unitranche secured (a combination of senior secured and junior secured debt in the same facility in which the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan) debt and, to a lesser extent, unsecured subordinated debt and equity investments. Monroe CapitalThe Company is managed by Monroe Capital BDC Advisors, LLC (“MC Advisors”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. In addition, for U.S. federal income tax purposes, Monroe Capitalthe Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

On February 28, 2014, the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”), a Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013. As of September 30, 2017, MRCC SBIC had $57,624 in leverageable capital and $92,100 in SBA-guaranteed debentures outstanding. See Note 7 for additional information.

On June 9, 2017, the Company closed a public offering of 3,000,000 shares of its common stock at a public offering price of $15.00 per share, raising approximately $45,000 in gross proceeds. On June 14, 2017, pursuant to the underwriters’ exercise of the over-allotment option, the Company sold an additional 450,000 shares of its common stock, at a public offering price of $15.00 per share, and additional $6,750 in gross proceeds for a total of $51,750. Aggregate underwriters’ discounts and commissions were $2,070 and offering costs were $127, resulting in net proceeds of approximately $49,553.

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 orand 10 of Regulation S-X. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 —–Financial Services —  – Investment Companies (“ASC Topic 946”). Certain prior period amounts have been reclassified to conform to the current period presentation.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Consolidation

 

As permitted under Regulation S-X and ASC Topic 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries, including MRCC SBIC and its wholly-owned general partner MCC SBIC GP, LLC, MC Forest Park Lender, LLC, and MC Reserve Lender, LLC,the Company’s wholly-owned taxable subsidiaries (the “Taxable Subsidies”) in its consolidated financial statements. The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for U.S. federal income tax purposes while complying with the “source of income” requirements contained in the RIC tax provisions. The Taxable Subsidiaries are not consolidated with the Company for U.S. federal corporate income tax purposes, and each Taxable Subsidiary is subject to U.S. federal corporate income tax on its taxable income. All intercompany balances and transactions have been eliminated. The Company does not consolidate its non-controlling interest in MRCC Senior Loan Fund I, LLC (“SLF”). See further description of the Company’s investment in SLF in Note 3.

 

Fair Value of Financial Instruments

 

The Company applies fair value to substantially all of its financial instruments in accordance with ASC Topic 820 —–Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 to the consolidated financial statements for further discussion regarding the fair value measurements and hierarchy.

  

18

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.

 

Revenue Recognition

 

The Company’s revenue recognition policies are as follows:

 

Investments and related investment income:Interest and dividend income areis recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. All other income is recorded into income when earned. The Company records prepayment fees and amendment fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period earned.the service has been completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the applicable distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For the three months ended March 31, 2021 and 2020, the Company received return of capital distributions from its equity investments and its investment in LLC equity interest in SLF of $60 and zero, respectively.


The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. The Company stops accruing PIK interest or PIK dividends when it is determined that PIK interest or PIK dividends are no longer collectible. To maintain RIC tax treatment, and to avoid incurring corporate U.S. federal income tax, substantially all of this income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.

 

Loan origination fees, original issue discount and market discount or premiums are capitalized, and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. Unamortized discounts and loan origination fees totaled $5,571$4,263 and $6,192$4,844 as of September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively. Upfront loan origination and closing fees received for the three and nine months ended September 30, 2017March 31, 2021 and 2020, totaled $755$465 and $2,732, respectively. For the three and nine months ended September 30, 2016, upfront loan origination and closing fees received totaled $694 and $2,190, respectively. For the three and nine months ended September 30, 2017, interest income included $532 and $1,278 of accretion of loan origination fees, original issue discounts and market discounts or premiums, respectively. For the three and nine months ended September 30, 2016, interest income included $383 and $1,137 of accretion of loan origination fees, original issue discounts and market discounts or premiums,$975, respectively. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. For the three and nine months ended September 30, 2017, interest income included $514 and $1,488 of unamortized discount or loan origination fees recorded as interest income upon prepayment of a loan or debt security, respectively. For the three and nine months ended September 30, 2016, interest income included $227 and $836 of unamortized discount or loan origination fees recorded as interest income upon prepayment of a loan or debt security, respectively.

 

The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or dividends that are added tocomponents of the principal balance and recordedCompany’s investment income were as income. For the three and nine months ended September 30, 2017, interest income included $345 and $1,363 of PIK interest, respectively. For the three and nine months ended September 30, 2016, interest income included $600 and $1,430 of PIK interest, respectively. The Company stops accruing PIK interest when it is determined that PIK interest is no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.follows:

  Three months ended March 31, 
  2021  2020 
Interest income $8,961  $11,979 
PIK interest income  1,679   1,076 
Dividend income (1)  1,262   1,191 
Fee income  477   198 
Prepayment gain (loss)  482   214 
Accretion of discounts and amortization of premium  352   344 
Total investment income $13,213  $15,002 

(1)Includes PIK dividends of $62 and $41, respectively.

  

Investment transactions are recorded on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains andor losses previously recognized. Realized gains and losses are recorded within net realized gain (loss) on investments inon the consolidated statements of operations. Changes in the fair value of investments from the prior period, as determined by the Company’s board of directors (the “Board”) through the application of the Company’s valuation policy, are included within net change in unrealized gain (loss) on investments inon the consolidated statements of operations.

 

Non-accrual: Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected. The Company generally reverses accrued interest when a loan is placed on non-accrual status. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal, interest, or dividends are paid, and, in management’s judgment are likely to remain current. The fair value of the Company’s investments on non-accrual status totaled $9,124$27,277 and $10,394$22,273 at September 30, 2017March 31, 2021 and December 31, 2016,2020, respectively.

Partial loan sales: The Company follows the guidance in ASC Topic 860 — Transfers and Servicing (“ASC Topic 860”), when accounting for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain on the Company’s consolidated statements of assets and liabilities and the proceeds are recorded as a secured borrowing until the definition is met. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the accompanying consolidated statements of operations. Changes in the fair value of secured borrowings from the prior period, as determined by the Board through the application of the Company’s valuation policy, are included as changes in unrealized gain (loss) on secured borrowings in the consolidated statements of operations. See Note 7 “Secured Borrowings” for additional information.

19

 

Distributions

 

Distributions to common stockholders are recorded on the applicable record date. The amount, if any, to be distributed to common stockholders is determined by the Board each quarter and is generally based upon the Company’s earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually, although the Company may decide to retain such capital gains for investment.annually.

 

The determination of the tax attributes for the Company’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital.

 

TheIn October 2012, the Company has adopted a dividend reinvestment plan (“DRIP”) that provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, ifWhen the Company declares a cash dividend, the Company’s stockholders who have not “opted out” of the DRIP at least three days prior to the dividend payment date will have their cash dividend automatically reinvested into additional shares of the Company’s common stock. The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares are valued based upon the final closing price of the Company’s common stock on a date determined by the Board. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs. See Note 8 regarding distributions for additional information.

Earnings per Share

In accordance with the provisions of ASC Topic 260 —Earnings per Share (“ASC Topic 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. The weighted average shares outstanding utilized in the calculation of earnings per share take into account share issues on the issuance date and the Company’s repurchases of its common stock on the repurchase date. See Note 9 for additional information on the Company’s share activity. For the periods presented in these consolidated financial statements, there were no potentially dilutive common shares issued.distributions.

 

Segments

 

In accordance with ASC Topic 280 —– Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.

 

Cash

 

The Company deposits its cash in a financial institution and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

 

Restricted Cash

 

Restricted cash includes amounts held within MRCC SBIC. Cash held within an SBIC is generally restricted to the originations of new loans from the SBIC and the payment of SBA debentures and related interest expense.

  

22

Unamortized Deferred Financing Costs

 

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company had unamortized deferred financing costs of $4,524$7,715 and $3,945,$7,052 respectively, presented as a direct reduction of the carrying amount of debt on the consolidated statements of assets and liabilities. These amounts are amortized and included in interest expense inand other debt financing expenses on the consolidated statements of operations over the estimated average life of the borrowings. Amortization of deferred financing costs for the three and nine months ended September 30, 2017March 31, 2021 and 2020 was $274$601 and $760, respectively. Amortization of deferred financing costs for the three and nine months ended September 30, 2016 was $222 and $603,$484, respectively.

 

Offering Costs

 

Offering costs include, among other things, fees paid in relation to legal, accounting, regulatory and printing work completed in preparation of debt and equity offerings. Offering costs from equity offerings are charged against the proceeds from equity offeringsthe offering within the consolidated statements of changes in net assets. Offering costs from debt offerings are reclassified to unamortized deferred financing costs on the consolidated statements of assets and liabilities as noted above. As of September 30, 2017March 31, 2021 and December 31, 2016,2020, other assets on the consolidated statements of assets and liabilities included $308$143 and $281,$562, respectively, of deferred offering costs which will be charged against the proceeds from future debt or equity offerings when received.completed.

20

 

Investments Denominated in Foreign Currency

 

As of September 30, 2017,March 31, 2021, the Company held an investmentinvestments in two portfolio companies that were denominated in Great Britain pounds and one portfolio company that was denominated in Australian dollars. As of December 31, 2020, the Company held investments in two portfolio companies that were denominated in Great Britain pounds.

 

At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into U.S. dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into U.S. dollars using the rates of exchange prevailing on the respective dates of such transactions.

 

Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into U.S. dollars using the applicable foreign exchange rates described above, the Company does not isolate thatthe portion of the change in fair valuesvalue resulting from foreign currency exchange rates fluctuations from the change in fair valuesvalue of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) ofon investments inon the Company’s consolidated statements of operations.

 

Investments denominated in foreign currencies and foreign currency transactions may involve certain consideration and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

Derivative Instruments

The Company may enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market based on the difference between the forward rate and the exchange rate at the current period end. Unrealized gain (loss) on foreign currency forward contracts are recorded on the Company’s consolidated statements of assets and liabilities by counterparty on a net basis.

The Company does not utilize hedge accounting and as such values its foreign currency forward contracts at fair value with the change in unrealized gain or loss recorded in net change in unrealized gain (loss) on foreign currency forward contracts and the realized gain or loss recorded in net realized gain (loss) on foreign currency forward contracts on the Company’s consolidated statements of operations.

 

Income Taxes

 

The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment available to RICs. To maintain qualification as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of the Company’s “investment company taxable income,” which is generally the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. If the Company qualifies as a RIC and satisfies the annual distribution requirement, the Company will not have to pay corporate-level federal income taxes on any income that the Company distributes to its stockholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company willis also be subject to nondeductible federal excise taxes if the Company does not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed income from prior years for which it paid no federal income taxes. To the extent that the Company determines that its estimated current year annual taxable income may exceed estimated current year dividend distributions, the Company accrues excise tax, if any, calculated as 4% of the estimated excess taxable income, if any, as taxable income is earned. For the three and nine months ended September 30, 2017, $100March 31, 2021 and $100,2020, the Company recorded a net expense on the consolidated statements of operations of $30 and $20, respectively, for U.S. federal excise tax. As of March 31, 2021 and December 31, 2020, the Company had a receivable of $64 and a payable of $306 for excise taxes, respectively, which were recordedincluded in accounts payable and accrued expenses on the Company’s consolidated statements of assets and liabilities.

The Company’s consolidated Taxable Subsidiaries may be subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2021 and 2020, the Company did not record a net tax expense on the consolidated statements of operations for U.S. federal excise taxes. For the threethese Taxable Subsidiaries. As of both March 31, 2021 and nine months ended September 30, 2016, $342 and $429, respectively,December 31, 2020, no payables for corporate-level income taxes were recorded on the consolidated statements of operations for U.S. federal excise taxes.accrued.

  

The Company accounts for income taxes in conformity with ASC Topic 740 —Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were noThe Company did not take any material uncertain income tax positions through September 30, 2017.March 31, 2021. The 20132017 through 20162020 tax years remain subject to examination by U.S. federal and state tax authorities.

 

Subsequent Events

 

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued and such disclosure is included in Note 12. Other than what was disclosed in Note 12, thereissued. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the ninethree months ended September 30, 2017.March 31, 2021.

 

Recent Accounting Pronouncements

 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09,Revenue from Contracts with Customers (ASC Topic 606) (“ASU 2014-09”). The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

ASU 2014-09 also specified the accounting for some costs to obtain or fulfill a contract with a customer. In addition, ASU 2014-09 requires that an entity disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The initial effective date of ASU 2014-09 was for fiscal periods beginning after December 15, 2016. However, in August 2015,March 2020, the FASB issued ASU 2015-14,2020-04, Revenue from Contracts with Customers (ASC Topic 606): DeferralReference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of the Effective Date, which deferred the effective date to fiscal periods beginning afterMarch 12, 2020 through December 15, 2017.31, 2022. Management is currently evaluating the impact these changes will haveof the optional guidance on the Company’s consolidated financial statements and disclosures.

21

The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2021.

 

In January 2016, the FASB issued ASU 2016-01,Financial Instruments — Overall (Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. Management is currently evaluating the impact these changes will have on the Company’s consolidated financial statements and disclosures.

In October 2016, the U.S. Securities and Exchange Commission (“SEC”) adopted new rules and amended rules (together “final rules”) intended to modernize the reporting and disclosures of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X was August 1, 2017. The Company has adopted the final rules, as applicable, and the revised presentation is reflected in the Company’s consolidated financial statements for the periods presented.

In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statements of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The new guidance is effective for annual and interim periods, beginning after December 15, 2017, and early adoption is permitted and is to be applied on a retrospective basis. The Company has adopted ASU 2016-18 and the revised presentation is reflected in the Company’s consolidated financial statements for the periods presented.


Note 3. Investments

 

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Amortized Cost:                         
Senior secured loans $338,448   76.9% $280,324   67.8% $411,723 72.8% $427,173 71.7%
Unitranche loans  44,776   10.2   57,361   13.9 
Unitranche secured loans 65,285 11.5 77,465 13.0 
Junior secured loans  40,402   9.2   61,674   14.9  11,884 2.1 14,763 2.4 
LLC equity interest in SLF 42,150 7.5 42,150 7.1 
Equity securities  16,296   3.7   13,883   3.4   34,779  6.1  34,552  5.8 
Total $439,922   100.0% $413,242   100.0% $565,821  100.0% $596,103  100.0%

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Fair Value:                         
Senior secured loans $327,984   76.1% $275,253   66.7% $392,399 75.2% $405,224 74.1%
Unitranche loans  44,592   10.4   51,638   12.5 
Unitranche secured loans 48,298 9.3 64,040 11.7 
Junior secured loans  38,555   8.9   59,366   14.4  11,999 2.3 14,592 2.6 
LLC equity interest in SLF 41,067 7.9 39,284 7.2 
Equity securities  19,966   4.6   26,663   6.4   27,616  5.3  23,899  4.4 
Total $431,097   100.0% $412,920   100.0% $521,379  100.0% $547,039  100.0%

 

The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Amortized Cost:                         
International $4,809   1.1% $6,667   1.6% $ 28,909 5.1% $19,276 3.2%
Midwest  61,311   14.0   59,710   14.5   144,718 25.6 149,468 25.1 
Northeast  123,686   28.1   105,482   25.5   127,036 22.5 139,553 23.4 
South  —   —   2,425   0.6 
Southeast  69,641   15.8   60,719   14.7   129,177 22.8 142,721 24.0 
Southwest  50,681   11.5   50,562   12.2   25,434 4.5 23,857 4.0 
West  129,794   29.5   127,677   30.9    110,547  19.5  121,228  20.3 
Total $439,922   100.0% $413,242   100.0% $565,821  100.0% $596,103  100.0%

 

22

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Fair Value:                         
International $5,023   1.2% $6,636   1.6% $ 29,440 5.6% $20,008 3.7%
Midwest  60,373   14.0   60,579   14.7   142,285 27.3 144,261 26.4 
Northeast  124,326   28.8   108,188   26.2   112,437 21.6 123,349 22.5 
South  —   —   2,445   0.6 
Southeast  70,959   16.5   61,128   14.8   126,011 24.2 138,406 25.3 
Southwest  44,416   10.3   54,263   13.1   27,535 5.3 25,557 4.7 
West  126,000   29.2   119,681   29.0    83,671  16.0  95,458  17.4 
Total $431,097   100.0% $412,920   100.0% $521,379  100.0% $547,039  100.0%

 

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Amortized Cost:                         
Aerospace & Defense $4,940   1.1% $9,524   2.3%
Automotive  —   —   12,496   3.0  $ 9,471 1.7% $9,495 1.6%
Banking, Finance, Insurance & Real Estate  46,126   10.5   34,912   8.4   74,799 13.2 70,779 11.9 
Beverage, Food & Tobacco  17,931   4.1   18,068   4.4   26,392 4.7 26,308 4.4 
Capital Equipment  13,527 2.4 13,603 2.3 
Chemicals, Plastics & Rubber  8,729   2.0   3,949   1.0   29,178 5.1 28,723 4.8 
Construction & Building  17,777   4.0   18,282   4.4   16,695 3.0 16,651 2.8 
Consumer Goods: Durable  11,762   2.7   3,600   0.9   6,203 1.1 24,410 4.1 
Consumer Goods: Non-Durable  24,888   5.7   35,567   8.6   26,227 4.6 26,030 4.3 
Containers, Packaging & Glass  5,052   1.2   3,582   0.9  — — 4,926 0.8 
Energy: Oil & Gas  2,376   0.5   7,819   1.9 
Environmental Industries  3,541   0.8   3,675   0.9   12,970 2.3 12,996 2.2 
Healthcare & Pharmaceuticals  57,126   13.0   41,584   10.1   46,771 8.3 42,857 7.2 
High Tech Industries  36,606   8.3   19,746   4.8   84,811 15.0 81,845 13.7 
Hotels, Gaming & Leisure  41,692   9.5   37,860   9.2   2,590 0.5 1,771 0.3 
Investment Funds & Vehicles  42,150 7.4 42,150 7.1 
Media: Advertising, Printing & Publishing  12,771   2.9   11,781   2.8   29,108 5.1 30,764 5.1 
Media: Broadcasting & Subscription  16,174   3.7   17,527   4.2   2,326 0.4 2,190 0.4 
Media: Diversified & Production  4,945   1.1   4,938   1.2   6,709 1.2 6,707 1.1 
Metals & Mining  —   —   5,219   1.3 
Retail  56,650   12.9   48,488   11.7   32,985 5.8 32,017 5.4 
Services: Business  26,983   6.1   38,806   9.4   62,353 11.0 79,768 13.4 
Services: Consumer  20,954   4.8   24,608   5.9   25,540 4.5 29,697 5.0 
Telecommunications  3,268   0.7   3,431   0.8   1,100 0.2 1,100 0.2 
Utilities: Electric  2,758   0.6   2,964   0.7 
Wholesale  16,873   3.8   4,816   1.2    13,916  2.5  11,316  1.9 
Total $439,922   100.0% $413,242   100.0% $565,821  100.0% $596,103  100.0%

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
Fair Value:                         
Aerospace & Defense $5,028   1.2% $10,601   2.6%
Automotive  —   —   7,514   1.8  $ 9,603 1.9% $9,637 1.8%
Banking, Finance, Insurance & Real Estate  46,912   10.9   37,130   9.0   77,959 15.0  72,627 13.3 
Beverage, Food & Tobacco  17,788   4.1   16,794   4.1   21,767 4.2 20,676 3.8 
Capital Equipment  13,890 2.7 13,750 2.5 
Chemicals, Plastics & Rubber  8,864   2.1   4,040   1.0   28,879 5.5 27,754 5.1 
Construction & Building  17,933   4.2   18,602   4.5   16,855 3.2 16,809 3.0 
Consumer Goods: Durable  11,952   2.8   3,620   0.9   475 0.1 18,893 3.4 
Consumer Goods: Non-Durable  19,462   4.5   32,000   7.7   9,061 1.7 13,027 2.4 
Containers, Packaging & Glass  4,919   1.1   3,663   0.9  — — 4,997 0.9 
Energy: Oil & Gas  2,346   0.5   7,803   1.9 
Environmental Industries  3,644   0.8   3,768   0.9   13,218 2.5 13,168 2.4 
Healthcare & Pharmaceuticals  66,275   15.4   56,435   13.7   42,179 8.1 37,815 6.9 
High Tech Industries  36,085   8.4   18,899   4.6   84,886 16.3 81,417 14.9 
Hotels, Gaming & Leisure  42,738   9.9   38,010   9.2   2,651 0.5 1,771 0.3 
Investment Funds & Vehicles  41,067 7.9  39,284 7.2 
Media: Advertising, Printing & Publishing  13,356   3.1   11,742   2.8   31,623 6.1 31,553 5.8 
Media: Broadcasting & Subscription  16,466   3.8   18,046   4.4   2,335 0.4 2,227 0.4 
Media: Diversified & Production  5,006   1.2   4,938   1.2   6,889 1.3  6,811 1.2 
Metals & Mining  —   —   5,268   1.3 
Retail  40,740   9.5   38,147   9.2   19,404 3.7 18,443 3.4 
Services: Business  27,264   6.3   40,164   9.7   62,071 11.9 78,584 14.4 
Services: Consumer  21,170   4.9   24,807   6.0   21,363 4.1 25,306 4.6 
Telecommunications  3,333   0.8   3,430   0.8   1,102 0.2 1,100 0.2 
Utilities: Electric  2,801   0.6   2,999   0.7 
Wholesale  17,015   3.9   4,500   1.1    14,102  2.7  11,390  2.1 
Total $431,097   100.0% $412,920   100.0% $521,379  100.0% $547,039  100.0%

MRCC Senior Loan Fund I, LLC

The Company co-invests with Life Insurance Company of the Southwest (“LSW”) in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as underlying investment transactions are completed, taking into account available debt and equity commitments available for funding these investments. All portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee, consisting of one representative from the Company and one representative from LSW. SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as described in Note 4. The Company’s investment is illiquid in nature as SLF does not allow for withdrawal from the LLC or the sale of a member’s interest unless approved by the board members of SLF. The full withdrawal of a member would result in an orderly wind-down of SLF.

SLF’s profits and losses are allocated to the Company and LSW in accordance with their respective ownership interests. As of both March 31, 2021 and December 31, 2020, the Company and LSW each owned 50.0% of the LLC equity interests of SLF. As of both March 31, 2021 and December 31, 2020, SLF had $100,000 in equity commitments from its members (in the aggregate), of which $84,300 was funded.

As of both March 31, 2021 and December 31, 2020, the Company had committed to fund $50,000 of LLC equity interest subscriptions to SLF. As of both March 31, 2021 and December 31, 2020, $42,150 of the Company’s LLC equity interest subscriptions to SLF had been called and contributed, net of return of capital distributions subject to recall.

For the three months ended March 31, 2021 and 2020, the Company received $1,200 and $1,150 of dividend income from its LLC equity interest in SLF, respectively.

SLF has a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Capital One, N.A., through its wholly-owned subsidiary MRCC Senior Loan Fund I Financing SPV, LLC (“SLF SPV”), which as of March 31, 2021 allowed SLF SPV to borrow up to $170,000 at any one time, subject to leverage and borrowing base restrictions. Borrowings under the SLF Credit Facility bear interest at an annual rate of LIBOR (three-month) plus 2.25%. The maturity date on the SLF Credit Facility is March 22, 2023.

SLF does not pay any fees to MC Advisors or its affiliates; however, SLF has entered into an administration agreement with Monroe Capital Management Advisors, LLC (“MC Management”), pursuant to which certain loan servicing and administrative functions are delegated to MC Management. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. For the three months ended March 31, 2021 and 2020, SLF incurred $58 and $56, of allocable expenses, respectively. There are no agreements or understandings by which the Company guarantees any SLF obligations.

As of March 31, 2021 and December 31, 2020, SLF had total assets at fair value of $202,560 and $209,666, respectively. As of March 31, 2021 and December 31, 2021, SLF had one portfolio company investment on non-accrual status with a fair value of $1,076 and $1,031, respectively. The portfolio companies in SLF are in industries and geographies similar to those in which the Company may invest directly. Additionally, as of March 31, 2021 and December 31, 2020, SLF had $563 and $839, respectively, in outstanding commitments to fund investments under undrawn revolvers and delayed draw commitments.

Below is a summary of SLF’s portfolio, followed by a listing of the individual investments in SLF’s portfolio as of March 31, 2021 and December 31, 2020:

  As of 
  March 31, 2021  December 31, 2020 
Senior secured loans (1)  203,382   214,389 
Weighted average current interest rate on senior secured loans (2)  5.9%  5.8%
Number of borrowers in SLF  55   57 
Largest portfolio company investment (1)  6,772   6,790 
Total of five largest portfolio company investments (1)  27,037   27,064 

 

(1)23Represents outstanding principal amount, excluding unfunded commitments.
(2)Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at outstanding principal amount.

