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 SeptemberJune 30, 20172021

 

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 shareMRCCThe 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,August 2, 2021, the registrant had 20,239,95721,543,540 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 SeptemberJune 30, 20172021 (unaudited) and December 31, 201620203
   
 Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 2017 (unaudited)2021 and 20162020 (unaudited)4
   
 Consolidated Statements of Changes in Net Assets for the ninethree and six months ended SeptemberJune 30, 2017 (unaudited)2021 and 20162020 (unaudited)5
   
 Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 2017 (unaudited)2021 and 20162020 (unaudited)6
   
 Consolidated Schedules of Investments as of SeptemberJune 30, 20172021 (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 Operations3650
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk5072
   
Item 4.Controls and Procedures5172
   
PART II. OTHER INFORMATION5173
   
Item 1.Legal Proceedings5173
   
Item 1A.Risk Factors5173
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds5175
   
Item 3.Defaults Upon Senior Securities5175
   
Item 4.Mine Safety Disclosures5175
   
Item 5.Other Information5175
   
Item 6.Exhibits5276
   
Signatures 5377

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  June 30, 2021  December 31, 2020 
 (unaudited)     (unaudited)    
ASSETS                
Investments, at fair value:                
Non-controlled/non-affiliate company investments $368,634  $353,980  $379,045  $398,040 
Non-controlled affiliate company investments  53,595   50,041   109,559   109,715 
Controlled affiliate company investments  8,868   8,899   41,385   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: $569,165 and $596,103, respectively)  529,989   547,039 
Cash  3,721   5,958   21,129   6,769 
Restricted cash  5,689   2,373   29,545   25,657 
Unrealized gain on foreign currency forward contracts  333   — 
Interest receivable  4,220   2,643   6,900   4,606 
Other assets  535   651   1,655   1,052 
Total assets  445,262   424,545   589,551   585,123 
                
LIABILITIES                
Debt:                
Revolving credit facility  60,612   129,000   126,668   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   343,568   350,559 
Less: Unamortized deferred financing costs  (4,524)  (3,945)  (7,178)  (7,052)
Total debt, less unamortized deferred financing costs  148,188   176,555   336,390   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   3,989   2,764 
Unrealized loss on foreign currency forward contracts  —   113 
Management fees payable  1,953   1,749   2,327   1,978 
Incentive fees payable  1,721   1,222 
Accounts payable and accrued expenses  1,855   2,120   2,048   2,327 
Directors' fees payable  37   - 
Total liabilities  161,720   183,695   344,754   350,689 
Net assets $283,542  $240,850  $244,797  $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, 21,544 and 21,304 shares issued and outstanding, respectively $22  $21 
Capital in excess of par value  286,269   233,526   297,586   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  (52,811)  (60,484)
Total net assets $283,542  $240,850  $244,797  $234,434 
                
Net asset value per share $14.01  $14.52  $11.36  $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 September 30,  Nine months ended September 30,  Three months ended June 30,  Six months ended June 30, 
 2017  2016  2017  2016  2021  2020  2021  2020 
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 
Non-controlled/non-affiliate company investments:                
Interest income $8,079  $14,461  $16,312  $26,808 
Payment-in-kind interest income  227   855   881   926 
Dividend income  30   (92)  50   (76)
Fee income  300   2,823   777   3,021 
Total investment income from non-controlled/non-affiliate company investments  8,636   18,047   18,020   30,679 
Non-controlled affiliate company investments:                
Interest income  1,102   45   2,664   235 
Payment-in-kind interest income  1,507   1,609   2,532   2,614 
Dividend income  44   41   86   66 
Total investment income from non-controlled affiliate company investments  2,653   1,695   5,282   2,915 
Controlled affiliate company investments:                
Dividend income  1,075   900   2,275   2,050 
Total investment income from controlled affiliate company investments  1,075   900   2,275   2,050 
Total investment income  13,469   11,128   37,743   33,785   12,364   20,642   25,577   35,644 
                                
Operating expenses:                                
Interest and other debt financing expenses  1,907   1,523   6,101   4,987   3,842   4,555   8,295   9,385 
Base management fees  1,953   1,594   5,661   4,598   2,327   2,434   4,661   4,985 
Incentive fees  1,721   1,223   4,471   4,282   420   —   1,250   — 
Professional fees  277   237   854   682   240   322   466   537 
Administrative service fees  295   324   926   956   337   314   693   652 
General and administrative expenses  292   265   760   611   269   214   529   445 
Excise taxes  100   342   100   429 
Directors' fees  37   37   111   111   39   40   74   75 
Expenses before incentive fee waiver  6,582   5,545   18,984   16,656 
Expenses before incentive fee waivers  7,474   7,879   15,968   16,079 
Incentive fee waiver  -   -   (250)  -   (420)  —   (1,057)  — 
Total expenses, net of incentive fee waiver  6,582   5,545   18,734  16,656 
Total expenses, net of incentive fee waivers  7,054   7,879   14,911   16,079 
Net investment income before income taxes  5,310   12,763   10,666   19,565 
Income taxes, including excise taxes  153   127   183   147 
Net investment income  6,887   5,583   19,009   17,129   5,157   12,636   10,483   19,418 
                                
Net gain (loss) on investments, secured borrowings and foreign currency borrowings:                
Net gain (loss):                
Net realized gain (loss):                                
Non-controlled/non-affiliate company investments  (2,900)  -   (572)  587   909   2,461   967   2,555 
Secured borrowings  -   -   66   - 
Non-controlled affiliate company investments  —   —   (250)  — 
Extinguishment of debt  —   —   (2,774)  — 
Foreign currency forward contracts  (37)  22   (75)  18 
Foreign currency and other transactions  —   (1)  (14)  (16)
Net realized gain (loss)  (2,900)  -   (506)  587   872   2,482   (2,146)  2,557 
                                
Net change in unrealized gain (loss):                                
Non-controlled/non-affiliate company investments  3,099   200   3,788   (920)  4,243   (5,220)  8,884   (25,575)
Non-controlled affiliate company investments  454   618   (8,902)  3,814   705   98   (1,097)  (13,609)
Controlled affiliate company investments  (1,155)  (2,666)  (3,389)  (3,741)  318   4,230   2,101   (6,857)
Secured borrowings  -   (123)  (6)  (36)
Foreign currency borrowings  (67)  -   (83)  - 
Foreign currency forward contracts  112   (24)  446   74 
Foreign currency and other transactions  (77)  32   (286)  1,376 
Net change in unrealized gain (loss)  2,331   (1,971)  (8,592)  (883)  5,301   (884)  10,048   (44,591)
                                
Net gain (loss) on investments, secured borrowings and foreign currency borrowings  (569)  (1,971)  (9,098)  (296)
Net gain (loss)  6,173   1,598   7,902   (42,034)
                                
Net increase (decrease) in net assets resulting from operations $6,318  $3,612  $9,911  $16,833  $11,330  $14,234  $18,385  $(22,616)
                                
Per common share data:                                
Net investment income per share - basic and diluted $0.34  $0.36  $1.05  $1.24  $0.24  $0.61  $0.49  $0.95 
Net increase in net assets resulting from operations per share - basic and diluted $0.31  $0.23  $0.55  $1.21 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $0.53  $0.69  $0.86  $(1.10)
Weighted average common shares outstanding - basic and diluted  20,240   15,559   18,081   13,864   21,361   20,637   21,333   20,541 

 

See Notes to Consolidated Financial Statements.

4

MONROE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

  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.

4

5

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

(in thousands)

  Common Stock     Accumulated
undistributed		    
  Number of
shares		  Par
value		  Capital in excess
of par value		  (overdistributed)
earnings		  Total
net assets		 
Balances at March 31, 2020  20,445  $20  $288,850  $(83,518) $205,352 
Net investment income  —   —   —   12,636   12,636 
Net realized gain (loss)  —   —   —   2,482   2,482 
Net change in unrealized gain (loss)  —   —   —   (884)  (884)
Issuance of common stock, net of offering and underwriting costs  825   1   6,266   —   6,267 
Distributions to stockholders  —   —   —   (5,257)  (5,257)
Balances at June 30, 2020  21,270  $21  $295,116  $(74,541) $220,596 
                     
Balances at March 31, 2021  21,304  $21  $294,897  $(58,755) $236,163 
Net investment income  —   —   —   5,157   5,157 
Net realized gain (loss)  —   —   —   872   872 
Net change in unrealized gain (loss)  —   —   —   5,301   5,301 
Issuance of common stock, net of offering and underwriting costs  240   1   2,689   —   2,690 
Distributions to stockholders  —   —   —   (5,386)  (5,386)
Balances at June 30, 2021  21,544  $22  $297,586  $(52,811) $244,797 

 

  Nine months ended September 30, 
  2017  2016 
       
Cash flows from operating activities:        
Net increase (decrease) in net assets resulting from operations $9,911  $16,833 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:        
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 realized (gain) loss on investments  572   (587)
Net realized (gain) loss on secured borrowings  (66)  - 
Payment-in-kind interest income  (1,363)  (1,430)
Net accretion of discounts and amortization of premiums  (1,278)  (1,137)
Proceeds from principal payments and sales of investments  144,445   62,459 
Purchases of investments  (169,056)  (95,717)
Amortization of deferred financing costs  760   603 
Changes in operating assets and liabilities:        
Interest receivable  (1,577)  (515)
Other assets  116   329 
Payable for open trades  7,425   (4,693)
Interest payable  (194)  (369)
Management fees payable  204   91 
Incentive fees payable  499   109 
Accounts payable and accrued expenses  (265)  827 
Directors' fees payable  37   (37)
Net cash provided by (used in) operating activities  (1,238)  (22,351)
         
Cash flows from financing activities:        
Borrowings on revolving credit facility  93,529   64,000 
Repayments of revolving credit facility  (162,000)  (83,200)
SBA debentures borrowings  40,600   - 
Payments of deferred financing costs  (1,339)  (917)
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)
Net cash provided by (used in) financing activities  2,317   16,700 
         
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 
         
Supplemental disclosure of cash flow information:        
Cash interest paid during the period $5,405  $4,545 
Cash paid for excise taxes during the period $495  $284 
 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  —   —   —   19,418   19,418 
Net realized gain (loss)  —   —   —   2,557   2,557 
Net change in unrealized gain (loss)  —   —   —   (44,591)  (44,591)
Issuance of common stock, net of offering and underwriting costs  825   1   6,266   —   6,267 
Distributions to stockholders  —   —   —   (12,412)  (12,412)
Balances at June 30, 2020  21,270  $21  $295,116  $(74,541) $220,596 
                     
Balances at December 31, 2020  21,304  $21  $294,897  $(60,484) $234,434 
Net investment income  —   —   —   10,483   10,483 
Net realized gain (loss)  —   —   —   (2,146)  (2,146)
Net change in unrealized gain (loss)  —   —   —   10,048   10,048 
Issuance of common stock, net of offering and underwriting costs  240   1   2,689   —   2,690 
Distributions to stockholders  —   —   —   (10,712)  (10,712)
Balances at June 30, 2021  21,544  $22  $297,586  $(52,811) $244,797 

 

(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.

See Notes to Consolidated Financial Statements.

6


MONROE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

  Six months ended June 30, 
  2021  2020 
Cash flows from operating activities:        
Net increase (decrease) in net assets resulting from operations $18,385  $(22,616)
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  (717)  (2,555)
Net realized (gain) loss on extinguishment of debt  2,774   — 
Net realized (gain) loss on foreign currency forward contracts  75   (18)
Net realized (gain) loss on foreign currency and other transactions  14   16 
Net change in unrealized (gain) loss on investments  (9,888)  46,041 
Net change in unrealized (gain) loss on foreign currency forward contracts  (446)  (74)
Net change in unrealized (gain) loss on foreign currency and other transactions  286   (1,376)
Payment-in-kind interest income  (3,413)  (3,540)
Net accretion of discounts and amortization of premiums  (617)  (680)
Purchases of investments  (99,567)  (81,410)
Proceeds from principal payments, sales of investments and settlement of forward contracts  131,177   95,097 
Amortization of deferred financing costs  1,138   1,004 
Changes in operating assets and liabilities:        
Interest receivable  (2,294)  3,830 
Other assets  (603)  (596)
Interest payable  1,225   (80)
Management fees payable  349   (317)
Incentive fees payable  —   (1,374)
Accounts payable and accrued expenses  (279)  (157)
Net cash provided by (used in) operating activities  37,599   31,195 
         
Cash flows from financing activities:        
Borrowings on revolving credit facility  175,500   55,200 
Repayments of revolving credit facility  (175,650)  (88,100)
Repayment of 2023 Notes  (109,000)  — 
Proceeds from 2026 Notes  130,000   — 
Repayment of SBA debentures  (28,100)  — 
Payments of deferred financing costs  (4,038)  (939)
Proceeds from shares sold, net of offering and underwriting costs  2,690   6,267 
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $0 and $0, respectively  (10,712)  (12,412)
Net cash provided by (used in) financing activities  (19,310)  (39,984)
         
Net increase (decrease) in Cash and Restricted cash  18,289   (8,789)
Effects of foreign currency exchange rates  (41)  (18)
Cash and Restricted cash, beginning of period  32,426   29,643 
Cash and Restricted cash, end of period $50,674  $20,836 
         
Supplemental disclosure of cash flow information:        
Cash interest paid during the period $5,874  $8,428 
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:

  June 30, 2021  December 31, 2020 
Cash $21,129  $6,769 
Restricted cash  29,545   25,657 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $50,674  $32,426 

   June 30, 2020   December 31, 2019 
Cash $7,443  $2,234 
Restricted cash  13,393   27,409 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $20,836  $29,643 

See Notes to Consolidated Financial Statements.


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

June 30, 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                        
Born To Run, LLC  L+6.00%  7.00% 4/1/2021  4/1/2027  3,500 $3,432 $3,520  1.4%
Born To Run, LLC (Delayed Draw) (f) (g)  L+6.00%  7.00% 4/1/2021  4/1/2027  569  —  —  0.0%
Hastings Manufacturing Company  L+7.75%  8.75% 4/24/2018  4/24/2023  2,637  2,614  2,637  1.1%
Magneto & Diesel Acquisition, Inc.  L+6.05%  7.10% 12/18/2018  12/18/2023  4,875  4,829  4,875  2.0%
Magneto & Diesel Acquisition, Inc.  L+6.05%  7.10% 7/6/2020  12/18/2023  1,918  1,890  1,956  0.8%
Magneto & Diesel Acquisition, Inc. (Revolver) (f)  L+5.50%  6.55% 12/18/2018  12/18/2023  500  —  —  0.0%
              13,999  12,765  12,988  5.3%
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  267  0.1%
Liftforward SPV II, LLC (h)  L+10.75%  11.25% 11/10/2016  12/31/2021  1,189  1,189  1,122  0.5%
NCBP Property, LLC (h)  L+9.50%  10.50% 12/18/2020  12/16/2022  1,950  1,936  1,946  0.8%
Oceana Australian Fixed Income Trust (h) (i) (j)  n/a  10.75% 6/29/2021  6/29/2026  3,394  3,400  3,394  1.4%
Oceana Australian Fixed Income Trust (h) (i) (j)  n/a  11.50% 2/25/2021  2/25/2026  8,057  8,460  8,057  3.3%
StarCompliance MidCo, LLC  L+6.75%  7.75% 1/12/2021  1/11/2027  2,000  1,963  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) (h)  L+8.75%  9.75% 11/30/2020  11/29/2024  1,500  980  998  0.4%
W3 Monroe RE Debt LLC (h)  n/a  10.00% 2/5/2021  2/4/2028  2,766  2,766  2,766  1.1%
              23,928  20,961  20,548  8.4%
Beverage, Food & Tobacco                        
LVF Holdings, Inc.  L+6.25%  7.25% 6/10/2021  6/10/2027  1,500  1,470  1,470  0.6%
LVF Holdings, Inc. (Delayed Draw) (f) (g)  L+6.25%  7.25% 6/10/2021  6/10/2027  344  —  —  0.0%
LVF Holdings, Inc. (Delayed Draw) (f) (g)  L+6.25%  7.25% 6/10/2021  6/10/2027  1,436  —  —  0.0%
LVF Holdings, Inc. (Revolver) (f)  L+6.25%  7.25% 6/10/2021  6/10/2027  238  10  9  0.0%
LX/JT Intermediate Holdings, Inc. (k)  L+6.00%  7.50% 3/11/2020  3/11/2025  9,554  9,407  9,453  3.9%
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%
              15,618  12,559  10,932  4.5%
Capital Equipment                        
MCP Shaw Acquisitionco, LLC (k)  L+6.50%  7.50% 2/28/2020  11/28/2025  9,873  9,720  9,849  4.0%
MCP Shaw Acquisitionco, LLC (Revolver) (f)  L+6.50%  7.50% 2/28/2020  11/28/2025  1,784  —  —  0.0%
              11,657  9,720  9,849  4.0%
Chemicals, Plastics & Rubber                        
Valudor Products, LLC  L+7.50%  7.00% Cash/
1.50% PIK		  6/18/2018  6/19/2023  1,573  1,559  1,775  0.7%
Valudor Products, LLC (n)  L+7.50%  8.50% PIK  6/18/2018  6/19/2023  227  224  39  0.0%
Valudor Products, LLC (Revolver) (f)  L+9.50%  10.50% 6/18/2018  6/19/2023  818  614  595  0.2%
              2,618  2,397  2,409  0.9%
Construction & Building                        
Dude Solutions Holdings, Inc.  L+7.50%  8.50% 6/14/2019  6/13/2025  9,950  9,787  9,935  4.1%
Dude Solutions Holdings, Inc. (Revolver) (f)  L+7.50%  8.50% 6/14/2019  6/13/2025  1,304  —  —  0.0%
TCFIII OWL Buyer LLC  L+6.00%  7.00% 4/19/2021  4/17/2026  2,050  2,015  2,050  0.8%
TCFIII OWL Buyer LLC (Delayed Draw) (f) (g)  L+6.00%  7.00% 4/19/2021  4/17/2026  2,500  1,881  1,881  0.8%
              15,804  13,683  13,866  5.7%
Consumer Goods: Durable                        
Parterre Flooring & Surface Systems, LLC (k)  L+9.00%  10.00% (m) 8/22/2017  8/22/2022  6,936  5,929  76  0.0%
              6,936  5,929  76  0.0%
Consumer Goods: Non-Durable                        
The Kyjen Company, LLC  L+6.50%  7.50% 5/14/2021  4/3/2026  998  988  996  0.4%
The Kyjen Company, LLC (Revolver) (f)  L+6.50%  7.50% 5/14/2021  4/3/2026  105  43  43  0.0%
Thrasio, LLC  L+7.00%  8.00% 12/18/2020  12/18/2026  1,492  1,458  1,515  0.6%
Thrasio, LLC (Delayed Draw) (f) (g)  L+7.00%  8.00% 12/18/2020  12/18/2026  990  300  305  0.1%
              3,585  2,789  2,859  1.1%
Environmental Industries                        
Quest Resource Management Group, LLC  L+7.50%  8.75% 10/19/2020  10/20/2025  995  929  1,030  0.4%
Quest Resource Management Group, LLC (Delayed Draw) (f) (g)  L+7.50%  8.75% 10/19/2020  10/20/2025  1,087  —  —  0.0%
StormTrap, LLC  L+5.50%  6.50% 12/10/2018  12/8/2023  7,170  7,103  7,170  2.9%
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  2,869  2,860  2,869  1.2%
Synergy Environmental Corporation (k)  L+6.00%  7.00% 4/29/2016  9/29/2023  480  478  480  0.2%
Synergy Environmental Corporation  L+6.00%  7.00% 4/29/2016  9/29/2023  816  816  816  0.4%
Synergy Environmental Corporation (Revolver) (f)  L+6.00%  7.00% 4/29/2016  9/29/2023  671  67  67  0.0%
              14,520  12,253  12,432  5.1%
Healthcare & Pharmaceuticals                        
American Optics Holdco, Inc. (h) (j)  L+7.00%  8.00% 9/13/2017  9/13/2022  2,104  2,092  2,104  0.9%
American Optics Holdco, Inc. (h) (j)  L+7.00%  8.00% 9/13/2017  9/13/2022  1,595  1,585  1,595  0.6%
American Optics Holdco, Inc. (Revolver) (f) (h) (j)  L+7.00%  8.00% 9/13/2017  9/13/2022  220  —  —  0.0%
American Optics Holdco, Inc. (Revolver) (f) (h) (j)  L+7.00%  8.00% 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  3,595  3,553  3,350  1.4%
Apotheco, LLC (Revolver)  L+8.50%  6.50% Cash/
3.00% PIK		  4/8/2019  4/8/2024  941  941  877  0.4%
Brickell Bay Acquisition Corp.  L+7.00%  8.00% 2/12/2021  2/12/2026  1,908  1,873  1,916  0.8%
Brickell Bay Acquisition Corp. (Delayed Draw) (f) (g)  L+7.00%  8.00% 2/12/2021  2/12/2026  382  —  —  0.0%
Caravel Autism Health, LLC  L+5.75%  6.75% 6/30/2021  6/30/2027  5,000  4,900  4,900  2.0%
Caravel Autism Health, LLC (Delayed Draw) (f) (g)  L+5.75%  6.75% 6/30/2021  6/30/2027  3,750  —  —  0.0%
Caravel Autism Health, LLC (Revolver) (f)  L+5.75%  6.75% 6/30/2021  6/30/2027  1,250  —  —  0.0%
Dorado Acquisition, Inc.  L+6.75%  7.75% 6/30/2021  6/30/2026  5,000  4,900  4,900  2.0%
Dorado Acquisition, Inc. (Delayed Draw) (f) (g)  L+6.75%  7.75% 6/30/2021  6/30/2026  216  —  —  0.0%
Dorado Acquisition, Inc. (Revolver) (f)  L+6.75%  7.75% 6/30/2021  6/30/2026  596  —  —  0.0%
INH Buyer, Inc.  L+6.00%  7.00% 6/30/2021  6/28/2028  2,946  2,917  2,917  1.2%
Rockdale Blackhawk, LLC  n/a  n/a (o) 3/31/2015  n/a (p) —  —  1,592  0.6%
Seran BioScience, LLC  L+6.25%  7.25% 12/31/2020  12/31/2025  2,494  2,449  2,491  1.0%
Seran BioScience, LLC (Revolver) (f)  L+6.25%  7.25% 12/31/2020  12/31/2025  444  —  —  0.0%
              32,881  25,210  26,642  10.9%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

