UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO |
☒
FS Investment CorporationKKR Capital Corp. II
(Exact name of registrant as specified in its charter)
80-0741103 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
201 Rouse Boulevard | |||||
19112 | |||||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:(215) 495-1150
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 ☒ 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 ofRegulation 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 ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”company” and “emerging growth company” inRule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | Smaller reporting company | ☐ | |||||||||
Emerging growth company | ☐ |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☑
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||
N/A | N/A |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The issuer had 327,309,962684,810,154 shares of common stock outstanding as of August 9, 2019.May 8, 2020.
TABLE OF CONTENTS
Page | ||||||||||||
PART I—FINANCIAL INFORMATION | ||||||||||||
ITEM 1. | ||||||||||||
Consolidated Balance Sheets as of | ||||||||||||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | ||||||||||||
PART II—OTHER INFORMATION | ||||||||||||
PART I—FINANCIAL INFORMATION
Consolidated Balance Sheets
(in thousands,millions, except share and per share amounts)
| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||
Assets | | | | | | | | | | | | | |
Investments, at fair value | | | | | | | | | | | | | |
Non-controlled/unaffiliated investments (amortized cost—$3,924,164 and $4,312,105, respectively) | | | | $ | 3,786,451 | | | | | $ | 4,131,877 | | |
Non-controlled/affiliated investments (amortized cost—$266,434 and $248,500, respectively) | | | | | 254,258 | | | | | | 227,403 | | |
Total investments, at fair value (amortized cost—$4,190,598 and $4,560,605, respectively) | | | | | 4,040,709 | | | | | | 4,359,280 | | |
Cash | | | | | 257,702 | | | | | | 148,172 | | |
Restricted cash | | | | | 33,216 | | | | | | — | | |
Foreign currency, at fair value (cost – $11,640 and $2,264, respectively) | | | | | 11,683 | | | | | | 2,286 | | |
Collateral held at broker for open interest rate swap contracts | | | | | 13,000 | | | | | | — | | |
Receivable for investments sold and repaid | | | | | 5,948 | | | | | | 4,025 | | |
Interest receivable | | | | | 36,594 | | | | | | 34,221 | | |
Deferred financing costs | | | | | 7,284 | | | | | | 6,000 | | |
Receivable on interest rate swaps | | | | | 1,267 | | | | | | 173 | | |
Prepaid expenses and other assets | | | | | 292 | | | | | | 97 | | |
Total assets | | | | $ | 4,407,695 | | | | | $ | 4,554,254 | | |
Liabilities | | | | | | | | | | | | | |
Payable for investments purchased | | | | $ | 34,650 | | | | | $ | 42,236 | | |
Credit facilities payable (net of deferred financing costs of $2,203 and $3,122, respectively)(1) | | | | | 1,746,553 | | | | | | 1,887,132 | | |
Stockholder distributions payable | | | | | 12,101 | | | | | | 11,688 | | |
Management fees payable | | | | | 16,982 | | | | | | 17,256 | | |
Subordinated income incentive fees payable(2) | | | | | 8,736 | | | | | | 5,796 | | |
Administrative services expense payable | | | | | 665 | | | | | | 365 | | |
Interest payable | | | | | 14,843 | | | | | | 16,480 | | |
Directors’ fees payable | | | | | 107 | | | | | | 243 | | |
Interest rate swap income payable | | | | | 1,289 | | | | | | 174 | | |
Unrealized depreciation on interest rate swaps | | | | | 12,396 | | | | | | 1,743 | | |
Other accrued expenses and liabilities | | | | | 1,709 | | | | | | 3,732 | | |
Total liabilities | | | | | 1,850,031 | | | | | | 1,986,845 | | |
Commitments and contingencies(3) | | | | | | | | | | | | | |
Stockholders’ equity | | | | | | | | | | | | | |
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding | | | | | — | | | | | | — | | |
Common stock, $0.001 par value, 450,000,000 shares authorized, 326,267,116 and 326,445,320 shares issued and outstanding, respectively | | | | | 326 | | | | | | 326 | | |
Capital in excess of par value | | | | | 2,989,461 | | | | | | 2,990,996 | | |
Retained earnings (accumulated deficit)(4) | | | | | (432,123) | | | | | | (423,913) | | |
Total stockholders’ equity | | | | | 2,557,664 | | | | | | 2,567,409 | | |
Total liabilities and stockholders’ equity | | | | $ | 4,407,695 | | | | | $ | 4,554,254 | | |
Net asset value per share of common stock at period end | | | | $ | 7.84 | | | | | $ | 7.86 | | |
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||
Assets | ||||||||
Investments, at fair value | ||||||||
Non-controlled/unaffiliated investments (amortized cost—$7,364 and $8,004 respectively) | $ | 6,600 | $ | 7,670 | ||||
Non-controlled/affiliated investments (amortized cost—$543 and $478, respectively) | 325 | 356 | ||||||
Controlled/affiliated investments (amortized cost—$612 and $559, respectively) | 539 | 565 | ||||||
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Total investments, at fair value (amortized cost—$8,519 and $9,041, respectively) | 7,464 | 8,591 | ||||||
Cash | 225 | 163 | ||||||
Foreign currency, at fair value (cost—$7 and $4, respectively) | 7 | 4 | ||||||
Collateral held at broker for open interest rate swap contracts | 59 | 44 | ||||||
Due from counterparty | 4 | 45 | ||||||
Receivable for investments sold and repaid | 321 | 23 | ||||||
Interest receivable | 88 | 84 | ||||||
Deferred financing costs | 11 | 12 | ||||||
Unrealized appreciation on foreign currency forward contracts | 1 | — | ||||||
Prepaid expenses and other assets | 4 | 4 | ||||||
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Total assets | $ | 8,184 | $ | 8,970 | ||||
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Liabilities | ||||||||
Payable for investments purchased | $ | 114 | $ | 37 | ||||
Debt (net of deferred financing costs of $5 and $0, respectively)(1) | 3,629 | 3,809 | ||||||
Stockholder distributions payable | 102 | — | ||||||
Management fees payable | 33 | 35 | ||||||
Subordinated income incentive fees payable(2) | 23 | 11 | ||||||
Administrative services expense payable | 3 | 3 | ||||||
Interest payable | 25 | 30 | ||||||
Unrealized depreciation on foreign currency forward contracts | — | 1 | ||||||
Unrealized depreciation on total return swap | 1 | 4 | ||||||
Unrealized depreciation on interest rate swaps | 59 | 29 | ||||||
Other accrued expenses and liabilities | 9 | 15 | ||||||
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Total liabilities | 3,998 | 3,974 | ||||||
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Commitments and contingencies(3) | ||||||||
Stockholders’ equity | ||||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding | — | — | ||||||
Common stock, $0.001 par value, 900,000,000 shares authorized, 678,379,301 and | 1 | 1 | ||||||
Capital in excess of par value | 5,794 | 5,794 | ||||||
Retained earnings (accumulated deficit)(4) | (1,609 | ) | (799 | ) | ||||
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Total stockholders’ equity | 4,186 | 4,996 | ||||||
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Total liabilities and stockholders’ equity | $ | 8,184 | $ | 8,970 | ||||
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Net asset value per share of common stock at period end | $ | 6.17 | $ | 7.36 |
(1) | See Note 9 for a discussion of the Company’s financing arrangements. |
(2) | See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees. |
(3) | See Note 10 for a discussion of the Company’s commitments and contingencies. |
(4) | See Note 5 for a discussion of the sources of distributions paid by the Company. |
See notes to unaudited consolidated financial statements.
Unaudited Consolidated Statements of Operations
(in thousands,millions, except share and per share amounts)
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Investment income | | | | | | | | | | | | | | | | | | | | | | | | | |
From non-controlled/unaffiliated investments: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income | | | | $ | 95,971 | | | | | $ | 94,377 | | | | | $ | 198,572 | | | | | $ | 189,534 | | |
Paid-in-kind interest income | | | | | 2,332 | | | | | | 1,755 | | | | | | 4,213 | | | | | | 3,976 | | |
Fee income | | | | | 6,182 | | | | | | 4,509 | | | | | | 13,226 | | | | | | 8,460 | | |
Dividend income | | | | | — | | | | | | — | | | | | | 71 | | | | | | 7,494 | | |
From non-controlled/affiliated investments: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income | | | | | 5,319 | | | | | | 6,003 | | | | | | 10,586 | | | | | | 11,002 | | |
Paid-in-kind interest income | | | | | 2,036 | | | | | | 1,458 | | | | | | 5,111 | | | | | | 4,215 | | |
Fee income | | | | | 43 | | | | | | — | | | | | | 43 | | | | | | 1,123 | | |
Total investment income | | | | | 111,883 | | | | | | 108,102 | | | | | | 231,822 | | | | | | 225,804 | | |
Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | |
Management fees(1) | | | | | 16,982 | | | | | | 18,938 | | | | | | 34,846 | | | | | | 44,172 | | |
Subordinated income incentive fees(2) | | | | | 8,736 | | | | | | 1,480 | | | | | | 19,867 | | | | | | 7,055 | | |
Administrative services expenses | | | | | 647 | | | | | | 790 | | | | | | 1,554 | | | | | | 1,572 | | |
Stock transfer agent fees | | | | | 501 | | | | | | 501 | | | | | | 1,206 | | | | | | 996 | | |
Accounting and administrative fees | | | | | 311 | | | | | | 411 | | | | | | 744 | | | | | | 832 | | |
Interest expense(3) | | | | | 25,503 | | | | | | 26,851 | | | | | | 55,078 | | | | | | 51,034 | | |
Directors’ fees | | | | | 75 | | | | | | 295 | | | | | | 217 | | | | | | 799 | | |
Other general and administrative expenses | | | | | 1,020 | | | | | | 1,051 | | | | | | 2,088 | | | | | | 2,322 | | |
Operating expenses | | | | | 53,775 | | | | | | 50,317 | | | | | | 115,600 | | | | | | 108,782 | | |
Management fee waiver(1) | | | | | — | | | | | | (278) | | | | | | — | | | | | | (3,432) | | |
Net expenses | | | | | 53,775 | | | | | | 50,039 | | | | | | 115,600 | | | | | | 105,350 | | |
Net investment income | | | | | 58,108 | | | | | | 58,063 | | | | | | 116,222 | | | | | | 120,454 | | |
Realized and unrealized gain/loss | | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized gain (loss) on investments: | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled/unaffiliated investments | | | | | (21,960) | | | | | | 15,694 | | | | | | (40,625) | | | | | | (3,600) | | |
Non-controlled/affiliated investments | | | | | 3 | | | | | | (25,709) | | | | | | 182 | | | | | | (25,709) | | |
Net realized gain (loss) on foreign currency | | | | | 112 | | | | | | (339) | | | | | | 115 | | | | | | (666) | | |
Net change in unrealized appreciation (depreciation) on investments: | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-controlled/unaffiliated investments | | | | | 5,858 | | | | | | 24,288 | | | | | | 42,515 | | | | | | (59,602) | | |
Non-controlled/affiliated investments | | | | | 9,320 | | | | | | (41,610) | | | | | | 8,921 | | | | | | (46,332) | | |
Net change in unrealized appreciation (depreciation) on interest rate swaps | | | | | (6,657) | | | | | | — | | | | | | (10,653) | | | | | | — | | |
Net change in unrealized gain (loss) on foreign currency | | | | | (1,541) | | | | | | 367 | | | | | | (2,665) | | | | | | 777 | | |
Total net realized and unrealized gain (loss) on investments | | | | | (14,865) | | | | | | (27,309) | | | | | | (2,210) | | | | | | (135,132) | | |
Net increase (decrease) in net assets resulting from operations | | | | $ | 43,243 | | | | | $ | 30,754 | | | | | $ | 114,012 | | | | | $ | (14,678) | | |
Per share information—basic and diluted | | | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations (Earnings per Share) | | | | $ | 0.13 | | | | | $ | 0.09 | | | | | $ | 0.35 | | | | | $ | (0.05) | | |
Weighted average shares outstanding | | | | | 324,242,365 | | | | | | 324,462,550 | | | | | | 324,275,540 | | | | | | 324,688,459 | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Investment income | ||||||||
Fromnon-controlled/unaffiliated investments: | ||||||||
Interest income | $ | 145 | $ | 103 | ||||
Paid-in-kind interest income | 11 | 2 | ||||||
Fee income | 15 | 7 | ||||||
Dividend income | 2 | — | ||||||
Fromnon-controlled/affiliated investments: | ||||||||
Interest income | 3 | 5 | ||||||
Paid-in-kind interest income | 3 | 3 | ||||||
Fee income | — | — | ||||||
From controlled/affiliated investments: | ||||||||
Interest income | 3 | — | ||||||
Paid-in-kind interest income | — | — | ||||||
Dividend income | 13 | — | ||||||
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Total investment income | 195 | 120 | ||||||
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Operating expenses | ||||||||
Management fees | 33 | 18 | ||||||
Subordinated income incentive fees(1) | 23 | 11 | ||||||
Administrative services expenses | 2 | 1 | ||||||
Stock transfer agent fees | 1 | 1 | ||||||
Accounting and administrative fees | 1 | 0 | ||||||
Interest expense(2) | 40 | 30 | ||||||
Other general and administrative expenses | 2 | 1 | ||||||
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Net expenses | 102 | 62 | ||||||
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Net investment income | 93 | 58 | ||||||
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See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Statements of Operations (continued)
(in millions, except share and per share amounts)
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Realized and unrealized gain/loss | ||||||||
Net realized gain (loss) on investments: | ||||||||
Non-controlled/unaffiliated investments | (217 | ) | (19 | ) | ||||
Non-controlled/affiliated investments | 0 | 0 | ||||||
Controlled/affiliated investments | — | — | ||||||
Net realized gain (loss) on total return swap | (2 | ) | — | |||||
Net realized gain (loss) on foreign currency forward contracts | 0 | — | ||||||
Net realized gain (loss) on interest rate swaps | (2 | ) | — | |||||
Net realized gain (loss) on foreign currency | 1 | 0 | ||||||
Net change in unrealized appreciation (depreciation) on investments: | ||||||||
Non-controlled/unaffiliated investments | (429 | ) | 37 | |||||
Non-controlled/affiliated investments | (96 | ) | 0 | |||||
Controlled/affiliated investments | (80 | ) | — | |||||
Net change in unrealized appreciation (depreciation) on total return swap | 3 | — | ||||||
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 2 | — | ||||||
Net change in unrealized appreciation (depreciation) on interest rate swaps | (30 | ) | (4 | ) | ||||
Net change in unrealized gain (loss) on foreign currency | 49 | (1 | ) | |||||
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Total net realized and unrealized gain (loss) on investments | (801 | ) | 13 | |||||
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Net increase (decrease) in net assets resulting from operations | $ | (708 | ) | $ | 71 | |||
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Per share information—basic and diluted | ||||||||
Net increase (decrease) in net assets resulting from operations (Earnings per Share) | $ | (1.04 | ) | $ | 0.22 | |||
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Weighted average shares outstanding | 678,379,301 | 324,309,084 | ||||||
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(1) | See Note 2 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees. |
(2) | See Note 9 for a discussion of the Company’s financing arrangements. |
See notes to unaudited consolidated financial statements.
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Operations | | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | | | $ | 58,108 | | | | | $ | 58,063 | | | | | $ | 116,222 | | | | | $ | 120,454 | | |
Net realized gain (loss) on investments and foreign currency | | | | | (21,845) | | | | | | (10,354) | | | | | | (40,328) | | | | | | (29,975) | | |
Net change in unrealized appreciation (depreciation) on investments and interest rate swaps(1) | | | | | 8,521 | | | | | | (17,322) | | | | | | 40,783 | | | | | | (105,934) | | |
Net change in unrealized gain (loss) on foreign currency | | | | | (1,541) | | | | | | 367 | | | | | | (2,665) | | | | | | 777 | | |
Net increase (decrease) in net assets resulting from operations | | | | | 43,243 | | | | | | 30,754 | | | | | | 114,012 | | | | | | (14,678) | | |
Stockholder distributions(2) | | | | | | | | | | | | | | | | | | | | | | | | | |
Distributions to stockholders | | | | | (61,108) | | | | | | (61,146) | | | | | | (122,222) | | | | | | (122,299) | | |
Net decrease in net assets resulting from stockholder distributions | | | | | (61,108) | | | | | | (61,146) | | | | | | (122,222) | | | | | | (122,299) | | |
Capital share transactions(3) | | | | | | | | | | | | | | | | | | | | | | | | | |
Reinvestment of stockholder distributions | | | | | 25,004 | | | | | | 28,022 | | | | | | 50,698 | | | | | | 56,981 | | |
Repurchases of common stock | | | | | (25,692) | | | | | | (28,960) | | | | | | (52,233) | | | | | | (58,953) | | |
Net increase (decrease) in net assets resulting from capital share transactions | | | | | (688) | | | | | | (938) | | | | | | (1,535) | | | | | | (1,972) | | |
Total increase (decrease) in net assets | | | | | (18,553) | | | | | | (31,330) | | | | | | (9,745) | | | | | | (138,949) | | |
Net assets at beginning of period | | | | | 2,576,217 | | | | | | 2,745,402 | | | | | | 2,567,409 | | | | | | 2,853,021 | | |
Net assets at end of period | | | | $ | 2,557,664 | | | | | $ | 2,714,072 | | | | | $ | 2,557,664 | | | | | $ | 2,714,072 | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Operations | ||||||||
Net investment income | $ | 93 | $ | 58 | ||||
Net realized gain (loss) on investments and foreign currency | (220 | ) | (19 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and interest rate swaps(1) | (630 | ) | 33 | |||||
Net change in unrealized gain (loss) on foreign currency | 49 | (1 | ) | |||||
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Net increase (decrease) in net assets resulting from operations | (708 | ) | 71 | |||||
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Stockholder distributions(2) | ||||||||
Distributions to stockholders | (102 | ) | (61 | ) | ||||
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Net decrease in net assets resulting from stockholder distributions | (102 | ) | (61 | ) | ||||
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Capital share transactions(3) | ||||||||
Reinvestment of stockholder distributions | — | 26 | ||||||
Repurchases of common stock | — | (27 | ) | |||||
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Net increase (decrease) in net assets resulting from capital share transactions | — | (1 | ) | |||||
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Total increase (decrease) in net assets | (810 | ) | 9 | |||||
Net assets at beginning of period | 4,996 | 2,567 | ||||||
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Net assets at end of period | $ | 4,186 | $ | 2,576 | ||||
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(1) | See Note 7 for a discussion of these financial instruments. |
(2) | See Note 5 for a discussion of the sources of distributions paid by the Company. |
(3) | See Note 3 for a discussion of the Company’s capital share transactions. |
See notes to unaudited consolidated financial statements.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
| | | Six Months Ended June 30, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | | $ | 114,012 | | | | | $ | (14,678) | | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | | | | | | | | | | | | | |
Purchases of investments | | | | | (729,410) | | | | | | (540,847) | | |
Paid-in-kind interest | | | | | (9,324) | | | | | | (8,191) | | |
Proceeds from sales and repayments of investments | | | | | 1,072,656 | | | | | | 733,671 | | |
Net realized (gain) loss on investments | | | | | 40,443 | | | | | | 29,309 | | |
Net change in unrealized (appreciation) depreciation on investments | | | | | (51,436) | | | | | | 105,934 | | |
Net change in unrealized (appreciation) depreciation on interest rate swaps | | | | | 10,653 | | | | | | — | | |
Accretion of discount | | | | | (4,358) | | | | | | (2,906) | | |
Amortization of deferred financing costs and discount | | | | | 2,009 | | | | | | 2,298 | | |
Unrealized (gain) loss on borrowings in foreign currency | | | | | 2,685 | | | | | | (287) | | |
(Increase) decrease in receivable for investments sold and repaid | | | | | (1,923) | | | | | | (26,765) | | |
(Increase) decrease in interest receivable | | | | | (2,373) | | | | | | (4,515) | | |
(Increase) decrease in receivable on interest rate swaps | | | | | (1,094) | | | | | | — | | |
(Increase) decrease in prepaid expenses and other assets | | | | | (195) | | | | | | 669 | | |
Increase (decrease) in payable for investments purchased | | | | | (7,586) | | | | | | 33,077 | | |
Increase (decrease) in management fees payable | | | | | (274) | | | | | | (3,935) | | |
Increase (decrease) in subordinated income incentive fees payable | | | | | 2,940 | | | | | | (17,649) | | |
Increase (decrease) in administrative services expense payable | | | | | 300 | | | | | | 362 | | |
Increase (decrease) in interest payable | | | | | (1,637) | | | | | | 2,928 | | |
Increase (decrease) in directors’ fees payable | | | | | (136) | | | | | | 14 | | |
Increase (decrease) in interest rate swap income payable | | | | | 1,115 | | | | | | — | | |
Increase (decrease) in other accrued expenses and liabilities | | | | | (2,023) | | | | | | (2,122) | | |
Net cash provided by (used in) operating activities | | | | | 435,044 | | | | | | 286,367 | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Repurchases of common stock | | | | | (52,233) | | | | | | (58,953) | | |
Stockholder distributions | | | | | (71,111) | | | | | | (64,758) | | |
Borrowings under credit facilities(1) | | | | | 508,948 | | | | | | 2,970 | | |
Repayments of credit facilities(1) | | | | | (653,131) | | | | | | (214,626) | | |
Deferred financing costs paid | | | | | (2,374) | | | | | | (6) | | |
Net cash provided by financing activities | | | | | (269,901) | | | | | | (335,373) | | |
Total increase (decrease) in cash | | | | | 165,143 | | | | | | (49,006) | | |
Cash, restricted cash and foreign currency at beginning of period | | | | | 150,458 | | | | | | 460,409 | | |
Cash, restricted cash and foreign currency at end of period(2) | | | | $ | 315,601 | | | | | $ | 411,403 | | |
Supplemental disclosure | | | | | | | | | | | | | |
Non-cash purchase of investments | | | | $ | (21,482) | | | | | $ | (60,000) | | |
Non-cash sale of investments | | | | $ | 21,482 | | | | | $ | 60,000 | | |
Distributions reinvested | | | | $ | 50,698 | | | | | $ | 56,981 | | |
Local and excise taxes paid | | | | $ | 2,098 | | | | | $ | 2,574 | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Cash flows from operating activities | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | (708 | ) | $ | 71 | |||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||||||
Purchases of investments | (1,317 | ) | (454 | ) | ||||
Paid-in-kind interest | (18 | ) | (5 | ) | ||||
Proceeds from sales and repayments of investments | 1,643 | 203 | ||||||
Net realized (gain) loss on investments | 217 | 18 | ||||||
Net change in unrealized (appreciation) depreciation on investments | 605 | (36 | ) | |||||
Net change in unrealized (appreciation) depreciation on total return swap(1) | (3 | ) | — | |||||
Net change in unrealized (appreciation) depreciation on foreign currency forward contracts | (2 | ) | — | |||||
Net change in unrealized (appreciation) depreciation on interest rate swaps | 30 | 4 | ||||||
Accretion of discount | (5 | ) | (2 | ) | ||||
Amortization of deferred financing costs | 1 | 1 | ||||||
Unrealized (gain) loss on borrowings in foreign currency | (49 | ) | 1 | |||||
(Increase) decrease in collateral held at broker for open swap contracts | (15 | ) | — | |||||
(Increase) decrease in due from counterparty | 41 | — | ||||||
(Increase) decrease in receivable for investments sold and repaid | (298 | ) | 1 | |||||
(Increase) decrease in income receivable | (4 | ) | (9 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | — | (2 | ) | |||||
Increase (decrease) in payable for investments purchased | 77 | 12 | ||||||
Increase (decrease) in management fees payable | (2 | ) | 1 | |||||
Increase (decrease) in subordinated income incentive fees payable | 12 | 5 | ||||||
Increase (decrease) in administrative services expense payable | — | 0 | ||||||
Increase (decrease) in interest payable | (5 | ) | 2 | |||||
Increase (decrease) in other accrued expenses and liabilities | (6 | ) | 0 | |||||
|
|
|
| |||||
Net cash provided by (used in) operating activities | 194 | (189 | ) | |||||
|
|
|
| |||||
Cash flows from financing activities | ||||||||
Repurchases of common stock | — | (27 | ) | |||||
Stockholder distributions | — | (35 | ) | |||||
Borrowings under financing arrangements(1) | 1,108 | 437 | ||||||
Repayments of financing arrangements(1) | (1,232 | ) | (217 | ) | ||||
Deferred financing costs paid | (5 | ) | (2 | ) | ||||
|
|
|
| |||||
Net cash provided by financing activities | (129 | ) | 156 | |||||
|
|
|
| |||||
Total increase (decrease) in cash | 65 | (33 | ) | |||||
Cash, restricted cash and foreign currency at beginning of period | 167 | 151 | ||||||
|
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|
| |||||
Cash, restricted cash and foreign currency at end of period | $ | 232 | $ | 118 | ||||
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| |||||
Supplemental disclosure | ||||||||
Non-cash purchase of investments | $ | (69 | ) | $ | 0 | |||
|
|
|
| |||||
Non-cash sale of investments | $ | 69 | $ | 0 | ||||
|
|
|
| |||||
Distributions reinvested | $ | — | $ | 26 | ||||
|
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| |||||
Local and excise taxes paid | $ | 2 | $ | 2 | ||||
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|
(1) | See Note 9 for a discussion of the Company’s financing arrangements. During the three months ended March 31, 2020 and 2019, the Company paid $44 and $27 respectively, in interest expense on the credit facilities. |
See notes to unaudited consolidated financial statements.
Unaudited Consolidated Schedule of Investments
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Senior Secured Loans—First Lien—112.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
5 Arch Income Fund 2, LLC | | | (m)(q) | | | Diversified Financials | | | 10.5% | | | | | | | | | 11/18/23 | | | | $ | 37,729 | | | | | $ | 37,729 | | | | | $ | 37,681 | | |
5 Arch Income Fund 2, LLC | | | (m)(n)(q) | | | Diversified Financials | | | 10.5% | | | | | | | | | 11/18/23 | | | | | 36,271 | | | | | | 36,271 | | | | | | 36,225 | | |
Abaco Energy Technologies LLC | | | (h)(i)(s) | | | Energy | | | L+700, 2.5% PIK (2.5% Max PIK) | | | | | 1.0% | | | | 11/20/20 | | | | | 23,720 | | | | | | 23,361 | | | | | | 23,513 | | |
ABB CONCISE Optical Group LLC | | | (s) | | | Retailing | | | L+500 | | | | | 1.0% | | | | 6/15/23 | | | | | 2,754 | | | | | | 2,763 | | | | | | 2,610 | | |
Accuride Corp | | | (s) | | | Capital Goods | | | L+525 | | | | | 1.0% | | | | 11/17/23 | | | | | 537 | | | | | | 519 | | | | | | 475 | | |
Acosta Holdco Inc | | | (h)(s) | | | Commercial & Professional Services | | | L+325 | | | | | 1.0% | | | | 9/26/21 | | | | | 6,609 | | | | | | 5,355 | | | | | | 2,450 | | |
Advanced Lighting Technologies Inc | | | (t) | | | Materials | | | L+750 | | | | | 1.0% | | | | 10/4/22 | | | | | 9,079 | | | | | | 8,005 | | | | | | 8,898 | | |
Advantage Sales & Marketing Inc | | | (i)(s) | | | Commercial & Professional Services | | | L+325 | | | | | 1.0% | | | | 7/23/21 | | | | | 15,290 | | | | | | 14,715 | | | | | | 14,033 | | |
All Systems Holding LLC | | | (g)(h)(i) | | | Commercial & Professional Services | | | L+767 | | | | | 1.0% | | | | 10/31/23 | | | | | 111,623 | | | | | | 111,622 | | | | | | 112,739 | | |
Altus Power America Inc | | | (i) | | | Energy | | | L+750 | | | | | 1.5% | | | | 9/30/21 | | | | | 3,547 | | | | | | 3,547 | | | | | | 3,387 | | |
Altus Power America Inc | | | (n) | | | Energy | | | L+750 | | | | | 1.5% | | | | 9/30/21 | | | | | 203 | | | | | | 203 | | | | | | 194 | | |
American Tire Distributors Inc | | | (s) | | | Automobiles & Components | | | L+600, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 9/1/23 | | | | | 634 | | | | | | 597 | | | | | | 631 | | |
American Tire Distributors Inc | | | (s) | | | Automobiles & Components | | | L+750 | | | | | 1.0% | | | | 9/2/24 | | | | | 4,011 | | | | | | 3,503 | | | | | | 3,770 | | |
Ammeraal Beltech Holding BV | | | (m)(s) | | | Capital Goods | | | E+375 | | | | | | | | | 7/30/25 | | | | € | 1,491 | | | | | | 1,725 | | | | | | 1,700 | | |
Apex Group Limited | | | (m)(n) | | | Diversified Financials | | | L+650 | | | | | | | | | 6/15/23 | | | | $ | 2,302 | | | | | | 2,245 | | | | | | 2,302 | | |
Apex Group Limited | | | (m) | | | Diversified Financials | | | L+700 | | | | | 1.0% | | | | 6/15/25 | | | | £ | 22,310 | | | | | | 28,335 | | | | | | 28,337 | | |
Apex Group Limited | | | (i)(m) | | | Diversified Financials | | | L+700 | | | | | 1.0% | | | | 6/15/25 | | | | $ | 34,939 | | | | | | 34,702 | | | | | | 34,939 | | |
Apex Group Limited | | | (f)(g)(m) | | | Diversified Financials | | | L+700 | | | | | 1.3% | | | | 6/15/25 | | | | | 15,486 | | | | | | 15,211 | | | | | | 15,486 | | |
Aspect Software Inc | | | (n) | | | Software & Services | | | L+500 | | | | | 1.0% | | | | 7/15/23 | | | | | 865 | | | | | | 865 | | | | | | 865 | | |
Aspect Software Inc | | | (h) | | | Software & Services | | | L+500 | | | | | 1.0% | | | | 1/15/24 | | | | | 5,642 | | | | | | 5,018 | | | | | | 4,993 | | |
ATX Networks Corp | | | (f)(m)(s) | | | Technology Hardware & Equipment | | | L+600, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 6/11/21 | | | | | 26,301 | | | | | | 25,940 | | | | | | 24,920 | | |
AVF Parent LLC | | | (h)(i) | | | Retailing | | | L+725 | | | | | 1.3% | | | | 3/1/24 | | | | | 73,500 | | | | | | 73,500 | | | | | | 58,110 | | |
Belk Inc | | | (s) | | | Retailing | | | L+475 | | | | | 1.0% | | | | 12/12/22 | | | | | 22,482 | | | | | | 19,902 | | | | | | 18,239 | | |
Borden Dairy Co | | | (g)(h) | | | Food, Beverage & Tobacco | | | L+750 | | | | | 1.0% | | | | 7/6/23 | | | | | 52,500 | | | | | | 52,500 | | | | | | 47,677 | | |
Brand Energy & Infrastructure Services Inc | | | (s) | | | Capital Goods | | | L+425 | | | | | 1.0% | | | | 6/21/24 | | | | | 2,322 | | | | | | 2,281 | | | | | | 2,249 | | |
Caprock Midstream LLC | | | (s) | | | Energy | | | L+475 | | | | | | | | | 11/3/25 | | | | | 6,046 | | | | | | 5,923 | | | | | | 5,769 | | |
CEPSA Holdco (Matador Bidco) | | | (j)(m)(s) | | | Energy | | | L+475 | | | | | | | | | 6/19/26 | | | | | 1,877 | | | | | | 1,858 | | | | | | 1,886 | | |
CHS/Community Health Systems, Inc. | | | (m)(s) | | | Health Care Equipment & Services | | | 8.0% | | | | | | | | | 3/15/26 | | | | | 6,585 | | | | | | 6,394 | | | | | | 6,345 | | |
Cimarron Energy Inc | | | | | | Energy | | | L+900 | | | | | 1.0% | | | | 6/30/21 | | | | | 7,500 | | | | | | 7,500 | | | | | | 7,500 | | |
Conservice LLC | | | (h) | | | Consumer Services | | | L+525 | | | | | | | | | 11/30/24 | | | | | 32,505 | | | | | | 32,204 | | | | | | 32,707 | | |
Conservice LLC | | | (n) | | | Consumer Services | | | L+525 | | | | | | | | | 11/30/24 | | | | | 5,275 | | | | | | 5,243 | | | | | | 5,291 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||||||
Senior Secured Loans—First Lien—122.2% | ||||||||||||||||||||||||||||
5 Arch Income Fund 2, LLC | (r)(x)(y) | Diversified Financials | 10.5% | 11/18/23 | $ | 97.3 | $ | 97.3 | $ | 92.3 | ||||||||||||||||||
5 Arch Income Fund 2, LLC | (r)(s)(x)(y) | Diversified Financials | 10.5% | 11/18/23 | 16.2 | 16.2 | 15.4 | |||||||||||||||||||||
Accuride Corp | (l)(n)(ab) | Capital Goods | L+525 | 1.0 | % | 11/17/23 | 12.6 | 10.6 | 5.5 | |||||||||||||||||||
Acproducts Inc | (k)(l)(o)(p) | Consumer Durables & Apparel | L+650 | 1.0 | % | 8/18/25 | 64.9 | 64.2 | 63.0 | |||||||||||||||||||
Advanced Lighting Technologies Inc | (n)(t)(u)(ad) | Materials | L+750 | 1.0 | % | 10/4/22 | 9.0 | 7.8 | 6.6 | |||||||||||||||||||
Advantage Sales & Marketing Inc | (n)(ab) | Commercial & Professional Services | L+325 | 1.0 | % | 7/23/21 | 31.3 | 29.9 | 25.3 | |||||||||||||||||||
All Systems Holding LLC | (f)(k)(l)(m)(n)(o)(p) | Commercial & Professional Services | L+625 | 1.0 | % | 10/31/23 | 209.3 | 209.3 | 204.6 | |||||||||||||||||||
All Systems Holding LLC | (s) | Commercial & Professional Services | L+625 | 1.0 | % | 10/31/23 | 3.0 | 3.0 | 2.9 | |||||||||||||||||||
American Tire Distributors Inc | (n)(ab) | Automobiles & Components | L+600, 1.0% PIK (1.0% Max PIK) | 1.0 | % | 9/1/23 | 2.6 | 2.5 | 2.4 | |||||||||||||||||||
American Tire Distributors Inc | (n)(ab) | Automobiles & Components | L+750 | 1.0 | % | 9/2/24 | 16.3 | 14.4 | 11.0 | |||||||||||||||||||
Apex Group Limited | (n)(r) | Diversified Financials | L+700 | 1.3 | % | 6/15/23 | 2.3 | 2.2 | 2.2 | |||||||||||||||||||
Apex Group Limited | (r)(s) | Diversified Financials | L+700 | 1.3 | % | 6/15/23 | 2.3 | 2.2 | 2.2 | |||||||||||||||||||
Apex Group Limited | (f)(n)(q)(r) | Diversified Financials | L+700 | 1.0 | % | 6/15/25 | 32.5 | 32.4 | 31.7 | |||||||||||||||||||
Apex Group Limited | (f)(k)(l)(n)(q)(r) | Diversified Financials | L+700 | 1.3 | % | 6/15/25 | 37.7 | 37.1 | 36.8 | |||||||||||||||||||
Apex Group Limited | (n)(r) | Diversified Financials | L+700 | 1.5 | % | 6/15/25 | £ | 23.1 | 29.4 | 28.5 | ||||||||||||||||||
Arrotex Australia Group Pty Ltd | (n)(r) | Pharmaceuticals, Biotechnology & Life Sciences | B+525 | 1.0 | % | 7/10/24 | A$ | 47.8 | 32.8 | 28.0 | ||||||||||||||||||
Aspect Software Inc | (n) | Software & Services | 8.0% PIK (8.0% Max PIK) | 6/30/20 | $ | 0.2 | — | 0.2 | ||||||||||||||||||||
Aspect Software Inc | (n) | Software & Services | L+500 | 1.0 | % | 7/15/23 | 1.4 | 1.4 | 1.4 | |||||||||||||||||||
Aspect Software Inc | (s) | Software & Services | L+500 | 1.0 | % | 7/15/23 | 1.9 | 1.9 | 1.9 | |||||||||||||||||||
Aspect Software Inc | (l)(n)(p) | Software & Services | L+500 | 1.0 | % | 1/15/24 | 21.1 | 19.1 | 19.1 | |||||||||||||||||||
ATX Networks Corp | (n)(o)(r)(ab) | Technology Hardware & Equipment | L+600, 1.0% PIK (1.0% Max PIK) | 1.0 | % | 6/11/21 | 81.4 | 78.6 | 67.6 | |||||||||||||||||||
Belk Inc | (n)(ab) | Retailing | L+675 | 1.0 | % | 7/31/25 | 50.7 | 42.3 | 29.0 | |||||||||||||||||||
Bellatrix Exploration Ltd | (n)(r) | Energy | 10.0% | 5/29/20 | 0.6 | 0.6 | 0.6 | |||||||||||||||||||||
Bellatrix Exploration Ltd | (r)(s) | Energy | 10.0% | 5/29/20 | 0.8 | 0.8 | 0.8 | |||||||||||||||||||||
Berner Food & Beverage LLC | (n) | Food & Staples Retailing | L+875 | 1.0 | % | 2/2/23 | 4.3 | 4.3 | 4.2 | |||||||||||||||||||