 


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

March 31, 2021

Portfolio Company (a) Spread Above Index (b)  Interest Rate (b)  Maturity  Principal  Fair Value 
Non-Controlled/Non-Affiliate Company Investments                    
Senior Secured Loans                    
Aerospace & Defense                    
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   2,765  $2,707 
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   1,843   1,805 
Trident Maritime SH, Inc.  L+5.50%   6.50%  2/26/2027   2,485   2,481 
Trident Maritime SH, Inc. (Revolver) (d)  L+5.50%   6.50%  2/26/2027   265   41 
               7,358   7,034 
Automotive                    
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   1,722   1,720 
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   255   255 
Wheel Pros, LLC  L+5.25%   6.25%  11/10/2027   2,993   2,993 
               4,970   4,968 
Banking, Finance, Insurance & Real Estate                    
Avison Young (USA), Inc. (c)  L+5.00%   5.20%  1/30/2026   4,888   4,881 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.)  L+5.25%   6.25%  12/13/2024   4,641   4,576 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.)  L+5.25%   6.25%  12/13/2024   103   102 
Lightbox Intermediate, L.P.  L+5.00%   5.20%  5/11/2026   4,913   4,863 
Minotaur Acquisition, Inc.  L+5.00%   5.11%  3/27/2026   2,940   2,941 
               17,485   17,363 
Beverage, Food & Tobacco                    
CBC Restaurant Corp.  n/a   5.00% PIK(e)   4/28/2022   1,116   1,076 
SW Ingredients Holdings, LLC  L+4.00%   5.00%  7/3/2025   3,647   3,645 
               4,763   4,721 
Capital Equipment                    
Analogic Corporation  L+5.25%   6.25%  6/24/2024   4,788   4,788 
               4,788   4,788 
Chemicals, Plastics & Rubber                    
Polymer Solutions Group  L+7.00%   8.00%  6/30/2021   1,206   1,177 
               1,206   1,177 
Construction & Building                    
The Cook & Boardman Group, LLC  L+5.75%   6.75%  10/20/2025   2,933   2,864 
               2,933   2,864 
Consumer Goods: Durable                    
International Textile Group, Inc.  L+5.00%   5.26%  5/1/2024   1,746   1,646 
               1,746   1,646 
Consumer Goods: Non-Durable                    
PH Beauty Holdings III, Inc.  L+5.00%   5.19%  9/26/2025   2,436   2,328 
               2,436   2,328 
Containers, Packaging & Glass                    
Liqui-Box Holdings, Inc.  L+4.50%   5.50%  2/26/2027   4,301   4,107 
Polychem Acquisition, LLC  L+5.00%   5.11%  3/17/2025   2,940   2,936 
Port Townsend Holdings Company, Inc.  L+6.75%   5.75% Cash/
2.00% PIK		   4/3/2024   4,716   4,291 
PVHC Holding Corp.  L+4.75%   5.75%  8/5/2024   3,242   2,837 
               15,199   14,171 
Energy: Oil & Gas                    
Drilling Info Holdings, Inc.  L+4.25%   4.36%  7/30/2025   4,551   4,483 
Offen, Inc.  L+5.00%   5.11%  6/22/2026   2,406   2,384 
Offen, Inc.  L+5.00%   5.11%  6/22/2026   883   875 
               7,840   7,742 


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2021

Portfolio Company (a)   Spread Above
Index (b) 		   Interest Rate (b)    Maturity    Principal    Fair Value  
Healthcare & Pharmaceuticals                    
LSCS Holdings, Inc.  L+4.25%   4.45%  3/17/2025   2,293  $2,270 
LSCS Holdings, Inc.  L+4.25%   4.45%  3/17/2025   592   586 
Radiology Partners, Inc.  L+4.25%   4.36%  7/9/2025   4,760   4,731 
               7,645   7,587 
High Tech Industries                    
Corel, Inc. (c)   L+5.00%   5.19%  7/2/2026   3,875   3,863 
LW Buyer, LLC  L+5.00%   5.11%  12/30/2024   4,912   4,888 
TGG TS Acquisition Company  L+6.50%   6.61%  12/12/2025   3,679   3,698 
               12,466   12,449 
Hotels, Gaming & Leisure                    
Excel Fitness Holdings, Inc.  L+5.25%   6.25%  10/7/2025   4,197   4,020 
North Haven Spartan US Holdco, LLC  L+5.00%   6.00%  6/6/2025   2,315   1,998 
Tait, LLC  L+5.00%   5.20%  3/28/2025   4,157   3,695 
Tait, LLC (Revolver)  P+4.00%   7.25%  3/28/2025   769   715 
               11,438   10,428 
Media: Advertising, Printing & Publishing                    
Cadent, LLC  L+5.25%   6.25%  9/11/2023   4,728   4,716 
Cadent, LLC (Revolver) (d)  L+5.25%   6.25%  9/11/2023   167   — 
Digital Room Holdings, Inc.  L+5.00%   5.20%  5/21/2026   4,351   4,284 
Monotype Imaging Holdings, Inc.  L+5.50%   6.50%  10/9/2026   4,875   4,865 
               14,121   13,865 
Media: Diversified & Production                    
Research Now Group, Inc. and Survey Sampling International, LLC  L+5.50%   6.50%  12/20/2024   6,772   6,723 
Stats Intermediate Holding, LLC  L+5.25%   5.45%  7/10/2026   4,937   4,937 
The Octave Music Group, Inc.  L+6.00%   6.25% Cash/
0.75% PIK		   5/29/2025   4,828   4,580 
               16,537   16,240 
Services: Business                    
AQ Carver Buyer, Inc.  L+5.00%   6.00%  9/23/2025   4,938   4,925 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   1,997   1,867 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   421   394 
Eliassen Group, LLC  L+4.25%   4.36%  11/5/2024   3,013   2,968 
Engage2Excel, Inc.  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   4,309   4,285 
Engage2Excel, Inc.  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   777   773 
Engage2Excel, Inc. (Revolver) (d)  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   550   373 
GI Revelation Acquisition, LLC  L+5.00%   5.11%  4/16/2025   1,362   1,366 
Legility, LLC  L+6.00%   7.00%  12/17/2025   4,875   4,719 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   2,450   2,460 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   1,892   1,900 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   553   555 
Output Services Group, Inc.  L+4.50%   5.50%  3/27/2024   4,852   4,124 
SIRVA Worldwide, Inc.  L+5.50%   5.70%  8/4/2025   1,887   1,746 
Teneo Holdings, LLC  L+5.25%   6.25%  7/11/2025   4,925   4,929 
The Kleinfelder Group, Inc.  L+5.25%   6.25%  11/29/2024   2,444   2,444 
               41,245   39,828 
Services: Consumer                    
Cambium Learning Group, Inc.  L+4.50%   5.25%  12/18/2025   4,516   4,527 
LegalZoom.com, Inc.  L+4.50%   4.61%  11/21/2024   2,687   2,688 
               7,203   7,215 
Telecommunications                    
Intermedia Holdings, Inc.  L+6.00%   7.00%  7/21/2025   1,792   1,796 
Mavenir Systems, Inc.  L+6.00%   7.00%  5/8/2025   3,890   3,897 
               5,682   5,693 
Transportation: Cargo                    
GlobalTranz Enterprises, LLC  L+5.00%   5.11%  5/15/2026   3,254   3,129 
               3,254   3,129 
Utilities: Oil & Gas                    
NGS US Finco, LLC  L+4.25%   5.25%  10/1/2025   1,708   1,640 
NGS US Finco, LLC  L+5.25%   6.25%  10/1/2025   249   245 
               1,957   1,885 
Wholesale                    
BMC Acquisition, Inc.  L+5.25%   6.25%  12/30/2024   4,837   4,816 
HALO Buyer, Inc.  L+4.50%   5.50%  6/30/2025   4,862   4,704 
PT Intermediate Holdings III, LLC  L+5.50%   6.50%  10/15/2025   1,975   1,958 
               11,674   11,478 
                     
TOTAL INVESTMENTS                 $198,599 

(a)All investments are U.S. companies unless otherwise noted.
(b)The majority of investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) which reset daily, monthly, quarterly or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at March 31, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of March 31, 2021. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.
(e)This position was on non-accrual status as of March 31, 2021, meaning that the Company has ceased accruing interest income on the position.


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2020

Portfolio Company (a) Spread Above
Index (b)		  Interest Rate (b)  Maturity  Principal  Fair Value 
Non-Controlled/Non-Affiliate Company Investments                    
Senior Secured Loans                    
Aerospace & Defense                    
Bromford Industries Limited (c)  L+5.25%  6.25%  11/5/2025   2,772  $2,685 
Bromford Industries Limited (c)  L+5.25%  6.25%  11/5/2025   1,848   1,790 
Trident Maritime SH, Inc.  L+4.75%  5.75%  6/4/2024   4,401   4,363 
Trident Maritime SH, Inc. (Revolver) (d)  L+4.75%  5.75%  6/4/2024   340   — 
               9,361   8,838 
Automotive                    
Truck-Lite Co., LLC  L+6.25%  7.25%  12/14/2026   1,726   1,716 
Truck-Lite Co., LLC  L+6.25%  7.25%  12/14/2026   256   254 
Wheel Pros, LLC  L+5.25%  6.25%  11/10/2027   3,000   2,961 
               4,982   4,931 
Banking, Finance, Insurance & Real Estate                    
Avison Young (USA), Inc. (c)  L+5.00%  5.25%  1/30/2026   4,900   4,659 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.)  L+5.25%  6.25%  12/13/2024   4,653   4,585 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.) (Delayed Draw) (d)  L+5.25%  6.25%  12/13/2024   264   102 
Lightbox Intermediate, L.P.  L+5.00%  5.15%  5/11/2026   4,925   4,777 
Minotaur Acquisition, Inc.  L+5.00%  5.15%  3/27/2026   2,947   2,900 
               17,689   17,023 
Beverage, Food & Tobacco                    
CBC Restaurant Corp.  n/a   5.00% PIK(e)  4/28/2022   1,117   1,031 
SW Ingredients Holdings, LLC  L+4.00%  5.00%  7/3/2025   3,656   3,647 
               4,773   4,678 
Capital Equipment                    
Analogic Corporation  L+5.25%  6.25%  6/24/2024   4,800   4,800 
               4,800   4,800 
Chemicals, Plastics & Rubber                    
Polymer Solutions Group  L+7.00%  8.00%  6/30/2021   1,216   1,189 
               1,216   1,189 
Construction & Building                    
ISC Purchaser, LLC  L+4.00%  5.00%  7/11/2025   4,937   4,896 
The Cook & Boardman Group, LLC  L+5.75%  6.75%  10/20/2025   2,940   2,811 
               7,877   7,707 
Consumer Goods: Durable                    
International Textile Group, Inc.  L+5.00%  5.37%  5/1/2024   1,758   1,597 
               1,758   1,597 
Consumer Goods: Non-Durable                    
PH Beauty Holdings III, Inc.  L+5.00%  5.23%  9/26/2025   2,442   2,149 
               2,442   2,149 
Containers, Packaging & Glass                    
Liqui-Box Holdings, Inc.  L+4.50%  5.50%  2/26/2027   4,312   3,848 
Polychem Acquisition, LLC  L+5.00%  5.15%  3/17/2025   2,948   2,948 
Port Townsend Holdings Company, Inc.  L+6.75%  5.75% Cash/
2.00% PIK		   4/3/2024   4,683   4,263 
PVHC Holding Corp.  L+4.75%  5.75%  8/5/2024   3,250   2,844 
               15,193   13,903 
Energy: Oil & Gas                    
Drilling Info Holdings, Inc.  L+4.25%  4.40%  7/30/2025   4,563   4,429 
Offen, Inc.  L+5.00%  5.15%  6/22/2026   2,412   2,343 
Offen, Inc.  L+5.00%  5.15%  6/22/2026   885   860 
               7,860   7,632 
Healthcare & Pharmaceuticals                    
LSCS Holdings, Inc.  L+4.25%  4.51%  3/17/2025   2,299   2,253 
LSCS Holdings, Inc.  L+4.25%  4.51%  3/17/2025   593   582 
Radiology Partners, Inc.  L+4.25%  4.40%  7/9/2025   4,760   4,692 
               7,652   7,527 


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

December 31, 2020

Portfolio Company (a)  Spread Above
Index (b) 		   Interest Rate (b)    Maturity    Principal    Fair Value  
High Tech Industries                    
AQA Acquisition Holding, Inc.  L+4.25%  5.25%  5/24/2023   3,257  $3,257 
Corel, Inc. (c)   L+5.00%  5.23%  7/2/2026   3,900   3,844 
LW Buyer, LLC  L+5.00%  5.15%  12/30/2024   4,925   4,900 
TGG TS Acquisition Company  L+6.50%  6.65%  12/12/2025   3,753   3,720 
               15,835   15,721 
Hotels, Gaming & Leisure                    
Excel Fitness Holdings, Inc.  L+5.25%  6.25%  10/7/2025   4,207   3,878 
North Haven Spartan US Holdco, LLC  L+5.00%  6.00%  6/6/2025   2,321   1,979 
Tait, LLC  L+5.00%  5.23%  3/28/2025   4,167   3,669 
Tait, LLC (Revolver)  P+4.00%  7.25%  3/28/2025   769   711 
               11,464   10,237 
Media: Advertising, Printing & Publishing                    
Cadent, LLC  L+5.50%  6.50%  9/11/2023   4,728   4,622 
Cadent, LLC (Revolver) (d)  L+5.50%  6.50%  9/11/2023   167   — 
Digital Room Holdings, Inc.  L+5.00%  5.27%  5/21/2026   4,362   4,133 
Monotype Imaging Holdings, Inc.  L+5.50%  6.50%  10/9/2026   4,906   4,653 
               14,163   13,408 
Media: Diversified & Production                    
Research Now Group, Inc. and Survey Sampling International, LLC  L+5.50%  6.50%  12/20/2024   6,790   6,708 
Stats Intermediate Holding, LLC  L+5.25%  5.47%  7/10/2026   4,950   4,909 
The Octave Music Group, Inc.  L+6.00%  6.25% Cash/
0.75% PIK		   5/29/2025   4,871   4,335 
               16,611   15,952 
Services: Business                    
AQ Carver Buyer, Inc.  L+5.00%  6.00%  9/23/2025   4,937   4,888 
CHA Holdings, Inc.  L+4.50%  5.50%  4/10/2025   2,002   1,872 
CHA Holdings, Inc.  L+4.50%  5.50%  4/10/2025   422   395 
Eliassen Group, LLC  L+4.25%  4.40%  11/5/2024   3,017   2,922 
Engage2Excel, Inc.  L+8.00%  7.00% Cash/
2.00% PIK		   3/7/2023   4,299   4,178 
Engage2Excel, Inc.  L+8.00%  7.00% Cash/
2.00% PIK		   3/7/2023   776   754 
Engage2Excel, Inc. (Revolver) (d)  L+8.00%  7.00% Cash/
2.00% PIK		   3/7/2023   548   364 
GI Revelation Acquisition, LLC  L+5.00%  5.15%  4/16/2025   1,365   1,344 
Legility, LLC  L+6.00%  7.00%  12/17/2025   4,906   4,735 
Orbit Purchaser, LLC  L+4.50%  5.50%  10/21/2024   2,456   2,407 
Orbit Purchaser, LLC  L+4.50%  5.50%  10/21/2024   1,897   1,859 
Orbit Purchaser, LLC  L+4.50%  5.50%  10/21/2024   555   544 
Output Services Group, Inc.  L+4.50%  5.50%  3/27/2024   4,865   3,648 
SIRVA Worldwide, Inc.  L+5.50%  5.65%  8/4/2025   1,900   1,741 
Teneo Holdings, LLC  L+5.25%  6.25%  7/11/2025   4,938   4,903 
The Kleinfelder Group, Inc.  L+5.25%  6.25%  11/29/2024   2,450   2,450 
               41,333   39,004 
Services: Consumer                    
Cambium Learning Group, Inc.  L+4.50%  4.75%  12/18/2025   4,900   4,883 
LegalZoom.com, Inc.  L+4.50%  4.65%  11/21/2024   2,694   2,706 
               7,594   7,589 
Telecommunications                    
Intermedia Holdings, Inc.  L+6.00%  7.00%  7/21/2025   1,797   1,795 
Mavenir Systems, Inc.  L+6.00%  7.00%  5/8/2025   3,900   3,893 
               5,697   5,688 
Transportation: Cargo                    
GlobalTranz Enterprises, LLC  L+5.00%  5.15%  5/15/2026   3,262   3,050 
               3,262   3,050 
Utilities: Oil & Gas                    
NGS US Finco, LLC  L+4.25%  5.25%  10/1/2025   1,712   1,640 
NGS US Finco, LLC  L+5.25%  6.25%  10/1/2025   250   246 
               1,962   1,886 
Wholesale                    
BMC Acquisition, Inc.  L+5.25%  6.25%  12/30/2024   4,850   4,802 
HALO Buyer, Inc.  L+4.50%  5.50%  6/30/2025   4,875   4,533 
PT Intermediate Holdings III, LLC  L+5.50%  6.50%  10/15/2025   1,980   1,851 
               11,705   11,186 
                     
TOTAL INVESTMENTS                 $205,695 

(a)All investments are U.S. companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of December 31, 2020. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.
(e)This position was on non-accrual status as of December 31, 2020, meaning that the Company has ceased accruing interest income on the position.


Below is certain summarized financial information for SLF as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020:

  March 31, 2021  December 31, 2020 
  (unaudited)    
Assets        
Investments, at fair value $198,599  $205,695 
Cash  25   351 
Restricted cash  3,136   2,948 
Interest receivable  714   629 
Other assets  86   43 
Total assets $202,560  $209,666 
Liabilities        
Revolving credit facility $121,614  $131,497 
Less: Unamortized deferred financing costs  (1,570)  (969)
Total debt, less unamortized deferred financing costs  120,044   130,528 
Interest payable  91   294 
Accounts payable and accrued expenses  291   277 
Total liabilities  120,426   131,099 
Members’ capital  82,134   78,567 
Total liabilities and members’ capital $202,560  $209,666 

  Three months ended March 31, 
  2021  2020 
       
  (unaudited) 
Investment income:        
Interest income $3,453  $4,253 
Total investment income  3,453   4,253 
Expenses:        
Interest and other debt financing expenses  979   1,614 
Professional fees  170   184 
Total expenses  1,149   1,798 
Net investment income (loss)  2,304   2,455 
Net gain (loss):        
Net change in unrealized gain (loss)  3,663   (22,329)
Net gain (loss)  3,663   (22,329)
Net increase (decrease) in members’ capital $5,967  $(19,874)

 

Note 4. Fair Value Measurements

 

Investments

 

The Company values all investments in accordance with ASC Topic 820. ASC Topic 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity.

 

ASC Topic 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

 ·Level 1 —– Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

 

 ·Level 2 —– Valuations based on inputs other than quoted prices in active markets, including quoted prices for similar assets or liabilities, which are either directly or indirectly observable.

 

 ·Level 3 —– Valuations based on inputs that are unobservable and significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. All investments, with the exception of investments measured at fair value using net asset value (“NAV”), as of September 30, 2017March 31, 2021 and December 31, 20162020 were categorized as Level 3 investments.

 


With respect to investments for which market quotations are not readily available, the Company’s Board undertakes a multi-step valuation process each quarter, as described below:

 

 ·the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;

 ·preliminary valuation conclusions are then documented and discussed with the investment committee of the Company;

 ·the Board also engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly;quarterly for each investment;

 

·to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;
·preliminary valuation conclusions are then documented and discussed with the investment committee of MC Advisors;
 ·the audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and responds andMC Advisors adjusts or further supplements the valuation recommendations to reflect any comments;comments provided by the audit committee; and

 ·the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

The accompanying consolidated schedules of investments held by the Company consist primarily of private debt instruments (“Level 3 debt”). The Company generally uses the yieldincome approach to determine fair value for Level 3 debt where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may include probability weighting of alternative outcomes. The Company generally considers its Level 3 debt to be performing loans if the borrower is not in default, the borrower is remitting payments in a timely manner; the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

 

24

Under the yieldincome approach, the Company uses discounted cash flow models are utilized to determine the present value of the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the yieldincome approach, the Company also considers the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

  

Under the market approach, the Company typically uses the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which the Company derives a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

Secured Borrowings In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.

As of March 31, 2021, the Board determined, in good faith, the fair value of the Company’s portfolio investments in accordance with GAAP and the Company’s valuation procedures based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has caused, any valuations conducted in the future in conformity with GAAP could result in a lower fair value of the Company’s portfolio. The potential impact of COVID-19 on the Company’s results going forward will depend to a large extent on future developments or new information that may emerge regarding the full duration and severity of COVID-19, including the actions taken by governments and other entities to contain COVID-19 or treat its impact, all of which are beyond the Company’s control. Accordingly, the Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.

Foreign Currency Forward Contracts

 

The Company has electedvaluation for the fair value option under ASC Topic 825 —Financial Instruments (“ASC Topic 825”) relating to accounting for debt obligationsCompany’s foreign currency forward contracts is based on the difference between the exchange rate associated with the forward contract and the exchange rate at their fair value for its secured borrowings which arose due to partial loan sales which did not meet the criteria for sale treatment under ASC Topic 860. The Company reports changescurrent period end. Foreign currency forward contracts are categorized as Level 2 in the fair value of its secured borrowings within net change in unrealized gain (loss) on secured borrowings in the consolidated statements of operations. The net gain or loss reflects the difference between the fair value and the principal amount due on maturity.hierarchy.

 

Due to the absence of a liquid trading market for these secured borrowings, they are valued by calculating the net present value of the future expected cash flow streams using an appropriate risk-adjusted discount rate model. The discount rate considers projected performance of the related loan investment, applicable market yields and leverage levels, credit quality, prepayment penalties and comparable company analysis. The Company consults with an independent valuation firm relative to the fair value of its secured borrowings at least once in every calendar year.


Fair Value Disclosures

 

The following table presentstables present fair value measurements of investments and secured borrowings,foreign currency forward contracts, by major class as of September 30, 2017, according to the fair value hierarchy:

 

 Fair Value Measurements  Fair Value Measurements 
 Level 1  Level 2  Level 3  Total 
March 31, 2021 Level 1  Level 2  Level 3  Total 
Investments:                                
Senior secured loans $—  $—  $327,984  $327,984  $—  $—  $392,399  $392,399 
Unitranche loans  —   —   44,592   44,592 
Unitranche secured loans  —   —   48,298   48,298 
Junior secured loans  —   —   38,555   38,555   —   —   11,999   11,999 
Equity securities  —   —   19,966   19,966   —   —   27,616   27,616 
Total Investments $—  $—  $431,097  $431,097 
                
Secured borrowings $—  $—  $—  $— 
Investments measured at NAV (1) (2)  —   —   —   41,067 
Total investments $—  $—  $480,312  $521,379 
Foreign currency forward contracts asset (liability) $—  $221  $—  $221 

  Fair Value Measurements 
December 31, 2020 Level 1  Level 2  Level 3  Total 
Investments:                
Senior secured loans $—  $—  $405,224  $405,224 
Unitranche secured loans  —   —   64,040   64,040 
Junior secured loans  —   —   14,592   14,592 
Equity securities  —   —   23,899   23,899 
Investments measured at NAV (1) (2)  —   —   —   39,284 
Total investments $—  $—  $507,755  $547,039 
Foreign currency forward contracts asset (liability) $—  $(113) $—  $(113)

(1)Certain investments that are measured at fair value using the NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the consolidated statements of assets and liabilities.
(2)Represents the Company’s investment in LLC equity interests in SLF. The fair value of this investment has been determined using the NAV of the Company’s ownership interest in SLF’s members’ capital.

 

The following table presents fair value measurements of investments andSenior secured borrowings, by major class, as of December 31, 2016, according to the fair value hierarchy:

  Fair Value Measurements 
  Level 1  Level 2  Level 3  Total 
Investments:                
Senior secured loans $—  $—  $275,253  $275,253 
Unitranche loans  —   —   51,638   51,638 
Junior secured loans  —   —   59,366   59,366 
Equity securities  —   —   26,663   26,663 
Total Investments $—  $—  $412,920  $412,920 
                 
Secured borrowings $—  $—  $1,314  $1,314 

25

 Senior,loans, unitranche secured loans and junior secured loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating, and are based on current market conditions and credit ratings of the borrower. TheExcluding loans on non-accrual, the contractual interest rates on the loans ranged between 6.24%from 6.00% to 15.24%18.00% at September 30, 2017March 31, 2021 and 5.75%6.00% to 17.00%18.00% at December 31, 2016.2020. The maturity dates on the loans outstanding at September 30, 2017March 31, 2021 range between December 2017June 2021 and August 2025.February 2028. 

 

The following tables provide a reconciliation of the beginning and ending balances for investments and secured borrowingsat fair value that use Level 3 inputs for the three and nine months ended September 30, 2017:March 31, 2021 and 2020:

 

  Investments    
  Senior
secured loans		  

Unitranche

loans

  

Junior

secured loans

  

Equity

securities

  

Total

investments

  

Secured

borrowings

 
Balance as of June 30, 2017 $351,491  $37,302  $37,709  $19,047  $445,549  $— 
Reclassifications(1)  (15,747)  15,747   —   —   —   — 
Net change in unrealized gain (loss) on investments  (3,380)   4,554   305   919   2,398   — 
Net realized gain (loss) on investments  —   (3,399)   7   492   (2,900)   — 
Purchases of investments and other adjustments to cost(2)  44,119   225   10,691   —   55,035   — 
Proceeds from principal payments and sales on investments (3)  (48,499)  (9,837)  (10,157)  (492)  (68,985)  — 
Net change in unrealized gain (loss) on secured borrowings  —   —   —   —   —   — 
Repayments on secured borrowings  —   —   —   —   —   — 
Net realized (gain) loss on secured borrowings  —   —   —   —   —   — 
Balance as of September 30, 2017 $327,984  $44,592  $38,555  $19,966  $431,097  $— 
  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2020 $405,224  $64,040  $14,592  $23,899  $507,755 
Net realized gain (loss) on investments  (194)  —   —   2   (192)
Net change in unrealized gain (loss) on investments  2,625   (3,563)  286   3,491   2,839 
Purchases of investments and other adjustments to cost (1)  44,896   424   168   287   45,775 
Proceeds from principal payments and sales of investments (2)  (60,152)  (12,603)  (3,047)  (63)  (75,865)
Reclassifications (3)  —   —   —   —   — 
Balance as of March 31, 2021 $392,399  $48,298  $11,999  $27,616  $480,312 

 

  Investments    
  Senior
secured loans		  

Unitranche

loans

  

Junior

secured loans

  

Equity

securities

  

Total

investments

  

Secured

borrowings

 
Balance as of December 31, 2016 $275,253  $51,638  $59,366  $26,663  $412,920  $1,314 
Reclassifications(1)  (18,542)  15,747   382   2,413   —   — 
Net change in unrealized gain (loss) on investments  (5,237)   5,382   462   (9,110)   (8,503)  — 
Net realized gain (loss) on investments  41   (3,399)   7   2,779   (572)   — 
Purchases of investments and other adjustments to cost(2)  155,915   4,889   10,893   —   171,697   — 
Proceeds from principal payments and sales on investments (3)  (79,446)  (29,665)  (32,555)  (2,779)  (144,445)  — 
Net change in unrealized gain (loss) on secured borrowings  —   —   —   —   —   6 
Repayments on secured borrowings  —   —   —   —   —   (1,254) 
Net realized (gain) loss on secured borrowings  —   —   —   —   —   (66)
Balance as of September 30, 2017 $327,984  $44,592  $38,555  $19,966  $431,097  $— 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2019 $475,157  $76,247  $13,676  $8,739  $573,819 
Net realized gain (loss) on investments  5   89   —   —   94 
Net change in unrealized gain (loss) on investments  (23,542)  (8,487)  (1,510)  (523)  (34,062)
Purchases of investments and other adjustments to cost (1)  64,703   1,739   3,865   2,201   72,508 
Proceeds from principal payments and sales of investments (2)  (34,761)  (13,759)  (4,327)  —   (52,847)
Reclassifications (3)  3   (3)  —   —   — 
Balance as of March 31, 2020
 $481,565  $55,826  $11,704  $10,417  $559,512 

(1)Represents non-cash reclassifications of investment type due to restructuring of the investments in portfolio companies.

(2)(1)Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.
(3)(2)Represents net proceeds from investments sold and principal paydowns received.