SeptemberJune 30, 20172021

(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  4,489 $4,402 $4,518  1.8%
MarkLogic Corporation  L+6.00%  7.00% 10/20/2020  10/20/2025  3,483  3,407  3,552  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  6,438  6,358  6,328  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  10,921  10,884  10,921  4.5%
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 9,396  9,462  3.9%
Planful, Inc. (Delayed Draw) (f) (g)  L+6.50%  7.50% 1/11/2021  12/30/2024  1,325  884  880  0.4%
Planful, Inc. (Revolver) (f)  L+6.50%  7.50% 12/28/2018  12/30/2024  442  88  88  0.0%
RPL Bidco Limited (h) (j) (q)  L+7.00%  7.50% 11/9/2017  11/9/2023  14,478  13,776  14,478  5.9%
RPL Bidco Limited (h) (j) (q)  L+7.00%  7.50% 5/22/2018  11/9/2023  1,798  1,639  1,798  0.7%
RPL Bidco Limited (h) (j) (q)  L+7.00%  7.50% 3/3/2021  11/9/2023  1,245  1,256  1,245  0.5%
RPL Bidco Limited (Revolver) (f) (h) (j) (q)  L+7.00%  7.50% 11/9/2017  11/9/2023  553  —  —  0.0%
              56,858  52,090  53,270  21.8%
Hotels, Gaming & Leisure                        
Equine Network, LLC  L+8.00%  9.00% 12/31/2020  12/31/2025  1,746  1,710  1,757  0.7%
Equine Network, LLC  L+8.00%  9.00% 1/29/2021  12/31/2025  792  777  796  0.3%
Equine Network, LLC (Delayed Draw) (f) (g)  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%
              3,136  2,487  2,553  1.0%
Media: Advertising, Printing & Publishing                        
AdTheorent Holding Company, LLC  L+8.50%  9.00% 12/22/2016  12/22/2021  2,575  2,569  2,575  1.0%
Destination Media, Inc. (k)  L+5.50%  6.50% 4/7/2017  4/7/2022  4,125  4,113  4,125  1.7%
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+6.00%  7.00% 10/30/2020  10/30/2025  2,488  2,443  2,512  1.0%
North Haven USHC Acquisition, Inc. (Delayed Draw) (f) (g)  P+5.00%  8.25% 3/12/2021  10/30/2025  721  206  208  0.1%
North Haven USHC Acquisition, Inc. (Revolver) (f)  L+6.00%  7.00% 10/30/2020  10/30/2025  240  —  —  0.0%
Relevate Health Group, LLC  L+6.25%  7.25% 11/20/2020  11/20/2025  1,496  1,470  1,526  0.6%
Relevate Health Group, LLC (Delayed Draw) (f) (g)  L+6.25%  7.25% 11/20/2020  11/20/2025  788  669  683  0.3%
Relevate Health Group, LLC (Revolver) (f)  L+6.25%  7.25% 11/20/2020  11/20/2025  316  —  —  0.0%
XanEdu Publishing, Inc.  L+6.50%  7.50% 1/28/2020  1/28/2025  1,876  1,848  1,883  0.8%
XanEdu Publishing, Inc. (Revolver) (f)  L+6.50%  7.50% 1/28/2020  1/28/2025  495  —  —  0.0%
              15,662  13,318  13,512  5.5%
Media: Broadcasting & Subscription                        
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/
8.00% PIK		  5/2/2019  11/2/2022  1,466  1,461  1,466  0.6%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/
8.00% PIK		  11/4/2019  11/2/2022  281  279  281  0.1%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/
8.00% PIK		  5/2/2019  11/2/2022  460  460  460  0.2%
Vice Group Holding, Inc.  L+12.00%  5.50% Cash/
8.00% PIK		  5/2/2019  11/2/2022  173  173  173  0.1%
              2,380  2,373  2,380  1.0%
Media: Diversified & Production                        
Attom Intermediate Holdco, LLC  L+5.75%  6.75% 1/4/2019  1/4/2024  1,950  1,929  1,950  0.8%
Attom Intermediate Holdco, LLC  L+7.50%  8.75% 6/25/2020  1/4/2024  475  468  475  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  3,955  4,000  1.6%
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%
EveryAction Intermediate Holding Corporation  L+7.00%  8.00% 4/30/2021  4/30/2027  11,560  11,340  11,560  4.8%
EveryAction Intermediate Holding Corporation (Revolver) (f)  L+7.00%  8.00% 4/30/2021  4/30/2027  706  —  —  0.0%
              19,238  17,752  18,045  7.4%
Retail                        
BLST Operating Company, LLC  L+8.50%  1.00% Cash/
9.00% PIK		(m) 8/28/2020  8/28/2025  1,259  1,192  1,253  0.5%
Forman Mills, Inc. (k)  L+9.50%  8.50% Cash/ 2.00% PIK
 		 1/14/2020  12/30/2022  1,336  1,336  1,323  0.5%
Forman Mills, Inc. (k)  L+9.50%  8.50% Cash/
2.00% PIK		  10/4/2016  12/30/2022  601  600  595  0.2%
Forman Mills, Inc. (k)  L+9.50%  8.50% Cash/
2.00% PIK		  10/4/2016  12/30/2022  7,623  7,614  7,242  3.0%
LuLu's Fashion Lounge, LLC  L+9.50%  8.00% Cash/
2.50% PIK		  8/21/2017  8/29/2022  3,987  3,955  3,409  1.4%
The Worth Collection, Ltd. (k)  L+8.50%  9.00% (m) 9/29/2016  9/29/2021  10,587  10,248  —  0.0%
              25,393  24,945  13,822  5.6%
Services: Business                        
Aras Corporation  L+7.00%  8.00% 4/13/2021  4/13/2027  1,500  1,471  1,518  0.6%
Aras Corporation (Delayed Draw) (f) (g)  L+7.00%  8.00% 4/13/2021  4/13/2027  200  —  —  0.0%
Aras Corporation (Revolver) (f)  L+7.00%  8.00% 4/13/2021  4/13/2027  150  —  —  0.0%
Atlas Sign Industries of FLA, LLC (k)  L+11.50%  11.50% Cash/
1.00% PIK		  5/14/2018  5/15/2023  3,581  3,386  3,581  1.5%
Burroughs, Inc. (k)  L+6.50%  7.50% 12/22/2017  12/22/2022  5,651  5,619  5,651  2.3%
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  8,922  9,000  3.7%
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  9,905  9,950  4.1%
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  7,559  7,477  7,560  3.1%
IT Global Holding, LLC  L+9.00%  10.00% 7/19/2019  11/10/2023  2,819  2,780  2,819  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+6.75%  7.75% 6/1/2018  6/5/2023  217  215  217  0.1%
RedZone Robotics, Inc. (Revolver) (f)  L+6.75%  7.75% 6/1/2018  6/5/2023  158  —  —  0.0%
Relativity ODA, LLC  L+7.50%  8.50% PIK  5/12/2021  5/12/2027  1,814  1,769  1,807  0.7%
Relativity ODA, LLC (Revolver) (f)  L+7.50%  8.50% PIK  5/12/2021  5/12/2027  180  —  —  0.0%
Security Services Acquisition Sub Corp. (k)  L+6.00%  7.00% 2/15/2019  2/15/2024  3,421  3,384  3,421  1.4%
Security Services Acquisition Sub Corp. (k)  L+6.00%  7.00% 2/15/2019  2/15/2024  2,461  2,461  2,461  1.0%
Security Services Acquisition Sub Corp. (k)  L+6.00%  7.00% 2/15/2019  2/15/2024  2,162  2,162  2,162  0.9%
Security Services Acquisition Sub Corp.  L+6.00%  7.00% 2/15/2019  2/15/2024  1,555  1,555  1,555  0.6%
VPS Holdings, LLC  L+7.00%  8.00% 10/5/2018  10/4/2024  3,538  3,494  3,254  1.3%
VPS Holdings, LLC  L+7.00%  8.00% 10/5/2018  10/4/2024  2,889  2,889  2,656  1.1%
VPS Holdings, LLC (Revolver) (f)  L+7.00%  8.00% 10/5/2018  10/4/2024  1,000  100  92  0.0%
              64,453  59,793  59,908  24.5%


MONROE CAPITAL CORPORATION 

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 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: Consumer                        
Express Wash Acquisition Company, LLC  L+6.50%  7.50% 12/28/2020  12/26/2025  3,219 $3,167 $3,203  1.3%
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  L+6.50%  7.50% 12/15/2020  12/15/2026  5,544  5,442  5,551  2.3%
IDIG Parent, LLC (Delayed Draw) (f) (g)  L+6.00%  7.00% 12/15/2020  12/15/2026  918  —  —  0.0%
IDIG Parent, LLC (Revolver) (f)  L+6.00%  7.00% 12/15/2020  12/15/2026  429  —  —  0.0%
Mammoth Holdings, LLC  L+6.00%  7.00% 10/16/2018  10/16/2023  1,950  1,930  1,952  0.8%
Mammoth Holdings, LLC  L+6.00%  7.00% 10/16/2018  10/16/2023  4,094  4,094  4,098  1.7%
Mammoth Holdings, LLC (Delayed Draw) (f) (g)  L+6.00%  7.00% 6/15/2021  10/16/2023  1,646  —  —  0.0%
Mammoth Holdings, LLC (Delayed Draw) (f) (g)  L+6.00%  7.00% 3/12/2021  10/16/2023  6,386  6,075  6,081  2.5%
Mammoth Holdings, LLC (Revolver) (f)  L+6.00%  7.00% 10/16/2018  10/16/2023  657  —  —  0.0%
              25,843  20,708  20,885  8.6%
Telecommunications                        
Calabrio, Inc.  L+7.00%  8.00% 4/16/2021  4/16/2027  3,400  3,317  3,400  1.4%
Calabrio, Inc. (Revolver) (f)  L+7.00%  8.00% 4/16/2021  4/16/2027  409  —  —  0.0%
              3,809  3,317  3,400  1.4%
Wholesale                        
Nearly Natural, Inc. (k)  L+7.00%  8.00% 12/15/2017  12/15/2022  6,510  6,467  6,510  2.7%
Nearly Natural, Inc.  L+7.00%  8.00% 2/16/2021  12/15/2022  3,056  3,008  3,056  1.3%
Nearly Natural, Inc. (k)  L+7.00%  8.00% 9/22/2020  12/15/2022  1,682  1,661  1,682  0.7%
Nearly Natural, Inc. (k)  L+7.00%  8.00% 8/28/2019  12/15/2022  1,834  1,834  1,834  0.7%
Nearly Natural, Inc. (Revolver) (f)  L+7.00%  8.00% 12/15/2017  12/15/2022  2,397  1,598  1,598  0.6%
              15,479  14,568  14,680  6.0%
Total Non-Controlled/Non-Affiliate Senior Secured Loans             373,797  329,617  315,056  128.7%
                         
Unitranche Secured Loans (r)                        
Chemicals, Plastics & Rubber                        
MFG Chemical, LLC (k)  L+8.00%  9.00% 6/23/2017  6/23/2022  6,441  6,419  6,438  2.6%
MFG Chemical, LLC  L+8.00%  9.00% 3/15/2018  6/23/2022  630  630  629  0.3%
              7,071  7,049  7,067  2.9%
Healthcare & Pharmaceuticals                        
Priority Ambulance, LLC (s)  L+6.50%  7.50% 7/18/2018  4/12/2022  10,015  10,015  9,990  4.1%
Priority Ambulance, LLC (t)  L+6.50%  7.50% 4/12/2017  4/12/2022  1,253  1,246  1,250  0.5%
Priority Ambulance, LLC  L+6.50%  7.50% 12/13/2018  4/12/2022  663  663  662  0.3%
Priority Ambulance, LLC  L+6.50%  7.50% 10/22/2020  4/12/2022  1,002  1,002  1,000  0.4%
              12,933  12,926  12,902  5.3%
High Tech Industries                        
Energy Services Group, LLC  L+8.42%  9.42% 5/4/2017  5/4/2022  3,837  3,826  3,837  1.6%
Energy Services Group, LLC (h) (q)  L+8.42%  9.42% 5/4/2017  5/4/2022  4,779  4,579  4,779  2.0%
Energy Services Group, LLC  L+8.42%  9.42% 5/4/2017  5/4/2022  1,092  1,078  1,092  0.4%
WillowTree, LLC  L+5.00%  6.00% 10/9/2018  10/9/2023  7,740  7,671  7,709  3.1%
              17,448  17,154  17,417  7.1%
Telecommunications                        
VB E1, LLC (Delayed Draw) (f) (g)  L+8.50%  9.00% 11/18/2020  11/18/2026  2,250  1,100  1,105  0.4%
              2,250  1,100  1,105  0.4%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans             39,702  38,229  38,491  15.7%
                         
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  1,260  1,279  0.5%
CSM Bakery Solutions, LLC  L+7.75%  8.75% 5/23/2013  2/4/2022  6,116  6,116  6,080  2.5%
              7,380  7,376  7,359  3.0%
Services: Consumer                        
Education Corporation of America  L+11.00%  5.65% Cash/
5.50% PIK		(m) 9/3/2015  n/a(p) 833  831  766  0.3%
              833  831  766  0.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans             8,213  8,207  8,125  3.3%
                         