Borden Dairy Co | (n)(t)(u) | Food, Beverage & Tobacco | L+750 | 1.0 | % | 7/6/23 | 105.0 | 103.1 | 45.4 | |||||||||||||||||||
Bugaboo International BV | (n)(r) | Consumer Durables & Apparel | 7.8% PIK (7.8% Max PIK) | 3/20/25 | € | 1.6 | 1.9 | 1.7 | ||||||||||||||||||||
Caprock Midstream LLC | (n)(ab) | Energy | L+475 | 11/3/25 | $ | 13.5 | 12.8 | 7.8 | ||||||||||||||||||||
Charles Taylor PLC | (n)(r) | Diversified Financials | L+575 | 1/24/27 | £ | 19.4 | 24.7 | 23.1 | ||||||||||||||||||||
CHS/Community Health Systems, Inc. | (g)(h)(k)(r)(aa)(ab) | Health Care Equipment & Services | 8.0% | 3/15/26 | $ | 17.6 | 17.1 | 16.8 | ||||||||||||||||||||
Cimarron Energy Inc | (n) | Energy | 10.0% | 6/30/21 | 7.5 | 7.5 | 6.9 | |||||||||||||||||||||
Conservice LLC | (f)(n)(o)(p) | Consumer Services | L+525 | 11/29/24 | 59.4 | 58.9 | 59.4 | |||||||||||||||||||||
Conservice LLC | (s) | Consumer Services | L+525 | 11/29/24 | 2.9 | 2.9 | 2.9 | |||||||||||||||||||||
Conservice LLC | (n) | Consumer Services | L+525 | 11/29/24 | 1.1 | 1.1 | 1.1 | |||||||||||||||||||||
Conservice LLC | (s) | Consumer Services | L+525 | 11/29/24 | 2.3 | 2.3 | 2.3 | |||||||||||||||||||||
Constellis Holdings LLC | (n)(ad) | Capital Goods | L+1,000 | 1.0 | % | 6/30/21 | 8.4 | 8.4 | 8.4 | |||||||||||||||||||
Constellis Holdings LLC | (n)(ad) | Capital Goods | L+750 | 1.0 | % | 3/31/24 | 15.0 | 15.0 | 15.0 | |||||||||||||||||||
CSafe Global | (n) | Capital Goods | L+650 | 1.0 | % | 11/1/21 | 9.1 | 9.1 | 8.9 | |||||||||||||||||||
CSafe Global | (f)(k)(l)(p)(q) | Capital Goods | L+650 | 10/31/23 | 76.8 | 76.8 | 74.8 | |||||||||||||||||||||
CSafe Global | (l)(n) | Capital Goods | L+650 | 1.0 | % | 10/31/23 | 14.4 | 14.4 | 14.1 | |||||||||||||||||||
CSafe Global | (s) | Capital Goods | L+650 | 1.0 | % | 10/31/23 | 13.2 | 13.2 | 12.9 | |||||||||||||||||||
CSM Bakery Products | (l)(n)(ab) | Food, Beverage & Tobacco | L+400 | 1.0 | % | 7/3/20 | 6.4 | 6.2 | 5.3 | |||||||||||||||||||
CTI Foods Holding Co LLC | (n) | Food, Beverage & Tobacco | L+700 | 1.0 | % | 5/3/24 | 0.0 | 0.0 | 0.0 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Constellis Holdings LLC/Constellis Finance Corp | | | (h) | | | Capital Goods | | | L+625 | | | | | 1.0% | | | | 4/15/22 | | | | $ | 47,088 | | | | | $ | 46,474 | | | | | $ | 43,575 | | |
CSafe Global | | | (n) | | | Capital Goods | | | L+650 | | | | | 1.0% | | | | 11/1/21 | | | | | 6,261 | | | | | | 6,261 | | | | | | 6,229 | | |
CSafe Global | | | (n) | | | Capital Goods | | | L+650 | | | | | 1.0% | | | | 10/31/23 | | | | | 12,522 | | | | | | 12,522 | | | | | | 12,522 | | |
CSafe Global | | | (f)(g)(h) | | | Capital Goods | | | L+650 | | | | | 1.0% | | | | 10/31/23 | | | | | 59,597 | | | | | | 59,597 | | | | | | 59,597 | | |
CSM Bakery Products | | | (i)(s) | | | Food, Beverage & Tobacco | | | L+400 | | | | | 1.0% | | | | 7/3/20 | | | | | 5,217 | | | | | | 5,110 | | | | | | 4,985 | | |
Dayton Superior Corp | | | (i)(s) | | | Materials | | | L+800, 6.0% PIK (6.0% Max PIK) | | | | | 1.0% | | | | 11/15/21 | | | | | 3,508 | | | | | | 3,465 | | | | | | 1,894 | | |
Diamond Resorts International Inc | | | (i)(s) | | | Consumer Services | | | L+375 | | | | | 1.0% | | | | 9/2/23 | | | | | 14,015 | | | | | | 13,751 | | | | | | 13,283 | | |
Distribution International Inc | | | (s) | | | Retailing | | | L+575 | | | | | 1.0% | | | | 12/15/21 | | | | | 3,389 | | | | | | 3,260 | | | | | | 3,254 | | |
Eagle Family Foods Inc | | | | | | Food, Beverage & Tobacco | | | L+650 | | | | | 1.0% | | | | 6/14/23 | | | | | 1,009 | | | | | | 1,000 | | | | | | 970 | | |
Eagle Family Foods Inc | | | (n) | | | Food, Beverage & Tobacco | | | L+650 | | | | | 1.0% | | | | 6/14/23 | | | | | 3,117 | | | | | | 3,089 | | | | | | 2,999 | | |
Eagle Family Foods Inc | | | (g)(h) | | | Food, Beverage & Tobacco | | | L+650 | | | | | 1.0% | | | | 6/14/24 | | | | | 27,231 | | | | | | 26,965 | | | | | | 26,200 | | |
Eagleclaw Midstream Ventures LLC | | | (i)(s) | | | Energy | | | L+425 | | | | | 1.0% | | | | 6/24/24 | | | | | 11,397 | | | | | | 10,900 | | | | | | 10,852 | | |
EIF Van Hook Holdings LLC | | | (i)(s) | | | Energy | | | L+525 | | | | | | | | | 9/5/24 | | | | | 7,239 | | | | | | 7,107 | | | | | | 7,000 | | |
Empire Today LLC | | | (f)(g)(h)(i) | | | Retailing | | | L+650 | | | | | 1.0% | | | | 11/17/22 | | | | | 87,750 | | | | | | 87,750 | | | | | | 87,324 | | |
Fairway Group Holdings Corp | | | | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | | | | | 8/28/23 | | | | | 452 | | | | | | 450 | | | | | | 452 | | |
Fairway Group Holdings Corp | | | (n) | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | | | | | 8/28/23 | | | | | 227 | | | | | | 227 | | | | | | 227 | | |
Fairway Group Holdings Corp | | | | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | 1.0% | | | | 8/28/23 | | | | | 1,130 | | | | | | 1,117 | | | | | | 1,130 | | |
Fairway Group Holdings Corp | | | (k)(l) | | | Food & Staples Retailing | | | 10.0% PIK (10.0% Max PIK) | | | | | | | | | 11/27/23 | | | | | 2,064 | | | | | | 1,733 | | | | | | 160 | | |
Fairway Group Holdings Corp | | | | | | Food & Staples Retailing | | | 12.0% PIK (12.0% Max PIK) | | | | | 1.0% | | | | 11/27/23 | | | | | 3,261 | | | | | | 3,261 | | | | | | 3,062 | | |
Foresight Energy LLC | | | (h)(m)(s) | | | Materials | | | L+575 | | | | | 1.0% | | | | 3/28/22 | | | | | 10,319 | | | | | | 10,307 | | | | | | 8,500 | | |
Fox Head Inc | | | (h)(i) | | | Consumer Durables & Apparel | | | L+850 | | | | | 1.0% | | | | 12/19/20 | | | | | 50,672 | | | | | | 50,672 | | | | | | 47,528 | | |
FullBeauty Brands Holdings Corp | | | | | | Retailing | | | L+1,000 | | | | | 1.0% | | | | 2/7/22 | | | | | 188 | | | | | | 188 | | | | | | 184 | | |
FullBeauty Brands Holdings Corp | | | (s) | | | Retailing | | | L+900 | | | | | 1.0% | | | | 2/7/24 | | | | | 1,097 | | | | | | 1,071 | | | | | | 1,042 | | |
Gulf Finance LLC | | | (i)(s) | | | Energy | | | L+525 | | | | | 1.0% | | | | 8/25/23 | | | | | 4,664 | | | | | | 4,571 | | | | | | 3,834 | | |
HM Dunn Co Inc | | | (h)(k)(l)(t) | | | Capital Goods | | | L+875 PIK (L+875 Max PIK) | | | | | 1.0% | | | | 6/30/21 | | | | | 46,386 | | | | | | 38,571 | | | | | | 12,524 | | |
HM Dunn Co Inc | | | (t) | | | Capital Goods | | | 15.0% PIK (15.0% Max PIK) | | | | | | | | | 6/30/21 | | | | | 2,190 | | | | | | 2,190 | | | | | | 2,190 | | |
HM Dunn Co Inc | | | (n)(t) | | | Capital Goods | | | 15.0% PIK (15.0% Max PIK) | | | | | | | | | 6/30/21 | | | | | 2,143 | | | | | | 2,143 | | | | | | 2,143 | | |
Hudson Technologies Co | | | (m) | | | Commercial & Professional Services | | | L+1,025 | | | | | 1.0% | | | | 10/10/23 | | | | | 50,460 | | | | | | 50,065 | | | | | | 34,628 | | |
Icynene Group Ltd | | | (f)(h)(i) | | | Materials | | | L+700 | | | | | 1.0% | | | | 11/30/24 | | | | | 35,460 | | | | | | 35,460 | | | | | | 34,957 | | |
Industry City TI Lessor LP | | | (h) | | | Consumer Services | | | 10.8%, 1.0% PIK (1.0% Max PIK) | | | | | | | | | 6/30/26 | | | | | 11,089 | | | | | | 11,089 | | | | | | 12,031 | | |
JAKKS Pacific Inc | | | (h) | | | Consumer Durables & Apparel | | | L+900 | | | | | 1.5% | | | | 6/14/21 | | | | | 2,793 | | | | | | 2,778 | | | | | | 2,815 | | |
JC Penney Corp Inc | | | (m)(s) | | | Retailing | | | L+425 | | | | | 1.0% | | | | 6/23/23 | | | | | 1,188 | | | | | | 1,139 | | | | | | 1,038 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||
Eacom Timber Corp | (n)(r) | Materials | L+650 | 1.0 | % | 11/30/23 | $ | 2.6 | $ | 2.6 | $ | 2.3 | ||||||||||||
Eagle Family Foods Inc | (n) | Food, Beverage & Tobacco | L+675 | 1.0 | % | 6/14/23 | 2.9 | 2.9 | 2.7 | |||||||||||||||
Eagle Family Foods Inc | (s) | Food, Beverage & Tobacco | L+675 | 1.0 | % | 6/14/23 | 5.3 | 5.2 | 4.9 | |||||||||||||||
Eagle Family Foods Inc | (f)(k)(l)(n)(p) | Food, Beverage & Tobacco | L+675 | 1.0 | % | 6/14/24 | 53.5 | 53.1 | 49.4 | |||||||||||||||
Eagleclaw Midstream Ventures LLC | (n)(ab) | Energy | L+425 | 1.0 | % | 6/24/24 | 8.9 | 8.2 | 4.0 | |||||||||||||||
EIF Van Hook Holdings LLC | (n)(ab) | Energy | L+525 | 9/5/24 | 2.2 | 2.1 | 1.6 | |||||||||||||||||
Electronics For Imaging Inc | (n)(ab) | Technology Hardware & Equipment | L+500 | 7/23/26 | 15.6 | 14.8 | 13.0 | |||||||||||||||||
Empire Today LLC | (f)(k)(l)(n)(o)(p)(q) | Retailing | L+650 | 1.0 | % | 11/17/22 | 133.5 | 133.5 | 130.5 | |||||||||||||||
Entertainment Benefits Group LLC | (n) | Media & Entertainment | L+575 | 1.0 | % | 9/30/24 | 5.0 | 5.0 | 4.5 | |||||||||||||||
Entertainment Benefits Group LLC | (s) | Media & Entertainment | L+575 | 1.0 | % | 9/30/24 | 0.9 | 0.9 | 0.9 | |||||||||||||||
Entertainment Benefits Group LLC | (f)(k)(l)(n) | Media & Entertainment | L+575 | 1.0 | % | 9/30/25 | 32.5 | 32.2 | 29.8 | |||||||||||||||
Fairway Group Holdings Corp | (n)(ad) | Food & Staples Retailing | L+1,000 | 10/21/20 | 3.0 | 2.9 | 3.0 | |||||||||||||||||
Fairway Group Holdings Corp | (n)(ad) | Food & Staples Retailing | L+1,000 | 10/23/20 | 7.1 | 7.1 | 7.1 | |||||||||||||||||
Fairway Group Holdings Corp | (n)(t)(u)(ad) | Food & Staples Retailing | 12.0% PIK (12.0% Max PIK) | 11/27/23 | 11.3 | 11.3 | 3.0 | |||||||||||||||||
Fairway Group Holdings Corp | (n)(t)(u)(ad) | Food & Staples Retailing | 10.0% PIK (10.0% Max PIK) | 11/28/23 | 7.3 | 5.6 | — | |||||||||||||||||
Fox Head Inc | (l)(n)(p) | Consumer Durables & Apparel | L+850 | 1.0 | % | 12/19/20 | 36.4 | 36.4 | 33.7 | |||||||||||||||
Frontline Technologies Group LLC | (n) | Software & Services | L+575 | 1.0 | % | 9/18/23 | 5.3 | 5.3 | 5.1 | |||||||||||||||
Greystone Equity Member Corp | (n)(r) | Diversified Financials | L+725 | 3.8 | % | 4/1/26 | 161.7 | 161.7 | 159.1 | |||||||||||||||
Greystone Equity Member Corp | (r)(s) | Diversified Financials | L+725 | 3.8 | % | 4/1/26 | 2.5 | 2.5 | 2.5 | |||||||||||||||
Heniff Transportation Systems LLC | (n) | Transportation | L+575 | 1.0 | % | 12/3/24 | 4.0 | 4.0 | 3.8 | |||||||||||||||
Heniff Transportation Systems LLC | (s) | Transportation | L+575 | 1.0 | % | 12/3/24 | 5.6 | 5.6 | 5.3 | |||||||||||||||
Heniff Transportation Systems LLC | (f)(k)(l)(n) | Transportation | L+575 | 1.0 | % | 12/3/26 | 75.2 | 74.9 | 72.0 | |||||||||||||||
HM Dunn Co Inc | (n)(t)(u)(ad) | Capital Goods | L+875 PIK (L+875 Max PIK) | 1.0 | % | 6/30/21 | 56.3 | 44.4 | 13.0 | |||||||||||||||
HM Dunn Co Inc | (n)(ad) | Capital Goods | 15.0% PIK (15.0% Max PIK) | 6/30/21 | 5.3 | 5.3 | 5.3 | |||||||||||||||||
HM Dunn Co Inc | (s)(ad) | Capital Goods | 15.0% PIK (15.0% Max PIK) | 6/30/21 | 1.5 | 1.5 | 1.5 | |||||||||||||||||
Hudson Technologies Co | (n)(r) | Commercial & Professional Services | L+1,025 | 1.0 | % | 10/10/23 | 54.2 | 53.9 | 28.2 | |||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/24 | € | 0.2 | 0.2 | 0.2 | ||||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/24 | £ | 0.1 | 0.1 | 0.1 | ||||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/25 | € | 0.9 | 1.1 | 1.0 | ||||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | L+725 | 3/29/25 | £ | 0.6 | 0.8 | 0.7 | ||||||||||||||||
Industria Chimica Emiliana Srl | (r)(s) | Pharmaceuticals, Biotechnology & Life Sciences | E+650 | 6/30/26 | € | 13.6 | 14.8 | 14.1 | ||||||||||||||||
Industria Chimica Emiliana Srl | (n)(r) | Pharmaceuticals, Biotechnology & Life Sciences | L+650 | 6/30/26 | 51.8 | 55.4 | 53.8 | |||||||||||||||||
Industry City TI Lessor LP | (n)(p) | Consumer Services | 10.8%, 1.0% PIK (1.0% Max PIK) | 6/30/26 | $ | 10.4 | 10.4 | 11.5 | ||||||||||||||||
J S Held LLC | (f)(n)(o)(p) | Insurance | L+600 | 1.0 | % | 7/1/25 | 71.5 | 70.9 | 69.8 | |||||||||||||||
J S Held LLC | (s) | Insurance | L+600 | 1.0 | % | 7/1/25 | 13.5 | 13.5 | 13.2 | |||||||||||||||
J S Held LLC | (n) | Insurance | L+600 | 1.0 | % | 7/1/25 | 4.6 | 4.5 | 4.5 | |||||||||||||||
J S Held LLC | (s) | Insurance | L+600 | 1.0 | % | 7/1/25 | 3.3 | 3.3 | 3.2 | |||||||||||||||
JC Penney Corp Inc | (n)(r)(ab) | Retailing | L+425 | 1.0 | % | 6/23/23 | 3.8 | 3.4 | 1.6 | |||||||||||||||
Jo-Ann Stores Inc | (n)(ab) | Retailing | L+500 | 1.0 | % | 10/20/23 | 13.1 | 11.7 | 5.1 | |||||||||||||||
Kellermeyer Bergensons Services LLC | (f)(k)(l)(n)(o)(p)(q) | Commercial & Professional Services | L+650 | 1.0 | % | 11/7/26 | 164.5 | 163.3 | 155.3 | |||||||||||||||
Kellermeyer Bergensons Services LLC | (s) | Commercial & Professional Services | L+650 | 1.0 | % | 11/7/26 | 40.6 | 40.6 | 38.3 | |||||||||||||||
Kodiak BP LLC | (f)(k)(l)(m)(n)(o)(p)(q) | Capital Goods | L+725 | 1.0 | % | 12/1/24 | 222.6 | 222.6 | 222.3 | |||||||||||||||
Kodiak BP LLC | (s) | Capital Goods | L+725 | 1.0 | % | 12/1/24 | 10.7 | 10.7 | 10.7 | |||||||||||||||
LBM Borrower LLC | (l)(n)(ab) | Capital Goods | L+375 | 1.0 | % | 8/20/22 | 5.3 | 5.0 | 4.7 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Jo-Ann Stores Inc | | | (i)(s) | | | Retailing | | | L+500 | | | | | 1.0% | | | | 10/20/23 | | | | $ | 4,890 | | | | | $ | 4,882 | | | | | $ | 4,442 | | |
Jostens Inc | | | (s) | | | Consumer Services | | | L+550 | | | | | | | | | 12/19/25 | | | | | 3,499 | | | | | | 3,401 | | | | | | 3,464 | | |
JSS Holdings Ltd | | | (f)(h)(i) | | | Capital Goods | | | L+800, 0.0% PIK (2.5% Max PIK) | | | | | 1.0% | | | | 3/31/23 | | | | | 72,890 | | | | | | 72,384 | | | | | | 75,076 | | |
Kodiak BP LLC | | | (g)(h)(i) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 12/1/24 | | | | | 112,680 | | | | | | 112,680 | | | | | | 111,553 | | |
Kodiak BP LLC | | | (n) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 12/1/24 | | | | | 7,344 | | | | | | 7,344 | | | | | | 7,270 | | |
Lazard Global Compounders Fund | | | (m) | | | Diversified Financials | | | L+725 | | | | | 3.8% | | | | 4/1/26 | | | | | 39,843 | | | | | | 39,843 | | | | | | 38,997 | | |
Lazard Global Compounders Fund | | | (m)(n) | | | Diversified Financials | | | L+725 | | | | | 3.8% | | | | 4/1/26 | | | | | 5,157 | | | | | | 5,157 | | | | | | 5,047 | | |
LD Intermediate Holdings Inc | | | (i)(s) | | | Software & Services | | | L+588 | | | | | 1.0% | | | | 12/9/22 | | | | | 15,725 | | | | | | 14,791 | | | | | | 15,646 | | |
Lenovo Group Ltd | | | (m) | | | Technology Hardware & Equipment | | | 9.56% | | | | | | | | | 6/30/22 | | | | | 15,881 | | | | | | 15,881 | | | | | | 15,881 | | |
Lenovo Group Ltd | | | (m) | | | Technology Hardware & Equipment | | | 9.56% | | | | | | | | | 6/30/22 | | | | € | 7,557 | | | | | | 8,593 | | | | | | 8,596 | | |
Lipari Foods LLC | | | (h)(i) | | | Food & Staples Retailing | | | L+588 | | | | | 1.0% | | | | 1/4/25 | | | | $ | 121,878 | | | | | | 120,944 | | | | | | 121,637 | | |
Lipari Foods LLC | | | (n) | | | Food & Staples Retailing | | | L+588 | | | | | 1.0% | | | | 1/4/25 | | | | | 25,220 | | | | | | 25,220 | | | | | | 25,170 | | |
MB Precision Holdings LLC | | | (g)(t) | | | Capital Goods | | | L+725, 2.3% PIK (2.3% Max PIK) | | | | | 1.3% | | | | 1/23/21 | | | | | 21,403 | | | | | | 20,923 | | | | | | 21,403 | | |
Mitel US Holdings Inc | | | (i)(s) | | | Technology Hardware & Equipment | | | L+450 | | | | | | | | | 11/30/25 | | | | | 119 | | | | | | 119 | | | | | | 114 | | |
Monitronics International Inc | | | (j)(s) | | | Commercial & Professional Services | | | L+550 | | | | | 1.0% | | | | 9/30/22 | | | | | 17,954 | | | | | | 17,324 | | | | | | 17,152 | | |
Multi-Color Corp | | | (j)(m)(s) | | | Commercial & Professional Services | | | 6.8% | | | | | | | | | 7/15/26 | | | | | 4,007 | | | | | | 4,007 | | | | | | 4,059 | | |
Murray Energy Corp | | | (h) | | | Energy | | | L+900 | | | | | 1.0% | | | | 2/12/21 | | | | | 10,891 | | | | | | 10,837 | | | | | | 10,868 | | |
NaviHealth Inc. | | | (i)(s) | | | Health Care Equipment & Services | | | L+500 | | | | | | | | | 8/1/25 | | | | | 15,035 | | | | | | 14,402 | | | | | | 14,960 | | |
North Haven Cadence Buyer Inc | | | (n) | | | Consumer Services | | | L+500 | | | | | 1.0% | | | | 9/2/21 | | | | | 2,625 | | | | | | 2,625 | | | | | | 2,625 | | |
North Haven Cadence Buyer Inc | | | (h) | | | Consumer Services | | | L+650 | | | | | 1.0% | | | | 9/2/22 | | | | | 24,899 | | | | | | 24,899 | | | | | | 24,775 | | |
North Haven Cadence Buyer Inc | | | (n) | | | Consumer Services | | | L+650 | | | | | 1.0% | | | | 9/2/22 | | | | | 292 | | | | | | 292 | | | | | | 290 | | |
North Haven Cadence Buyer Inc | | | (h)(i) | | | Consumer Services | | | L+795 | | | | | 1.0% | | | | 9/2/22 | | | | | 51,188 | | | | | | 51,188 | | | | | | 50,932 | | |
One Call Care Management Inc | | | (j)(s) | | | Insurance | | | L+400 | | | | | 1.0% | | | | 11/27/20 | | | | | 253 | | | | | | 223 | | | | | | 219 | | |
One Call Care Management Inc | | | (j)(s) | | | Insurance | | | L+525 | | | | | 1.0% | | | | 11/27/22 | | | | | 5,806 | | | | | | 4,908 | | | | | | 4,742 | | |
P2 Energy Solutions, Inc. | | | (s) | | | Software & Services | | | L+400 | | | | | 1.0% | | | | 10/30/20 | | | | | 74 | | | | | | 73 | | | | | | 73 | | |
PAE Holding Corp | | | (s) | | | Capital Goods | | | L+550 | | | | | 1.0% | | | | 10/20/22 | | | | | 9 | | | | | | 9 | | | | | | 9 | | |
Peak 10 Holding Corp | | | (g)(s) | | | Telecommunication Services | | | L+350 | | | | | | | | | 8/1/24 | | | | | 11,012 | | | | | | 10,287 | | | | | | 10,145 | | |
PF Chang’s China Bistro Inc | | | (s) | | | Consumer Services | | | L+650 | | | | | | | | | 3/1/26 | | | | | 5,803 | | | | | | 5,747 | | | | | | 5,609 | | |
PHRC License LLC | | | (g)(h) | | | Consumer Services | | | L+850, 0.3% PIK (0.3% Max PIK) | | | | | 1.5% | | | | 4/28/22 | | | | | 66,535 | | | | | | 66,535 | | | | | | 67,283 | | |
Power Distribution Inc | | | (f) | | | Capital Goods | | | L+725 | | | | | 1.3% | | | | 1/25/23 | | | | | 42,063 | | | | | | 42,063 | | | | | | 41,117 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||
Lexitas Inc | (k)(l)(n) | Commercial & Professional Services | L+575 | 1.0 | % | 11/14/25 | $ | 26.9 | $ | 26.7 | $ | 25.7 | ||||||||||||
Lexitas Inc | (s) | Commercial & Professional Services | L+575 | 1.0 | % | 11/14/25 | 4.3 | 4.3 | 4.1 | |||||||||||||||
Lexitas Inc | (s) | Commercial & Professional Services | L+575 | 1.0 | % | 11/14/25 | 2.9 | 2.9 | 2.8 | |||||||||||||||
Lionbridge Technologies Inc | (f)(k)(p)(q) | Consumer Services | L+625 | 1.0 | % | 12/29/25 | 90.0 | 89.6 | 87.5 | |||||||||||||||
Lipari Foods LLC | (f)(m)(n)(o)(p) | Food & Staples Retailing | L+588 | 1.0 | % | 1/6/25 | 151.0 | 149.7 | 145.2 | |||||||||||||||
Lipari Foods LLC | (f)(n) | Food & Staples Retailing | L+588 | 1.0 | % | 1/6/25 | 22.0 | 22.0 | 21.1 | |||||||||||||||
Luxembourg Life Fund—Absolute Return Fund I | (n)(r) | Insurance | L+750 | 1.5 | % | 3/1/25 | 8.2 | 8.1 | 8.0 | |||||||||||||||
MB Precision Holdings LLC | (k)(n)(ad) | Capital Goods | L+725, 2.3% PIK (2.3% Max PIK) | 1.3 | % | 7/23/22 | 21.5 | 21.1 | 20.9 | |||||||||||||||
Monitronics International Inc | (f)(n)(ab)(ac) | Commercial & Professional Services | L+650 | 1.3 | % | 3/29/24 | 39.3 | 37.5 | 27.0 | |||||||||||||||
Monitronics International Inc | (f)(ab) | Commercial & Professional Services | L+500 | 1.5 | % | 7/3/24 | 1.9 | 1.9 | 1.5 | |||||||||||||||
Monitronics International Inc | (n)(ab) | Commercial & Professional Services | L+500 | 1.5 | % | 7/3/24 | 30.7 | 30.7 | 30.7 | |||||||||||||||
Monitronics International Inc | (s)(ab) | Commercial & Professional Services | L+500 | 1.5 | % | 7/3/24 | 39.3 | 39.3 | 39.3 | |||||||||||||||
Motion Recruitment Partners LLC | (n)(q) | Commercial & Professional Services | L+600 | 1.0 | % | 12/20/25 | 43.8 | 43.4 | 41.8 | |||||||||||||||
Motion Recruitment Partners LLC | (s) | Commercial & Professional Services | L+600 | 1.0 | % | 12/20/25 | 34.6 | 34.6 | 33.0 | |||||||||||||||
NCI Inc | (n) | Software & Services | L+750 | 1.0 | % | 8/15/24 | 4.2 | 4.2 | 3.8 | |||||||||||||||
One Call Care Management Inc | (n)(ab)(ad) | Insurance | L+525 | 1.0 | % | 11/27/22 | 2.9 | 2.5 | 2.4 | |||||||||||||||
P2 Energy Solutions Inc | (n) | Software & Services | L+675 | 1.0 | % | 1/31/25 | 2.7 | 2.7 | 2.6 | |||||||||||||||
P2 Energy Solutions Inc | (s) | Software & Services | L+675 | 1.0 | % | 1/31/25 | 5.4 | 5.4 | 5.2 | |||||||||||||||
P2 Energy Solutions Inc | (f)(k)(p)(q) | Software & Services | L+675 | 1.0 | % | 1/31/26 | 136.1 | 134.4 | 130.2 | |||||||||||||||
Peak 10 Holding Corp | (n)(ab) | Telecommunication Services | L+350 | 8/1/24 | 25.5 | 23.0 | 18.4 | |||||||||||||||||
PF Chang’s China Bistro Inc | (n)(ab) | Consumer Services | L+625 | 3/1/26 | 14.9 | 14.7 | 7.0 | |||||||||||||||||
Premium Credit Ltd | (n)(r) | Diversified Financials | L+650 | 1/16/26 | £ | 58.6 | 74.8 | 68.9 | ||||||||||||||||
Pretium Packaging LLC | (f)(k)(l)(n)(p)(q) | Household & Personal Products | L+625 | 1.0 | % | 1/15/27 | $ | 111.2 | 110.1 | 107.9 | ||||||||||||||
Pretium Packaging LLC | (s) | Household & Personal Products | L+625 | 1.0 | % | 1/15/27 | 22.7 | 22.4 | 22.0 | |||||||||||||||
Production Resource Group LLC | (m)(n)(t)(u) | Media & Entertainment | L+700 | 1.0 | % | 8/21/24 | 381.0 | 381.0 | 263.8 | |||||||||||||||
Project Marron | (n)(r) | Consumer Services | B+625 | 7/3/25 | A$ | 36.5 | 24.0 | 21.1 | ||||||||||||||||
Project Marron | (f)(n)(r) | Consumer Services | L+625 | 7/2/25 | C$ | 28.7 | 21.9 | 19.3 | ||||||||||||||||
Propulsion Acquisition LLC | (f)(l)(m)(n)(p)(q) | Capital Goods | L+600 | 1.0 | % | 7/13/21 | $ | 113.9 | 112.6 | 110.7 | ||||||||||||||
PSKW LLC | (l)(m)(o)(p)(q) | Health Care Equipment & Services | L+625 | 1.0 | % | 3/9/26 | 161.7 | 159.7 | 159.7 | |||||||||||||||
Quorum Health Corp | (n)(ab) | Health Care Equipment & Services | L+675 | 1.0 | % | 4/29/22 | 7.6 | 7.6 | 6.4 | |||||||||||||||
Reliant Rehab Hospital Cincinnati LLC | (f)(l)(o)(p) | Health Care Equipment & Services | L+675 | 9/2/24 | 117.7 | 116.9 | 110.5 | |||||||||||||||||
Roadrunner Intermediate Acquisition Co LLC | (l)(m)(o)(q) | Health Care Equipment & Services | L+675 | 1.0 | % | 3/15/23 | 95.7 | 95.7 | 94.1 | |||||||||||||||
RSC Insurance Brokerage Inc | (f)(k)(l)(n)(o)(p) | Insurance | L+550 | 1.0 | % | 11/1/26 | 93.2 | 92.4 | 87.9 | |||||||||||||||
RSC Insurance Brokerage Inc | (s) | Insurance | L+550 | 1.0 | % | 11/1/26 | 19.3 | 19.1 | 18.2 | |||||||||||||||
RSC Insurance Brokerage Inc | (s) | Insurance | L+550 | 1.0 | % | 11/1/26 | 3.7 | 3.6 | 3.5 | |||||||||||||||
Safe-Guard Products International LLC | (f)(p)(q) | Diversified Financials | L+575 | 1/27/27 | 76.1 | 75.4 | 70.6 | |||||||||||||||||
Savers Inc | (f)(n)(o)(p) | Retailing | L+650, 0.8% PIK (0.8% Max PIK) | 1.5 | % | 3/28/24 | 52.6 | 52.1 | 50.9 | |||||||||||||||
Savers Inc | (f)(n) | Retailing | L+700, 0.8% PIK (0.8% Max PIK) | 1.5 | % | 3/28/24 | C$ | 73.1 | 53.9 | 50.1 | ||||||||||||||
Sequa Corp | (n)(ab) | Materials | L+500 | 1.0 | % | 11/28/21 | $ | 4.8 | 4.7 | 3.9 | ||||||||||||||
Sequel Youth & Family Services LLC | (f)(o)(p) | Health Care Equipment & Services | L+700 | 1.0 | % | 9/1/23 | 15.5 | 15.5 | 15.0 | |||||||||||||||
Sequel Youth & Family Services LLC | (f)(l)(n)(p) | Health Care Equipment & Services | L+800 | 9/1/23 | 90.0 | 90.0 | 86.9 | |||||||||||||||||
Sequential Brands Group Inc. | (k)(l)(n) | Consumer Durables & Apparel | L+875 | 2/7/24 | 213.9 | 210.7 | 205.8 | |||||||||||||||||
SIRVA Worldwide Inc | (n)(ab) | Commercial & Professional Services | L+550 | 8/4/25 | 7.4 | 7.3 | 5.6 | |||||||||||||||||
Smart & Final Stores LLC | (m)(n)(ab) | Food & Staples Retailing | L+675 | 6/20/25 | 20.3 | 18.4 | 17.9 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Production Resource Group LLC | | | (f)(g)(h)(i) | | | Media | | | L+700 | | | | | 1.0% | | | | 8/21/24 | | | | $ | 207,992 | | | | | $ | 207,992 | | | | | $ | 202,793 | | |
Propulsion Acquisition LLC | | | (f)(h)(i)(s) | | | Capital Goods | | | L+600 | | | | | 1.0% | | | | 7/13/21 | | | | | 52,322 | | | | | | 51,228 | | | | | | 51,798 | | |
PSKW LLC | | | (f)(h) | | | Health Care Equipment & Services | | | L+823 | | | | | 1.0% | | | | 11/25/21 | | | | | 41,312 | | | | | | 41,276 | | | | | | 41,312 | | |
PSKW LLC | | | (f)(h) | | | Health Care Equipment & Services | | | L+824 | | | | | 1.0% | | | | 11/25/21 | | | | | 14,713 | | | | | | 14,713 | | | | | | 14,713 | | |
Reliant Rehab Hospital Cincinnati LLC | | | (h) | | | Health Care Equipment & Services | | | L+675 | | | | | 1.0% | | | | 8/30/24 | | | | | 59,862 | | | | | | 59,373 | | | | | | 59,017 | | |
Roadrunner Intermediate Acquisition Co LLC | | | (f) | | | Health Care Equipment & Services | | | L+675 | | | | | 1.0% | | | | 3/15/23 | | | | | 6,924 | | | | | | 6,923 | | | | | | 6,373 | | |
Safariland LLC | | | | | | Capital Goods | | | L+725 | | | | | 1.1% | | | | 11/18/23 | | | | | 745 | | | | | | 745 | | | | | | 713 | | |
Safariland LLC | | | (g)(h) | | | Capital Goods | | | L+775 | | | | | 1.1% | | | | 11/18/23 | | | | | 69,053 | | | | | | 69,053 | | | | | | 66,119 | | |
Savers Inc | | | | | | Retailing | | | L+650, 0.8% PIK (0.8% Max PIK) | | | | | 1.5% | | | | 3/28/24 | | | | C$ | 36,422 | | | | | | 26,804 | | | | | | 27,533 | | |
Savers Inc | | | | | | Retailing | | | L+650, 0.8% PIK (0.8% Max PIK) | | | | | 1.5% | | | | 3/28/24 | | | | $ | 26,227 | | | | | | 25,913 | | | | | | 25,954 | | |
Sequa Corp | | | (i)(j)(s) | | | Materials | | | L+500 | | | | | 1.0% | | | | 11/28/21 | | | | | 18,863 | | | | | | 18,636 | | | | | | 18,493 | | |
Sequel Youth & Family Services LLC | | | (h) | | | Health Care Equipment & Services | | | L+700 | | | | | 1.0% | | | | 9/1/23 | | | | | 12,168 | | | | | | 12,168 | | | | | | 12,289 | | |
Sequel Youth & Family Services LLC | | | (f)(h)(i) | | | Health Care Equipment & Services | | | L+800 | | | | | | | | | 9/1/23 | | | | | 70,000 | | | | | | 70,000 | | | | | | 70,700 | | |
Sequential Brands Group Inc. | | | (g) | | | Consumer Durables & Apparel | | | L+875 | | | | | | | | | 2/7/24 | | | | | 117,336 | | | | | | 115,490 | | | | | | 116,309 | | |
SI Group Inc | | | (s) | | | Materials | | | L+475 | | | | | | | | | 10/15/25 | | | | | 2,908 | | | | | | 2,806 | | | | | | 2,875 | | |
SIRVA Worldwide Inc | | | (i)(s) | | | Commercial & Professional Services | | | L+550 | | | | | | | | | 8/4/25 | | | | | 2,742 | | | | | | 2,705 | | | | | | 2,668 | | |
Smart & Final Stores LLC | | | (m)(s) | | | Food & Staples Retailing | | | L+675 | | | | | | | | | 6/20/25 | | | | | 17,789 | | | | | | 16,013 | | | | | | 16,521 | | |
Smart Foodservice | | | (m)(s) | | | Food & Staples Retailing | | | L+475 | | | | | | | | | 6/20/26 | | | | | 2,528 | | | | | | 2,503 | | | | | | 2,537 | | |
Sorenson Communications LLC | | | (i)(s) | | | Telecommunication Services | | | L+650 | | | | | | | | | 4/29/24 | | | | | 55,946 | | | | | | 53,768 | | | | | | 56,156 | | |
Staples Canada | | | (m) | | | Retailing | | | L+700 | | | | | 1.0% | | | | 9/12/24 | | | | C$ | 51,070 | | | | | | 39,517 | | | | | | 39,767 | | |
Sungard Availability Services Capital Inc | | | | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 2/3/22 | | | | $ | 734 | | | | | | 712 | | | | | | 760 | | |
Sungard Availability Services Capital Inc | | | (n) | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 2/3/22 | | | | | 734 | | | | | | 712 | | | | | | 760 | | |
Sutherland Global Services Inc | | | (h)(i)(m)(s) | | | Software & Services | | | L+538 | | | | | 1.0% | | | | 4/23/21 | | | | | 12,956 | | | | | | 12,522 | | | | | | 12,853 | | |
Swift Worldwide Resources Holdco Ltd | | | (f)(g) | | | Energy | | | L+1,000, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 7/20/21 | | | | | 19,650 | | | | | | 19,650 | | | | | | 19,650 | | |
Tangoe LLC | | | (h) | | | Software & Services | | | L+650 | | | | | 1.0% | | | | 11/28/25 | | | | | 51,764 | | | | | | 51,279 | | | | | | 51,402 | | |
Team Health Inc | | | (s) | | | Health Care Equipment & Services | | | L+275 | | | | | 1.0% | | | | 2/6/24 | | | | | 77 | | | | | | 71 | | | | | | 69 | | |
Torrid Inc | | | (g) | | | Retailing | | | L+675 | | | | | 1.0% | | | | 12/14/24 | | | | | 20,060 | | | | | | 19,837 | | | | | | 19,835 | | |
Trace3 Inc | | | (f)(g)(h)(i) | | | Software & Services | | | L+675 | | | | | 1.0% | | | | 8/3/24 | | | | | 160,775 | | | | | | 160,775 | | | | | | 159,168 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||
SMART Global Holdings Inc | (r)(s) | Semiconductors & Semiconductor Equipment | L+400 | 2/9/21 | $ | 0.1 | $ | 0.1 | $ | 0.1 | ||||||||||||||
Sorenson Communications LLC | (f)(k)(m)(n)(q)(ab) | Telecommunication Services | L+650 | 4/29/24 | 76.5 | 73.9 | 71.7 | |||||||||||||||||
Staples Canada | (n)(r) | Retailing | L+700 | 1.0 | % | 9/12/24 | C$ | 4.3 | 3.5 | 3.1 | ||||||||||||||
Sungard Availability Services Capital Inc | (n) | Software & Services | L+750 | 1.0 | % | 2/3/22 | $ | 2.4 | 2.3 | 2.5 | ||||||||||||||
Sungard Availability Services Capital Inc | (s) | Software & Services | L+750 | 1.0 | % | 2/3/22 | 2.4 | 2.3 | 2.5 | |||||||||||||||
Sutherland Global Services Inc | (n)(p)(r)(ab) | Software & Services | L+538 | 1.0 | % | 4/23/21 | 6.1 | 6.0 | 4.5 | |||||||||||||||
Swift Worldwide Resources Holdco Ltd | (k)(n)(q) | Energy | 9.5% L+150 PIK (L+150 Max PIK) | 2.5 | % | 7/20/21 | 37.9 | 37.9 | 37.6 | |||||||||||||||
Syncsort Inc | (n)(ab) | Software & Services | L+600 | 1.0 | % | 8/16/24 | 4.8 | 3.8 | 3.9 | |||||||||||||||
Tangoe LLC | (f)(n)(o)(p) | Software & Services | L+650 | 1.0 | % | 11/28/25 | 102.5 | 101.6 | 99.0 | |||||||||||||||
Torrid Inc | (f)(k)(l)(n) | Retailing | L+675 | 1.0 | % | 12/14/24 | 39.7 | 39.3 | 39.1 | |||||||||||||||
Total Safety US Inc | (f)(n)(ab) | Capital Goods | L+600 | 1.0 | % | 8/16/25 | 1.0 | 0.9 | 0.8 | |||||||||||||||
Trace3 Inc | (f)(k)(l)(n)(o)(p) | Software & Services | L+675 | 1.0 | % | 8/3/24 | 168.9 | 168.9 | 165.3 | |||||||||||||||
Transaction Services Group Ltd | (n)(r) | Consumer Services | L+600 | 10/15/26 | A$ | 72.7 | 48.2 | 40.9 | ||||||||||||||||
Transaction Services Group Ltd | (n)(r) | Consumer Services | L+600 | 10/15/26 | £ | 7.7 | 9.8 | 8.8 | ||||||||||||||||
Transaction Services Group Ltd | (n)(r) | Consumer Services | L+600 | 10/15/26 | $ | 20.1 | 20.1 | 18.4 | ||||||||||||||||
Truck-Lite Co LLC | (n) | Capital Goods | L+625 | 1.0 | % | 12/13/24 | USD | 8.8 | 8.7 | 8.4 | ||||||||||||||
Truck-Lite Co LLC | (s) | Capital Goods | L+625 | 1.0 | % | 12/13/24 | 4.9 | 4.8 | 4.6 | |||||||||||||||
Truck-Lite Co LLC | (f)(k)(n)(o)(p) | Capital Goods | L+625 | 1.0 | % | 12/13/26 | 127.6 | 126.4 | 121.5 | |||||||||||||||
Truck-Lite Co LLC | (s) | Capital Goods | L+625 | 1.0 | % | 12/13/26 | 18.8 | 18.6 | 17.9 | |||||||||||||||
Virgin Pulse Inc | (f)(l)(m)(o)(p) | Software & Services | L+650 | 1.0 | % | 5/22/25 | 159.0 | 158.0 | 155.2 | |||||||||||||||
Warren Resources Inc | (n)(ad) | Energy | L+1,000, 1.0% PIK (1.0% Max PIK) | 1.0 | % | 5/22/20 | 21.0 | 21.0 | 19.1 | |||||||||||||||
West Corp | (l)(ab) | Software & Services | L+350 | 1.0 | % | 10/10/24 | 4.9 | 4.4 | 3.7 | |||||||||||||||
West Corp | (l)(o)(ab) | Software & Services | L+400 | 1.0 | % | 10/10/24 | 19.6 | 18.1 | 14.8 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+855 | 1.0 | % | 1/26/21 | 0.5 | 0.5 | 0.5 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+855 | 1.0 | % | 8/26/21 | 0.3 | 0.3 | 0.3 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0 | % | 6/30/24 | 1.0 | 1.0 | 1.0 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0 | % | 11/1/24 | 0.4 | 0.4 | 0.4 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0 | % | 12/21/24 | 0.2 | 0.2 | 0.2 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0 | % | 12/21/24 | 0.7 | 0.7 | 0.7 | |||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0 | % | 12/21/24 | 0.7 | 0.7 | 0.7 | |||||||||||||||
Zeta Interactive Holdings Corp | (m)(n)(o)(p)(q) | Software & Services | L+750 | 1.0 | % | 7/29/22 | 122.2 | 122.2 | 122.2 | |||||||||||||||
Zeta Interactive Holdings Corp | (s) | Software & Services | L+750 | 1.0 | % | 7/29/22 | 4.4 | 4.4 | 4.4 | |||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Senior Secured Loans—First Lien | 5,908.4 | 5,419.0 | ||||||||||||||||||||||
Unfunded Loan Commitments | (302.9 | ) | (302.9 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Senior Secured Loans—First Lien | 5,605.5 | 5,116.1 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Senior Secured Loans—Second Lien—16.5% | ||||||||||||||||||||||||
Advantage Sales & Marketing Inc | (n)(ab) | Commercial & Professional Services | L+650 | 1.0 | % | 7/25/22 | 8.1 | 7.1 | 5.9 | |||||||||||||||
American Bath Group LLC | (l)(n)(ab) | Capital Goods | L+975 | 1.0 | % | 9/30/24 | 3.0 | 3.0 | 2.7 | |||||||||||||||
Ammeraal Beltech Holding BV | (f)(n)(o)(r) | Capital Goods | L+800 | 7/27/26 | 51.3 | 50.4 | 47.7 | |||||||||||||||||
Applied Systems Inc | (n)(ab) | Software & Services | L+700 | 1.0 | % | 9/19/25 | 2.6 | 2.6 | 2.4 | |||||||||||||||
Arena Energy LP | (l)(n)(o)(p)(t)(u) | Energy | L+900, 4.0% PIK (4.0% Max PIK) | 1.0 | % | 1/24/21 | 54.4 | 53.5 | 36.0 | |||||||||||||||
athenahealth Inc | (f)(m)(n)(p) | Health Care Equipment & Services | L+850 | 2/11/27 | 129.2 | 128.0 | 126.3 | |||||||||||||||||
BCA Marketplace PLC | (n)(r) | Retailing | L+825 | 11/12/27 | £ | 30.2 | 37.3 | 35.1 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Vertiv Group Corp | | | (j)(s) | | | Technology Hardware & Equipment | | | L+400 | | | | | 1.0% | | | | 11/30/23 | | | | $ | 10,975 | | | | | $ | 10,519 | | | | | $ | 10,454 | | |
Virgin Pulse Inc | | | (h)(i) | | | Software & Services | | | L+650 | | | | | 1.0% | | | | 5/22/25 | | | | | 79,490 | | | | | | 78,926 | | | | | | 79,097 | | |
Vivint Inc | | | (i)(s) | | | Commercial & Professional Services | | | L+500 | | | | | | | | | 4/1/24 | | | | | 18,490 | | | | | | 18,446 | | | | | | 17,704 | | |
Warren Resources Inc | | | (t) | | | Energy | | | L+1,000, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 5/22/20 | | | | | 14,734 | | | | | | 14,734 | | | | | | 14,734 | | |
York Risk Services Group Inc | | | (j)(s) | | | Insurance | | | L+375 | | | | | 1.0% | | | | 10/1/21 | | | | | 8,182 | | | | | | 7,819 | | | | | | 7,758 | | |
Zeta Interactive Holdings Corp | | | (f)(h) | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 7/29/22 | | | | | 40,398 | | | | | | 40,398 | | | | | | 40,802 | | |
Zeta Interactive Holdings Corp | | | (n) | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 7/29/22 | | | | | 3,286 | | | | | | 3,286 | | | | | | 3,319 | | |
Total Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,058,712 | | | | | | 2,977,209 | | |
Unfunded Loan Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (113,705) | | | | | | (113,705) | | |
Net Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,945,007 | | | | | | 2,863,504 | | |
Senior Secured Loans—Second Lien—14.5% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Access CIG LLC | | | (s) | | | Software & Services | | | L+775 | | | | | | | | | 2/27/26 | | | | | 1,326 | | | | | | 1,341 | | | | | | 1,321 | | |
Advantage Sales & Marketing Inc | | | (s) | | | Commercial & Professional Services | | | L+650 | | | | | 1.0% | | | | 7/25/22 | | | | | 2,291 | | | | | | 2,065 | | | | | | 1,825 | | |