The following tables provide a reconciliation of the beginning and ending balances for investments and secured borrowings that use Level 3 inputs for the three and nine months ended September 30, 2016:

26

  Investments    
  Senior
secured loans		  

Unitranche

loans

  

Junior

secured loans

  

Equity

securities

  

Total

investments

  

Secured

borrowings

 
Balance as of June 30, 2016 $201,002  $53,920  $64,955  $22,931  $342,808  $2,112 
Reclassifications  —   —   —   —   —   — 
Net change in unrealized gain (loss) on investments  (2,739)   (635)   873   653   (1,848)  — 
Net realized gain (loss) on investments  —   —   —   —   —   — 
Purchases of investments and other adjustments to cost(2)  50,384   197   191   —   50,772   — 
Proceeds from principal payments and sales on investments (3)  (8,127)  (1,624)  (5,325)  —   (15,076)  — 
Net change in unrealized gain (loss) on secured borrowings  —   —   —   —   —   123 
Proceeds from secured borrowings  —   —   —   —   —   — 
Repayments on secured borrowings  —   —   —   —   —   (625)
Balance as of September 30, 2016 $240,520  $51,858  $60,694  $23,584  $376,656  $1,610 

  Investments    
  Senior
secured loans		  

Unitranche

loans

  

Junior

secured loans

  

Equity

securities

  

Total

investments

  

Secured

borrowings

 
Balance as of December 31, 2015 $190,559  $68,090  $63,388  $19,054  $341,091  $2,476 
Reclassifications(1)  6,525   (6,525)   —   —   —   — 
Net change in unrealized gain (loss) on investments  (3,360)   (2,349)   332   4,530   (847)  — 
Net realized gain (loss) on investments  —   —   —   587   587   — 
Purchases of investments and other adjustments to cost(2)  88,497   1,719   8,068   —   98,284   — 
Proceeds from principal payments and sales on investments (3)  (41,701)  (9,077)  (11,094)  (587)  (62,459)  — 
Net change in unrealized gain (loss) on secured borrowings  —   —   —   —   —   36 
Proceeds from secured borrowings  —   —   —   —   —   — 
Repayments on secured borrowings  —   —   —   —   —   (902)
Balance as of September 30, 2016 $240,520  $51,858  $60,694  $23,584  $376,656  $1,610 

(1)(3)Represents non-cash reclassificationsreclassification of investment type due to restructuring of the investments in portfolio companies.
(2)Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.
(3)Represents net proceeds from investments sold and principal paydowns received.a restructuring.

  

The total change in unrealized gain (loss) included in the consolidated statements of operations within net change in unrealized gain (loss) on investments included on the consolidated statements of operations for the three and nine months ended September 30, 2017,March 31, 2021 and 2020, attributable to Level 3 investments still held at September 30, 2017,March 31, 2021 and 2020, was ($254)$2,993 and ($11,637), respectively. The total change in unrealized gain (loss) included in the consolidated statements of operations within net change in unrealized gain (loss) on investments for the three and nine months ended September 30, 2016, attributable to Level 3 investments still held at September 30, 2016, was ($1,821) and ($377), respectively. The total change in unrealized gain (loss) included in the consolidated statements of operations within net change in unrealized gain (loss) on secured borrowings for the three and nine months ended September 30, 2016, attributable to Level 3 secured borrowings still held at September 30, 2016, was($123) and ($36)33,632), respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period in which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 during the three and nine months ended September 30, 2017March 31, 2021 and 2016.2020.

 

32

Significant Unobservable Inputs

 

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

  

27

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of September 30, 2017March 31, 2021 were as follows:

 

         Weighted  Range 
  Fair
Value		  Valuation Technique Unobservable
Input		 Average
Mean		  Minimum  Maximum 
Assets:                    
Senior secured loans $257,683  Discounted cash flow EBITDA multiples  6.9x   1.3x   14.0x 
        Market yields  11.5%  6.8%  22.0%
Senior secured loans  13,350  Waterfall Delinquency ratio  0.0%  0.0%  0.0%
Senior secured loans  12,897  Discounted cash flow Tangible book value multiples  1.4x   1.3x   1.4x 
        Market yields  13.8%  9.8%  19.2%
Senior secured loans  9,124  Enterprise value Revenue multiples  0.3x   0.3x   0.6x 
Senior secured loans  8,405  Enterprise value EBITDA multiples  7.1x   5.5x   9.0x 
Unitranche loans  44,299  Discounted cash flow EBITDA multiples  7.2x   4.5x   8.5x 
        Market yields  13.6%  6.5%  20.9%
Unitranche loans  293  Enterprise value EBITDA multiples  5.0x   4.5x   5.5x 
Junior secured loans  5,653  Discounted cash flow EBITDA multiples  8.9x   3.8x   10.0x 
        Market yields  11.5%  10.6%  13.5%
Equity securities  9,705  Enterprise value EBITDA multiples  5.2x   4.5x   9.5x 
Equity securities  8,192  Discounted cash flow EBITDA multiples  4.0x   3.8x   4.3x 
        Market yields  19.0%  18.0%  20.0%
Equity securities  610  Enterprise value Tangible book value multiples  1.4x   1.3x   1.4x 
Equity securities  215  Enterprise value Revenue multiples  2.5x   2.4x   2.6x 
Total Level 3 Assets $370,426(1)                
                     
Liabilities:                    
Secured Borrowings $—                 

         Weighted       
     Valuation Unobservable Average  Range 
  Fair Value  Technique Input Mean  Minimum  Maximum 
Assets:                    
Senior secured loans $242,639  Discounted cash flow EBITDA multiples  7.3x  4.5x  16.5x
        Market yields  10.0%  6.0%  20.0%
Senior secured loans  95,709  Discounted cash flow Revenue multiples  4.9x  0.5x  12.3x
        Market yields  8.7%  6.3%  17.0%
Senior secured loans  21,616  Enterprise value Book value multiples  2.0x  2.0x  2.0x
Senior secured loans  16,096  Enterprise value Revenue multiples  2.2x  0.7x  2.7x
Senior secured loans  7,047  Enterprise value EBITDA multiples  5.8x  5.8x  5.8x
Senior secured loans  4,786  Liquidation Probability weighting of alternative outcomes  74.0%  1.1%  100.0%
Unitranche loans  40,735  Discounted cash flow EBITDA multiples  8.6x  7.3x  10.3x
        Market yields  9.7%  8.1%  12.8%
Unitranche loans  7,563  Enterprise value Revenue multiples  0.6x  0.6x  0.6x
Junior secured loans  3,934  Discounted cash flow Market yields  9.8%  9.8%  9.8%
Junior secured loans  765  Liquidation Probability weighting of alternative outcomes  91.9%  91.9%  91.9%
Equity securities  11,859  Enterprise value EBITDA multiples  8.3x  5.0x  15.3x
Equity securities  8,277  Enterprise value Revenue multiples  1.8x  0.5x  12.0x
Equity securities  5,117  Liquidation Probability weighting of alternative outcomes  54.6%  54.6%  54.6%
Equity securities  286  Enterprise value Tangible book value multiples  2.0x  2.0x  2.0x
Equity securities  122  Option pricing model Volatility  65.0%  65.0%  65.0%
Total Level 3 Assets $466,551(1)                 

 

 

(1)Excludes loans of $57,521$13,761 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required. Also excludes loans of $3,150 at fair value which were fully repaid subsequent to September 30, 2017 where valuation represents the repayment price.

  

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of December 31, 20162020 were as follows:follows:

 

         Weighted  Range 
  Fair
Value		  Valuation Technique Unobservable
Input		 Average
Mean		  Minimum  Maximum 
Assets:                    
Senior secured loans $214,267  Discounted cash flow EBITDA multiples  7.0x   3.2x   13.3x 
        Market yields  11.7%  7.0%  22.0%
Senior secured loans  1,054  Enterprise value Revenue multiples  0.6x   0.5x   0.6x 
Senior secured loans  12,727  Enterprise value EBITDA multiples  4.1x   3.3x   5.5x 
Unitranche loans  47,861  Discounted cash flow EBITDA multiples  6.1x   4.8x   8.0x 
        Market yields  13.4%  9.5%  22.1%
Unitranche loans  3,491  Combination of discounted cash flow and enterprise value Revenue multiples  0.5x   0.5x   0.6x 
        Market yields  29.2%  29.2%  29.2%
Unitranche loans  286  Enterprise value EBITDA multiples  6.0x   5.5x   6.5x 
Junior secured loans  18,572  Discounted cash flow EBITDA multiples  7.5x   3.5x   9.5x 
        Market yields  11.5%  7.0%  13.5%
Junior secured loans  —  Enterprise value Revenue multiples  0.6x   0.5x   0.6x 
Equity securities  8,121  Discounted cash flow EBITDA multiples  3.8x   3.5x   4.0x 
        Market yields  17.0%  16.0%  18.0%
Equity securities  18,164  Enterprise value EBITDA multiples  4.6x   3.3x   13.3x 
Equity securities  249  Enterprise value Revenue multiples  0.8x   0.1x   3.8x 
Total Level 3 Assets $324,792(1)                
                     
Liabilities:                    
Secured Borrowings $1,314  Discounted cash flow Market yields  7.7%  7.1%  8.2%

         Weighted       
       Unobservable Average  Range 
  Fair Value  Valuation Technique Input Mean  Minimum  Maximum 
Assets:                
Senior secured loans $271,926  Discounted cash flow EBITDA multiples  7.5x  2.8x  16.6x
        Market yields  9.5%  6.2%  18.8%
Senior secured loans  74,479  Discounted cash flow Revenue multiples  4.8x  0.5x  10.5x
        Market yields  9.2%  6.1%  18.5%
Senior secured loans  24,271  Enterprise value Book value multiples  2.0x  2.0x  2.0x
Senior secured loans  15,515  Enterprise value Revenue multiples  2.0x  0.7x  2.4x
Senior secured loans  7,525  Liquidation Probability weighting of alternative outcomes  63.2%  1.1%  100.0%
Senior secured loans  6,944  Enterprise value EBITDA multiples  8.0x  8.0x  8.0x
Unitranche secured loans  52,476  Discounted cash flow EBITDA multiples  9.7x  8.0x  12.5x
        Market yields  9.3%  7.5%  12.8%
Unitranche secured loans  9,800  Discounted cash flow Revenue multiples  0.7x  0.7x  0.7x
        Market yields  10.7%  10.5%  11.0%
Unitranche secured loans  1,764  Enterprise value Revenue multiples  0.7x  0.7x  0.7x
Junior secured loans  3,886  Discounted cash flow Market yields  10.0%  10.0%  10.0%
Junior secured loans  762  Liquidation Probability weighting of alternative outcomes  91.5%  91.5%  91.5%
Equity securities  10,865  Enterprise value EBITDA multiples  7.6x  2.8x  15.3x
Equity securities  6,771  Enterprise value Revenue multiples  1.3x  0.5x  11.0x
Equity securities  5,117  Liquidation Probability weighting of alternative outcomes  54.6%  54.6%  54.6%
Equity securities  87  Option pricing model Volatility  70.0%  70.0%  70.0% 
Total Level 3 Assets $492,188(1)                

28

 

 

(1)Excludes loans of $88,128$15,567 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

 

The significant unobservable inputsinput used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

The significant unobservable inputs used in the yieldincome approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

 

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment. 


Other Financial Assets and Liabilities

 

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. Fair value of the Company’s revolving credit facility is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if applicable. TheAs of both March 31, 2021 and December 31, 2020, the Company believes that the carrying value of its revolving credit facility approximates fair value. SBA-guaranteedThe 2026 Notes are carried at cost and with their longer maturity dates, fair value is estimated by discounting remaining payments using current market rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the notes. As of March 31, 2021, the Company believes that the carrying value of the 2026 Notes approximates fair value. SBA debentures are carried at cost and with their longer maturity dates, fair value is estimated by discounting remaining payments using current market rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the SBA debentures. As of September 30, 2017both March 31, 2021 and December 31, 2016,2020, the fair value ofCompany believes that the Company’s SBA debentures using Level 3 inputs were estimated at $92,100 and $51,500, respectively, which is the same as the Company’s carrying value of the SBA debentures.debentures approximates fair value.

 

Note 5. Transactions with Affiliated Companies

 

An affiliated company is a company in which the Company has an ownership interest of 5% or more of its voting securities. A controlled affiliate company is a company in which the Company has an ownership interest of more than 25% of its voting securities. Please see the Company’s consolidated schedule of investments for the type of investment, principal amount, interest rate including the spread, and the maturity date. Transactions related to the Company’s investments with affiliates for the ninethree months ended September 30, 2017March 31, 2021 and 20162020 were as follows:

 

Portfolio Company Fair value
at
December
31,
2016		  

 

Transfers in
(out)

  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gains (losses)		  Net
unrealized
gains
(losses)		  

Fair value
at
September
30,

2017

 
Non-controlled affiliate company investments(1) :                                    
American Community Homes, Inc. $13,950  $—  $647  $—  $168  $52  $—  $(1,310) $13,507 
Luxury Optical Holdings Co.(2)  —   3,970   808   —   68   4   —   (364)  4,486 
Rockdale Blackhawk, LLC(3)  27,077   —   4,161   (16)  —   147   —   (6,394)  24,975 
Rocket Dog Brands, LLC  1,054   —   —   —   130   (1)  —   (927)  256 
SHI Holdings, Inc.  4,297   —   833   —   —   15       307   5,452 
Summit Container Corporation  3,663   —   1,499   (102)  55   18   —   (214)  4,919 
Total non-controlled affiliate company investments $50,041  $3,970  $7,948  $(118) $421  $235  $—  $(8,902) $53,595 
Controlled affiliate company investments(1) :                                    
TPP Acquisition, Inc.(4) $—  $—  $—  $—  $—  $—  $—  $—  $— 
TPP Operating, Inc.(4)  8,899   —   4,330   (972)  —   —   —   (3,389)  8,868 
Total controlled affiliate company investments $8,899  $—  $4,330  $(972) $—  $—  $—  $(3,389) $8,868 
Portfolio Company Fair value at
December 31, 2020		  Transfers
in (out)		  Purchases  Sales and
paydowns		  PIK
interest		  Discount
accretion		  Net
realized
gain (loss)		  Net
unrealized
gain (loss)		  Fair value at
March 31, 2021		 
Non-controlled affiliate company investment:                                    
American Community Homes, Inc. $9,401  $  —  $   —  $(90) $274  $—  $—  $—  $9,585 
American Community Homes, Inc.  6,239   —   —   (2,229)  202   —   —   —   4,212 
American Community Homes, Inc.  825   —   —   (838)  13   —   —   —   — 
American Community Homes, Inc.  570   —   —   (5)  16   —   —   —   581 
American Community Homes, Inc.  335   —   —   (341)  6   —   —   —   — 
American Community Homes, Inc.  2,915   —   —   (20)  61   —   —   175   3,131 
American Community Homes, Inc.  3,879   —   —   (37)  113   —   —   42   3,997 
American Community Homes, Inc.  18   —   —   —   1   —   —   —   19 
American Community Homes, Inc.  89   —   —   (1)  3   —   —   —   91 
American Community Homes, Inc. (Revolver)  —   —   —   —   —   —   —   —   — 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   286   286 
   24,271   —   —   (3,561)  689   —   —   503   21,902 
                                     
Ascent Midco, LLC  6,997   —   —   (18)  —   7   —   (5)  6,981 
Ascent Midco, LLC (Delayed Draw)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (Revolver)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (2,032,258 Class A units)  3,016   —   —   —   —   —   —   266   3,282 
   10,013   —   —   (18)  —   7   —   261   10,263 
                                     
Curion Holdings, LLC  3,159   —   —   —   —   —   —   426   3,585 
Curion Holdings, LLC (Revolver)  820   —   —   —   —   —   —   2   822 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,979   —   —   —   —   —   —   428   4,407 
                                     
Familia Dental Group Holdings, LLC (1,052 Class A units)  3,118   —   —   —   —   —   —   232   3,350 
   3,118   —   —   —   —   —   —   232   3,350 
                                     
HFZ Capital Group, LLC  13,106   —   —   —   —   —   —   1,169   14,275 
HFZ Capital Group, LLC  4,709   —   —   —   —   —   —   420   5,129 
MC Asset Management (Corporate), LLC  —   —   6,423   —   —   —   —   —   6,423 
MC Asset Management (Corporate), LLC (15.9% interests)  785   —   —   —   —   —   —   (209)  576 
MC Asset Management (Industrial), LLC  11,579   —   —   —   98   —   —   (98)  11,579 
   30,179   —   6,423   —   98   —   —   1,282   37,982 
                                     
Incipio, LLC  1,764   —   —   —   —   —   —   (1,764)  — 
Incipio, LLC  4,227   —   —   —   48   —   —   (2,187)  2,088 
Incipio, LLC  1,805   —   —   —   15   —   —   (79)  1,741 
Incipio, LLC  761   —   —   —   6   —   —   (33)  734 
Incipio, LLC  1,519   —   —   —   13   —   —   (67)  1,465 
Incipio, LLC (Delayed Draw)  1,488   —   108   —   9   —   —   (70)  1,535 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   11,564   —   108   —   91   —   —   (4,200)  7,563 
                                     
Luxury Optical Holdings Co.  1,430   —   —   —   —   —   —   12   1,442 
Luxury Optical Holdings Co. (Delayed Draw)  624   —   882   (45)  —   —   —   45   1,506 
Luxury Optical Holdings Co. (Revolver)  66   —   —   —   —   —   —   —   66 
Luxury Optical Holdings Co. (90 preferred units)  2,476   —   —   —   —   —   —   (38)  2,438 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,596   —   882   (45)  —   —   —   19   5,452 
                                     
Mnine Holdings, Inc.  12,356   —   —   —   147   11   —   (3)  12,511 
Mnine Holdings, Inc. (6,400 Class B units)  —   —   —   —   —   —   —   —   — 
   12,356   —   —   —   147   11   —   (3)  12,511 
                                     
NECB Collections, LLC (Revolver)  834   —   —   —   —   —   —   (27)  807 
NECB Collections, LLC (20.8% of units)  —   —   —   —   —   —   —   —   — 
   834   —   —   —   —   —   —   (27)  807 
                                     
SHI Holdings, Inc.  188   —   —   —   —   —   —   (73)  115 
SHI Holdings, Inc. (Revolver)  297   —   —   —   —   —   —   (115)  182 
SHI Holdings, Inc. (24 shares of common stock)  —   —   —   —   —   —   —   —   — 
   485   —   —   —   —   —   —   (188)  297 
                                     
Summit Container Corporation  3,204   —   —   (3,019)  —   —   (250)  65   — 
Summit Container Corporation (Revolver)  1,654   —   5,402   (7,059)  —   —   —   3   — 
Summit Container Corporation (warrant to
purchase up to 19.5% of the equity)		  139   —   —   —   —   —   —   (139)  — 
   4,997   —   5,402   (10,078)  —   —   (250)  (71)  — 
                                     
TJ Management HoldCo, LLC (Revolver)  —   —   —   —   —   —   —   —   — 
TJ Management HoldCo, LLC (16 shares of common stock)  3,323   —   —   —   —   —   —   (38)  3,285 
   3,323   —   —   —   —   —   —   (38)  3,285 
Total non-controlled affiliate company investments $109,715  $—  $12,815  $(13,702) $1,025  $18  $(250) $(1,802) $107,819 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $39,284  $—  $—  $—  $—  $—  $—  $1,783  $41,067 
   39,284   —   —   —   —   —   —   1,783   41,067 
Total controlled affiliate company investments $39,284  $—  $—  $—  $—  $—  $—  $1,783  $41,067 


Portfolio Company Fair value at
December 31,
2019		  Transfers
in (out)		  Purchases  Sales and
paydowns		  PIK
interest		  Discount
accretion		  Net
realized
gain
(loss)		  Net
unrealized
gain (loss)		  Fair value at
March 31, 2020		 
Non-controlled affiliate company investment:                                    
American Community Homes, Inc. $6,764  $—  $—  $—  $266  $2  $—  $(773) $6,259 
American Community Homes, Inc.  4,289   —   —   —   235   1   —   (511)  4,014 
American Community Homes, Inc.  512   —   —   —   21   —   —   (59)  474 
American Community Homes, Inc.  410   —   —   —   16   —   —   (47)  379 
American Community Homes, Inc.  230   —   —   —   13   —   —   (27)  216 
American Community Homes, Inc.  1,472   —   —   —   48   —   —   (165)  1,355 
American Community Homes, Inc.  2,760   —   —   —   90   —   —   (309)  2,541 
American Community Homes, Inc.  11   —   —   —   1   —   —   (2)  10 
American Community Homes, Inc.  1,168   —   —   (1,111)  9   —   —   (8)  58 
American Community Homes, Inc. (Revolver)  —   —   1,667   —   —   —   —   (520)  1,147 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   —   — 
   17,616   —   1,667   (1,111)  699   3   —   (2,421)  16,453 
                                     
Ascent Midco, LLC  —   —   6,860   (17)  —   4   —   (130)  6,717 
Ascent Midco, LLC (Delayed Draw)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (Revolver)  —   —   734   —   —   —   —   (28)  706 
Ascent Midco, LLC (2,032,258 Class A units)  —   —   2,032   —   —   —   —   (54)  1,978 
   —   —   9,626   (17)  —   4   —   (212)  9,401 
                                     
Curion Holdings, LLC  3,279   —   —   —   —   —   —   (268)  3,011 
Curion Holdings, LLC (Revolver)  441   —   —   —   —   —   —   (1)  440 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,720   —   —   —   —   —   —   (269)  3,451 
                                     
Incipio, LLC  12,343   —   —   —   128   —   —   (6,444)  6,027 
Incipio, LLC  3,750   —   —   —   99   —   —   (38)  3,811 
Incipio, LLC  1,606   —   —   —   42   —   —   (17)  1,631 
Incipio, LLC  686   —   —   —   18   —   —   (8)  696 
Incipio, LLC  —   —   1,404   —   19   —   —   (28)  1,395 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   18,385   —   1,404   —   306   —   —   (6,535)  13,560 
                                     
Luxury Optical Holdings Co.  3,457   —   —   —   —   —   —   (500)  2,957 
Luxury Optical Holdings Co. (Delayed Draw)  620   —   —   —   —   —   —   (5)  615 
Luxury Optical Holdings Co. (Revolver)  159   —   —   —   —   —   —   (23)  136 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,236   —   —   —   —   —   —   (528)  3,708 
                                     
NECB Collection, LLC (Revolver)  1,148   —   112   —   —   —   —   —   1,260 
NECB Collection, LLC (20.8% of units)  318   —   —   —   —   —   —   (198)  120 
   1,466   —   112   —   —   —   —   (198)  1,380 
                                     
SHI Holdings, Inc.  2,459   —   —   —   —   —   —   (1,279)  1,180 
SHI Holdings, Inc. (Revolver)  3,601   —   345   —   —   —   —   (2,078)  1,868 
SHI Holdings, Inc. (24 shares of common stock)  —   —   —   —   —   —   —   —   — 
   6,060   —   345   —   —   —   —   (3,357)  3,048 
                                     
Summit Container Corporation  2,971   —   —   —   —   —   —   (171)  2,800 
Summit Container Corporation (Revolver)  5,406   —   8,236   (9,409)  —   —   —   (16)  4,217 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   —   — 
   8,377   —   8,236   (9,409)  —   —   —   (187)  7,017 
Total non-controlled affiliate company investments $59,860  $—  $21,390  $(10,537) $1,005  $7  $—  $(13,707) $58,018 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $42,412  $—  $—  $—  $—  $—  $—  $(11,087) $31,325 
   42,412   —   —   —   —   —   —   (11,087)  31,325 
Total controlled affiliate company investments $42,412  $—  $—  $—  $—  $—  $—  $(11,087) $31,325 

 

29

  For the three months ended March 31, 
  2021  2020 
Portfolio Company Interest Income  Dividend Income  Fee Income  Interest Income  Dividend Income  Fee Income 
Non-controlled affiliate company investments:                        
American Community Homes, Inc. $272  $—  $—  $265  $—  $— 
American Community Homes, Inc.  198   —   —   233   —   — 
American Community Homes, Inc.  13   —   —   20   —   — 
American Community Homes, Inc.  16   —   —   16   —   — 
American Community Homes, Inc.  5   —   —   13   —   — 
American Community Homes, Inc.  60   —   —   47   —   — 
American Community Homes, Inc.  112   —   —   101   —   — 
American Community Homes, Inc.  19   —   —   1   —   — 
American Community Homes, Inc.  3   —   —   9   —   — 
American Community Homes, Inc. (Revolver)  —   —   —   1   —   — 
American Community Homes, Inc. (Warrant)  —   —   —   —   —   — 
   698   —   —   706   —   — 
                         
Ascent Midco, LLC  120   —   —   84   —   — 
Ascent Midco, LLC (Delayed Draw)  4   —   —   3   —   — 
Ascent Midco, LLC (Revolver)  1          —   —   1   —   — 
Ascent Midco, LLC (Class A units)  —   42          —   —   25   — 
   125   42   —   88   25   — 
                         
Curion Holdings, LLC  —   —   —   —   —   — 
Curion Holdings, LLC (Revolver)  —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Common units)  —   —   —   —   —   — 
   —   —   —   —   —   — 
                         
Familia Dental Group Holdings, LLC (Class A units)  —   —   —    n/a     n/a     n/a  
   —   —   —    n/a     n/a     n/a  
                         
HFZ Capital Group, LLC  463   —   —    n/a     n/a     n/a  
HFZ Capital Group, LLC  167   —   —    n/a     n/a     n/a  
MC Asset Management (Corporate), LLC  183   —   —    n/a     n/a     n/a  
MC Asset Management (Corporate), LLC (LLC interest)  —   —   —    n/a     n/a     n/a  
MC Asset Management (Industrial), LLC  522   —   —    n/a     n/a     n/a  
   1,335   —   —    n/a     n/a     n/a  
                         
Incipio, LLC  —   —   —   (52)  —   — 
Incipio, LLC  —      —   —   101   —   — 
Incipio, LLC  —   —   —   42   —   — 
Incipio, LLC  —   —        —   18   —   — 
Incipio, LLC  —   —   —   31   —   — 
Incipio, LLC (Delayed Draw)  —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Common units)  —   —   —   —   —   — 
   —   —   —   140   —   — 
                         
Luxury Optical Holdings Co.  —   —   —   —   —   — 
Luxury Optical Holdings Co. (Delayed Draw)  —   —   —   21   —   — 
Luxury Optical Holdings Co. (Revolver)  —   —   —   —   —   — 
Luxury Optical Holdings Co. (Preferred units)  —   —   —   —   —   — 
Luxury Optical Holdings Co. (Common stock)  —   —   —   —   —   — 
   —   —   —   21   —   — 
                         
Mnine Holdings, Inc.  334   —   —    n/a     n/a     n/a  
Mnine Holdings, Inc. (Common units)  —   —   —    n/a     n/a     n/a  
   334   —   —    n/a     n/a     n/a  
                         
NECB Collections, LLC (Revolver)  —   —   —   39   —   — 
NECB Collections, LLC (LLC units)  —   —   —   —   —   — 
   —   —   —   39   —   — 
                         
SHI Holdings, Inc.  —   —   —   (2)  —   — 
SHI Holdings, Inc. (Revolver)  —   —   —   (3)  —   — 
SHI Holdings, Inc. (Common stock)  —   —   —   —   —   — 
   —   —   —   (5)  —   — 
                         