Equity Securities (u) (v)                        
Automotive                        
Born To Run, LLC (269,438 Class A units) —  —(x) 4/1/2021  —  —  269  266  0.1%
                 269  266  0.1%
Banking, Finance, Insurance & Real Estate                        
J2 BWA Funding, LLC (0.7% profit sharing) (h) (w) —  —(x) 12/24/2020  —  —  —  —  0.0%
PKS Holdings, LLC (5,680 preferred units) (h)  n/a  12.00% PIK  11/30/2017  —  —  58  234  0.1%
PKS Holdings, LLC (5,714 preferred units) (h)  n/a  12.00% PIK  11/30/2017  —  —  9  36  0.0%
PKS Holdings, LLC (132 preferred units) (h)  n/a  12.00% PIK  11/30/2017  —  —  1  5  0.0%
PKS Holdings, LLC (916 preferred units) (h)  n/a  12.00% PIK  11/30/2017  —  —  9  36  0.0%
                 77  311  0.1%
Beverage, Food & Tobacco                        
California Pizza Kitchen, Inc. (78,699 preferred units) —  —(x) 8/19/2016  —  —  5,468  4,466  1.8%
                 5,468  4,466  1.8%
Capital Equipment                        
MCP Shaw Acquisitionco, LLC (118,906 Class A-2 units) (w) —  —(x) 2/28/2020  —  —  119  168  0.1%
                 119  168  0.1%
Chemicals, Plastics & Rubber                        
Valudor Products, LLC (501,014 Class A-1 units) (w)  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) —  —(x) 10/19/2020  3/19/2028  —  67  223  0.1%
                 67  223  0.1%
Healthcare & Pharmaceuticals                        
Dorado Acquisition, Inc. (178,891 Class A-1 units) —  —(x) 6/30/2021  —  —  179  179  0.1%
Dorado Acquisition, Inc. (178,891 Class A-2 units) —  —(x) 6/30/2021  —  —  —  —  0.0%
Seran BioScience, LLC (33,333 common units) (w) —  —(x) 12/31/2020  —  —  334  493  0.2%
                 513  672  0.3%
High Tech Industries                        
Answers Finance, LLC (76,539 shares of common stock) —  —(x) 4/14/2017  —  —  2,284  13  0.0%
MarkLogic Corporation (290,239 Class A units) —  —(x) 10/20/2020  —  —  290  454  0.2%
Planful, Inc. (473,082 Class A units)  n/a   8.00% PIK  12/28/2018  —  —  473  553  0.2%
Recorded Future, Inc. (80,486 Class A units) (y) —  —(x) 7/3/2019  —  —  81  171  0.1%
                 3,128  1,191  0.5%
Hotels, Gaming & Leisure                        
Equine Network, LLC (99 Class A units) (w)  n/a   10.00% PIK  12/31/2020  —  —  99  92  0.0%
                 99  92  0.0%
Media: Advertising, Printing & Publishing                        
AdTheorent Holding Company, LLC (128,866 Class A voting units) —  —(x) 12/22/2016  —  —  129  648  0.3%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity) (h) (j) —  —(x) 9/18/2015  9/18/2025  —  —  1,818  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) —  —(x) 11/20/2020  —  —  —  6  0.0%
XanEdu Publishing, Inc. (49,479 Class A units)  n/a  8.00% PIK  1/28/2020  —  —  49  77  0.0%
                 218  2,589  1.0%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 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)		 
Media: Diversified & Production                        
Attom Intermediate Holdco, LLC (297,197 Class A units) (w) —  —(x) 1/4/2019  —  — $297 $454  0.2%
                 297  454  0.2%
Retail                        
BLST Operating Company, LLC (139,883 Class A units) (w) —  —(x) 8/28/2020  —  —  712  154  0.1%
Forman Mills, Inc. (warrant to purchase up to 2.6% of the equity) (k) —  —(x) 1/14/2020  1/14/2029  —  —  356  0.1%
                 712  510  0.2%
Services: Business                        
APCO Worldwide, Inc. (100 Class A voting common stock) —  —(x) 11/1/2017  —  —  395  433  0.2%
Atlas Sign Industries of FLA, LLC (warrant to purchase up to 3.0% of the equity) (k) —  —(x) 5/14/2018  5/14/2026  —  125  239  0.1%
                 520  672  0.3%
Services: Consumer                        
Education Corporation of America - Series G Preferred Stock (8,333 shares)  n/a  12.00% PIK(m) 9/3/2015  —  —  7,492  5,117  2.1%
Express Wash Acquisition Company, LLC (100,000 Class A units) (w)  n/a   8.00% PIK  12/28/2020  —  —  100  144  0.1%
IDIG Parent, LLC (245,958 shares of common stock) (w) (z) —  —(x) 1/4/2021  —  —  248  318  0.1%
                 7,840  5,579  2.3%
Wholesale                        
Nearly Natural, Inc. (152,174 Class A units) —  —(x) 12/15/2017  —  —  153  180  0.1%
                 153  180  0.1%
Total Non-Controlled/Non-Affiliate Equity Securities                19,981  17,373  7.1%
Total Non-Controlled/Non-Affiliate Company Investments               $396,034 $379,045  154.8%
                         
Non-Controlled Affiliate Company Investments (aa)                        
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate                        
American Community Homes, Inc.  L+10.00%  11.50% PIK  7/22/2014  12/31/2021  9,866 $9,866 $9,866  4.0%
American Community Homes, Inc.  L+14.50%  16.00% PIK  7/22/2014  12/31/2021  4,384  4,384  4,384  1.8%
American Community Homes, Inc.  L+10.00%  11.50% PIK  5/24/2017  12/31/2021  598  598  598  0.3%
American Community Homes, Inc.  L+10.00%  11.50% PIK  8/10/2018  12/31/2021  2,200  2,200  3,225  1.3%
American Community Homes, Inc.  L+10.00%  11.50% PIK  3/29/2019  12/31/2021  4,071  4,071  4,113  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  94  94  94  0.0%
HFZ Capital Group, LLC (h) (ab)  L+12.50%  14.00% PIK  10/20/2017  n/a(p) 13,242  13,242  14,543  5.9%
HFZ Capital Group, LLC (h) (ab)  L+12.50%  14.00% PIK  10/20/2017  n/a(p) 4,758  4,758  5,225  2.1%
MC Asset Management (Corporate), LLC (h)  L+15.00%  16.00% PIK  1/26/2021  1/26/2024  6,606  6,606  6,606  2.7%
MC Asset Management (Corporate), LLC (Delayed Draw) (f) (g) (h)  L+15.00%  16.00% PIK  4/26/2021  1/26/2024  1,586  793  793  0.3%
MC Asset Management (Industrial), LLC (h) (ab)  L+17.00%  18.00% PIK  6/11/2019  10/30/2024  11,320  11,314  12,100  5.0%
              58,744  57,945  61,566  25.1%
Beverage, Food & Tobacco                        
TJ Management HoldCo, LLC (Revolver) (f) (l)  L+5.50%  6.50% 9/9/2020  6/28/2024  477  —  —  0.0%
              477  —  —  0.0%
Healthcare & Pharmaceuticals                        
Ascent Midco, LLC (k)  L+5.50%  6.50% 2/5/2020  2/5/2025  6,427  6,332  6,491  2.7%
Ascent Midco, LLC (Delayed Draw) (f) (g) (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%  10.85% PIK(m) 7/10/2014  n/a(p) 2,899  2,897  132  0.0%
SHI Holdings, Inc. (Revolver) (f) L+10.75%  10.85% PIK(m) 7/10/2014  n/a(p) 4,667  4,585  208  0.1%
              17,960  13,814  6,831  2.8%
High Tech Industries                        
Mnine Holdings, Inc.  L+8.00%  4.00% Cash/
5.00% PIK		  11/2/2018  12/30/2022  12,066  11,982  12,643  5.2%
              12,066  11,982  12,643  5.2%
Retail                        
Luxury Optical Holdings Co.  L+8.00%  9.00% PIK(m) 9/12/2014  12/15/2021  1,481  1,481  1,481  0.6%
Luxury Optical Holdings Co. (Delayed Draw) (f) (g)  L+11.50%  12.50%  (m) 9/29/2017  12/15/2021  3,565  1,413  1,506  0.7%
Luxury Optical Holdings Co. (Revolver)  L+8.00%  9.00% PIK(m) 9/12/2014  12/15/2021  68  68  68  0.0%
              5,114  2,962  3,055  1.3%
Services: Business                        
Curion Holdings, LLC (k)  n/a  14.00% PIK(m) 5/2/2017  5/2/2022  4,226  4,189  3,602  1.5%
Curion Holdings, LLC (Revolver) (f)  n/a  14.00% PIK(m) 5/2/2017  5/2/2022  871  836  825  0.3%
              5,097  5,025  4,427  1.8%
Services: Consumer                        
NECB Collections, LLC (Revolver) (f)  L+11.00%  12.00% PIK(m) 6/25/2019  n/a(p) 1,356  1,312  744  0.3%
              1,356  1,312  744  0.3%
Total Non-Controlled Affiliate Senior Secured Loans             100,814  93,040  89,266  36.5%
                         
Unitranche Secured Loans (r)                        
Consumer Goods: Non-Durable                        
Incipio, LLC (ac)  L+8.50%  9.50% PIK(m) 12/26/2014  8/22/2022  14,701  14,677  —  0.0%
Incipio, LLC (ad)  L+8.50%  9.50% PIK(m) 3/9/2018  8/22/2022  4,326  4,326  1,562  0.7%
Incipio, LLC  L+8.50%  9.50% PIK(m) 7/6/2018  8/22/2022  1,833  1,833  1,732  0.7%
Incipio, LLC  L+8.50%  9.50% PIK(m) 1/15/2020  8/22/2022  1,543  1,543  1,458  0.6%
Incipio, LLC  L+8.50%  9.50% PIK(m) 4/17/2019  8/22/2022  772  772  730  0.3%
Incipio, LLC  L+8.50%  9.50% PIK(m) 7/8/2020  8/22/2022  1,615  1,615  1,527  0.6%
              24,790  24,766  7,009  2.9%
Total Non-Controlled Affiliate Unitranche Secured Loans             24,790  24,766  7,009  2.9%
                         
Junior Secured Loans                        
Consumer Goods: Non-Durable                        
Incipio, LLC (ae)  n/a  10.70% PIK(m) 6/18/2018  8/22/2022  3,766  —  —  0.0%
Incipio, LLC (af)  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 (v) (aa)                        
Banking, Finance, Insurance & Real Estate                        
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) —  —(x) 10/9/2014  12/18/2024  —  —  584  0.2%
MC Asset Management (Corporate), LLC (15.9% of interests) (h) (w) (ab) —  —(x) 6/11/2019  —  —  793  886  0.4%
                 793  1,470  0.6%
Beverage, Food & Tobacco                        
TJ Management HoldCo, LLC (16 shares of common stock) (l) (w) —  —(x) 9/9/2020  —  —  1,631  2,821  1.1%
                 1,631  2,821  1.1%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 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)		 
Consumer Goods: Non-Durable                        
Incipio, LLC (1,774 shares of Series C common units) (w) —  —(x) 7/6/2018  —  — $— $—  0.0%
                 —  —  0.0%
Healthcare & Pharmaceuticals                        
Ascent Midco, LLC (2,032,258 Class A units) (w)  n/a  8.00% PIK  2/5/2020  —  —  2,032  3,430  1.4%
Familia Dental Group Holdings, LLC (1,052 Class A units) (w) (ag) —  —(x) 4/8/2016  —  —  3,602  3,178  1.3%
SHI Holdings, Inc. (24 shares of common stock) —  —(x) 12/14/2016  —  —  27  —  0.0%
                 5,661  6,608  2.7%
High Tech Industries                        
Mnine Holdings, Inc. (6,400 Class B units) —  —(x) 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  2,385  1.0%
Luxury Optical Holdings Co. (86 shares of common stock) —  —(x) 9/29/2017  —  —  —  —  0.0%
                 3,631  2,385  1.0%
Services: Business                        
Curion Holdings, LLC (58,779 shares of common stock) (k) —  —(x) 8/17/2018  —  —  —  —  0.0%
                 —  —  0.0%
Services: Consumer                        
NECB Collections, LLC (20.8% of units) (w) —  —(x) 6/21/2019  —  —  1,458  —  0.0%
                 1,458  —  0.0%
Total Non-Controlled Affiliate Equity Securities                13,174  13,284  5.4%
Total Non-Controlled Affiliate Company Investments               $130,981 $109,559  44.8%
                         
Controlled Affiliate Company Investments (ah)                        
Equity Securities                        
Investment Funds & Vehicles                        
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests) (h) —  —  10/31/2017  —  — $42,150 $41,385  16.9%
Total Controlled Affiliate Equity Securities                42,150  41,385  16.9%
Total Controlled Affiliate Company Investments               $42,150 $41,385  16.9%
                         
TOTAL INVESTMENTS               $569,165 $529,989  216.5%


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 2021

(in thousands, except for shares and units)

Derivative Instruments

Foreign currency forward contracts

Description Notional Amount
to be Purchased		  Notional Amount
to be Sold		  Counterparty Settlement Date Unrealized Gain
(Loss)		 
Foreign currency forward contract $103  £84  Bannockburn Global Forex, LLC 7/2/2021 $(13)
Foreign currency forward contract $1,256  £900  Bannockburn Global Forex, LLC 7/2/2021  11 
Foreign currency forward contract $22  £16  Bannockburn Global Forex, LLC 7/6/2021  — 
Foreign currency forward contract $102  £83  Bannockburn Global Forex, LLC 10/4/2021  (13)
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  £30  Bannockburn Global Forex, LLC 5/6/2022  (4)
Foreign currency forward contract $77  AUD98  Bannockburn Global Forex, LLC 7/16/2021  4 
Foreign currency forward contract $80  AUD102  Bannockburn Global Forex, LLC 8/17/2021  4 
Foreign currency forward contract $33  AUD44  Bannockburn Global Forex, LLC 8/17/2021  (1)
Foreign currency forward contract $85  AUD 109  Bannockburn Global Forex, LLC 9/16/2021  4 
Foreign currency forward contract $31  AUD41  Bannockburn Global Forex, LLC 9/16/2021  (1)
Foreign currency forward contract $83  AUD105  Bannockburn Global Forex, LLC 10/19/2021  4 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 10/19/2021  (1)
Foreign currency forward contract $75  AUD  95  Bannockburn Global Forex, LLC 11/16/2021  4 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 11/16/2021  (1)
Foreign currency forward contract $85  AUD109  Bannockburn Global Forex, LLC 12/16/2021  4 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 12/16/2021  (1)
Foreign currency forward contract $91  AUD115  Bannockburn Global Forex, LLC 1/19/2022  4 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 1/19/2022  (1)
Foreign currency forward contract $74  AUD  95  Bannockburn Global Forex, LLC 2/16/2022  4 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 2/16/2022  (1)
Foreign currency forward contract $75  AUD  95  Bannockburn Global Forex, LLC 3/16/2022  4 
Foreign currency forward contract $28  AUD  37  Bannockburn Global Forex, LLC 3/16/2022  (1)
Foreign currency forward contract $82  AUD105  Bannockburn Global Forex, LLC 4/19/2022  4 
Foreign currency forward contract $30  AUD  41  Bannockburn Global Forex, LLC 4/19/2022  (1)
Foreign currency forward contract $77  AUD  98  Bannockburn Global Forex, LLC 5/17/2022  4 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 5/17/2022  (1)
Foreign currency forward contract $88  AUD112  Bannockburn Global Forex, LLC 6/17/2022  4 
Foreign currency forward contract $30  AUD  41  Bannockburn Global Forex, LLC 6/17/2022  — 
Foreign currency forward contract $77  AUD  98  Bannockburn Global Forex, LLC 7/18/2022  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 7/18/2022  — 
Foreign currency forward contract $77  AUD  98  Bannockburn Global Forex, LLC 8/16/2022  3 
Foreign currency forward contract $30  AUD  41  Bannockburn Global Forex, LLC 8/16/2022  — 
Foreign currency forward contract $88  AUD112  Bannockburn Global Forex, LLC 9/16/2022  4 
Foreign currency forward contract $30  AUD  41  Bannockburn Global Forex, LLC 9/16/2022  — 
Foreign currency forward contract $88  AUD112  Bannockburn Global Forex, LLC 10/19/2022  4 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 10/19/2022  — 
Foreign currency forward contract $74  AUD  95  Bannockburn Global Forex, LLC 11/16/2022  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 11/16/2022  — 
Foreign currency forward contract $79  AUD102  Bannockburn Global Forex, LLC 12/16/2022  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 12/16/2022  — 
Foreign currency forward contract $87  AUD112  Bannockburn Global Forex, LLC 1/18/2023  4 
Foreign currency forward contract $30  AUD  41  Bannockburn Global Forex, LLC 1/18/2023  — 
Foreign currency forward contract $77  AUD  98  Bannockburn Global Forex, LLC 2/16/2023  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 2/16/2023  — 
Foreign currency forward contract $74  AUD  95  Bannockburn Global Forex, LLC 3/16/2023  3 
Foreign currency forward contract $28  AUD  37  Bannockburn Global Forex, LLC 3/16/2023  — 
Foreign currency forward contract $93  AUD119  Bannockburn Global Forex, LLC 4/20/2023  4 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 4/20/2023  — 
Foreign currency forward contract $63  AUD  81  Bannockburn Global Forex, LLC 5/16/2023  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 5/16/2023  — 
Foreign currency forward contract $90  AUD115  Bannockburn Global Forex, LLC 6/19/2023  4 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 6/19/2023  — 
Foreign currency forward contract $77  AUD  98  Bannockburn Global Forex, LLC 7/18/2023  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 7/18/2023  — 
Foreign currency forward contract $82  AUD105  Bannockburn Global Forex, LLC 8/16/2023  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 8/16/2023  — 
Foreign currency forward contract $82  AUD105  Bannockburn Global Forex, LLC 9/18/2023  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 9/18/2023  — 
Foreign currency forward contract $84  AUD109  Bannockburn Global Forex, LLC 10/18/2023  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 10/18/2023  — 
Foreign currency forward contract $76  AUD  98  Bannockburn Global Forex, LLC 11/16/2023  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 11/16/2023  — 
Foreign currency forward contract $79  AUD102  Bannockburn Global Forex, LLC 12/18/2023  3 
Foreign currency forward contract $30  AUD  40  Bannockburn Global Forex, LLC 12/18/2023  — 
Foreign currency forward contract $84  AUD109  Bannockburn Global Forex, LLC 1/17/2024  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 1/17/2024  — 
Foreign currency forward contract $79  AUD102  Bannockburn Global Forex, LLC 2/16/2024  3 
Foreign currency forward contract $31  AUD  41  Bannockburn Global Forex, LLC 2/16/2024  — 
Foreign currency forward contract $76  AUD  98  Bannockburn Global Forex, LLC 3/18/2024  3 
Foreign currency forward contract $8,365  AUD10,746  Bannockburn Global Forex, LLC 3/18/2024  307 
Foreign currency forward contract $29  AUD  39  Bannockburn Global Forex, LLC 3/18/2024  — 
Foreign currency forward contract $3,357  AUD4,527  Bannockburn Global Forex, LLC 3/18/2024  (37)
              $333 


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 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%

7

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)		 
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%

8

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)		 
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%

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 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)
(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 June 30, 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 June 30, 2021 represented 216.5% of the Company’s net assets or 89.9% 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 $244,797 as of June 30, 2021.
(f)All or a portion of this commitment was unfunded at June 30, 2021. 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)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 June 30, 2021, non-qualifying assets totaled 21.8% of the Company’s total assets.
(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 December 31, 2020.
(m)This position was on non-accrual status as of June 30, 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 June 30, 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)Ownership of certain equity investments may occur through a holding company or partnership.
(w)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.
(x)Represents a non-income producing security.
(y)As of June 30, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $16.
(z)As of June 30, 2021, the Company was party to a subscription agreement with a commitment to fund an equity investment of $43.
(aa)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).
(ab)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.
(ac)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.
(ad)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.
(ae)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.
(af)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.
(ag)As of June 30, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $611.
(ah)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.

(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.

n/a - not applicable


MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

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)		 
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%


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)		 
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)

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)

(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.

(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 and six months ended June 30, 2021, the Company received return of capital distributions from its equity investments of $1,117 and $1,177, respectively. For the three and six months ended June 30, 2020, the Company did not receive return of capital distributions from its equity investments.