American Bath Group LLC | | | (i)(s) | | | Capital Goods | | | L+975 | | | | | 1.0% | | | | 9/30/24 | | | | | 7,000 | | | | | | 6,623 | | | | | | 7,000 | | |
Ammeraal Beltech Holding BV | | | (h)(m) | | | Capital Goods | | | L+800 | | | | | | | | | 7/27/26 | | | | | 52,309 | | | | | | 51,337 | | | | | | 51,053 | | |
Arena Energy LP | | | (f)(h) | | | Energy | | | L+1,300 PIK (L+1,300 Max PIK) | | | | | 1.0% | | | | 1/24/21 | | | | | 26,390 | | | | | | 26,390 | | | | | | 26,389 | | |
athenahealth Inc | | | (h) | | | Health Care Equipment & Services | | | L+850 | | | | | | | | | 2/11/27 | | | | | 65,229 | | | | | | 64,605 | | | | | | 65,737 | | |
Bellatrix Exploration Ltd | | | (m) | | | Energy | | | 8.5% | | | | | | | | | 9/11/23 | | | | | 6,372 | | | | | | 5,981 | | | | | | 5,778 | | |
Byrider Finance LLC | | | | | | Automobiles & Components | | | L+1,000, 0.5% PIK (4.0% Max PIK) | | | | | 1.3% | | | | 8/22/20 | | | | | 29,769 | | | | | | 29,769 | | | | | | 29,508 | | |
Chisholm Oil & Gas Operating LLC | | | (h) | | | Energy | | | L+800 | | | | | 1.0% | | | | 3/21/24 | | | | | 16,000 | | | | | | 16,000 | | | | | | 15,735 | | |
Crossmark Holdings Inc | | | (i)(k)(l)(s) | | | Media | | | L+750 | | | | | 1.3% | | | | 12/21/20 | | | | | 7,778 | | | | | | 7,786 | | | | | | 58 | | |
Emerald Performance Materials LLC | | | (j)(s) | | | Materials | | | L+775 | | | | | 1.0% | | | | 8/1/22 | | | | | 230 | | | | | | 227 | | | | | | 226 | | |
Excelitas Technologies Corp | | | (s) | | | Technology Hardware & Equipment | | | L+750 | | | | | 1.0% | | | | 12/1/25 | | | | | 3,101 | | | | | | 3,120 | | | | | | 3,111 | | |
Fairway Group Holdings Corp | | | (k)(l) | | | Food & Staples Retailing | | | 11.0% PIK (11.0% Max PIK) | | | | | | | | | 2/24/24 | | | | | 1,843 | | | | | | 1,520 | | | | | | — | | |
Gruden Acquisition Inc | | | (h)(s) | | | Transportation | | | L+850 | | | | | 1.0% | | | | 8/18/23 | | | | | 15,000 | | | | | | 14,552 | | | | | | 14,925 | | |
LBM Borrower LLC | | | (f)(h)(i)(s) | | | Capital Goods | | | L+925 | | | | | 1.0% | | | | 8/20/23 | | | | | 29,332 | | | | | | 29,109 | | | | | | 28,746 | | |
One Call Care Management Inc | | | (h) | | | Insurance | | | L+375, 6.0% PIK (6.0% Max PIK) | | | | | 1.0% | | | | 4/11/24 | | | | | 12,866 | | | | | | 12,763 | | | | | | 11,134 | | |
OPE Inmar Acquisition Inc | | | (i)(s) | | | Software & Services | | | L+800 | | | | | 1.0% | | | | 5/1/25 | | | | | 2,615 | | | | | | 2,585 | | | | | | 2,458 | | |
P2 Energy Solutions, Inc. | | | (i)(s) | | | Software & Services | | | L+800 | | | | | 1.0% | | | | 4/30/21 | | | | | 14,500 | | | | | | 14,593 | | | | | | 14,246 | | |
Paradigm Acquisition Corp | | | (s) | | | Health Care Equipment & Services | | | L+750 | | | | | | | | | 10/26/26 | | | | | 1,599 | | | | | | 1,595 | | | | | | 1,591 | | |
Peak 10 Holding Corp | | | (i)(s) | | | Telecommunication Services | | | L+725 | | | | | 1.0% | | | | 8/1/25 | | | | | 5,814 | | | | | | 5,640 | | | | | | 4,902 | | |
Pure Fishing Inc | | | (i) | | | Consumer Durables & Apparel | | | L+838 | | | | | 1.0% | | | | 12/31/26 | | | | | 46,828 | | | | | | 46,380 | | | | | | 44,170 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||
Bellatrix Exploration Ltd | (n)(r)(t)(u) | Energy | 8.5% | 9/11/23 | $ | 5.6 | $ | 5.6 | $ | 4.4 | ||||||||||||||
Bellatrix Exploration Ltd | (n)(r)(t)(u) | Energy | 8.5% | 9/11/23 | 13.5 | 12.3 | — | |||||||||||||||||
Byrider Finance LLC | (n) | Automobiles & Components | L+1,000, 0.5% PIK (0.5% Max PIK) | 1.3 | % | 6/7/22 | 35.9 | 35.9 | 35.9 | |||||||||||||||
CDS US Intermediate Holdings Inc | (l)(n)(r)(t)(u)(ab) | Media & Entertainment | L+825 | 1.0 | % | 7/10/23 | 21.2 | 18.9 | 8.7 | |||||||||||||||
Chisholm Oil & Gas Operating LLC | (n)(t)(u) | Energy | L+550, 3.0% PIK (3.0% Max PIK) | 1.3 | % | 3/21/24 | 38.6 | 38.3 | 14.6 | |||||||||||||||
CommerceHub Inc | (n) | Software & Services | L+775 | 5/21/26 | 3.2 | 3.1 | 3.1 | |||||||||||||||||
Constellis Holdings LLC | (f)(n)(ad) | Capital Goods | L+100, 10% PIK (10% Max PIK) | 1.0 | % | 3/31/25 | 13.5 | 13.5 | 13.5 | |||||||||||||||
Dayton Superior Corp | (n) | Materials | L+700 | 2.0 | % | 12/4/24 | 1.9 | 1.9 | 1.9 | |||||||||||||||
Electronics For Imaging Inc | (n)(ab) | Technology Hardware & Equipment | L+900 | 7/23/27 | 3.9 | 3.7 | 3.1 | |||||||||||||||||
Emerald Performance Materials LLC | (l)(n)(ab) | Materials | L+775 | 1.0 | % | 8/1/22 | 5.3 | 5.3 | 4.4 | |||||||||||||||
Excelitas Technologies Corp | (l)(n)(ab) | Technology Hardware & Equipment | L+750 | 1.0 | % | 12/1/25 | 6.6 | 6.7 | 5.2 | |||||||||||||||
Fairway Group Holdings Corp | (n)(t)(u)(ad) | Food & Staples Retailing | 11.0% PIK (11.0% Max PIK) | 2/24/24 | 6.5 | 5.0 | — | |||||||||||||||||
Gruden Acquisition Inc | (m)(p)(ab) | Transportation | L+850 | 1.0 | % | 8/18/23 | 25.0 | 24.4 | 22.8 | |||||||||||||||
Invictus | (n)(ab) | Materials | L+675 | 3/30/26 | 0.1 | 0.1 | 0.1 | |||||||||||||||||
LBM Borrower LLC | (l)(n)(p)(q)(ab) | Capital Goods | L+925 | 1.0 | % | 8/20/23 | 75.0 | 72.1 | 68.8 | |||||||||||||||
NEP Broadcasting LLC | (n)(ab) | Media & Entertainment | L+700 | 10/19/26 | 5.8 | 5.6 | 3.0 | |||||||||||||||||
OEConnection LLC | (f)(p) | Software & Services | L+825 | 9/25/27 | 42.9 | 42.5 | 40.4 | |||||||||||||||||
Ontic Engineering & Manufacturing Inc | (f)(n) | Capital Goods | L+850 | 10/29/27 | 26.8 | 26.3 | 24.8 | |||||||||||||||||
OPE Inmar Acquisition Inc | (l)(n)(ab) | Software & Services | L+800 | 1.0 | % | 5/1/25 | 15.0 | 15.0 | 11.1 | |||||||||||||||
Paradigm Acquisition Corp | (l)(n)(ab) | Health Care Equipment & Services | L+750 | 10/26/26 | 3.7 | 3.7 | 2.9 | |||||||||||||||||
Peak 10 Holding Corp | (n)(ab) | Telecommunication Services | L+725 | 1.0 | % | 8/1/25 | 15.9 | 13.6 | 6.4 | |||||||||||||||
Polyconcept North America Inc | (n) | Household & Personal Products | L+1,000 | 1.0 | % | 2/16/24 | 0.6 | 0.6 | 0.6 | |||||||||||||||
Pure Fishing Inc | (f)(n) | Consumer Durables & Apparel | L+838 | 1.0 | % | 12/31/26 | 45.9 | 45.5 | 36.7 | |||||||||||||||
Rise Baking Company | (f)(l)(n) | Food, Beverage & Tobacco | L+800 | 1.0 | % | 8/9/26 | 17.6 | 17.5 | 17.0 | |||||||||||||||
Sequa Corp | (n)(ab) | Materials | L+900 | 1.0 | % | 4/28/22 | 2.3 | 2.3 | 1.7 | |||||||||||||||
SIRVA Worldwide Inc | (n)(ab) | Commercial & Professional Services | L+950 | 8/3/26 | 6.5 | 5.9 | 5.2 | |||||||||||||||||
Sorenson Communications LLC | (n)(o)(p) | Telecommunication Services | 11.5% PIK (11.5% Max PIK) | 4/30/25 | 15.4 | 15.4 | 15.4 | |||||||||||||||||
Sparta Systems Inc | (n) | Software & Services | L+825 | 1.0 | % | 8/21/25 | 2.4 | 2.4 | 2.1 | |||||||||||||||
Sungard Availability Services Capital Inc | (m)(n) | Software & Services | L+400, 2.5% PIK (2.5% Max PIK) | 1.0 | % | 11/3/22 | 12.7 | 12.7 | 12.7 | |||||||||||||||
Titan Energy LLC | (n)(t)(u)(ad) | Energy | L+900 | 1.0 | % | 5/23/20 | 137.2 | 100.7 | — | |||||||||||||||
Vantage Specialty Chemicals Inc | (n)(ab) | Materials | L+825 | 1.0 | % | 10/27/25 | 0.8 | 0.7 | 0.5 | |||||||||||||||
WireCo WorldGroup Inc | (n)(ab) | Capital Goods | L+900 | 1.0 | % | 9/30/24 | 14.1 | 13.9 | 12.4 | |||||||||||||||
Wittur Holding GmbH | (n)(r) | Capital Goods | E+850, 0.5% PIK (0.5% Max PIK) | 9/23/27 | € | 55.2 | 60.5 | 57.1 | ||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Senior Secured Loans—Second Lien | 913.5 | 692.6 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Other Senior Secured Debt—3.6% | ||||||||||||||||||||||||
Advanced Lighting Technologies Inc | (n)(t)(u)(ad) | Materials | L+1,700 PIK (L+1,700 Max PIK) | 1.0 | % | 10/4/23 | $ | 15.1 | 10.7 | — | ||||||||||||||
APTIM Corp | (g)(n)(ab) | Diversified Financials | 7.8% | 6/15/25 | 8.2 | 8.1 | 2.8 | |||||||||||||||||
Black Swan Energy Ltd | (n)(r) | Energy | 9.0% | 1/20/24 | 4.0 | 4.0 | 3.2 | |||||||||||||||||
Cleaver-Brooks Inc | (h)(aa)(ab) | Capital Goods | 7.9% | 3/1/23 | 0.2 | 0.2 | 0.2 | |||||||||||||||||
Diamond Resorts International Inc | (m)(ab) | Consumer Services | 7.8% | 9/1/23 | 4.9 | 4.9 | 3.5 | |||||||||||||||||
Enterprise Development Authority | (g)(h)(aa)(ab) | Consumer Services | 12.0% | 7/15/24 | 8.2 | 8.5 | 7.2 | |||||||||||||||||
FourPoint Energy LLC | (n)(p) | Energy | 9.0% | 12/31/21 | 46.3 | 45.7 | 37.1 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Rise Baking Company | | | (i) | | | Food, Beverage & Tobacco | | | L+800 | | | | | 1.0% | | | | 8/9/26 | | | | $ | 17,990 | | | | | $ | 17,824 | | | | | $ | 17,718 | | |
Sequa Corp | | | (i)(s) | | | Materials | | | L+900 | | | | | 1.0% | | | | 4/28/22 | | | | | 7,462 | | | | | | 7,422 | | | | | | 7,163 | | |
SIRVA Worldwide Inc | | | (i)(s) | | | Commercial & Professional Services | | | L+950 | | | | | | | | | 8/3/26 | | | | | 2,494 | | | | | | 2,319 | | | | | | 2,170 | | |
SMG/PA | | | (s) | | | Consumer Services | | | L+700 | | | | | | | | | 1/23/26 | | | | | 3,641 | | | | | | 3,670 | | | | | | 3,692 | | |
Sorenson Communications LLC | | | (h) | | | Telecommunication Services | | | 11.5% PIK (11.5% Max PIK) | | | | | | | | | 4/30/25 | | | | | 5,489 | | | | | | 5,317 | | | | | | 5,489 | | |
Titan Energy LLC | | | (h)(k)(l) | | | Energy | | | L+1,300 PIK (L+1,300 Max PIK) | | | | | 1.0% | | | | 2/23/20 | | | | | 91,946 | | | | | | 67,595 | | | | | | 670 | | |
WireCo WorldGroup Inc | | | (s) | | | Capital Goods | | | L+900 | | | | | 1.0% | | | | 9/30/24 | | | | | 5,115 | | | | | | 5,174 | | | | | | 5,115 | | |
Total Senior Secured Loans—Second Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 453,302 | | | | | | 371,930 | | |
Other Senior Secured Debt—8.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies Inc | | | (k)(l)(t) | | | Materials | | | L+1,700 PIK (L+1,700 Max PIK) | | | | | 1.0% | | | | 10/4/23 | | | | | 13,112 | | | | | | 10,663 | | | | | | 164 | | |
Akzo Nobel Specialty Chemicals | | | (m)(s) | | | Materials | | | 8.0% | | | | | | | | | 10/1/26 | | | | | 6,305 | | | | | | 6,283 | | | | | | 6,510 | | |
Artesyn Embedded Technologies Inc | | | (s) | | | Technology Hardware & Equipment | | | 9.8% | | | | | | | | | 10/15/20 | | | | | 2,238 | | | | | | 2,168 | | | | | | 2,277 | | |
Black Swan Energy Ltd | | | (m) | | | Energy | | | 9.0% | | | | | | | | | 1/20/24 | | | | | 1,333 | | | | | | 1,333 | | | | | | 1,313 | | |
Enterprise Development Authority/The | | | (s) | | | Consumer Services | | | 12.0% | | | | | | | | | 7/15/24 | | | | | 3,356 | | | | | | 3,489 | | | | | | 3,658 | | |
FourPoint Energy LLC | | | (h)(i) | | | Energy | | | 9.0% | | | | | | | | | 12/31/21 | | | | | 46,313 | | | | | | 45,347 | | | | | | 45,618 | | |
Frontier Communications Corp | | | (m)(s) | | | Telecommunication Services | | | 8.5% | | | | | | | | | 4/1/26 | | | | | 10,722 | | | | | | 10,385 | | | | | | 10,427 | | |
Genesys Telecommunications Laboratories Inc | | | (s) | | | Technology Hardware & Equipment | | | 10.0% | | | | | | | | | 11/30/24 | | | | | 144 | | | | | | 158 | | | | | | 157 | | |
JC Penney Corp Inc | | | (m)(s) | | | Retailing | | | 5.7% | | | | | | | | | 6/1/20 | | | | | 126 | | | | | | 118 | | | | | | 114 | | |
JW Aluminum Co | | | (h)(s)(t) | | | Materials | | | 10.3% | | | | | | | | | 6/1/26 | | | | | 33,001 | | | | | | 33,001 | | | | | | 34,816 | | |
Lycra | | | (g)(m)(s) | | | Consumer Durables & Apparel | | | 7.5% | | | | | | | | | 5/1/25 | | | | | 6,732 | | | | | | 6,732 | | | | | | 6,421 | | |
Mood Media Corp | | | (h)(t) | | | Media | | | L+1,400 PIK (L+1,400 Max PIK) | | | | | | | | | 12/31/23 | | | | | 40,563 | | | | | | 39,429 | | | | | | 40,563 | | |
MultiPlan Inc | | | (s) | | | Health Care Equipment & Services | | | 7.1% | | | | | | | | | 6/1/24 | | | | | 6,952 | | | | | | 7,004 | | | | | | 6,554 | | |
Numericable-SFR | | | (m)(s) | | | Software & Services | | | 8.1% | | | | | | | | | 2/1/27 | | | | | 917 | | | | | | 917 | | | | | | 965 | | |
PAREXEL International Corp | | | (s) | | | Pharmaceuticals, Biotechnology & Life Sciences | | | 6.4% | | | | | | | | | 9/1/25 | | | | | 72 | | | | | | 70 | | | | | | 67 | | |
Pattonair Holdings Ltd | | | (j)(m)(s) | | | Capital Goods | | | 9.0% | | | | | | | | | 11/1/22 | | | | | 6,767 | | | | | | 6,959 | | | | | | 6,970 | | |
Ply Gem Holdings Inc | | | (s) | | | Capital Goods | | | 8.0% | | | | | | | | | 4/15/26 | | | | | 7,807 | | | | | | 7,470 | | | | | | 7,631 | | |
Sungard Availability Services Capital Inc | | | (f) | | | Software & Services | | | L+400, 2.5% PIK (2.5% Max PIK) | | | | | 1.0% | | | | 11/3/22 | | | | | 3,297 | | | | | | 3,297 | | | | | | 3,297 | | |
Sunnova Energy Corp | | | | | | Energy | | | 9.5% | | | | | | | | | 3/30/21 | | | | | 1,157 | | | | | | 1,182 | | | | | | 1,185 | | |
Velvet Energy Ltd | | | (i)(m) | | | Energy | | | 9.0% | | | | | | | | | 10/5/23 | | | | | 15,000 | | | | | | 15,000 | | | | | | 15,675 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||
JW Aluminum Co | (g)(h)(p)(aa)(ab)(ad) | Materials | 10.3% | 6/1/26 | $ | 34.5 | $ | 34.5 | $ | 30.3 | ||||||||||||||
Lycra | (g)(h)(n)(r)(aa)(ab) | Consumer Durables & Apparel | 7.5% | 5/1/25 | 16.4 | 16.4 | 9.6 | |||||||||||||||||
Mood Media Corp | (n)(t)(u)(ad) | Media & Entertainment | 14.0% PIK (14.0% Max PIK) | 12/31/23 | 43.9 | 42.9 | 23.3 | |||||||||||||||||
TruckPro LLC | (g)(h)(aa)(ab) | Capital Goods | 11.0% | 10/15/24 | 7.9 | 7.5 | 7.5 | |||||||||||||||||
Velvet Energy Ltd | (n)(r) | Energy | 9.0% | 10/5/23 | 7.5 | 7.5 | 6.4 | |||||||||||||||||
Vivint Inc | (g)(h)(k)(m)(aa)(ab) | Commercial & Professional Services | 7.9% | 12/1/22 | 19.2 | 18.9 | 18.4 | |||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Other Senior Secured Debt | 209.8 | 149.5 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Subordinated Debt—5.5% | ||||||||||||||||||||||||
All Systems Holding LLC | (n) | Commercial & Professional Services | 10.0% PIK (10.0% Max PIK) | 10/31/22 | 0.2 | 0.2 | 0.2 | |||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU | (g)(h)(aa)(ab) | Energy | 10.0% | 4/1/22 | 26.0 | 26.0 | 14.1 | |||||||||||||||||
athenahealth Inc | (n) | Health Care Equipment & Services | L+1,125 PIK (L+1,125 Max PIK) | 2/11/27 | 74.9 | 74.8 | 72.3 | |||||||||||||||||
Byrider Finance LLC | (n) | Automobiles & Components | 20.0% PIK (20.0% Max PIK) | 3/31/22 | 2.3 | 2.3 | 2.3 | |||||||||||||||||
ClubCorp Club Operations Inc | (g)(h)(n)(aa)(ab) | Consumer Services | 8.5% | 9/15/25 | 31.8 | 30.9 | 19.4 | |||||||||||||||||
Craftworks Rest & Breweries Group Inc | (n)(t)(u) | Consumer Services | 12.0% PIK (12.0% Max PIK) | 11/1/24 | 6.2 | 6.2 | — | |||||||||||||||||
Diamond Resorts International Inc | (g)(h)(aa)(ab) | Consumer Services | 10.8% | 9/1/24 | 4.4 | 4.6 | 2.7 | |||||||||||||||||
Intelsat Jackson Holdings SA | (g)(h)(n)(r)(aa)(ab) | Media & Entertainment | 5.5% | 8/1/23 | 3.7 | 3.4 | 2.3 | |||||||||||||||||
Kenan Advantage Group Inc | (h)(aa)(ab) | Transportation | 7.9% | 7/31/23 | 19.2 | 17.2 | 16.3 | |||||||||||||||||
LifePoint Hospitals Inc | (g)(h)(aa)(ab) | Health Care Equipment & Services | 9.8% | 12/1/26 | 10.3 | 10.6 | 9.8 | |||||||||||||||||
Montage Resources Corp | (h)(n)(r)(aa)(ab) | Energy | 8.9% | 7/15/23 | 10.6 | 10.5 | 7.2 | |||||||||||||||||
MultiPlan Inc | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 7.1% | 6/1/24 | 10.0 | 10.1 | 8.8 | |||||||||||||||||
Opendoor Labs Inc | (n)(r) | Real Estate | 10.0% | 1/23/26 | 26.8 | 26.8 | 26.8 | |||||||||||||||||
Opendoor Labs Inc | (r)(s) | Real Estate | 10.0% | 1/23/26 | 53.6 | 53.6 | 53.7 | |||||||||||||||||
Plastipak Holdings Inc | (g)(h)(aa)(ab) | Materials | 6.3% | 10/15/25 | 1.4 | 1.3 | 1.3 | |||||||||||||||||
Quorum Health Corp | (g)(h)(n)(t)(u)(aa)(ab) | Health Care Equipment & Services | 11.6% | 4/15/23 | 6.0 | 6.0 | 4.0 | |||||||||||||||||
Radiology Partners Inc | (h)(aa)(ab) | Health Care Equipment & Services | 9.3% | 2/1/28 | 2.5 | 2.5 | 2.2 | |||||||||||||||||
SRS Distribution Inc | (g)(h)(p)(aa)(ab) | Capital Goods | 8.3% | 7/1/26 | 22.8 | 22.6 | 20.7 | |||||||||||||||||
Team Health Inc | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 6.4% | 2/1/25 | 20.5 | 18.4 | 7.4 | |||||||||||||||||
Vivint Inc | (g)(h)(aa)(ab) | Commercial & Professional Services | 7.6% | 9/1/23 | 14.3 | 13.4 | 11.2 | |||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Subordinated Debt | 341.4 | 282.7 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Unfunded Debt Commitments | (53.6 | ) | (53.6 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Net Subordinated Debt | 287.8 | 229.1 | ||||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | |||||||||
Vivint Inc | | | (g)(h)(s) | | | Commercial & Professional Services | | | 7.9% | | | | | | 12/1/22 | | | | $ | 11,307 | | | | | $ | 11,102 | | | | | $ | 10,897 | | |
Vivint Inc | | | (h)(s) | | | Commercial & Professional Services | | | 7.6% | | | | | | 9/1/23 | | | | | 7,309 | | | | | | 6,758 | | | | | | 5,920 | | |
Total Other Senior Secured Debt | | | | | | | | | | | | | | | | | | | | | | | | | | 218,865 | | | | | | 211,199 | | |
Subordinated Debt—8.5% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
All Systems Holding LLC | | | | | | Commercial & Professional Services | | | 10.0% PIK (10.0% Max PIK) | | | | | | 10/31/22 | | | | | 206 | | | | | | 206 | | | | | | 206 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp | | | (h)(i)(s) | | | Energy | | | 10.0% | | | | | | 4/1/22 | | | | | 26,026 | | | | | | 26,026 | | | | | | 27,682 | | |
athenahealth Inc | | | | | | Health Care Equipment & Services | | | L+1,125 PIK (L+1,125 Max PIK) | | | | | | | | | | | 32,614 | | | | | | 32,614 | | | | | | 33,032 | | |
Avantor Inc | | | (i)(s) | | | Pharmaceuticals, Biotechnology & Life Sciences | | | 9.0% | | | | | | 10/1/25 | | | | | 20,000 | | | | | | 20,000 | | | | | | 22,350 | | |
Byrider Finance LLC | | | | | | Automobiles & Components | | | 20.0% PIK (20.0% Max PIK) | | | | | | 3/31/22 | | | | | 1,765 | | | | | | 1,765 | | | | | | 1,765 | | |
CEC Entertainment Inc | | | (s) | | | Consumer Services | | | 8.0% | | | | | | 2/15/22 | | | | | 3,728 | | | | | | 3,682 | | | | | | 3,770 | | |
ClubCorp Club Operations Inc | | | (h)(s) | | | Consumer Services | | | 8.5% | | | | | | 9/15/25 | | | | | 10,733 | | | | | | 10,381 | | | | | | 10,009 | | |
Diamond Resorts International Inc | | | (s) | | | Consumer Services | | | 10.8% | | | | | | 9/1/24 | | | | | 3,048 | | | | | | 3,181 | | | | | | 3,018 | | |
Eclipse Resources Corp | | | (m)(s) | | | Energy | | | 8.9% | | | | | | 7/15/23 | | | | | 8,175 | | | | | | 8,073 | | | | | | 6,928 | | |
GFL Environmental Inc | | | (m)(s) | | | Commercial & Professional Services | | | 8.5% | | | | | | 5/1/27 | | | | | 8,827 | | | | | | 9,076 | | | | | | 9,522 | | |
Hub International Ltd | | | (s) | | | Insurance | | | 7.0% | | | | | | 5/1/26 | | | | | 3,518 | | | | | | 3,469 | | | | | | 3,575 | | |
Intelsat Jackson Holdings SA | | | (m)(s) | | | Media | | | 5.5% | | | | | | 8/1/23 | | | | | 5,752 | | | | | | 5,231 | | | | | | 5,277 | | |
Ken Garff Automotive LLC | | | (s) | | | Retailing | | | 7.5% | | | | | | 8/15/23 | | | | | 6,004 | | | | | | 6,050 | | | | | | 6,244 | | |
LifePoint Hospitals Inc | | | (s) | | | Health Care Equipment & Services | | | 9.8% | | | | | | 12/1/26 | | | | | 9,259 | | | | | | 9,287 | | | | | | 9,722 | | |
Logan’s Roadhouse Inc | | | (l) | | | Consumer Services | | | | | | | | | 11/1/24 | | | | | 4,907 | | | | | | 4,861 | | | | | | 4,907 | | |
Plastipak Holdings Inc | | | (s) | | | Materials | | | 6.3% | | | | | | 10/15/25 | | | | | 974 | | | | | | 911 | | | | | | 886 | | |
Quorum Health Corp | | | (s) | | | Health Care Equipment & Services | | | 11.6% | | | | | | 4/15/23 | | | | | 2,396 | | | | | | 2,384 | | | | | | 2,097 | | |
SRS Distribution Inc | | | (h)(s) | | | Capital Goods | | | 8.3% | | | | | | 7/1/26 | | | | | 11,667 | | | | | | 11,486 | | | | | | 11,375 | | |
Stars Group Holdings BV | | | (m)(s) | | | Consumer Services | | | 7.0% | | | | | | 7/15/26 | | | | | 1,438 | | | | | | 1,438 | | | | | | 1,524 | | |
Team Health Inc | | | (s) | | | Health Care Equipment & Services | | | 6.4% | | | | | | 2/1/25 | | | | | 6,901 | | | | | | 6,017 | | | | | | 5,314 | | |
Vertiv Group Corp | | | (h)(s) | | | Technology Hardware & Equipment | | | 9.3% | | | | | | 10/15/24 | | | | | 16,553 | | | | | | 16,390 | | | | | | 15,932 | | |
Vivint Inc | | | (h)(s) | | | Commercial & Professional Services | | | 8.8% | | | | | | 12/1/20 | | | | | 5,813 | | | | | | 5,666 | | | | | | 5,537 | | |
York Risk Services Group Inc | | | (h)(i)(s) | | | Insurance | | | 8.5% | | | | | | 10/1/22 | | | | | 33,473 | | | | | | 31,517 | | | | | | 27,699 | | |
Total Subordinated Debt | | | | | | | | | | | | | | | | | | | | | | | | | | 219,711 | | | | | | 218,371 | | |
|
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c)/ Shares | Cost | Fair Value(d) | ||||||||||||||||||||||||
Asset Based Finance—14.0% | ||||||||||||||||||||||||||||||||
801 5th Ave, Seattle, Private Equity | (n)(r)(t)(ae) | Real Estate | 7,819,411 | $ | 7.8 | $ | 7.6 | |||||||||||||||||||||||||
801 5th Ave, Seattle, Structure Mezzanine | (n)(r)(ae) | Real Estate | 8.0%, 0.0% PIK (3.0% Max PIK) | 12/19/29 | $ | 47.1 | 47.1 | 47.1 | ||||||||||||||||||||||||
Abacus JV, Private Equity | (n)(r) | Insurance | 34,147,572 | 34.1 | 36.8 | |||||||||||||||||||||||||||
Accelerator Investments Aggregator LP, Private | (n)(r)(t) | Diversified Financials | 153,628 | 0.2 | 0.1 | |||||||||||||||||||||||||||
Altavair AirFinance, Private Equity | (n)(r) | Capital Goods | 31,984,765 | 32.0 | 29.1 | |||||||||||||||||||||||||||
Australis Maritime, Common Stock | (n)(r)(t) | Transportation | 19,832,267 | 19.8 | 19.8 | |||||||||||||||||||||||||||
Global Jet Capital LLC, Preferred Stock | (i)(n)(t) | Commercial & Professional Services | 76,447,526 | 76.4 | — | |||||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/30/25 | $ | 2.4 | 2.2 | 2.0 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 4/30/25 | $ | 15.1 | 13.9 | 12.9 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 9/3/25 | $ | 3.1 | 2.9 | 2.7 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 9/29/25 | $ | 2.9 | 2.7 | 2.5 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/4/25 | $ | 88.7 | 81.6 | 75.8 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/4/25 | $ | 19.7 | 18.2 | 16.9 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/9/25 | $ | 2.0 | 1.9 | 1.7 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/9/25 | $ | 15.7 | 14.4 | 13.4 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/29/26 | $ | 7.6 | 7.0 | 6.5 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/29/26 | $ | 1.7 | 1.6 | 1.4 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 2/17/26 | $ | 20.4 | 18.8 | 17.5 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 4/14/26 | $ | 12.7 | 11.6 | 10.8 | ||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/2/26 | $ | 21.5 | 19.8 | 18.4 | ||||||||||||||||||||||||
Global Lending Services LLC, Private Equity | (n)(r)(t) | Diversified Financials | 12,984,642 | 13.0 | 13.3 | |||||||||||||||||||||||||||
Home Partners JV, Common Stock | (n)(r)(t) | Real Estate | 16,434,441 | 16.4 | 17.8 | |||||||||||||||||||||||||||
Home Partners JV, Private Equity | (n)(r)(t)(ab) | Real Estate | 706,596 | 0.7 | — | |||||||||||||||||||||||||||
Home Partners JV, Structured Mezzanine | (n)(r) | Real Estate | 11.0% PIK (11.0% Max PIK) | 3/25/29 | $ | 35.8 | 35.8 | 35.8 | ||||||||||||||||||||||||
Home Partners JV, Structured Mezzanine | (r)(s) | Real Estate | 11.0% PIK (11.0% Max PIK) | 3/25/29 | $ | 19.5 | 19.5 | 19.5 | ||||||||||||||||||||||||
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest | (n)(r) | Capital Goods | 5,432,797 | 5.4 | 6.0 | |||||||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 8.0% | 6/22/22 | € | 9.3 | 10.6 | 10.2 | ||||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 8.0% | 6/22/22 | $ | 19.5 | 19.5 | 19.5 | ||||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 12.0% | 6/22/22 | € | 5.9 | 6.7 | 6.5 | ||||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 12.0% | 6/22/22 | $ | 12.4 | 12.4 | 12.4 | ||||||||||||||||||||||||
NewStar Clarendon2014-1A Class D | (n)(r)(t) | Diversified Financials | 1/25/27 | $ | 8.3 | 2.5 | 2.7 | |||||||||||||||||||||||||
Pretium Partners LLC P1, Structured Mezzanine | (n)(r) | Real Estate | 2.8%, 5.3% PIK (5.3% Max PIK) | 10/22/26 | $ | 6.5 | 6.5 | 6.3 | ||||||||||||||||||||||||
Pretium Partners LLC P2, Structured Mezzanine | (n)(r) | Real Estate | 2.0%, 7.5% PIK (7.5% Max PIK) | 5/29/25 | $ | 14.8 | 14.8 | 14.7 | ||||||||||||||||||||||||
Prime ST LLC, Private Equity | (n)(r)(t)(ae) | Real Estate | 6,635,747 | 6.6 | 6.6 | |||||||||||||||||||||||||||
Prime ST LLC, Structured Mezzanine | (n)(r)(ae) | Real Estate | 5.0%, 6.0% PIK (6.0% Max PIK) | 3/12/30 | $ | 47.2 | 47.2 | 47.2 | ||||||||||||||||||||||||
Sofi Lending Corp, Purchase Facility | (n)(r)(t) | Diversified Financials | 40,637,805 | 40.6 | 43.0 | |||||||||||||||||||||||||||
Toorak Capital Funding LLC, Membership Interest | (n)(r) | Diversified Financials | N/A | 18.7 | 21.7 | |||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total Asset Based Finance | 690.9 | 606.2 | ||||||||||||||||||||||||||||||
Unfunded Commitments | (19.5 | ) | (19.5 | ) | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Net Asset Based Finance | 671.4 | 586.7 | ||||||||||||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Cost | | | Fair Value(d) | | |||||||||
Asset Based Finance—3.7% | | | | | | | | | | | | | | | | | | |||||||||||||||||
Abacus JV, Private Equity | | | (m) | | | Insurance | | | | | | | | | | | | | | 8,497,569 | | | | | $ | 8,498 | | | | | $ | 8,498 | | |
Altavair NewCo, Private Equity | | | (l)(m) | | | Capital Goods | | | | | | | | | | | | | | 3,429,458 | | | | | | 3,429 | | | | | | 3,608 | | |
Altus Power America Inc, Preferred Stock | | | (r) | | | Energy | | | 9.0%, 5.0% PIK (5.0% Max PIK) | | | | | | 10/3/23 | | | | | 1,107,723 | | | | | | 1,108 | | | | | | 1,097 | | |
Australis Maritime, Private Equity | | | (l)(m) | | | Transportation | | | | | | | | | | | | | | 5,448,630 | | | | | | 5,449 | | | | | | 5,449 | | |
CGMS CLO 2013-3A Class Subord., 7/15/2025 | | | (m) | | | Commercial & Professional Services | | | 7.4% | | | | | | 7/15/25 | | | | $ | 23,263 | | | | | | 8,901 | | | | | | 11,549 | | |
Global Jet Capital LLC, Preferred Stock | | | (e)(l) | | | Commercial & Professional Services | | | | | | | | | | | | | | 7,806,703 | | | | | | 7,807 | | | | | | 781 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/30/25 | | | | $ | 1,062 | | | | | | 1,017 | | | | | | 1,056 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 4/30/25 | | | | $ | 6,748 | | | | | | 6,463 | | | | | | 6,714 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 9/3/25 | | | | $ | 1,395 | | | | | | 1,336 | | | | | | 1,387 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 9/29/25 | | | | $ | 1,313 | | | | | | 1,257 | | | | | | 1,306 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/4/25 | | | | $ | 7,926 | | | | | | 7,591 | | | | | | 7,886 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/4/25 | | | | $ | 1,765 | | | | | | 1,690 | | | | | | 1,756 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/9/25 | | | | $ | 182 | | | | | | 175 | | | | | | 181 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/9/25 | | | | $ | 1,403 | | | | | | 1,343 | | | | | | 1,396 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/29/26 | | | | $ | 679 | | | | | | 650 | | | | | | 675 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/29/26 | | | | $ | 151 | | | | | | 145 | | | | | | 151 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/2/26 | | | | $ | 2,511 | | | | | | 2,405 | | | | | | 2,499 | | |
Home Partners JV, Common Stock | | | (l)(m) | | | Real Estate | | | | | | | | | | | | | | 6,514,831 | | | | | | 6,515 | | | | | | 6,515 | | |
Home Partners JV, Private Equity | | | (l)(m)(s) | | | Real Estate | | | | | | | | | | | | | | 351,531 | | | | | | 352 | | | | | | 94 | | |
Home Partners JV, Structured Mezzanine | | | (m) | | | Real Estate | | | 11.0% PIK (11.0% Max PIK) | | | | | | 3/25/29 | | | | $ | 13,030 | | | | | | 13,030 | | | | | | 13,030 | | |
Home Partners JV, Structured Mezzanine | | | (m)(n) | | | Real Estate | | | 11.0% PIK (11.0% Max PIK) | | | | | | 3/25/29 | | | | $ | 13,030 | | | | | | 13,030 | | | | | | 13,030 | | |
NewStar Clarendon 2014-1A Class D | | | (m) | | | Diversified Financials | | | 15.4% | | | | | | 1/25/27 | | | | $ | 12,140 | | | | | | 7,389 | | | | | | 7,649 | | |
Pretium Partners LLC, Structured Mezzanine | | | (m) | | | Real Estate | | | 9.5% | | | | | | 5/29/25 | | | | $ | 11,292 | | | | | | 11,292 | | | | | | 11,292 | | |
Total Asset Based Finance | | | | | | | | | | | | | | | | | | | | | | | | | | 110,872 | | | | | | 107,599 | | |
Unfunded Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | (13,030) | | | | | | (13,030) | | |
Net Asset Based Finance | | | | | | | | | | | | | | | | | | | | | | | | | | 97,842 | | | | | | 94,569 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c)/ Shares | Cost | Fair Value(d) | ||||||||||||||||||||||||
Credit Opportunities Partners, LLC—10.3% | ||||||||||||||||||||||||||||||||
Credit Opportunities Partners, LLC | (n)(r)(ae) | Diversified Financials | $ | 503.1 | $ | 503.1 | $ | 430.2 | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Total Credit Opportunities Partners, LLC | 503.1 | 430.2 | ||||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||||
Equity/Other—6.2% | ||||||||||||||||||||||||||||||||
Abaco Energy Technologies LLC, Common Stock | (n)(t) | Energy | 3,055,556 | 3.1 | 0.5 | |||||||||||||||||||||||||||
Abaco Energy Technologies LLC, Preferred Stock | (n)(t) | Energy | 12,734,481 | 0.6 | 3.0 | |||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Common Stock | (n)(t)(ad) | Materials | 265,747 | 7.5 | — | |||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Warrant | (n)(t)(ad) | Materials | 10/4/27 | 4,189 | 0.0 | — | ||||||||||||||||||||||||||
All Systems Holding LLC, Common Stock | (n)(t) | Commercial & Professional Services | 1,880,308 | 1.8 | 1.8 | |||||||||||||||||||||||||||
ASG Technologies, Common Stock | (n)(t)(ad) | Software & Services | 625,178 | 13.5 | 24.6 | |||||||||||||||||||||||||||
ASG Technologies, Warrant | (n)(t)(ad) | Software & Services | 6/27/22 | 314,110 | 9.0 | 5.5 | ||||||||||||||||||||||||||
Aspect Software Inc, Common Stock | (l)(n)(p)(t) | Software & Services | 1,148,694 | 1.9 | 1.7 | |||||||||||||||||||||||||||
Aspect Software Inc, Warrant | (l)(n)(p)(t) | Software & Services | 1/15/24 | 1,146,890 | — | — | ||||||||||||||||||||||||||
ATX Networks Corp, Common Stock | (n)(r)(t) | Technology Hardware & Equipment | 156,123 | 0.2 | — | |||||||||||||||||||||||||||
AVF Parent LLC, Trade Claim | (n)(t) | Retailing | 121,058 | — | 1.7 | |||||||||||||||||||||||||||
Bellatrix Exploration Ltd, Warrant | (n)(r)(t) | Energy | 9/11/23 | 382,476 | — | — | ||||||||||||||||||||||||||
Byrider Finance LLC, Common Stock | (n)(t) | Automobiles & Components | 1,667 | — | — | |||||||||||||||||||||||||||
Catalina Marketing Corp, Common Stock | (n)(t) | Media & Entertainment | 6,522 | — | — | |||||||||||||||||||||||||||
Chisholm Oil & Gas Operating LLC, Series A Units | (t)(v)(w)(z) | Energy | 225,000 | 0.2 | — | |||||||||||||||||||||||||||
Cimarron Energy Inc, Common Stock | (n)(t) | Energy | 4,302,293 | 3.9 | 0.2 | |||||||||||||||||||||||||||
Cimarron Energy Inc, Participation Option | (n)(t) | Energy | 25,000,000 | 1.3 | 1.1 | |||||||||||||||||||||||||||
Constellis Holdings LLC, Private Equity | (f)(n)(t)(ad) | Capital Goods | 849,702 | 18.9 | 18.9 | |||||||||||||||||||||||||||
Crossmark Holdings Inc, Warrant | (n)(t) | Commercial & Professional Services | 8,358 | — | — | |||||||||||||||||||||||||||
CSafe Global, Common Stock | (n)(t) | Capital Goods | 608,700 | 0.6 | 0.8 | |||||||||||||||||||||||||||
CTI Foods Holding Co LLC, Common Stock | (n)(t) | Food, Beverage & Tobacco | 56 | 0.0 | 0.0 | |||||||||||||||||||||||||||
Dayton Superior Corp, Common Stock | (n)(t) | Materials | 16,977 | 1.0 | 1.0 | |||||||||||||||||||||||||||
Dayton Superior Corp, Warrants | (n)(t) | Materials | 12/2/21 | 4,287 | — | — | ||||||||||||||||||||||||||
Empire Today LLC, Common Stock | (n)(t) | Retailing | 630 | 1.9 | 2.8 | |||||||||||||||||||||||||||
Envigo Laboratories Inc, Series A Warrant | (p)(t) | Health Care Equipment & Services | 4/29/24 | 10,924 | — | — | ||||||||||||||||||||||||||
Envigo Laboratories Inc, Series B Warrant | (p)(t) | Health Care Equipment & Services | 4/29/24 | 17,515 | — | — | ||||||||||||||||||||||||||
Fairway Group Holdings Corp, Common Stock | (n)(t)(ad) | Food & Staples Retailing | 103,091 | 3.3 | — | |||||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class C—II—A Units | (t)(v) | Energy | 13,000 | 13.0 | 0.2 | |||||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class D Units | (t)(v) | Energy | 2,437 | 1.6 | 0.0 | |||||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class E—II Units | (t)(v) | Energy | 29,730 | 7.4 | 0.4 | |||||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class E—III Units | (t)(v) | Energy | 43,875 | 11.0 | 0.6 | |||||||||||||||||||||||||||
Fox Head Inc, Common Stock | (i)(n)(t) | Consumer Durables & Apparel | 10,000,000 | 10.0 | — | |||||||||||||||||||||||||||
Harvey Industries Inc, Common Stock | (n)(t) | Capital Goods | 2,666,667 | 2.7 | 6.4 | |||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series A | (n)(p)(t)(ad) | Capital Goods | 14,786 | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series B | (n)(p)(t)(ad) | Capital Goods | 14,786 | — | — | |||||||||||||||||||||||||||
JHC Acquisition LLC, Common Stock | (n)(t) | Capital Goods | 9,517 | 9.5 | 5.6 | |||||||||||||||||||||||||||
JSS Holdings Ltd, Net Profits Interest | (n)(t) | Capital Goods | 54 | — | 0.6 | |||||||||||||||||||||||||||
JW Aluminum Co, Common Stock | (i)(n)(t)(ad) | Materials | 631 | — | — | |||||||||||||||||||||||||||
JW Aluminum Co, Preferred Stock | (i)(n)(ad) | Materials | 12.5% PIK (12.5% Max PIK) | 2/15/28 | 6,875 | 55.6 | 75.8 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Amortized Cost | | | Fair Value(d) | | |||||||||||||||
Equity/Other—11.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Abaco Energy Technologies LLC, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 3,055,556 | | | | | $ | 3,055 | | | | | $ | 1,270 | | |
Abaco Energy Technologies LLC, Preferred Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 12,734,481 | | | | | | 637 | | | | | | 6,686 | | |
Advanced Lighting Technologies Inc, Common Stock | | | (l)(t) | | | Materials | | | | | | | | | | | | | | | | | | | | 219,154 | | | | | | 7,471 | | | | | | — | | |
Advanced Lighting Technologies Inc, Warrant | | | (l)(t) | | | Materials | | | | | | | | | | | | | | 10/4/27 | | | | | | 50,782 | | | | | | 39 | | | | | | — | | |