Summit Container Corporation  57   —   —   80   —   — 
Summit Container Corporation (Revolver)  35   —   —   126   —   — 
Summit Container Corporation (Warrant)  —   —   —   —   —   — 
   92   —   —   206   —   — 
                         
TJ Management HoldCo, LLC (Revolver)  3   —   —     n/a     n/a     n/a  
TJ Management HoldCo, LLC (Common stock)  —   —   —     n/a     n/a     n/a  
   3   —   —    n/a     n/a     n/a  
Total non-controlled affiliate company investments $2,587  $42  $—  $1,195  $25  $— 
                         
Controlled affiliate company investments:                        
MRCC Senior Loan Fund I, LLC $—  $1,200  $—  $—  $1,150  $— 
   —   1,200   —   —   1,150   — 
Total controlled affiliate company investments $—  $1,200  $—  $—  $1,150  $— 

 


 Portfolio Company Fair value
at
December
31,
2015		  

 

 

Transfers in
(out)

  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gains
(losses)		  Net
unrealized
gains
(losses)		  

Fair value
at
September
30,

2016

 
Non-controlled affiliate company investments(1) :                                    
American Community Homes, Inc. $11,692  $—  $488  $—  $153  $44  $—  $1,045  $13,422 
Rockdale Blackhawk, LLC  21,903   —   462   (2,187)  —   140   —   3,945   24,263 
Rocket Dog Brands, LLC  1,752   —   384   (12)  319   7   —   (1,293)  1,157 
Summit Container Corporation  3,400   —   137   (141)  48   20   —   117   3,581 
Total non-controlled affiliate company investments $38,747  $—  $1,471  $(2,340) $520  $211  $—  $3,814  $42,423 
Controlled affiliate company investments(1) :                                    
TPP Acquisition, Inc. $6,525  $—  $4,769  $(1,304) $—  $—  $—  $(3,741) $6,249 
Total controlled affiliate company investments $6,525  $—  $4,769  $(1,304) $—  $—  $—  $(3,741) $6,249 

  For the nine months ended September 30, 
  2017  2016 
Portfolio Company Interest
income		  Dividend
income		  Fee
income		  Interest
income		  Dividend
income		  Fee
income		 
Non-controlled affiliate company investments (1) :                        
American Community Homes, Inc. $1,142  $—  $—  $1,073  $—  $— 
Luxury Optical Holdings Co.  142   —   —   —   —   — 
Rockdale Blackhawk, LLC  1,518   —   —   1,373   3,546   — 
Rocket Dog Brands, LLC  126   —   —   351   —   — 
SHI Holdings, Inc.  367   —   —   —   —   — 
Summit Container Corporation  482   —   —   485   —   — 
Total non-controlled affiliate company investments $3,777  $—  $—  $3,282  $3,546  $— 
Controlled affiliate company investments(1):                        
TPP Acquisition, Inc. $—  $—  $—  $30  $—  $— 
TPP Operating, Inc.  594   —   —   —   —   — 
Total controlled affiliate company investments $594  $—  $—  $30  $—  $— 

(1)Includes both loan and equity security investment transactions for these portfolio companies.
(2)The Company provided a follow-on investment to Luxury Optical Holdings Co. (“LOH”) as a part of a restructuring during the three months ended September 30, 2017. As part of the restructuring, the Company also received 9.6% of the equity of LOH. For the purpose of this schedule, transfers in represents the fair value at June 30, 2017.
(3)The Company provided a follow-on investment to Rockdale Blackhawk, LLC (“Rockdale”) during the three months ended September 30, 2017. In conjunction with the follow-on investment, the Company also received an additional 6.4% of the equity of Rockdale, increasing total equity ownership to 18.0%.
(4)On September 2, 2016, TPP Acquisition, Inc. filed for bankruptcy as part of a restructuring process. The existing lenders, including the Company, submitted a credit bid to purchase certain assets of TPP Acquisition, Inc., which was approved by the bankruptcy court. The sale closed on November 8, 2016. A new operating company, TPP Operating, Inc., was formed to acquire certain of the assets of TPP Acquisition, Inc. and continue business operations. These new operations are no longer encumbered by significant lease liabilities. The Company owns 40% of the equity interests in both the former operating company, TPP Acquisition, Inc. (which is in wind-down) and the new operating company, TPP Operating, Inc. During the bankruptcy period, the Company and the other existing lenders provided additional financing through a debtor-in-possession financing (“DIP”) facility. Upon the purchase of TPP Acquisition, Inc.’s assets, TPP Operating, Inc. entered into a new credit facility with the existing lenders, including the Company. The principal amount of the new facility with TPP Operating, Inc. represented the amount owed to the lenders under the pre-petition facilities plus the amount funded under the DIP facility, less the amount of the credit bid. The cost basis of the Company’s equity investment in TPP Operating, Inc. represents the credit bid and equates to the reduction of principal outstanding on the debt facilities when the new facility was issued to TPP Operating, Inc. As of September 30, 2017, the Company valued its positions in TPP Operating, Inc. utilizing an enterprise value waterfall model. The key inputs to the model were an estimated 2017 revenue forecast and revenue multiple developed using comparable public and private company data.

Note 6. Transactions with Related Parties

 

The Company has entered into an Investment Advisory and Management Agreementinvestment advisory agreement with MC Advisors (the “Investment Advisory Agreement”), under which MC Advisors, subject to the overall supervision of the Board, provides investment advisory services to the Company. The Company pays MC Advisors a fee for its services under the Investment Advisory and Management Agreement consisting of two components—components - a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee are borne by the Company’s stockholders, unless such fees are waived by MC Advisors.

The base management fee is calculated initially at an annual rate equal to 1.75% of average invested assets (calculated as total assets excluding cash, which includes assets financed using leverage); provided, however, the base management fee is calculated at an annual rate equal to 1.75%1.00% of the Company’s average invested assets (calculated as total assets excluding cash)cash, which includes assets financed using leverage) that exceeds the product of (i) 200% and (ii) the Company’s average net assets. For the avoidance of doubt, the 200% is calculated in accordance with the asset coverage limitation as defined in the 1940 Act to give effect to the Company’s exemptive relief with respect to MRCC SBIC’s SBA debentures. This has the effect of reducing the Company’s base management fee rate on assets in excess of regulatory leverage of 1:1 debt to equity to 1.00% per annum. The base management fee is payable quarterly in arrears.

Base management fees for the three and nine months ended September 30, 2017March 31, 2021 and 2020 were $1,953$2,334 and $5,661,$2,551, respectively. Base management fees for the three and nine months ended September 30, 2016 were $1,594 and $4,598, respectively.

30

 

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20% of “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a 2% (8% annualized) preferred return, or “hurdle,” and a “catch up” feature. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of pre-incentive fee net investment income will be payable except to the extent that 20% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters.quarters (the “Incentive Fee Limitation”). Therefore, any ordinary income incentive fee that is payable in a calendar quarter will be limited to the lesser of (1) 20% of the amount by which pre-incentive fee net investment income for such calendar quarter exceeds the 2% hurdle, subject to the “catch-up” provision, and (2) (x) 20% of the cumulative net increase in net assets resulting from operations for the then current and 11 preceding calendar quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the sum of pre-incentive fee net investment income, realized gains and losses and unrealized gains and losses for the then current and 11 preceding calendar quarters. The second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year in an amount equal to 20% of realized capital gains, if any, on a cumulative basis from inception through the end of the year, computed net of all realized capital losses on a cumulative basis and unrealized depreciation, less the aggregate amount of any previously paid capital gain incentive fees.

 

Incentive fees, excluding the impactThe composition of the incentive fee waiver, for the three and nine months ended September 30, 2017 were $1,721 and $4,471, respectively. Incentive fees for the three months ended September 30, 2017 consisted solely of part oneCompany’s incentive fees (based on net investment income) of $1,721. Incentive fees for the nine months ended September 30, 2017, consisted of part one incentive fees of $4,646 and part two incentive fees (based upon net realized and unrealized gains and losses, or capital gains) of ($175). Part two incentive fees reduced total incentive fees for the nine months ended September 30, 2017, primarilywas as a result of net unrealized losses during the period. Incentive fees for the three and nine months ended September 30, 2016 were $1,223 and $4,282, respectively. Incentive fees for the three months ended September 30, 2016, consisted of part one incentive fees of $1,361 and part two incentive fees of ($138). Part two incentive fees reduced the total incentive fees for the three months ended September 30, 2016, primarily as a result of net unrealized losses during the period. Incentive fees for the nine months ended September 30, 2016, consisted solely of part one incentive fees of $4,282. For the three and nine months ended September 30, 2017, MC Advisors waived part one incentive fees of zero and $250, respectively. For the three and nine months ended September 30, 2016 no incentive fees were waived. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 20% of the sum of net realized gain (loss) plus net unrealized gain (loss).follows:

  Three months ended March 31, 
  2021  2020 
Part one incentive fees (1) $830  $1,356 
Part two incentive fees (2)  —   — 
Incentive Fee Limitation  —   (1,356)
Incentive fees, excluding the impact of the incentive fee waiver  830   — 
Incentive fee waiver (3)  (637)  — 
Total incentive fees, net of incentive fee waiver $193  $— 

(1)Based on pre-incentive fee net investment income.
(2)Based upon net realized and unrealized gains and losses, or capital gains. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 20% of the sum of net realized gain (loss) plus net unrealized gain (loss).
(3)Represents part one incentive fees waived by MC Advisors.

  

The Company has entered into an Administration Agreementadministration agreement with Monroe CapitalMC Management Advisors, LLC (“MC Management”(the “Administration Agreement”), under which the Company reimburses MC Management, (subjectsubject to the review and approval of the Board)Board, for its allocable portion of overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that MC Management outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit to MC Management. For the three and nine months ended September 30, 2017,March 31, 2021 and 2020, the Company incurred $864$842 and $2,540,$784, respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $295$356 and $926, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. For the three and nine months ended September 30, 2016, the Company incurred $826 and $2,249, respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $324 and $956,$338, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of September 30, 2017March 31, 2021 and December 31, 2016, $2952020, $356 and $330,$327, respectively, of expenses were due to MC Management under this agreement and are included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

  

The Company has entered into a license agreement with Monroe Capital LLC under which Monroe Capital LLC has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Company will have ahas the right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as the AdvisorMC Advisors or one of its affiliates remains its investment advisor.adviser. Other than with respect to this limited license, the Company has no legal right to the “Monroe Capital” name.name or logo.

 

As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company had accounts payable to members of the Board of $37$35 and zero, respectively, representing accrued and unpaid fees for their services.

31

Note 7. Borrowings

 

In accordance with the 1940 Act, the Company is permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2021 and December 31, 2020, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 206% and 200%, respectively.

Revolving Credit Facility:Facility As of September 30, 2017, the: The Company had U.S. dollar borrowings of $58,200 and non-U.S. dollar borrowings denominated in Great Britain pounds of £1,800 ($2,412 in U.S. dollars) under itshas a $255,000 revolving credit facility with ING Capital LLC, as agent, to finance the purchase of the Company’s assets.agent. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in change in unrealized gain (loss) on foreign currency borrowings in the Company’s consolidated statements of operations. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond the control of the Company and cannot be predicted. As of December 31, 2016, the Company had U.S. dollar borrowings of $129,000 outstanding under the revolving credit facility. As of September 30, 2017, the maximum amount the Company was able to borrow was $200,000 and this borrowing can be increased to $300,000 pursuant tofacility has an accordion feature which permits the Company, under certain circumstances to increase the size of the facility up to $400,000 (subject to maintaining 200%150% asset coverage, as defined by the 1940 Act). On February 22, 2017, the Company closed a $40,000 upsize to the revolving credit facility, bringing the maximum amount the Company is able to borrow from $160,000 to the now current maximum amount of $200,000, in accordance with the facility’s accordion feature. The maturity date on the facility is December 14, 2020.

The revolving credit facility is secured by a lien on all of the Company’s assets, including cash on hand, but excluding the assets of the Company’s wholly-owned subsidiary, MRCC SBIC. The Company’s ability to borrow under the revolving credit facility is subject to availability under a defined borrowing base, which varies based on portfolio characteristics and certain eligibility criteria and concentration limits, as well as required valuation methodologies. The Company may make draws under the revolving credit facility to make or purchase additional investments through December 2019March 1, 2023 and for general working capital purposes until March 1, 2024, the maturity date of the revolving credit facility. Borrowings under the revolving credit facility bear interest, at the Company’s election, at an annual rate of LIBOR (one-month, two-month, three-month or six-month at our discretion based on the term of the borrowing) plus 2.75% or at a daily rate equal to 2.00% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%. The LIBOR rate on the revolving credit facility was reduced to LIBOR plus 2.75% from LIBOR plus 3.00% in conjunction with the Company’s capital raise on June 9, 2017, as net worth (excluding investments in MRCC SBIC) exceeded $225,000. In addition to the stated interest rate on borrowings under the revolving credit facility, the Company is required to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 65% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 65% of the then available maximum borrowing. As of September 30, 2017 and December 31, 2016, the outstanding borrowings were accruing at a weighted average interest rate of 4.0% and 3.8%, respectively. The weighted average interest rate of the revolving credit facility borrowings (excluding debt issuance costs) for the three and nine months ended September 30, 2017 was 4.1% and 4.1%, respectively. The weighted average fee rate on the unused portion of the revolving credit facility for the three and nine months ended September 30, 2017 was 0.5% and 0.5%, respectively. The weighted average interest rate of the revolving credit facility borrowings (excluding debt issuance costs) for the three and nine months ended September 30, 2016 was 3.7% and 3.6%, respectively. The weighted average fee rate on the unused portion of the revolving credit facility for the three and nine months ended September 30, 2016 was 0.5% and 0.5%, respectively.

 

The Company’s ability to borrow under the revolving credit facility is subject to availability under the borrowing base, which permits the Company to borrow up to 70%72.5% of the fair market value of its portfolio company investments depending on the type of the investment the Company holds and whether the investment is quoted. The Company’s ability to borrow is also subject to certain concentration limits, and continued compliance with the representations, warranties and covenants given by the Company under the facility. The revolving credit facility contains certain financial and restrictive covenants, including, but not limited to, the Company’s maintenance of: (1) a minimum consolidated total net assets at least equal to the greater of (a) 40% of the consolidated total assets on the last day of each quarter or (b) $120,000$150,000 plus 65% of the net proceeds to the Company from sales of its equity securities after December 14, 2015;March 1, 2019; (2) a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of not less than 2.1 times;1.5 to 1; and (3) a senior debt coverage ratio of earnings before interest and taxes to interest expense of at least 2.5 times.2 to 1. The revolving credit facility also requires the Company to undertake customary indemnification obligations with respect to ING Capital LLC and other members of the lending group and to reimburse the lenders for expenses associated with entering into the credit facility. The revolving credit facility also has customary provisions regarding events of default, including events of default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC Advisors, failure to comply with financial and negative covenants, and failure to maintain ourthe Company’s relationship with MC Advisors. If the Company incurs an event of default under the revolving credit facility and fails to remedy such default under any applicable grace period, if any, then the entire revolving credit facility could become immediately due and payable, which would materially and adversely affect the Company’s liquidity, financial condition, results of operations and cash flows.

 

The Company’s revolving credit facility also imposes certain conditions that may limit the amount of the Company’s distributions to stockholders. Distributions payable in the Company’s common stock under the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock are generally limited to 115% of the amount of distributions required to maintain the Company’s status as a RIC.

 

As of March 31, 2021, the Company had U.S. dollar borrowings of $70,700 and non-U.S. dollar borrowings denominated in Great Britain pounds of £16,100 ($22,191 in U.S. dollars) under the revolving credit facility. As of December 31, 2020, the Company had U.S. dollar borrowings of $104,550 and non-U.S. dollar borrowings denominated in Great Britain pounds of £16,100 ($22,009 in U.S. dollars) under the revolving credit facility. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond the control of the Company and cannot be predicted. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in net change in unrealized gain (loss) on foreign currency and other transactions on the Company’s consolidated statements of operations and totaled ($182) and $1,348 for the three months ended March 31, 2021 and 2020, respectively.

Borrowings under the revolving credit facility bear interest, at the Company’s election, at an annual rate of LIBOR (one-month, three-month or six-month at the Company’s discretion based on the term of the borrowing) plus 2.625% or at a daily rate equal to 1.625% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%, with a LIBOR floor of 0.5%. In addition to the stated interest rate on borrowings under the revolving credit facility, the Company is required to pay a commitment fee and certain conditional fees based on usage of the expanded borrowing base and usage of the asset coverage ratio flexibility. A commitment fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 35% of the then available maximum borrowing or a commitment fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 35% of the then available maximum borrowing. As of March 31, 2021 and December 31, 2020, the outstanding borrowings were accruing at a weighted average interest rate of 3.2% and 3.2%, respectively.

2023 Notes: On February 18, 2021, the Company redeemed $109,000 in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC Subtopic 470-50, Debt – Modifications and Extinguishments (“ASC 470-50”), which resulted in a realized loss of $2,335 (primarily comprised of the unamortized deferred financing costs at the time of the redemption) recorded in net gain (loss) on extinguishment of debt on the Company’s consolidated statements of operations. The 2023 Notes were delisted from the Nasdaq Global Select Market in conjunction with the redemption.

2026 Notes: On January 25, 2021, the Company closed a private offering of $130,000 in aggregate principal amount of senior unsecured notes (the “2026 Notes”). Aggregate underwriting commissions were $3,325 and other issuance costs were $683, resulting in net proceeds of approximately $125,992. The 2026 Notes will mature on February 15, 2026 and may be redeemed in whole or in part at any time or from time to time at the Company’s option at par plus a “make-whole” premium, if applicable. The 2026 Notes will bear interest at an annual rate of 4.75% payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2021. The 2026 Notes are general, unsecured obligations and rank equal in right of payment with all of the Company’s existing and future unsecured indebtedness.


SBA Debentures: On February 28, 2014, the Company’s wholly-owned subsidiary, MRCC SBIC received a license from the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.

 

The SBIC license allows MRCC SBIC to obtain leverage by issuing SBA-guaranteedSBA debentures, subject to the issuance of a leverage commitment by the SBA and other customary procedures. SBA-guaranteedSBA debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten year10-year maturity. The principal amount of SBA-guaranteedSBA debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteedSBA debentures is fixed on a semi-annual basis (pooling date) at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC SBIC’s assets over the Company’s stockholders in the event the Company liquidates MRCC SBIC, or the SBA exercises its remedies upon an event of default.

 

On March 1, 2021, the Company repaid $28,100 in aggregate principal amount of the SBA debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50 which resulted in a realized loss of $439 (primarily comprised of the unamortized deferred financing costs at the time of the repayment) recorded in net gain (loss) on extinguishment of debt on the Company’s consolidated statements of operations. As of March 31, 2021, MRCC SBIC had $8,165 in cash and $120,642 in investments at fair value. As of December 31, 2020, MRCC SBIC had $25,657 in cash and $131,167 in investments at fair value.

32

 

As of March 31, 2021 and December 31, 2020, MRCC SBIC had $57,624 in leverageable capital and the following SBA-guaranteed debentures outstanding:

Maturity Date Interest Rate  

March 31,

2021

  December 31, 2020 
September 2024  3.4% $12,920  $12,920 
March 2025  3.3%  14,800   14,800 
March 2025  2.9%  7,080   7,080 
September 2025  3.6%  —   5,200 
March 2027  3.5%  20,000   20,000 
September 2027  3.2%  32,100   32,100 
March 2028  3.9%  —   18,520 
September 2028  4.2%  —   4,380 
Total     $86,900  $115,000 

  

SBA regulations currently limit the amount that an individual SBIC may borrow to a maximum of $150,000$175,000 when it has at least $75,000$87,500 in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing. The SBA also historically limitedlimits a related group of SBICs (commonly referred to as a “family of funds”) to a maximum of $225,000 in total borrowings. On December 18, 2015, this family of funds limitation was raised to $350,000 in total borrowings. As the

The Company has other affiliated SBICs already in operation, MRCC SBIC was historically limited to a maximum of $40,000 in borrowings. Pursuant to the increase in the family of funds limitation, the Company submitted a commitment application to the SBA and on April 13, 2016, MRCC SBIC was approved by the SBA for an additional $75,000 in SBA-guaranteed debentures, for a total of $115,000 in available debentures.

As of September 30, 2017, MRCC SBIC had $57,624 in leverageable capital and $92,100 in SBA-guaranteed debentures outstanding. As of December 31, 2016, MRCC SBIC had $41,000 in leverageable capital and $51,500 in SBA-guaranteed debentures outstanding. As of September 30, 2017, the Company has made all required leverageable capital contributions to MRCC SBIC in order to access the remaining $22,900 in available SBA-guaranteed debentures.

As of September 30, 2017, MRCC SBIC had the following SBA-guaranteed debentures outstanding (dollars in thousands):

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  3.5%  20,000 
September 2027  3.2%  32,100 
Total     $92,100 

As of December 31, 2016, MRCC SBIC had the following SBA-guaranteed debentures outstanding (dollars in thousands):

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  2.1%(1)  9,200 
March 2027  2.0%(1)  2,300 
Total     $51,500 

(1)Represents an interim rate of interest as the SBA-guaranteed debentures had not yet pooled.

On October 2, 2014, the Company wasbeen granted exemptive relief from the SEC for permission to exclude the debt of MRCC SBIC guaranteed by the SBA from the 200% asset coverage test under the 1940 Act. The receipt of this exemption for this SBA-guaranteedSBA debt increases flexibility under the 200% asset coverage test.

 

Secured Borrowings: Certain partial loan sales do not qualify for sale accounting under ASC Topic 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment on the accompanying consolidated statements of assets and liabilities and the portion sold is recorded as a secured borrowing in the liabilities section of the consolidated statements of assets and liabilities. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the accompanying consolidated statements of operations.

As of September 30, 2017, there were no secured borrowings. As of December 31, 2016, secured borrowings at fair value totaled $1,314 and the fair value of the loans that are associated with these secured borrowings was $5,814. These secured borrowings were created as a result of the Company’s completion of partial loan sales of certain unitranche loan assets during the year ended December 31, 2013 that did not meet the definition of a “participating interest.” As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings. No such partial loan sales occurred during the year ended December 31, 2016 and the nine months ended September 30, 2017. During the three and nine months ended September 30, 2017, repayments on secured borrowings totaled zero and $1,254, respectively. During the three and nine months ended September 30, 2016 repayments on secured borrowings totaled $625 and $902, respectively. The weighted average interest rate on the Company’s secured borrowings was approximately zero and 6.3% as of September 30, 2017 and December 31, 2016, respectively.

Components of interest expense: The components of the Company’s interest expense and other debt financing expenses, areaverage outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows:

 

  Three months ended September 30, 
  2017  2016 
Interest expense – revolving credit facility $944  $935 
Interest expense – SBA debentures  683   329 
Amortization of deferred financing costs  274   222 
Interest expense – secured borrowings  —   27 
Other  6   10 
Total interest and other debt financing expenses $1,907  $1,523 
  Three months ended March 31, 
  2021  2020 
Interest expense - revolving credit facility $1,005  $1,798 
Interest expense - 2023 Notes  837   1,567 
Interest expense - 2026 Notes  1,132   — 
Interest expense - SBA debentures  878   981 
Amortization of deferred financing costs  601   484 
Total interest and other debt financing expenses $4,453  $4,830 
Average debt outstanding $346,655  $400,453 
Average stated interest rate  4.5%  4.4%


Note 8. Derivative Instruments

 

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on future interest cash flows from the Company’s investments denominated in foreign currencies. As of March 31, 2021 and December 31, 2020, the counterparty to these foreign currency forward contracts was Bannockburn Global Forex, LLC. Net unrealized gain or loss on foreign currency forward contracts are included in net change in unrealized gain (loss) on foreign currency forward contracts and net realized gain or loss on forward currency forward contracts are included in net realized gain (loss) on foreign currency forward contracts on the accompanying consolidated statements of operations.

33

 

Certain information related to the Company’s foreign currency forward contracts is presented below as of March 31, 2021 and December 31, 2020.  

  As of March 31, 2021
  

Notional

Amount to be
Sold

 

Settlement

Date

 

Gross
Amount
of

Unrealized
Gain

 

Gross

Amount
of

Unrealized

Loss

  Balance Sheet location of Net Amounts
Foreign currency forward contract £84 4/2/2021  $—   $(13) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £212 6/1/2021  —  (21) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £26 6/1/2021  —  (3) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £16 6/3/2021  —  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £83 7/2/2021  —  (12)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £900 7/2/2021  16  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £83 10/4/2021  —  (12)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £82 1/3/2022  —  (12)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £79 4/4/2022  —  (12)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £ 29 5/6/2022  —  (4)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD173 4/20/2021  5  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 5/18/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 6/17/2021   3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 7/16/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 8/17/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 9/16/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 10/19/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 11/16/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 12/16/2021  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD115 1/19/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 2/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 3/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 4/19/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 5/17/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 6/17/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 7/18/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 8/16/2022  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 9/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 10/19/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 11/16/2022  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 12/16/2022  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 1/18/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 2/16/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 3/16/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD118 4/20/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD81 5/16/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD115 6/19/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 7/18/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 8/16/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 9/18/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 10/18/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 11/16/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 12/18/2023  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 1/17/2024  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 2/16/2024  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 3/18/2024  2  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD10,746 3/18/2024  200  —  Unrealized gain on foreign currency forward contracts
Total      $310 $(89)  


 

  Nine months ended September 30, 
  2017  2016 
Interest expense – revolving credit facility $3,674  $3,251 
Interest expense – SBA debentures  1,607   981 
Amortization of deferred financing costs  760   603 
Interest expense – secured borrowings  34   99 
Other  26   53 
Total interest and other debt financing expenses $6,101  $4,987 
  As of December 31, 2020
  Notional
Amount to
be
Sold		  Settlement
Date		 Gross
Amount
of
Unrealized
Gain		  Gross
Amount
of
Unrealized
Loss		  Balance Sheet location of Net Amounts
Foreign currency forward contract £87  1/4/2021  $—   $(12)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £206  3/3/2021  —   (18) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £26  3/3/2021  —   (2) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £84  4/2/2021  —   (12) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £212  6/1/2021  —   (19)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £26  6/1/2021  —   (2)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £83  7/2/2021  —   (11)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £83  10/4/2021  —   (11)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £82  1/3/2022  —   (11)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £79  4/4/2022  —   (11)  Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £29  5/6/2022  —   (4)  Unrealized loss on foreign currency forward contracts
Total       $—  $(113)   

For the three months ended March 31, 2021 and 2020, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of $334 and $98, respectively. For the three months ended March 31, 2021 and 2020, the Company recognized net realized gain (loss) on foreign currency forward contracts of ($38) and ($4), respectively.