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$4,380 and $6,192$4,844 as of SeptemberJune 30, 20172021 and December 31, 2016,2020, respectively. Upfront loan origination and closing fees received for the three and ninesix months ended SeptemberJune 30, 20172021 totaled $755$1,038 and $2,732,$1,503, respectively. For the three and nine months ended September 30, 2016, upfrontUpfront loan origination and closing fees received totaled $694 and $2,190, respectively. Forfor the three and ninesix months ended SeptemberJune 30, 2017, interest income included $5322020 totaled $11 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,$986, 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 June 30, 
  2021  2020 
Interest income $8,500  $13,531 
PIK interest income  1,734   2,464 
Dividend income (1)  1,149   849 
Fee income  300   2,823 
Prepayment gain (loss)  416   639 
Accretion of discounts and amortization of premium  265   336 
Total investment income $12,364  $20,642 

  Six months ended June 30, 
  2021  2020 
Interest income $17,461  $25,510 
PIK interest income  3,413   3,540 
Dividend income (2)  2,411   2,040 
Fee income  777   3,021 
Prepayment gain (loss)  898   853 
Accretion of discounts and amortization of premium  617   680 
Total investment income $25,577  $35,644 

(1)Includes PIK dividends of $72 and ($51), respectively.
(2)Includes PIK dividends of $134 and ($10), 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$26,451 and $10,394$22,273 at SeptemberJune 30, 20172021 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.

 

Unamortized Deferred Financing Costs

 

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the Company had unamortized deferred financing costs of $4,524$7,178 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 ninesix months ended SeptemberJune 30, 20172021 was $274$537 and $760,$1,138, respectively. Amortization of deferred financing costs for the three and ninesix months ended SeptemberJune 30, 20162020 was $222$520 and $603,$1,004, 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 SeptemberJune 30, 20172021 and December 31, 2016,2020, other assets on the consolidated statements of assets and liabilities included $308$131 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 SeptemberJune 30, 2017,2021, 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 ninesix months ended SeptemberJune 30, 2017, $1002021, the Company recorded a net expense on the consolidated statements of operations of $153 and $100,$183, respectively, for U.S. federal excise tax. For the three and six months ended June 30, 2020, the Company recorded a net expense on the consolidated statements of operations of $125 and $145, respectively, for U.S. federal excise tax. As of June 30, 2021 and December 31, 2020, the Company had payables of $89 and $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 and six months ended June 30, 2021, the Company did not record a net tax expense on the consolidated statements of operations for U.S. federal excise taxes.these Taxable Subsidiaries. For both the three and ninesix months ended SeptemberJune 30, 2016, $342 and $429, respectively, were2020, the Company recorded a net tax expense of $2 on the consolidated statements of operations for U.S. federal excise taxes.these subsidiaries. As of both June 30, 2021 and December 31, 2020, no payables for corporate-level income taxes were 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 SeptemberJune 30, 2017.2021. 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 ninesix months ended SeptemberJune 30, 2017.2021.

 

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. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the six months ended June 30, 2021.

 

21

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  June 30, 2021  December 31, 2020 
Amortized Cost:                                
Senior secured loans $338,448   76.9% $280,324   67.8% $422,657   74.3% $427,173   71.7%
Unitranche loans  44,776   10.2   57,361   13.9 
Unitranche secured loans  62,995   11.1   77,465   13.0 
Junior secured loans  40,402   9.2   61,674   14.9   8,208   1.4   14,763   2.4 
LLC equity interest in SLF  42,150   7.4   42,150   7.1 
Equity securities  16,296   3.7   13,883   3.4   33,155   5.8   34,552   5.8 
Total $439,922   100.0% $413,242   100.0% $569,165   100.0% $596,103   100.0%

 

 September 30, 2017  December 31, 2016  June 30, 2021  December 31, 2020 
Fair Value:                         
Senior secured loans $327,984   76.1% $275,253   66.7% $404,322   76.3% $405,224   74.1%
Unitranche loans  44,592   10.4   51,638   12.5 
Unitranche secured loans  45,500   8.6   64,040   11.7 
Junior secured loans  38,555   8.9   59,366   14.4   8,125   1.5   14,592   2.6 
LLC equity interest in SLF  41,385   7.8   39,284   7.2 
Equity securities  19,966   4.6   26,663   6.4   30,657   5.8   23,899   4.4 
Total $431,097   100.0% $412,920   100.0% $529,989   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  June 30, 2021  December 31, 2020 
Amortized Cost:                                
International $4,809   1.1% $6,667   1.6% $32,208   5.6% $19,276   3.2%
Midwest  61,311   14.0   59,710   14.5   123,868   21.8   149,468   25.1 
Northeast  123,686   28.1   105,482   25.5   140,082   24.6   139,553   23.4 
South  —   —   2,425   0.6 
Southeast  69,641   15.8   60,719   14.7   141,595   24.9   142,721   24.0 
Southwest  50,681   11.5   50,562   12.2   23,306   4.1   23,857   4.0 
West  129,794   29.5   127,677   30.9   108,106   19.0   121,228   20.3 
Total $439,922   100.0% $413,242   100.0% $569,165   100.0% $596,103   100.0%

 

22

 September 30, 2017  December 31, 2016  June 30, 2021  December 31, 2020 
Fair Value:                                
International $5,023   1.2% $6,636   1.6% $32,671   6.2% $20,008   3.7%
Midwest  60,373   14.0   60,579   14.7   122,152   23.0   144,261   26.4 
Northeast  124,326   28.8   108,188   26.2   126,785   23.9   123,349   22.5 
South  —   —   2,445   0.6 
Southeast  70,959   16.5   61,128   14.8   138,863   26.2   138,406   25.3 
Southwest  44,416   10.3   54,263   13.1   25,491   4.8   25,557   4.7 
West  126,000   29.2   119,681   29.0   84,027   15.9   95,458   17.4 
Total $431,097   100.0% $412,920   100.0% $529,989   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  June 30, 2021  December 31, 2020 
Amortized Cost:                                
Aerospace & Defense $4,940   1.1% $9,524   2.3%
Automotive  —   —   12,496   3.0  $13,034   2.3% $9,495   1.6%
Banking, Finance, Insurance & Real Estate  46,126   10.5   34,912   8.4   79,776   14.0   70,779   11.9 
Beverage, Food & Tobacco  17,931   4.1   18,068   4.4   27,034   4.7   26,308   4.4 
Capital Equipment  9,839   1.7   13,603   2.3 
Chemicals, Plastics & Rubber  8,729   2.0   3,949   1.0   9,947   1.7   28,723   4.8 
Construction & Building  17,777   4.0   18,282   4.4   13,683   2.4   16,651   2.8 
Consumer Goods: Durable  11,762   2.7   3,600   0.9   5,929   1.0   24,410   4.1 
Consumer Goods: Non-Durable  24,888   5.7   35,567   8.6   27,555   4.8   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   12,320   2.2   12,996   2.2 
Healthcare & Pharmaceuticals  57,126   13.0   41,584   10.1   58,124   10.2   42,857   7.2 
High Tech Industries  36,606   8.3   19,746   4.8   84,354   14.8   81,845   13.7 
Hotels, Gaming & Leisure  41,692   9.5   37,860   9.2   2,586   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   13,536   2.4   30,764   5.1 
Media: Broadcasting & Subscription  16,174   3.7   17,527   4.2   2,373   0.4   2,190   0.4 
Media: Diversified & Production  4,945   1.1   4,938   1.2   18,049   3.2   6,707   1.1 
Metals & Mining  —   —   5,219   1.3 
Retail  56,650   12.9   48,488   11.7   32,250   5.7   32,017   5.4 
Services: Business  26,983   6.1   38,806   9.4   65,339   11.5   79,768   13.4 
Services: Consumer  20,954   4.8   24,608   5.9   32,149   5.7   29,697   5.0 
Telecommunications  3,268   0.7   3,431   0.8   4,417   0.8   1,100   0.2 
Utilities: Electric  2,758   0.6   2,964   0.7 
Wholesale  16,873   3.8   4,816   1.2   14,721   2.6   11,316   1.9 
Total $439,922   100.0% $413,242   100.0% $569,165   100.0% $596,103   100.0%

 

 September 30, 2017  December 31, 2016  June 30, 2021  December 31, 2020 
Fair Value:                                
Aerospace & Defense $5,028   1.2% $10,601   2.6%
Automotive  —   —   7,514   1.8  $13,254   2.5% $9,637   1.8%
Banking, Finance, Insurance & Real Estate  46,912   10.9   37,130   9.0   83,895   15.8   72,627   13.3 
Beverage, Food & Tobacco  17,788   4.1   16,794   4.1   25,578   4.8   20,676   3.8 
Capital Equipment  10,017   1.9   13,750   2.5 
Chemicals, Plastics & Rubber  8,864   2.1   4,040   1.0   9,476   1.8   27,754   5.1 
Construction & Building  17,933   4.2   18,602   4.5   13,866   2.6   16,809   3.0 
Consumer Goods: Durable  11,952   2.8   3,620   0.9   76   —   18,893   3.4 
Consumer Goods: Non-Durable  19,462   4.5   32,000   7.7   9,868   1.9   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   12,655   2.4   13,168   2.4 
Healthcare & Pharmaceuticals  66,275   15.4   56,435   13.7   53,655   10.1   37,815   6.9 
High Tech Industries  36,085   8.4   18,899   4.6   84,521   15.9   81,417   14.9 
Hotels, Gaming & Leisure  42,738   9.9   38,010   9.2   2,645   0.5   1,771   0.3 
Investment Funds & Vehicles  41,385   7.8   39,284   7.2 
Media: Advertising, Printing & Publishing  13,356   3.1   11,742   2.8   16,101   3.0   31,553   5.8 
Media: Broadcasting & Subscription  16,466   3.8   18,046   4.4   2,380   0.5   2,227   0.4 
Media: Diversified & Production  5,006   1.2   4,938   1.2   18,499   3.5   6,811   1.2 
Metals & Mining  —   —   5,268   1.3 
Retail  40,740   9.5   38,147   9.2   19,772   3.7   18,443   3.4 
Services: Business  27,264   6.3   40,164   9.7   65,007   12.3   78,584   14.4 
Services: Consumer  21,170   4.9   24,807   6.0   27,974   5.3   25,306   4.6 
Telecommunications  3,333   0.8   3,430   0.8   4,505   0.9   1,100   0.2 
Utilities: Electric  2,801   0.6   2,999   0.7 
Wholesale  17,015   3.9   4,500   1.1   14,860   2.8   11,390   2.1 
Total $431,097   100.0% $412,920   100.0% $529,989   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 June 30, 2021 and December 31, 2020, the Company and LSW each owned 50.0% of the LLC equity interests of SLF. As of both June 30, 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 June 30, 2021 and December 31, 2020, the Company had committed to fund $50,000 of LLC equity interest subscriptions to SLF. As of both June 30, 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 and six months ended June 30, 2021, the Company received $1,075 and $2,275 of dividend income from its LLC equity interest in SLF, respectively. For the three and six months ended June 30, 2020, the Company received $900 and $2,050 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 June 30, 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 and six months ended June 30, 2021, SLF incurred $50 and $108, respectively, of allocable expenses. For the three and six months ended June 30, 2020, SLF incurred $50 and $106, respectively, of allocable expenses. There are no agreements or understandings by which the Company guarantees any SLF obligations.

As of June 30, 2021 and December 31, 2020, SLF had total assets at fair value of $199,766 and $209,666, respectively. As of June 30, 2021 and December 31, 2020, SLF had one portfolio company investment on non-accrual status with a fair value of $1,050 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 June 30, 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 June 30, 2021 and December 31, 2020:

  As of 
  June 30, 2021  December 31, 2020 
Senior secured loans (1)  200,376   214,389 
Weighted average current interest rate on senior secured loans (2)  5.9%  5.8%
Number of borrowers in SLF  54   57 
Largest portfolio company investment (1)  6,755   6,790 
Total of five largest portfolio company investments (1)  26,982   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)

June 30, 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   2,758  $2,701 
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   1,839   1,801 
Trident Maritime SH, Inc.  L+5.50%   6.50%  2/26/2027   2,479   2,474 
Trident Maritime SH, Inc. (Revolver) (d)  L+5.50%   6.50%  2/26/2027   265   41 
               7,341   7,017 
Automotive                    
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   1,717   1,717 
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   254   254 
Wheel Pros, Inc.  L+4.50%   5.25%  5/11/2028   1,957   1,957 
               3,928   3,928 
Banking, Finance, Insurance & Real Estate                    
Avison Young (USA), Inc. (c)  L+6.00%   6.15%  1/30/2026   4,875   4,826 
Harbour Benefit Holdings, Inc.  L+5.25%   6.25%  12/13/2024   4,629   4,566 
Harbour Benefit Holdings, Inc.  L+5.25%   6.25%  12/13/2024   103   102 
Lightbox Intermediate, L.P.  L+5.00%   5.15%  5/11/2026   4,900   4,875 
Minotaur Acquisition, Inc.  L+4.75%   4.85%  3/27/2026   2,933   2,936 
               17,440   17,305 
Beverage, Food & Tobacco                    
CBC Restaurant Corp. (f)  n/a   5.00% PIK(e)  12/30/2022   1,116   1,050 
SW Ingredients Holdings, LLC  L+4.00%   5.00%  7/3/2025   3,638   3,634 
               4,754   4,684 
Capital Equipment                    
Analogic Corporation  L+5.25%   6.25%  6/24/2024   4,776   4,667 
               4,776   4,667 
Chemicals, Plastics & Rubber                    
Polymer Solutions Group  L+7.00%   8.00%  1/1/2023   1,197   1,179 
               1,197   1,179 
Construction & Building                    
The Cook & Boardman Group, LLC  L+5.75%   6.75%  10/20/2025   2,925   2,859 
               2,925   2,859 
Consumer Goods: Durable                    
International Textile Group, Inc.  L+5.00%   5.26%  5/1/2024   1,734   1,677 
               1,734   1,677 
Consumer Goods: Non-Durable                    
PH Beauty Holdings III, Inc.  L+5.00%   5.14%  9/26/2025   2,430   2,330 
               2,430   2,330 
Containers, Packaging & Glass                    
Liqui-Box Holdings, Inc.  L+4.50%   5.50%  2/26/2027   4,290   4,125 
Polychem Acquisition, LLC  L+5.00%   5.50%  3/17/2025   2,933   2,933 
Port Townsend Holdings Company, Inc.  L+6.75%   

5.75% Cash/

2.00% PIK

   4/3/2024   4,740   4,313 
PVHC Holding Corp.  L+4.75%   5.75%  8/5/2024   3,234   2,943 
               15,197   14,314 
Energy: Oil & Gas                    
Drilling Info Holdings, Inc.  L+4.25%   4.35%  7/30/2025   4,539   4,483 
Offen, Inc.  L+5.00%   5.10%  6/22/2026   2,400   2,400 
Offen, Inc.  L+5.00%   5.10%  6/22/2026   881   881 
               7,820   7,764 
Healthcare & Pharmaceuticals                    
LSCS Holdings, Inc.  L+4.25%   4.42%  3/17/2025   2,287   2,264 
LSCS Holdings, Inc.  L+4.25%   4.42%  3/17/2025   590   584 
Radiology Partners, Inc.  L+4.25%   4.32%  7/9/2025   4,760   4,764 
               7,637   7,612 


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2021

Portfolio Company (a) Spread Above
Index (b)		  Interest Rate (b)  Maturity  Principal  Fair Value 
High Tech Industries                    
Corel, Inc. (c)   L+5.00%   5.14%  7/2/2026   3,850  $3,857 
LW Buyer, LLC  L+5.00%   5.15%  12/30/2024   4,900   4,876 
TGG TS Acquisition Company  L+6.50%   6.60%  12/12/2025   3,557   3,569 
               12,307   12,302 
Hotels, Gaming & Leisure                    
Excel Fitness Holdings, Inc.  L+5.25%   6.25%  10/7/2025   4,186   4,083 
North Haven Spartan US Holdco, LLC  L+5.00%   6.00%  6/6/2025   2,309   2,041 
Tait, LLC  L+5.00%   5.20%  3/28/2025   4,146   3,723 
Tait, LLC (Revolver)  P+4.00%   7.25%  3/28/2025   769   723 
               11,410   10,570 
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   4,340   4,340 
Monotype Imaging Holdings, Inc.  L+5.50%   6.50%  10/9/2026   4,844   4,837 
               14,079   13,893 
Media: Diversified & Production                    
Research Now Group, Inc. and Survey Sampling International, LLC  L+5.50%   6.50%  12/20/2024   6,755   6,693 
Stats Intermediate Holding, LLC  L+5.25%   5.41%  7/10/2026   4,925   4,941 
The Octave Music Group, Inc.  L+6.00%   

6.25% Cash/

0.75% PIK

   5/29/2025   4,828   4,725 
               16,508   16,359 
Services: Business                    
AQ Carver Buyer, Inc.  L+5.00%   6.00%  9/23/2025   4,913   4,906 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   1,992   1,892 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   420   399 
Eliassen Group, LLC  L+4.25%   4.35%  11/5/2024   3,009   3,000 
Engage2Excel, Inc.  L+7.25%   

7.00% Cash/

1.25% PIK

   3/7/2023   4,316   4,348 
Engage2Excel, Inc.  L+7.25%   

7.00% Cash/

1.25% PIK

   3/7/2023   779   784 
Engage2Excel, Inc. (Revolver) (d)  L+7.25%   

7.00% Cash/

1.25% PIK

   3/7/2023   552   379 
Legility, LLC  L+6.00%   7.00%  12/17/2025   4,838   4,753 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   2,444   2,425 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   1,887   1,873 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   552   548 
Output Services Group, Inc.  L+4.50%   5.50%  3/27/2024   4,840   4,217 
SIRVA Worldwide, Inc.  L+5.50%   5.60%  8/4/2025   1,875   1,771 
Teneo Holdings, LLC  L+5.25%   6.25%  7/11/2025   4,913   4,876 
The Kleinfelder Group, Inc.  L+5.25%   6.25%  11/29/2024   2,438   2,438 
               39,768   38,609 
Services: Consumer                    
Cambium Learning Group, Inc.  L+4.50%   5.25%  12/18/2025   4,503   4,534 
LegalZoom.com, Inc.  L+4.50%   4.60%  11/21/2024   2,681   2,681 
               7,184   7,215 
Telecommunications                    
Intermedia Holdings, Inc.  L+6.00%   7.00%  7/21/2025   1,788   1,787 
Mavenir Systems, Inc.  L+6.00%   7.00%  5/8/2025   3,880   3,892 
               5,668   5,679 
Transportation: Cargo                    
GlobalTranz Enterprises, LLC  L+5.00%   5.10%  5/15/2026   3,246   3,232 
               3,246   3,232 
Utilities: Oil & Gas                    
NGS US Finco, LLC  L+4.25%   5.25%  10/1/2025   1,704   1,653 
NGS US Finco, LLC  L+5.25%   6.25%  10/1/2025   249   245 
               1,953   1,898 
Wholesale                    
BMC Acquisition, Inc.  L+5.25%   6.25%  12/30/2024   4,825   4,823 
HALO Buyer, Inc.  L+4.50%   5.50%  6/30/2025   4,849   4,674 
PT Intermediate Holdings III, LLC  L+5.50%   6.50%  10/15/2025   1,970   1,953 
               11,644   11,450 
                     
TOTAL INVESTMENTS                 $196,543 

(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. The Company has provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at June 30, 2021. Certain investment are subject to a LIBOR or Prime interest rate floor.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of June 30, 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 June 30, 2021, meaning that the Company has ceased accruing interest income on the position.
(f)A portion of this loan (principal of $115) is held at the SLF, not at the SLF SPV, and is therefore not collateral to the SLF Credit Facility.