All Systems Holding LLC, Common Stock | | | (l) | | | Commercial & Professional Services | | | | | | | | | | | | | | | | | | | | 1,240,204 | | | | | | 1,201 | | | | | | 1,704 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp, Common Stock | | | (l)(o) | | | Energy | | | | | | | | | | | | | | | | | | | | 13,556 | | | | | | 12,900 | | | | | | 4,284 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp, Trade Claim | | | (o) | | | Energy | | | | | | | | | | | | | | | | | | | | 115,178,571 | | | | | | 25,800 | | | | | | 36,396 | | |
ASG Technologies, Common Stock | | | (l)(t) | | | Software & Services | | | | | | | | | | | | | | | | | | | | 625,178 | | | | | | 13,475 | | | | | | 36,285 | | |
ASG Technologies, Warrant | | | (l)(t) | | | Software & Services | | | | | | | | | | | | | | 6/27/22 | | | | | | 253,704 | | | | | | 7,231 | | | | | | 9,207 | | |
Aspect Software Inc, Common Stock | | | (h)(l) | | | Software & Services | | | | | | | | | | | | | | | | | | | | 304,599 | | | | | | 493 | | | | | | 484 | | |
Aspect Software Inc, Warrant | | | (h)(l) | | | Software & Services | | | | | | | | | | | | | | 1/15/24 | | | | | | 304,120 | | | | | | — | | | | | | — | | |
ATX Networks Corp, Common Stock | | | (l)(m) | | | Technology Hardware & Equipment | | | | | | | | | | | | | | | | | | | | 72,635 | | | | | | 116 | | | | | | 67 | | |
Bellatrix Exploration Ltd | | | (l)(m) | | | Energy | | | | | | | | | | | | | | 9/11/23 | | | | | | 127,489 | | | | | | — | | | | | | 22 | | |
Byrider Finance LLC, Common Stock | | | (l) | | | Automobiles & Components | | | | | | | | | | | | | | | | | | | | 1,389 | | | | | | — | | | | | | — | | |
Catalina Marketing Corp, Common Stock | | | (l) | | | Media | | | | | | | | | | | | | | | | | | | | 6,522 | | | | | | — | | | | | | — | | |
Chisholm Oil & Gas Operating LLC, Series A Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 75,000 | | | | | | 75 | | | | | | 35 | | |
Cimarron Energy Inc, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 4,302,293 | | | | | | 3,950 | | | | | | 176 | | |
Cimarron Energy Inc, Participation Option | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 25,000,000 | | | | | | 1,289 | | | | | | 1,025 | | |
CSafe Global, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 417,400 | | | | | | 417 | | | | | | 772 | | |
Empire Today LLC, Common Stock | | | (l) | | | Retailing | | | | | | | | | | | | | | | | | | | | 411 | | | | | | 1,227 | | | | | | 1,699 | | |
Envigo Laboratories Inc, Series A Warrant | | | (h)(l) | | | Health Care Equipment & Services | | | | | | | | | | | | | | 4/29/24 | | | | | | 10,924 | | | | | | — | | | | | | — | | |
Envigo Laboratories Inc, Series B Warrant | | | (h)(l) | | | Health Care Equipment & Services | | | | | | | | | | | | | | 4/29/24 | | | | | | 17,515 | | | | | | — | | | | | | — | | |
Fairway Group Holdings Corp, Common Stock | | | (l) | | | Food & Staples Retailing | | | | | | | | | | | | | | | | | | | | 31,626 | | | | | | 1,016 | | | | | | — | | |
FourPoint Energy LLC, Common Stock, Class C—II—A Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 13,000 | | | | | | 13,000 | | | | | | 3,001 | | |
FourPoint Energy LLC, Common Stock, Class D Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 2,437 | | | | | | 1,610 | | | | | | 568 | | |
FourPoint Energy LLC, Common Stock, Class E—II Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 29,730 | | | | | | 7,432 | | | | | | 6,864 | | |
FourPoint Energy LLC, Common Stock, Class E—III Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 43,875 | | | | | | 10,969 | | | | | | 10,130 | | |
Fox Head Inc, Common Stock | | | (e)(l) | | | Consumer Durables & Apparel | | | | | | | | | | | | | | | | | | | | 8,857,143 | | | | | | 8,857 | | | | | | 1,332 | | |
FullBeauty Brands Holdings Corp, Common Stock | | | (l) | | | Retailing | | | | | | | | | | | | | | | | | | | | 5,583 | | | | | | 26 | | | | | | 58 | | |
Harvey Industries Inc, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 666,667 | | | | | | 667 | | | | | | 2,660 | | |
HM Dunn Co Inc, Preferred Stock, Series A | | | (h)(l)(t) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 12,857 | | | | | | — | | | | | | — | | |
HM Dunn Co Inc, Preferred Stock, Series B | | | (h)(l)(t) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 12,857 | | | | | | — | | | | | | — | | |
JHC Acquisition LLC, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 1,449 | | | | | | 1,449 | | | | | | 1,739 | | |
JSS Holdings Ltd, Net Profits Interest | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 27 | | | | | | — | | | | | | 404 | | |
JW Aluminum Co, Common Stock | | | (e)(i)(l)(t) | | | Materials | | | | | | | | | | | | | | | | | | | | 548 | | | | | | — | | | | | | — | | |
JW Aluminum Co, Preferred Stock | | | (e)(i)(t) | | | Materials | | | | | 12.5%PIK | | | | | | | | | 2/15/28 | | | | | | 4,869 | | | | | | 35,851 | | | | | | 58,872 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor(b) | Maturity | Principal Amount(c)/ Shares | Cost | Fair Value(d) | ||||||||||||||||||||||||
MB Precision Holdings LLC, Class A—2 Units | (t)(v)(ad) | Capital Goods | 6,655,178 | $ | 2.3 | $ | — | |||||||||||||||||||||||||
MB Precision Holdings LLC, Preferred Stock | (t)(v)(ad) | Capital Goods | 41,778,909 | 8.8 | 5.5 | |||||||||||||||||||||||||||
Misys Ltd, Preferred Stock | (n)(r) | Software & Services | L+1,025 | 2,841 | 2.8 | 2.5 | ||||||||||||||||||||||||||
Mood Media Corp, Common Stock | (n)(t)(ad) | Media & Entertainment | 17,400,835 | 12.6 | — | |||||||||||||||||||||||||||
One Call Care Management Inc, Common Stock | (n)(t)(ad) | Insurance | 2,604,293,203 | 1.8 | 1.5 | |||||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock A | (n)(t)(ad) | Insurance | 277,791 | 19.3 | 16.3 | |||||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock B | (n)(ad) | Insurance | 9.0% PIK (9.0% Max PIK) | 10/25/29 | 5,729,445 | 5.8 | 6.0 | |||||||||||||||||||||||||
Polyconcept North America Inc, Class A—1 Units | (n)(t) | Household & Personal Products | 624 | 0.1 | 0.1 | |||||||||||||||||||||||||||
Professional Plumbing Group Inc, Common Stock | (i)(t) | Materials | 3,000,000 | 3.0 | 4.1 | |||||||||||||||||||||||||||
Ridgeback Resources Inc, Common Stock | (i)(n)(r)(t) | Energy | 1,644,464 | 10.1 | 5.0 | |||||||||||||||||||||||||||
Sequential Brands Group Inc., Common Stock | (i)(n)(t)(ab) | Consumer Durables & Apparel | 534,076 | 7.2 | 0.1 | |||||||||||||||||||||||||||
Sorenson Communications LLC, Common Stock | (i)(n)(t) | Telecommunication Services | 43,796 | — | 25.5 | |||||||||||||||||||||||||||
SSC (Lux) Limited S.a r.l., Common Stock | (n)(r)(t) | Health Care Equipment & Services | 125,000 | 2.5 | 3.8 | |||||||||||||||||||||||||||
Sungard Availability Services Capital Inc, Common Stock | (m)(n)(o)(t) | Software & Services | 217,659 | 15.2 | 8.7 | |||||||||||||||||||||||||||
Swift Worldwide Resources Holdco Ltd, Common Stock | (n)(t) | Energy | 1,250,000 | 2.0 | 0.3 | |||||||||||||||||||||||||||
Templar Energy LLC, Common Stock | (i)(t)(v)(w)(ab) | Energy | 847,547 | 7.2 | 0.1 | |||||||||||||||||||||||||||
Templar Energy LLC, Preferred Stock | (i)(n)(t)(ab) | Energy | 561,819 | 5.6 | — | |||||||||||||||||||||||||||
Titan Energy LLC, Common Stock | (i)(n)(t)(ab)(ad) | Energy | 272,778 | 8.6 | — | |||||||||||||||||||||||||||
Trace3 Inc, Common Stock | (n)(t) | Software & Services | 42,486 | 0.4 | 0.5 | |||||||||||||||||||||||||||
Warren Resources Inc, Common Stock | (n)(t)(ad) | Energy | 3,370,272 | 15.8 | — | |||||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | (n)(t) | Software & Services | 1,051,348 | 8.4 | 10.9 | |||||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series F | (n)(t) | Software & Services | 956,233 | 8.4 | 15.1 | |||||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Warrant | (n)(t) | Software & Services | 4/20/27 | 143,435 | — | 0.1 | ||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
Total Equity/Other | 327.4 | 259.3 | ||||||||||||||||||||||||||||||
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|
| |||||||||||||||||||||||||||||
TOTAL INVESTMENTS—178.3% | $ | 8,518.5 | 7,463.5 | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS—(78.3%) | (3,277.5 | ) | ||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
NET ASSETS—100.0% | $ | 4,186.0 | ||||||||||||||||||||||||||||||
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
MB Precision Holdings LLC, Class A—2 Units | | | (g)(h)(l)(p)(t) | | | Capital Goods | | | | | | | | | | | | | | | | | 6,655,178 | | | | | $ | 2,288 | | | | | $ | — | | |
MB Precision Holdings LLC, Preferred Stock | | | (g)(l)(t) | | | Capital Goods | | | | | | | | | | | | | | | | | 41,778,909 | | | | | | 8,774 | | | | | | 2,430 | | |
Mood Media Corp, Common Stock | | | (l)(t) | | | Media | | | | | | | | | | | | | | | | | 17,400,835 | | | | | | 12,644 | | | | | | 6,125 | | |
North Haven Cadence Buyer Inc, Common Stock | | | (l) | | | Consumer Services | | | | | | | | | | | | | | | | | 2,916,667 | | | | | | 2,917 | | | | | | 5,614 | | |
Power Distribution Inc, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | 2,912,147 | | | | | | 2,495 | | | | | | 888 | | |
Professional Plumbing Group Inc, Common Stock | | | (e)(l) | | | Materials | | | | | | | | | | | | | | | | | 3,000,000 | | | | | | 3,000 | | | | | | 6,915 | | |
Ridgeback Resources Inc, Common Stock | | | (e)(l)(m) | | | Energy | | | | | | | | | | | | | | | | | 817,308 | | | | | | 5,022 | | | | | | 4,433 | | |
Sequential Brands Group Inc., Common Stock | | | (e)(l)(s) | | | Consumer Durables & Apparel | | | | | | | | | | | | | | | | | 408,685 | | | | | | 5,517 | | | | | | 225 | | |
Sorenson Communications LLC, Common Stock | | | (e)(l) | | | Telecommunication Services | | | | | | | | | | | | | | | | | 43,796 | | | | | | — | | | | | | 34,671 | | |
SSC (Lux) Limited S.a r.l., Common Stock | | | (l)(m) | | | Health Care Equipment & Services | | | | | | | | | | | | | | | | | 261,364 | | | | | | 5,227 | | | | | | 6,545 | | |
Sungard Availability Services Capital Inc | | | (f)(l) | | | Software & Services | | | | | | | | | | | | | | | | | 57,588 | | | | | | 4,025 | | | | | | 4,025 | | |
Sunnova Energy Corp, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 384,746 | | | | | | 1,444 | | | | | | 1,568 | | |
Sunnova Energy Corp, Preferred Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 70,229 | | | | | | 374 | | | | | | 444 | | |
Swift Worldwide Resources Holdco Ltd, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 1,250,000 | | | | | | 2,010 | | | | | | 638 | | |
Templar Energy LLC, Common Stock | | | (e)(l)(p)(s) | | | Energy | | | | | | | | | | | | | | | | | 717,718 | | | | | | 6,101 | | | | | | 718 | | |
Templar Energy LLC, Preferred Stock | | | (e)(l)(s) | | | Energy | | | | | | | | | | | | | | | | | 475,758 | | | | | | 4,751 | | | | | | — | | |
Titan Energy LLC, Common Stock | | | (e)(l)(s) | | | Energy | | | | | | | | | | | | | | | | | 200,039 | | | | | | 6,322 | | | | | | 8 | | |
Trace3 Inc, Common Stock | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | 33,216 | | | | | | 332 | | | | | | 977 | | |
Warren Resources Inc, Common Stock | | | (l)(t) | | | Energy | | | | | | | | | | | | | | | | | 2,371,337 | | | | | | 11,145 | | | | | | 6,047 | | |
White Star Petroleum LLC, Common Stock | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 1,613,753 | | | | | | 1,372 | | | | | | — | | |
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | 620,025 | | | | | | 4,929 | | | | | | 6,784 | | |
Zeta Interactive Holdings Corp, Preferred Stock, Series F | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | 563,932 | | | | | | 4,929 | | | | | | 6,112 | | |
Zeta Interactive Holdings Corp, Warrant | | | (l) | | | Software & Services | | | | | | | | | | | 4/20/27 | | | | | | 84,590 | | | | | | — | | | | | | 229 | | |
Total Equity/Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 255,871 | | | | | | 281,136 | | |
TOTAL INVESTMENTS—158.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,190,598 | | | | | | 4,040,709 | | |
LIABILITIES IN EXCESS OF OTHER ASSETS—(58.0%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,483,045) | | |
NET ASSETS—100.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,557,664 | | |
|
Foreign currency forward contracts
Foreign Currency | Settlement Date | Counterparty | Amount and Transaction | US$ Value at Settlement Date | US$ Value at March 31, 2020 | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
AUD | 4/8/2020 | ING Capital LLC | A$ | 6.8 Sold | $ | 4.6 | $ | 4.2 | $ | 0.4 | ||||||||||||||||||
EUR | 4/8/2020 | ING Capital LLC | € | 5.6 Sold | 6.3 | 6.2 | 0.1 | |||||||||||||||||||||
GBP | 4/8/2020 | ING Capital LLC | £ | 0.4 Sold | 0.5 | 0.4 | 0.1 | |||||||||||||||||||||
EUR | 7/17/2023 | JP Morgan Chase Bank | € | 0.1 Sold | 0.1 | 0.1 | — | |||||||||||||||||||||
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Total | $ | 11.5 | $ | 10.9 | $ | 0.6 | ||||||||||||||||||||||
�� |
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Interest rate swaps
Counterparty | | | Notional Amount | | | Company Receives Floating Rate | | | Company Pays Fixed Rate | | | Termination Date | | | Premiums Paid/ (Received) | | | Value | | | Unrealized Depreciation | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.78% | | | | 12/18/2023 | | | | $ | — | | | | | $ | (3,881) | | | | | $ | (3,881) | | |
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.81% | | | | 12/18/2021 | | | | | — | | | | | | (2,162) | | | | | | (2,162) | | |
ING Capital Markets | | | | $ | 100,000 | | | | 3-Month LIBOR | | | | | 2.59% | | | | 1/14/2024 | | | | | — | | | | | | (4,055) | | | | | | (4,055) | | |
ING Capital Markets | | | | $ | 100,000 | | | | 3-Month LIBOR | | | | | 2.62% | | | | 1/14/2022 | | | | | — | | | | | | (2,298) | | | | | | (2,298) | | |
| | | | | | | | | | | | | | | | | | | | | | $ | — | | | | | $ | (12,396) | | | | | $ | (12,396) | | |
Counterparty | Notional Amount | Company Receives Floating Rate | Company Pays Fixed Rate | Termination Date | Premiums Paid/ (Received) | Value | Unrealized Depreciation | |||||||||||||||||||||
JP Morgan Chase Bank | $ | 200 | 3-Month LIBOR | 2.78 | % | 12/18/2023 | $ | — | $ | (18 | ) | $ | (18 | ) | ||||||||||||||
JP Morgan Chase Bank | $ | 200 | 3-Month LIBOR | 2.81 | % | 12/18/2021 | — | (9 | ) | (9 | ) | |||||||||||||||||
ING Capital Markets | $ | 250 | 3-Month LIBOR | 2.59 | % | 1/14/2024 | — | (22 | ) | (22 | ) | |||||||||||||||||
ING Capital Markets | $ | 250 | 3-Month LIBOR | 2.62 | % | 1/14/2022 | — | (10 | ) | (10 | ) | |||||||||||||||||
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$ | — | $ | (59 | ) | $ | (59 | ) | |||||||||||||||||||||
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(a) | Security may be an obligation of one or more entities affiliated with the named company. |
(b) | Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.45%, the Euro Interbank Offered Rate, or EURIBOR, was (0.36)%, Candian Dollar Offer Rate, or CDOR was 1.24%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.42%, and the U.S. Prime Lending Rate, or Prime, was 3.25%. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases. |
(c) | Denominated in U.S. dollars unless otherwise noted. |
(d) | Fair value determined by the Company’s board of directors (see Note 8). |
(e) | Not used. |
(f) | Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9). |
(g) | Security or portion thereof held within Broomall Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Broomall Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
(h) | Security or portion thereof held within Burholme Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Burholme Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). |
(i) | Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9). |
(j) | Not used. |
(k) | Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9). |
(l) | Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9). |
(m) | Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9). |
(n) | Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9). |
(o) | Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9). |
(p) | Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9). |
(q) | Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9). |
(r) | The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of March 31, 2020, 77.4% of the Company’s total assets represented qualifying assets. |
(s) | Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding. |
(t) | Security isnon-income producing. |
(u) | Asset is onnon-accrual status. |
(v) | Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company. |
(w) | Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company. |
(x) | Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company. |
(y) | Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company. |
(z) | Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company. |
(aa) | Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of March 31, 2020, the fair value of securities rehypothecated by BNPP was $114. |
(ab) | Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8). |
(ac) | Position or portion thereof unsettled as of March 31, 2020. |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company | | | Fair Value at December 31, 2018 | | | Gross Additions(1) | | | Gross Reductions(2) | | | Net Realized Gain (Loss) | | | Net Change in Unrealized Appreciation (Depreciation) | | | Fair Value at June 30, 2019 | | | Interest Income(3) | | | PIK Income(3) | | | Fee Income(3) | | |||||||||||||||||||||||||||
Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies Inc | | | | $ | 9,125 | | | | | $ | 112 | | | | | $ | (46) | | | | | $ | 6 | | | | | $ | (299) | | | | | $ | 8,898 | | | | | $ | 467 | | | | | $ | — | | | | | $ | — | | |
HM Dunn Co Inc | | | | | 7,022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,502 | | | | | | 12,524 | | | | | | — | | | | | | — | | | | | | — | | |
HM Dunn Co Inc (4) | | | | | — | | | | | | 2,190 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,190 | | | | | | — | | | | | | 47 | | | | | | 43 | | |
MB Precision Holdings LLC | | | | | 21,339 | | | | | | 967 | | | | | | (584) | | | | | | 176 | | | | | | (495) | | | | | | 21,403 | | | | | | 1,295 | | | | | | 239 | | | | | | — | | |
Warren Resources Inc | | | | | 14,652 | | | | | | 82 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,734 | | | | | | 873 | | | | | | 82 | | | | | | — | | |
Senior Secured Loans—Second Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other Senior Secured Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | |
Advanced Lighting Technologies Inc | | | | | 3,630 | | | | | | — | | | | | | — | | | | | | — | | | | | | (3,466) | | | | | | 164 | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co | | | | | 32,919 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,897 | | | | | | 34,816 | | | | | | 1,691 | | | | | | — | | | | | | — | | |
Mood Media Corp | | | | | 28,478 | | | | | | 11,046 | | | | | | — | | | | | | — | | | | | | 1,039 | | | | | | 40,563 | | | | | | 2,600 | | | | | | 1,139 | | | | | | — | | |
Equity/Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | |
Advanced Lighting Technologies Inc, Common Equity | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Advanced Lighting Technologies Inc, Warrant | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | �� | | — | | |
ASG Technologies, Common Equity | | | | | 31,743 | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,542 | | | | | | 36,285 | | | | | | — | | | | | | — | | | | | | — | | |
ASG Technologies, Warrants | | | | | 7,364 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,843 | | | | | | 9,207 | | | | | | — | | | | | | — | | | | | | — | | |
HM Dunn Co Inc, Preferred Stock, Series A | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
HM Dunn Co Inc, Preferred Stock, Series B | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co, Common Stock | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co, Preferred Stock | | | | | 43,890 | | | | | | 3,811 | | | | | | — | | | | | | — | | | | | | 11,171 | | | | | | 58,872 | | | | | | 3,660 | | | | | | 3,604 | | | | | | — | | |
MB Precision Holdings LLC, Class A-2 Units | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
MB Precision Holdings LLC, Preferred Stock | | | | | 5,826 | | | | | | 174 | | | | | | — | | | | | | — | | | | | | (3,570) | | | | | | 2,430 | | | | | | — | | | | | | — | | | | | | — | | |
Mood Media Corp, Common Stock | | | | | 15,842 | | | | | | — | | | | | | — | | | | | | — | | | | | | (9,717) | | | | | | 6,125 | | | | | | — | | | | | | — | | | | | | — | | |
Warren Resources Inc, Common Stock | | | | | 5,573 | | | | | | — | | | | | | — | | | | | | — | | | | | | 474 | | | | | | 6,047 | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | 227,403 | | | | | $ | 18,382 | | | | | $ | (630) | | | | | $ | 182 | | | | | $ | 8,921 | | | | | $ | 254,258 | | | | | $ | 10,586 | | | | | $ | 5,111 | | | | | $ | 43 | | |
(ad) | Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the three months ended March 31, 2020: |
Portfolio Company | Fair Value at December 31, 2019 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at March 31, 2020 | Interest Income(3) | PIK Income(3) | Fee Income(3) | |||||||||||||||||||||||||||
Senior Secured Loans—First Lien | ||||||||||||||||||||||||||||||||||||
Advanced Lighting Technologies Inc | $ | 5.9 | $ | — | $ | (0.3 | ) | $ | 0.0 | $ | 1.0 | $ | 6.6 | $ | 0.0 | $ | — | $ | — | |||||||||||||||||
Constellis Holdings LLC | — | 8.4 | — | — | — | 8.4 | 0.0 | — | — | |||||||||||||||||||||||||||
Constellis Holdings LLC | — | 15.0 | — | — | — | 15.0 | — | — | — | |||||||||||||||||||||||||||
Fairway Group Holdings Corp | — | 3.0 | (0.1 | ) | — | 0.1 | 3.0 | — | — | — | ||||||||||||||||||||||||||
Fairway Group Holdings Corp | — | 7.1 | — | — | — | 7.1 | 0.1 | — | — | |||||||||||||||||||||||||||
Fairway Group Holdings Corp | 6.3 | 0.0 | (6.3 | ) | 0.1 | (0.1 | ) | — | 0.0 | 0.0 | — | |||||||||||||||||||||||||
Fairway Group Holdings Corp | 6.5 | — | — | — | (3.5 | ) | 3.0 | — | — | — | ||||||||||||||||||||||||||
Fairway Group Holdings Corp | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc | 26.0 | — | — | — | (13.0 | ) | 13.0 | — | — | — | ||||||||||||||||||||||||||
HM Dunn Co Inc | 5.2 | 0.6 | (0.5 | ) | — | — | 5.3 | 0.3 | 0.2 | — | ||||||||||||||||||||||||||
MB Precision Holdings LLC | 21.4 | 0.2 | (0.1 | ) | 0.0 | (0.6 | ) | 20.9 | 0.6 | 0.1 | — | |||||||||||||||||||||||||
One Call Care Management Inc | 2.7 | 0.0 | 0.0 | 0.0 | (0.3 | ) | 2.4 | 0.1 | — | — | ||||||||||||||||||||||||||
Warren Resources Inc | 21.0 | 0.0 | — | — | (1.9 | ) | 19.1 | 0.6 | 0.1 | — | ||||||||||||||||||||||||||
Senior Secured Loans—Second Lien | ||||||||||||||||||||||||||||||||||||
Constellis Holdings LLC | — | 13.5 | — | — | — | 13.5 | 0.0 | — | — | |||||||||||||||||||||||||||
Fairway Group Holdings Corp | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Titan Energy LLC | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other Senior Secured Debt | ||||||||||||||||||||||||||||||||||||
Advanced Lighting Technologies Inc | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
JW Aluminum Co | 36.3 | — | — | — | (6.0 | ) | 30.3 | 0.9 | — | — | ||||||||||||||||||||||||||
Mood Media Corp | 39.0 | 3.4 | — | — | (19.1 | ) | 23.3 | 0.5 | — | — | ||||||||||||||||||||||||||
Equity/Other | ||||||||||||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Warrant | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
ASG Technologies, Common Stock | 30.7 | — | — | — | (6.1 | ) | 24.6 | — | — | — | ||||||||||||||||||||||||||
ASG Technologies, Warrant | 8.6 | — | — | — | (3.1 | ) | 5.5 | — | — | — | ||||||||||||||||||||||||||
Constellis Holdings LLC | — | 18.9 | — | — | — | 18.9 | — | — | — | |||||||||||||||||||||||||||
Fairway Group Holdings Corp, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series A | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series B | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
JW Aluminum Co, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
JW Aluminum Co, Preferred Stock | 104.1 | 3.0 | — | — | (31.3 | ) | 75.8 | — | 2.8 | — | ||||||||||||||||||||||||||
MB Precision Holdings LLC, Class A—2 Units | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
MB Precision Holdings LLC, Preferred Stock | 5.6 | — | — | — | (0.1 | ) | 5.5 | — | — | — | ||||||||||||||||||||||||||
Mood Media Corp, Common Stock | 1.0 | — | — | — | (1.0 | ) | — | — | — | — |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Unaudited Consolidated Schedule of Investments (continued)
As of June 30, 2019
March 31, 2020
(in thousands,millions, except share amounts)
Portfolio Company | Fair Value at December 31, 2019 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at March 31, 2020 | Interest Income(3) | PIK Income(3) | Fee Income(3) | |||||||||||||||||||||||||||
One Call Care Management Inc, Common Stock | $ | 1.8 | $ | — | $ | — | $ | — | $ | (0.3 | ) | $ | 1.5 | $ | — | $ | — | $ | — | |||||||||||||||||
One Call Care Management Inc, Preferred Stock A | 19.3 | — | — | — | (3.0 | ) | 16.3 | — | — | — | ||||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock B | 5.8 | — | 0.0 | — | 0.2 | 6.0 | — | 0.1 | — | |||||||||||||||||||||||||||
Titan Energy LLC, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Warren Resources Inc, Common Stock | 8.3 | — | — | — | (8.3 | ) | — | — | — | — | ||||||||||||||||||||||||||
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Total | $ | 355.5 | $ | 73.1 | $ | (7.3 | ) | $ | 0.1 | $ | (96.4 | ) | $ | 325.0 | $ | 3.1 | $ | 3.3 | $ | — | ||||||||||||||||
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(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category. |
(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. |
(3) | Interest, PIK and fee income presented for the three months ended March 31, 2020. |
(ae) | Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2020, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the three months ended March 31, 2020: |
Portfolio Company | Fair Value at December 31, 2019 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at March 31, 2020 | Interest Income(3) | PIK Income(3) | Dividend Income(3) | |||||||||||||||||||||||||||
Asset Based Finance | ||||||||||||||||||||||||||||||||||||
801 5th Ave, Seattle, Structure Mezzanine | $ | 47.1 | $ | — | $ | — | $ | — | $ | — | $ | 47.1 | $ | 1.3 | $ | — | $ | — | ||||||||||||||||||
801 5th Ave, Seattle, Private Equity | 7.8 | — | — | — | (0.2 | ) | 7.6 | — | — | — | ||||||||||||||||||||||||||
Prime ST LLC, Structured Mezzanine | — | 47.2 | — | — | — | 47.2 | 1.5 | — | — | |||||||||||||||||||||||||||
Prime ST LLC, Private Equity | — | 6.6 | — | — | — | 6.6 | — | — | — | |||||||||||||||||||||||||||
Credit Opportunities Partners, LLC | ||||||||||||||||||||||||||||||||||||
Credit Opportunities Partners, LLC | 510.0 | — | (0.3 | ) | — | (79.5 | ) | 430.2 | — | — | 13.1 | |||||||||||||||||||||||||
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Total | $ | 564.9 | $ | 53.8 | $ | (0.3 | ) | $ | — | $ | (79.7 | ) | $ | 538.7 | $ | 2.8 | $ | — | $ | 13.1 | ||||||||||||||||
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(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category. |
(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. |
(3) | Interest, PIK and dividend income presented for the three months ended March 31, 2020. |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Senior Secured Loans—First Lien—128.3% | | | | | | | | | | ||||||||||||||||||||||||||||
5 Arch Income Fund 2, LLC | | | (m)(q) | | | Diversified Financials | | | 9.0% | | | | | | | | | 11/18/23 | | | | $ | 39,540 | | | | | $ | 39,561 | | | | | $ | 39,540 | | |
5 Arch Income Fund 2, LLC | | | (m)(n)(q) | | | Diversified Financials | | | 9.0% | | | | | | | | | 11/18/23 | | | | | 34,461 | | | | | | 34,461 | | | | | | 34,461 | | |
Abaco Energy Technologies LLC | | | (h)(i)(t) | | | Energy | | | L+700, 2.5% PIK (2.5% Max PIK) | | | | | 1.0% | | | | 11/20/20 | | | | | 24,428 | | | | | | 23,941 | | | | | | 24,153 | | |
ABB CONCISE Optical Group LLC | | | (t) | | | Retailing | | | L+500 | | | | | 1.0% | | | | 6/15/23 | | | | | 2,769 | | | | | | 2,779 | | | | | | 2,658 | | |
Accuride Corp | | | (j)(t) | | | Capital Goods | | | L+525 | | | | | 1.0% | | | | 11/17/23 | | | | | 540 | | | | | | 520 | | | | | | 518 | | |
Acosta Holdco Inc | | | (h)(t) | | | Commercial & Professional Services | | | L+325 | | | | | 1.0% | | | | 9/26/21 | | | | | 6,644 | | | | | | 5,383 | | | | | | 4,081 | | |
Addison Holdings | | | (f)(g)(h)(i) | | | Commercial & Professional Services | | | L+675 | | | | | 1.0% | | | | 12/29/23 | | | | | 83,832 | | | | | | 83,832 | | | | | | 83,974 | | |
Advanced Lighting Technologies Inc | | | (h)(u) | | | Materials | | | L+750 | | | | | 1.0% | | | | 10/4/22 | | | | | 9,125 | | | | | | 7,933 | | | | | | 9,125 | | |
Advantage Sales & Marketing Inc | | | (i)(t) | | | Commercial & Professional Services | | | L+325 | | | | | 1.0% | | | | 7/23/21 | | | | | 15,370 | | | | | | 14,681 | | | | | | 13,654 | | |
Aleris International Inc | | | (h)(t) | | | Materials | | | L+475 | | | | | | | | | 2/27/23 | | | | | 1,367 | | | | | | 1,354 | | | | | | 1,358 | | |
All Systems Holding LLC | | | (g)(h)(i) | | | Commercial & Professional Services | | | L+767 | | | | | 1.0% | | | | 10/31/23 | | | | | 111,623 | | | | | | 111,623 | | | | | | 112,739 | | |
Altus Power America Inc | | | (i) | | | Energy | | | L+750 | | | | | 1.5% | | | | 9/30/21 | | | | | 3,183 | | | | | | 3,183 | | | | | | 3,087 | | |
Altus Power America Inc | | | (n) | | | Energy | | | L+750 | | | | | 1.5% | | | | 9/30/21 | | | | | 140 | | | | | | 140 | | | | | | 136 | | |
American Tire Distributors Inc | | | (t) | | | Automobiles & Components | | | L+750 | | | | | 1.0% | | | | 8/30/24 | | | | | 4,031 | | | | | | 3,521 | | | | | | 3,319 | | |
American Tire Distributors Inc | | | (t) | | | Automobiles & Components | | | L+650, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 9/1/23 | | | | | 634 | | | | | | 593 | | | | | | 593 | | |
Ammeraal Beltech Holding BV | | | (m)(t) | | | Capital Goods | | | E+375 | | | | | | | | | 7/30/25 | | | | € | 1,491 | | | | | | 1,725 | | | | | | 1,701 | | |
Apex Group Limited | | | (m)(n) | | | Diversified Financials | | | L+650 | | | | | | | | | 6/15/23 | | | | $ | 2,302 | | | | | | 2,238 | | | | | | 1,970 | | |
Apex Group Limited | | | (f)(g)(m) | | | Diversified Financials | | | L+650 | | | | | 1.0% | | | | 6/15/25 | | | | | 15,565 | | | | | | 15,271 | | | | | | 14,948 | | |
Apex Group Limited | | | (m)(n) | | | Diversified Financials | | | L+650 | | | | | 1.0% | | | | 6/15/25 | | | | | 7,509 | | | | | | 7,370 | | | | | | 7,211 | | |
Apex Group Limited | | | (m) | | | Diversified Financials | | | L+650 | | | | | 1.0% | | | | 6/15/25 | | | | | 2,503 | | | | | | 2,466 | | | | | | 2,404 | | |
Apex Group Limited | | | (m)(n) | | | Diversified Financials | | | L+650 | | | | | 1.0% | | | | 6/15/25 | | | | | 3,754 | | | | | | 3,699 | | | | | | 3,606 | | |
Ascension Insurance Inc | | | (f)(g)(h) | | | Insurance | | | L+825 | | | | | 1.3% | | | | 3/5/19 | | | | | 77,635 | | | | | | 77,567 | | | | | | 77,635 | | |
Ascension Insurance Inc | | | (n) | | | Insurance | | | L+825 | | | | | 1.3% | | | | 3/5/19 | | | | | 27,800 | | | | | | 27,800 | | | | | | 27,800 | | |
Aspect Software Inc | | | (k)(l) | | | Software & Services | | | L+400, 6.5% PIK (6.5% Max PIK) | | | | | | | | | 5/25/20 | | | | | 4,671 | | | | | | 4,657 | | | | | | 3,480 | | |
Aspect Software Inc | | | (h)(k)(l) | | | Software & Services | | | L+1100 | | | | | 1.0% | | | | 5/25/20 | | | | | 3,598 | | | | | | 3,556 | | | | | | 2,680 | | |
ATX Networks Corp | | | (f)(m)(t) | | | Technology Hardware & Equipment | | | L+600, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 6/11/21 | | | | | 1,852 | | | | | | 1,839 | | | | | | 1,759 | | |
ATX Networks Corp | | | (f)(i)(m)(t) | | | Technology Hardware & Equipment | | | L+600, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 6/11/21 | | | | | 24,804 | | | | | | 24,368 | | | | | | 23,564 | | |
AVF Parent LLC | | | (h)(i) | | | Retailing | | | L+725 | | | | | 1.3% | | | | 3/1/24 | | | | | 74,461 | | | | | | 74,461 | | | | | | 69,605 | | |
Belk Inc | | | (t) | | | Retailing | | | L+475 | | | | | 1.0% | | | | 12/12/22 | | | | | 22,635 | | | | | | 19,743 | | | | | | 18,366 | | |
Borden Dairy Co | | | (g)(h) | | | Food, Beverage & Tobacco | | | L+808 | | | | | 1.0% | | | | 7/6/23 | | | | | 52,500 | | | | | | 52,500 | | | | | | 47,738 | | |
Caprock Midstream LLC | | | (t) | | | Energy | | | L+475 | | | | | | | | | 11/3/25 | | | | | 6,046 | | | | | | 5,916 | | | | | | 5,638 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||||||
Senior Secured Loans—First Lien—114.4% | ||||||||||||||||||||||||||
5 Arch Income Fund 2, LLC | (r)(x)(y) | Diversified Financials | 10.5% | 11/18/23 | $ | 109.5 | $ | 109.6 | $ | 106.0 | ||||||||||||||||
5 Arch Income Fund 2, LLC | (r)(s)(x)(y) | Diversified Financials | 10.5% | 11/18/23 | 112.9 | 112.9 | 109.2 | |||||||||||||||||||
ABB CONCISE Optical Group LLC | (n)(ab) | Retailing | L+500 | 1.0% | 6/15/23 | 3.6 | 3.6 | 3.4 | ||||||||||||||||||
Accuride Corp | (n)(ab) | Capital Goods | L+525 | 1.0% | 11/17/23 | 9.2 | 7.9 | 7.3 | ||||||||||||||||||
Advanced Lighting Technologies Inc | (n)(ad) | Materials | L+750 | 1.0% | 10/4/22 | 9.0 | 8.1 | 5.9 | ||||||||||||||||||
Advantage Sales & Marketing Inc | (n)(ab) | Commercial & Professional Services | L+325 | 1.0% | 7/23/21 | 30.6 | 29.0 | 29.7 | ||||||||||||||||||
All Systems Holding LLC | (f)(k)(l)(m)(n)(o)(p) | Commercial & Professional Services | L+625 | 1.0% | 10/31/23 | 198.3 | 198.3 | 200.4 | ||||||||||||||||||
All Systems Holding LLC | (n) | Commercial & Professional Services | L+625 | 1.0% | 10/31/23 | 4.4 | 4.4 | 4.4 | ||||||||||||||||||
All Systems Holding LLC | (s) | Commercial & Professional Services | L+625 | 1.0% | 10/31/23 | 10.2 | 10.2 | 10.3 | ||||||||||||||||||
Alstom SA | (n)(r)(ab) | Transportation | L+450 | 1.0% | 8/29/21 | 6.2 | 6.0 | 5.8 | ||||||||||||||||||
American Tire Distributors Inc | (n)(ab) | Automobiles & Components | L+600, 1.0% PIK (1.0% Max PIK) | 1.0% | 9/1/23 | 2.6 | 2.5 | 2.6 | ||||||||||||||||||
American Tire Distributors Inc | (n)(ab) | Automobiles & Components | L+750 | 1.0% | 9/2/24 | 16.3 | 14.5 | 14.7 | ||||||||||||||||||
Ammeraal Beltech Holding BV | (n)(r)(ab) | Capital Goods | E+375 | 7/30/25 | € | 3.3 | 3.8 | 3.6 | ||||||||||||||||||
Apex Group Limited | (r)(s) | Diversified Financials | L+700 | 1.3% | 6/15/23 | $ | 4.6 | 4.5 | 4.5 | |||||||||||||||||
Apex Group Limited | (f)(k)(l)(n)(q)(r) | Diversified Financials | L+700 | 1.3% | 6/15/25 | 70.4 | 69.7 | 70.5 | ||||||||||||||||||
Apex Group Limited | (n)(r) | Diversified Financials | L+700 | 1.5% | 6/15/25 | £ | 23.2 | 29.5 | 30.9 | |||||||||||||||||
Arrotex Australia Group Pty Ltd | (n)(r) | Pharmaceuticals, Biotechnology & Life Sciences | B+525 | 1.0% | 7/10/24 | A$ | 47.8 | 32.8 | 33.0 | |||||||||||||||||
Aspect Software Inc | (s) | Software & Services | L+500 | 1.0% | 7/15/23 | $ | 3.3 | 3.3 | 3.3 | |||||||||||||||||