 

Note 8.9. Distributions

 

The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the ninethree months ended September 30, 2017March 31, 2021 and 2016:2020:

 

Date

Declared

 

Record

Date

 

Payment

Date

 Amount
Per Share		  Cash
Distribution		  DRIP
Shares
Issued		  DRIP
Shares
Value		  DRIP Shares
Repurchased
in the Open
Market		  Cost of
DRIP Shares
Repurchased		 
Nine months ended September 30, 2017:                        
March 7, 2017 March 17, 2017 March 31, 2017 $0.35  $5,549   16,217  $254   —  $— 
May 31, 2017 June 15, 2017 June 30, 2017  0.35   6,807   17,932   271   —   — 
August 31, 2017 September 15, 2017 September 29, 2017  0.35   7,084   —   —   6,508   93 
Total distributions declared  $1.05  $19,440   34,149  $525   6,508  $93 
                             
Nine months ended September 30, 2016:                        
March 4, 2016 March 15, 2016 March 31, 2016 $0.35  $4,553   —  $—   20,144  $277 
June 1, 2016 June 15, 2016 June 30, 2016  0.35   4,553   —   —   18,518   275 
August 30, 2016 September 15, 2016 September 30, 2016  0.35   5,730   4,493   70   —   — 
Total distributions declared $1.05  $14,836   4,493  $70   38,662  $552 
Date
Declared		 Record
Date		 Payment
Date		 Amount
Per Share		  Cash
Distribution		  DRIP
Shares
Issued		  DRIP
Shares
Value		  DRIP Shares
Repurchased
in the Open
Market		  Cost of
DRIP Shares
Repurchased		 
Three months ended March 31, 2021:                            
March 2, 2021 March 16, 2021 March 31, 2021 $0.25  $5,326     —  $—   35,611  $364 
Total distributions declared     $0.25  $5,326   —  $—   35,611  $364 
                             
Three months ended March 31, 2020:                            
March 3, 2020 March 16, 2020 March 31, 2020 $0.35  $7,155   —  $—   55,938  $374 
Total distributions declared     $0.35  $7,155   —  $—   55,938  $374 

 

Note 9.10. Stock ActivityIssuances and Repurchases

Stock Issuances: On July 1, 2016, the Company amended the ATM securities offering program with MLV & Co, LLC (“MLV”) and JMP Securities LLC to replace MLV with FBR Capital Markets & Co. (“FBR”), an affiliate of MLV (the “Prior ATM Program”). On May 12, 2017, the Company entered into newat-the-market (“ATM”) equity distribution agreements with each of JMP Securities LLC (“JMP”) and FBR and JMP that reference the Company’s current registration statementCapital Markets & Co. (“FBR”) (the “ATM Program”). through which the Company could sell, by means of ATM offerings, from time to time, up to $50,000 of the Company’s common stock. On May 8, 2020, the Company entered into an amendment to the ATM Program to extend its term. All other material terms of the Prior ATM Program remain unchanged under the ATM Program. During the nine months ended September 30, 2017, the Company sold 173,939 shares at an average price of $15.71 per share for gross proceeds of $2,732 under the Prior ATM Program and no shares were sold under the ATM Program. Aggregate underwriters’ discounts and commissions were $41 and offering costs were $23, resulting in net proceeds of approximately $2,668.unchanged. There were no stock issuances underthrough the Prior ATM Program during the ninethree months ended September 30, 2016.

On June 9, 2017, the Company closed a public offering of 3,000,000 shares of its common stock at a public offering price of $15.00 per share, raising approximately $45,000 in gross proceeds. On June 14, 2017, pursuant to the underwriters’ exercise of the over-allotment option, the Company sold an additional 450,000 shares of its common stock, at a public offering price of $15.00 per share,March 31, 2021 and additional $6,750 in gross proceeds for a total of $51,750. Aggregate underwriters’ discounts and commissions were $2,070 and offering costs were $127, resulting in net proceeds of approximately $49,553.

On July 25, 2016, the Company closed a public offering of 3,100,000 shares of common stock at a public offering price of $15.50 per share, raising approximately $48,050 in gross proceeds. On August 3, 2016, the Company sold an additional 465,000 shares of common stock at a public offering price of $15.50 per share, raising approximately $7,208 in gross proceeds pursuant to the underwriters’ exercise of the over-allotment option. Aggregate underwriters’ discounts and commissions were $2,210 and offering costs were $528, resulting in net proceeds of $52,520.2020.

 

Note 10.11. Commitments and Contingencies

 

Commitments: As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company had $33,110$50,135 and $37,716,$52,252, respectively, in outstanding commitments to fund investments under undrawn revolvers, capital expenditure loans, and delayed draw commitments.commitments and subscription agreements (excluding SLF). As described in Note 3, the Company had unfunded commitments of $7,850 to SLF as of March 31, 2021 and December 31, 2020 that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee. Drawdowns of the commitments to SLF require authorization from one of the Company’s representatives on SLF’s board of managers. Management believes that the Company’s available cash balances and/or ability to draw on the revolving credit facility provide sufficient funds to cover its unfunded commitments as of March 31, 2021.

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Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these agreements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnifications to be remote.

34

 

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

 

Market risk: The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

 

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial statements.

 

Note 11.12. Financial Highlights

 

The following is a schedule of financial highlights for the ninethree months ended September 30, 2017March 31, 2021 and 2016:2020:

 

  September 30, 2017  September 30, 2016 
Per share data:        
Net asset value at beginning of period $14.52  $14.19 
Net investment income(1)  1.05   1.24 
Net gain (loss) on investments, secured borrowings and foreign currency borrowings(1)  (0.50)  (0.03)
Net increase in net assets from operations(1)  0.55   1.21 
Stockholder distributions(2)  (1.05)  (1.05)
Other(3)  (0.01)  0.07 
Net asset value at end of period $14.01  $14.42 
         
Net assets at end of period $283,542  $239,087 
Shares outstanding at end of period  20,239,957   16,577,500 
Per share market value at end of period $14.31  $15.73 
Total return based on market value(4)  (0.29)%  28.98%
Total return based on average net asset value(5)  3.78%  8.41%
Ratio/Supplemental data:        
Ratio of net investment income to average net assets(6)  10.24%  12.15%
Ratio of total expenses to average net assets(6) (7)  9.01%  10.40%
Average debt outstanding $177,739  $153,163 
Average debt outstanding per share $9.83  $11.05 
Portfolio turnover(8)  33.83%  17.79%
  March 31, 2021  March 31, 2020 
Per share data:        
Net asset value at beginning of period $11.00  $12.20 
Net investment income (1)  0.25   0.33 
Net gain (loss) (1)  0.08   (2.14)
Net increase (decrease) in net assets resulting from operations (1)  0.33   (1.81)
Stockholder distributions - income (2)  (0.25)  (0.35)
Net asset value at end of period $11.08  $10.04 
Net assets at end of period $236,163  $205,352 
Shares outstanding at end of period  21,303,540   20,444,564 
Per share market value at end of period $10.04  $7.10 
Total return based on market value (3)  28.09%  (31.20)%
Total return based on average net asset value (4)  3.00%  (16.21)%
Ratio/Supplemental data:        
Ratio of net investment income to average net assets (5)  9.43%  12.00%
Ratio of total expenses, net of incentive fee waiver, to average net assets (5) (6)  13.34%  14.54%
Portfolio turnover (7)  8.19%  8.76%

 

 

(1)Calculated using the weighted average shares outstanding during the period.periods presented.

(2)Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of September 30, 2017March 31, 2021 and 2016,2020, none of the distributions would have been characterized as a tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.

(3)Includes the effect of share issuances above (below) net asset value and the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of a period end or transaction date.

(4)Total return based on market value is calculated assuming a purchase of common shares at the market value on the first day and a sale at the market value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total return based on market value does not reflect brokerage commissions. Return calculations are not annualized.

(5)(4)Total return based on average net asset value is calculated by dividing the net increase (decrease) in net assets resulting from operations by the average net asset value. Return calculations are not annualized.

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(6)(5)Ratios are annualized. Incentive fees included within the ratio are not annualized.

(7)(6)The following is a schedule of supplemental ratios for the ninethree months ended September 30, 2017March 31, 2021 and 2016.2020. These ratios have been annualized unless otherwise noted.

  

 September 30,
2017		  September 30,
2016		  March 31, 2021 March 31, 2020 
Ratio of total investment income to average net assets 22.77% 26.54%
Ratio of interest and other debt financing expenses to average net assets  3.11%  3.33% 7.68% 8.54%
Ratio of total expenses (without incentive fees) to average net assets  7.40%  8.26% 13.26% 14.54%
Ratio of incentive fees, net of incentive fee waiver, to average net assets (not annualized)(9)  1.61%  2.14%
Ratio of incentive fees, net of incentive fee waiver, to average net assets (7) (8)  0.08% 0.00%

 

(8)(7)Ratios are not annualized.

(9)(8)The ratio of waived incentive fees to average net assets was 0.10%0.27% and zero for ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, respectively.

 


Note 12. Subsequent Events

On November 1, 2017, the Company announced the formation of a joint venture with NLV Financial Corporation (“NLV”), the parent of National Life Insurance Company, to create MRCC Senior Loan Fund I, LLC (the “Senior Loan Fund”). The Senior Loan Fund is expected to invest primarily in senior secured loans to middle market companies in the United States. The Company and NLV have each initially committed $50,000 of capital to the joint venture. In addition, the Senior Loan Fund intends to obtain third party financing that is expected to allow the joint venture to access market levels of leverage.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except as otherwise specified, references to “we,” “us” and “our” refer to Monroe Capital Corporation and its consolidated subsidiaries.subsidiaries; MC Advisors refers to Monroe Capital BDC Advisors, LLC, our investment adviser and a Delaware limited liability company; MC Management refers to Monroe Capital Management Advisors, LLC, our administrator and a Delaware limited liability company; Monroe Capital refers to Monroe Capital LLC, a Delaware limited liability company, and its subsidiaries and affiliates; and SLF refers to MRCC Senior Loan Fund I, LLC, an unconsolidated Delaware limited liability company, in which we co-invest with Life Insurance Company of the Southwest (“LSW”) primarily in senior secured loans. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing in our annual report on Form 10-K (the “Annual Report”) for the year ended December 31, 2016,2020, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 7, 2017.2, 2021. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly Report”).

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

 

·our future operating results;
our future operating results;

our business prospects and the prospects of our portfolio companies;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

·•the impact of global health epidemics, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business prospects and the prospects of our prospective portfolio companies;global economy;

·the dependence of our future success on the general economy and its impact on the industries in which we invest;

·•the impact of a protracted decline in the liquidity of credit markets on our business;

·
•the impact of increased competition;changes in London Interbank Offered Rate (“LIBOR”) on our operating results;

 

·the impact of fluctuations in interest rates on our business and our portfolio companies;

·our contractual arrangements and relationships with third parties;

·the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

·the ability of our prospective portfolio companies to achieve their objectives;

·our expected financings and investments;

·the adequacy of our cash resources and working capital;

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the impact of increased competition;

 

·the ability of our Monroe Capital BDC Advisors, LLC (“MC Advisors”) to locate suitable investments for us and to monitor our investments; and
the impact of fluctuations in interest rates on our business and our portfolio companies;

 

·the impact of future legislation and regulation on our business and our portfolio companies.
our contractual arrangements and relationships with third parties;

the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

actual and potential conflicts of interest with MC Advisors, MC Management and other affiliates of Monroe Capital;

the ability of our portfolio companies to achieve their objectives;

the use of borrowed money to finance a portion of our investments;

the adequacy of our financing sources and working capital;

the timing of cash flows, if any, from the operations of our portfolio companies;

the ability of MC Advisors to locate suitable investments for us and to monitor and administer our investments;

the ability of MC Advisors or its affiliates to attract and retain highly talented professionals;

our ability to qualify and maintain our qualification as a regulated investment company and as a business development company; and

the impact of future legislation and regulation on our business and our portfolio companies.

 

We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,” “targets,” “expects”“targets” and similar expressions to identify forward-looking statements. The forward lookingforward-looking statements contained in this Quarterly Report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I—ItemI-Item 1A. Risk Factors” in our Annual Report and “Part II—ItemII-Item 1A. Risk Factors” in this Quarterly Report.

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statementstatements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.

  

We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and current reportsCurrent Reports on Form 8-K.

 


Overview

 

Monroe Capital Corporation is an externally managed, closed-end, non-diversified management investment company that has elected to be treatedregulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, we have elected to be treated as a regulated investment company (“RIC”) under the subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We were incorporated under the Maryland General Corporation Law on February 9, 2011. We are a specialty finance company focused on providing financing solutions primarily to lower middle-market companies in the United States and Canada. We provide customized financing solutions focused primarily on senior secured, junior secured and unitranche secured (a combination of senior secured and junior secured debt in the same facility in which we syndicate a “first out” portion of the loan to an investor and retain a “last out” portion of the loan) debt and, to a lesser extent, unsecured subordinated debt and equity, including equity co-investments in preferred and common stock, and warrants.

 

Our shares are currently listed on the NASDAQ Global Select Market under the symbol “MRCC”.

 

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through investment in senior secured, unitranche secured and junior secured debt and, to a lesser extent, unsecured subordinated debt and equity investments. We seek to use our extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in primarily senior secured, unitranche secured and junior secured debt of middle-market companies. Our investments in senior, unitranche, junior secured debt and other investmentswill generally will range between $2.0 million and $18.0$25.0 million each, although this investment size may vary proportionately with the size of our capital base. As of September 30, 2017,March 31, 2021, our portfolio included approximately 76.1%75.2% senior secured debt, 10.4%loans, 9.3% unitranche debt, 8.9%secured loans, 2.3% junior secured debtloans and 4.6%13.2% equity securities, compared to December 31, 2016,2020, when our portfolio included approximately 66.7%74.1% senior secured debt, 12.5%loans, 11.7% unitranche debt, 14.4%secured loans, 2.6% junior secured debtloans and 6.4%11.6% equity securities. We expect that the companies in which we invest may be leveraged, often as a result of leveraged buy-outs or other recapitalization transactions, and, in certain cases, will not be rated by national ratings agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies.

 

While our primary focus is to maximize current income and capital appreciation through debt investments in thinly traded or private U.S. companies, we may invest a portion of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in high-yield bonds, distressed debt, private equity or securities of public companies that are not thinly traded and securities of middle-market companies located outside of the United States. We expect that these public companies generally will have debt securities that are non-investment grade.

 

On February 28, 2014, our wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”), a Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958. MRCC SBIC commenced operations on September 16, 2013. As of September 30, 2017, MRCC SBIC had $57.6 million in leverageable capital and $92.1 million in SBA-guaranteed debentures outstanding. See “SBA Debentures” below for more information.

On June 9, 2017, we closed a public offering of 3,000,000 shares of our common stock at a public offering price of $15.00 per share, raising approximately $45.0 million in gross proceeds. On June 14, 2017, pursuant to the underwriters’ exercise of the over-allotment option, we sold an additional 450,000 shares of our common stock, at a public offering price of $15.00 per share, and additional $6.8 million in gross proceeds for a total of $51.8 million. Aggregate underwriters’ discounts and commissions were $2.1 and offering costs were $0.1 million, resulting in net proceeds of approximately $49.6 million.

 

37

 

Investment income

 

We generate interest income on the debt investments in portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior juniorsecured, unitranche secured or unitranchejunior secured debt, typically have an initial term of three to seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investmentinvestments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. In some cases, our investments provide for deferred interest of payment-in-kind (“PIK”) interest. In addition, we may generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums and prepayment gains (losses) on loans as interest income. As the frequency or volume of the repayments which trigger these prepayment premiums and prepayment gains (losses) may fluctuate significantly from period to period, the associated interest income recorded may also fluctuate significantly from period to period. Interest and fee income isare recorded on the accrual basis to the extent we expect to collect such amounts. In addition, we also generate dividendInterest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. The frequency and volume of the distributions on common equity securities and LLC interests in accordance with our revenue recognition policies.and LP investments may fluctuate significantly from period to period.

 

Expenses

 

Our primary operating expenses include the payment of base management and incentive fees to MC Advisors, under the Investmentinvestment advisory and management agreement (the “Investment Advisory and Management Agreement (management and incentive fees)Agreement”), and the payment of fees to Monroe CapitalMC Management Advisors, LLC (“MC Management”) for our allocable portion of overhead and other expenses under the Administration Agreementadministration agreement (the “Administration Agreement”) and other operating costs. See Note 6 to our consolidated financial statements and “Related Party Transactions” below for additional information on our Investment Advisory and Management Agreement and Administration agreement.Agreement. Our expenses also include interest expense on our revolving credit facility, our SBA-guaranteed debentures and our secured borrowings.various forms of indebtedness. We bear all other out-of-pocket costs and expenses of our operations and transactions.

Net gain (loss) on investments, secured borrowings and foreign currency borrowings

 

We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments, secured borrowings, and foreign currency borrowingsforward contracts, foreign currency and other transactions within net change in unrealized gain (loss) on investments, secured borrowings, and foreign currency borrowings in the consolidated statements of operations.

 

Portfolio and Investment Activity

 

During the three months ended September 30, 2017,March 31, 2021, we invested $29.7$21.5 million in sixfive new portfolio companies and $24.5$22.2 million in 2017 existing portfolio companies and had $69.0$75.8 million in aggregate amount of sales and principal repayments, resulting in net sales and repayments of $14.8$32.1 million for the period.

 

During the ninethree months ended September 30, 2017,March 31, 2020, we invested $125.0$41.3 million in 16six new portfolio companies and $44.1$29.8 million in 2634 existing portfolio companies and had $144.4$52.8 million in aggregate amount of sales and principal repayments, resulting in net investments of $24.7$18.3 million for the period.

 

During the three months ended September 30, 2016, we invested $44.3 million in eight new portfolio companies and $5.5 million in seven existing portfolio companies and had $15.1 million in aggregate amount of sales and principal repayments, resulting in net investments of $34.7 million for the period.

During the nine months ended September 30, 2016, we invested $61.0 million in 12 new portfolio companies and $34.7 million in 16 existing portfolio companies and had $62.5 million in aggregate amount of sales and principal repayments, resulting in net investments of $33.2 million for the period.


The following tables show the composition of the investmenttable shows portfolio (in thousands) and associated yield data:by security type:

 

 September 30, 2017  March 31, 2021 December 31, 2020 
 Fair Value  

Percentage

of
Total Portfolio

  Weighted Average
Annualized
Contractual 
Coupon Yield(1)		  Weighted Average
Annualized
Effective Yield(2)		  Weighted Average
Annualized
Contractual
Coupon
Yield (1)		 Weighted
Average
Annualized
Effective
Yield (2)		 Weighted Average
Annualized
Contractual
Coupon
Yield (1)		 Weighted
Average
Annualized
Effective
Yield (2)		 
Senior secured loans $327,984   76.1%  9.5%  9.5% 8.3% 8.3% 8.1% 8.1%
Unitranche loans  44,592   10.4   9.7   11.1 
Unitranche secured loans 5.1 5.4 6.3 6.5 
Junior secured loans  38,555   8.9   9.4   9.4  8.7 8.7 7.6 7.6 
Equity securities  19,966   4.6   10.8   10.8 
Preferred equity securities  1.4  1.4  1.4  1.4 
Total $431,097   100.0%  9.8%  9.9%  7.7%  7.7%  7.7%  7.7%

 

38

  December 31, 2016 
  Fair Value  

Percentage

of
Total Portfolio

  Weighted Average
Annualized
Contractual 
Coupon Yield(1)		  Weighted Average
Annualized
Effective Yield(2)		 
Senior secured loans $275,253   66.7%  9.2%  9.2%
Unitranche loans  51,638   12.5   10.9   11.4 
Junior secured loans  59,366   14.4   9.7   9.7 
Equity securities  26,663   6.4   10.8   10.8 
Total $412,920   100.0%  9.5%  9.6%

 

(1)The weighted average annualized contractual coupon yield at period end is computed by dividing (a) the interest income on our debt investments and preferred equity investments (with a stated coupon rate) at the period end contractual coupon rate for each investment by (b) the par value of our debt investmentinvestments (excluding debt investments acquired for no cost in a restructuring on non-accrual status) and the cost basis of our preferred equity investments. We exclude loans acquired for no cost in a restructuring on non-accrual status within this metric as management believes this disclosure provides a better indication of return on invested capital. This exclusion impacts only the junior secured loans and total disclosed above. The weighted average contractual coupon yield including debt investments acquired for no cost in a restructuring on non-accrual status was 4.2% for junior secured loans and 7.5% in total as of March 31, 2021. The weighted average contractual coupon yield including debt investments acquired for no cost in a restructuring on non-accrual status was 4.1% for junior secured loans and 7.5% in total as of December 31, 2020.

(2)The weighted average annualized effective yield on portfolio investments at period end is computed by dividing (a) interest income on our debt investments and preferred equity investments (with a stated coupon rate) at the period end effective rate for each investment by (b) the par value of our debt investments (excluding debt investments acquired for no cost in a restructuring on non-accrual status) and the cost basis of our preferred equity investments. We exclude loans acquired for no cost in a restructuring on non-accrual status within this metric as management believes this disclosure provides a better indication of return on invested capital. This exclusion impacts only the junior secured loans and total disclosed above. The weighted average effective yield including debt investments acquired for no cost in a restructuring on non-accrual status was 4.2% for junior secured loans and 7.5% in total as of March 31, 2021. The weighted average effective yield including debt investments acquired for no cost in a restructuring on non-accrual status was 4.1% for junior secured loans and 7.5% in total as of December 31, 2020. The weighted average annualized effective yield on portfolio investments is a metric on the investment portfolio alone and does not represent a return to stockholders. This metric is not inclusive of our fees and expenses, the impact of leverage on the portfolio or sales load that may be paid by investors.stockholders.

The portfolio weighted average contractual coupon yield and weighted average effective yield increased slightly during the three and nine months ended September 30, 2017 and the portfolio mix continued to shift toward senior secured loans.

 

The following table shows the composition of our investment portfolio (in thousands):

  March 31, 2021  December 31, 2020 
Fair Value:                
Senior secured loans $392,399   75.2% $405,224   74.1%
Unitranche secured loans  48,298   9.3   64,040   11.7 
Junior secured loans  11,999   2.3   14,592   2.6 
LLC equity interest in SLF  41,067   7.9   39,284   7.2 
Equity securities  27,616   5.3   23,899   4.4 
Total $521,379   100.0% $547,039   100.0%

Our portfolio composition and contractual and effective yields remained relatively consistent with December 31, 2020.

The following table shows our portfolio composition by industry grouping at fair value (dollars in(in thousands):

 

 September 30, 2017  December 31, 2016  March 31, 2021 December 31, 2020 
 Investments at
Fair Value		  Percentage of
Total Portfolio		  

Investments at

Fair Value

 

Percentage of

Total Portfolio

 
Aerospace & Defense $5,028   1.2% $10,601   2.6%
Fair Value:         
Automotive  —   —   7,514   1.8  $ 9,603 1.9% $9,637 1.8%
Banking, Finance, Insurance & Real Estate  46,912   10.9   37,130   9.0   77,959 15.0  72,627 13.3 
Beverage, Food & Tobacco  17,788   4.1   16,794   4.1   21,767 4.2 20,676 3.8 
Capital Equipment  13,890 2.7 13,750 2.5 
Chemicals, Plastics & Rubber  8,864   2.1   4,040   1.0   28,879 5.5 27,754 5.1 
Construction & Building  17,933   4.2   18,602   4.5   16,855 3.2 16,809 3.0 
Consumer Goods: Durable  11,952   2.8   3,620   0.9   475 0.1 18,893 3.4 
Consumer Goods: Non-Durable  19,462   4.5   32,000   7.7   9,061 1.7 13,027 2.4 
Containers, Packaging & Glass  4,919   1.1   3,663   0.9  — — 4,997 0.9 
Energy: Oil & Gas  2,346   0.5   7,803   1.9 
Environmental Industries  3,644   0.8   3,768   0.9   13,218 2.5 13,168 2.4 
Healthcare & Pharmaceuticals  66,275   15.4   56,435   13.7   42,179 8.1 37,815 6.9 
High Tech Industries  36,085   8.4   18,899   4.6   84,886 16.3 81,417 14.9 
Hotels, Gaming & Leisure  42,738   9.9   38,010   9.2   2,651 0.5 1,771 0.3 
Investment Funds & Vehicles  41,067 7.9  39,284 7.2 
Media: Advertising, Printing & Publishing  13,356   3.1   11,742   2.8   31,623 6.1 31,553 5.8 
Media: Broadcasting & Subscription  16,466   3.8   18,046   4.4   2,335 0.4 2,227 0.4 
Media: Diversified & Production  5,006   1.2   4,938   1.2   6,889 1.3  6,811 1.2 
Metals & Mining  —   —   5,268   1.3 
Retail  40,740   9.5   38,147   9.2   19,404 3.7 18,443 3.4 
Services: Business  27,264   6.3   40,164   9.7   62,071 11.9 78,584 14.4 
Services: Consumer  21,170   4.9   24,807   6.0   21,363 4.1 25,306 4.6 
Telecommunications  3,333   0.8   3,430   0.8   1,102 0.2 1,100 0.2 
Utilities: Electric  2,801   0.6   2,999   0.7 
Wholesale  17,015   3.9   4,500   1.1    14,102  2.7  11,390  2.1 
Total $431,097   100.0% $412,920   100.0% $521,379  100.0% $547,039  100.0%

 


Portfolio Asset Quality

 

MC Advisors’ portfolio management staff closely monitors all credits, with senior portfolio managers covering agented and more complex investments. MC Advisors segregates our capital markets investments by industry. The MC Advisors’ monitoring process and projections developed by Monroe Capital both have daily, weekly, monthly and quarterly components and related reports, each to evaluate performance against historical, budget and underwriting expectations. MC Advisors’ analysts will monitor performance using standard industry software tools to provide consistent disclosure of performance. MC Advisors also monitors our investment exposure using a proprietary trend analysis tool. When necessary, MC Advisors will update our internal risk ratings, borrowing base criteria and covenant compliance reports.

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As part of the monitoring process, MC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal proprietary system that uses the categories listed below, which we refer to as MC Advisors’ investment performance rating. For any investment rated in grades 3, 4 or 5, MC Advisors, through its internal Portfolio Management Group (“PMG”), will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. The PMG is responsible for oversight and management of any investments rated in grades 3, 4, or 5. MC Advisors monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, MC Advisors reviews these investment ratings on a quarterly basis, and our board of directors (the “Board”) reviews and affirms such ratings. A definition of thebasis. The investment performance rating system is described as follows:

 

Investment


Performance


Risk Rating

 Summary Description
Grade 1 Includes investments exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating trends and risk factors are generally positive.
   
Grade 2 Includes investments exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing as expected or the risk factors are neutral to positive.
   