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, Inc.  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 June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020:

  June 30, 2021  December 31, 2020 
  (unaudited)    
Assets        
Investments, at fair value $196,543  $205,695 
Cash  39   351 
Restricted cash  2,619   2,948 
Interest receivable  528   629 
Other assets  37   43 
Total assets $199,766  $209,666 
Liabilities        
Revolving credit facility $117,815  $131,497 
Less: Unamortized deferred financing costs  (1,372)  (969)
Total debt, less unamortized deferred financing costs  116,443   130,528 
Interest payable  262   294 
Accounts payable and accrued expenses  292   277 
Total liabilities  116,997   131,099 
Members’ capital  82,769   78,567 
Total liabilities and members’ capital $199,766  $209,666 

  Three months ended June 30,  Six months ended June 30, 
  2021  2020  2021  2020 
  (unaudited)  (unaudited) 
Investment income:                
Interest income $3,210  $4,011  $6,663  $8,264 
Total investment income  3,210   4,011   6,663   8,264 
Expenses:                
Interest and other debt financing expenses  1,024   1,488   2,003   3,102 
Professional fees  162   164   332   348 
Total expenses  1,186   1,652   2,335   3,450 
Net investment income (loss)  2,024   2,359   4,328   4,814 
Net gain (loss):                
Net change in unrealized gain (loss)  761   7,901   4,424   (14,428)
Net gain (loss)  761   7,901   4,424   (14,428)
Net increase (decrease) in members’ capital $2,785  $10,260  $8,752  $(9,614)

 

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 asAs of SeptemberJune 30, 20172021 and December 31, 20162020, all investments, with the exception of investments measured at fair value using net asset value (“NAV”), 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 BorrowingsIn 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 June 30, 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 
June 30, 2021 Level 1 Level 2 Level 3 Total 
Investments:                         
Senior secured loans $—  $—  $327,984  $327,984  $— $— $404,322 $404,322 
Unitranche loans  —   —   44,592   44,592 
Unitranche secured loans — — 45,500 45,500 
Junior secured loans  —   —   38,555   38,555  — — 8,125 8,125 
Equity securities  —   —   19,966   19,966  — — 30,657 30,657 
Total Investments $—  $—  $431,097  $431,097 
                
Secured borrowings $—  $—  $—  $— 
Investments measured at NAV (1) (2)  —  —  —  41,385 
Total investments $— $— $488,604 $529,989 
Foreign currency forward contracts asset (liability) $— $333 $— $333 

 

  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)

The following table presents fair value measurements of

(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.


Senior 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 SeptemberJune 30, 20172021 and 5.75%6.00% to 17.00%18.00% at December 31, 2016.2020. The maturity dates on the loans outstanding at SeptemberJune 30, 20172021 range between December 2017September 2021 and August 2025.June 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 ninesix months ended SeptemberJune 30, 2017:2021:

 

  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 March 31, 2021 $392,399  $48,298  $11,999  $27,616  $480,312 
Net realized gain (loss) on investments  19   —   —   890   909 
Net change in unrealized gain (loss) on investments  986   (508)  (199)   4,669   4,948 
Purchases of investments and other adjustments to cost (1)  56,342   1,031   —   449   57,822 
Proceeds from principal payments and sales of investments (2)  (45,424)  (3,321)  (3,675)  (2,967)  (55,387)
Reclassifications (3)  —   —   —   —   — 
Balance as of June 30, 2021 $404,322  $45,500  $8,125  $30,657  $488,604 

 

  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, 2020 $405,224  $64,040  $14,592  $23,899  $507,755 
Net realized gain (loss) on investments  (175)  —   —   892   717 
Net change in unrealized gain (loss) on investments  3,611   (4,071)  87   8,160   7,787 
Purchases of investments and other adjustments to cost (1)  101,238   1,455   168   736   103,597 
Proceeds from principal payments and sales of investments (2)  (105,576)  (15,924)  (6,722)  (3,030)   (131,252)
Reclassifications (3)  —   —   —   —   — 
Balance as of June 30, 2021 $404,322  $45,500  $8,125  $30,657  $488,604 

 

 

(1)Represents non-cash reclassifications 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)(2)Represents net proceeds from investments sold and principal paydowns received.
(3)Represents non-cash reclassification of investment type due to a restructuring.

 

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 ninesix months ended SeptemberJune 30, 2016:2020:

 

26
  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of March 31, 2020 $481,565  $55,826  $11,704  $10,417  $559,512 
Net realized gain (loss) on investments  2,340   —   —   121   2,461 
Net change in unrealized gain (loss) on investments  (4,960)  (1,960)  710   1,088   (5,122)
Purchases of investments and other adjustments to cost (1)  12,729   314   10   69   13,122 
Proceeds from principal payments and sales of investments (2)  (41,859)  (165)  (48)  (160)  (42,232)
Reclassifications (3)  —   —   —   —   — 
Balance as of June 30, 2020 $449,815  $54,015  $12,376  $11,535  $527,741 

 


  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 
  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  2,345   89   —   121   2,555 
Net change in unrealized gain (loss) on investments  (28,502)  (10,447)  (800)  565   (39,184)
Purchases of investments and other adjustments to cost (1)  77,432   2,053   3,875   2,270   85,630 
Proceeds from principal payments and sales of investments (2)  (76,620)  (13,924)  (4,375)  (160)   (95,079)
Reclassifications (3)  3   (3)  —   —   — 
Balance as of June 30, 2020 $449,815  $54,015  $12,376  $11,535  $527,741 

 

 

(1)Represents non-cash reclassifications 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)(2)Represents net proceeds from investments sold and principal paydowns received.
(3)Represents non-cash reclassification of investment type due to the 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 ninesix months ended SeptemberJune 30, 2017,2021, attributable to Level 3 investments still held at SeptemberJune 30, 2017,2021, was ($254)$5,602 and ($11,637),$8,339, respectively. 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 ninesix months ended SeptemberJune 30, 2016,2020, attributable to Level 3 investments still held at SeptemberJune 30, 2016,2020, was ($1,821)$5,353 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)28,714), 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 ninesix months ended SeptemberJune 30, 20172021 and 2016.2020.

 

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 SeptemberJune 30, 20172021 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       
       Unobservable Average  Range 
  Fair Value  Valuation Technique Input Mean  Minimum  Maximum 
Assets:                
Senior secured loans $243,378  Discounted cash flow EBITDA multiples  7.0x  4.5x  19.6x
        Market yields  10.1%  5.7%  20.0%
Senior secured loans  113,825  Discounted cash flow Revenue multiples  5.3x  0.5x  14.5x
        Market yields  8.5%  6.0%  17.0%
Senior secured loans  22,299  Enterprise value Book value multiples  1.5x  1.5x  1.5x
Senior secured loans  16,245  Enterprise value Revenue multiples  2.3x  0.7x  2.7x
Senior secured loans  3,874  Liquidation Probability weighting of alternative outcomes  79.7%  1.1%  100.0%
Senior secured loans  39  Enterprise value EBITDA multiples  11.5x  11.5x  11.5x
Unitranche secured loans  38,491  Discounted cash flow EBITDA multiples  8.8x  5.8x  10.5x
        Market yields  8.9%  7.8%  12.0%
Unitranche secured loans  7,009  Enterprise value Revenue multiples  0.6x  0.6x  0.6x
Junior secured loans  766  Liquidation Probability weighting of alternative outcomes  91.9%  91.9%  91.9%
Equity securities  12,114  Enterprise value EBITDA multiples  8.0x  4.5x  15.3x
Equity securities  7,986  Enterprise value Revenue multiples  2.0x  0.5x  12.0x
Equity securities  5,117  Liquidation Probability weighting of alternative outcomes  54.6%  54.6%  54.6%
Equity securities  584  Enterprise value Tangible book value multiples  1.5x  1.5x  1.5x
Equity securities  223  Option pricing model Volatility  65.0%  65.0%  65.0%
Total Level 3 Assets $471,950 (1)                

 

 

(1)Excludes loans of $57,521$16,654 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     
   Weighted Range    Unobservable Average Range 
 Fair
Value		 Valuation Technique Unobservable
Input		 Average
Mean		 Minimum Maximum  Fair Value Valuation Technique Input Mean Minimum Maximum 
Assets:                         
Senior secured loans $214,267 Discounted cash flow EBITDA multiples 7.0x 3.2x 13.3x  $271,926 Discounted cash flow EBITDA multiples 7.5x 2.8x 16.6x
   Market yields 11.7% 7.0% 22.0%   Market yields 9.5% 6.2% 18.8%
Senior secured loans 1,054 Enterprise value Revenue multiples 0.6x 0.5x 0.6x  74,479 Discounted cash flow Revenue multiples 4.8x 0.5x 10.5x
   Market yields 9.2% 6.1% 18.5%
Senior secured loans 12,727 Enterprise value EBITDA multiples 4.1x 3.3x 5.5x  24,271 Enterprise value Book value multiples 2.0x 2.0x 2.0x
Unitranche loans 47,861 Discounted cash flow EBITDA multiples 6.1x 4.8x 8.0x 
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 13.4% 9.5% 22.1%   Market yields 9.3% 7.5% 12.8%
Unitranche loans 3,491 Combination of discounted cash flow and enterprise value Revenue multiples 0.5x 0.5x 0.6x 
Unitranche secured loans 9,800 Discounted cash flow Revenue multiples 0.7x 0.7x 0.7x
   Market yields 29.2% 29.2% 29.2%   Market yields 10.7% 10.5% 11.0%
Unitranche loans 286 Enterprise value EBITDA multiples 6.0x 5.5x 6.5x 
Unitranche secured loans 1,764 Enterprise value Revenue multiples 0.7x 0.7x 0.7x
Junior secured loans 18,572 Discounted cash flow EBITDA multiples 7.5x 3.5x 9.5x  3,886 Discounted cash flow Market yields 10.0% 10.0% 10.0%
   Market yields 11.5% 7.0% 13.5%
Junior secured loans — Enterprise value Revenue multiples 0.6x 0.5x 0.6x  762 Liquidation Probability weighting of alternative outcomes 91.5% 91.5% 91.5%
Equity securities 8,121 Discounted cash flow EBITDA multiples 3.8x 3.5x 4.0x  10,865 Enterprise value EBITDA multiples 7.6x 2.8x 15.3x
   Market yields 17.0% 16.0% 18.0%
Equity securities 6,771 Enterprise value Revenue multiples 1.3x 0.5x 11.0x
Equity securities 18,164 Enterprise value EBITDA multiples 4.6x 3.3x 13.3x  5,117 Liquidation Probability weighting of alternative outcomes 54.6% 54.6% 54.6%
Equity securities  249 Enterprise value Revenue multiples 0.8x 0.1x 3.8x   87 Option pricing model Volatility 70.0% 70.0% 70.0% 
Total Level 3 Assets $324,792(1)        $492,188 (1)       
         
Liabilities:         
Secured Borrowings $1,314 Discounted cash flow Market yields 7.7% 7.1% 8.2%

 

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 June 30, 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 June 30, 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 Septemberboth June 30, 20172021 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 ninesix months ended SeptemberJune 30, 20172021 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
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gain (loss)		  Net
unrealized
gain (loss)		  Fair value at
June
30, 2021		 
Non-controlled affiliate company investment:                                    
American Community Homes, Inc. $9,401  $—  $—  $(90) $555  $—  $—  $—  $9,866 
American Community Homes, Inc.  6,239   —   —   (2,229)  374   —   —   —   4,384 
American Community Homes, Inc.  825   —   —   (838)  13   —   —   —   — 
American Community Homes, Inc.  570   —   —   (5)  33   —   —   —   598 
American Community Homes, Inc.  335   —   —   (341)  6   —   —   —   — 
American Community Homes, Inc.  2,915   —   —   (20)  125   —   —   205   3,225 
American Community Homes, Inc.  3,879   —   —   (37)  229   —   —   42   4,113 
American Community Homes, Inc.  18   —   —   —   1   —   —   —   19 
American Community Homes, Inc.  89   —   —   (1)  6   —   —   —   94 
American Community Homes, Inc. (Revolver)  —   —   —   —   —   —   —   —   — 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   584   584 
   24,271   —   —   (3,561)  1,342   —   —   831   22,883 
                                     
Ascent Midco, LLC  6,997   —   —   (496)  —   14   —   (24)  6,491 
Ascent Midco, LLC (Delayed Draw)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (Revolver)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (2,032,258 Class A units)  3,016   —   —   —   —   —   —   414   3,430 
   10,013   —   —   (496)  —   14   —   390   9,921 
                                     
Curion Holdings, LLC  3,159   —   —   —   —   —   —   443   3,602 
Curion Holdings, LLC (Revolver)  820   —   —   —   —   —   —   5   825 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,979   —   —   —   —   —   —   448   4,427 
                                     
Familia Dental Group Holdings, LLC (1,052 Class A units)  3,118   —   —   —   —   —   —   60   3,178 
   3,118   —   —   —   —   —   —   60   3,178 
                                     
HFZ Capital Group, LLC  13,106   —   —   —   —   —   —   1,437   14,543 
HFZ Capital Group, LLC  4,709   —   —   —   —   —   —   516   5,225 
MC Asset Management (Corporate), LLC  —   —   6,423   —   183   —   —   —   6,606 
MC Asset Management (Corporate), LLC (Delayed Draw)  —   —   793   —   —   —   —   —   793 
MC Asset Management (Corporate), LLC (15.9% interests)  785   —   —   —   —   —   —   101   886 
MC Asset Management (Industrial), LLC  11,579   —   —   —   619   —   —   (98)  12,100 
   30,179   —   7,216   —   802   —   —   1,956   40,153 
                                     
Incipio, LLC  1,764   —   —   —   —   —   —   (1,764)  — 
Incipio, LLC  4,227   —   —   —   48   —   —   (2,713)  1,562 
Incipio, LLC  1,805   —   —   —   15   —   —   (88)  1,732 
Incipio, LLC  1,519   —   —   —   13   —   —   (74)  1,458 
Incipio, LLC  761   —   —   —   6   —   —   (37)  730 
Incipio, LLC  1,488   —   108   —   9   —   —   (78)  1,527 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   11,564   —   108   —   91   —   —   (4,754)  7,009 
                                     
Luxury Optical Holdings Co.  1,430   —   —   ��   —   —   —   51   1,481 
Luxury Optical Holdings Co. (Delayed Draw)  624   —   882   (93)  —   —   —   93   1,506 
Luxury Optical Holdings Co. (Revolver)  66   —   —   —   —   —   —   2   68 
Luxury Optical Holdings Co. (91 preferred units)  2,476   —   —   —   —   —   —   (91)  2,385 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,596   —   882   (93)  —   —   —   55   5,440 
                                     
Mnine Holdings, Inc.  12,356   —   —   —   297   20   —   (30)  12,643 
Mnine Holdings, Inc. (6,400 Class B units)  —   —   —   —   —   —   —   —   — 
   12,356   —   —   —   297   20   —   (30)  12,643 
                                     
NECB Collections, LLC (Revolver)  834   —   —   —   —   —   —   (90)  744 
NECB Collections, LLC (20.8% of units)  —   —   —   —   —   —   —   —   — 
   834   —   —   —   —   —   —   (90)  744 
                                     
SHI Holdings, Inc.  188   —   —   —   —   —   —   (56)  132 
SHI Holdings, Inc. (Revolver)  297   —   —   —   —   —   —   (89)  208 
SHI Holdings, Inc. (24 shares of common stock)  —   —   —   —   —   —   —   —   — 
   485   —   —   —   —   —   —   (145)  340 
                                     
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   —   —   (755)  —   —   —   253   2,821 
   3,323   —   —   (755)  —   —   —   253   2,821 
Total non-controlled affiliate company investments $109,715  $—  $13,608  $(14,983)  $2,532  $34  $(250)  $(1,097)  $109,559 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $39,284  $—  $—  $—  $—  $—  $—  $2,101  $41,385 
   39,284   —   —   —   —   —   —   2,101   41,385 
Total controlled affiliate company investments $39,284  $—  $—  $—  $—  $—  $—  $2,101  $41,385 

 

29

Portfolio Company Fair value at
December 31, 2019		  Transfers
in (out)		  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gain (loss)		  Net
unrealized
gain (loss)		  Fair value at
June 30, 2020		 
Non-controlled affiliate company investment:                                    
American Community Homes, Inc. $6,764  $—  $—  $—  $534  $       4  $       —  $199  $7,501 
American Community Homes, Inc.  4,289   —   —   —   474   2   —   100   4,865 
American Community Homes, Inc.  512   —   —   —   135   —   —   (4)  643 
American Community Homes, Inc.  410   —   —   —   32   1   —   12   455 
American Community Homes, Inc.  230   —   —   —   26   —   —   5   261 
American Community Homes, Inc.  1,472   —   —   —   173   —   —   33   1,678 
American Community Homes, Inc.  2,760   —   —   —   276   —   —   72   3,108 
American Community Homes, Inc.  11   —   —   —   4   —   —   —   15 
American Community Homes, Inc.  1,168   —   —   (1,111)  14   —   —   —   71 
American Community Homes, Inc. (Revolver)  —   —   2,500   —   13   —   —   (500)  2,013 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   —   — 
   17,616   —   2,500   (1,111)  1,681   7   —   (83)  20,610 
                                     
Ascent Midco, LLC  —   —   6,860   (34)  —   11   —   28   6,865 
Ascent Midco, LLC (Delayed Draw)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (Revolver)  —   —   734   (367)  —   —   —   (5)  362 
Ascent Midco, LLC (2,032,258 Class A units)  —   —   2,032   —   —   —   —   705   2,737 
   —   —   9,626   (401)  —   11   —   728   9,964 
                                     
Curion Holdings, LLC  3,279   —   —   —   —   —   —   (159)  3,120 
Curion Holdings, LLC (Revolver)  441   —   —   —   —   —   —   —   441 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,720   —   —   —   —   —   —   (159)  3,561 
                                     
Incipio, LLC  12,343   —   —   —   128   —   —   (8,722)  3,749 
Incipio, LLC  3,750   —   —   —   263   —   —   (32)  3,981 
Incipio, LLC  1,606   —   —   —   112   —   —   (16)  1,702 
Incipio, LLC  686   —   —   —   38   —   —   (7)  717 
Incipio, LLC  —   —   1,404   —   54   —   —   (26)  1,432 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   18,385   —   1,404   —   595   —   —   (8,803)  11,581 
                                     
Luxury Optical Holdings Co.  3,457   —   —   —   —   —   —   (775)  2,682 
Luxury Optical Holdings Co.  620   —   —   —   —   —   —   (7)  613 
Luxury Optical Holdings Co. (Revolver)  159   —   —   —   —   —   —   (36)  123 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,236   —   —   —   —   —   —   (818)  3,418 
                                     
Mnine Holdings, Inc. (1)  —   10,321   —   —   964   7   —   857   12,149 
Mnine Holdings, Inc. (6,400 Class B units) (1)  —   —   —   —   —   —   —   —   — 
   —   10,321   —   —   964   7   —   857   12,149 
                                     
NECB Collections, LLC (Revolver)  1,148   —   112   —   39   —   —   —   1,299 
NECB Collections LLC, LLC (20.8% of units)  318   —   —   —   —   —   —   (281)  37 
   1,466   —   112   —   39   —   —   (281)  1,336 
                                     
SHI Holdings, Inc.  2,459   —   —   —   —   —   —   (2,089)  370 
SHI Holdings, Inc. (Revolver)  3,601   —   345   —   —   —   —   (3,360)  586 
SHI Holdings, Inc. (24 shares of common stock)  —   —   —   —   —   —   —   —   — 
   6,060   —   345   —   —   —   —   (5,449)  956 
                                     
Summit Container Corporation  2,971   —   —   —   —   —   —   125   3,096 
Summit Container Corporation (Revolver)  5,406   —   14,732   (17,618)  —   —   —   34   2,554 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   240   240 
   8,377   —   14,732   (17,618)  —   —   —   399   5,890 
Total non-controlled affiliate company investments $59,860  $10,321  $28,719  $(19,130) $3,279  $25  $—  $(13,609) $69,465 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $42,412  $—  $—  $—  $—  $—  $—  $(6,857) $35,555 
   42,412   —   —   —   —   —   —   (6,857)  35,555 
Total controlled affiliate company investments $42,412  $—  $—  $—  $—  $—  $—  $(6,857) $35,555 

 

 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-onrestructured its investment to Luxury Opticalin Mnine Holdings, Co.Inc. (“LOH”Mnine”) as a part of a restructuring during the three months ended SeptemberJune 30, 2017.2020. As a part of the restructuring, the Company also received 9.6%5.3% of the equity of LOH.Mnine. 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.March 31, 2020.