Aspect Software Inc | (l)(n)(p) | Software & Services | L+500 | 1.0% | 1/15/24 | 21.2 | 19.0 | 19.2 | ||||||||||||||||||
ATX Networks Corp | (j)(n)(o)(r)(ab) | Technology Hardware & Equipment | L+600, 1.0% PIK (1.0% Max PIK) | 1.0% | 6/11/21 | 48.8 | 47.8 | 45.7 | ||||||||||||||||||
AVF Parent LLC | (n)(t)(u) | Retailing | L+925 PIK (L+925 Max PIK) | 1.3% | 3/1/24 | 118.9 | 114.7 | 37.5 | ||||||||||||||||||
Belk Inc | (n)(ab) | Retailing | L+675 | 1.0% | 7/31/25 | 54.3 | 45.1 | 38.2 | ||||||||||||||||||
Bellatrix Exploration Ltd | (n)(r) | Energy | 10.0% | 3/31/20 | 2.0 | 2.0 | 2.0 | |||||||||||||||||||
Bellatrix Exploration Ltd | (r)(s) | Energy | 10.0% | 3/31/20 | 0.8 | 0.8 | 0.8 | |||||||||||||||||||
Berner Food & Beverage LLC | (n) | Food & Staples Retailing | L+875 | 1.0% | 2/2/23 | 4.3 | 4.3 | 4.3 | ||||||||||||||||||
Borden Dairy Co | (n)(t)(u) | Food, Beverage & Tobacco | L+750 | 1.0% | 7/6/23 | 105.0 | 103.3 | 54.3 | ||||||||||||||||||
Brand Energy & Infrastructure Services Inc | (n)(ab)(ac) | Capital Goods | L+425 | 1.0% | 6/21/24 | 22.2 | 21.5 | 22.2 | ||||||||||||||||||
Bugaboo International BV | (n)(r) | Consumer Durables & Apparel | 7.8% PIK (7.8% Max PIK) | 3/20/25 | € | 1.5 | 1.8 | 1.7 | ||||||||||||||||||
Caprock Midstream LLC | (n)(ab) | Energy | L+475 | 11/3/25 | $ | 11.7 | 11.1 | 10.8 | ||||||||||||||||||
CEPSA Holdco (Matador Bidco) | (n)(r)(ab) | Energy | L+475 | 10/15/26 | 4.8 | 4.8 | 4.9 | |||||||||||||||||||
CHS/Community Health Systems, Inc. | (g)(h)(k)(n)(r)(aa)(ab) | Health Care Equipment & Services | 8.0% | 3/15/26 | 17.6 | 17.1 | 18.1 | |||||||||||||||||||
Cimarron Energy Inc | (n) | Energy | 10.0% | 6/30/21 | 7.5 | 7.5 | 7.5 | |||||||||||||||||||
Compassus LLC | (n)(ab)(ac) | Health Care Equipment & Services | L+500 | 1.0% | 12/31/26 | 6.8 | 6.7 | 6.8 | ||||||||||||||||||
Conservice LLC | (f)(n)(o)(p) | Consumer Services | L+525 | 11/29/24 | 59.5 | 59.0 | 59.8 | |||||||||||||||||||
Conservice LLC | (s) | Consumer Services | L+525 | 11/29/24 | 2.9 | 2.9 | 2.9 | |||||||||||||||||||
Conservice LLC | (s) | Consumer Services | L+525 | 11/29/24 | 3.4 | 3.3 | 3.4 | |||||||||||||||||||
Constellis Holdings LLC | (f)(n)(o)(p)(t)(u) | Capital Goods | L+625 | 1.0% | 4/15/22 | 92.8 | 91.8 | 61.4 | ||||||||||||||||||
CSafe Global | (n) | Capital Goods | L+650 | 1.0% | 11/1/21 | 5.9 | 5.9 | 5.9 | ||||||||||||||||||
CSafe Global | (s) | Capital Goods | L+650 | 1.0% | 11/1/21 | 3.2 | 3.2 | 3.2 | ||||||||||||||||||
CSafe Global | (f)(k)(l)(n)(p)(q) | Capital Goods | L+650 | 1.0% | 10/31/23 | 86.4 | 86.5 | 85.8 | ||||||||||||||||||
CSafe Global | (s) | Capital Goods | L+650 | 1.0% | 10/31/23 | 18.3 | 18.3 | 18.1 | ||||||||||||||||||
CSM Bakery Products | (l)(n)(ab) | Food, Beverage & Tobacco | L+400 | 1.0% | 7/3/20 | 7.5 | 7.2 | 7.3 | ||||||||||||||||||
CTI Foods Holding Co LLC | (n) | Food, Beverage & Tobacco | L+700 | 1.0% | 5/3/24 | — | — | — |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Cimarron Energy Inc | | | | | | Energy | | | L+900 | | | | | 1.0% | | | | 6/30/21 | | | | $ | 7,500 | | | | | $ | 7,500 | | | | | $ | 7,500 | | |
Constellis Holdings LLC/Constellis Finance Corp | | | | | | Capital Goods | | | L+575 | | | | | 1.0% | | | | 4/1/22 | | | | | 47,325 | | | | | | 46,621 | | | | | | 46,615 | | |
CSafe Global | | | | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 11/1/21 | | | | | 626 | | | | | | 626 | | | | | | 632 | | |
CSafe Global | | | (n) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 11/1/21 | | | | | 5,635 | | | | | | 5,635 | | | | | | 5,691 | | |
CSafe Global | | | (f)(g)(h) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 10/31/23 | | | | | 53,605 | | | | | | 53,605 | | | | | | 54,141 | | |
CSM Bakery Products | | | (i)(t) | | | Food, Beverage & Tobacco | | | L+400 | | | | | 1.0% | | | | 7/3/20 | | | | | 5,217 | | | | | | 5,071 | | | | | | 4,845 | | |
Dade Paper and Bag Co Inc | | | (f)(g)(h)(i) | | | Capital Goods | | | L+750 | | | | | 1.0% | | | | 6/10/24 | | | | | 135,734 | | | | | | 135,734 | | | | | | 133,019 | | |
Dade Paper and Bag Co Inc | | | (f)(g)(h) | | | Capital Goods | | | L+700 | | | | | 1.0% | | | | 6/10/24 | | | | | 17,312 | | | | | | 17,312 | | | | | | 16,620 | | |
Dayton Superior Corp | | | (i)(t) | | | Materials | | | L+800, 6.0% PIK (6.0% Max PIK) | | | | | 1.0% | | | | 11/15/21 | | | | | 11,790 | | | | | | 11,585 | | | | | | 9,874 | | |
Diamond Resorts International Inc | | | (i)(t) | | | Consumer Services | | | L+375 | | | | | 1.0% | | | | 9/2/23 | | | | | 14,085 | | | | | | 13,795 | | | | | | 13,170 | | |
Distribution International Inc | | | (t) | | | Retailing | | | L+500 | | | | | 1.0% | | | | 12/15/21 | | | | | 3,398 | | | | | | 3,247 | | | | | | 3,024 | | |
Eagle Family Foods Inc | | | (n) | | | Food, Beverage & Tobacco | | | L+650 | | | | | 1.0% | | | | 6/14/23 | | | | | 4,126 | | | | | | 4,084 | | | | | | 3,516 | | |
Eagle Family Foods Inc | | | (g)(h) | | | Food, Beverage & Tobacco | | | L+650 | | | | | 1.0% | | | | 6/14/24 | | | | | 27,368 | | | | | | 27,082 | | | | | | 26,950 | | |
Eagleclaw Midstream Ventures LLC | | | (i)(j)(t) | | | Energy | | | L+425 | | | | | 1.0% | | | | 6/24/24 | | | | | 11,455 | | | | | | 10,917 | | | | | | 10,747 | | |
EIF Van Hook Holdings LLC | | | (i)(t) | | | Energy | | | L+525 | | | | | | | | | 9/5/24 | | | | | 7,378 | | | | | | 7,234 | | | | | | 7,184 | | |
Empire Today LLC | | | (f)(g)(h)(i) | | | Retailing | | | L+700 | | | | | 1.0% | | | | 11/17/22 | | | | | 88,200 | | | | | | 88,200 | | | | | | 88,361 | | |
Fairway Group Holdings Corp | | | (k)(l) | | | Food & Staples Retailing | | | 10.0% PIK (10.0% Max PIK) | | | | | | | | | 11/27/23 | | | | | 1,964 | | | | | | 1,733 | | | | | | 258 | | |
Fairway Group Holdings Corp | | | (h) | | | Food & Staples Retailing | | | 12.0% PIK (12.0% Max PIK) | | | | | | | | | 11/27/23 | | | | | 3,072 | | | | | | 3,072 | | | | | | 2,984 | | |
Fairway Group Holdings Corp | | | | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | | | | | 8/28/23 | | | | | 212 | | | | | | 210 | | | | | | 212 | | |
Fairway Group Holdings Corp | | | (n) | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | | | | | 8/28/23 | | | | | 455 | | | | | | 455 | | | | | | 455 | | |
Fairway Group Holdings Corp | | | | | | Food & Staples Retailing | | | 4.0%, 11.0% PIK (11.0% Max PIK) | | | | | | | | | 8/28/23 | | | | | 1,070 | | | | | | 1,055 | | | | | | 1,070 | | |
Foresight Energy LLC | | | (h)(m)(t) | | | Materials | | | L+575 | | | | | 1.0% | | | | 3/28/22 | | | | | 10,591 | | | | | | 10,575 | | | | | | 10,423 | | |
Fox Head Inc | | | (h)(i) | | | Consumer Durables & Apparel | | | L+850 | | | | | 1.0% | | | | 12/19/20 | | | | | 5,051 | | | | | | 5,051 | | | | | | 4,989 | | |
Fox Head Inc | | | (h)(i) | | | Consumer Durables & Apparel | | | L+850 | | | | | 1.0% | | | | 12/19/20 | | | | | 47,253 | | | | | | 47,253 | | | | | | 46,671 | | |
FullBeauty Brands Holdings Corp | | | (k)(l)(t) | | | Retailing | | | L+475 | | | | | 1.0% | | | | 10/14/22 | | | | | 4,910 | | | | | | 4,574 | | | | | | 1,495 | | |
Gulf Finance LLC | | | (i)(t) | | | Energy | | | L+525 | | | | | 1.0% | | | | 8/25/23 | | | | | 4,687 | | | | | | 4,585 | | | | | | 3,615 | | |
HM Dunn Co Inc | | | (h)(k)(l)(u) | | | Capital Goods | | | L+875 PIK (L+875 Max PIK) | | | | | | | | | 6/30/21 | | | | | 43,885 | | | | | | 38,571 | | | | | | 7,022 | | |
Hudson Technologies Co | | | (h)(i)(m) | | | Commercial & Professional Services | | | L+1025 | | | | | 1.0% | | | | 10/10/23 | | | | | 50,717 | | | | | | 50,286 | | | | | | 36,262 | | |
Icynene Group Ltd | | | (f)(h)(i) | | | Materials | | | L+700 | | | | | 1.0% | | | | 11/30/24 | | | | | 35,640 | | | | | | 35,640 | | | | | | 34,656 | | |
Industrial Group Intermediate Holdings LLC | | | (f)(g)(h)(i) | | | Materials | | | L+800 | | | | | 1.3% | | | | 5/31/20 | | | | | 118,840 | | | | | | 118,840 | | | | | | 118,098 | | |
Industry City TI Lessor LP | | | (h) | | | Consumer Services | | | 10.8%, 1.0% PIK (1.0% Max PIK) | | | | | | | | | 6/30/26 | | | | | 11,522 | | | | | | 11,522 | | | | | | 11,522 | | |
JAKKS Pacific Inc | | | (h) | | | Consumer Durables & Apparel | | | L+900 | | | | | 1.5% | | | | 6/14/21 | | | | | 2,793 | | | | | | 2,775 | | | | | | 2,803 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Diamond Resorts International Inc | (l)(n)(ab) | Consumer Services | L+375 | 1.0% | 9/2/23 | $ | 46.1 | $ | 43.9 | $ | 45.2 | |||||||||||
Distribution International Inc | (n)(ab) | Retailing | L+575 | 1.0% | 12/15/23 | 13.1 | 11.8 | 12.6 | ||||||||||||||
Eacom Timber Corp | (n)(r) | Materials | L+650 | 1.0% | 11/30/23 | 2.6 | 2.6 | 2.5 | ||||||||||||||
Eagle Family Foods Inc | (n) | Food, Beverage & Tobacco | L+650 | 1.0% | 6/14/23 | 1.5 | 1.4 | 1.4 | ||||||||||||||
Eagle Family Foods Inc | (s) | Food, Beverage & Tobacco | L+650 | 1.0% | 6/14/23 | 6.7 | 6.7 | 6.5 | ||||||||||||||
Eagle Family Foods Inc | (f)(k)(l)(n)(p) | Food, Beverage & Tobacco | L+650 | 1.0% | 6/14/24 | 53.7 | 53.2 | 52.0 | ||||||||||||||
Eagleclaw Midstream Ventures LLC | (n)(ab) | Energy | L+425 | 1.0% | 6/24/24 | 5.5 | 5.1 | 5.1 | ||||||||||||||
EaglePicher Technologies LLC | (n)(ab)(ac) | Capital Goods | L+325 | 3/8/25 | — | — | — | |||||||||||||||
Electronics For Imaging Inc | (n)(ab) | Technology Hardware & Equipment | L+500 | 7/23/26 | 13.9 | 13.3 | 13.0 | |||||||||||||||
Empire Today LLC | (f)(k)(l)(n)(o)(p)(q) | Retailing | L+650 | 1.0% | 11/17/22 | 133.9 | 133.9 | 133.6 | ||||||||||||||
Entertainment Benefits Group LLC | (n) | Media & Entertainment | L+575 | 1.0% | 9/30/24 | 1.2 | 1.2 | 1.2 | ||||||||||||||
Entertainment Benefits Group LLC | (s) | Media & Entertainment | L+575 | 1.0% | 9/30/24 | 4.7 | 4.7 | 4.7 | ||||||||||||||
Entertainment Benefits Group LLC | (f)(k)(l)(n) | Media & Entertainment | L+575 | 1.0% | 9/30/25 | 32.6 | 32.2 | 32.3 | ||||||||||||||
Fairway Group Holdings Corp | (n)(ad) | Food & Staples Retailing | 4.0%, 11.0% PIK (11.0% Max PIK) | 8/28/23 | 6.3 | 6.2 | 6.3 | |||||||||||||||
Fairway Group Holdings Corp | (n)(ad) | Food & Staples Retailing | 12.0% PIK (12.0% Max PIK) | 11/27/23 | 11.3 | 11.3 | 6.5 | |||||||||||||||
Fairway Group Holdings Corp | (n)(t)(u)(ad) | Food & Staples Retailing | 10.0% PIK (10.0% Max PIK) | 11/28/23 | 7.2 | 5.6 | — | |||||||||||||||
FHC Health Systems Inc | (n)(ab) | Health Care Equipment & Services | L+400 | 1.0% | 12/23/21 | 8.7 | 7.6 | 8.8 | ||||||||||||||
Fox Head Inc | (l)(n)(p) | Consumer Durables & Apparel | L+850 | 1.0% | 12/19/20 | 36.5 | 36.5 | 36.1 | ||||||||||||||
Frontline Technologies Group LLC | (n) | Software & Services | L+575 | 1.0% | 9/18/23 | 5.3 | 5.3 | 5.3 | ||||||||||||||
FullBeauty Brands Holdings Corp | (n) | Retailing | L+1,000 | 1.0% | 2/7/22 | 0.7 | 0.7 | 0.7 | ||||||||||||||
FullBeauty Brands Holdings Corp | (n)(ab) | Retailing | L+900 | 1.0% | 2/7/24 | 4.0 | 3.9 | 1.9 | ||||||||||||||
Greystone Equity Member Corp | (n)(r) | Diversified Financials | L+725 | 3.8% | 4/1/26 | 158.3 | 158.3 | 154.3 | ||||||||||||||
Greystone Equity Member Corp | (r)(s) | Diversified Financials | L+725 | 3.8% | 4/1/26 | 5.9 | 5.9 | 5.8 | ||||||||||||||
Heniff Transportation Systems LLC | (n) | Transportation | L+575 | 1.0% | 12/3/24 | 0.8 | 0.8 | 0.8 | ||||||||||||||
Heniff Transportation Systems LLC | (s) | Transportation | L+575 | 1.0% | 12/3/24 | 8.8 | 8.8 | 8.8 | ||||||||||||||
Heniff Transportation Systems LLC | (f)(l) | Transportation | L+575 | 1.0% | 12/3/26 | 45.1 | 45.1 | 45.1 | ||||||||||||||
Heniff Transportation Systems LLC | (k)(l)(n) | Transportation | L+575 | 1.0% | 12/3/26 | 30.1 | 29.8 | 29.8 | ||||||||||||||
HM Dunn Co Inc | (n)(t)(u)(ad) | Capital Goods | L+875 PIK (L+875 Max PIK) | 1.0% | 6/30/21 | 56.3 | 44.4 | 26.0 | ||||||||||||||
HM Dunn Co Inc | (n)(ad) | Capital Goods | 15.0% PIK (15.0% Max PIK) | 6/30/21 | 5.2 | 5.2 | 5.2 | |||||||||||||||
Hudson Technologies Co | (n)(r) | Commercial & Professional Services | L+1,025 | 1.0% | 10/10/23 | 54.6 | 54.2 | 31.1 | ||||||||||||||
Icynene Group Ltd | (f)(l)(m)(n)(o)(p)(q) | Materials | L+700 | 1.0% | 11/30/24 | 117.6 | 117.6 | 118.8 | ||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/24 | € | 0.2 | 0.2 | 0.2 | ||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/24 | £ | 0.1 | 0.1 | 0.1 | ||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | E+700 | 3/29/25 | € | 0.9 | 1.1 | 1.1 | ||||||||||||||
ID Verde | (n)(r) | Commercial & Professional Services | L+725 | 3/29/25 | £ | 0.6 | 0.8 | 0.8 | ||||||||||||||
Industria Chimica Emiliana Srl | (n)(r) | Pharmaceuticals, Biotechnology & Life Sciences | L+650 | 6/30/26 | € | 51.8 | 55.3 | 56.8 | ||||||||||||||
Industria Chimica Emiliana Srl | (r)(s) | Pharmaceuticals, Biotechnology & Life Sciences | E+650 | 6/30/26 | 13.6 | 14.8 | 14.8 | |||||||||||||||
Industry City TI Lessor LP | (n)(p) | Consumer Services | 10.8%, 1.0% PIK (1.0% Max PIK) | 6/30/26 | $ | 10.6 | 10.6 | 11.5 | ||||||||||||||
Ivanti Software Inc | (l)(ab) | Software & Services | L+425 | 1.0% | 1/20/24 | 7.4 | 7.3 | 7.4 | ||||||||||||||
J S Held LLC | (f)(n)(o)(p) | Insurance | L+600 | 1.0% | 7/1/25 | 68.8 | 68.2 | 68.8 | ||||||||||||||
J S Held LLC | (s) | Insurance | L+600 | 1.0% | 7/1/25 | 16.4 | 16.4 | 16.4 | ||||||||||||||
J S Held LLC | (n) | Insurance | L+600 | 1.0% | 7/1/25 | 1.4 | 1.4 | 1.4 | ||||||||||||||
J S Held LLC | (s) | Insurance | L+600 | 1.0% | 7/1/25 | 6.4 | 6.4 | 6.4 | ||||||||||||||
JC Penney Corp Inc | (n)(r)(ab) | Retailing | L+425 | 1.0% | 6/23/23 | 3.4 | 3.1 | 3.0 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
JC Penney Corp Inc | | | (m)(t) | | | Retailing | | | L+425 | | | | | 1.0% | | | | 6/23/23 | | | | $ | 1,205 | | | | | $ | 1,149 | | | | | $ | 1,034 | | |
JHC Acquisition LLC | | | (f)(g)(h) | | | Capital Goods | | | L+750 | | | | | 1.0% | | | | 1/29/24 | | | | | 121,947 | | | | | | 121,947 | | | | | | 121,947 | | |
JHC Acquisition LLC | | | (n) | | | Capital Goods | | | L+750 | | | | | 1.0% | | | | 1/29/24 | | | | | 35,269 | | | | | | 35,268 | | | | | | 35,269 | | |
Jo-Ann Stores Inc | | | (i)(t) | | | Retailing | | | L+500 | | | | | 1.0% | | | | 10/20/23 | | | | | 5,013 | | | | | | 5,004 | | | | | | 4,794 | | |
Jostens Inc | | | (j)(t) | | | Consumer Services | | | L+550 | | | | | | | | | 12/19/25 | | | | | 3,663 | | | | | | 3,552 | | | | | | 3,574 | | |
JSS Holdings Ltd | | | (f)(h)(i) | | | Capital Goods | | | L+800, 0.0% PIK (2.5% Max PIK) | | | | | 1.0% | | | | 3/31/23 | | | | | 72,696 | | | | | | 72,140 | | | | | | 74,877 | | |
Kodiak BP LLC | | | (g)(h)(i) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 12/1/24 | | | | | 110,681 | | | | | | 110,681 | | | | | | 108,329 | | |
Kodiak BP LLC | | | (n) | | | Capital Goods | | | L+725 | | | | | 1.0% | | | | 12/1/24 | | | | | 9,849 | | | | | | 9,849 | | | | | | 9,639 | | |
Lazard Global Compounders Fund | | | (m) | | | Diversified Financials | | | L+725 | | | | | 3.8% | | | | 4/1/26 | | | | | 38,356 | | | | | | 38,356 | | | | | | 38,644 | | |
Lazard Global Compounders Fund | | | (m)(n) | | | Diversified Financials | | | L+725 | | | | | 3.8% | | | | 4/1/26 | | | | | 6,644 | | | | | | 6,644 | | | | | | 6,694 | | |
LD Intermediate Holdings Inc | | | (i)(t) | | | Software & Services | | | L+588 | | | | | 1.0% | | | | 12/9/22 | | | | | 16,150 | | | | | | 15,058 | | | | | | 14,656 | | |
MB Precision Holdings LLC | | | (g)(h)(k)(l)(u) | | | Capital Goods | | | L+725, 2.3% PIK (2.3% Max PIK) | | | | | 1.3% | | | | 1/23/21 | | | | | 21,339 | | | | | | 20,364 | | | | | | 21,339 | | |
Mitel US Holdings Inc | | | (i)(t) | | | Technology Hardware & Equipment | | | L+450 | | | | | | | | | 11/30/25 | | | | | 4,559 | | | | | | 4,548 | | | | | | 4,431 | | |
Monitronics International Inc | | | (j)(m)(t) | | | Commercial & Professional Services | | | L+550 | | | | | 1.0% | | | | 9/30/22 | | | | | 3,838 | | | | | | 3,702 | | | | | | 3,442 | | |
Murray Energy Corp | | | (h) | | | Energy | | | L+900 | | | | | 1.0% | | | | 2/12/21 | | | | | 10,891 | | | | | | 10,824 | | | | | | 10,842 | | |
NaviHealth Inc. | | | (i)(j)(t) | | | Health Care Equipment & Services | | | L+500 | | | | | | | | | 8/1/25 | | | | | 15,111 | | | | | | 14,437 | | | | | | 14,318 | | |
North Haven Cadence Buyer Inc | | | (n) | | | Consumer Services | | | L+500 | | | | | 1.0% | | | | 9/2/21 | | | | | 2,625 | | | | | | 2,625 | | | | | | 2,625 | | |
North Haven Cadence Buyer Inc | | | (h) | | | Consumer Services | | | L+777 | | | | | 1.0% | | | | 9/2/24 | | | | | 14,762 | | | | | | 14,762 | | | | | | 14,614 | | |
North Haven Cadence Buyer Inc | | | (h)(i) | | | Consumer Services | | | L+798 | | | | | 1.0% | | | | 9/2/24 | | | | | 51,187 | | | | | | 51,187 | | | | | | 50,676 | | |
North Haven Cadence Buyer Inc | | | (n) | | | Consumer Services | | | L+650 | | | | | 1.0% | | | | 9/2/24 | | | | | 10,500 | | | | | | 10,500 | | | | | | 10,395 | | |
P2 Energy Solutions, Inc. | | | (t) | | | Energy | | | L+400 | | | | | 1.3% | | | | 10/30/20 | | | | | 74 | | | | | | 73 | | | | | | 71 | | |
PAE Holding Corp | | | (j)(t) | | | Capital Goods | | | L+550 | | | | | 1.0% | | | | 10/20/22 | | | | | 9 | | | | | | 9 | | | | | | 9 | | |
Panda Liberty LLC | | | (f)(g)(t) | | | Energy | | | L+650 | | | | | 1.0% | | | | 8/21/20 | | | | | 11,515 | | | | | | 11,525 | | | | | | 10,383 | | |
Peak 10 Holding Corp | | | (j)(t) | | | Telecommunication Services | | | L+325 | | | | | 1.0% | | | | 8/1/24 | | | | | 8,965 | | | | | | 8,329 | | | | | | 8,181 | | |
PHRC License LLC | | | (g)(h) | | | Consumer Services | | | L+850, 0.3% PIK (0.3% Max PIK) | | | | | 1.5% | | | | 4/28/22 | | | | | 66,842 | | | | | | 66,842 | | | | | | 68,262 | | |
Power Distribution Inc | | | (f)(i) | | | Capital Goods | | | L+725 | | | | | 1.3% | | | | 1/25/23 | | | | | 44,021 | | | | | | 44,021 | | | | | | 44,021 | | |
Production Resource Group LLC | | | (f)(g)(h)(i) | | | Media | | | L+700 | | | | | 1.0% | | | | 8/21/24 | | | | | 207,992 | | | | | | 207,992 | | | | | | 204,352 | | |
Propulsion Acquisition LLC | | | (f)(h)(i)(t) | | | Capital Goods | | | L+600 | | | | | 1.0% | | | | 7/13/21 | | | | | 58,267 | | | | | | 56,734 | | | | | | 57,684 | | |
PSKW LLC | | | (f)(h) | | | Health Care Equipment & Services | | | L+850 | | | | | 1.0% | | | | 11/25/21 | | | | | 56,025 | | | | | | 55,983 | | | | | | 56,166 | | |
Reliant Rehab Hospital Cincinnati LLC | | | (h) | | | Health Care Equipment & Services | | | L+675 | | | | | 1.0% | | | | 8/30/24 | | | | | 55,015 | | | | | | 54,490 | | | | | | 54,850 | | |
Roadrunner Intermediate Acquisition Co LLC | | | (f) | | | Health Care Equipment & Services | | | L+675 | | | | | 1.0% | | | | 3/15/23 | | | | | 7,165 | | | | | | 7,165 | | | | | | 6,673 | | |
Rogue Wave Software Inc | | | (h) | | | Software & Services | | | L+843 | | | | | 1.0% | | | | 9/25/21 | | | | | 72,434 | | | | | | 72,434 | | | | | | 72,343 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Jo-Ann Stores Inc | (n)(ab) | Retailing | L+500 | 1.0% | 10/20/23 | $ | 11.2 | $ | 10.3 | $ | 7.9 | |||||||||||
Jostens Inc | (n)(ab) | Consumer Services | L+550 | 12/19/25 | 16.0 | 15.8 | 16.0 | |||||||||||||||
Kellermeyer Bergensons Services LLC | (s) | Commercial & Professional Services | L+650 | 1.0% | 2/5/20 | 31.1 | 31.1 | 30.8 | ||||||||||||||
Kellermeyer Bergensons Services LLC | (f)(k)(l)(n)(o)(p) | Commercial & Professional Services | L+650 | 1.0% | 11/7/26 | 135.2 | 133.9 | 133.9 | ||||||||||||||
Kellermeyer Bergensons Services LLC | (s) | Commercial & Professional Services | L+650 | 1.0% | 11/7/26 | 40.6 | 40.6 | 40.2 | ||||||||||||||
Kodiak BP LLC | (f)(k)(l)(m)(n)(o)(p) | Capital Goods | L+725 | 1.0% | 12/1/24 | 223.1 | 223.1 | 223.0 | ||||||||||||||
Kodiak BP LLC | (s) | Capital Goods | L+725 | 1.0% | 12/1/24 | 10.7 | 10.7 | 10.7 | ||||||||||||||
Laird PLC | (n)(r)(ab) | Technology Hardware & Equipment | L+450 | 7/9/25 | 4.4 | 4.0 | 4.4 | |||||||||||||||
LBM Borrower LLC | (l)(n)(ab) | Capital Goods | L+375 | 1.0% | 8/20/22 | 13.7 | 13.4 | 13.8 | ||||||||||||||
LD Intermediate Holdings Inc | (n)(ab) | Software & Services | L+588 | 1.0% | 12/9/22 | 31.5 | 29.8 | 31.6 | ||||||||||||||
Lexitas Inc | (s) | Commercial & Professional Services | L+575 | 1.0% | 11/14/25 | 2.9 | 2.9 | 2.9 | ||||||||||||||
Lexitas Inc | (k)(l)(n) | Commercial & Professional Services | L+575 | 1.0% | 11/14/25 | 22.0 | 21.8 | 21.8 | ||||||||||||||
Lexitas Inc | (s) | Commercial & Professional Services | L+575 | 1.0% | 11/14/25 | 9.3 | 9.3 | 9.2 | ||||||||||||||
Lionbridge Technologies Inc | (f)(k)(l)(p)(q) | Consumer Services | L+625 | 1.0% | 12/27/25 | 115.3 | 114.7 | 114.7 | ||||||||||||||
Lipari Foods LLC | (f)(n) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | 22.0 | 22.0 | 22.0 | ||||||||||||||
Lipari Foods LLC | (s) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | 49.9 | 49.9 | 49.9 | ||||||||||||||
Lipari Foods LLC | (f)(m)(n)(o)(p) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | 151.0 | 149.7 | 150.9 | ||||||||||||||
MB Precision Holdings LLC | (k)(n)(ad) | Capital Goods | L+725, 2.3% PIK (2.3% Max PIK) | 1.3% | 1/23/21 | 21.5 | 21.0 | 21.4 | ||||||||||||||
MedAssets Inc | (n)(ab) | Health Care Equipment & Services | L+450 | 1.0% | 10/20/22 | 0.1 | 0.1 | 0.1 | ||||||||||||||
MI Windows & Doors Inc | (n)(ab) | Capital Goods | L+550 | 1.0% | 11/6/26 | 20.0 | 19.0 | 20.1 | ||||||||||||||
Mitel US Holdings Inc | (n)(ab) | Technology Hardware & Equipment | L+450 | 11/30/25 | 0.3 | 0.3 | 0.3 | |||||||||||||||
Monitronics International Inc | (f)(n)(ab)(ac) | Commercial & Professional Services | L+650 | 1.3% | 3/29/24 | 36.1 | 34.8 | 30.8 | ||||||||||||||
Monitronics International Inc | (f)(n)(ab) | Commercial & Professional Services | L+500 | 1.5% | 7/3/24 | 17.8 | 17.8 | 17.8 | ||||||||||||||
Monitronics International Inc | (n)(ab) | Commercial & Professional Services | L+500 | 1.5% | 7/3/24 | 7.7 | 7.7 | 7.7 | ||||||||||||||
Monitronics International Inc | (s)(ab) | Commercial & Professional Services | L+500 | 1.5% | 7/3/24 | 62.3 | 62.3 | 62.3 | ||||||||||||||
Motion Recruitment Partners LLC | (n) | Commercial & Professional Services | L+600 | 1.0% | 12/20/25 | 43.9 | 43.5 | 43.5 | ||||||||||||||
Motion Recruitment Partners LLC | (s) | Commercial & Professional Services | L+600 | 1.0% | 12/20/25 | 7.9 | 7.9 | 7.9 | ||||||||||||||
Motion Recruitment Partners LLC | (s) | Commercial & Professional Services | L+600 | 1.0% | 12/20/25 | 34.6 | 34.6 | 34.6 | ||||||||||||||
Multi-Color Corp | (n)(r)(ab) | Commercial & Professional Services | 6.8% | 7/15/26 | 10.4 | 10.4 | 11.0 | |||||||||||||||
NaviHealth Inc. | (n)(ab) | Health Care Equipment & Services | L+500 | 8/1/25 | 24.9 | 24.2 | 24.9 | |||||||||||||||
NCI Inc | (n) | Software & Services | L+750 | 1.0% | 8/15/24 | 4.2 | 4.2 | 4.1 | ||||||||||||||
North Haven Cadence Buyer Inc | (s) | Consumer Services | L+500 | 1.0% | 9/2/21 | 3.6 | 3.6 | 3.6 | ||||||||||||||
North Haven Cadence Buyer Inc | (f)(k)(n)(p) | Consumer Services | L+650 | 1.0% | 9/2/22 | 44.0 | 44.0 | 44.0 | ||||||||||||||
North Haven Cadence Buyer Inc | (s) | Consumer Services | L+650 | 1.0% | 9/2/22 | 10.7 | 10.7 | 10.7 | ||||||||||||||
North Haven Cadence Buyer Inc | (f)(l)(n)(o)(p) | Consumer Services | L+793 | 1.0% | 9/2/22 | 72.5 | 72.5 | 72.5 | ||||||||||||||
One Call Care Management Inc | (n)(ab)(ad) | Insurance | L+525 | 1.0% | 11/27/22 | 2.9 | 2.5 | 2.7 | ||||||||||||||
Ontic Engineering & Manufacturing Inc | (n)(ab) | Capital Goods | L+475 | 10/30/26 | 1.9 | 1.9 | 1.9 | |||||||||||||||
Ontic Engineering & Manufacturing Inc | (s)(ab) | Capital Goods | L+238 | 10/31/26 | 0.3 | 0.3 | 0.3 | |||||||||||||||
Onvoy LLC | (n)(ab) | Telecommunication Services | L+450 | 1.0% | 2/10/24 | 0.2 | 0.1 | 0.1 | ||||||||||||||
P2 Energy Solutions, Inc. | (n)(ab) | Software & Services | L+375 | 1.0% | 10/30/20 | 2.5 | 2.4 | 2.5 | ||||||||||||||
PAE Holding Corp | (n)(ab) | Capital Goods | L+550 | 1.0% | 10/20/22 | 7.3 | 7.4 | 7.4 | ||||||||||||||
Peak 10 Holding Corp | (k)(n)(ab) | Telecommunication Services | L+350 | 8/1/24 | 22.4 | 20.2 | 18.7 | |||||||||||||||
PF Chang’s China Bistro Inc | (n)(ab) | Consumer Services | L+625 | 3/1/26 | 14.9 | 14.8 | �� | 12.2 | ||||||||||||||
Power Distribution Inc | (f)(n) | Capital Goods | L+725 | 1.3% | 1/25/23 | 65.1 | 65.1 | 60.6 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Safariland LLC | | | (g)(h) | | | Capital Goods | | | L+765 | | | | | 1.1% | | | | 11/18/23 | | | | $ | 70,234 | | | | | $ | 70,234 | | | | | $ | 62,947 | | |
Savers Inc | | | (t) | | | Retailing | | | L+375 | | | | | 1.3% | | | | 7/9/19 | | | | | 1,539 | | | | | | 1,529 | | | | | | 1,473 | | |
Sequa Corp | | | (i)(j)(t) | | | Materials | | | L+500 | | | | | 1.0% | | | | 11/28/21 | | | | | 18,467 | | | | | | 18,212 | | | | | | 17,705 | | |
Sequel Youth & Family Services LLC | | | (h) | | | Health Care Equipment & Services | | | L+700 | | | | | 1.0% | | | | 9/1/23 | | | | | 12,229 | | | | | | 12,229 | | | | | | 12,448 | | |
Sequel Youth & Family Services LLC | | | (f)(h)(i) | | | Health Care Equipment & Services | | | L+800 | | | | | | | | | 9/1/23 | | | | | 70,000 | | | | | | 70,000 | | | | | | 71,247 | | |
Sequential Brands Group Inc. | | | (g)(h)(i) | | | Consumer Durables & Apparel | | | L+875 | | | | | | | | | 2/7/24 | | | | | 118,929 | | | | | | 116,976 | | | | | | 118,929 | | |
SI Group Inc | | | (j)(t) | | | Materials | | | L+475 | | | | | | | | | 10/15/25 | | | | | 2,922 | | | | | | 2,814 | | | | | | 2,820 | | |
SIRVA Worldwide Inc | | | (i)(t) | | | Commercial & Professional Services | | | L+550 | | | | | | | | | 8/2/25 | | | | | 2,776 | | | | | | 2,737 | | | | | | 2,728 | | |
Sorenson Communications LLC | | | (f)(g)(h)(j)(t) | | | Telecommunication Services | | | L+575 | | | | | 2.3% | | | | 4/30/20 | | | | | 107,393 | | | | | | 107,217 | | | | | | 106,991 | | |
SSC (Lux) Limited S.a r.l. | | | (g)(h)(i)(m) | | | Health Care Equipment & Services | | | L+750 | | | | | 1.0% | | | | 9/10/24 | | | | | 104,545 | | | | | | 104,545 | | | | | | 105,591 | | |
Staples Canada | | | (m) | | | Retailing | | | L+700 | | | | | 1.0% | | | | 9/12/24 | | | | C$ | 56,874 | | | | | | 44,009 | | | | | | 42,101 | | |
Strike LLC | | | (i)(t) | | | Energy | | | L+800 | | | | | 1.0% | | | | 11/30/22 | | | | $ | 4,285 | | | | | | 4,191 | | | | | | 4,290 | | |
Sungard Availability Services Capital Inc | | | (f)(t) | | | Software & Services | | | L+700 | | | | | 1.0% | | | | 9/30/21 | | | | | 10,336 | | | | | | 10,266 | | | | | | 8,827 | | |
Sungard Availability Services Capital Inc | | | (t) | | | Software & Services | | | L+1000 | | | | | 1.0% | | | | 10/1/22 | | | | | 962 | | | | | | 918 | | | | | | 933 | | |
Sutherland Global Services Inc | | | (h)(i)(j)(m)(t) | | | Software & Services | | | L+538 | | | | | 1.0% | | | | 4/23/21 | | | | | 10,564 | | | | | | 10,143 | | | | | | 9,974 | | |
Sutherland Global Services Inc | | | (h)(i)(j)(m)(t) | | | Software & Services | | | L+538 | | | | | 1.0% | | | | 4/23/21 | | | | | 2,459 | | | | | | 2,361 | | | | | | 2,322 | | |
Swift Worldwide Resources Holdco Ltd | | | (f)(g) | | | Energy | | | L+1000, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 7/20/21 | | | | | 19,492 | | | | | | 19,492 | | | | | | 19,492 | | |
Tangoe LLC | | | | | | Software & Services | | | L+650 | | | | | 1.0% | | | | 11/28/25 | | | | | 52,024 | | | | | | 51,511 | | | | | | 51,504 | | |
Team Health Inc | | | (j)(t) | | | Health Care Equipment & Services | | | L+275 | | | | | 1.0% | | | | 2/6/24 | | | | | 78 | | | | | | 71 | | | | | | 70 | | |
Trace3 Inc | | | (f)(g)(h)(i) | | | Diversified Financials | | | L+675 | | | | | 1.0% | | | | 8/5/24 | | | | | 161,585 | | | | | | 161,585 | | | | | | 159,970 | | |
Virgin Pulse Inc | | | (h)(i) | | | Software & Services | | | L+650 | | | | | 1.0% | | | | 5/22/25 | | | | | 79,891 | | | | | | 79,290 | | | | | | 77,407 | | |
Vivint Inc | | | (i)(t) | | | Commercial & Professional Services | | | L+500 | | | | | | | | | 4/1/24 | | | | | 18,583 | | | | | | 18,537 | | | | | | 18,111 | | |
Warren Resources Inc | | | (h)(u) | | | Energy | | | L+1000, 1.0% PIK (1.0% Max PIK) | | | | | 1.0% | | | | 5/22/20 | | | | | 14,652 | | | | | | 14,652 | | | | | | 14,652 | | |
York Risk Services Group Inc | | | (t) | | | Insurance | | | L+375 | | | | | 1.0% | | | | 10/1/21 | | | | | 980 | | | | | | 975 | | | | | | 919 | | |
Zeta Interactive Holdings Corp | | | (f)(h) | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 7/29/22 | | | | | 37,112 | | | | | | 37,112 | | | | | | 37,483 | | |
Zeta Interactive Holdings Corp | | | (n) | | | Software & Services | | | L+750 | | | | | 1.0% | | | | 7/29/22 | | | | | 6,571 | | | | | | 6,571 | | | | | | 6,637 | | |
Total Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,539,497 | | | | | | 3,450,630 | | |
Unfunded Loan Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (157,339) | | | | | | (157,339) | | |
Net Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,382,158 | | | | | | 3,293,291 | | |
|
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Production Resource Group LLC | (k)(l)(m)(n)(p) | Media & Entertainment | L+700 | 1.0% | 8/21/24 | $ | 381.0 | $ | 381.0 | $ | 306.2 | |||||||||||
Project Marron | (n)(r) | Consumer Services | B+625 | 7/3/25 | A$ | 36.5 | 23.9 | 25.7 | ||||||||||||||
Project Marron | (f)(n)(r) | Consumer Services | L+625 | 7/2/25 | C$ | 28.7 | 21.9 | 22.4 | ||||||||||||||
Propulsion Acquisition LLC | (f)(l)(m)(n)(p)(q) | Capital Goods | L+600 | 1.0% | 7/13/21 | $ | 113.9 | 112.4 | 112.9 | |||||||||||||
PSKW LLC | (n)(o)(p) | Health Care Equipment & Services | L+768 | 1.0% | 11/25/21 | 16.5 | 16.5 | 16.5 | ||||||||||||||
PSKW LLC | (l)(m)(n)(o)(p)(q) | Health Care Equipment & Services | L+768 | 1.0% | 11/25/21 | 191.6 | 191.6 | 191.6 | ||||||||||||||
PSKW LLC | (m)(n) | Health Care Equipment & Services | L+768 | 1.0% | 11/25/21 | 20.4 | 20.2 | 20.4 | ||||||||||||||
Qdoba Restaurant Corp | (n)(ab) | Consumer Services | L+700 | 1.0% | 3/21/25 | 2.0 | 1.9 | 2.0 | ||||||||||||||
Quorum Health Corp | (n)(ab) | Health Care Equipment & Services | L+675 | 1.0% | 4/29/22 | 7.6 | 7.6 | 7.5 | ||||||||||||||
Reliant Rehab Hospital Cincinnati LLC | (f)(n)(o)(p) | Health Care Equipment & Services | L+675 | 1.0% | 9/2/24 | 118.0 | 117.1 | 115.6 | ||||||||||||||
Roadrunner Intermediate Acquisition Co LLC | (l)(m)(o)(q) | Health Care Equipment & Services | L+675 | 1.0% | 3/15/23 | 96.4 | 96.4 | 94.7 | ||||||||||||||
RSC Insurance Brokerage Inc | (f)(k)(l)(n)(o)(p) | Insurance | L+550 | 1.0% | 11/1/26 | 90.0 | 89.1 | 89.1 | ||||||||||||||
RSC Insurance Brokerage Inc | (s) | Insurance | L+550 | 1.0% | 11/1/26 | 22.7 | 22.5 | 22.5 | ||||||||||||||
RSC Insurance Brokerage Inc | (s) | Insurance | L+550 | 1.0% | 11/1/26 | 3.7 | 3.6 | 3.6 | ||||||||||||||
Safariland LLC | (n) | Capital Goods | L+775 | 1.1% | 11/18/23 | 2.2 | 2.2 | 2.1 | ||||||||||||||
Safariland LLC | (f)(k)(l)(n)(p) | Capital Goods | L+775 | 1.1% | 11/18/23 | 115.7 | 115.7 | 109.0 | ||||||||||||||
Savers Inc | (f)(n)(o)(p) | Retailing | L+650, 0.8% PIK (0.8% Max PIK) | 1.5% | 3/28/24 | 52.7 | 52.1 | 52.2 | ||||||||||||||
Savers Inc | (f)(n) | Retailing | L+700, 0.8% PIK (0.8% Max PIK) | 1.5% | 3/28/24 | C$ | 73.1 | 53.9 | 57.4 | |||||||||||||
Sequa Corp | (n)(ab)(ac) | Materials | L+500 | 1.0% | 11/28/21 | $ | 30.2 | 29.8 | 30.2 | |||||||||||||
Sequel Youth & Family Services LLC | (f)(o)(p) | Health Care Equipment & Services | L+700 | 1.0% | 9/1/23 | 15.6 | 15.6 | 15.6 | ||||||||||||||
Sequel Youth & Family Services LLC | (f)(l)(n)(p) | Health Care Equipment & Services | L+800 | 9/1/23 | 90.0 | 90.0 | 90.1 | |||||||||||||||
Sequential Brands Group Inc. | (k)(l)(n) | Consumer Durables & Apparel | L+875 | 2/7/24 | 213.9 | 210.6 | 210.4 | |||||||||||||||
SI Group Inc | (n)(ab) | Materials | L+475 | 10/15/25 | 2.0 | 1.9 | 2.0 | |||||||||||||||
SIRVA Worldwide Inc | (n)(ab) | Commercial & Professional Services | L+550 | 8/4/25 | 6.6 | 6.4 | 6.5 | |||||||||||||||
Smart Foodservice | (n)(ab) | Food & Staples Retailing | L+475 | 6/20/26 | 5.8 | 5.7 | 5.8 | |||||||||||||||
Smart & Final Stores LLC | (m)(n)(ab) | Food & Staples Retailing | L+675 | 6/20/25 | 28.0 | 25.4 | 27.1 | |||||||||||||||
SMART Global Holdings Inc | (r)(s) | Semiconductors & Semiconductor Equipment | L+400 | 2/9/21 | 0.1 | 0.1 | 0.1 | |||||||||||||||
SMART Global Holdings Inc | (n)(r) | Semiconductors & Semiconductor Equipment | L+625 | 1.0% | 8/9/22 | 3.2 | 3.2 | 3.2 | ||||||||||||||
Sorenson Communications LLC | (f)(k)(m)(n)(ab) | Telecommunication Services | L+650 | 4/29/24 | 78.6 | 75.8 | 78.2 | |||||||||||||||
Staples Canada | (n)(r) | Retailing | L+700 | 1.0% | 9/12/24 | C$ | 4.4 | 3.6 | 3.5 | |||||||||||||
Sungard Availability Services Capital Inc | (n) | Software & Services | L+750 | 1.0% | 2/3/22 | 2.4 | 2.3 | 2.5 | ||||||||||||||
Sungard Availability Services Capital Inc | (s) | Software & Services | L+750 | 1.0% | 2/3/22 | 2.4 | 2.3 | 2.5 | ||||||||||||||
Sutherland Global Services Inc | (n)(p)(r)(ab) | Software & Services | L+538 | 1.0% | 4/23/21 | 26.9 | 26.1 | 26.7 | ||||||||||||||
Swift Worldwide Resources Holdco Ltd | (k)(n)(q) | Energy | 9.5% L+150 PIK (L+150 Max PIK) | 2.5% | 7/20/21 | 37.6 | 37.6 | 37.6 | ||||||||||||||
Syncsort Inc | (n)(ab) | Software & Services | L+600 | 1.0% | 8/16/24 | 9.5 | 8.7 | 9.1 | ||||||||||||||
Tangoe LLC | (f)(n)(o)(p) | Software & Services | L+650 | 1.0% | 11/28/25 | 102.7 | 101.8 | 102.8 | ||||||||||||||
Team Health Inc | (n)(ab) | Health Care Equipment & Services | L+275 | 1.0% | 2/6/24 | 1.1 | 1.1 | 0.9 | ||||||||||||||
Torrid Inc | (f)(k)(l)(n) | Retailing | L+675 | 1.0% | 12/14/24 | 40.0 | 39.6 | 40.2 | ||||||||||||||
Total Safety US Inc | (f)(n)(ab) | Capital Goods | L+600 | 1.0% | 8/16/25 | 9.1 | 8.2 | 8.6 | ||||||||||||||
Trace3 Inc | (f)(k)(l)(n)(o)(p) | Software & Services | L+675 | 1.0% | 8/3/24 | 169.8 | 169.8 | 168.3 | ||||||||||||||
Transaction Services Group Ltd | (n)(r) | Consumer Services | L+600 | 10/15/26 | A$ | 63.0 | 41.8 | 43.4 | ||||||||||||||
Transaction Services Group Ltd | (n)(r) | Consumer Services | L+600 | 10/15/26 | £ | 7.7 | 9.8 | 10.1 | ||||||||||||||
Transaction Services Group Ltd | (r)(s) | Consumer Services | L+600 | 10/15/26 | $ | 26.6 | 26.6 | 26.1 | ||||||||||||||
Truck-Lite Co LLC | (s) | Automobiles & Components | L+625 | 1.0% | 12/13/24 | 13.7 | 13.5 | 13.5 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Senior Secured Loans—Second Lien—13.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Access CIG LLC | | | (t) | | | Software & Services | | | L+775 | | | | | | | | | 2/27/26 | | | | $ | 1,326 | | | | | $ | 1,342 | | | | | $ | 1,314 | | |
Advantage Sales & Marketing Inc | | | (t) | | | Commercial & Professional Services | | | L+650 | | | | | 1.0% | | | | 7/25/22 | | | | | 2,291 | | | | | | 2,039 | | | | | | 1,815 | | |
American Bath Group LLC | | | (i)(t) | | | Capital Goods | | | L+975 | | | | | 1.0% | | | | 9/30/24 | | | | | 7,000 | | | | | | 6,588 | | | | | | 6,965 | | |