Grade 3 Includes investments performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.
   
Grade 4 Includes an issuer performing materially below expectations and indicates that the issuer’s risk has increased materially since origination. In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but generally not more than six months past due). For grade 4 investments, we intend to increase monitoring of the issuer.
   
Grade 5 Indicates that the issuer is performing substantially below expectations and the investment risk has substantially increased since origination. Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we expect to recover.full.

 

Our investment performance risk ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or reflect or represent any third-party assessment of any of our investments.

 

In the event of a delinquency or a decision to rate an investment grade 4 or grade 5, the applicable analyst,PMG, in consultation with a member of the investment committee, will develop an action plan. Such a plan may require a meeting with the borrower’s management or the lender group to discuss reasons for the default and the steps management is undertaking to address the under-performance, as well as required amendments and waivers that may be required. In the event of a dramatic deterioration of a credit, MC Advisors intends toand the PMG will form a team or engage outside advisors to analyze, evaluate and take further steps to preserve itsour value in the credit. In this regard, we would expect to explore all options, including in a private equity sponsored investment, assuming certain responsibilities for the private equity sponsor or a formal sale of the business with oversight of the sale process by us. Several of Monroe Capital’s professionals are experiencedThe PMG and the investment committee have extensive experience in running debt work-out transactions and bankruptcies.


The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of March 31, 2021 (in thousands):

Investment Performance Risk Rating Investments at
Fair Value		  Percentage of
Total Investments		 
1 $1,592   0.3%
2  408,562   78.4 
3  78,708   15.1 
4  28,600   5.5 
5  3,917   0.7 
Total $521,379   100.0%

 

The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale as of September 30, 2017 (dollars in thousands):

Investment Performance Rating Investments at
Fair Value		  Percentage of
Total Investments		 
1 $—   —%
2  350,064   81.2 
3  62,504   14.5 
4  18,529   4.3 
5  —   — 
Total $431,097   100.0%

The following table shows the distribution of our investments on the 1 to 5 investment performancerisk rating scale as of December 31, 2016 (dollars in2020 (in thousands):

 

Investment Performance Rating Investments at
Fair Value		  Percentage of
Total Investments		 
Investment Performance Risk Rating Investments at
Fair Value		 Percentage of
Total Investments		 
1 $—   —% $1,592 0.3%
2  360,338   87.3  428,554 78.4 
3  40,192   9.7  92,001 16.8 
4  12,390   3.0  19,844 3.6 
5  —   —   5,048  0.9 
Total $412,920   100.0% $547,039  100.0%

 

As of March 31, 2021, we had 12 borrowers with loans or preferred equity securities on non-accrual status (BLST Operating Company, LLC (“BLST”), California Pizza Kitchen, Inc. (“CPK”), Curion Holdings, LLC (“Curion”), Education Corporation of America (“ECA”), Incipio, LLC (“Incipio”), Luxury Optical Holdings Co. (“LOH”), NECB Collections, LLC (“NECB”), Parterre Flooring & Surface Systems, LLC (“Parterre”), SHI Holdings, Inc. (“SHI”), The Worth Collection, Ltd. (“Worth”), Toojay’s Management, LLC (“Toojay’s OldCo”) and Valudor Products, LLC (“Valudor”) preferred equity), and these investments totaled $27.3 million in fair value, or 5.2% of our total investments at fair value. As of December 31, 2020, we had 12 borrowers with loans or preferred equity securities on non-accrual status (BLST, CPK, Curion, ECA, Incipio last out term loan and third lien tranches, LOH, NECB, Parterre, SHI, Worth, Toojay’s OldCo and Valudor preferred equity), and these investments totaled $22.3 million in fair value, or 4.1% of our total investments at fair value. The Curion promissory notes and the Incipio third lien tranches were obtained in restructurings for no cost. Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected.

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Results of Operations

 

Operating results were as follows (dollars in(in thousands):

 

 Three months ended September 30,  Three months ended March 31, 
 2017  2016  2021 2020 
Total investment income $13,469  $11,128  $13,213 $15,002 
Total expenses  6,582   5,545 
Total expenses, net of incentive fee waiver  7,857  8,200 
Net investment income before income taxes 5,356 6,802 
Income taxes, including excise taxes  30  20 
Net investment income  6,887   5,583  5,326 6,782 
Net realized gain (loss) on investments  (2,900)  —   (192) 94 
Net realized gain (loss) on secured borrowings  —   — 
Net realized gain (loss) on extinguishment of debt (2,774) - 
Net realized gain (loss) on foreign currency forward contracts (38) (4)
Net realized gain (loss) on foreign currency and other transactions  (14)  (15)
Net realized gain (loss) (3,018) 75 
Net change in unrealized gain (loss) on investments  2,398   (1,848) 4,622 (45,149)
Net change in unrealized gain (loss) on secured borrowings  —   (123)
Net change in unrealized gain (loss) on foreign currency borrowings  (67)  — 
Net change in unrealized gain (loss) on foreign currency forward contracts 334 98 
Net change in unrealized gain (loss) on foreign currency and other transactions  (209)  1,344 
Net change in unrealized gain (loss)  4,747  (43,707)
Net increase (decrease) in net assets resulting from operations $6,318  $3,612  $7,055 $(36,850)

 

  Nine months ended September 30, 
  2017  2016 
Total investment income $37,743  $33,785 
Total expenses, net of incentive fee waiver  18,734   16,656 
Net investment income  19,009   17,129 
Net realized gain (loss) on investments  (572)  587 
Net realized gain (loss) on secured borrowings  66   — 
Net change in unrealized gain (loss) on investments  (8,503)  (847)
Net change in unrealized gain (loss) on secured borrowings  (6)  (36)
Net change in unrealized gain (loss) on foreign currency borrowings  (83)  — 
Net increase (decrease) in net assets resulting from operations $9,911  $16,833 


Investment Income

 

The composition of our investment income was as follows (dollars in(in thousands):

 

 Three months ended September 30,  Three months ended March 31, 
 2017  2016  2021 2020 
Interest income $11,511  $8,914  $8,961 $11,979 
Dividend income  251   1,384 
PIK interest income 1,679 1,076 
Dividend income (1) 1,262 1,191 
Fee income  661   220  477 198 
Prepayment gain (loss)  514   227  482 214 
Accretion of discounts and amortization of premium  532   383   352  344 
Total investment income $13,469  $11,128  $13,213 $15,002 

 

  Nine months ended September 30, 
  2017  2016 
Interest income $32,600  $26,448 
Dividend income  751   4,297 
Fee income  1,626   1,067 
Prepayment gain (loss)  1,488   836 
Accretion of discounts and amortization of premium  1,278   1,137 
Total investment income $37,743  $33,785 

(1)Includes PIK dividends of $62 and $41, respectively.

 

The increasedecrease in investment income of $2.3 million and $4.0$1.8 million during the three and nine months ended September 30, 2017,March 31, 2021 as compared to the three and nine months ended September 30, 2016,March 31, 2020 is primarily the result of a decrease in interest income due to increasesa decrease in average outstanding loan balances and increasesdeclines in prepayment loan activity, partially offset by decreases in dividend income. The decrease in dividend income during the three and nine months ended September 30, 2017, as compared toeffective rate on the prior year periods, isportfolio driven by decreases in dividend income from our investmentLIBOR and the placement of additional investments on non-accrual status, partially offset by increases in Rockdale Blackhawk, LLC (“Rockdale”) of $1.1 millionprepayment gain and $3.5 million, respectively. While we have received significant equity distributions from our investment in Rockdale in the past, the timing and amount of these distributions are not within our control and are difficult to predict and may fluctuate significantly from period to period.fee income.

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Operating Expenses

 

The composition of our operating expenses was as follows (dollars in(in thousands):

 

 Three months ended September 30,  Three months ended March 31, 
 2017  2016  2021 2020 
Interest and other debt financing expenses $1,907  $1,523  $4,453 $4,830 
Base management fees  1,953   1,594  2,334 2,551 
Incentive fees  1,721   1,223 
Incentive fees, net of incentive fee waiver (1) 193 — 
Professional fees  277   237  226 215 
Administrative service fees  295   324  356 338 
General and administrative expenses  292   265  260 231 
Excise taxes  100   342 
Directors’ fees  37   37   35  35 
Total expenses $6,582  $5,545 
Total expenses, net of incentive fee waiver $7,857 $8,200 

 

  Nine months ended September 30, 
  2017  2016 
Interest and other debt financing expenses $6,101  $4,987 
Base management fees  5,661   4,598 
Incentive fees, net of incentive fee waiver  4,221   4,282 
Professional fees  854   682 
Administrative service fees  926   956 
General and administrative expenses  760   611 
Excise taxes  100   429 
Directors’ fees  111   111 
Total expenses, net of incentive fee waiver $18,734  $16,656 

(1)During the three months ended March 31, 2021 and 2020, MC Advisors waived part one incentive fees (based on net investment income) of $637 and zero, respectively. Incentive fees during the three months ended March 31, 2021 and 2020 were limited by zero and $1,356, respectively, due to the Incentive Fee Limitation. See Note 6 in our attached consolidated financial statements for additional information on the Incentive Fee Limitation.

  

The composition of our interest and other debt financing expenses, wasaverage outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows (dollars in(in thousands):

 

  Three months ended September 30, 
  2017  2016 
Interest expense – revolving credit facility $944  $935 
Interest expense – SBA debentures  683   329 
Amortization of deferred financing costs  274   222 
Interest expense – secured borrowings  —   27 
Other  6   10 
Total interest and other debt financing expenses $1,907  $1,523 

  Nine months ended September 30, 
  2017  2016 
Interest expense – revolving credit facility $3,674  $3,251 
Interest expense – SBA debentures  1,607   981 
Amortization of deferred financing costs  760   603 
Interest expense – secured borrowings  34   99 
Other  26   53 
Total interest and other debt financing expenses $6,101  $4,987 
  Three months ended March 31, 
  2021  2020 
Interest expense - revolving credit facility $1,005  $1,798 
Interest expense - 2023 Notes  837   1,567 
Interest expense - 2026 Notes  1,132   — 
Interest expense - SBA debentures  878   981 
Amortization of deferred financing costs  601   484 
Total interest and other debt financing expenses $4,453  $4,830 
Average debt outstanding $346,655  $400,453 
Average stated interest rate  4.5%  4.4%

 

The increasedecrease in expenses of $1.0$0.3 million during the three months ended September 30, 2017,March 31, 2021, as compared to the three months ended September 30, 2016,March 31, 2020, is primarily due tothe result of a decrease in interest expense and base management fees, partially offset by an increase in base management fees and part one incentive fees, (based on net investment income) dueof waiver.

Income Taxes, Including Excise Taxes

We have elected to the growth in invested assets and an increase in interest expense primarilybe treated as a result of additional SBA-guaranteed debenture borrowings required to support the growthRIC under Subchapter M of the portfolio. These increases were partially offset byCode and operate in a decline in the accrual for excise taxesmanner so as to qualify for the three months ended September 30, 2017tax treatment available to RICs. To maintain qualification as compareda RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the three months ended September 30, 2016.excess, if any, of realized net short-term capital gains over realized net long-term capital losses.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year dividend distributions, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three months ended September 30, 2017March 31, 2021 and 2016, no incentive fees were waived.2020, we recorded a net expense on the consolidated statements of operations of $30 thousand and $20 thousand, respectively, for U.S. federal excise tax.

 

The increase in expensesCertain of $2.1 million duringour consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For both the ninethree months ended September 30, 2017, as compared toMarch 31, 2021 and 2020, we recorded a net tax expense of zero on the nine months ended September 30, 2016, is primarily due to an increase in base management fees due to the growth in invested assets and an increase in interest expense as a resultconsolidated statements of additional borrowings (including SBA-guaranteed debentures) required to support the growth of the portfolio. These increases were partially offset by a decline in the accrualoperations for excise taxes for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016. During the nine months ended September 30, 2017 and 2016, MC Advisors waived part one incentive fees (based on net investment income) of $0.3 million and zero, respectively.these subsidiaries.

 

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Net Realized Gain (Loss) on Investments and Secured Borrowings

During the three months ended September 30, 2017March 31, 2021 and 2016,2020, we had sales or dispositions of investments of $12.5$8.5 million and zero$13.1 million, respectively, resulting in ($2.9) million192) thousand and zero$94 thousand of net realized gains (losses), respectively. The net realized lossesgain (loss) on the portfolio were primarily driven by the exit of our investment in Fabco Automotive Corporation (“Fabco”). During the nine months ended September 30, 2017 and 2016, we had sales of investments, of $16.7 million and $0.6 million resulting in ($0.6) million and $0.6 million of net realized gains (losses), respectively.

 

During the three months ended September 30, 2017March 31, 2021, we recognized a net loss on extinguishment of debt of $2.8 million, which was due to our $109.0 million repayment of the 2023 Notes on February 18, 2021 and 2016,repayment of $28.1 million of SBA debentures on March 1, 2021.

We may enter into foreign currency forward contracts to reduce our exposure to foreign currency exchange rate fluctuations. During the three months ended March 31, 2021 and 2020, we had no sales of secured borrowings. During the nine months ended September 30, 2017 and 2016, we had sales of secured borrowings of $1.3 million and zero resulting in $66($38) thousand and zero($4) thousand of net realized gains,gain (loss) on foreign currency forward contracts, respectively. During the three months ended March 31, 2021 and 2020, we had ($14) thousand and ($15) thousand of net realized gain (loss) on foreign currency and other transactions, respectively.

Net Change in Unrealized Gain (Loss) on Investments, Secured Borrowings and Foreign Currency Borrowings

 

For the three months ended September 30, 2017March 31, 2021 and 2016,2020, our investments had $2.4$4.6 million and ($1.8)45.1) million of net change in unrealized gain (loss), respectively. During the three months ended September 30, 2017, theThe net change in unrealized gain (loss) includes both unrealized gain on investments in our portfolio with mark-to-market gains onduring the portfolio included the reversal of a mark-to-marketquarter and unrealized loss on Fabco. The saleinvestments in our portfolio with mark-to-market losses during the quarter.

We estimate approximately $5.1 million of our investment in Fabcothe net unrealized gain on investments during the three months ended September 30, 2017 occurred atMarch 31, 2021 was attributable to broad market movements and tightening of credit spreads in the loan markets. Approximately $3.3 million of these net unrealized gains were attributable to investments held in the portfolio directly, while approximately $1.8 million of these gains were attributable to our investment in SLF. These increases in value were offset by ($0.5) million in net unrealized losses attributable to specific credit or fundamental performance of the underlying portfolio companies, a significant portion of which is as a result of the impact of the COVID-19 pandemic on individual credit performance. The fair value aboveof our portfolio investments may be further negatively impacted after March 31, 2021 by circumstances and events that are not yet known.

We estimate approximately $25.6 million of the most recent fairnet unrealized loss on investments during the three months ended March 31, 2020 was attributable to broad market value. movements and widening credit spreads in the loan markets as market participants expected a higher yield on similar investments given the significant market volatility generated by the COVID-19 pandemic. Approximately $14.5 million of these net unrealized losses were attributable to investments held in the portfolio directly, while approximately $11.1 million of these losses were attributable to our investment in SLF. The SLF’s underlying investments are loans to middle-market borrowers that are generally larger than the rest of our portfolio which is focused on lower middle-market companies. These upper middle-market loans held within the SLF experienced higher volatility in valuation during the three months ended March 31, 2020 than the rest of our portfolio. Additionally, we estimate the remaining approximately $19.5 million of the net unrealized losses this period were attributable to specific credit or fundamental performance of the underlying portfolio companies, a significant portion of which is as a result of the impact of the COVID-19 pandemic on individual credit performance.

For the three months ended September 30, 2017March 31, 2021 and 2016,2020, our secured borrowingsforeign currency forward contracts had zero$0.3 million and ($0.1)$0.1 million of net change in unrealized gain (loss), respectively. For the three months ended September 30, 2017March 31, 2021 and 2016,2020, our foreign currency borrowings and cash denominated in foreign currencies had ($67) thousand and zero of net change in unrealized gain (loss), respectively.

  For the nine months ended September 30, 2017 and 2016, our investments had ($8.5)0.2) million and ($0.8)$1.3 million of net change in unrealized gain (loss), respectively. The net change in unrealized losses during the nine months ended September 30, 2017 was primarily attributable to mark-to-market losses on our common equity investment in Rockdale and our debt investment in TPP Operating Inc. For the nine months ended September 30, 2017 and 2016, our secured borrowings had ($6) thousand and ($36) thousand of net change in unrealized gain (loss), respectively. For the nine months ended September 30, 2017 and 2016, our foreign currency borrowings had ($83) thousand and zero of net change in unrealized gain (loss), respectively.

 

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended September 30, 2017March 31, 2021 and 2016,2020, the net increase (decrease) in net assets resulting from operations was $6.3$7.1 million and $3.6($36.9) million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2017March 31, 2021 and 2016,2020, our per share net increase (decrease) in net assets resulting from operations was $0.31$0.33 and $0.23,($1.81), respectively. The $2.7$44.0 million increase during the three months ended September 30, 2017,March 31, 2021 as compared to the three months ended September 30, 2016,March 31, 2020, is primarily the result of an increase in net investment income and unrealized mark-to-market gains on investments in the portfolio during the three months ended September 30, 2017March 31, 2021, as compared to the three months ended September 30, 2016. These increases were partially offset by an increase in realized losses on the portfolio during the three months ended September 30, 2017. 

For the nine months ended September 30, 2017 and 2016, the net increase in net assets from operations was $9.9 million and $16.8 million, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2017 and 2016, our per share net increase in net assets resulting from operations was $0.55 and $1.21, respectively. The $6.9 million decrease during the nine months ended September 30, 2017, as compared to nine months ended September 30, 2016, is primarily the result of an increase in net unrealized mark-to-market losses onMarch 31, 2020, investments in the portfolio during the nine months ended September 30, 2017experienced significant net unrealized mark to mark-to-market losses primarily as compareda result of market volatility and deterioration of fundamental performance on certain portfolio companies related to the nine months ended September 30, 2016, partially offset by an increase in net investment income over the same period.COVID-19 pandemic.

 

Liquidity and Capital Resources

 

As of September 30, 2017,March 31, 2021, we had $3.7$7.7 million in cash, $5.7$8.2 million in cash at MRCC SBIC, $60.6$92.9 million of total debt outstanding on our revolving credit facility, $130.0 million in 2026 Notes and $92.1$86.9 million in outstanding SBA-guaranteedSBA debentures. We had $139.4$162.1 million available for additional borrowings on our revolving credit facility, and $22.9 million in available SBA-guaranteed debentures.subject to borrowing base availability. See “Borrowings” below for additional information.

In accordance with the 1940 Act, we are permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2021 and December 31, 2020, our asset coverage ratio based on aggregate borrowings outstanding was 206% and 200%, respectively.

Cash Flows

 

For the ninethree months ended September 30, 2017March 31, 2021 and 2016,2020, we experienced a net increase (decrease) in cash and restricted cash of $1.1($16.5) million and ($5.7)10.4) million, respectively. For the ninethree months ended September 30, 2017,March 31, 2021, operating activities provided $33.8 million, primarily as a result of principal repayments on and sales of portfolio investments, partially offset by purchases of portfolio investments. For the three months ended March 31, 2020, operating activities used $1.2$16.3 million, primarily as a result of purchases of portfolio investments and net investment income, partially offset by sales of and principal repayments on portfolio investments. For the nine months ended September 30, 2016, operating activities used $22.4 million, primarily as a result of purchases of portfolio investments, partially offset by sales of and principal repayments on portfolio investments. During the ninethree months ended September 30, 2017,March 31, 2021, we used $50.3 million in financing activities, primarily as a result of net repayments on our revolving credit facility, 2023 Notes and SBA debentures and distributions to stockholders, partially offset by net proceeds from our 2026 Notes (net of deferred financing cost payments). During the three months ended March 31, 2020, we generated $2.3$5.9 million from financing activities, primarily as a result of net proceeds from capital raises and SBA debenturenet borrowings during the period, partially offset by net repayments on our revolving credit facility andpartially offset by distributions to stockholders. During the nine months ended September 30, 2016, we generated $16.7 million for financing activities primarily as a result of proceeds from our capital raise during the period, partially offset by net repayments on our revolving credit facility and distributions to stockholders.

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Capital Resources

 

As a BDC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. We intend to generate additional cash primarily from future offerings of securities, future borrowings and cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be to invest in portfolio companies and make cash distributions to our stockholders. We may also use available funds to repay outstanding borrowings.

 

As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value (“NAV”) per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset valueNAV per share of our common stock if our Board,board of directors (“Board”), including our independent directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders have approved such sales. On July 14, 2016,June 19, 2019, our stockholders voted to allow us to sell or otherwise issue common stock at a price below net asset valueNAV per share for a period of one year, subject to certain limitations. On July 21, 2017June 17, 2020, our stockholders once again voted to allow us to sell or otherwise issue common stock at a price below net asset value per share for a period of one year, subject to certain limitations. As of September 30, 2017March 31, 2021 and December 31, 2016,2020, we had 20,239,95721,303,540 and 16,581,86921,303,540 shares outstanding, respectively.

 

On June 24, 2015, our stockholders approved a proposal to authorize us to issue warrants, options or rights to subscribe to, convert to, or purchase our common stock in one or more offerings. This is a standing authorization and does not require annual re-approval by our stockholders.

 

Stock Issuances:On July 1, 2016,May 12, 2017, we amended the ATM securities offering programentered into at-the-market (“ATM”) equity distribution agreements with MLV & Co, LLC (“MLV”) andeach of JMP Securities LLC to replace MLV with(“JMP”) and FBR Capital Markets & Co. (“FBR”), an affiliate (the “ATM Program”) through which we can sell, by means of MLV (the “Prior ATM Program”).offerings, from time to time, up to $50.0 million of our common stock. On May 12, 2017,8, 2020, we entered into new equity distribution agreements with each of FBR and JMP that reference our current registration statement (the “ATM Program”).an amendment to the ATM Program to extend its term. All other material terms of the Prior ATM Program remain unchanged under the ATM Program. During the nine months ended September 30, 2017, we sold 173,939 shares at an average price of $15.71 per share for gross proceeds of $2.7 million under the Prior ATM Program and no shares were sold under the ATM Program. Aggregate underwriters’ discounts and commissions were $41 thousand and offering costs were $23 thousand, resulting in net proceeds of approximately $2.7 million.unchanged. There were no stock issuances underthrough the Prior ATM Program during the ninethree months ended September 30, 2016.March 31, 2021 and 2020.

 

 On June 9, 2017, we closed a public offering of 3,000,000 shares of our common stock at a public offering price of $15.00 per share, raising approximately $45.0 million in gross proceeds. On June 14, 2017, pursuant to the underwriters’ exercise of the over-allotment option, we sold an additional 450,000 shares of our common stock, at a public offering price of $15.00 per share, and additional $6.8 million in gross proceeds for a total of $51.8 million. Aggregate underwriters’ discounts and commissions were $2.1 and offering costs were $0.1 million, resulting in net proceeds of approximately $49.6 million.

On July 25, 2016, we closed a public offering of 3,100,000 shares of our common stock at a public offering price of $15.50 per share, raising approximately $48.1 million in gross proceeds. On August 3, 2016, we sold an additional 465,000 shares of our common stock, at a public offering price of $15.50 per share, raising approximately $7.2 million in gross proceeds pursuant to the underwriters’ exercise of the over-allotment option. Aggregate underwriters’ discounts and commissions were $2.2 million and offering costs were $0.5 million, resulting in net proceeds of $52.5 million.


Borrowings

Revolving Credit Facility:Facility As of September 30, 2017, we had U.S. dollar borrowings of $58.2: We have a $255.0 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £1.8 million ($2.4 million in U.S. dollars) under our revolving credit facility with ING Capital LLC, as agent, to finance the purchase of our assets.agent. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in change in unrealized gain (loss) on foreign currency borrowings in our consolidated statements of operations. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond our control and cannot be predicted. As of December 31, 2016, we had U.S. dollar borrowings of $129.0 million outstanding under the revolving credit facility. As of September 30, 2017, the maximum amount we were able to borrow was $200.0 million and this borrowing can be increased to $300.0 million pursuant tofacility has an accordion feature which permits us, under certain circumstances to increase the size of the facility up to $400.0 million (subject to maintaining 200%150% asset coverage, as defined by the 1940 Act). On February 22, 2017, we closed a $40.0 million upsize to the revolving credit facility, bringing the maximum amount we are able to borrow from $160.0 million to the now current maximum amount of $200.0 million, in accordance with the facility’s accordion feature. The maturity date on the facility is December 14, 2020.

The revolving credit facility is secured by a lien on all of our assets, including cash on hand, but excluding the assets of our wholly-owned subsidiary, MRCC SBIC. Our ability to borrow under the revolving credit facility is subject to availability under a defined borrowing base, which varies based on portfolio characteristics and certain eligibility criteria and concentration limits, as well as required valuation methodologies. We may make draws under the revolving credit facility to make or purchase additional investments through December 2019March 1, 2023 and for general working capital purposes until March 1, 2024, the maturity date of the revolving credit facility. Borrowings under the revolving credit facility bear interest, at our election, at an annual rate of LIBOR (one-month, two-month, three-month or six-month at our discretion based on the term of the borrowing) plus 2.75% or at a daily rate equal to 2.00% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%. The LIBOR rate on the revolving credit facility was reduced to LIBOR plus 2.75% from LIBOR plus 3.00% in conjunction with our capital raise on June 9, 2017, as net worth (excluding investments in MRCC SBIC) exceeded $225.0 million. In addition to the stated interest rate on borrowings under the revolving credit facility, we are required to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 65% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 65% of the then available maximum borrowing. As of September 30, 2017 and December 31, 2016, the outstanding borrowings were accruing at a weighted average interest rate of 4.0% and 3.8%, respectively. The weighted average interest rate of the revolving credit facility borrowings (excluding debt issuance costs) for the three and nine months ended September 30, 2017 was 4.1% and 4.1%, respectively. The weighted average fee rate on the unused portion of the revolving credit facility for the three and nine months ended September 30, 2017 was 0.5% and 0.5%, respectively. The weighted average interest rate of the revolving credit facility borrowings (excluding debt issuance costs) for the three and nine months ended September 30, 2016 was 3.7% and 3.6%, respectively. The weighted average fee rate on the unused portion of the revolving credit facility for the three and nine months ended September 30, 2016 was 0.5% and 0.5%, respectively.