  For the six months ended June 30, 
  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. $553  $—  $—  $535  $—  $— 
American Community Homes, Inc.  371   —   —   474   —   — 
American Community Homes, Inc.  13   —   —   135   —   — 
American Community Homes, Inc.  33   —   —   33   —   — 
American Community Homes, Inc.  5   —   —   26   —   — 
American Community Homes, Inc.  123   —   —   173   —   — 
American Community Homes, Inc.  228   —   —   299   —   — 
American Community Homes, Inc.  23   —   —   4   —   — 
American Community Homes, Inc.  6   —   —   13   —   — 
American Community Homes, Inc. (Revolver)  —   —   —   72   —   — 
American Community Homes, Inc. (Warrant)  —   —   —   —   —   — 
   1,355   —   —   1,764   —   — 
                         
Ascent Midco, LLC  247   —   —   211   —   — 
Ascent Midco, LLC (Delayed Draw)  8   —   —   6   —   — 
Ascent Midco, LLC (Revolver)  2   —   —   14   —   — 
Ascent Midco, LLC (Class A units)  —   86   —   —   66   — 
   257   86   —   231   66   — 
                         
Curion Holdings, LLC  —   —   —   —   —   — 
Curion Holdings, LLC (Revolver)  —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Common stock)  —   —   —   —   —   — 
   —   —   —   —   —   — 
                         
Familia Dental Group Holdings, LLC (Class A units)  —   —   —   n/a   n/a   n/a 
   —   —   —   n/a   n/a   n/a 
                         
HFZ Capital Group, LLC  932   —   —   n/a   n/a   n/a 
HFZ Capital Group, LLC  335   —   —   n/a   n/a   n/a 
MC Asset Management (Corporate), LLC  450   —   —   n/a   n/a   n/a 
MC Asset Management (Corporate), LLC (Delayed Draw)  23   —   —   n/a   n/a   n/a 
MC Asset Management (Corporate), LLC (LLC interest)  —   —   —   n/a   n/a   n/a 
MC Asset Management (Industrial), LLC  1,073   —   —   n/a   n/a   n/a 
   2,813   —   —   n/a   n/a   n/a 
                         
Incipio, LLC  —   —   —   (309)  —   — 
Incipio, LLC  —   —   —   197   —   — 
Incipio, LLC  —   —   —   83   —   — 
Incipio, LLC  —   —   —   35   —   — 
Incipio, LLC  —   —   —   65   —   — 
Incipio, LLC  —   —   —   n/a   n/a   n/a 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Common units)  —   —   —   —   —   — 
   —   —   —   71   —   — 
                         
Luxury Optical Holdings Co.  —   —   —   —   —   — 
Luxury Optical Holdings Co. (Delayed Draw)  —   —   —   41   —   — 
Luxury Optical Holdings Co. (Revolver)  —   —   —   —   —   — 
Luxury Optical Holdings Co. (Preferred units)  —   —   —   n/a   n/a   n/a 
Luxury Optical Holdings Co. (Common stock)  —   —   —   —   —   — 
   —   —   —   41   —   — 
                         
Mnine Holdings, Inc.  673   —   —   299   —   — 
Mnine Holdings, Inc. (Common units)  —   —   —   —   —   — 
   673   —   —   299   —   — 
                         
NECB Collections, LLC (Revolver)  —   —   —   77   —   — 
NECB Collections, LLC (LLC units)  —   —   —   —   —   — 
   —   —   —   77   —   — 
                         
SHI Holdings, Inc.  —   —   —   (2)  —   — 
SHI Holdings, Inc. (Revolver)  —   —   —   (3)  —   — 
SHI Holdings, Inc. (Common stock)  —   —   —   —   —   — 
   —   —   —   (5)  —   — 
                         
Summit Container Corporation  57   —   —   154   —   — 
Summit Container Corporation (Revolver)  35   —   —   217   —   — 
Summit Container Corporation (Warrant)  —   —   —   —   —   — 
   92   —   —   371   —   — 
                         
TJ Management HoldCo, LLC (Revolver)  6   —   —   n/a   n/a   n/a 
TJ Management HoldCo, LLC (Common stock)  —   —   —   n/a   n/a   n/a 
   6   —   —   n/a   n/a   n/a 
                         
Total non-controlled affiliate company investments $5,196  $86  $—  $2,849  $66  $— 
                         
Controlled affiliate company investments:                        
MRCC Senior Loan Fund I, LLC $—  $2,275  $—  $—  $2,050  $— 
   —   2,275   —   —   2,050   — 
Total controlled affiliate company investments $—  $2,275  $—  $—  $2,050  $— 

 


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 ninesix months ended SeptemberJune 30, 20172021 were $1,953$2,327 and $5,661,$4,661, respectively. Base management fees for the three and ninesix months ended SeptemberJune 30, 20162020 were $1,594$2,434 and $4,598,$4,985, 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 June 30,  Six months ended June 30, 
  2021  2020  2021  2020 
Part one incentive fees (1) $420  $2,527  $1,250  $3,883 
Part two incentive fees (2)  —   —   —   — 
Incentive Fee Limitation  —   (2,527)  —   (3,883)
Incentive fees, excluding the impact of the incentive fee waiver  420   —   1,250   — 
Incentive fee waiver (3)  (420)  —   (1,057)  — 
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 ninesix months ended SeptemberJune 30, 2017,2021, the Company incurred $864$846 and $2,540,$1,688, 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$337 and $926,$693, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. For the three and ninesix months ended SeptemberJune 30, 2016,2020, the Company incurred $826$850 and $2,249,$1,634, 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$314 and $956,$652, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of SeptemberJune 30, 20172021 and December 31, 2016, $2952020, $337 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 Septemberboth June 30, 20172021 and December 31, 2016,2020, the Company had accounts payable to members of the Board of $37 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 June 30, 2021 and December 31, 2020, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 195% 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 June 30, 2021, the Company had U.S. dollar borrowings of $104,400 and non-U.S. dollar borrowings denominated in Great Britain pounds of £16,100 ($22,268 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 ($77) and ($259) for the three and six months ended June 30, 2021, and $30 and $1,378 for the three and six months ended June 30, 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 June 30, 2021 and December 31, 2020, the outstanding borrowings were accruing at a weighted average interest rate of 3.4% 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.

 

32

SBA regulations currently limitOn March 1, 2021, the Company repaid $28,100 in aggregate principal amount that an individual SBIC may borrow to a maximum of $150,000 when it has at least $75,000 in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing.debentures. The SBA also historically limited a related group of SBICs (commonly referred torepayment was accounted for as a “familydebt extinguishment in accordance with ASC 470-50 which resulted in a realized loss of funds”) to a maximum$439 (primarily comprised of $225,000the unamortized deferred financing costs at the time of the repayment) recorded in total borrowings. On December 18, 2015, this familynet gain (loss) on extinguishment of funds limitation was raised to $350,000 in total borrowings.debt on the Company’s consolidated statements of operations. As the Company has other affiliated SBICs already in operation,of June 30, 2021, MRCC SBIC was historically limited to a maximumhad $29,545 in cash and $101,258 in investments at fair value. As 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,December 31, 2020, MRCC SBIC was approved by the SBA for an additional $75,000had $25,657 in SBA-guaranteed debentures, for a total of $115,000cash and $131,167 in available debentures.investments at fair value.

 

As of SeptemberJune 30, 2017,2021 and December 31, 2020, 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):outstanding:

 

Maturity Date Interest Rate  Amount  Interest Rate 

June 30,

2021

 December 31,
2020		 
September 2024  3.4% $12,920  3.4% $12,920 $12,920 
March 2025  3.3%  14,800  3.3% 14,800 14,800 
March 2025  2.9%  7,080  2.9% 7,080 7,080 
September 2025  3.6%  5,200  3.6% — 5,200 
March 2027  3.5%  20,000  3.5% 20,000 20,000 
September 2027  3.2%  32,100  3.2% 32,100 32,100 
March 2028 3.9% — 18,520 
September 2028  4.2%  —  4,380 
Total     $92,100     $86,900 $115,000 

 

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, theThe Company washas been 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 June 30, 
  2021  2020 
Interest expense - revolving credit facility $1,051  $1,488 
Interest expense - 2023 Notes  —   1,567 
Interest expense - 2026 Notes  1,544   — 
Interest expense - SBA debentures  710   980 
Amortization of deferred financing costs  537   520 
Total interest and other debt financing expenses $3,842  $4,555 
Average debt outstanding $320,074  $402,279 
Average stated interest rate  4.1%  4.0%

 

33

  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 
  Six months ended June 30, 
  2021  2020 
Interest expense - revolving credit facility $2,056  $3,286 
Interest expense - 2023 Notes  837   3,134 
Interest expense - 2026 Notes  2,676   — 
Interest expense - SBA debentures  1,588   1,961 
Amortization of deferred financing costs  1,138   1,004 
Total interest and other debt financing expenses $8,295  $9,385 
Average debt outstanding $333,291  $401,366 
Average stated interest rate  4.3%  4.2%

 

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 June 30, 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.


Certain information related to the Company’s foreign currency forward contracts is presented below as of June 30, 2021 and December 31, 2020.

  As of June 30, 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 £83 7/2/2021  $—   $(13) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £900 7/2/2021  11  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £16 7/6/2021  —  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £83 10/4/2021   —  (13) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £82 1/3/2022  —  (13) 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 AUD98 7/16/2021   4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102      8/17/2021  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD 44 8/17/2021  —  (1) Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 9/16/2021  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 9/16/2021  —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 10/19/2021  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 10/19/2021   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 11/16/2021  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 11/16/2021   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 12/16/2021  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 12/16/2021   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD115 1/19/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 1/19/2022   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 2/16/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 2/16/2022   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 3/16/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD37 3/16/2022   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 4/19/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 4/19/2022   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 5/17/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 5/17/2022   —  (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 6/17/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD42 6/17/2022   —   —  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 AUD40 7/18/2022   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 8/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 8/16/2022   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 9/16/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 9/16/2022   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 10/19/2022  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 10/19/2022  —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 11/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 11/16/2022   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 12/16/2022  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 12/16/2022   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD112 1/18/2023  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 1/18/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 2/16/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 2/16/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD95 3/16/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD37 3/16/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD118 4/20/2023  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 4/20/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD81 5/16/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 5/16/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD115 6/19/2023  4  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 6/19/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 7/18/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 7/18/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 8/16/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 8/16/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD105 9/18/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 9/18/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD108 10/18/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 10/18/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 11/16/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 11/16/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 12/18/2023  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD40 12/18/2023   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD109 1/17/2024  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 1/17/2024   —   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD102 2/16/2024  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD41 2/16/2024  —  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD98 3/18/2024  3  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD10,746 3/18/2024  308  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD39 3/18/2024  —  —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract AUD4,527 3/18/2024  —  (37)  Unrealized gain on foreign currency forward contracts
Total      $435 $(102)  


  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 and six months ended June 30, 2021, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of $112 and $446, respectively. For the three and six months ended June 30, 2021, the Company recognized net realized gain (loss) on foreign currency forward contracts of ($37) and ($75), respectively.

For the three and six months ended June 30, 2020, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of ($24) and $74, respectively. For the three and six months ended June 30, 2020, the Company recognized net realized gain (loss) on foreign currency forward contracts of $22 and $18, respectively.


Note 9. Distributions

 

The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the ninesix months ended SeptemberJune 30, 20172021 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		 
Six months ended June 30, 2021:                            
March 2, 2021 March 16, 2021 March 31, 2021 $0.25  $5,326     —  $—   35,611  $364 
June 2, 2021 June 16, 2021 June 30, 2021  0.25   5,386   —   —   31,277   343 
Total distributions declared     $0.50  $10,712   —  $—   66,888  $707 
                             
Six months ended June 30, 2020:                            
March 3, 2020 March 16, 2020 March 31, 2020 $0.35  $7,155   —  $—   55,938  $374 
May 8, 2020 June 15, 2020 June 30, 2020  0.25   5,257   —   —   40,612   283 
Total distributions declared     $0.60  $12,412   —  $—   96,550  $657 

 

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.unchanged. During the ninesix months ended SeptemberJune 30, 2017,2021, the Company sold 173,939240,000 shares at an average price of $15.71$11.43 per share for gross proceeds of $2,732 under the Prior ATM Program and no shares were sold$2,743 under the ATM Program.program. Aggregate underwriters’underwriter’s discounts and commissions were $41 and offering costs were $23,$12, resulting in net proceeds of approximately $2,668. There were no stock issuances under$2,690. During the Prior ATM Program during the ninesix months ended SeptemberJune 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,2020, the Company sold 825,460 shares at an additional 450,000 shares of its common stock, at a public offeringaverage price of $15.00$7.81 per share and additional $6,750 infor gross proceeds for a total of $51,750.$6,450 under the ATM program. Aggregate underwriters’underwriter’s discounts and commissions were $2,070$97 and offering costs were $127,$86, 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.$6,267.

 

Note 10.11. Commitments and Contingencies

Commitments: As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the Company had $33,110$48,244 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 June 30, 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 June 30, 2021.

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 ninesix months ended SeptemberJune 30, 20172021 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%
  June 30, 2021  June 30, 2020 
Per share data:        
Net asset value at beginning of period $11.00  $12.20 
Net investment income (1)  0.49   0.95 
Net gain (loss) (1)  0.37   (2.05)
Net increase (decrease) in net assets resulting from operations (1)  0.86   (1.10)
Stockholder distributions - income (2)  (0.50)  (0.60)
Effect of share issuances below NAV (3)  —   (0.13)
Net asset value at end of period $11.36  $10.37 
Net assets at end of period $244,797  $220,596 
Shares outstanding at end of period  21,543,540   21,270,024 
Per share market value at end of period $10.73  $6.95 
Total return based on market value (4)  40.00%  (30.23)%
Total return based on average net asset value (5)  7.71%  (10.05)%
Ratio/Supplemental data:        
Ratio of net investment income to average net assets (6)  8.95%  17.35%
Ratio of total expenses, net of incentive fee waiver, to average net assets (6) (7)  12.68%  14.50%
Portfolio turnover (8)  18.69%  13.80%

 

 

(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 SeptemberJune 30, 20172021 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)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.

35

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

(7)The following is a schedule of supplemental ratios for the ninesix months ended SeptemberJune 30, 20172021 and 2016.2020. These ratios have been annualized unless otherwise noted.

 

 September 30,
2017		  September 30,
2016		  June 30, 2021 June 30, 2020 
Ratio of total investment income to average net assets 21.63% 31.84%
Ratio of interest and other debt financing expenses to average net assets  3.11%  3.33% 7.01% 8.38%
Ratio of total expenses (without incentive fees) to average net assets  7.40%  8.26% 12.60% 14.50%
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 (8) (9)  0.08% 0.00%

 

(8)Ratios are not annualized.

(9)The ratio of waived incentive fees to average net assets was 0.10%0.44% and zero for ninethe six months ended SeptemberJune 30, 20172021 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;

36

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 SeptemberJune 30, 2017,2021, our portfolio included approximately 76.1%76.3% senior secured debt, 10.4%loans, 8.6% unitranche debt, 8.9%secured loans, 1.5% junior secured debtloans and 4.6%13.6% 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 SeptemberJune 30, 2017,2021, we invested $29.7$40.9 million in six11 new portfolio companies and $24.5$14.9 million in 2012 existing portfolio companies and had $69.0 million in aggregate amount of sales and principal repayments, resulting in net repayments of $14.8 million for the period.

During the nine months ended September 30, 2017, we invested $125.0 million in 16 new portfolio companies and $44.1 million in 26 existing portfolio companies and had $144.4$55.4 million in aggregate amount of sales and principal repayments, resulting in net investments of $24.7$0.4 million for the period.

 

During the threesix months ended SeptemberJune 30, 2016,2021, we invested $44.3$62.4 million in eight16 new portfolio companies and $5.5$37.2 million in seven24 existing portfolio companies and had $15.1$131.3 million in aggregate amount of sales and principal repayments, resulting in net investmentssales and repayments of $34.7$31.7 million for the period.

 

During the ninethree months ended SeptemberJune 30, 2016,2020, we did not invest in any new portfolio companies. During the three months ended June 30, 2020, we invested $61.0$10.3 million in 12 new portfolio companies and $34.7 million in 1613 existing portfolio companies and had $62.5$42.3 million in aggregate amount of sales and principal repayments, resulting in net investmentssales and repayments of $33.2$32.0 million for the period.