Ammeraal Beltech Holding BV | | | (m) | | | Capital Goods | | | L+800 | | | | | | | | | 7/27/26 | | | | | 52,309 | | | | | | 51,285 | | | | | | 51,183 | | |
Arena Energy LP | | | (f)(h) | | | Energy | | | L+900, 4.0% PIK (4.0% Max PIK) | | | | | 1.0% | | | | 1/24/21 | | | | | 25,872 | | | | | | 25,872 | | | | | | 25,872 | | |
Bellatrix Exploration Ltd | | | (m) | | | Energy | | | 8.5% | | | | | | | | | 7/26/23 | | | | | 4,500 | | | | | | 4,076 | | | | | | 3,979 | | |
Bellatrix Exploration Ltd | | | (m) | | | Energy | | | 8.5% | | | | | | | | | 7/26/23 | | | | | 1,872 | | | | | | 1,872 | | | | | | 1,866 | | |
Bellatrix Exploration Ltd | | | (m)(n) | | | Energy | | | 8.5% | | | | | | | | | 7/26/23 | | | | | 624 | | | | | | 624 | | | | | | 622 | | |
Byrider Finance LLC | | | | | | Automobiles & Components | | | L+1000, 0.5% PIK (4.0% Max PIK) | | | | | 1.3% | | | | 8/22/20 | | | | | 29,695 | | | | | | 29,695 | | | | | | 29,138 | | |
Catalina Marketing Corp | | | (i)(k)(l)(t) | | | Media | | | L+675 | | | | | 1.0% | | | | 4/11/22 | | | | | 10,000 | | | | | | 9,958 | | | | | | 237 | | |
Chisholm Oil & Gas Operating LLC | | | (h) | | | Energy | | | L+800 | | | | | 1.0% | | | | 3/21/24 | | | | | 16,000 | | | | | | 16,000 | | | | | | 15,811 | | |
Crossmark Holdings Inc | | | (i)(k)(l)(t) | | | Media | | | L+750 | | | | | 1.3% | | | | 12/21/20 | | | | | 7,778 | | | | | | 7,786 | | | | | | 311 | | |
Envigo Laboratories Inc | | | (h)(t) | | | Health Care Equipment & Services | | | L+775 | | | | | | | | | 4/29/20 | | | | | 3,272 | | | | | | 3,189 | | | | | | 3,051 | | |
Fairway Group Holdings Corp | | | (k)(l) | | | Food & Staples Retailing | | | 11.0% PIK (11.0% Max PIK) | | | | | | | | | 2/24/24 | | | | | 1,744 | | | | | | 1,520 | | | | | | — | | |
Grocery Outlet Inc | | | (t) | | | Food & Staples Retailing | | | L+725 | | | | | | | | | 10/22/26 | | | | | 2,287 | | | | | | 2,265 | | | | | | 2,273 | | |
Gruden Acquisition Inc | | | (h)(t) | | | Transportation | | | L+850 | | | | | 1.0% | | | | 8/18/23 | | | | | 15,000 | | | | | | 14,511 | | | | | | 15,038 | | |
Jazz Acquisition Inc | | | (f)(t) | | | Capital Goods | | | L+675 | | | | | 1.0% | | | | 6/19/22 | | | | | 3,700 | | | | | | 3,729 | | | | | | 3,460 | | |
LBM Borrower LLC | | | (f)(i)(j)(t) | | | Capital Goods | | | L+925 | | | | | 1.0% | | | | 8/20/23 | | | | | 29,332 | | | | | | 29,090 | | | | | | 28,746 | | |
One Call Care Management Inc | | | (h) | | | Insurance | | | L+375, 6.0% PIK (6.0% Max PIK) | | | | | | | | | 4/11/24 | | | | | 12,472 | | | | | | 12,362 | | | | | | 11,946 | | |
OPE Inmar Acquisition Inc | | | (i)(t) | | | Software & Services | | | L+800 | | | | | 1.0% | | | | 5/1/25 | | | | | 2,615 | | | | | | 2,583 | | | | | | 2,589 | | |
P2 Energy Solutions, Inc. | | | (i)(t) | | | Energy | | | L+800 | | | | | 1.0% | | | | 4/30/21 | | | | | 14,500 | | | | | | 14,614 | | | | | | 13,920 | | |
Paradigm Acquisition Corp | | | (t) | | | Health Care Equipment & Services | | | L+750 | | | | | | | | | 10/26/26 | | | | | 1,599 | | | | | | 1,595 | | | | | | 1,607 | | |
Peak 10 Holding Corp | | | (i)(j)(t) | | | Telecommunication Services | | | L+725 | | | | | 1.0% | | | | 8/1/25 | | | | | 5,814 | | | | | | 5,630 | | | | | | 5,247 | | |
Pure Fishing Inc | | | | | | Consumer Durables & Apparel | | | L+838 | | | | | 1.0% | | | | 12/31/26 | | | | | 46,828 | | | | | | 46,362 | | | | | | 46,359 | | |
Rise Baking Company | | | (i) | | | Food, Beverage & Tobacco | | | L+800 | | | | | 1.0% | | | | 8/9/26 | | | | | 17,990 | | | | | | 17,817 | | | | | | 17,822 | | |
Sequa Corp | | | (i)(t) | | | Materials | | | L+900 | | | | | 1.0% | | | | 4/28/22 | | | | | 7,462 | | | | | | 7,416 | | | | | | 7,089 | | |
SIRVA Worldwide Inc | | | (i)(t) | | | Commercial & Professional Services | | | L+950 | | | | | | | | | 8/2/26 | | | | | 2,494 | | | | | | 2,312 | | | | | | 2,207 | | |
SMG/PA | | | (j)(t) | | | Consumer Services | | | L+700 | | | | | | | | | 1/23/26 | | | | | 3,641 | | | | | | 3,671 | | | | | | 3,599 | | |
Spencer Gifts LLC | | | (i)(t) | | | Retailing | | | L+825 | | | | | 1.0% | | | | 6/29/22 | | | | | 20,000 | | | | | | 20,063 | | | | | | 17,100 | | |
Titan Energy LLC | | | (h)(k)(l) | | | Energy | | | L+1300 PIK (L+1300 Max PIK) | | | | | 1.0% | | | | 2/23/20 | | | | | 89,408 | | | | | | 67,595 | | | | | | 8,316 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Truck-Lite Co LLC | (f)(k)(n)(o)(p) | Automobiles & Components | L+625 | 1.0% | 12/13/26 | $ | 127.9 | $ | 126.7 | $ | 126.6 | |||||||||||
Truck-Lite Co LLC | (s) | Automobiles & Components | L+625 | 1.0% | 12/13/26 | 18.8 | 18.6 | 18.6 | ||||||||||||||
Vertiv Group Corp | (n)(ab) | Technology Hardware & Equipment | L+400 | 1.0% | 11/30/23 | 16.5 | 15.7 | 16.5 | ||||||||||||||
Virgin Pulse Inc | (f)(l)(m)(n)(o)(p) | Software & Services | L+650 | 1.0% | 5/22/25 | 159.4 | 158.4 | 159.5 | ||||||||||||||
Vivint Inc | (l)(n)(ab) | Commercial & Professional Services | L+500 | 4/1/24 | 20.8 | 20.0 | 20.8 | |||||||||||||||
Warren Resources Inc | (n)(ad) | Energy | L+1,000, 1.0% PIK (1.0% MaxPIK) | 1.0% | 5/22/20 | 21.0 | 21.0 | 21.0 | ||||||||||||||
West Corp | (l)(ab) | Software & Services | L+350 | 1.0% | 10/10/24 | 4.9 | 4.4 | 4.1 | ||||||||||||||
West Corp | (l)(o)(ab) | Software & Services | L+400 | 1.0% | 10/10/24 | 19.6 | 18.1 | 16.7 | ||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+855 | 1.0% | 1/26/21 | 0.6 | 0.6 | 0.6 | ||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+855 | 1.0% | 8/26/21 | 0.3 | 0.3 | 0.3 | ||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0% | 6/30/24 | 1.1 | 1.1 | 1.1 | ||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0% | 11/1/24 | 0.4 | 0.4 | 0.4 | ||||||||||||||
Wheels Up Partners LLC | (n) | Transportation | L+710 | 1.0% | 12/21/24 | 1.7 | 1.7 | 1.7 | ||||||||||||||
WireCo WorldGroup Inc | (n)(ab) | Capital Goods | L+500 | 1.0% | 9/29/23 | 0.1 | 0.1 | 0.1 | ||||||||||||||
Zeta Interactive Holdings Corp | (m)(n)(o)(p)(q) | Software & Services | L+750 | 1.0% | 7/29/22 | 122.2 | 122.2 | 122.2 | ||||||||||||||
Zeta Interactive Holdings Corp | (s) | Software & Services | L+750 | 1.0% | 7/29/22 | 4.4 | 4.4 | 4.4 | ||||||||||||||
|
|
|
| |||||||||||||||||||
Total Senior Secured Loans—First Lien | 6,596.0 | 6,295.8 | ||||||||||||||||||||
Unfunded Loan Commitments | (578.6 | ) | (578.6 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Net Senior Secured Loans—First Lien | 6,017.4 | 5,717.2 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Senior Secured Loans—Second Lien—16.2% | ||||||||||||||||||||||
Access CIG LLC | (n)(ab) | Software & Services | L+775 | 2/27/26 | $ | 1.5 | $ | 1.5 | $ | 1.5 | ||||||||||||
Advantage Sales & Marketing Inc | (n)(ab) | Commercial & Professional Services | L+650 | 1.0% | 7/25/22 | 7.2 | 6.2 | 6.5 | ||||||||||||||
Albany Molecular Research Inc | (n)(ab) | Pharmaceuticals, Biotechnology & Life Sciences | L+700 | 1.0% | 8/30/25 | 0.9 | 0.9 | 0.9 | ||||||||||||||
American Bath Group LLC | (l)(n)(ab) | Capital Goods | L+975 | 1.0% | 9/30/24 | 10.0 | 9.6 | 10.0 | ||||||||||||||
Ammeraal Beltech Holding BV | (f)(n)(o)(r) | Capital Goods | L+800 | 7/27/26 | 51.3 | 50.4 | 49.5 | |||||||||||||||
Applied Systems Inc | (n)(ab) | Software & Services | L+700 | 1.0% | 9/19/25 | 2.6 | 2.6 | 2.7 | ||||||||||||||
Arena Energy LP | (l)(n)(o)(p) | Energy | L+900, 4.0% PIK (4.0% Max PIK) | 1.0% | 1/24/21 | 53.9 | 53.9 | 52.4 | ||||||||||||||
athenahealth Inc | (f)(m)(n)(p) | Health Care Equipment & Services | L+850 | 2/11/27 | 129.2 | 128.0 | 131.8 | |||||||||||||||
BCA Marketplace PLC | (n)(r) | Retailing | L+825 | 9/24/27 | £ | 30.2 | 37.3 | 39.5 | ||||||||||||||
Bellatrix Exploration Ltd | (n)(r)(t)(u) | Energy | 8.5% | 9/11/23 | $ | 13.5 | 12.3 | 4.3 | ||||||||||||||
Bellatrix Exploration Ltd | (n)(r) | Energy | 8.5% | 9/11/23 | 5.6 | 5.6 | 5.6 | |||||||||||||||
Byrider Finance LLC | (n) | Automobiles & Components | L+1,000, 0.5% PIK (4.0% Max PIK) | 1.3% | 6/7/22 | 35.8 | 35.8 | 35.9 | ||||||||||||||
CDS US Intermediate Holdings Inc | (l)(n)(r)(ab) | Media & Entertainment | L+825 | 1.0% | 7/10/23 | 18.0 | 16.4 | 15.1 | ||||||||||||||
Chisholm Oil & Gas Operating LLC | (n)(p) | Energy | L+550, 3.0% PIK (3.0% Max PIK) | 1.3% | 3/21/24 | 38.3 | 38.0 | 28.9 | ||||||||||||||
CommerceHub Inc | (n) | Software & Services | L+775 | 5/21/26 | 3.2 | 3.1 | 3.2 | |||||||||||||||
Dayton Superior Corp | (n) | Materials | L+700 | 2.0% | 12/3/24 | 1.7 | 1.6 | 1.6 | ||||||||||||||
EaglePicher Technologies LLC | (n)(ab) | Capital Goods | L+725 | 3/8/26 | 0.4 | 0.4 | 0.4 | |||||||||||||||
Electronics For Imaging Inc | (n)(ab) | Technology Hardware & Equipment | L+900 | 7/23/27 | 3.9 | 3.7 | 3.7 | |||||||||||||||
Emerald Performance Materials LLC | (l)(n)(ab) | Materials | L+775 | 1.0% | 8/1/22 | 10.0 | 9.9 | 9.8 | ||||||||||||||
Excelitas Technologies Corp | (l)(n)(ab) | Technology Hardware & Equipment | L+750 | 1.0% | 12/1/25 | 13.3 | 13.3 | 12.9 | ||||||||||||||
Fairway Group Holdings Corp | (n)(t)(u)(ad) | Food & Staples Retailing | 11.0% PIK (11.0% Max PIK) | 2/24/24 | 6.5 | 5.0 | — | |||||||||||||||
Gruden Acquisition Inc | (m)(p)(ab) | Transportation | L+850 | 1.0% | 8/18/23 | 25.0 | 24.4 | 24.8 |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
WireCo WorldGroup Inc | | | (t) | | | Capital Goods | | | L+900 | | | | | 1.0% | | | | 9/30/24 | | | | $ | 5,115 | | | | | $ | 5,178 | | | | | $ | 5,128 | | |
Total Senior Secured Loans—Second Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 418,639 | | | | | | 334,610 | | |
Unfunded Loan Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (624) | | | | | | (624) | | |
Net Senior Secured Loans—Second Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 418,015 | | | | | | 333,986 | | |
Other Senior Secured Debt—7.7% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies Inc | | | (k)(l)(u) | | | Materials | | | L+700, 10.0% PIK (10.0% Max PIK) | | | | | 1.0% | | | | 10/4/23 | | | | | 11,342 | | | | | | 10,663 | | | | | | 3,630 | | |
Akzo Nobel Specialty Chemicals | | | (m)(t) | | | Materials | | | 8.0% | | | | | | | | | 10/1/26 | | | | | 2,019 | | | | | | 2,019 | | | | | | 1,890 | | |
Artesyn Embedded Technologies Inc | | | (t) | | | Technology Hardware & Equipment | | | 9.8% | | | | | | | | | 10/15/20 | | | | | 1,574 | | | | | | 1,518 | | | | | | 1,456 | | |
Black Swan Energy Ltd | | | (m) | | | Energy | | | 9.0% | | | | | | | | | 1/20/24 | | | | | 1,333 | | | | | | 1,333 | | | | | | 1,286 | | |
Boyne USA Inc | | | (t) | | | Consumer Services | | | 7.3% | | | | | | | | | 5/1/25 | | | | | 44 | | | | | | 46 | | | | | | 46 | | |
DJO Finance LLC/DJO Finance Corp | | | (t) | | | Health Care Equipment & Services | | | 8.1% | | | | | | | | | 6/15/21 | | | | | 6,838 | | | | | | 6,886 | | | | | | 7,060 | | |
FourPoint Energy LLC | | | (h)(i) | | | Energy | | | 9.0% | | | | | | | | | 12/31/21 | | | | | 46,313 | | | | | | 45,107 | | | | | | 45,502 | | |
Genesys Telecommunications Laboratories Inc | | | (t) | | | Technology Hardware & Equipment | | | 10.0% | | | | | | | | | 11/30/24 | | | | | 144 | | | | | | 159 | | | | | | 152 | | |
Global A&T Electronics Ltd | | | (i)(m)(t) | | | Semiconductors & Semiconductor Equipment | | | 8.5% | | | | | | | | | 1/12/23 | | | | | 15,949 | | | | | | 16,079 | | | | | | 14,155 | | |
JC Penney Corp Inc | | | (j)(m)(t) | | | Retailing | | | 5.7% | | | | | | | | | 6/1/20 | | | | | 126 | | | | | | 117 | | | | | | 101 | | |
JW Aluminum Co | | | (h)(t)(u) | | | Materials | | | 10.3% | | | | | | | | | 6/1/26 | | | | | 33,001 | | | | | | 33,001 | | | | | | 32,919 | | |
Lycra | | | (m)(t) | | | Consumer Durables & Apparel | | | 7.5% | | | | | | | | | 5/1/25 | | | | | 3,659 | | | | | | 3,687 | | | | | | 3,444 | | |
Mood Media Corp | | | (h)(u) | | | Media | | | L+1400 PIK (L+1400 Max PIK) | | | | | 1.0% | | | | 6/28/24 | | | | | 28,478 | | | | | | 28,383 | | | | | | 28,478 | | |
Numericable-SFR | | | (m)(t) | | | Software & Services | | | 8.1% | | | | | | | | | 2/1/27 | | | | | 917 | | | | | | 917 | | | | | | 869 | | |
Pattonair Holdings Ltd | | | (m)(t) | | | Capital Goods | | | 9.0% | | | | | | | | | 11/1/22 | | | | | 4,111 | | | | | | 4,252 | | | | | | 4,153 | | |
Ply Gem Holdings Inc | | | (t) | | | Capital Goods | | | 8.0% | | | | | | | | | 4/15/26 | | | | | 7,807 | | | | | | 7,453 | | | | | | 7,182 | | |
Sorenson Communications LLC | | | (h)(t) | | | Telecommunication Services | | | 9.0%, 0.0% PIK (9.0% Max PIK) | | | | | | | | | 10/31/20 | | | | | 7,058 | | | | | | 6,952 | | | | | | 6,987 | | |
Sunnova Energy Corp | | | | | | Energy | | | 6.0%, 6.0% PIK (6.0% Max PIK) | | | | | | | | | 7/31/19 | | | | | 1,123 | | | | | | 1,123 | | | | | | 1,116 | | |
Talos Production LLC | | | (h)(t) | | | Energy | | | 11.0% | | | | | | | | | 4/3/22 | | | | | 4,500 | | | | | | 4,701 | | | | | | 4,376 | | |
Velvet Energy Ltd | | | (i)(m) | | | Energy | | | 9.0% | | | | | | | | | 10/5/23 | | | | | 15,000 | | | | | | 15,000 | | | | | | 15,120 | | |
Vivint Inc | | | (h)(t) | | | Commercial & Professional Services | | | 7.6% | | | | | | | | | 9/1/23 | | | | | 7,309 | | | | | | 6,707 | | | | | | 5,981 | | |
Vivint Inc | | | (h)(t) | | | Commercial & Professional Services | | | 7.9% | | | | | | | | | 12/1/22 | | | | | 11,307 | | | | | | 11,078 | | | | | | 10,713 | | |
Total Other Senior Secured Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 207,181 | | | | | | 196,616 | | |
|
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Invictus | (n)(ab) | Materials | L+675 | 3/30/26 | $ | 0.1 | $ | 0.1 | $ | 0.1 | ||||||||||||
LBM Borrower LLC | (l)(n)(p)(q)(ab) | Capital Goods | L+925 | 1.0% | 8/20/23 | 58.6 | 57.6 | 57.8 | ||||||||||||||
Misys Ltd | (n)(r)(ab) | Software & Services | L+725 | 1.0% | 6/13/25 | 7.3 | 7.2 | 7.1 | ||||||||||||||
NEP Broadcasting LLC | (n)(ab) | Media & Entertainment | L+700 | 10/19/26 | 5.6 | 5.4 | 5.1 | |||||||||||||||
New Arclin US Holding Corp | (n)(r)(ab) | Materials | L+875 | 1.0% | 2/14/25 | 0.3 | 0.3 | 0.3 | ||||||||||||||
OEConnection LLC | (f)(n) | Software & Services | L+825 | 9/25/27 | 42.9 | 42.5 | 42.6 | |||||||||||||||
Ontic Engineering & Manufacturing Inc | (f)(n) | Capital Goods | L+850 | 10/29/27 | 26.8 | 26.3 | 26.3 | |||||||||||||||
OPE Inmar Acquisition Inc | (l)(n)(ab) | Software & Services | L+800 | 1.0% | 5/1/25 | 24.6 | 24.1 | 23.1 | ||||||||||||||
P2 Energy Solutions, Inc. | (n)(ab) | Software & Services | L+800 | 1.0% | 4/30/21 | 14.5 | 14.6 | 14.2 | ||||||||||||||
Paradigm Acquisition Corp | (n)(ab) | Health Care Equipment & Services | L+750 | 10/26/26 | 3.7 | 3.7 | 3.7 | |||||||||||||||
Peak 10 Holding Corp | (n)(ab) | Telecommunication Services | L+725 | 1.0% | 8/1/25 | 11.9 | 11.1 | 7.5 | ||||||||||||||
Polyconcept North America Inc | (n) | Household & Personal Products | L+1,000 | 1.0% | 2/16/24 | 0.6 | 0.6 | 0.6 | ||||||||||||||
Pure Fishing Inc | (f)(n) | Consumer Durables & Apparel | L+838 | 1.0% | 12/31/26 | 45.9 | 45.5 | 39.6 | ||||||||||||||
Rise Baking Company | (f)(l)(n) | Food, Beverage & Tobacco | L+800 | 1.0% | 8/9/26 | 17.6 | 17.5 | 17.3 | ||||||||||||||
Sequa Corp | (n)(ab) | Materials | L+900 | 1.0% | 4/28/22 | 11.5 | 11.2 | 11.3 | ||||||||||||||
SIRVA Worldwide Inc | (n)(ab) | Commercial & Professional Services | L+950 | 8/3/26 | 5.7 | 5.1 | 5.5 | |||||||||||||||
Sorenson Communications LLC | (n)(o)(p) | Telecommunication Services | 11.5% PIK (11.5% Max PIK) | 4/30/25 | 15.4 | 15.4 | 15.4 | |||||||||||||||
Sparta Systems Inc | (n) | Software & Services | L+825 | 1.0% | 7/27/25 | 2.4 | 2.4 | 2.2 | ||||||||||||||
Sungard Availability Services Capital Inc | (m)(n) | Software & Services | L+400, 2.5% PIK (2.5% Max PIK) | 1.0% | 11/3/22 | 12.6 | 12.6 | 12.6 | ||||||||||||||
Titan Energy LLC | (n)(t)(u)(ad) | Energy | L+1,300 PIK (L+1,300 Max PIK) | 1.0% | 2/23/20 | 137.2 | 100.7 | — | ||||||||||||||
Transplace | (n)(ab) | Transportation | L+875 | 1.0% | 10/6/25 | 3.3 | 3.2 | 3.1 | ||||||||||||||
Vantage Specialty Chemicals Inc | (n)(ab) | Materials | L+825 | 1.0% | 10/27/25 | 0.8 | 0.7 | 0.7 | ||||||||||||||
WireCo WorldGroup Inc | (n)(ab) | Capital Goods | L+900 | 1.0% | 9/30/24 | 12.5 | 12.5 | 11.4 | ||||||||||||||
Wittur Holding GmbH | (n)(r) | Capital Goods | E+850, 0.5% PIK (0.5% Max PIK) | 9/23/27 | € | 55.2 | 60.5 | 60.2 | ||||||||||||||
|
|
|
| |||||||||||||||||||
Total Senior Secured Loans—Second Lien | 940.7 | 808.7 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Other Senior Secure Debt—4.6% | ||||||||||||||||||||||
Advanced Lighting Technologies Inc | (n)(t)(u)(ad) | Materials | L+1,700 PIK (L+1,700 Max PIK) | 1.0% | 10/4/23 | $ | 14.4 | 10.7 | — | |||||||||||||
APTIM Corp | (g)(n)(ab) | Diversified Financials | 7.8% | 6/15/25 | 8.2 | 8.2 | 4.9 | |||||||||||||||
Black Swan Energy Ltd | (n)(r) | Energy | 9.0% | 1/20/24 | 4.0 | 4.0 | 4.0 | |||||||||||||||
Cleaver-Brooks Inc | (n)(ab) | Capital Goods | 7.9% | 3/1/23 | 0.3 | 0.3 | 0.3 | |||||||||||||||
Cornerstone Chemical Co | (n)(ab) | Materials | 6.8% | 8/15/24 | 2.7 | 2.7 | 2.4 | |||||||||||||||
Diamond Resorts International Inc | (m)(ab) | Consumer Services | 7.8% | 9/1/23 | 12.0 | 12.0 | 12.3 | |||||||||||||||
Enterprise Development Authority | (g)(h)(n)(aa)(ab) | Consumer Services | 12.0% | 7/15/24 | 8.2 | 8.5 | 9.4 | |||||||||||||||
FourPoint Energy LLC | (n)(p) | Energy | 9.0% | 12/31/21 | 46.3 | 45.6 | 44.0 | |||||||||||||||
Genesys Telecommunications Laboratories Inc | (g)(h)(n)(aa)(ab) | Technology Hardware & Equipment | 10.0% | 11/30/24 | 2.6 | 2.8 | 2.8 | |||||||||||||||
JC Penney Corp Inc | (g)(h)(n)(r)(aa)(ab) | Retailing | 5.7% | 6/1/20 | 0.3 | 0.3 | 0.3 | |||||||||||||||
JW Aluminum Co | (g)(n)(p)(ab)(ad) | Materials | 10.3% | 6/1/26 | 34.5 | 34.5 | 36.3 | |||||||||||||||
Lycra | (g)(h)(n)(r)(aa)(ab) | Consumer Durables & Apparel | 7.5% | 5/1/25 | 16.4 | 16.4 | 13.2 | |||||||||||||||
Mood Media Corp | (n)(ad) | Media & Entertainment | L+1,400 PIK (L+1,400 Max PIK) | 12/31/23 | 40.6 | 39.5 | 39.0 | |||||||||||||||
Pattonair Holdings Ltd | (g)(h)(n)(r)(aa)(ab) | Capital Goods | 9.0% | 11/1/22 | 16.5 | 16.9 | 17.3 | |||||||||||||||
TruckPro LLC | (g)(h)(n)(aa)(ab) | Capital Goods | 11.0% | 10/15/24 | 7.9 | 7.4 | 8.2 | |||||||||||||||
Velvet Energy Ltd | (n)(r) | Energy | 9.0% | 10/5/23 | 7.5 | 7.5 | 7.7 | |||||||||||||||
Vivint Inc | (g)(h)(k)(m)(n)(aa)(ab) | Commercial & Professional Services | 7.9% | 12/1/22 | 25.5 | 25.2 | 25.8 | |||||||||||||||
|
|
|
| |||||||||||||||||||
Total Other Senior Secured Debt | 242.5 | 227.9 | ||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c) | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Subordinated Debt—8.6% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
All Systems Holding LLC | | | | | | Commercial & Professional Services | | | 10.0% PIK (10.0% Max PIK) | | | | | | | | | 10/31/22 | | | | $ | 206 | | | | | $ | 206 | | | | | $ | 206 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp | | | (h)(i)(t) | | | Energy | | | 10.0% | | | | | | | | | 4/1/22 | | | | | 26,026 | | | | | | 26,026 | | | | | | 26,635 | | |
Aurora Diagnostics Holdings LLC/Aurora Diagnostics Financing Inc | | | (h)(t) | | | Health Care Equipment & Services | | | 12.3%, 1.5% PIK (1.5% Max PIK) | | | | | | | | | 1/15/20 | | | | | 6,235 | | | | | | 5,951 | | | | | | 6,235 | | |
Avantor Inc | | | (i)(t) | | | Pharmaceuticals, Biotechnology & Life Sciences | | | 9.0% | | | | | | | | | 10/1/25 | | | | | 20,000 | | | | | | 20,000 | | | | | | 20,012 | | |
Byrider Finance LLC | | | | | | Automobiles & Components | | | 20.0% PIK (20.0% Max PIK) | | | | | | | | | 3/31/22 | | | | | 1,458 | | | | | | 1,458 | | | | | | 1,458 | | |
CEC Entertainment Inc | | | (t) | | | Consumer Services | | | 8.0% | | | | | | | | | 2/15/22 | | | | | 18,510 | | | | | | 18,397 | | | | | | 16,659 | | |
ClubCorp Club Operations Inc | | | (h)(t) | | | Consumer Services | | | 8.5% | | | | | | | | | 9/15/25 | | | | | 10,733 | | | | | | 10,361 | | | | | | 9,660 | | |
Diamond Resorts International Inc | | | (t) | | | Consumer Services | | | 10.8% | | | | | | | | | 9/1/24 | | | | | 3,048 | | | | | | 3,191 | | | | | | 2,751 | | |
Eclipse Resources Corp | | | (m)(t) | | | Energy | | | 8.9% | | | | | | | | | 7/15/23 | | | | | 9,175 | | | | | | 9,049 | | | | | | 7,879 | | |
Great Lakes Dredge & Dock Corp | | | (m)(t) | | | Capital Goods | | | 8.0% | | | | | | | | | 5/15/22 | | | | | 5,276 | | | | | | 5,276 | | | | | | 5,364 | | |
Intelsat Jackson Holdings SA | | | (m)(t) | | | Media | | | 5.5% | | | | | | | | | 8/1/23 | | | | | 5,752 | | | | | | 5,178 | | | | | | 5,058 | | |
Ken Garff Automotive LLC | | | (t) | | | Retailing | | | 7.5% | | | | | | | | | 8/15/23 | | | | | 6,004 | | | | | | 6,055 | | | | | | 5,959 | | |
Lazard Global Compounders Fund | | | (m)(n) | | | Diversified Financials | | | L+650 | | | | | 4.5% | | | | 9/15/25 | | | | | 15,000 | | | | | | 15,000 | | | | | | 14,682 | | |
LifePoint Hospitals Inc | | | (t) | | | Health Care Equipment & Services | | | 9.8% | | | | | | | | | 12/1/26 | | | | | 7,656 | | | | | | 7,571 | | | | | | 7,295 | | |
Logan’s Roadhouse Inc | | | (l) | | | Consumer Services | | | | | | | | | | | | 11/1/24 | | | | | 4,907 | | | | | | 4,857 | | | | | | 4,855 | | |
PF Chang’s China Bistro Inc | | | (h)(i)(t) | | | Consumer Services | | | 10.3% | | | | | | | | | 6/30/20 | | | | | 28,977 | | | | | | 28,320 | | | | | | 26,460 | | |
Quorum Health Corp | | | (t) | | | Health Care Equipment & Services | | | 11.6% | | | | | | | | | 4/15/23 | | | | | 2,566 | | | | | | 2,554 | | | | | | 2,446 | | |
Sorenson Communications LLC | | | (h)(t) | | | Telecommunication Services | | | 13.9%, 0.0% PIK (13.9% Max PIK) | | | | | | | | | 10/31/21 | | | | | 5,364 | | | | | | 5,170 | | | | | | 5,498 | | |
SRS Distribution Inc | | | (h)(t) | | | Capital Goods | | | 8.3% | | | | | | | | | 7/1/26 | | | | | 11,667 | | | | | | 11,476 | | | | | | 10,734 | | |
Stars Group Holdings BV | | | (m)(t) | | | Consumer Services | | | 7.0% | | | | | | | | | 7/15/26 | | | | | 1,438 | | | | | | 1,438 | | | | | | 1,398 | | |
Sungard Availability Services Capital Inc | | | (t) | | | Software & Services | | | 8.8% | | | | | | | | | 4/1/22 | | | | | 5,900 | | | | | | 4,860 | | | | | | 1,322 | | |
Team Health Inc | | | (t) | | | Health Care Equipment & Services | | | 6.4% | | | | | | | | | 2/1/25 | | | | | 6,901 | | | | | | 5,958 | | | | | | 5,633 | | |
Vertiv Group Corp | | | (h)(t) | | | Technology Hardware & Equipment | | | 9.3% | | | | | | | | | 10/15/24 | | | | | 16,584 | | | | | | 16,411 | | | | | | 14,760 | | |
Vivint Inc | | | (h)(t) | | | Commercial & Professional Services | | | 8.8% | | | | | | | | | 12/1/20 | | | | | 7,602 | | | | | | 7,328 | | | | | | 7,250 | | |
York Risk Services Group Inc | | | (h)(i)(t) | | | Insurance | | | 8.5% | | | | | | | | | 10/1/22 | | | | | 38,070 | | | | | | 35,701 | | | | | | 26,649 | | |
Total Subordinated Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 257,792 | | | | | | 236,858 | | |
Unfunded Debt Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (15,000) | | | | | | (15,000) | | |
Net Subordinated Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 242,792 | | | | | | 221,858 | | |
|
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c) | Amortized Cost | Fair Value(d) | ||||||||||||||
Subordinated Debt—9.8% | ||||||||||||||||||||||
All Systems Holding LLC | (n) | Commercial & Professional Services | 10.0% PIK (10.0% Max PIK) | 10/31/22 | $ | 0.3 | $ | 0.3 | $ | 0.3 | ||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp | (g)(h)(aa)(ab) | Energy | 10.0% | 4/1/22 | 26.0 | 26.0 | 25.9 | |||||||||||||||
athenahealth Inc | (n) | Health Care Equipment & Services | L+1,125 PIK (L+1,125 Max PIK) | 2/11/27 | 72.6 | 72.6 | 73.1 | |||||||||||||||
Avantor Inc | (g)(m)(n)(o)(ab) | Pharmaceuticals, Biotechnology & Life Sciences | 9.0% | 10/1/25 | 85.0 | 85.6 | 95.2 | |||||||||||||||
Byrider Finance LLC | (n) | Automobiles & Components | 20.0% PIK (20.0% Max PIK) | 3/31/22 | 2.3 | 2.3 | 2.3 | |||||||||||||||
Calumet Specialty Products | (h)(n)(r)(aa)(ab) | Energy | 7.8% | 4/15/23 | 10.3 | 10.3 | 10.3 | |||||||||||||||
ClubCorp Club Operations Inc | (g)(h)(n)(aa)(ab) | Consumer Services | 8.5% | 9/15/25 | 31.8 | 30.9 | 27.8 | |||||||||||||||
Craftworks Rest & Breweries Group Inc | (n) | Consumer Services | 12.0% PIK (12.0% Max PIK) | 11/1/24 | 6.2 | 6.2 | 4.7 | |||||||||||||||
Diamond Resorts International Inc | (g)(h)(aa)(ab) | Consumer Services | 10.8% | 9/1/24 | 4.4 | 4.6 | 4.6 | |||||||||||||||
GFL Environmental Inc | (g)(h)(n)(r)(aa)(ab) | Commercial & Professional Services | 8.5% | 5/1/27 | 13.4 | 13.7 | 14.7 | |||||||||||||||
Intelsat Jackson Holdings SA | (g)(h)(n)(r)(aa)(ab) | Media & Entertainment | 5.5% | 8/1/23 | 11.1 | 10.2 | 9.5 | |||||||||||||||
Kenan Advantage Group Inc | (n)(ab) | Transportation | 7.9% | 7/31/23 | 19.2 | 17.0 | 18.8 | |||||||||||||||
LifePoint Hospitals Inc | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 9.8% | 12/1/26 | 24.8 | 25.2 | 28.1 | |||||||||||||||
Montage Resources Corp | (h)(n)(r)(aa)(ab) | Energy | 8.9% | 7/15/23 | 16.4 | 16.2 | 15.1 | |||||||||||||||
MultiPlan Inc | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 7.1% | 6/1/24 | 17.1 | 17.2 | 16.6 | |||||||||||||||
Nouryon (fka Akzo Nobel Specialty Chemicals) | (g)(h)(n)(r)(aa)(ab) | Materials | 8.0% | 10/1/26 | 15.3 | 15.3 | 16.3 | |||||||||||||||
PAREXEL International Corp | (g)(h)(n)(aa)(ab) | Pharmaceuticals, Biotechnology & Life Sciences | 6.4% | 9/1/25 | 0.8 | 0.8 | 0.8 | |||||||||||||||
Plastipak Holdings Inc | (g)(h)(n)(aa)(ab) | Materials | 6.3% | 10/15/25 | 2.4 | 2.2 | 2.1 | |||||||||||||||
Ply Gem Holdings Inc | (g)(h)(n)(aa)(ab) | Capital Goods | 8.0% | 4/15/26 | 19.1 | 18.3 | 20.0 | |||||||||||||||
Quorum Health Corp | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 11.6% | 4/15/23 | 6.0 | 6.0 | 5.1 | |||||||||||||||
SRS Distribution Inc | (g)(h)(n)(p)(aa)(ab) | Capital Goods | 8.3% | 7/1/26 | 28.5 | 28.2 | 29.5 | |||||||||||||||
Team Health Inc | (g)(h)(n)(aa)(ab) | Health Care Equipment & Services | 6.4% | 2/1/25 | 20.5 | 18.3 | 13.8 | |||||||||||||||
Vertiv Group Corp | (g)(h)(aa)(ab) | Technology Hardware & Equipment | 9.3% | 10/15/24 | 23.7 | 23.4 | 25.6 | |||||||||||||||
Vivint Inc | (g)(h)(m)(n)(p)(aa)(ab) | Commercial & Professional Services | 8.8% | 12/1/20 | 15.5 | 15.1 | 15.5 | |||||||||||||||
Vivint Inc | (g)(h)(n)(aa)(ab) | Commercial & Professional Services | 7.6% | 9/1/23 | 14.3 | 13.3 | 13.5 | |||||||||||||||
|
|
|
| |||||||||||||||||||
Total Subordinated Debt | 479.2 | 489.2 | ||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Cost | | | Fair Value(d) | | |||||||||
Asset Based Finance—1.9% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
Altus Power America Inc, Preferred Stock | | | (r) | | | Energy | | | 9.0%, 5.0% PIK | | | | | | 10/3/23 | | | | | 1,060,975 | | | | | $ | 1,061 | | | | | $ | 1,045 | | |
Australis Maritime, Private Equity | | | (l)(m) | | | Transportation | | | | | | | | | | | | | | — | | | | | | 1,136 | | | | | | 1,136 | | |
CGMS CLO 2013-3A Class Subord., 7/15/2025 | | | (m) | | | Diversified Financials | | | 27.8% | | | | | | 7/15/25 | | | | $ | 23,263 | | | | | | 9,222 | | | | | | 12,050 | | |
Global Jet Capital LLC, Preferred Stock | | | (e)(l) | | | Commercial & Professional Services | | | | | | | | | | | | | | 5,385,440 | | | | | | 5,386 | | | | | | 754 | | |
Global Jet Capital LLC, Preferred Stock | | | (e)(l)(m) | | | Commercial & Professional Services | | | | | | | | | | | | | | 843,426 | | | | | | 843 | | | | | | 118 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/30/25 | | | | $ | 986 | | | | | | 971 | | | | | | 986 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 4/30/25 | | | | $ | 6,267 | | | | | | 6,174 | | | | | | 6,267 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 9/3/25 | | | | $ | 1,295 | | | | | | 1,276 | | | | | | 1,295 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 9/29/25 | | | | $ | 1,219 | | | | | | 1,201 | | | | | | 1,219 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/4/25 | | | | $ | 7,287 | �� | | | | | 7,179 | | | | | | 7,287 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/4/25 | | | | $ | 1,712 | | | | | | 1,687 | | | | | | 1,712 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/9/25 | | | | $ | 219 | | | | | | 216 | | | | | | 219 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/9/25 | | | | $ | 1,253 | | | | | | 1,234 | | | | | | 1,253 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/29/26 | | | | $ | 625 | | | | | | 616 | | | | | | 625 | | |
Global Jet Capital LLC, Structured Mezzanine | | | (e)(m) | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 1/29/26 | | | | $ | 146 | | | | | | 143 | | | | | | 146 | | |
Global Jet Capital LLC, Structured Mezzanine | | | | | | Commercial & Professional Services | | | 15.0% PIK (15.0% Max PIK) | | | | | | 12/2/26 | | | | $ | 2,332 | | | | | | 2,298 | | | | | | 2,332 | | |
NewStar Clarendon 2014-1A Class Subord. B | | | (m) | | | Diversified Financials | | | L+435 | | | | | | 1/25/27 | | | | $ | 1,060 | | | | | | 1,014 | | | | | | 1,055 | | |
NewStar Clarendon 2014-1A Class D | | | (m) | | | Diversified Financials | | | 13.2% | | | | | | 1/25/27 | | | | $ | 12,140 | | | | | | 7,758 | | | | | | 8,661 | | |
Total Asset Based Finance | | | | | | | | | | | | | | | | | | | | | | | | | | 49,415 | | | | | | 48,160 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c)/ Number of Shares | Cost | Fair Value(d) | ||||||||||||||||||||||
Asset Based Finance—9.7% | ||||||||||||||||||||||||||||||
801 5th Ave, Seattle, Structure Mezzanine | (n)(r)(ae) | Real Estate | 8.0%, 0.0% PIK (3.0% Max PIK) | 12/19/29 | $ | 47.1 | $ | 47.1 | $ | 47.1 | ||||||||||||||||||||
801 5th Ave, Seattle, Private Equity | (n)(r)(t)(ae) | Real Estate | 7,819,411 | 7.8 | 7.8 | |||||||||||||||||||||||||
Abacus JV, Private Equity | (n)(r) | Insurance | 31,301,941 | 31.3 | 31.3 | |||||||||||||||||||||||||
Accelerator Investments Aggregator LP, Private Equity | (n)(r)(t) | Diversified Financials | 153,628 | 0.2 | 0.2 | |||||||||||||||||||||||||
Altavair Air Finance, Private Equity | (n)(r) | Capital Goods | 10,964,023 | 11.0 | 11.2 | |||||||||||||||||||||||||
Australis Maritime, Common Stock | (n)(r)(t) | Transportation | 10,790,511 | 10.8 | 10.8 | |||||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/30/25 | $ | 2.3 | 2.1 | 2.3 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 4/30/25 | $ | 14.6 | 13.6 | 14.6 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 9/3/25 | $ | 3.0 | 2.8 | 3.0 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 9/29/25 | $ | 2.8 | 2.6 | 2.8 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/4/25 | $ | 85.4 | 79.6 | 85.4 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/4/25 | $ | 19.0 | 17.7 | 19.0 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/9/25 | $ | 2.0 | 1.8 | 2.0 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/9/25 | $ | 15.1 | 14.1 | 15.1 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/29/26 | $ | 7.3 | 6.8 | 7.3 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (i)(n)(r) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 1/29/26 | $ | 1.6 | 1.5 | 1.6 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 2/17/26 | $ | 19.7 | 18.3 | 19.7 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 4/14/26 | $ | 12.2 | 11.4 | 12.2 | ||||||||||||||||||||||
Global Jet Capital LLC, Structured Mezzanine | (n) | Commercial & Professional Services | 15.0% PIK (15.0% Max PIK) | 12/2/26 | $ | 20.7 | 19.3 | 20.7 | ||||||||||||||||||||||
Global Jet Capital LLC, Preferred Stock | (i)(n)(t) | Commercial & Professional Services | 76,447,526 | 76.4 | 9.6 | |||||||||||||||||||||||||
Global Lending Services LLC, Private Equity | (n)(r)(t) | Diversified Financials | 8,092,505 | 8.1 | 8.1 | |||||||||||||||||||||||||
Home Partners JV, Structured Mezzanine | (n)(r) | Real Estate | 11.0% PIK (11.0% Max PIK) | 3/25/29 | $ | 30.1 | 30.1 | 30.1 | ||||||||||||||||||||||
Home Partners JV, Structured Mezzanine | (r)(s) | Real Estate | 11.0% PIK (11.0% Max PIK) | 3/25/29 | $ | 22.3 | 22.3 | 22.3 | ||||||||||||||||||||||
Home Partners JV, Common Stock | (n)(r)(t) | Real Estate | 15,059,448 | 15.1 | 16.0 | |||||||||||||||||||||||||
Home Partners JV, Private Equity | (n)(r)(t)(ab) | Real Estate | 706,596 | 0.7 | 0.1 | |||||||||||||||||||||||||
KKR Zeno Aggregator LP (K2 Aviation), Partnership Interest | (n)(r) | Capital Goods | 5,432,797 | 5.4 | 6.4 | |||||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 8.0% | 6/22/22 | € | 9.3 | 10.6 | 10.4 | ||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 8.0% | 6/22/22 | $ | 19.5 | 19.5 | 19.5 | ||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 12.0% | 6/22/22 | € | 5.9 | 6.7 | 6.6 | ||||||||||||||||||||||
Lenovo Group Ltd, Structured Mezzanine | (n)(r) | Technology Hardware & Equipment | 12.0% | 6/22/22 | $ | 12.4 | 12.4 | 12.4 | ||||||||||||||||||||||
NewStar Clarendon2014-1A Class D | (n)(r)(t) | Diversified Financials | 1/25/27 | $ | 8.3 | 4.6 | 3.3 | |||||||||||||||||||||||
Pretium Partners LLC P1, Structured Mezzanine | (n)(r) | Real Estate | 2.8%, 5.3% PIK (5.3% Max PIK) | 10/22/26 | $ | 6.5 | 6.5 | 6.5 | ||||||||||||||||||||||
Pretium Partners LLC P2, Structured Mezzanine | (n)(r) | Real Estate | 2.0%, 7.5% PIK (7.5% Max PIK) | 5/29/25 | $ | 14.3 | 14.3 | 14.4 | ||||||||||||||||||||||
Sofi Lending Corp,2019-C R1 | (n)(r) | Diversified Financials | 11/16/48 | $ | 26.7 | 15.1 | 15.2 | |||||||||||||||||||||||
Toorak Capital Funding LLC, Membership Interest | (n)(r) | Diversified Financials | N/A | 9.9 | 12.6 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
Total Asset Based Finance | 557.5 | 507.6 | ||||||||||||||||||||||||||||
Unfunded Loan Commitments | (22.3 | ) | (22.3 | ) | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
Net Asset Based Finance | 535.2 | 485.3 | ||||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
Credit Opportunities Partners, LLC—10.2% | ||||||||||||||||||||||||||||||
Credit Opportunities Partners, LLC | (n)(r)(ae) | Diversified Financials | $ | 503.1 | 503.4 | 510.0 | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
Total Credit Opportunities Partners, LLC | 503.4 | 510.0 | ||||||||||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Amortized Cost | | | Fair Value(d) | | ||||||||||||
Equity/Other—10.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
5 Arch Income Fund 2, LLC, Common Stock | | | (m)(p) | | | Diversified Financials | | | | | | | | | | | | | | | | | 8,000 | | | | | $ | 197 | | | | | $ | 400 | | |
Abaco Energy Technologies LLC, Common Equity | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 3,055,556 | | | | | | 3,056 | | | | | | 1,299 | | |
Abaco Energy Technologies LLC, Preferred Equity | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 12,734,481 | | | | | | 637 | | | | | | 6,686 | | |
Advanced Lighting Technologies Inc, Common Stock | | | (l)(u) | | | Materials | | | | | | | | | | | | | | | | | 265,747 | | | | | | 7,471 | | | | | | — | | |