44

 

Our ability to borrow under the revolving credit facility is subject to availability under the borrowing base, which permits us to borrow up to 70%72.5% of the fair market value of our portfolio company investments depending on the type of the investment we hold and whether the investment is quoted. Our ability to borrow is also subject to certain concentration limits, and our continued compliance with the representations, warranties and covenants given by us under the facility. The revolving credit facility contains certain financial and restrictive covenants, including, but not limited to, our maintenance of: (1) a minimum consolidated total net assets at least equal to the greater of (a) 40% of the consolidated total assets on the last day of each quarter or (b) $120.0$150.0 million plus 65% of the net proceeds to us from sales of our equity securities after December 14, 2015;March 1, 2019; (2) a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of not less than 2.1 times;1.5 to 1; and (3) a senior debt coverage ratio of earnings before interest and taxes to interest expense of at least 2.5 times.2 to 1. The revolving credit facility also requires us to undertake customary indemnification obligations with respect to ING Capital LLC and other members of the lending group and to reimburse the lenders for expenses associated with entering into the credit facility. The revolving credit facility also has customary provisions regarding events of default, including events of default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC Advisors, failure to comply with financial and negative covenants, and failure to maintain our relationship with MC Advisors. If we incur an event of default under the revolving credit facility and fail to remedy such default under any applicable grace period, if any, then the entire revolving credit facility could become immediately due and payable, which would materially and adversely affect our liquidity, financial condition, results of operations and cash flows.

 

Our revolving credit facility also imposes certain conditions that may limit the amount of our distributions to stockholders. Distributions payable in our common stock under the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock are generally limited to 115% of the amount of distributions required to maintain our status as a RIC.

 

As of March 31, 2021, we had U.S. dollar borrowings of $70.7 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £16.1 million ($22.2 million in U.S. dollars) under the revolving credit facility. As of December 31, 2020, we had U.S. dollar borrowings of $104.6 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £16.1 million ($22.0 million in U.S. dollars) under the revolving credit facility. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond our control and cannot be predicted. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in net change in unrealized gain (loss) on foreign currency and other transactions on our consolidated statements of operations and totaled ($0.2) million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. 

Borrowings under the revolving credit facility bear interest, at our election, at an annual rate of LIBOR (one-month, three-month or six-month at our discretion based on the term of the borrowing) plus 2.625% or at a daily rate equal to 1.625% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%, with a LIBOR floor of 0.5%. In addition to the stated interest rate on borrowings under the revolving credit facility, we are required to pay a commitment fee and certain conditional fees based on usage of the expanded borrowing base and usage of the asset coverage ratio flexibility. A commitment fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 35% of the then available maximum borrowing or a commitment fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 35% of the then available maximum borrowing. As of March 31, 2021 and December 31, 2020, the outstanding borrowings were accruing at a weighted average interest rate of 3.2% and 3.2%, respectively.  

2023 Notes: On February 18, 2021, we redeemed $109.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC Subtopic 470-50, Debt – Modifications and Extinguishment (“ASC 470-50”), which resulted in a realized loss of $2.3 million (primarily comprised of the unamortized deferred financing costs at the time of the redemption) and was recorded in net gain (loss) on extinguishment of debt on our consolidated statements of operations. The 2023 Notes were delisted from the Nasdaq Global Select Market, in conjunction with the redemption.

2026 Notes: On January 25, 2021, we closed a private offering of $130.0 million in aggregate principal amount of senior unsecured notes (the “2026 Notes”). Aggregate underwriting commissions were $3.3 million and other issuance costs were $0.7 million, resulting in proceeds of approximately $126.0 million. The 2026 Notes will mature on February 15, 2026 and may be redeemed in whole or in part at any time or from time to time at our option at par plus a “make-whole” premium, if applicable. The 2026 Notes will bear interest at an annual rate of 4.75% payable semi-annually on February 15 and August 15 of each year, commencing on August 15, 2021. The 2026 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future unsecured indebtedness.

SBA Debentures: On February 28, 2014, our wholly-owned subsidiary, MRCC SBIC, received a license from the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.

  

The SBIC license allows MRCC SBIC to obtain leverage by issuing SBA-guaranteedSBA debentures, subject to the issuance of a leverage commitment by the SBA and other customary procedures. SBA-guaranteedSBA debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten yearten-year maturity. The principal amount of SBA-guaranteedSBA debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteedSBA debentures is fixed on a semi-annual basis (pooling date) at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC SBIC’s assets over our stockholders in the event we liquidate MRCC SBIC, or the SBA exercises its remedies upon an event of default.

 

On March 1, 2021, we repaid $28.1 million in aggregate principal amount of the SBA debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, which resulted in a realized loss of $0.5 million (primarily comprised of the unamortized deferred financing costs at the time of the repayment) recorded in net gain (loss) on extinguishment of debt on our consolidated statements of operations. As of March 31, 2021, MRCC SBIC had $8.2 million in cash and $120.6 million in investments at fair value. As of December 31, 2020, MRCC SBIC had $25.7 million in cash and $131.2 million in investments at fair value. 

As of March 31, 2021 and December 31, 2020, MRCC SBIC had $57.6 million in leverageable capital and the following SBA-guaranteed debentures outstanding:

Maturity Date Interest Rate  

March 31,

2021

  December 31, 2020 
September 2024  3.4% $12,920  $12,920 
March 2025  3.3%  14,800   14,800 
March 2025  2.9%  7,080   7,080 
September 2025  3.6%  —   5,200 
March 2027  3.5%  20,000   20,000 
September 2027  3.2%  32,100   32,100 
March 2028  3.9%  —   18,520 
September 2028  4.2%  —   4,380 
Total     $86,900  $115,000 


SBA regulations currently limit the amount that an individual SBIC may borrow to a maximum of $150.0$175.0 million when it has at least $75.0$87.5 million in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing. The SBA also historically limitedlimits a related group of SBICs (commonly referred to as a “family of funds”) to a maximum of $225.0 million in total borrowings. On December 18, 2015, this family of funds limitation was raised to $350.0 million in total borrowings. As we have other affiliated SBICs already in operation, MRCC SBIC was historically limited to a maximum of $40.0 million in borrowings. Pursuant to the increase in the family of funds limitation, we submitted a commitment application to the SBA and on April 13, 2016 we were approved for $75.0 million in additional SBA-guaranteed debentures for MRCC SBIC for a total of $115.0 million in available debentures.

 

As of September 30, 2017, MRCC SBIC had $57.6 million in leverageable capital and $92.1 million in SBA-guaranteed debentures outstanding. As of December 31, 2016, MRCC SBIC had $41.0 million in leverageable capital and $51.5 million in SBA-guaranteed debentures outstanding. As of September 30, 2017, we have made all required leverageable capital contributions to MRCC SBIC in order to access the remaining $22.9 million in available SBA-guaranteed debentures.

As of September 30, 2017, MRCC SBIC had the following SBA-guaranteed debentures outstanding (dollars in thousands):

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  3.5%  20,000 
September 2027  3.2%  32,100 
Total     $92,100 

As of December 31, 2016, MRCC SBIC had the following SBA-guaranteed debentures outstanding (dollars in thousands):

45

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  2.1%(1)  9,200 
March 2027  2.0%(1)  2,300 
Total     $51,500 

(1)Represents an interim rate of interest as the SBA-guaranteed debentures had not yet pooled.

On October 2, 2014, the Company wasWe were granted exemptive relief from the SEC for permission to exclude the debt of MRCC SBIC guaranteed by the SBA from the 200% asset coverage test under the 1940 Act. The receipt of this exemption for this SBA-guaranteedSBA debt increases flexibility under the 200% asset coverage test.

 

Secured Borrowings: Certain partial loan sales do not qualify for sale accounting under Accounting Standards Codification (“ASC”) Topic 860 —Transfers and Servicing (“ASC Topic 860”) because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment on the accompanying consolidated statements of assets and liabilities and the portion sold is recorded as a secured borrowing in the liabilities section of the consolidated statements of assets and liabilities. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the accompanying consolidated statements of operations.

As of September 30, 2017, we did not have secured borrowings. As of December 31, 2016, secured borrowings at fair value totaled $1.3 million and the fair value of the loans that are associated with these secured borrowings was $5.8 million. These secured borrowings were created as a result of our completion of partial loan sales of certain unitranche loan assets during the year ended December 31, 2013, that did not meet the definition of a “participating interest.” As a result, sale treatment was not allowed and these partial loan sales were treated as secured borrowings. No such partial loan sales occurred during the year ended December 31, 2016 and the nine months ended September 30, 2017. During the three and nine months ended September 30, 2017, repayments on secured borrowings totaled zero and $1.3 million, respectively. During the three and nine months ended September 30, 2016 repayments on secured borrowings totaled $0.6 million and $0.9 million, respectively. The weighted average interest rate on our secured borrowings was approximately zero and 6.3% as of September 30, 2017 and December 31, 2016, respectively.

Distribution PolicyDistributions

 

Our Board will determine the timing and amount, if any, of our distributions. We intend to pay distributions on a quarterly basis. In order to avoid corporate-level tax on the income we distribute as a RIC, we must distribute to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, on an annual basis out of the assets legally available for such distributions. In addition, we also intend to distribute any realized net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) at least annually out of the assets legally available for such distributions. Distributions to stockholders for the three and nine months ended September 30, 2017,March 31, 2021 and 2020, totaled $7.1$5.3 million ($0.350.25 per share) and $20.0$7.2 million ($1.05 per share), respectively. Distributions to stockholders for the three and nine months ended September 30, 2016 totaled $5.8 million ($0.35 per share) and $14.8 million ($1.05 per share), respectively. The tax character of such distributions is determined at the end of the fiscal year. However, if the character of such distributions were determined as of September 30, 2017March 31, 2021 and 2016,2020, no portion of these distributions would have been characterized as a tax return of capital to stockholders.

 

We haveIn October 2012, we adopted an “opt out” dividend reinvestment plan (“DRIP”) for our common stockholders. As a result, ifWhen we declare a distribution, our stockholders’ cash distributions will automatically be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes.

MRCC Senior Loan Fund I, LLC

We co-invest with LSW in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as underlying investment transactions are completed, taking into account available debt and equity commitments available for funding these investments. All portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee, consisting of one representative of each of us and LSW. SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as described below. Our investment is illiquid in nature as SLF does not allow for withdrawal from the LLC or the sale of a member’s interest unless approved by the board members of SLF. The full withdrawal of a member would result in an orderly wind-down of SLF.

SLF’s profits and losses are allocated to us and LSW in accordance with the respective ownership interests. As of both March 31, 2021 and December 31, 2020, we and LSW each owned 50.0% of the LLC equity interests of SLF. As of both March 31, 2021 and December 31, 2020, SLF had $100.0 million in equity commitments from its members (in the aggregate), of which $84.3 million was funded.

As of both March 31, 2021 and December 31, 2020, we have committed to fund $50.0 million of LLC equity interest subscriptions to SLF. As of both March 31, 2021 and December 31, 2020, $42.2 million of our LLC equity interest subscriptions to SLF had been called and contributed, net of return of capital distributions subject to recall.

For both the three months ended March 31, 2021 and 2020, we received $1.2 million of dividend income from our LLC equity interest in SLF.

SLF has a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Capital One, N.A., through its wholly-owned subsidiary MRCC Senior Loan Fund I Financing SPV, LLC (“SLF SPV”), which as of March 31, 2021 allowed SLF SPV to borrow up to $170.0 million at any one time, subject to leverage and borrowing base restrictions. Borrowings under the SLF Credit Facility bear interest at an annual rate of LIBOR (three-month) plus 2.25%. The maturity date on the SLF Credit Facility is March 22, 2023.

SLF does not pay any fees to MC Advisors or its affiliates; however, SLF has entered into an administration agreement with Monroe Capital Management Advisors, LLC (“MC Management”), pursuant to which certain loan servicing and administrative functions are delegated to MC Management. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. For the three months ended March 31, 2021 and 2020, SLF incurred $58 thousand and $56 thousand of allocable expenses, respectively. There are no agreements or understandings by which we guarantee any SLF obligations.

As of March 31, 2021 and December 31, 2020, SLF had total assets at fair value of $202.6 million and $209.7 million, respectively. As of March 31, 2021, SLF had one portfolio company investment on non-accrual status with a fair value of $1.1 million. As of December 31, 2020, SLF had one portfolio company investment on non-accrual status with a fair value of $1.0 million. The portfolio companies in SLF are in industries and geographies similar to those in which we may invest directly. Additionally, as of March 31, 2021 and December 31, 2020, SLF had $0.6 million and $0.8 million, respectively, in outstanding commitments to fund investments under undrawn revolvers and delayed draw commitments. 

Below is a summary of SLF’s portfolio, followed by a listing of the individual investments in SLF’s portfolio as of March 31, 2021 and December 31, 2020:

  As of 
   March 31, 2021   December 31, 2020 
Senior secured loans (1)  203,382   214,389 
Weighted average current interest rate on senior secured loans (2)  5.9%  5.8%
Number of borrowers in SLF  55   57 
Largest portfolio company investment (1)  6,772   6,790 
Total of five largest portfolio company investments (1)  27,037   27,064 

(1)Represents outstanding principal amount, excluding unfunded commitments. Principal amounts in thousands.
(2)Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at outstanding principal amount.

51

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

March 31, 2021

(in thousands)

Portfolio Company (a) 

Spread Above

Index (b)

  Interest Rate (b)  Maturity  Principal  Fair Value 
Non-Controlled/Non-Affiliate Company Investments                    
Senior Secured Loans                    
Aerospace & Defense                    
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   2,765  $2,707 
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   1,843   1,805 
Trident Maritime SH, Inc.  L+5.50%   6.50%  2/26/2027   2,485   2,481 
Trident Maritime SH, Inc. (Revolver) (d)  L+5.50%   6.50%  2/26/2027   265   41 
               7,358   7,034 
Automotive                    
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   1,722   1,720 
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   255   255 
Wheel Pros, LLC  L+5.25%   6.25%  11/10/2027   2,993   2,993 
               4,970   4,968 
Banking, Finance, Insurance & Real Estate                    
Avison Young (USA), Inc. (c)  L+5.00%   5.20%  1/30/2026   4,888   4,881 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.)  L+5.25%   6.25%  12/13/2024   4,641   4,576 
Harbour Benefit Holdings, Inc. (fka Zenith Merger Sub, Inc.)  L+5.25%   6.25%  12/13/2024   103   102 
Lightbox Intermediate, L.P.  L+5.00%   5.20%  5/11/2026   4,913   4,863 
Minotaur Acquisition, Inc.  L+5.00%   5.11%  3/27/2026   2,940   2,941 
               17,485   17,363 
Beverage, Food & Tobacco                    
CBC Restaurant Corp.  n/a   5.00% PIK(e)   4/28/2022   1,116   1,076 
SW Ingredients Holdings, LLC  L+4.00%   5.00%  7/3/2025   3,647   3,645 
               4,763   4,721 
Capital Equipment                    
Analogic Corporation  L+5.25%   6.25%  6/24/2024   4,788   4,788 
               4,788   4,788 
Chemicals, Plastics & Rubber                    
Polymer Solutions Group  L+7.00%   8.00%  6/30/2021   1,206   1,177 
               1,206   1,177 
Construction & Building                    
The Cook & Boardman Group, LLC  L+5.75%   6.75%  10/20/2025   2,933   2,864 
               2,933   2,864 
Consumer Goods: Durable                    
International Textile Group, Inc.  L+5.00%   5.26%  5/1/2024   1,746   1,646 
               1,746   1,646 
Consumer Goods: Non-Durable                    
PH Beauty Holdings III, Inc.  L+5.00%   5.19%  9/26/2025   2,436   2,328 
               2,436   2,328 
Containers, Packaging & Glass                    
Liqui-Box Holdings, Inc.  L+4.50%   5.50%  2/26/2027   4,301   4,107 
Polychem Acquisition, LLC  L+5.00%   5.11%  3/17/2025   2,940   2,936 
Port Townsend Holdings Company, Inc.  L+6.75%   5.75% Cash/
2.00% PIK		   4/3/2024   4,716   4,291 
PVHC Holding Corp.  L+4.75%   5.75%  8/5/2024   3,242   2,837 
               15,199   14,171 
Energy: Oil & Gas                    
Drilling Info Holdings, Inc.  L+4.25%   4.36%  7/30/2025   4,551   4,483 
Offen, Inc.  L+5.00%   5.11%  6/22/2026   2,406   2,384 
Offen, Inc.  L+5.00%   5.11%  6/22/2026   883   875 
               7,840   7,742 


MRCC SENIOR LOAN FUND I, LLC
CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)
(unaudited)
March 31, 2021 

(in thousands)

Portfolio Company (a)  

Spread Above
Index (b)

    Interest Rate (b)    Maturity   Principal    Fair Value 
Healthcare & Pharmaceuticals                    
LSCS Holdings, Inc.  L+4.25%   4.45%  3/17/2025   2,293  $2,270 
LSCS Holdings, Inc.  L+4.25%   4.45%  3/17/2025   592   586 
Radiology Partners, Inc.  L+4.25%   4.36%  7/9/2025   4,760   4,731 
               7,645   7,587 
High Tech Industries                    
Corel, Inc. (c)   L+5.00%   5.19%  7/2/2026   3,875   3,863 
LW Buyer, LLC  L+5.00%   5.11%  12/30/2024   4,912   4,888 
TGG TS Acquisition Company  L+6.50%   6.61%  12/12/2025   3,679   3,698 
               12,466   12,449 
Hotels, Gaming & Leisure                    
Excel Fitness Holdings, Inc.  L+5.25%   6.25%  10/7/2025   4,197   4,020 
North Haven Spartan US Holdco, LLC  L+5.00%   6.00%  6/6/2025   2,315   1,998 
Tait, LLC  L+5.00%   5.20%  3/28/2025   4,157   3,695 
Tait, LLC (Revolver)  P+4.00%   7.25%  3/28/2025   769   715 
               11,438   10,428 
Media: Advertising, Printing & Publishing                    
Cadent, LLC  L+5.25%   6.25%  9/11/2023   4,728   4,716 
Cadent, LLC (Revolver) (d)  L+5.25%   6.25%  9/11/2023   167   — 
Digital Room Holdings, Inc.  L+5.00%   5.20%  5/21/2026   4,351   4,284 
Monotype Imaging Holdings, Inc.  L+5.50%   6.50%  10/9/2026   4,875   4,865 
               14,121   13,865 
Media: Diversified & Production                    
Research Now Group, Inc. and Survey Sampling International, LLC  L+5.50%   6.50%  12/20/2024   6,772   6,723 
Stats Intermediate Holding, LLC  L+5.25%   5.45%  7/10/2026   4,937   4,937 
The Octave Music Group, Inc.  L+6.00%   6.25% Cash/
0.75% PIK		   5/29/2025   4,828   4,580 
               16,537   16,240 
Services: Business                    
AQ Carver Buyer, Inc.  L+5.00%   6.00%  9/23/2025   4,938   4,925 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   1,997   1,867 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   421   394 
Eliassen Group, LLC  L+4.25%   4.36%  11/5/2024   3,013   2,968 
Engage2Excel, Inc.  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   4,309   4,285 
Engage2Excel, Inc.  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   777   773 
Engage2Excel, Inc. (Revolver) (d)  L+8.00%   7.00% Cash/
2.00% PIK		   3/7/2023   550   373 
GI Revelation Acquisition, LLC  L+5.00%   5.11%  4/16/2025   1,362   1,366 
Legility, LLC  L+6.00%   7.00%  12/17/2025   4,875   4,719 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   2,450   2,460 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   1,892   1,900 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   553   555 
Output Services Group, Inc.  L+4.50%   5.50%  3/27/2024   4,852   4,124 
SIRVA Worldwide, Inc.  L+5.50%   5.70%  8/4/2025   1,887   1,746 
Teneo Holdings, LLC  L+5.25%   6.25%  7/11/2025   4,925   4,929 
The Kleinfelder Group, Inc.  L+5.25%   6.25%  11/29/2024   2,444   2,444 
               41,245   39,828 
Services: Consumer                    
Cambium Learning Group, Inc.  L+4.50%   5.25%  12/18/2025   4,516   4,527 
LegalZoom.com, Inc.  L+4.50%   4.61%  11/21/2024   2,687   2,688 
               7,203   7,215 
Telecommunications                    
Intermedia Holdings, Inc.  L+6.00%   7.00%  7/21/2025   1,792   1,796 
Mavenir Systems, Inc.  L+6.00%   7.00%  5/8/2025   3,890   3,897 
               5,682   5,693 
Transportation: Cargo                    
GlobalTranz Enterprises, LLC  L+5.00%   5.11%  5/15/2026   3,254   3,129 
               3,254   3,129 
Utilities: Oil & Gas                    
NGS US Finco, LLC  L+4.25%   5.25%  10/1/2025   1,708   1,640 
NGS US Finco, LLC  L+5.25%   6.25%  10/1/2025   249   245 
               1,957   1,885 
Wholesale                    
BMC Acquisition, Inc.  L+5.25%   6.25%  12/30/2024   4,837   4,816 
HALO Buyer, Inc.  L+4.50%   5.50%  6/30/2025   4,862   4,704 
PT Intermediate Holdings III, LLC  L+5.50%   6.50%  10/15/2025   1,975   1,958 
               11,674   11,478 
                     
TOTAL INVESTMENTS                 $198,599 

(a)All investments are U.S. companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, we have provided the spread over LIBOR or Prime and the current contractual interest rate in effect at March 31, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of March 31, 2021. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.
(e)This position was on non-accrual status as of March 31, 2021, meaning that we have ceased accruing interest income on the position.

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2020

(in thousands)

Portfolio Company (a) Spread Above Index (b) Interest Rate (b) Maturity  Principal  Fair Value 
Non-Controlled/Non-Affiliate Company Investments                 
Senior Secured Loans                 
Aerospace & Defense                 
Bromford Industries Limited (c) L+5.25% 6.25% 11/5/2025   2,772  $2,685 
Bromford Industries Limited (c) L+5.25% 6.25% 11/5/2025   1,848   1,790 
Trident Maritime SH, Inc. L+4.75% 5.75% 6/4/2024   4,401   4,363 
Trident Maritime SH, Inc. (Revolver) (d) L+4.75% 5.75% 6/4/2024   340   — 
            9,361   8,838 
Automotive                 
Truck-Lite Co., LLC L+6.25% 7.25% 12/14/2026   1,726   1,716 
Truck-Lite Co., LLC L+6.25% 7.25% 12/14/2026   256   254 
Wheel Pros, LLC L+5.25% 6.25% 11/10/2027   3,000   2,961 
            4,982   4,931 
Banking, Finance, Insurance & Real Estate                 
Avison Young (USA), Inc. (c) L+5.00% 5.25% 1/30/2026   4,900   4,659 
Harbour Benefit Holdings, Inc. (fka Zenith Merger
       Sub, Inc.)		 L+5.25% 6.25% 12/13/2024   4,653   4,585 
Harbour Benefit Holdings, Inc. (fka Zenith Merger
       Sub, Inc.) (Delayed Draw) (d)		 L+5.25% 6.25% 12/13/2024   264   102 
Lightbox Intermediate, L.P. L+5.00% 5.15% 5/11/2026   4,925   4,777 
Minotaur Acquisition, Inc. L+5.00% 5.15% 3/27/2026   2,947   2,900 
            17,689   17,023 
Beverage, Food & Tobacco                 
CBC Restaurant Corp. n/a  5.00% PIK  4/28/2022   1,117   1,031 
SW Ingredients Holdings, LLC L+4.00% 5.00% 7/3/2025   3,656   3,647 
            4,773   4,678 
Capital Equipment                 
Analogic Corporation L+5.25% 6.25% 6/24/2024   4,800   4,800 
            4,800   4,800 
Chemicals, Plastics & Rubber                 
Polymer Solutions Group L+7.00% 8.00% 6/30/2021   1,216   1,189 
            1,216   1,189 
Construction & Building                 
ISC Purchaser, LLC L+4.00% 5.00% 7/11/2025   4,937   4,896 
The Cook & Boardman Group, LLC L+5.75% 6.75% 10/20/2025   2,940   2,811 
            7,877   7,707 
Consumer Goods: Durable                 
International Textile Group, Inc. L+5.00% 5.37% 5/1/2024   1,758   1,597 
            1,758   1,597 
Consumer Goods: Non-Durable                 
PH Beauty Holdings III, Inc. L+5.00% 5.23% 9/26/2025   2,442   2,149 
            2,442   2,149 
Containers, Packaging & Glass                 
Liqui-Box Holdings, Inc. L+4.50% 5.50% 2/26/2027   4,312   3,848 
Polychem Acquisition, LLC L+5.00% 5.15% 3/17/2025   2,948   2,948 
Port Townsend Holdings Company, Inc. L+6.75% 5.75% Cash/
2.00% PIK		  4/3/2024   4,683   4,263 
PVHC Holding Corp. L+4.75% 5.75% 8/5/2024   3,250   2,844 
            15,193   13,903 
Energy: Oil & Gas                 
Drilling Info Holdings, Inc. L+4.25% 4.40% 7/30/2025   4,563   4,429 
Offen, Inc. L+5.00% 5.15% 6/22/2026   2,412   2,343 
Offen, Inc. L+5.00% 5.15% 6/22/2026   885   860 
            7,860   7,632 
Healthcare & Pharmaceuticals                 
LSCS Holdings, Inc. L+4.25% 4.51% 3/17/2025   2,299   2,253 
LSCS Holdings, Inc. L+4.25% 4.51% 3/17/2025   593   582 
Radiology Partners, Inc. L+4.25% 4.40% 7/9/2025   4,760   4,692 
            7,652   7,527 
High Tech Industries                 
AQA Acquisition Holding, Inc. L+4.25% 5.25% 5/24/2023   3,257   3,257 
Corel, Inc. (c)  L+5.00% 5.23% 7/2/2026   3,900   3,844 
LW Buyer, LLC L+5.00% 5.15% 12/30/2024   4,925   4,900 
TGG TS Acquisition Company L+6.50% 6.65% 12/12/2025   3,753   3,720 
            15,835   15,721 
Hotels, Gaming & Leisure                 
Excel Fitness Holdings, Inc. L+5.25% 6.25% 10/7/2025   4,207   3,878 
North Haven Spartan US Holdco, LLC L+5.00% 6.00% 6/6/2025   2,321   1,979 
Tait, LLC L+5.00% 5.23% 3/28/2025   4,167   3,669 
Tait, LLC (Revolver) P+4.00% 7.25% 3/28/2025   769   711 
            11,464   10,237 
Media: Advertising, Printing & Publishing                 
Cadent, LLC L+5.50% 6.50% 9/11/2023   4,728   4,622 
Cadent, LLC (Revolver) (d) L+5.50% 6.50% 9/11/2023   167   — 
Digital Room Holdings, Inc. L+5.00% 5.27% 5/21/2026   4,362   4,133 
Monotype Imaging Holdings, Inc. L+5.50% 6.50% 10/9/2026   4,906   4,653 
            14,163   13,408 
Media: Diversified & Production                 
Research Now Group, Inc. and Survey Sampling
       International, LLC		 L+5.50% 6.50% 12/20/2024   6,790   6,708 
Stats Intermediate Holding, LLC L+5.25% 5.47% 7/10/2026   4,950   4,909 
The Octave Music Group, Inc. L+6.00% 6.25% Cash/
0.75% PIK		  5/29/2025   4,871   4,335 
            16,611   15,952 


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

December 31, 2020

(in thousands)

Portfolio Company (a) Spread Above Index (b) Interest Rate (b) Maturity  Principal  Fair Value 
Services: Business                 
AQ Carver Buyer, Inc. L+5.00% 6.00% 9/23/2025   4,937  $4,888 
CHA Holdings, Inc. L+4.50% 5.50% 4/10/2025   2,002   1,872 
CHA Holdings, Inc. L+4.50% 5.50% 4/10/2025   422   395 
Eliassen Group, LLC L+4.25% 4.40% 11/5/2024   3,017   2,922 
Engage2Excel, Inc. L+8.00% 7.00% Cash/
2.00% PIK		  3/7/2023   4,299   4,178 
Engage2Excel, Inc. L+8.00% 7.00% Cash/
2.00% PIK		  3/7/2023   776   754 
Engage2Excel, Inc. (Revolver) (d) L+8.00% 7.00% Cash/
2.00% PIK		  3/7/2023   548   364 
GI Revelation Acquisition, LLC L+5.00% 5.15% 4/16/2025   1,365   1,344 
Legility, LLC L+6.00% 7.00% 12/17/2025   4,906   4,735 
Orbit Purchaser, LLC L+4.50% 5.50% 10/21/2024   2,456   2,407 
Orbit Purchaser, LLC L+4.50% 5.50% 10/21/2024   1,897   1,859 
Orbit Purchaser, LLC L+4.50% 5.50% 10/21/2024   555   544 
Output Services Group, Inc. L+4.50% 5.50% 3/27/2024   4,865   3,648 
SIRVA Worldwide, Inc. L+5.50% 5.65% 8/4/2025   1,900   1,741 
Teneo Holdings, LLC L+5.25% 6.25% 7/11/2025   4,938   4,903 
The Kleinfelder Group, Inc. L+5.25% 6.25% 11/29/2024   2,450   2,450 
            41,333   39,004 
Services: Consumer                 
Cambium Learning Group, Inc. L+4.50% 4.75% 12/18/2025   4,900   4,883 
LegalZoom.com, Inc. L+4.50% 4.65% 11/21/2024   2,694   2,706 
            7,594   7,589 
Telecommunications                 
Intermedia Holdings, Inc. L+6.00% 7.00% 7/21/2025   1,797   1,795 
Mavenir Systems, Inc. L+6.00% 7.00% 5/8/2025   3,900   3,893 
            5,697   5,688 
Transportation: Cargo                 
GlobalTranz Enterprises, LLC L+5.00% 5.15% 5/15/2026   3,262   3,050 
            3,262   3,050 
Utilities: Oil & Gas                 
NGS US Finco, LLC L+4.25% 5.25% 10/1/2025   1,712   1,640 
NGS US Finco, LLC L+5.25% 6.25% 10/1/2025   250   246 
            1,962   1,886 
Wholesale                 
BMC Acquisition, Inc. L+5.25% 6.25% 12/30/2024   4,850   4,802 
HALO Buyer, Inc. L+4.50% 5.50% 6/30/2025   4,875   4,533 
PT Intermediate Holdings III, LLC L+5.50% 6.50% 10/15/2025   1,980   1,851 
            11,705   11,186 
                  
TOTAL INVESTMENTS              $205,695 

(a)All investments are U.S. companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, we have provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of December 31, 2020. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.
(e)This position was on non-accrual status as of December 31, 2020, meaning that we have ceased accruing interest income on the position.