 

During the six months ended June 30, 2020, we invested $41.3 million in six new portfolio companies and $40.1 million in 37 existing portfolio companies and had $95.1 million in aggregate amount of sales and principal repayments, resulting in net sales and repayments of $13.7 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 
  Fair Value  

Percentage

of
Total Portfolio

  Weighted Average
Annualized
Contractual 
Coupon Yield(1)		  Weighted Average
Annualized
Effective Yield(2)		 
Senior secured loans $327,984   76.1%  9.5%  9.5%
Unitranche loans  44,592   10.4   9.7   11.1 
Junior secured loans  38,555   8.9   9.4   9.4 
Equity securities  19,966   4.6   10.8   10.8 
Total $431,097   100.0%  9.8%  9.9%

38

 December 31, 2016  June 30, 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 $275,253   66.7%  9.2%  9.2% 8.2% 8.2% 8.1% 8.1%
Unitranche loans  51,638   12.5   10.9   11.4 
Unitranche secured loans 4.9 5.0 6.3 6.5 
Junior secured loans  59,366   14.4   9.7   9.7  6.5 6.5 7.6 7.6 
Equity securities  26,663   6.4   10.8   10.8 
Preferred equity securities  1.6  1.6  1.4  1.4 
Total $412,920   100.0%  9.5%  9.6%  7.6%  7.6%  7.7%  7.7%

 

 

(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 2.6% for junior secured loans and 7.4% in total as of June 30, 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 2.6% for junior secured loans and 7.4% in total as of June 30, 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):

  June 30, 2021  December 31, 2020 
Fair Value:                
Senior secured loans $404,322   76.3% $405,224   74.1%
Unitranche secured loans  45,500   8.6   64,040   11.7 
Junior secured loans  8,125   1.5   14,592   2.6 
LLC equity interest in SLF  41,385   7.8   39,284   7.2 
Equity securities  30,657   5.8   23,899   4.4 
Total $529,989 100.0% $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  June 30, 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  $ 13,254 2.5% $9,637 1.8%
Banking, Finance, Insurance & Real Estate  46,912   10.9   37,130   9.0   83,895 15.8  72,627 13.3 
Beverage, Food & Tobacco  17,788   4.1   16,794   4.1   25,578 4.8 20,676 3.8 
Capital Equipment  10,017 1.9 13,750 2.5 
Chemicals, Plastics & Rubber  8,864   2.1   4,040   1.0   9,476 1.8 27,754 5.1 
Construction & Building  17,933   4.2   18,602   4.5   13,866 2.6 16,809 3.0 
Consumer Goods: Durable  11,952   2.8   3,620   0.9   76 — 18,893 3.4 
Consumer Goods: Non-Durable  19,462   4.5   32,000   7.7   9,868 1.9 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   12,655 2.4 13,168 2.4 
Healthcare & Pharmaceuticals  66,275   15.4   56,435   13.7   53,655 10.1 37,815 6.9 
High Tech Industries  36,085   8.4   18,899   4.6   84,521 15.9 81,417 14.9 
Hotels, Gaming & Leisure  42,738   9.9   38,010   9.2   2,645 0.5 1,771 0.3 
Investment Funds & Vehicles  41,385 7.8  39,284 7.2 
Media: Advertising, Printing & Publishing  13,356   3.1   11,742   2.8   16,101 3.0 31,553 5.8 
Media: Broadcasting & Subscription  16,466   3.8   18,046   4.4   2,380 0.5 2,227 0.4 
Media: Diversified & Production  5,006   1.2   4,938   1.2   18,499 3.5  6,811 1.2 
Metals & Mining  —   —   5,268   1.3 
Retail  40,740   9.5   38,147   9.2   19,772 3.7 18,443 3.4 
Services: Business  27,264   6.3   40,164   9.7   65,007 12.3 78,584 14.4 
Services: Consumer  21,170   4.9   24,807   6.0   27,974 5.3 25,306 4.6 
Telecommunications  3,333   0.8   3,430   0.8   4,505 0.9 1,100 0.2 
Utilities: Electric  2,801   0.6   2,999   0.7 
Wholesale  17,015   3.9   4,500   1.1    14,860  2.8  11,390  2.1 
Total $431,097   100.0% $412,920   100.0% $529,989 100.0% $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.

39

 

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 June 30, 2021 (in thousands):

Investment Performance Risk Rating Investments at
Fair Value		  Percentage of
Total Investments		 
1 $1,592   0.3%
2  398,344   75.1 
3  101,588   19.2 
4  22,304   4.2 
5  6,161   1.2 
Total $529,989   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 June 30, 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 $26.5 million in fair value, or 5.0% 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.

40

 

Results of Operations

 

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

 

 Three months ended September 30,  Three months ended June 30, 
 2017  2016  2021 2020 
Total investment income $13,469  $11,128  $12,364 $20,642 
Total expenses  6,582   5,545 
Total expenses, net of incentive fee waiver  7,054  7,879 
Net investment income before income taxes 5,310 12,763 
Income taxes, including excise taxes  153  127 
Net investment income  6,887   5,583  5,157 12,636 
Net realized gain (loss) on investments  (2,900)  —   909 2,461 
Net realized gain (loss) on secured borrowings  —   — 
Net realized gain (loss) on foreign currency forward contracts (37) 22 
Net realized gain (loss) on foreign currency and other transactions  —  (1)
Net realized gain (loss) 872 2,482 
Net change in unrealized gain (loss) on investments  2,398   (1,848) 5,266 (892)
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 112 (24) 
Net change in unrealized gain (loss) on foreign currency and other transactions  (77)  32 
Net change in unrealized gain (loss)  5,301  (884)
Net increase (decrease) in net assets resulting from operations $6,318  $3,612  $11,330 $14,234 

 

 Nine months ended September 30,  Six months ended June 30, 
 2017  2016  2021 2020(1) 
Total investment income $37,743  $33,785  $25,577 $35,644 
Total expenses, net of incentive fee waiver  18,734   16,656   14,911  16,079 
Net investment income before income taxes 10,666 19,565 
Income taxes, including excise taxes  183  147 
Net investment income  19,009   17,129  10,483 19,418 
Net realized gain (loss) on investments  (572)  587  717 2,555 
Net realized gain (loss) on secured borrowings  66   — 
Net realized gain (loss) on extinguishment of debt (2,774) — 
Net realized gain (loss) on foreign currency forward contracts (75)  18 
Net realized gain (loss) on foreign currency and other transactions  (14)  (16)
Net realized gain (loss) (2,146)  2,557 
Net change in unrealized gain (loss) on investments  (8,503)  (847)  9,888  (46,041)
Net change in unrealized gain (loss) on secured borrowings  (6)  (36)
Net change in unrealized gain (loss) on foreign currency borrowings  (83)  — 
Net change in unrealized gain (loss) on foreign currency forward contracts 446 74 
Net change in unrealized gain (loss) on foreign currency and other transactions  (286)  1,376 
Net change in unrealized gain (loss)  10,048  (44,591)
Net increase (decrease) in net assets resulting from operations $9,911  $16,833  $18,385 $(22,616)

(1)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. Our share of the net proceeds from the award exceeded the contractual obligations due to us as a result of our right to receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the Estate. In June 2020, we received $33.1 million as an initial payment of proceeds from the legal proceedings from the Estate, of which $19.5 million was recorded as a reduction in the cost basis of our investment in Rockdale Blackhawk, LLC (“Rockdale”), $3.9 million was recorded as the collection of previously accrued interest, $7.4 million was recorded as investment income for previously unaccrued interest and fees and $2.3 million was recorded as realized gains. Additionally, as an offset, we recorded net change in unrealized (loss) of ($8.2) million primarily as a result of the reversal associated with the collection of proceeds from the Estate. Total net income associated with our investment in Rockdale was $1.5 million during the three months ended June 30, 2020. As of June 30, 2021, we have a remaining investment in Rockdale associated with residual proceeds currently expected from the Estate of $1.6 million.

 

Investment Income

 

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

 

 Three months ended September 30,  Three months ended June 30, 
 2017  2016  2021 2020 
Interest income $11,511  $8,914  $8,500 $13,531 
Dividend income  251   1,384 
PIK interest income 1,734 2,464 
Dividend income (1) 1,149 849 
Fee income  661   220  300 2,823 
Prepayment gain (loss)  514   227  416 639 
Accretion of discounts and amortization of premium  532   383   265  336 
Total investment income $13,469  $11,128  $12,364 $20,642 

 

 Nine months ended September 30,  Six months ended June 30, 
 2017  2016  2021 2020 
Interest income $32,600  $26,448  $17,461 $25,510 
Dividend income  751   4,297 
PIK interest income 3,413 3,540 
Dividend income (2) 2,411 2,040 
Fee income  1,626   1,067  777 3,021 
Prepayment gain (loss)  1,488   836  898 853 
Accretion of discounts and amortization of premium  1,278   1,137   617  680 
Total investment income $37,743  $33,785  $25,577 $35,644 

 

(1)Includes PIK dividends of $72 and ($51), respectively.
(2)Includes PIK dividends of $134 and ($10), respectively.


The increasedecrease in investment income of $2.3$8.3 million and $4.0$10.1 million during the three and ninesix months ended SeptemberJune 30, 2017,2021 as compared to the three and ninesix months ended SeptemberJune 30, 2016,2020 is primarily the result of the inclusion of $7.4 million of previously unrecorded interest and fee income associated with our investment in Rockdale during the three and six months ended June 30, 2020 and a decrease in interest income due to increasesa decrease in average outstanding loan balances and increases 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 to the prior year periods, is driven by decreases in dividend income from our investment in Rockdale Blackhawk, LLC (“Rockdale”) of $1.1 million 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.balances.

41

 

Operating Expenses

 

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

 

 Three months ended September 30,  Three months ended June 30, 
 2017  2016  2021 2020 
Interest and other debt financing expenses $1,907  $1,523  $3,842 $4,555 
Base management fees  1,953   1,594  2,327 2,434 
Incentive fees  1,721   1,223 
Incentive fees, net of incentive fee waiver (1) — — 
Professional fees  277   237  240 322 
Administrative service fees  295   324  337 314 
General and administrative expenses  292   265  269 214 
Excise taxes  100   342 
Directors’ fees  37   37   39  40 
Total expenses $6,582  $5,545 
Total expenses, net of incentive fee waiver $7,054 $7,879 

 

 Nine months ended September 30,  Six months ended June 30, 
 2017  2016  2021 2020 
Interest and other debt financing expenses $6,101  $4,987  $8,295 $9,385 
Base management fees  5,661   4,598  4,661 4,985 
Incentive fees, net of incentive fee waiver(1)  4,221   4,282  193 — 
Professional fees  854   682  466 537 
Administrative service fees  926   956  693 652 
General and administrative expenses  760   611  529 445 
Excise taxes  100   429 
Directors’ fees  111   111   74  75 
Total expenses, net of incentive fee waiver $18,734  $16,656  $14,911 $16,079 

(1)During the three and six months ended June 30, 2021, MC Advisors waived part one incentive fees (based on net investment income) of $420 and $1,057, respectively, and incentive fees were not subject to the Incentive Fee Limitation. During the three and six months ended June 30, 2020, no incentive fees were waived as incentive fees were fully limited by $2,527 and $3,883, 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 
  Three months ended June 30, 
  2021  2020 
Interest expense - revolving credit facility $1,051  $1,488 
Interest expense - 2023 Notes  —   1,567 
Interest expense - 2026 Notes  1,544   — 
Interest expense - SBA debentures  710   980 
Amortization of deferred financing costs  537   520 
Total interest and other debt financing expenses $3,842  $4,555 
Average debt outstanding $320,074  $402,279 
Average stated interest rate  4.1%  4.0%

 

  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 
  Six months ended June 30, 
  2021  2020 
Interest expense - revolving credit facility $2,056  $3,286 
Interest expense - 2023 Notes  837   3,134 
Interest expense - 2026 Notes  2,676   — 
Interest expense - SBA debentures  1,588   1,961 
Amortization of deferred financing costs  1,138   1,004 
Total interest and other debt financing expenses $8,295  $9,385 
Average debt outstanding $333,291  $401,366 
Average stated interest rate  4.3%  4.2%

 


The increasedecrease in expenses of $1.0$0.8 million and $1.2 million during the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, is primarily the result of a decrease in interest expense due to lower average debt outstanding (including our repayment of $28.1 million in SBA debentures during the three months ended September 30, 2017, as compared toMarch 31, 2021). Additionally, the refinance of our 5.75% 2023 Notes with the 4.75% 2026 Notes during the three months ended September 30, 2016, is primarily due to an increase in base management fees and part one incentive fees (based on net investment income) dueMarch 31, 2021 contributed to the growth in invested assets and an increasedecline in interest expense primarilyexpense.

Income Taxes, Including Excise Taxes

We have elected to be 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 tax treatment available to RICs. To maintain qualification as a 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 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 both of the three and six months ended SeptemberJune 30, 2017 as compared to2021, we recorded a net expense on the consolidated statements of operations of $0.2 million for U.S. federal excise tax. For both of the three and six months ended SeptemberJune 30, 2016. For2020, we recorded a net expense on the three months ended September 30, 2017 and 2016, no incentive fees were waived.consolidated statements of operations of $0.1 million 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 and six months ended SeptemberJune 30, 2017, as compared to2021, we recorded a net tax expense of zero on the nineconsolidated statements of operations for these subsidiaries. For both the three and six months ended SeptemberJune 30, 2016, is primarily due to an increase in base management fees due to2020, we recorded a net tax expense of $2 thousand on 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.

42

 

Net Realized Gain (Loss) on Investments and Secured Borrowings

 

During the three months ended SeptemberJune 30, 20172021 and 2016,2020, we had sales or dispositions of investments of $12.5$3.9 million and zero$0.2 million, respectively, resulting in ($2.9)$0.9 million and zero of net realized gains (losses), respectively. The net realized losses 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$2.5 million of net realized gains (losses),gain (loss) on investments, respectively. During the six months ended June 30, 2021 and 2020, we had sales or dispositions of investments of $12.4 million and $13.3 million, respectively, resulting in $0.7 million and $2.6 million of net realized gain (loss) on investments, respectively. During the three and six months ended June 30, 2020, $2.3 million of the net realized gain was attributable to our investment in Rockdale.

 

During the three and six months ended SeptemberJune 30, 20172021, we recognized a net loss on extinguishment of debt of zero and 2016,$2.8 million, which was due to our $109.0 million repayment of the 2023 Notes on February 18, 2021 and repayment of the $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 June 30, 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($37) thousand and zero$22 thousand of net realized gains,gain (loss) on foreign currency forward contracts, respectively. During the six months ended June 30, 2021 and 2020, we had ($0.1) million and $18 thousand of net realized gain (loss) on foreign currency forward contracts, respectively. During the three months ended June 30, 2021 and 2020, we had zero and ($1) thousand of net realized gain (loss) on foreign currency and other transactions, respectively. During the six months ended June 30, 2021 and 2020, we had ($14) thousand and ($16) 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 SeptemberJune 30, 20172021 and 2016,2020, our investments had $2.4$5.3 million and ($1.8) million of net change in unrealized gain (loss), respectively. During the three months ended September 30, 2017, the net change in unrealized gains on the portfolio included the reversal of a mark-to-market loss on Fabco. The sale of our investment in Fabco during the three months ended September 30, 2017 occurred at a value above the most recent fair market value. For the three months ended September 30, 2017 and 2016, our secured borrowings had zero and ($0.1) million of net change in unrealized gain (loss), respectively. For the three months ended September 30, 2017 and 2016, our foreign currency borrowings 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) million and ($0.8)0.9) million of net change in unrealized gain (loss), respectively. The net change in unrealized gain (loss) includes both unrealized gain on investments in our portfolio with mark-to-market gains during the periods and unrealized loss on investments in our portfolio with mark-to-market losses during the nineperiods. For the three months ended SeptemberJune 30, 2017 was primarily attributable to mark-to-market losses on2021 and 2020, our common equity investment in Rockdaleforeign currency forward contracts had $0.1 million 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)24) thousand of net change in unrealized gain (loss), respectively. For the ninethree months ended SeptemberJune 30, 20172021 and 2016,2020, our foreign currency borrowings and cash denominated in foreign currencies had ($83)0.1) million and $32 thousand and zero of net change in unrealized gain (loss), respectively.

We estimate approximately $4.3 million of the net unrealized gains on investments during the three months ended June 30, 2021 was attributable to portfolio companies that have underlying credit or fundamental performance concerns resulting in a risk rating of Grade 3, 4 or 5 on our investment performance risk rating scale. Additionally, $0.9 million in net unrealized gain on investments was attributable to broad market movements or improvements in fundamental performance on the remainder of the portfolio. Approximately $0.6 million of these net unrealized gains were attributable to investments held in the portfolio directly, while approximately $0.3 million of these gains were attributable to our investment in SLF. The fair value of our portfolio investments may be further negatively impacted after June 30, 2021 by circumstances and events that are not yet known.


We estimate that during the three months ended June 30, 2020, we recorded net unrealized gains of $9.6 million attributable to broad market movements and tightening of credit spreads, of which $4.2 million was attributable to our investment in the SLF. These increases in value were offset by ($2.3) million in unrealized losses attributable to specific credit or fundamental performance of certain underlying portfolio companies, a significant portion of which is a result of the impact of the COVID-19 pandemic on individual credit performance, and ($8.2) million of net change in unrealized (loss) as a result of the reversal of previously recorded unrealized gains associated with the collection of proceeds from Rockdale.

For the six months ended June 30, 2021 and 2020, our investments had $9.9 million and ($46.0) million of net change in unrealized gain (loss), respectively. For the six months ended June 30, 2021 and 2020, our foreign currency forward contracts had $0.4 million and $0.1 million of net change in unrealized gain (loss), respectively. For the six months ended June 30, 2021 and 2020, our foreign currency borrowings and cash denominated in foreign currencies had ($0.3) million and $1.4 million of net change in unrealized gain (loss), respectively.

We estimate approximately $6.0 million of the net unrealized gain on investments during the six months ended June 30, 2021 was attributable to broad market movements and tightening of credit spreads in the loan markets. Approximately $3.9 million of these net unrealized gains were attributable to investments held in the portfolio directly, while approximately $2.1 million of these gains were attributable to our investment in SLF. Additionally, $3.8 million in net unrealized gain on investments was attributable to portfolio companies that have underlying credit or fundamental performance concerns resulting in a risk rating of Grade 3, 4 or 5 on our investment performance risk rating scale.

We estimate that during the six months ended June 30, 2020, we recorded net unrealized losses of ($15.9) million attributable to broad market movements and widening of credit spreads, of which ($6.9) million was attributable to our investment in the 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 than the rest of the portfolio. Additionally, we estimate approximately ($21.9) million of the net unrealized losses 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. We also recorded ($8.2) million of net change in unrealized (loss) as a result of the reversal of previously recorded unrealized gains associated with the collection of proceeds from Rockdale.