Advanced Lighting Technologies Inc, Warrant | | | (l)(u) | | | Materials | | | | | | | | | | | 10/4/27 | | | | | | 4,189 | | | | | | 39 | | | | | | — | | |
All Systems Holding LLC, Common Stock | | | | | | Commercial & Professional Services | | | | | | | | | | | | | | | | | 124 | | | | | | 1,201 | | | | | | 1,384 | | |
Altus Power America Inc, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 462,008 | | | | | | 462 | | | | | | 81 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp, Common Stock | | | (o) | | | Energy | | | | | | | | | | | | | | | | | 13,555,557 | | | | | | 12,900 | | | | | | 3,768 | | |
Ascent Resources Utica Holdings LLC/ARU Finance Corp, Trade Claim | | | (o) | | | Energy | | | | | | | | | | | | | | | | | 115,178,572 | | | | | | 25,800 | | | | | | 32,020 | | |
ASG Technologies, Common Stock | | | (l)(u) | | | Software & Services | | | | | | | | | | | | | | | | | 625,178 | | | | | | 13,475 | | | | | | 31,743 | | |
ASG Technologies, Warrants | | | (l)(u) | | | Software & Services | | | | | | | | | | | 6/27/22 | | | | | | 253,704 | | | | | | 7,231 | | | | | | 7,364 | | |
Aspect Software Inc, Common Stock | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | 38,574 | | | | | | 9,932 | | | | | | — | | |
ATX Networks Corp, Common Stock | | | (l)(m) | | | Technology Hardware & Equipment | | | | | | | | | | | | | | | | | 72,635 | | | | | | 116 | | | | | | 56 | | |
Aurora Diagnostics Holdings LLC/Aurora Diagnostics Financing Inc, Warrant | | | (h)(l) | | | Health Care Equipment & Services | | | | | | | | | | | 5/25/27 | | | | | | 94,193 | | | | | | 686 | | | | | | 135 | | |
Byrider Finance LLC, Common Stock | | | (l) | | | Automobiles & Components | | | | | | | | | | | | | | | | | 1,389 | | | | | | — | | | | | | — | | |
Chisholm Oil & Gas Operating LLC, Series A Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 75,000 | | | | | | 75 | | | | | | 32 | | |
Cimarron Energy Inc, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 4,302,293 | | | | | | 3,950 | | | | | | 194 | | |
Cimarron Energy Inc, Participation Option | | | (l) | | | Energy | | | | | | | | | | | | | | | | | 25,000,000 | | | | | | 1,289 | | | | | | 1,125 | | |
CSafe Global, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | 417,400 | | | | | | 417 | | | | | | 584 | | |
Eastman Kodak Co, Common Stock | | | (l)(t) | | | Consumer Durables & Apparel | | | | | | | | | | | | | | | | | 354 | | | | | | 7 | | | | | | 1 | | |
Empire Today LLC, Common Stock | | | (l) | | | Retailing | | | | | | | | | | | | | | | | | 411 | | | | | | 1,227 | | | | | | 1,189 | | |
Envigo Laboratories Inc, Warrant | | | (h)(l)(t) | | | Health Care Equipment & Services | | | | | | | | | | | 4/29/24 | | | | | | 10,924 | | | | | | — | | | | | | — | | |
Envigo Laboratories Inc, Warrant | | | (h)(l)(t) | | | Health Care Equipment & Services | | | | | | | | | | | 4/29/24 | | | | | | 17,515 | | | | | | — | | | | | | — | | |
Fairway Group Holdings Corp, Common Stock | | | (l) | | | Food & Staples Retailing | | | | | | | | | | | | | | | | | 31,626 | | | | | | 1,016 | | | | | | — | | |
FourPoint Energy LLC, Common Stock, Class C—II—A Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 13,000 | | | | | | 13,000 | | | | | | 2,909 | | |
FourPoint Energy LLC, Common Stock, Class D Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 2,437 | | | | | | 1,610 | | | | | | 551 | | |
FourPoint Energy LLC, Common Stock, Class E—II Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 29,730 | | | | | | 7,432 | | | | | | 6,652 | | |
FourPoint Energy LLC, Common Stock, Class E—III Units | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | 43,875 | | | | | | 10,969 | | | | | | 9,817 | | |
Fox Head Inc, Common Stock | | | (e)(l) | | | Consumer Durables & Apparel | | | | | | | | | | | | | | | | | 8,857,143 | | | | | | 8,857 | | | | | | 3,947 | | |
Harvest Oil & Gas Corp, Common Stock | | | (e)(l)(t) | | | Energy | | | | | | | | | | | | | | | | | 7,161 | | | | | | 158 | | | | | | 129 | | |
Harvey Industries Inc, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | 666,667 | | | | | | 667 | | | | | | 1,350 | | |
HM Dunn Co Inc, Preferred Stock, Series A | | | (h)(l)(u) | | | Capital Goods | | | | | | | | | | | | | | | | | 12,857 | | | | | | — | | | | | | — | | |
HM Dunn Co Inc, Preferred Stock, Series B | | | (h)(l)(u) | | | Capital Goods | | | | | | | | | | | | | | | | | 12,857 | | | | | | — | | | | | | — | | |
Industrial Group Intermediate Holdings LLC, Common Stock | | | (l)(p) | | | Materials | | | | | | | | | | | | | | | | | 2,678,947 | | | | | | 2,679 | | | | | | 1,607 | | |
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c)/ Number of Shares | Cost | Fair Value(d) | ||||||||||||||||||||||
Equity/Other—7.1%(e) | ||||||||||||||||||||||||||||||
Abaco Energy Technologies LLC, Preferred Stock | (n)(t) | Energy | 12,734,481 | $ | 0.6 | $ | 5.3 | |||||||||||||||||||||||
Abaco Energy Technologies LLC, Common Stock | (n)(t) | Energy | 3,055,556 | 3.1 | 1.0 | |||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Common Stock | (n)(t)(ad) | Materials | 265,747 | 7.5 | — | |||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Warrant | (n)(t)(ad) | Materials | 10/4/27 | 4,189 | — | — | ||||||||||||||||||||||||
All Systems Holding LLC, Common Stock | (n)(t) | Commercial & Professional Services | 1,880,308 | 1.8 | 2.5 | |||||||||||||||||||||||||
ASG Technologies, Common Stock | (n)(t)(ad) | Software & Services | 625,178 | 13.5 | 30.7 | |||||||||||||||||||||||||
ASG Technologies, Warrant | (n)(t)(ad) | Software & Services | 6/27/22 | 314,110 | 9.0 | 8.6 | ||||||||||||||||||||||||
Aspect Software Inc, Common Stock | (l)(n)(p)(t) | Software & Services | 1,148,694 | 1.9 | 2.0 | |||||||||||||||||||||||||
Aspect Software Inc, Warrant | (l)(n)(p)(t) | Software & Services | 1/15/24 | 1,146,890 | — | — | ||||||||||||||||||||||||
ATX Networks Corp, Common Stock | (n)(r)(t) | Technology Hardware & Equipment | 83,488 | 0.1 | 0.1 | |||||||||||||||||||||||||
Bellatrix Exploration Ltd, Warrant | (n)(r)(t) | Energy | 9/11/23 | 382,476 | — | — | ||||||||||||||||||||||||
Byrider Finance LLC, Common Stock | (n)(t) | Automobiles & Components | 1,667 | — | — | |||||||||||||||||||||||||
Catalina Marketing Corp, Common Stock | (n)(t) | Media & Entertainment | 6,522 | — | — | |||||||||||||||||||||||||
Chisholm Oil & Gas Operating LLC, Series A Units | (t)(v)(w)(z) | Energy | 225,000 | 0.2 | — | |||||||||||||||||||||||||
Cimarron Energy Inc, Common Stock | (n)(t) | Energy | 4,302,293 | 3.9 | 0.3 | |||||||||||||||||||||||||
Cimarron Energy Inc, Participation Option | (n)(t) | Energy | 25,000,000 | 1.3 | 1.6 | |||||||||||||||||||||||||
Crossmark Holdings Inc, Warrant | (n)(t) | Commercial & Professional Services | 8,358 | — | — | |||||||||||||||||||||||||
CSafe Global, Common Stock | (n)(t) | Capital Goods | 608,700 | 0.6 | 1.0 | |||||||||||||||||||||||||
CTI Foods Holding Co LLC, Common Stock | (n)(t) | Food, Beverage & Tobacco | 56 | — | — | |||||||||||||||||||||||||
Dayton Superior Corp, Common Stock | (n)(t) | Materials | 14,552 | 0.9 | 0.9 | |||||||||||||||||||||||||
Dayton Superior Corp, Warrants | (n)(t) | Materials | 12/2/21 | 3,675 | — | — | ||||||||||||||||||||||||
Empire Today LLC, Common Stock | (n)(t) | Retailing | 630 | 1.9 | 3.5 | |||||||||||||||||||||||||
Envigo Laboratories Inc, Series A Warrant | (p)(t) | Health Care Equipment & Services | 4/29/24 | 10,924 | — | — | ||||||||||||||||||||||||
Envigo Laboratories Inc, Series B Warrant | (p)(t) | Health Care Equipment & Services | 4/29/24 | 17,515 | — | — | ||||||||||||||||||||||||
Fairway Group Holdings Corp, Common Stock | (n)(t)(ad) | Food & Staples Retailing | 103,091 | 3.3 | — | |||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class C—II—A Units | (t)(v) | Energy | 13,000 | 13.0 | 1.4 | |||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class D Units | (t)(v) | Energy | 2,437 | 1.6 | 0.3 | |||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class E—II Units | (t)(v) | Energy | 29,730 | 7.4 | 3.1 | |||||||||||||||||||||||||
FourPoint Energy LLC, Common Stock, Class E—III Units | (t)(v) | Energy | 43,875 | 11.0 | 4.6 | |||||||||||||||||||||||||
Fox Head Inc, Common Stock | (i)(n)(t) | Consumer Durables & Apparel | 10,000,000 | 10.0 | 0.9 | |||||||||||||||||||||||||
FullBeauty Brands Holdings Corp, Common Stock | (n)(t) | Retailing | 20,297 | 0.1 | — | |||||||||||||||||||||||||
Harvey Industries Inc, Common Stock | (n)(t) | Capital Goods | 2,666,667 | 2.7 | 6.7 | |||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series A | (n)(p)(t)(ad) | Capital Goods | 14,786 | — | — | |||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series B | (n)(p)(t)(ad) | Capital Goods | 14,786 | — | — | |||||||||||||||||||||||||
JHC Acquisition LLC, Common Stock | (n)(t) | Capital Goods | 9,517 | 9.5 | 15.5 | |||||||||||||||||||||||||
JSS Holdings Ltd, Net Profits Interest | (n)(t) | Capital Goods | 54 | — | 1.6 | |||||||||||||||||||||||||
JW Aluminum Co, Common Stock | (i)(n)(t)(ad) | Materials | 631 | — | — | |||||||||||||||||||||||||
JW Aluminum Co, Preferred Stock | (i)(n)(ad) | Materials | 12.5% PIK | 2/15/28 | 6,875 | 52.6 | 104.1 | |||||||||||||||||||||||
MB Precision Holdings LLC, Class A—2 Units | (t)(v)(ad) | Capital Goods | 6,655,178 | 2.3 | — |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company(a) | | | Footnotes | | | Industry | | | Rate(b) | | | Floor | | | Maturity | | | Principal Amount(c)/ Shares | | | Amortized Cost | | | Fair Value(d) | | |||||||||||||||
JHC Acquisition LLC, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 1,449 | | | | | $ | 1,449 | | | | | $ | 1,946 | | |
JSS Holdings Ltd, Net Profits Interest | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | 471 | | |
JW Aluminum Co, Common Stock | | | (e)(i)(l)(u) | | | Materials | | | | | | | | | | | | | | | | | | | | 548 | | | | | | — | | | | | | — | | |
JW Aluminum Co, Preferred Stock | | | (e)(i)(u) | | | Materials | | | | | 12.5%PIK | | | | | | | | | 11/17/25 | | | | | | 4,869 | | | | | | 32,040 | | | | | | 43,890 | | |
MB Precision Holdings LLC, Class A—2 Units | | | (g)(h)(l)(u) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 6,655,178 | | | | | | 2,288 | | | | | | — | | |
MB Precision Holdings LLC, Preferred Stock | | | (g)(h)(l)(p)(u) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 41,778,909 | | | | | | 8,600 | | | | | | 5,826 | | |
Mood Media Corp, Common Stock | | | (l)(u) | | | Media | | | | | | | | | | | | | | | | | | | | 17,400,835 | | | | | | 12,644 | | | | | | 15,842 | | |
North Haven Cadence Buyer Inc, Common Equity | | | (l) | | | Consumer Services | | | | | | | | | | | | | | | | | | | | 2,916,667 | | | | | | 2,917 | | | | | | 4,448 | | |
Power Distribution Inc, Common Stock | | | (l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 2,076,923 | | | | | | 2,077 | | | | | | 1,090 | | |
Professional Plumbing Group Inc, Common Stock | | | (e)(l) | | | Capital Goods | | | | | | | | | | | | | | | | | | | | 3,000,000 | | | | | | 3,000 | | | | | | 7,800 | | |
Ridgeback Resources Inc, Common Stock | | | (e)(l)(m)(s) | | | Energy | | | | | | | | | | | | | | | | | | | | 817,308 | | | | | | 5,022 | | | | | | 4,043 | | |
Sequential Brands Group Inc., Common Stock | | | (e)(l)(t) | | | Consumer Durables & Apparel | | | | | | | | | | | | | | | | | | | | 408,685 | | | | | | 5,517 | | | | | | 327 | | |
Sorenson Communications LLC, Common Stock | | | (e)(l) | | | Telecommunication Services | | | | | | | | | | | | | | | | | | | | 43,796 | | | | | | — | | | | | | 36,026 | | |
SSC (Lux) Limited S.a r.l., Common Stock | | | (l)(m) | | | Health Care Equipment & Services | | | | | | | | | | | | | | | | | | | | 261,364 | | | | | | 5,227 | | | | | | 6,403 | | |
Sunnova Energy Corp, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 384,746 | | | | | | 1,444 | | | | | | — | | |
Sunnova Energy Corp, Preferred Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 70,229 | | | | | | 374 | | | | | | 385 | | |
Swift Worldwide Resources Holdco Ltd, Common Stock | | | (l) | | | Energy | | | | | | | | | | | | | | | | | | | | 1,250,000 | | | | | | 2,009 | | | | | | 625 | | |
Templar Energy LLC, Common Stock | | | (e)(l)(p)(t) | | | Energy | | | | | | | | | | | | | | | | | | | | 717,718 | | | | | | 6,101 | | | | | | 449 | | |
Templar Energy LLC, Preferred Stock | | | (e)(l)(t) | | | Energy | | | | | | | | | | | | | | | | | | | | 475,758 | | | | | | 4,751 | | | | | | 1,427 | | |
Titan Energy LLC, Common Stock | | | (e)(l)(t) | | | Energy | | | | | | | | | | | | | | | | | | | | 200,040 | | | | | | 6,321 | | | | | | 60 | | |
Trace3 Inc, Common Stock | | | | | | Diversified Financials | | | | | | | | | | | | | | | | | | | | 33,216 | | | | | | 332 | | | | | | 616 | | |
Warren Resources Inc, Common Stock | | | (l)(u) | | | Energy | | | | | | | | | | | | | | | | | | | | 2,371,337 | | | | | | 11,145 | | | | | | 5,573 | | |
White Star Petroleum LLC | | | (l)(p) | | | Energy | | | | | | | | | | | | | | | | | | | | 1,613,753 | | | | | | 1,372 | | | | | | 524 | | |
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | | | | 620,025 | | | | | | 4,929 | | | | | | 6,519 | | |
Zeta Interactive Holdings Corp, Preferred Stock, Series F | | | (l) | | | Software & Services | | | | | | | | | | | | | | | | | | | | 563,932 | | | | | | 4,929 | | | | | | 5,816 | | |
Zeta Interactive Holdings Corp, Warrant | | | (l) | | | Software & Services | | | | | | | | | | | | | | 4/20/27 | | | | | | 84,590 | | | | | | — | | | | | | 240 | | |
Total Equity/Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 261,044 | | | | | | 265,369 | | |
TOTAL INVESTMENTS—169.8% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,560,605 | | | | | | 4,359,280 | | |
LIABILITIES IN EXCESS OF ASSETS—(69.8%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,791,871) | | |
NET ASSETS—100.0% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,567,409 | | |
|
Portfolio Company(a) | Footnotes | Industry | Rate(b) | Floor | Maturity | Principal Amount(c)/ Number of Shares | Cost | Fair Value(d) | ||||||||||||||||||||||
MB Precision Holdings LLC, Preferred Stock | (t)(v)(ad) | Capital Goods | 41,778,909 | $ | 8.8 | $ | 5.6 | |||||||||||||||||||||||
Misys Ltd, Preferred Stock | (n)(r)(t) | Software & Services | L+1,025 | 2,841 | 2.8 | 2.8 | ||||||||||||||||||||||||
Mood Media Corp, Common Stock | (n)(t)(ad) | Media & Entertainment | 17,400,835 | 12.6 | 1.0 | |||||||||||||||||||||||||
North Haven Cadence Buyer Inc, Common Stock | (n)(t) | Consumer Services | 3,958,333 | 4.0 | 8.5 | |||||||||||||||||||||||||
One Call Care Management Inc, Common Stock | (n)(t)(ad) | Insurance | 2,604,293,203 | 1.8 | 1.8 | |||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock A | (n)(t)(ad) | Insurance | 277,791 | 19.3 | 19.3 | |||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock B | (n)(ad) | Insurance | 9.0% PIK (9.0% Max PIK) | 10/25/29 | 5,729,445 | 5.8 | 5.8 | |||||||||||||||||||||||
Polyconcept North America Inc, Class A—1 Units | (n)(t) | Household & Personal Products | 624 | 0.1 | 0.1 | |||||||||||||||||||||||||
Power Distribution Inc, Common Stock | (n)(t) | Capital Goods | 4,530,006 | 3.9 | 1.8 | |||||||||||||||||||||||||
Professional Plumbing Group Inc, Common Stock | (i)(t) | Materials | 3,000,000 | 3.0 | 9.0 | |||||||||||||||||||||||||
Ridgeback Resources Inc, Common Stock | (i)(n)(r)(t) | Energy | 1,644,464 | 10.1 | 8.7 | |||||||||||||||||||||||||
Sequential Brands Group Inc., Common Stock | (i)(n)(t)(ab) | Consumer Durables & Apparel | 534,076 | 7.2 | 0.2 | |||||||||||||||||||||||||
Sorenson Communications LLC, Common Stock | (i)(n)(t) | Telecommunication Services | 43,796 | — | 33.6 | |||||||||||||||||||||||||
SSC (Lux) Limited S.a r.l., Common Stock | (n)(r)(t) | Health Care Equipment & Services | 125,000 | 2.5 | 3.9 | |||||||||||||||||||||||||
Sungard Availability Services Capital Inc, Common Stock | (m)(n)(o)(t) | Software & Services | 217,659 | 15.2 | 14.2 | |||||||||||||||||||||||||
Sunnova Energy International Inc, Common Stock | (n)(t)(ab) | Energy | 487,528 | 5.5 | 5.4 | |||||||||||||||||||||||||
Swift Worldwide Resources Holdco Ltd, Common Stock | (n)(t) | Energy | 1,250,000 | 2.0 | 0.5 | |||||||||||||||||||||||||
Templar Energy LLC, Common Stock | (i)(t)(v)(w)(ab) | Energy | 847,547 | 7.2 | 0.1 | |||||||||||||||||||||||||
Templar Energy LLC, Preferred Stock | (i)(n)(t)(ab) | Energy | 561,819 | 5.6 | — | |||||||||||||||||||||||||
Titan Energy LLC, Common Stock | (i)(n)(t)(ab)(ad) | Energy | 272,778 | 8.6 | — | |||||||||||||||||||||||||
Trace3 Inc, Common Stock | (n)(t) | Software & Services | 42,486 | 0.4 | 1.5 | |||||||||||||||||||||||||
VICI Properties Inc, Common Stock | (n)(t)(ab) | Consumer Services | 66,020 | 1.2 | 1.7 | |||||||||||||||||||||||||
Warren Resources Inc, Common Stock | (n)(t)(ad) | Energy | 3,370,272 | 15.8 | 8.3 | |||||||||||||||||||||||||
White Star Petroleum LLC, Common Stock | (t)(v)(w) | Energy | 3,351,997 | 2.8 | — | |||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | (n)(t) | Software & Services | 1,051,348 | 8.4 | 12.0 | |||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series F | (n)(t) | Software & Services | 956,233 | 8.4 | 10.9 | |||||||||||||||||||||||||
Zeta Interactive Holdings Corp, Warrant | (n)(t) | Software & Services | 4/20/27 | 143,435 | — | 0.4 | ||||||||||||||||||||||||
|
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| |||||||||||||||||||||||||||
Total Equity/Other | 322.8 | 352.8 | ||||||||||||||||||||||||||||
|
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|
| |||||||||||||||||||||||||||
TOTAL INVESTMENTS—172.0% | $ | 9,010.7 | 8,561.0 | |||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS—(72.0%) | (3,565.0 | ) | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
NET ASSETS—100.0% | $ | 4,996.0 | ||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
Notional | Unrealized | |||||||||||||||||||||||||||||
Total Return Swap | Amount | Depreciation | ||||||||||||||||||||||||||||
Citibank TRS Facility (Note 9) | 93.5 | (4.4 | ) | |||||||||||||||||||||||||||
|
|
|
|
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Foreign currency forward contracts
Foreign Currency | Settlement Date | Counterparty | Amount and Transaction | US$ Value at Settlement Date | US$ Value at December 31, 2019 | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 4.8 Sold | $ | 3.3 | 3.4 | (0.1 | ) | |||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 1.9 Sold | 1.3 | 1.3 | — | |||||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 0.3 Sold | 0.2 | 0.2 | — | |||||||||||||||||||||
AUD | 4/8/2020 | ING Capital LLC | A$ | 6.8 Sold | 4.6 | 4.8 | (0.2 | ) | ||||||||||||||||||||
CAD | 1/14/2020 | JP Morgan Chase Bank | C$ | 5.7 Sold | 4.3 | 4.4 | (0.1 | ) | ||||||||||||||||||||
CAD | 1/14/2020 | ING Capital LLC | C$ | 1.5 Sold | 1.2 | 1.2 | — | |||||||||||||||||||||
CAD | 1/14/2020 | ING Capital LLC | C$ | 3.9 Sold | 3.0 | 3.0 | — | |||||||||||||||||||||
EUR | 1/14/2020 | ING Capital LLC | € | 1.0 Sold | 1.1 | 1.1 | — | |||||||||||||||||||||
EUR | 1/14/2020 | ING Capital LLC | € | 0.8 Sold | 0.9 | 0.9 | — | |||||||||||||||||||||
EUR | 4/8/2020 | ING Capital LLC | € | 5.6 Sold | 6.3 | 6.3 | — | |||||||||||||||||||||
EUR | 7/17/2023 | JP Morgan Chase Bank | € | 0.1 Sold | 0.1 | 0.1 | — | |||||||||||||||||||||
GBP | 1/14/2020 | ING Capital LLC | £ | 2.9 Sold | 3.6 | 3.9 | (0.3 | ) | ||||||||||||||||||||
GBP | 1/14/2020 | ING Capital LLC | £ | 3.3 Sold | 4.1 | 4.4 | (0.3 | ) | ||||||||||||||||||||
GBP | 4/8/2020 | ING Capital LLC | £ | 0.4 Sold | 0.5 | 0.5 | — | |||||||||||||||||||||
|
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|
|
|
| |||||||||||||||||||||||
Total | $ | 34.5 | $ | 35.5 | $ | (1.0 | ) | |||||||||||||||||||||
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|
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|
Interest rate swaps
Counterparty | | | Notional Amount | | | Company Receives Floating Rate | | | Company Pays Fixed Rate | | | Termination Date | | | Premiums Paid/ (Received) | | | Value | | | Unrealized Depreciation | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.78% | | | | 12/18/2023 | | | | $ | — | | | | | $ | (1,090) | | | | | $ | (1,090) | | |
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.81% | | | | 12/18/2021 | | | | | — | | | | | | (653) | | | | | | (653) | | |
| | | | | | | | | | | | | | | | | | | | | | $ | — | | | | | $ | (1,743) | | | | | $ | (1,743) | | |
Counterparty | Notional Amount | Company Receives Floating Rate | Company Pays Fixed Rate | Termination Date | Premiums Paid/ (Received) | Value | Unrealized Depreciation | |||||||||||||||||||||
JP Morgan Chase Bank | $ | 200 | 3-Month LIBOR | 2.78 | % | 12/18/2023 | $ | — | $ | (9 | ) | $ | (9 | ) | ||||||||||||||
JP Morgan Chase Bank | $ | 200 | 3-Month LIBOR | 2.81 | % | 12/18/2021 | — | (5 | ) | (5 | ) | |||||||||||||||||
ING Capital LLC | $ | 250 | 3-Month LIBOR | 2.59 | % | 1/14/2024 | — | (8 | ) | (8 | ) | |||||||||||||||||
ING Capital LLC | $ | 250 | 3-Month LIBOR | 2.62 | % | 1/14/2022 | — | (7 | ) | (7 | ) | |||||||||||||||||
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$— | $(29) | $(29) | ||||||||||||||||||||||||||
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(a) | Security may be an obligation of one or more entities affiliated with the named company. |
(b) | Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR, was (0.38)%, Candian Dollar Offer Rate, or CDOR was 2.08%, and the Australian Bank Bill Swap Bid Rate, or BBSY, or “B”, was 0.92%, and the U.S. Prime Lending Rate, or Prime, was 4.75%. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases. |
(c) | Denominated in U.S. dollars unless otherwise noted. |
(d) | Fair value determined by the Company’s board of directors (see Note 8). |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company | | | Fair Value at December 31, 2017 | | | Transfers In or Out | | | Purchases and Paid-in-Kind Interest | | | Sales and Repayments | | | Accretion of Discount | | | Net Realized Gain (Loss) | | | Net Change in Unrealized Appreciation (Depreciation) | | | Fair Value at December 31, 2018 | | | Interest Income(1) | | | PIK Income(1) | | | Fee Income(1) | | |||||||||||||||||||||||||||||||||
Senior Secured Loans—First Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies, Inc. | | | | $ | 9,218 | | | | | $ | — | | | | | $ | — | | | | | $ | (92) | | | | | $ | 223 | | | | | $ | 13 | | | | | $ | (237) | | | | | $ | 9,125 | | | | | $ | 1,119 | | | | | $ | — | | | | | $ | — | | |
H.M. Dunn Co., Inc.(2) | | | | | — | | | | | | 64,286 | | | | | | — | | | | | | — | | | | | | — | | | | | | (25,715) | | | | | | (31,549) | | | | | | 7,022 | | | | | | 1,656 | | | | | | — | | | | | | — | | |
Logan’s Roadhouse, Inc.(3) | | | | | 4,669 | | | | | | — | | | | | | 2,223 | | | | | | (6,875) | | | | | | — | | | | | | (25) | | | | | | 8 | | | | | | — | | | | | | 17 | | | | | | 710 | | | | | | — | | |
Logan’s Roadhouse, Inc. | | | | | — | | | | | | — | | | | | | 1,347 | | | | | | (1,333) | | | | | | — | | | | | | (14) | | | | | | — | | | | | | — | | | | | | 529 | | | | | | 529 | | | | | | — | | |
MB Precision Holdings LLC(2) | | | | | — | | | | | | 64,367 | | | | | | 710 | | | | | | (12,581) | | | | | | — | | | | | | (32,132) | | | | | | 975 | | | | | | 21,339 | | | | | | 3,507 | | | | | | — | | | | | | — | | |
Warren Resources, Inc. | | | | | 43,613 | | | | | | — | | | | | | 170 | | | | | | (28,068) | | | | | | — | | | | | | — | | | | | | (1,063) | | | | | | 14,652 | | | | | | 1,939 | | | | | | 170 | | | | | | 1,123 | | |
Senior Secured Loans—Second Lien | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
JW Aluminum Co. | | | | | 34,382 | | | | | | — | | | | | | — | | | | | | (33,874) | | | | | | 1 | | | | | | 7 | | | | | | (516) | | | | | | — | | | | | | 1,492 | | | | | | — | | | | | | — | | |
Logan’s Roadhouse, Inc. | | | | | 6,771 | | | | | | — | | | | | | 194 | | | | | | (1,839) | | | | | | 6 | | | | | | (13,001) | | | | | | 7,869 | | | | | | — | | | | | | 188 | | | | | | 194 | | | | | | — | | |
Other Senior Secured Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies, Inc. | | | | | 10,278 | | | | | | — | | | | | | 646 | | | | | | (261) | | | | | | — | | | | | | �� | | | | | | (7,033) | | | | | | 3,630 | | | | | | 1,182 | | | | | | 646 | | | | | | — | | |
JW Aluminum Co. | | | | | — | | | | | | — | | | | | | 33,001 | | | | | | — | | | | | | — | | | | | | — | | | | | | (82) | | | | | | 32,919 | | | | | | 1,983 | | | | | | — | | | | | | — | | |
Mood Media Corp. | | | | | 23,219 | | | | | | — | | | | | | 5,274 | | | | | | — | | | | | | 5 | | | | | | — | | | | | | (20) | | | | | | 28,478 | | | | | | 4,429 | | | | | | 1,901 | | | | | | — | | |
Equity/Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advanced Lighting Technologies, Inc., Common Equity | | | | | 5,900 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,900) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Advanced Lighting Technologies, Warrants, 10/4/2027 | | | | | 26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (26) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
ASG Everglades Holdings, Inc., Common Equity | | | | | 30,727 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,016 | | | | | | 31,743 | | | | | | — | | | | | | — | | | | | | — | | |
ASG Everglades Holdings, Inc., 6/27/2022, Warrants | | | | | 6,951 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 413 | | | | | | 7,364 | | | | | | — | | | | | | — | | | | | | — | | |
HM Dunn Aerosystems, Inc., Preferred Equity, Series A(2) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
HM Dunn Aerosystems, Inc., Preferred Equity, Series B(2) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co., Common Equity | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
JW Aluminum Co., Preferred Equity | | | | | 15,074 | | | | | | — | | | | | | 18,992 | | | | | | — | | | | | | 210 | | | | | | — | | | | | | 9,614 | | | | | | 43,890 | | | | | | 5,632 | | | | | | 4,785 | | | | | | — | | |
(e) | Listed investments may be treated as debt for GAAP or tax purposes. |
(f) | Security or portion thereof held within Ambler Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Ally Bank (see Note 9). |
(g) | Security or portion thereof held within Broomall Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Broomall Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). |
(h) | Security or portion thereof held within Burholme Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNPP. Securities held within Burholme Funding LLC may be rehypothecated from time to time as permitted under Rule15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). |
(i) | Security or portion thereof held within Cobbs Creek LLC and is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9). |
(j) | Security or portion thereof held within Cooper River LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Citibank, N.A. (see Note 9). |
(k) | Security or portion thereof held within Darby Creek LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9). |
(l) | Security or portion thereof held within Dunlap Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Deutsche Bank AG, New York Branch (see Note 9). |
(m) | Security or portion thereof held within Germantown Funding LLC and is pledged as collateral supporting the amounts outstanding under a term loan credit facility with Goldman Sachs (see Note 9). |
(n) | Security or portion thereof is pledged as collateral supporting the amounts outstanding under the senior secured revolving credit facility (see Note 9). |
(o) | Security or portion thereof held within Jefferson Square Funding LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, National Association (see Note 9). |
(p) | Security or portion thereof held within Juniata River LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with JPMorgan Chase Bank, N.A. (see Note 9). |
(q) | Security or portion thereof held within Meadowbrook Run LLC and is pledged as collateral supporting the amounts outstanding under a revolving credit facility with Morgan Stanley Senior Funding, Inc. (see Note 9). |
(r) | The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets. As of December 31, 2019, 79.5% of the Company’s total assets represented qualifying assets. In addition, the Company also calculates its compliance with the qualifying asset test on a “look through” basis by disregarding the value of the Company’s total return swap and treating each loan underlying the total return swap as either a qualifying asset ornon-qualifying asset based on whether the obligor is an eligible portfolio company. On this basis, 79.6% of the Company’s total assets represented qualifying assets as of December 31, 2019. |
(s) | Security is an unfunded commitment. Reflects the stated spread at the time of commitment, but may not be the actual rate received upon funding. |
(t) | Security isnon-income producing. |
(u) | Asset is onnon-accrual status. |
(v) | Security held within FSIC II Investments, Inc., a wholly-owned subsidiary of the Company. |
(w) | Security held within FSIC III Investments, Inc., a wholly-owned subsidiary of the Company. |
(x) | Security held within IC II Arches Investments, LLC, a wholly-owned subsidiary of the Company. |
(y) | Security held within IC III Arches Investments, LLC, a wholly-owned subsidiary of the Company. |
(z) | Security held within FSIC IV Investments, LLC, a wholly-owned subsidiary of the Company. |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2018
2019
(in thousands,millions, except share amounts)
Portfolio Company | | | Fair Value at December 31, 2017 | | | Transfers In or Out | | | Purchases and Paid-in-Kind Interest | | | Sales and Repayments | | | Accretion of Discount | | | Net Realized Gain (Loss) | | | Net Change in Unrealized Appreciation (Depreciation) | | | Fair Value at December 31, 2018 | | | Interest Income(1) | | | PIK Income(1) | | | Fee Income(1) | | |||||||||||||||||||||||||||||||||
MB Precision Holdings LLC, Class A-2 Units(2) | | | | $ | — | | | | | $ | 2,288 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | (2,288) | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
MB Precision Holdings LLC, Preferred Stock | | | | | — | | | | | | — | | | | | | 8,600 | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,774) | | | | | | 5,826 | | | | | | — | | | | | | — | | | | | | — | | |
Mood Media Corp. | | | | | 28,659 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (12,817) | | | | | | 15,842 | | | | | | — | | | | | | — | | | | | | — | | |
Roadhouse Holding Inc., Common Equity | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,657) | | | | | | 4,657 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Warren Resources, Inc., Common Equity | | | | | 4,031 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,542 | | | | | | 5,573 | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | 223,518 | | | | | $ | 130,941 | | | | | $ | 71,157 | | | | | $ | (84,923) | | | | | $ | 445 | | | | | $ | (75,524) | | | | | $ | (38,211) | | | | | $ | 227,403 | | | | | $ | 23,673 | | | | | $ | 8,935 | | | | | $ | 1,123 | | |
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(aa) | Security or portion thereof held within Burholme Funding LLC has been rehypothecated under Rule15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNPP (see Note 9). As of December 31, 2019, the fair value of securities rehypothecated by BNPP was $123. |
(ab) | Security is classified as Level 1 or Level 2 in the Company’s fair value hierarchy (see Note 8). |
(ac) | Position or portion thereof unsettled as of December 31, 2019. |
(ad) | Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control”. The following table presents certain financial information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person for the year ended December 31, 2019: |
Portfolio Company | Fair Value at December 31, 2018 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at December 31, 2019 | Interest Income(3) | PIK Income(3) | Fee Income(3) | |||||||||||||||||||||||||||
Senior Secured Loans—First Lien |
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Advanced Lighting Technologies Inc | $ | 9.1 | $ | 0.2 | $ | — | $ | — | $ | (3.4 | ) | $ | 5.9 | $ | 0.9 | $ | — | $ | — | |||||||||||||||||
Fairway Group Holdings Corp(4) | — | 6.2 | — | — | 0.1 | 6.3 | 0.4 | 0.4 | — | |||||||||||||||||||||||||||
Fairway Group Holdings Corp(4) | — | 11.3 | — | — | (4.8 | ) | 6.5 | 0.6 | 0.6 | — | ||||||||||||||||||||||||||
Fairway Group Holdings Corp(4) | — | 5.6 | — | — | (5.6 | ) | — | — | — | — | ||||||||||||||||||||||||||
HM Dunn Co Inc | 7.1 | 5.8 | — | — | 13.1 | 26.0 | — | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc | — | 5.2 | — | — | — | 5.2 | 0.2 | 0.1 | — | |||||||||||||||||||||||||||
MB Precision Holdings LLC | 21.3 | 1.2 | (0.8 | ) | 0.2 | (0.5 | ) | 21.4 | 2.6 | 0.5 | — | |||||||||||||||||||||||||
One Call Care Management Inc | — | 5.8 | (8.2 | ) | 4.9 | 0.2 | 2.7 | 0.2 | — | — | ||||||||||||||||||||||||||
Warren Resources Inc | 14.7 | 6.3 | — | — | — | 21.0 | 2.1 | 0.1 | — | |||||||||||||||||||||||||||
Senior Secured Loans—Second Lien |
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Fairway Group Holdings Corp(4) | — | 5.0 | — | — | (5.0 | ) | — | — | — | — | ||||||||||||||||||||||||||
One Call Care Management Inc(4) | — | 13.2 | (5.4 | ) | (7.8 | ) | — | — | 1.6 | 0.5 | — | |||||||||||||||||||||||||
Titan Energy LLC(4) | — | 100.7 | — | — | (100.7 | ) | — | — | — | — | ||||||||||||||||||||||||||
Other Senior Secured Debt | ||||||||||||||||||||||||||||||||||||
Advanced Lighting Technologies Inc | 3.6 | — | — | — | (3.6 | ) | — | — | — | — | ||||||||||||||||||||||||||
JW Aluminum Co | 32.9 | 1.5 | — | — | 1.9 | 36.3 | 3.4 | — | — | |||||||||||||||||||||||||||
Mood Media Corp | 28.5 | 11.1 | — | — | (0.6 | ) | 39.0 | 5.5 | — | — | ||||||||||||||||||||||||||
Equity/Other | ||||||||||||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Warrant | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Advanced Lighting Technologies Inc, Warrant | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
ASG Technologies, Common Stock | 31.7 | — | — | — | (1.0 | ) | 30.7 | — | — | — | ||||||||||||||||||||||||||
ASG Technologies, Warrant | 7.4 | 1.8 | — | — | (0.6 | ) | 8.6 | — | — | — | ||||||||||||||||||||||||||
Fairway Group Holdings Corp, Common Stock(4) | — | 3.3 | — | — | (3.3 | ) | — | — | — | — | ||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series A | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
HM Dunn Co Inc, Preferred Stock, Series B | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
JW Aluminum Co, Common Stock | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
JW Aluminum Co, Preferred Stock | 43.9 | 20.6 | — | — | 39.6 | 104.1 | — | 7.4 | — |
See notes to unaudited consolidated financial statements.