Below is certain summarized financial information for SLF as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020 (in thousands):

  March 31,
2021		  December 31,
2020		 
  (unaudited)    
Assets        
Investments, at fair value $198,599  $205,695 
Cash  25   351 
Restricted cash  3,136   2,948 
Interest receivable  714   629 
Other assets  86   43 
Total assets $202,560  $209,666 
Liabilities        
Revolving credit facility $121,614  $131,497 
Less: Unamortized deferred financing costs  (1,570)  (969)
Total debt, less unamortized deferred financing costs  120,044   130,528 
Interest payable  91   294 
Accounts payable and accrued expenses  291   277 
Total liabilities  120,426   131,099 
Members’ capital  82,134   78,567 
Total liabilities and members’ capital $202,560  $209,666 

  Three months ended March 31, 
  2021  2020 
       
  (unaudited) 
Investment income:        
Interest income $3,453  $4,253 
Total investment income  3,453   4,253 
Expenses:        
Interest and other debt financing expenses  979   1,614 
Professional fees  170   184 
Total expenses  1,149   1,798 
Net investment income (loss)  2,304   2,455 
Net gain (loss):        
Net change in unrealized gain (loss)  3,663   (22,329)
Net gain (loss)  3,663   (22,329)
Net increase (decrease) in members’ capital $5,967  $(19,874)

 

Related Party Transactions

 

We have a number of business relationships with affiliated or related parties, including the following:

 

 ·We have an Investment Advisory and Management Agreement with MC Advisors, an investment advisor registered with the SEC, to manage our day-to-day operating and investing activities. We pay MC Advisors a fee for its services under the Investment Advisory and Management Agreement consisting of two components —- a base management fee and an incentive fee. See Note 6 to our consolidated financial statements and “Significant Accounting Estimates and Critical Accounting Policies —- Capital Gains Incentive Fee” for additional information.

 

46

 ·We have an Administration Agreement with MC Management to provide us with the office facilities and administrative services necessary to conduct our day-to-day operations. See Note 6 to our consolidated financial statements for additional information.

·SLF has an administration agreement with MC Management to provide SLF with certain loan servicing and administrative functions. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. See Note 3 to our consolidated financial statements and “Liquidity and Capital Resources - MRCC Senior Loan Fund I, LLC” for additional information.

 

 ·Theodore L. Koenig, our Chief Executive Officer and Chairman of our Board is also a manager of MC Advisors and the President and Chief Executive Officer of MC Management. Aaron D. Peck, our Chief Financial Officer and Chief Investment Officer, serves as a director on our Board and is also a managing director of MC Management.

 

 ·We have a license agreement with Monroe Capital LLC, under which Monroe Capital LLC has agreed to grant us a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in our business.


In addition, we have adopted a formal code of ethics that governs the conduct of MC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and Maryland General Corporation Law.

 

Commitments and Contingencies and Off-Balance Sheet Arrangements

 

Commitments and Contingencies

 

As of September 30, 2017March 31, 2021 and December 31, 2016,2020, we had $33.1 million and $37.7 million, respectively, in outstanding commitments to fund investments under undrawn revolvers, capital expenditure loans, and delayed draw commitments.commitments and subscription agreements, excluding unfunded commitments in SLF, totaling $50.1 million and $52.3 million, respectively. As of both March 31, 2021 and December 31, 2020, we had unfunded commitments to SLF of $7.8 million that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee. Drawdowns of the commitments to SLF require authorization from one of our representatives on SLF’s board of managers. Additionally, we have entered into certain contracts with other parties that contain a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.

Off-Balance Sheet Arrangements

 

WeOther than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have noany off-balance sheet arrangements that havefinancings or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.liabilities.

 

Market Trends

 

In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly across the world, including to the United States. This outbreak has led to disruptions in local, regional, national and global markets and economies affected thereby and will continue to cause disruptions for an unknown and potentially significant amount of time. To date, cross border commercial activity and market sentiment have been negatively impacted by the outbreak and government and other measures seeking to contain its spread. The federal government and the Federal Reserve, as well as foreign governments and central banks, have implemented significant fiscal and monetary policies in response to these disruptions, and additional government and regulatory responses may be possible. It is currently impossible to determine the scope of this or any future outbreak, how long any such outbreak and market disruption, volatility or uncertainty may last, the effect any governmental actions and changes in base interest rates will have or the full potential impact on us, our industry and our portfolio companies.

We have also identified the following general trends that may affect our business:

 

Target Market:Market: We believe that small and middle-market companies in the United States with annual revenues between $10.0 million and $2.5 billion represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have generated a significant number of investment opportunities for investment funds managed or advised by Monroe Capital, and we believe that this market segment will continue to produce significant investment opportunities for us.

Specialized Lending Requirements:Requirements: We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender.

Demand for Debt Capital:Capital: We believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms will seek to leverage their investments by combining equity capital with senior secured loans and mezzanine debt from other sources, such as us.

Competition from Other Lenders:Lenders: We believe that many traditional bank lenders, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital market transactions. In addition, many commercial banks face significant balance sheet constraints as they seek to build capital and meet future regulatory capital requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore drive increased new investment opportunities for us. Conversely, there ishas been a significant amount of capital raised over the past several years dedicated to middle market lending which has increased competitive pressure in the BDC and investment company marketplace for senior and subordinated debt, which in turn could result in lower yields and weaker financial covenants for increasingly riskiernew assets.

Pricing and Deal Structures:Structures: We believe that the volatility in global markets over the last several years and current macroeconomic issues such as a weakened U.S. economyincluding changes in bank regulations for middle-market banks has reduced access to, and availability of, debt capital to middle-market companies, causing a reduction in competition and generally more favorable capital structures and deal terms. Recent capital raises in the BDC and investment company marketplace have created increased competition; however, we believe that current market conditions may continue to create favorable opportunities to invest at attractive risk-adjusted returns.

 

Recent Developments

On November 1, 2017, we announced the formation of a joint venture with NLV Financial Corporation (“NLV”), the parent of National Life Insurance Company, to create MRCC Senior Loan Fund I, LLC (the “Senior Loan Fund”). The Senior Loan Fund is expected to invest primarily in senior secured loans to middle market companies in the United States. Monroe Capital Corporation and NLV have each initially committed $50.0 million of capital to the joint venture. In addition, the Senior Loan Fund intends to obtain third party financing that is expected to allow the joint venture to access market levels of leverage. 

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Significant Accounting Estimates and Critical Accounting Policies

 

Revenue Recognition

 

We record interest and fee income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, we do not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount and market discount or premium isare capitalized, and then we then amortize such amounts using the effective interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”)LLC and limited partnership (“LP”)LP investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

 

Valuation of Portfolio Investments

 

As a BDC, we generally invest in illiquid securities including debt and, to a lesser extent, equity securities of middle-market companies. Under procedures established by our Board, we value investments for which market quotations are readily available and within a recent date at such market quotations. We obtain these market values from an independent pricing service or at the mean between the bid and ask prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). When doing so, we determine whether the quote obtained is sufficient in accordance with generally accepted accounting principles in the United States (“GAAP”)of America to determine the fair value of the security. Debt and equity securities that are not publicly traded or whose market prices are not readily available or whose market prices are not regularly updated are valued at fair value as determined in good faith by our Board. Such determination of fair values may involve subjective judgments and estimates. Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

  

Our Board is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or in any other situation where portfolio investments require a fair value determination. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

With respect to investments for which market quotations are not readily available, our Board undertakes a multi-step valuation process each quarter, as described below:

 

 ·the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;

·our Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. We will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly for each investment;

·to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;

 

 ·preliminary valuation conclusions are then documented and discussed with the investment committee;committee of MC Advisors;

 

 ·our Board engages one or more independent valuation firm(s) to conduct fair value appraisals of material investments for which market quotations are not readily available. These fair value appraisals for material investments are received at least once in every calendar year for each portfolio company investment, but are generally received quarterly;

·ourthe audit committee of theour Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and responds andMC Advisors adjusts or further supplements the valuation recommendations to reflect any comments;comments provided by the audit committee; and

 

 ·our Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

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The Board, together with our independent valuation firms,We generally usesuse the yieldincome approach to determine fair value for loans where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, we may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company under the market approach or the proceeds that would be received in a liquidation analysis. This liquidation analysis may also include probability weighting of alternative outcomes. We generally consider our debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner;manner, the loan is in covenant compliance orand the loan is otherwise not deemed to be impaired. In determining the fair value of the performing debt, the Company considerswe consider fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a debt instrument is not performing, as defined above, we will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the loan.debt instrument.

 

Under the yieldincome approach, we utilize discounted cash flow models are utilized to determine the present value of the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the yieldincome approach, we also consider the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

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Under the market approach, we typically use the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which we derive a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, we analyzesanalyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization, (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.

As of March 31, 2021, our Board determined, in good faith, the fair value of our investment portfolio in accordance with GAAP and our valuation procedures based on the facts and circumstances known by us at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic has caused, any valuations conducted in the future in conformity with GAAP could result in a lower fair value of our portfolio. The potential impact of COVID-19 on our results going forward will depend to a large extent on future developments or new information that may emerge regarding the full duration and severity of COVID-19 including the actions taken by governments and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. Accordingly, we cannot predict the extent to which our financial condition and results of operations will be affected at this time.

Net Realized GainsGain or LossesLoss and Net Change in Unrealized Gain or Loss

 

We measure realized gainsgain or lossesloss by the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized gain or loss previously recognized. Net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when gainsgain or losses areloss is realized. Additionally, we do not isolate the portion of the change in fair value resulting from foreign currency exchange rate fluctuations from the changes in fair values of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) on investments in fair value on our consolidated statements of operations. We report changes in the fair value of secured borrowings that are measured at fair value as a component of the net change in unrealized gain (loss) on secured borrowings in the consolidated statements of operations. The impact resulting from changes in foreign exchange rates on the revolving credit facility borrowings is included in net change in unrealized gain (loss) on foreign currency borrowings.and other transactions.

  

Capital Gains Incentive Fee

 

Pursuant to the terms of the Investment Advisory and Management Agreement with MC Advisors, the incentive fee on capital gains earned on liquidated investments of our portfolio is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory and administrative services agreement)Investment Advisory Agreement). This fee equals 20% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, we accrue for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

 

While the Investment Advisory and Management Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if our entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

 

During the three months ended September 30, 2017,March 31, 2021 and 2020, we did not accrue capital gains incentive fees. During the nine months ended September 30, 2017, we had a reductionhave any further reductions in accrued capital gains incentive fees of $0.2 million,as they were already at zero, primarily as a result of net declines in portfolio valuations during the period. During the three months ended September 30, 2016, we had a reduction in accrued capital gains incentive fees of $0.1 million, as a result of net declines in portfolio valuations during the period. During the nine months ended September 30, 2016, we did not accrue any capital gains incentive fees basedaccumulated realized and unrealized losses on the performance of our portfolio.

 

New Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,Revenue from Contracts with Customers(ASC Topic 606) (“ASU 2014-09”). The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

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ASU 2014-09 also specified the accounting for some costs to obtain or fulfill a contract with a customer. In addition, ASU 2014-09 requires that an entity disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The initial effective date of ASU 2014-09 was for fiscal periods beginning after December 15, 2016. However, in August 2015,March 2020, the FASB issued ASU 2015-14,2020-04, Revenue from Contracts with Customers (ASC Topic 606): DeferralReference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of the Effective Date, which deferred the effective date to fiscal periods beginning afterMarch 12, 2020 through December 15, 2017.31, 2022. Management is currently evaluating the impact these changes will haveof the optional guidance on our consolidated financial statements and disclosures. We did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2021.

 


In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall (Subtopic 825-10):Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. Management is currently evaluating the impact these changes will have on our consolidated financial statements and disclosures.

In October 2016, the SEC adopted new rules and amended rules (together “final rules”) intended to modernize the reporting and disclosures of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X was August 1, 2017. We have adopted the final rules, as applicable, and the revised presentation is reflected in our consolidated financial statements for the periods presented.

In November 2016, the FASB issued ASU 2016-18,Statement of Cash Flows (Topic 230):Restricted Cash (“ASU 2016-18”). ASU 2016-18 requires that the statements of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The new guidance is effective for annual and interim periods, beginning after December 15, 2017, and early adoption is permitted and is to be applied on a retrospective basis. We have adopted ASU 2016-18 and the revised presentation is reflected in our consolidated financial statements for the periods presented.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are subject to financial market risks, including changes in interest rates. rates and the valuations of our investment portfolio. Uncertainty with respect to the economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks. For additional information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see Part II – Other Information, Item 1A. Risk Factors, “Risk Factors – The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”

The majority of the loans in our portfolio have floating interest rates, and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in our current portfolio have interest rate floors which havewill effectively convertedconvert the loans to fixed rate loans in the currentevent interest rate environment.rates decrease. In addition, our revolving credit facility has a floating interest rate provision, whereas our SBA debentures and wethe 2026 Notes have fixed interest rates until maturity. We expect that other credit facilities into which we may enter in the future may also have floating interest rate provisions.

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these agreements may bear interest a lower interest rate, which could have an adverse impact on our results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our credit facilities. If we are unable to do so, amounts drawn under our credit facilities may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

  

Assuming that the consolidated statement of financial conditionassets and liabilities as of September 30, 2017 wereMarch 31, 2021 was to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates.rates (in thousands):

 

 Increase (decrease) in Increase (decrease) in Net increase (decrease) in  Increase 
(decrease) in		 Increase 
(decrease) in		 Net increase 
(decrease) in net		 
Change in Interest Rates interest income  interest expense  net investment income  interest income  interest expense  investment income 
 (in thousands)
Down 25 basis points $(863) $(152) $(711) $—  $(9) $9 
Up 100 basis points  3,851   606   3,245   538   568   (30)
Up 200 basis points  7,907   1,212   6,695   4,595   1,497   3,098 
Up 300 basis points  11,964   1,818   10,146   8,881   2,425   6,456 

 

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the credit facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

 

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts to the extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates or interest rate floors.

 

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We may also have exposure to foreign currencies (currently the Great Britain pound)pound and Australian dollar) related to certain investments. Such investments are translated into U.S. dollars based on the spot rate at each balance sheet date, exposing us to movements in the exchange rate. In order to reduce our exposure to fluctuations in exchange rates, we generally borrow in Great Britain pounds under our revolving credit facility to finance such investments. As of September 30, 2017,March 31, 2021, we have non-U.S. dollar borrowings denominated in Great Britain pounds of £1.8£16.1 million ($2.422.2 million U.S. dollars) outstanding under the revolving credit facility. We may also enter into foreign currency forward contracts to mitigate foreign currency exposure. As of March 31, 2021, we had foreign currency forward contracts in place for £1.6 million and AUD 14.5 million associated with future interest payments on certain investments.

 

ITEM 4. CONTROLS AND PROCEDURES

 

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, at the end of the period covered by our Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

 

No change occurred in our internal control over financial reporting (as defined in RuleRules 13a-15(f) and 15d-15(f) of the Exchange Act) during the ninethree months ended September 30, 2017March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 


PART II

 

OTHER INFORMATION

Item 1. Legal Proceedings

 

Neither we, our subsidiaries nor our investment adviser are currently subject to any material legal proceedings.

 

Item 1A. Risk Factors

 

None.In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 2, 2021, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes during the three months ended March 31, 2021 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.

In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly to across the world, including to the United States. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of “stay at home” orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general that will not necessarily adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on our portfolio companies and us and on the markets and the economy in general, and that impact could be material. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. It is impossible to determine the scope of the COVID-19 pandemic, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us, MC Advisors and our portfolio companies.

The COVID-19 pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) adversely impacted the value and performance of certain of our portfolio companies. The COVID-19 pandemic is continuing as of the filing date of this Quarterly Report, and its extended duration may have further adverse impacts on our portfolio companies after March 31, 2021, including for the reasons described below. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans. 

The effects described above on our portfolio companies have, for certain of our portfolio companies to date, impacted their ability to make payments on their loans on a timely basis and in some cases have required us to amend certain terms, including payment terms. In addition, an extended duration of the COVID-19 pandemic may impact the ability of our portfolio companies to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake similar amendment actions with respect to other of our investments or to restructure our investments. The amendment or restructuring of our investments may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our investments to permit a portfolio company to pay a portion of its interest through payment-in-kind, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.

If the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, loan non-accruals, problem assets, and bankruptcies may increase. In addition, collateral for our loans may decline in value, which could cause loan losses to increase and the net worth and liquidity of loan guarantors could decline, impairing their ability to honor commitments to us. An increase in loan delinquencies and non-accruals or a decrease in loan collateral and guarantor net worth could result in increased costs and reduced income, which would have a material adverse effect on our business, financial condition or results of operations.

The COVID-19 pandemic has adversely impacted the fair value of our investments as of March 31, 2021 and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments. Our Board approved the fair value of our investment portfolio as of March 31, 2021 and these valuations were determined in good faith in accordance with our valuation policy based on information known or knowable as of the valuation date. As a result, the long term impacts of the COVID-19 pandemic may not yet be fully reflected in the valuation of our investments and the fair value of our portfolio investments may be further negatively impacted after March 31, 2021 by circumstances and events that are not yet known, including the complete or continuing impact of the COVID-19 pandemic and the resulting measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses after March 31, 2021, which could have a material adverse effect on our business, financial condition and results of operations.

The volatility and disruption to the global economy from the COVID-19 pandemic has affected, and may continue to affect, the pace of our investment activity, which may have a material adverse impact on our results of operations. Such volatility and disruption have also led to the increased credit spreads in the private debt capital markets.

Further, from an operational perspective, MC Advisors’ investment professionals are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. In addition, we are highly dependent on third party service providers for certain communication and information systems. As a result, we rely upon the successful implementation and execution of the business continuity planning of such providers in the current environment. If one or more of these third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows.


The 1940 Act allows us to incur additional leverage, which could increase the risk of investing in us.

The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our total assets). However, under the Small Business Credit Availability Act (the “SBCAA”), which became law in March 2018, BDCs have the ability to elect to become subject to a lower asset coverage requirement of 150%, subject to the receipt of the requisite board or stockholder approvals under the SBCAA and satisfaction of certain other conditions.

On June 20, 2018, our stockholders approved the application of the modified asset coverage requirements, as approved by our board of directors on March 27, 2018, and we became subject to the 150% minimum asset coverage ratio, effective June 21, 2018.

Leverage is generally considered a speculative investment technique and may increase the risk of investing in our securities. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay distributions, scheduled debt payments or other payments related to our securities. The effects of leverage would cause any decrease in net asset value for any losses to be greater than any increase in net asset value for any corresponding gains. If we incur additional leverage, you will experience increased risks of investing in our common stock. 

We maintain a revolving credit facility and use other borrowed funds to make investments or fund our business operations, which exposes us to risks typically associated with leverage and increases the risk of investing in us.

We maintain a revolving credit facility, have issued debt securities and may borrow money, including through the issuance of additional debt securities or preferred stock, to leverage our capital structure, which is generally considered a speculative investment technique. As a result:

·our common stock is exposed to an increased risk of loss because a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;

·if we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;

·our ability to pay distributions on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150% and any amounts used to service indebtedness or preferred stock would not be available for such distributions;

·any credit facility is subject to periodic renewal by its lenders, whose continued participation cannot be guaranteed;

·our revolving credit facility with ING Capital LLC, as agent, is, and any other credit facility we may enter into would be, subject to various financial and operating covenants, including that our portfolio of investments satisfies certain eligibility and concentration limits as well as valuation methodologies;

·such securities would be governed by an indenture or other instrument containing covenants restricting our operating flexibility;

·we bear the cost of issuing and paying interest or distributions on such securities, which costs are entirely borne by our common stockholders; and

·any convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock.

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

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Assumed Return on Our Portfolio

(Net of Expenses) (1)

 
  -10%  -5%  0%  5%  10% 
Corresponding return to common stockholder (2)(3)  -31.02%  -18.54%  -6.06%  6.42%  18.90%

(1)The assumed return on our portfolio is required by regulation of the SEC to assist investors in understanding the effects of leverage and is not a prediction of, and does not represent, our projected or actual performance.

(2)Assumes $585.1 million in total assets, $350.7 million in debt outstanding, of which $235.6 million is senior securities outstanding, $234.4 million in net assets and an average cost of funds of 4.05%, which was the weighted average interest rate of borrowing on our revolving credit facility, SBA debentures and 2023 Notes as of December 31, 2020. The interest rate on our revolving credit facility is a variable rate. Actual interest payments may be different. 

(3)In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2020 total portfolio assets of at least 2.43%.

We are subject to risks associated with our revolving credit facility and the terms of our revolving credit facility may contractually limit our ability to incur additional indebtedness.

Our revolving credit facility, as amended, imposes certain conditions that may limit the amount of our distributions to stockholders. Distributions payable in our common stock under our dividend reinvestment plan are not limited by the revolving credit facility. Distributions in cash or property other than our common stock are generally limited to 115% of the amount of distributions required to maintain our ability to be subject to taxation as a RIC. We are required under the revolving credit facility to maintain our ability to be subject to taxation as a RIC.

The revolving credit facility requires us to comply with certain financial and operational covenants, including asset coverage ratios and a minimum net worth. For example, the revolving credit facility requires that we maintain an asset coverage ratio of at least 1.5 to 1 and a senior debt coverage ratio of at least 2 to 1 at all times. We may divert cash to pay the lenders in amounts sufficient to cause these tests to be satisfied. Our compliance with these covenants depends on many factors, some of which, such as market conditions, are beyond our control.

Our ability to sell our investments is also limited under the revolving credit facility. Under the revolving credit facility, the sale of any portfolio investment may not cause our covered debt amount to exceed our borrowing base. As a result, there may be times or circumstances during which we are unable to sell investments, pay distributions or take other actions that might be in our best interests.

Availability of borrowings under the revolving credit facility is linked to the valuation of the collateral pursuant to a borrowing base mechanism. As such, declines in the fair market value of our investments which are collateral to the revolving credit facility may reduce availability under our revolving credit facility.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

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Item 6. Exhibits

 

Exhibit  
Number Description of Document
3.1Amended and Restated Articles of Incorporation of Monroe Capital Corporation (Incorporated by reference to Exhibit (a)(1) of the Registrant’s Pre-Effective Amendment No. 8 to the Registration Statement on Form N-2 (File No. 333-172601) filed on October 18, 2012)
3.2Bylaws of Monroe Capital Corporation (Incorporated by reference to Exhibit (b)(1) of the Registrant’s Pre-Effective Amendment No. 8 to the Registration Statement on Form N-2 (File No. 333-172601) filed on October 18, 2012)
4.1Second Supplemental Indenture by and between the Registrant and U.S. Bank National Association, as trustee (Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (File No. 814-00866) filed on January 25, 2021)
4.2Form of Global Note with respect to the 4.75% Notes due 2026 (Incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (File No. 814-00866) filed on January 25, 2021, and Exhibit A therein)
   
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
   
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
   
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 7, 2017May 4, 2021By/s/ Theodore L. Koenig
  

Theodore L. Koenig

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

  Monroe Capital Corporation
   
Date: November 7, 2017May 4, 2021By/s/ Aaron D. Peck
  

Aaron D. Peck

Chief Financial Officer, Chief Investment Officer and Director

(Principal Financial and Accounting Officer)

Monroe Capital Corporation

 

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