 

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended SeptemberJune 30, 20172021 and 2016,2020, the net increase (decrease) in net assets resulting from operations was $6.3$11.3 million and $3.6$14.2 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended SeptemberJune 30, 20172021 and 2016,2020, our per share net increase (decrease) in net assets resulting from operations was $0.31$0.53 and $0.23,$0.69, respectively. The $2.7 million increase during the three months ended September 30, 2017, as compared to three months ended September 30, 2016, 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, 2017 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 ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, the net increase (decrease) in net assets resulting from operations was $9.9$18.4 million and $16.8($22.6) million, respectively. Based on the weighted average shares of common stock outstanding for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, our per share net increase (decrease) in net assets resulting from operations was $0.55$0.86 and $1.21,($1.10), respectively. The $6.9$41.0 million decreaseincrease during the ninesix months ended SeptemberJune 30, 2017,2021 as compared to ninethe six months ended SeptemberJune 30, 2016,2020, is primarily the result of an increase in net unrealized mark-to-market lossesgains on investments in the portfolio during the ninesix months ended SeptemberJune 30, 20172021, as compared to the ninesix months ended SeptemberJune 30, 2016, partially offset by an increase2020, where investments in the portfolio experienced significant net investment income overunrealized mark to mark-to-market losses, primarily as a result of market volatility and deterioration of fundamental performance on certain portfolio companies related to the same period.COVID-19 pandemic.

 

Liquidity and Capital Resources

 

As of SeptemberJune 30, 2017,2021, we had $3.7$21.1 million in cash, $5.7$29.5 million in cash at MRCC SBIC, $60.6$126.7 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$128.3 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 June 30, 2021 and December 31, 2020, our asset coverage ratio based on aggregate borrowings outstanding was 195% and 200%, respectively.

Cash Flows

 

For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, we experienced a net increase (decrease) in cash and restricted cash of $1.1$18.3 million and ($5.7)8.8) million, respectively. For the ninesix months ended SeptemberJune 30, 2017,2021 and 2020, operating activities used $1.2provided $37.6 million and $31.2 million, respectively, primarily as a result of purchasesprincipal repayments on and sales of portfolio investments, 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 ninesix months ended SeptemberJune 30, 2017,2021, we generated $2.3used $19.3 million fromin financing activities, primarily as a result of net proceeds from capital raisesrepayments on our 2023 Notes and SBA debenture borrowings during the period,debentures and distributions to stockholders, partially offset by net proceeds from our 2026 Notes (net of deferred financing cost payments). During the six months ended June 30, 2020, we used $40.0 million in financing activities, primarily as a result of net repayments on our revolving credit facility and 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,stockholders, partially offset by net repayments on our revolving credit facility and distributions to stockholders.proceeds from shares issued under the at-the-market (“ATM”) securities offering program.

 

43

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 16, 2021, our stockholders 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. On July 21, 2017 our stockholders once again 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. As of SeptemberJune 30, 20172021 and December 31, 2016,2020, we had 20,239,95721,543,540 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.unchanged. During the ninesix months ended SeptemberJune 30, 2017,2021, we sold 173,939240,000 shares at an average price of $15.71$11.43 per share for gross proceeds of $2.7 million under the Prior ATM Program and no shares were sold under the ATM Program.program. Aggregate underwriters’underwriter’s discounts and commissions were $41 thousand and offering costs were $23$12 thousand, resulting in net proceeds of approximately $2.7 million. There were no stock issuancesDuring the six months ended June 30, 2020, we sold 825,460 shares at an average price of $7.81 per share for gross proceeds of $6.5 million under the Prior ATM Program during the nine months ended September 30, 2016.

 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.program. Aggregate underwriters’underwriter’s discounts and commissions were $2.1$0.1 million and offering costs were $0.1 million, resulting in net proceeds of approximately $49.6$6.3 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 June 30, 2021, we had U.S. dollar borrowings of $104.4 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £16.1 million ($22.3 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 ($0.1) million and ($0.3) million for the three and six months ended June 30, 2021, and $30 thousand and $1.4 million for the three and six months ended June 30, 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 June 30, 2021 and December 31, 2020, the outstanding borrowings were accruing at a weighted average interest rate of 3.4% 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.

 

SBA regulations currently limit the amount that an individual SBIC may borrow to a maximum of $150.0 million when it has at least $75.0On March 1, 2021, we repaid $28.1 million in regulatory capital, receives a leverage commitment fromaggregate principal amount of the SBA and has been through an audit examination by the SBA subsequent to licensing.debentures. The SBA also historically limited a related group of SBICs (commonly referred torepayment was accounted for as a “familydebt extinguishment in accordance with ASC 470-50, which resulted in a realized loss of funds”) to a maximum$0.5 million (primarily comprised of $225.0the 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 June 30, 2021, MRCC SBIC had $29.5 million in total borrowings. On December 18, 2015, this family of funds limitation was raised to $350.0cash and $101.3 million in total borrowings.investments at fair value. As we have other affiliated SBICs already in operation,of December 31, 2020, MRCC SBIC was historically limited to a maximum of $40.0had $25.7 million in borrowings. Pursuant to the increase in the family of funds limitation, we submitted a commitment application to the SBAcash and on April 13, 2016 we were approved for $75.0$131.2 million in additional SBA-guaranteed debentures for MRCC SBIC for a total of $115.0 million in available debentures.investments at fair value.

 

As of SeptemberJune 30, 2017,2021 and December 31, 2020, 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):outstanding:

 

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  Interest Rate June 30, 2021 December 31, 2020 
September 2024  3.4% $12,920   3.4% $12,920 $12,920 
March 2025  3.3%  14,800  3.3% 14,800 14,800 
March 2025  2.9%  7,080  2.9% 7,080 7,080 
September 2025  3.6%  5,200  3.6% — 5,200 
March 2027  2.1%(1)  9,200  3.5% 20,000 20,000 
March 2027  2.0%(1)  2,300 
September 2027 3.2% 32,100 32,100 
March 2028 3.9% — 18,520 
September 2028  4.2%  —  4,380 
Total     $51,500    $86,900 $115,000 

 


(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 ninesix months ended SeptemberJune 30, 2017,2021, totaled $7.1$5.4 million ($0.350.25 per share) and $20.0$10.7 million ($1.050.50 per share), respectively. Distributions to stockholders for the three and ninesix months ended SeptemberJune 30, 20162020, totaled $5.8$5.3 million ($0.350.25 per share) and $14.8$12.4 million ($1.050.60 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 SeptemberJune 30, 20172021 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 June 30, 2021 and December 31, 2020, we and LSW each owned 50.0% of the LLC equity interests of SLF. As of both June 30, 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 June 30, 2021 and December 31, 2020, we have committed to fund $50.0 million of LLC equity interest subscriptions to SLF. As of both June 30, 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 the three and six months ended June 30, 2021, we received $1.1 million and $2.3 million of dividend income from our LLC equity interest in SLF, respectively. For the three and six months ended June 30, 2020, we received $0.9 million and $2.1 million of dividend income from our 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 June 30, 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 and six months ended June 30, 2021, SLF incurred $50 thousand and $0.1 million of allocable expenses, respectively. For the three and six months ended June 30, 2020, SLF incurred $50 thousand and $0.1 million, respectively, of allocable expenses. There are no agreements or understandings by which we guarantee any SLF obligations.

As of June 30, 2021 and December 31, 2020, SLF had total assets at fair value of $199.8 million and $209.7 million, respectively. As of June 30, 2021 and December 31, 2020, SLF had one portfolio company investment on non-accrual status with a fair value of $1.1 million and $1.0 million, respectively. The portfolio companies in SLF are in industries and geographies similar to those in which we may invest directly. Additionally, as of June 30, 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 June 30, 2021 and December 31, 2020:

  As of 
  June 30, 2021  December 31, 2020 
Senior secured loans (1)  200,376   214,389 
Weighted average current interest rate on senior secured loans (2)  5.9%  5.8%
Number of borrowers in SLF  54   57 
Largest portfolio company investment (1)  6,755   6,790 
Total of five largest portfolio company investments (1)  26,982   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.


MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

June 30, 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   2,758  $2,701 
Bromford Industries Limited (c)  L+5.25%   6.25%  11/5/2025   1,839   1,801 
Trident Maritime SH, Inc.  L+5.50%   6.50%  2/26/2027   2,479   2,474 
Trident Maritime SH, Inc. (Revolver) (d)  L+5.50%   6.50%  2/26/2027   265   41 
               7,341   7,017 
Automotive                    
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   1,717   1,717 
Truck-Lite Co., LLC  L+6.25%   7.25%  12/14/2026   254   254 
Wheel Pros, Inc.  L+4.50%   5.25%  5/11/2028   1,957   1,957 
               3,928   3,928 
Banking, Finance, Insurance & Real Estate                    
Avison Young (USA), Inc. (c)  L+6.00%   6.15%  1/30/2026   4,875   4,826 
Harbour Benefit Holdings, Inc.  L+5.25%   6.25%  12/13/2024   4,629   4,566 
Harbour Benefit Holdings, Inc.  L+5.25%   6.25%  12/13/2024   103   102 
Lightbox Intermediate, L.P.  L+5.00%   5.15%  5/11/2026   4,900   4,875 
Minotaur Acquisition, Inc.  L+4.75%   4.85%  3/27/2026   2,933   2,936 
               17,440   17,305 
Beverage, Food & Tobacco                    
CBC Restaurant Corp. (f)  n/a   5.00% PIK(e)   12/30/2022   1,116   1,050 
SW Ingredients Holdings, LLC  L+4.00%   5.00%  7/3/2025   3,638   3,634 
               4,754   4,684 
Capital Equipment                    
Analogic Corporation  L+5.25%   6.25%  6/24/2024   4,776   4,667 
               4,776   4,667 
Chemicals, Plastics & Rubber                    
Polymer Solutions Group  L+7.00%   8.00%  1/1/2023   1,197   1,179 
               1,197   1,179 
Construction & Building                    
The Cook & Boardman Group, LLC  L+5.75%   6.75%  10/20/2025   2,925   2,859 
               2,925   2,859 
Consumer Goods: Durable                    
International Textile Group, Inc.  L+5.00%   5.26%  5/1/2024   1,734   1,677 
               1,734   1,677 
Consumer Goods: Non-Durable                    
PH Beauty Holdings III, Inc.  L+5.00%   5.14%  9/26/2025   2,430   2,330 
               2,430   2,330 
Containers, Packaging & Glass                    
Liqui-Box Holdings, Inc.  L+4.50%   5.50%  2/26/2027   4,290   4,125 
Polychem Acquisition, LLC  L+5.00%   5.50%  3/17/2025   2,933   2,933 
Port Townsend Holdings Company, Inc.  L+6.75%   5.75% Cash/
2.00% PIK		   4/3/2024   4,740   4,313 
PVHC Holding Corp.  L+4.75%   5.75%  8/5/2024   3,234   2,943 
               15,197   14,314 
Energy: Oil & Gas                    
Drilling Info Holdings, Inc.  L+4.25%   4.35%  7/30/2025   4,539   4,483 
Offen, Inc.  L+5.00%   5.10%  6/22/2026   2,400   2,400 
Offen, Inc.  L+5.00%   5.10%  6/22/2026   881   881 
               7,820   7,764 
Healthcare & Pharmaceuticals                    
LSCS Holdings, Inc.  L+4.25%   4.42%  3/17/2025   2,287   2,264 
LSCS Holdings, Inc.  L+4.25%   4.42%  3/17/2025   590   584 
Radiology Partners, Inc.  L+4.25%   4.32%  7/9/2025   4,760   4,764 
               7,637   7,612 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS - (continued)

(unaudited)

June 30, 2021

(in thousands)

Portfolio Company (a)  Spread Above
Index (b)		  Interest Rate (b)  Maturity  Principal  Fair Value 
High Tech Industries                    
Corel, Inc. (c)  L+5.00%   5.14%  7/2/2026   3,850   $3,857 
LW Buyer, LLC  L+5.00%   5.15%  12/30/2024   4,900   4,876 
TGG TS Acquisition Company  L+6.50%   6.60%  12/12/2025   3,557   3,569 
               12,307   12,302 
Hotels, Gaming & Leisure                    
Excel Fitness Holdings, Inc.  L+5.25%   6.25%  10/7/2025   4,186   4,083 
North Haven Spartan US Holdco, LLC  L+5.00%   6.00%  6/6/2025   2,309   2,041 
Tait, LLC  L+5.00%   5.20%  3/28/2025   4,146   3,723 
Tait, LLC (Revolver)  P+4.00%   7.25%  3/28/2025   769   723 
               11,410   10,570 
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   4,340   4,340 
Monotype Imaging Holdings, Inc.  L+5.50%   6.50%  10/9/2026   4,844   4,837 
               14,079   13,893 
Media: Diversified & Production                    
Research Now Group, Inc. and Survey Sampling International, LLC  L+5.50%   6.50%  12/20/2024   6,755   6,693 
Stats Intermediate Holding, LLC  L+5.25%   5.41%  7/10/2026   4,925   4,941 
The Octave Music Group, Inc.  L+6.00%   6.25% Cash/
0.75% PIK		   5/29/2025   4,828   4,725 
               16,508   16,359 
Services: Business                    
AQ Carver Buyer, Inc.  L+5.00%   6.00%  9/23/2025   4,913   4,906 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   1,992   1,892 
CHA Holdings, Inc.  L+4.50%   5.50%  4/10/2025   420   399 
Eliassen Group, LLC  L+4.25%   4.35%  11/5/2024   3,009   3,000 
Engage2Excel, Inc.  L+7.25%   7.00% Cash/ 1.25% PIK   3/7/2023   4,316   4,348 
Engage2Excel, Inc.  L+7.25%   7.00% Cash/ 1.25% PIK   3/7/2023   779   784 
Engage2Excel, Inc. (Revolver) (d)  L+7.25%   7.00% Cash/ 1.25% PIK   3/7/2023   552   379 
Legility, LLC  L+6.00%   7.00%  12/17/2025   4,838   4,753 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   2,444   2,425 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   1,887   1,873 
Orbit Purchaser, LLC  L+4.50%   5.50%  10/21/2024   552   548 
Output Services Group, Inc.  L+4.50%   5.50%  3/27/2024   4,840   4,217 
SIRVA Worldwide, Inc.  L+5.50%   5.60%  8/4/2025   1,875   1,771 
Teneo Holdings, LLC  L+5.25%   6.25%  7/11/2025   4,913   4,876 
The Kleinfelder Group, Inc.  L+5.25%   6.25%  11/29/2024   2,438   2,438 
               39,768   38,609 
Services: Consumer                    
Cambium Learning Group, Inc.  L+4.50%   5.25%  12/18/2025   4,503   4,534 
LegalZoom.com, Inc.  L+4.50%   4.60%  11/21/2024   2,681   2,681 
               7,184   7,215 
Telecommunications                    
Intermedia Holdings, Inc.  L+6.00%   7.00%  7/21/2025   1,788   1,787 
Mavenir Systems, Inc.  L+6.00%   7.00%  5/8/2025   3,880   3,892 
               5,668   5,679 
Transportation: Cargo                    
GlobalTranz Enterprises, LLC  L+5.00%   5.10%  5/15/2026   3,246   3,232 
               3,246   3,232 
Utilities: Oil & Gas                    
NGS US Finco, LLC  L+4.25%   5.25%  10/1/2025   1,704   1,653 
NGS US Finco, LLC  L+5.25%   6.25%  10/1/2025   249   245 
               1,953   1,898 
Wholesale                    
BMC Acquisition, Inc.  L+5.25%   6.25%  12/30/2024   4,825   4,823 
HALO Buyer, Inc.  L+4.50%   5.50%  6/30/2025   4,849   4,674 
PT Intermediate Holdings III, LLC  L+5.50%   6.50%  10/15/2025   1,970   1,953 
               11,644   11,450 
                     
TOTAL INVESTMENTS                 $196,543 

(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 Rate (“Prime” or “P”) which reset daily, monthly, quarterly or semiannually. We have provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at June 30, 2021. Certain investments are subject to a LIBOR or Prime interest rate floor.
(c)This is an international company.
(d)All or a portion of this commitment was unfunded as of June 30, 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 June 30, 2021, meaning that we have ceased accruing interest income on the position.
(f)A portion of this loan (principal of $115) is held at the SLF, not at the SLF SPV, and is therefore not collateral to the SLF Credit Facility.


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, Inc.  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 
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 June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020 (in thousands):

  June 30, 2021  December 31, 2020 
  (unaudited)    
Assets        
Investments, at fair value $196,543  $205,695 
Cash  39   351 
Restricted cash  2,619   2,948 
Interest receivable  528   629 
Other assets  37   43 
Total assets $199,766  $209,666 
Liabilities        
Revolving credit facility $117,815  $131,497 
Less: Unamortized deferred financing costs  (1,372)  (969)
Total debt, less unamortized deferred financing costs  116,443   130,528 
Interest payable  262   294 
Accounts payable and accrued expenses  292   277 
Total liabilities  116,997   131,099 
Members’ capital  82,769   78,567 
Total liabilities and members’ capital $199,766  $209,666 

  Three months ended June 30,  Six months ended June 30, 
  2021  2020  2021  2020 
  (unaudited)  (unaudited) 
Investment income:                
Interest income $3,210  $4,011  $6,663  $8,264 
Total investment income  3,210   4,011   6,663   8,264 
Expenses:                
Interest and other debt financing expenses  1,024   1,488   2,003   3,102 
Professional fees  162   164   332   348 
Total expenses  1,186   1,652   2,335   3,450 
Net investment income (loss)  2,024   2,359   4,328   4,814 
Net gain (loss):                
Net change in unrealized gain (loss)  761   7,901   4,424   (14,428)
Net gain (loss)  761   7,901   4,424   (14,428)
Net increase (decrease) in members’ capital $2,785  $10,260  $8,752  $(9,614)

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 SeptemberJune 30, 20172021 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 $48.2 million and $52.3 million, respectively. As of both June 30, 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. 

47

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.

48

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.


 

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 June 30, 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 and six months ended SeptemberJune 30, 2017,2021 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.

49

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 six months ended June 30, 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. 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. 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 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 SeptemberJune 30, 2017 were2021 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) $—  $(56) $56 
Up 100 basis points  3,851   606   3,245   507   839   (332)
Up 200 basis points  7,907   1,212   6,695   4,591   2,106   2,485 
Up 300 basis points  11,964   1,818   10,146   8,886   3,373   5,513 

 

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.

 

50

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 generallymay borrow in Great Britain poundsforeign currency under our revolving credit facility to finance such investments.investments or we may enter into foreign currency forward contracts. As of SeptemberJune 30, 2017,2021, we have non-U.S. dollar borrowings denominated in Great Britain pounds of £1.8£16.1 million ($2.422.3 million U.S. dollars) outstanding under the revolving credit facility. As of June 30, 2021, we had foreign currency forward contracts in place for £1.3 million and AUD 20.0 million associated with future principal and 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 SeptemberJune 30, 20172021 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 June 30, 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 June 30, 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 certain of our investments as of June 30, 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 June 30, 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 June 30, 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 June 30, 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 partially 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.

  

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.

 

51


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)
   
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)

 

52


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, 2017August 3, 2021By/s/ Theodore L. Koenig
  

Theodore L. Koenig

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

  Monroe Capital Corporation
   
Date: November 7, 2017August 3, 2021By/s/ Aaron D. Peck
  

Aaron D. Peck

Chief Financial Officer, Chief Investment Officer and Director

(Principal Financial and Accounting Officer)

Monroe Capital Corporation

 

53