FS Investment CorporationKKR Capital Corp. II
Consolidated Schedule of Investments (continued)
As of December 31, 2019
(in millions, except share amounts)
Portfolio Company | Fair Value at December 31, 2018 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at December 31, 2019 | Interest Income(3) | PIK Income(3) | Fee Income(3) | |||||||||||||||||||||||||||
MB Precision Holdings LLC, Class A—2 Units | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
MB Precision Holdings LLC, Preferred Stock | 5.8 | 0.2 | — | — | (0.4 | ) | 5.6 | — | — | — | ||||||||||||||||||||||||||
Mood Media Corp, Common Stock | 15.8 | — | — | — | (14.8 | ) | 1.0 | — | — | — | ||||||||||||||||||||||||||
One Call Care Management Inc, Common Stock | — | 1.8 | — | — | — | 1.8 | — | — | — | |||||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock A | — | 19.3 | — | — | — | 19.3 | — | — | — | |||||||||||||||||||||||||||
One Call Care Management Inc, Preferred Stock B | — | 5.8 | — | — | — | 5.8 | — | 0.1 | — | |||||||||||||||||||||||||||
Titan Energy LLC, Common Stock(4) | — | 8.6 | — | — | (8.6 | ) | — | — | — | — | ||||||||||||||||||||||||||
Warren Resources Inc, Common Stock | 5.6 | 4.7 | — | — | (2.0 | ) | 8.3 | — | — | — | ||||||||||||||||||||||||||
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Total | $ | 227.4 | $ | 245.2 | $ | (14.4 | ) | $ | (2.7 | ) | $ | (100.0 | ) | $ | 355.5 | $ | 3.1 | $ | 3.3 | $ | — | |||||||||||||||
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(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category. |
(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. |
(3) | Interest, PIK and fee income presented for the year ended December 31, 2019. |
(4) | The Company held this investment as of December 31, 2018 but it was not deemed to be an “affiliated person” of the portfolio company as December 31, 2018. Transfers in or out have been presented at amortized cost. |
(ae) | Under the Investment Company Act of 1940, as amended, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2019, the Company held investments in portfolio companies of which it is deemed to be an “affiliated person” and deemed to “control”. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and deemed to control for the year ended December 31, 2019: |
Portfolio Company | Fair Value at December 31, 2018 | Gross Additions(1) | Gross Reductions(2) | Net Realized Gain (Loss) | Net Change in Unrealized Appreciation (Depreciation) | Fair Value at December 31, 2019 | Interest Income(3) | PIK Income(3) | Dividend Income(3) | |||||||||||||||||||||||||||
Asset Based Finance |
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801 5th Ave, Seattle, Structure Mezzanine | $ | — | $ | 47.1 | $ | — | $ | — | $ | — | $ | 47.1 | $ | 0.2 | $ | — | $ | — | ||||||||||||||||||
801 5th Ave, Seattle, Private Equity | — | 7.8 | — | — | — | 7.8 | — | — | — | |||||||||||||||||||||||||||
Credit Opportunities Partners, LLC |
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Credit Opportunities Partners, LLC | — | 503.4 | — | — | 6.6 | 510.0 | — | — | 13.1 | |||||||||||||||||||||||||||
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Total | $ | — | $ | 558.3 | $ | — | $ | — | $ | 6.6 | $ | 564.9 | $ | 2.8 | $ | — | $ | 13.1 | ||||||||||||||||||
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(1) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities of one or more new securities and the movement of an existing portfolio company into this category from a different category. |
(2) | Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. |
(3) | Interest, PIK and dividend income presented for the year ended December 31, 2019. |
See notes to unaudited consolidated financial statements.
FS KKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements
(in thousands,millions, except share and per share amounts)
Note 1. Principal Business and Organization
FS Investment CorporationKKR Capital Corp. II, or the Company, was incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. The Company is an externally managed,non-diversified,closed-end management investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, the Company has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of June 30, 2019,March 31, 2020, the Company had various wholly-owned subsidiaries, including special purposespecial-purpose financing subsidiaries and subsidiaries through which it holds interests in portfolio companies. The unaudited consolidated financial statements include both the Company’s accounts and the accounts of its wholly-owned subsidiaries as of June 30, 2019.March 31, 2020. All significant intercompany transactions have been eliminated in consolidation. Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state income taxes.
The Company’s investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. The Company’s portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle-market U.S. companies and, to a lesser extent, subordinated loans and certain asset-based financing loans of private U.S. companies. In addition, a portion of the Company’s portfolio may be comprised of equity and equity-related securities, corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps.
The Company is externally managed by FS/KKR Advisor, LLC, or the Advisor, pursuant to an investment advisory and administrative services agreement, dated as of April 9, 2018,December 18, 2019, or the investment advisory and administrative services agreement. On April 9, 2018, GSO/Blackstone Debt Funds Management LLC, or GDFM, resigned as the investmentsub-adviser to the Company and terminated the investmentsub-advisory agreement, or the investmentsub-advisory agreement, between FSIC II Advisor, LLC, or FSIC II Advisor, and GDFM, effective April 9, 2018. In connection with GDFM’s resignation as the investmentsub-adviser to the Company, on April 9, 2018, the Company entered into thean investment advisory and administrative services agreement, whichor the prior investment advisory and administrative services agreement, with the Advisor. The prior investment advisory and administrative services agreement replaced an investment advisory and administrative services agreement, dated February 8, 2012, or the FSIC II Advisor investment advisory and administrative services agreement, by and between the Company and FSIC II Advisor.
On May 31,December 18, 2019, the Company entered into ancompleted its acquisitions, or the Mergers, of FS Investment Corporation III, or FSIC III, FS Investment Corporation IV, or FSIC IV, and Corporate Capital Trust II, or CCT II, pursuant to that certain Agreement and Plan of Merger, or the Merger Agreement, with Corporate Capital Trust II, a Delaware statutory trust, or CCT II, FS Investment Corporation IV, a Maryland corporation, or FSIC IV, FS Investment Corporation III, a Maryland corporation, or FSIC IIIdated as of May 31, 2019, by and collectively withamong the Company, FSIC III, FSIC IV, and CCT II, the Funds, NT Acquisition 1, Inc., a Maryland corporation andformer wholly-owned subsidiary of the Company, or Merger Sub 1, NT Acquisition 2, Inc., a Delaware corporation andformer wholly-owned subsidiary of the Company, or Merger Sub 2, NT Acquisition 3, Inc., a Maryland corporation andformer wholly-owned subsidiary of the Company, or Merger Sub 3, and the Advisor. The Merger Agreement provides that, subject to the conditions set forth in the Merger Agreement, (i) Merger Sub 1 will merge with and into FSIC III, with FSIC III continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 1A, and, immediately thereafter, FSIC III will merge with and into the Company, with the Company continuing as the surviving company or, together with Merger 1A, Merger 1, (ii) Merger Sub 2 will merge with and into CCT II, with CCT II continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 2A, and, immediately thereafter, CCT II will merge with and into the Company, with the Company continuing as the surviving company or, together with Merger 2A, Merger 2, and (iii) Merger Sub 3 will merge with and into FSIC IV, with FSIC IV continuing as the surviving
Note 2. Summary of Significant Accounting Policies
Basis of Presentation:Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Form10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company’s interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 20182019 included in the Company’s annual report on Form10-K for the year ended December 31, 2018.2019. Operating results for the three and six months ended June 30, 2019March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.2020. The December 31, 20182019 consolidated balance sheet and consolidated schedule of investments are derived from the Company’s audited consolidated financial statements as of and for the year ended December 31, 2018.2019. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Financial Accounting Standards Boards, or the FASB, Accounting Standards Codification or ASC, Topic 946,Financial Services—Investment Companies..
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
Use of Estimates:Estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Capital Gains Incentive Fee:Fee: Pursuant to the terms of the investment advisory and administrative services agreement, the incentive fee on capital gains 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). This fee equals 20.0% of the Company’s incentive fee capital gains, which equalsshall equal each of FSIC III, FSIC IV, CCT II and the Company’s realized capital gains (without duplication) on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation (without duplication) on a cumulative basis, less the aggregate amount of any capital gain incentive fees previously paid by FSIC III, FSIC IV, CCT II and the Company. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fees as if it were due and payable as of the end of such period.
The Company includes 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 the Advisor if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though the Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.
Subordinated Income Incentive Fee:Fee: Pursuant to the terms of the investment advisory and administrative services agreement, the Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income under the investment advisory and administrative services agreement, which is calculated and payable quarterly in arrears, equals 20.0% of theCompany’s
Commencing with the ninth full calendar quarter following the closing of the Mergers, the subordinated incentive fee on income is subject to a cap equal to (i) 20.0% of the “per sharepre-incentive fee return” for the then-current calendar quarter and the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing with the first full calendar quarter following the Mergers) minus the cumulative “per share incentive fees” accrued and/or payable for the eleven calendar quarters (or fewer number of calendar quarters) preceding the then-current calendar quarter (commencing with the first full calendar quarter following the Mergers) multiplied by (ii) the weighted average number of shares outstanding during the calendar quarter (or any portion thereof) for which the subordinated incentive fee on income is being calculated.
Reclassifications: Certain amounts in the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2018March 31, 2019 and the audited consolidated financial statements as of and for the year ended December 31, 20182019 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements as of and for the three and six months ended June 30, 2019.
Revenue Recognition:Security transactions are accounted for on the trade date. The Company records interest income on an accrual basis to the extent that it expects to collect such amounts. The Company records dividend income on theex-dividend date. Distributions received from limited liability company (“LLC”) and limited partnership (“LP”) investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. The Company’s policy is to place investments onnon-accrual status when there is reasonable doubt that interest income will be collected. The Company considers many factors relevant to an investment when placing it on or removing it fromnon-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 2. Summary of Significant Accounting Policies (continued)
the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Company will receive any previously accrued interest, then the accrued interest income will bewritten-off. Payments received onnon-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest.Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on the Company’s judgment.
Loan origination fees, original issue discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are
Derivative Instruments:The Company’s derivative instruments include foreign currency forward contracts and interest rate swaps. The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements. Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result, the Company presents changes in fair value through net change in unrealized appreciation (depreciation) on derivative instruments in the consolidated statements of operations. Realized gains and losses that occur upon the cash settlement of the derivative instruments are included in net realized gains (losses) on derivative instruments in the consolidated statements of operations. As of June 30, 2019, the Company’s derivative instruments included interest rate swaps.
Recent Accounting Pronouncements: In August 2018 the Financial Accounting Standards Board, or FASB issued Accounting Standards Update2018-13,Fair Value Measurement—Disclosures Framework—Changes to Disclosure Requirements forof Fair Value Measurement (Topic 820), orASU 2018-13. ASU2018-13 introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company is currently evaluatingimplemented ASU2018-13 during the three months ended March 31, 2020, and it did not have a significant impact of ASU 2018-13 on its financial statements.
Note 3. Share Transactions
Below is a summary of transactions with respect to shares of the Company’s common stock during the sixthree months ended June 30, 2019March 31, 2020 and 2018:
| | | Six Months Ended June 30, | | |||||||||||||||||||||
| | | 2019 | | | 2018 | | ||||||||||||||||||
| | | Shares | | | Amount | | | Shares | | | Amount | | ||||||||||||
Reinvestment of Distributions | | | | | 6,310,424 | | | | | $ | 50,698 | | | | | | 6,590,215 | | | | | $ | 56,981 | | |
Share Repurchase Program | | | | | (6,488,628) | | | | | | (52,233) | | | | | | (6,775,793) | | | | | | (58,953) | | |
Net Proceeds from Share Transactions | | | | | (178,204) | | | | | $ | (1,535) | | | | | | (185,578) | | | | | $ | (1,972) | | |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Reinvestment of Distributions | — | $ | — | 3,191,361 | $ | 26 | ||||||||||
Share Repurchase Program | — | — | (3,297,056 | ) | (27 | ) | ||||||||||
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Net Proceeds from Share Transactions | — | $ | — | (105,695 | ) | $ | (1 | ) | ||||||||
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During the period from JulyApril 1, 20192020 to August 9, 2019,May 8, 2020, the Company issued 1,042,8466,430,853 shares of common stock pursuant to its distribution reinvestment plan, or DRP, for gross proceeds of $8,342,768$39,871,288 at an average price per share of $8.00.$6.20. For additional information regarding the terms of the DRP, see Note 5.
Acquisitions of FSIC III, FSIC IV and CCT II
In accordance with the terms of the Merger Agreement, at the time of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of the Company’s common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of the Company’s common stock and (iii) each outstanding share of FSIC IV common stock was converted into the
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 3. Share Transactions (continued)
right to receive 1.3634 shares of the Company’s common stock. As a result, the Company issued an aggregate of approximately 289,084,117 shares of its common stock to former FSIC III stockholders, 14,031,781 shares of its common stock to former CCT II shareholders and 43,668,803 shares of its common stock to former FSIC IV stockholders.
Share Repurchase Program
Historically, the Company has conducted quarterly tender offers pursuant to itsa share repurchase program. The Company’s board of directors considerssuspended the following factors, among others,share repurchase program in making its determination regarding whether to causeconnection with the Company to offer to repurchase shares of common stock and under what terms:
Historically, the Company limited the number of shares of common stock to be repurchased during any calendar year to the lesser of (i) the number of shares of common stock that the Company could repurchase with the proceeds it received from the issuance of shares of common stock under the DRP and (ii) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. On May 8, 2017, the board of directors of the Company amended the share repurchase program. As amended, the Company limits the maximum number of shares of common stock to be repurchased for any repurchase offer to the greater of (A) the number of shares of common stock that the Company can repurchase with the proceeds it has received from the sale of shares of common stock under the DRP during the twelve-month period ending on the date the applicable repurchase offer expires (less the amount of proceeds used to repurchase shares of common stock on each previous repurchase date for repurchase offers conducted during such twelve-month period) (the Company refers to this limitation as the twelve-month repurchase limitation) and (B) the number of shares of common stock that the Company can repurchase with the proceeds it received from the sale of shares of common stock under the DRP during the three-month period ending on the date the applicable repurchase offer expires (the Company refers to this limitation as the three-month repurchase limitation). In addition to this limitation, the maximum number of shares of common stock to be repurchased for any repurchase offer will also be limited to 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter. As a result, the maximum number of shares of common stock to be repurchased for any repurchase offer will not exceed the lesser of (i) 10% of the weighted average number of shares of common stock outstanding in the prior calendar year, or 2.5% in each calendar quarter, and (ii) whichever is greater of the twelve-month repurchase limitation described in clause (A) above and the three-month repurchase limitation described in clause (B) above. At the discretion of
Under the Company’s board of directors, the Company may also use cash on hand, cash available from borrowings and cash from the liquidation of securities investments as of the end of the applicable period to repurchase shares of common stock. The actual number of shares of common stock that the Company offers to repurchase may be less in light of the limitations noted above. The Company’s board of directors may amend, suspend or terminate the share repurchase program at any time upon 30 days’ notice.
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 3. Share Transactions (continued)
The following table provides information concerning the Company’s repurchases of shares of common stock pursuant to its former share repurchase program during the sixthree months ended June 30, 2019March 31, 2020 and 2018:
For the Three Months Ended | | | Repurchase Date | | | Shares Repurchased | | | Percentage of Shares Tendered That Were Repurchased | | | Percentage of Outstanding Shares Repurchased as of the Repurchase Date | | | Repurchase Price Per Share | | | Aggregate Consideration for Repurchased Shares | | |||||||||||||||
Fiscal 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2017 | | | January 12, 2018 | | | | | 3,408,305 | | | | | | 28.0% | | | | | | 1.04% | | | | | $ | 8.800 | | | | | $ | 29,993 | | |
March 31, 2018 | | | April 2, 2018 | | | | | 3,367,488 | | | | | | 21.0% | | | | | | 1.03% | | | | | $ | 8.600 | | | | | | 28,960 | | |
Total | | | | | | | | 6,775,793 | | | | | | | | | | | | | | | | | | | | | | | $ | 58,953 | | |
Fiscal 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2018 | | | January 2, 2019 | | | | | 3,297,056 | | | | | | 16.7% | | | | | | 1.01% | | | | | $ | 8.050 | | | | | $ | 26,541 | | |
March 31, 2019 | | | April 1, 2019 | | | | | 3,191,572 | | | | | | 14.2% | | | | | | 0.98% | | | | | $ | 8.050 | | | | | | 25,692 | | |
Total | | | | | | | | 6,488,628 | | | | | | | | | | | | | | | | | | | | | | | $ | 52,233 | | |
For the Three Months Ended | Repurchase Date | Shares Repurchased | Percentage of Shares Tendered That Were Repurchased | Percentage of Outstanding Shares Repurchased as of the Repurchase Date | Repurchase Price Per Share | Aggregate Consideration for Repurchased Shares | ||||||||||||||||||
Fiscal 2019 | ||||||||||||||||||||||||
December 31, 2018 | January 2, 2019 | 3,297,056 | 16.7 | % | 1.01 | % | $ | 8.050 | $ | (27 | ) | |||||||||||||
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| |||||||||||||||||||||
Total | 3,297,056 | $ | (27 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Fiscal 2020 | ||||||||||||||||||||||||
December 31, 2019(1) | — | — | — | $ | — | $ | — | |||||||||||||||||
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Total | — | $ | — | |||||||||||||||||||||
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(1) | The Company suspended its share repurchase program on May 31, 2019. |
Note 4. Related Party Transactions
Compensation of the Investment Adviser
Pursuant to the investment advisory and administrative services agreement, the Advisor is entitled to a base management fee calculated at an annual rate of 1.50% of the average weekly value of the Company’s gross assets excluding cash and cash equivalents (gross assets equal the total assets of the Company as set forth on the Company’s consolidated balance sheets), which base management fee is reduced from 1.50% to 1.00% on all assets financed using leverage over 1.0xdebt-to-equity, and an incentive fee based on the Company’s performance. The base management fee is payable quarterly in arrears. All or any part of the base management fee not taken as to any quarter will be deferred without interest and may be taken in such other quarter as the Advisor determines. The prior investment advisory and administrative services agreement had substantially similar terms, except that cash and cash equivalents were not excluded from gross assets. See Note 2 for a discussion of the capital gains and subordinated income incentive fees that the Advisor may be entitled to under the investment advisory and administrative services agreement.
On December 18, 2019, the Company entered into an administration agreement with the Advisor, or the administration agreement. Pursuant to the FSIC II Advisor investment advisory and administrative services agreement, which was in effect until April 9, 2018, FSIC II Advisor was entitled to an annual base management fee equal to 2.0% of the average value of the Company’s gross assets (gross assets equal the total assets of the Company as set forth on the Company’s consolidated balance sheets) and an incentive fee based on the Company’s performance. Effective March 5, 2015, FSIC II Advisor had agreed to permanently waive 0.25% of its base management fee to which it was entitled under the FSIC II Advisor investment advisory and administrative services agreement, so that the fee received equaled 1.75% of the average value of the Company’s gross assets. Pursuant to the investment sub-advisory agreement, GDFM was entitled to receive 50% of all management and incentive fees payable to FSIC II Advisor under the FSIC II Advisor investment advisory and administrative services agreement with respect to each year.
Pursuant to the investment advisory and administrative servicesadministration agreement, the Company reimburses the Advisor for expenses necessary to perform services related to its administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P. (which, which does business as FS Investments),Investments, or FS Investments, and KKR Credit Advisors (US), LLC, or KKR Credit, for providing administrative services to the Company on behalf of the Advisor. The Company reimburses the Advisor no less than monthlyquarterly for all costs and expenses necessary to perform services related toincurred by the Company’sAdvisor in performing its obligations and providing personnel and facilities under the administration and operations. The amount of this reimbursement is set at the lesser of (1) the Advisor’s actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for comparable services in the same geographic location.agreement. The Advisor allocates the cost of such services to the Company based on factors such as total assets, revenues, time allocations and/or other reasonable metrics. The Company’s board of directors reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 4. Related Party Transactions (continued)
allocation of administrative expenses among the Company and certain affiliates of the Advisor. The Company’s board of directors then assesses the reasonableness of such reimbursements for expenses allocated to it based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party service providers known to be available. In addition, the Company’s board of directors considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company’s board of directors compares the total amount paid to the Advisor for such services as a percentage of the Company’s net assets to the same ratio as reported by other comparable BDCs. The administrative services provisions of the FSIC II Advisor investment advisory and administrative services agreement and the prior investment advisory and administrative services agreement were substantially similar to the administrative services provisions of the investment advisory and administrative servicesadministration agreement.
The following table describes the fees and expenses accrued under the investment advisory agreement, the administration agreement, the prior investment advisory and administrative services agreement and the FSIC II Advisor investment advisory and administrative services agreement, as applicable, during the three and six months ended June 30, 2019March 31, 2020 and 2018:
| | | | | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
Related Party | | | Source Agreement | | | Description | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
The Advisor and FSIC II Advisor | | | FS/KKR Advisor Investment Advisory and Administrative Services Agreement and FSIC II Advisor Investment Advisory and Administrative Services Agreement | | | Base Management Fee(1) | | | | $ | 16,982 | | | | | $ | 18,660 | | | | | $ | 34,846 | | | | | $ | 40,740 | | |
The Advisor and FSIC II Advisor | | | FS/KKR Advisor Investment Advisory and Administrative Services Agreement and FSIC II Advisor Investment Advisory and Administrative Services Agreement | | | Subordinated Incentive Fee on Income(2) | | | | $ | 8,736 | | | | | $ | 1,480 | | | | | $ | 19,867 | | | | | $ | 7,055 | | |
The Advisor and FSIC II Advisor | | | FS/KKR Advisor Investment Advisory and Administrative Services Agreement and FSIC II Advisor Investment Advisory and Administrative Services Agreement | | | Administrative Services Expenses(3) | | | | $ | 647 | | | | | $ | 790 | | | | | $ | 1,554 | | | | | $ | 1,572 | | |
Three Months Ended March 31, | ||||||||
Related Party | Source Agreement | Description | 2020 | 2019 | ||||
The Advisor | Investment advisory agreement and prior investment advisory and administrative services agreement | Base Management Fee(1) | $33 | $18 | ||||
The Advisor | Investment advisory agreement and prior investment advisory and administrative services agreement | Subordinated Incentive Fee on Income(2) | $23 | $11 | ||||
The Advisor | Administration agreement and prior investment advisory and administrative services agreement | Administrative Services Expenses(3) | $2 | $1 |
(1) | During the three months ended March 31, 2020 and 2019, $35 and $17, respectively, in base management fees were paid to the Advisor. As of March 31, 2020, $33 in base management fees were payable to the Advisor. |
(2) | During the three months ended March 31, 2020 and 2019, $11 and $6, respectively, of subordinated incentive fees on income were paid to the Advisor. As of March 31, 2020, a subordinated incentive fee on income of $23 was payable to the Advisor. |
(3) | During the three months ended March 31, 2020 and 2019, $1 and $1, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by the Advisor and the remainder related to other reimbursable expenses, including reimbursement of fees related to transactional expenses for prospective investments, including fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as “broken deal” costs. Broken deal costs were $0.2 for the three months ended March 31, 2020. The Company paid $2 and $1 in administrative services expenses to the Advisor during the three months ended March 31, 2020 and 2019, respectively. |
Potential Conflicts of Interest
The members of the senior management and investment teams of the Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed by the same personnel. For example, the Advisor is the investment adviser to FS KKR Capital Corp., FS Investment Corporation III, FS Investment Corporation IV, and Corporate Capital Trust II, and the officers, managers and other personnel of the Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or KKR Credit. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Company’s best interests or in the best interest of the Company’s stockholders. The Company’s investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For additional information regarding potential conflicts of interest, see the Company’s annual report on Form10-K for the year ended December 31, 2018.
Exemptive Relief
As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permittedto co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may,simultaneously co-invest in transactions where price is the only negotiated term.
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 4. Related Party Transactions (continued)
In an order dated June 4, 2013, or the FS Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions,to co-invest in certain privately negotiated investment transactions with certain affiliates of FSIC II Advisor,its former investment adviser, including FS Energy and Power Fund, FS KKR Capital Corp., FS Investment Corporation III, FS Investment Corporation IV and any future BDCs that are advised by FSIC II Advisorits former investment adviser or its affiliated investment advisers. However, in connection with the investment advisory relationship with the Advisor, and in an effort to mitigate potential future conflicts of interest, the Company’s board of directors authorized and directed that the Company (i) withdraw from the FS Order, except with respect to any transaction in which the Company participated in reliance on the FS Order prior to April 9, 2018, and (ii) rely on an exemptive relief order, dated April 3, 2018, that permits the Company, subject to the satisfaction of certain conditions,to co-invest in certain privately negotiated investment transactions, including investments originated and directly negotiated by the Advisor or KKR Credit, with certain affiliates of the Advisor.
Note 5. Distributions
The following table reflects the cash distributions per share that the Company declared and paid on its common stock during the sixthree months ended June 30, 2019March 31, 2020 and 2018:
| | | Distribution | | |||||||||
For the Three Months Ended | | | Per Share | | | Amount | | ||||||
Fiscal 2018 | | | | | | | | | | | | | |
March 31, 2018 | | | | $ | 0.1885 | | | | | $ | 61,153 | | |
June 30, 2018 | | | | | 0.1885 | | | | | | 61,146 | | |
Total | | | | $ | 0.3770 | | | | | $ | 122,299 | | |
Fiscal 2019 | | | | | | | | | | | | | |
March 31, 2019 | | | | $ | 0.1885 | | | | | $ | 61,114 | | |
June 30, 2019 | | | | | 0.1885 | | | | | | 61,108 | | |
Total | | | | $ | 0.3770 | | | | | $ | 122,222 | | |
Distribution | ||||||||
For the Three Months Ended | Per Share | Amount | ||||||
Fiscal 2019 | ||||||||
March 31, 2019 | $ | 0.1885 | $ | 61 | ||||
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| |||||
Total | $ | 0.1885 | $ | 61 | ||||
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| |||||
Fiscal 2020 | ||||||||
March 31, 2020 | $ | 0.1500 | $ | 102 | ||||
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| |||||
Total | $ | 0.1500 | $ | 102 | ||||
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|
On April 30, 2019,28, 2020, the Company’s board of directors declared a regular monthlyquarterly cash distributions for July 2019 through September 2019, each in the amountdistribution of $0.06283$0.15 per share. These distributions have been orshare, which will be paid monthlyon or about July 2, 2020 to stockholders of record as of monthly record dates previously determined by the Company’s boardclose of directors.business on June 17, 2020. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.
The Company has adopted an “opt in” distribution reinvestment planDRP for its stockholders. As a result, if the Company makes a cash distribution, its stockholders will receive the distribution in cash unless they specifically “opt in” to the DRP so as to have their cash distributions reinvested in additional shares of the Company’s common stock. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a stockholder’s ability to participate in the DRP.
Under the Company’s DRP, cash distributions to participating stockholders will be reinvested in additional shares of the Company’s common stock at a purchase price determined by the Company’s board of directors, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per share of the Company’s common stock as determined in good faith by the Company’s board of directors or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per share of the Company’s common stock as of such date. Although distributions paid in the form of additional shares of common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders who elect to participate in the Company’s DRP will not receive any corresponding cash distributions with which to pay any such applicable taxes. Stockholders receiving distributions in the form of additional shares of common stock will be treated as receiving a distribution in the amount of the fair market value of the Company’s shares of common stock.
The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of the Company’s common stock, borrowings, net investment income from operations, capital gains
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 5. Distributions (continued)
proceeds from the sale of assets, gains from interest rate swaps,non-capital gains proceeds from the sale of assets and dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has not established limits on the amount of funds it may use from available sources to make distributions. During certain periods, the Company’s distributions may exceed its earnings. As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities. Each year a statement on Form1099-DIV identifying the sources of the
The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common stock during the sixthree months ended June 30, 2019March 31, 2020 and 2018:
| | | Six Months Ended June 30, | | | |||||||||||||||||||||||
| | | 2019 | | | 2018 | | | ||||||||||||||||||||
Source of Distribution | | | Distribution Amount | | | Percentage | | | Distribution Amount | | | Percentage | | | ||||||||||||||
Offering proceeds | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | |
Borrowings | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |
Net investment income(1) | | | | | 122,222 | | | | | | 100% | | | | | | 122,299 | | | | | | 100% | | | | ||
Short-term capital gains proceeds from the sale of assets | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |
Long-term capital gains proceeds from the sale of assets | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |
Non-capital gains proceeds from the sale of assets | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |
Distributions on account of preferred and common equity | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||
Total | | | | $ | 122,222 | | | | | | 100% | | | | | $ | 122,299 | | | | | | 100% | | | |
| | | Six Months Ended June 30, | | |||||||||
| | | 2019 | | | 2018 | | ||||||
GAAP-basis net investment income | | | | $ | 116,222 | | | | | $ | 120,454 | | |
Income subject to tax not recorded for GAAP (income recorded for GAAP not subject to tax) | | | | | (807) | | | | | | 3,500 | | |
GAAP versus tax-basis impact of consolidation of certain subsidiaries | | | | | 3,586 | | | | | | 3,569 | | |
Reclassification of unamortized original issue discount, prepayment fees and other income | | | | | (4,636) | | | | | | (8,525) | | |
Other miscellaneous differences | | | | | (26) | | | | | | (673) | | |
Tax-basis net investment income | | | | $ | 114,339 | | | | | $ | 118,325 | | |
|
Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Source of Distribution | Distribution Amount | Percentage | Distribution Amount | Percentage | ||||||||||||
Return of capital | $ | — | — | $ | — | — | ||||||||||
Net investment income(1) | 102 | 100 | % | 61 | 100 | % | ||||||||||
Short-term capital gains proceeds from the sale of assets | — | — | — | — | ||||||||||||
Long-term capital gains proceeds from the sale of assets | — | — | — | — | ||||||||||||
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Total | $ | 102 | 100 | % | $ | 61 | 100 | % | ||||||||
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(1) | During the three months ended March 31, 2020 and 2019, 90.2% and 94.0%, respectively, of the Company’s gross investment income was attributable to cash income earned, 2.6% and 1.9%, respectively, was attributable tonon-cash accretion of discount and 7.2% and 4.1%, respectively, was attributable topaid-in-kind, or PIK, interest. |
The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company’s distributions for a full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form1099-DIV.
| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||
Distributable ordinary income | | | | $ | 50,144 | | | | | $ | 58,028 | | |
Distributable realized gains | | | | | — | | | | | | — | | |
Capital loss carryover(1) | | | | | (232,671) | | | | | | (194,360) | | |
Other temporary differences | | | | | (126) | | | | | | (139) | | |
Net unrealized appreciation (depreciation) on investments and interest rate swaps and gain (loss) on foreign currency(2) | | | | | (246,598) | | | | | | (287,442) | | |
Total | | | | $ | (429,251) | | | | | $ | (423,913) | | |
Net capital losses recognizedincurred for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term losses. As of June 30, 2019,March 31, 2020, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $0$13 and $232,671,$601, respectively.
As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the gross unrealized appreciation on the Company’s investmentswas $162 and interest rate swaps and gain on foreign currency was $169,761 and $135,578,$276, respectively. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the gross unrealized depreciation on the Company’s investments$1,197 and interest rate swaps and loss on foreign currency was $416,359 and $423,020,$687, respectively.
The aggregate cost of the Company’s investments for U.S. federal income tax purposes totaled $4,274,397$8,689 and $4,647,131$9,167 as of June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. The aggregate net unrealized appreciation (depreciation) on investments on a tax basis was $(233,688)$(1,285) and $(287,851)$(609) as of June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
As of June 30, 2019,March 31, 2020, the Company had a deferred tax liability of $7,001 resulting from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries and a deferred tax asset of $20,412$21 resulting from net operating losses and capital losses of the Company’s wholly-owned taxable subsidiaries. As of June 30, 2019, certainMarch 31, 2020, the wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating losses, therefore the deferred tax asset was offset by a valuation allowance of $13,411.$21. For the sixthree months ended June 30, 2019,March 31, 2020, the Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries.
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 6. Investment Portfolio
The following table summarizes the composition of the Company’s investment portfolio at cost and fair value as of June 30, 2019March 31, 2020 and December 31, 2018:
| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||||||||||||||||||||||||||
| | | Amortized Cost(1) | | | Fair Value | | | Percentage of Portfolio | | | Amortized Cost(1) | | | Fair Value | | | Percentage of Portfolio | | ||||||||||||||||||
Senior Secured Loans—First Lien | | | | $ | 2,945,007 | | | | | $ | 2,863,504 | | | | | | 71% | | | | | $ | 3,382,158 | | | | | $ | 3,293,291 | | | | | | 75% | | |
Senior Secured Loans—Second Lien | | | | | 453,302 | | | | | | 371,930 | | | | | | 9% | | | | | | 418,015 | | | | | | 333,986 | | | | | | 8% | | |
Other Senior Secured Debt | | | | | 218,865 | | | | | | 211,199 | | | | | | 5% | | | | | | 207,181 | | | | | | 196,616 | | | | | | 5% | | |
Subordinated Debt | | | | | 219,711 | | | | | | 218,371 | | | | | | 6% | | | | | | 242,792 | | | | | | 221,858 | | | | | | 5% | | |
Asset Based Finance | | | | | 97,842 | | | | | | 94,569 | | | | | | 2% | | | | | | 49,415 | | | | | | 48,160 | | | | | | 1% | | |
Equity/Other | | | | | 255,871 | | | | | | 281,136 | | | | | | 7% | | | | | | 261,044 | | | | | | 265,369 | | | | | | 6% | | |
Total | | | | $ | 4,190,598 | | | | | $ | 4,040,709 | | | | | | 100% | | | | | $ | 4,560,605 | | | | | $ | 4,359,280 | | | | | | 100% | | |
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||||||||||
Amortized Cost(1) | Fair Value | Percentage of Portfolio | Amortized Cost(1) | Fair Value | Percentage of Portfolio | |||||||||||||||||||
Senior Secured Loans—First Lien | $ | 5,606 | $ | 5,116 | 69 | % | $ | 6,017 | $ | 5,717 | 67 | % | ||||||||||||
Senior Secured Loans—Second Lien | 914 | 693 | 9 | % | 941 | 809 | 9 | % | ||||||||||||||||
Other Senior Secured Debt | 210 | 150 | 2 | % | 243 | 228 | 3 | % | ||||||||||||||||
Subordinated Debt | 288 | 229 | 3 | % | 479 | 489 | 5 | % | ||||||||||||||||
Asset Based Finance | 671 | 587 | 8 | % | 535 | 485 | 6 | % | ||||||||||||||||
Credit Opportunities Partners, LLC | 503 | 430 | 6 | % | 503 | 510 | 6 | % | ||||||||||||||||
Equity/Other | 327 | 259 | 3 | % | 323 | 353 | 4 | % | ||||||||||||||||
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Total | $ | 8,519 | $ | 7,464 | 100 | % | $ | 9,041 | $ | 8,591 | 100 | % | ||||||||||||
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The following table summarizes the composition of the Company’s investment portfolio at cost representsand fair value as of March 31, 2020 and December 31, 2019 to include, on a look-through basis, the original cost adjusted forinvestments underlying the amortizationTRS, as disclosed in Note 9 to our unaudited financial statements included herein. The investments underlying the TRS had a notional amount and market value of premiums and/or accretion$0 and $0, and $94 and $89, respectively, as of discounts, as applicable, on investments.
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||||||||||
Amortized Cost(1) | Fair Value | Percentage of Portfolio | Amortized Cost(1) | Fair Value | Percentage of Portfolio | |||||||||||||||||||
Senior Secured Loans—First Lien | $ | 5,606 | $ | 5,116 | 69 | % | $ | 6,090 | $ | 5,788 | 67 | % | ||||||||||||
Senior Secured Loans—Second Lien | 914 | 693 | 9 | % | 961 | 827 | 10 | % | ||||||||||||||||
Other Senior Secured Debt | 210 | 150 | 2 | % | 243 | 228 | 3 | % | ||||||||||||||||
Subordinated Debt | 288 | 229 | 3 | % | 479 | 489 | 5 | % | ||||||||||||||||
Asset Based Finance | 671 | 587 | 8 | % | 535 | 485 | 5 | % | ||||||||||||||||
Credit Opportunities Partners, LLC | 503 | 430 | 6 | % | 503 | 510 | 6 | % | ||||||||||||||||
Equity/Other | 327 | 259 | 3 | % | 324 | 353 | 4 | % | ||||||||||||||||
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Total | $ | 8,519 | $ | 7,464 | 100 | % | $ | 9,135 | $ | 8,680 | 100 | % | ||||||||||||
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(1) | Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments. |
In general, under the 1940 Act, the Company would be presumed to “control” a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of such portfolio company, and would be an “affiliated person” of a portfolio company if it owned 5% or more of its voting securities.
As of June 30, 2019, the Company did not “control” any of its portfolio companies. As of June 30, 2019,March 31, 2020, the Company held investments in seventhree portfolio companies of which it is deemed to “control”. As of March 31, 2020, the Company held investments in eleven portfolio companies of which it is deemed to be an “affiliated person” but is not deemed to “control.” For additional information with respect to such portfolio companies, see footnote (t)footnotes (ad) and (ae) to the unaudited consolidated schedule of investments as of June 30, 2019March 31, 2020 in this quarterly report on Form10-Q.
As of December 31, 2018, the Company did not “control” any of its portfolio companies. As of December 31, 2018,2019, the Company held investments in seventwo portfolio companies of which it is deemed to “control”. As of December 31, 2019, the Company held investments in ten portfolio companies of which it was deemed to be an “affiliated person” but was not deemed to “control.” For additional information with respect to such portfolio companies, see footnote (u)footnotes (ad) and (ae) to the consolidated schedule of investments as of December 31, 20182019 in this quarterly report on Form10-Q.
The Company’s investment portfolio may contain loans and other unfunded arrangements that are in the form of lines of credit, revolving credit facilities, delayed draw credit facilities or other investments, pursuant to which require the Company may be required to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of June 30,March 31,
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
2020, the Company had unfunded debt investments with aggregate unfunded commitments of $376.0, unfunded equity/other commitments of $245.1, and unfunded commitments of $371.9 of Credit Opportunities Partners, LLC. As of December 31, 2019, the Company had unfunded debt investments with aggregate unfunded commitments of $126,735 and$600.9, unfunded equity/other commitments of $202,224. As of December 31, 2018, the Company had unfunded debt investments with aggregate$258.0 and unfunded commitments of $172,963 and an unfunded commitment to purchase up to $47 in shares$21.9 of preferred stock of Altus Power America Holdings,Credit Opportunities Partners, LLC. The Company maintains sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise. For additional details regarding the Company’s unfunded debt investments, see the Company’s unaudited consolidated schedule of investments as of June 30, 2019March 31, 2020 and audited consolidated schedule of investments as of December 31, 2018.
The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of June 30, 2019March 31, 2020 and December 31, 2018:2019:
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||
Industry Classification | Fair Value | Percentage of Portfolio | Fair Value | Percentage of Portfolio | ||||||||||||
Automobiles & Components | $ | 52 | 1 | % | $ | 182 | 2 | % | ||||||||
Capital Goods | 961 | 13 | % | 1,139 | 13 | % | ||||||||||
Commercial & Professional Services | 769 | 10 | % | 861 | 10 | % | ||||||||||
Consumer Durables & Apparel | 351 | 5 | % | 302 | 3 | % | ||||||||||
Consumer Services | 308 | 4 | % | 548 | 6 | % | ||||||||||
Credit Opportunities Partners, LLC | 430 | 6 | % | 510 | 6 | % | ||||||||||
Diversified Financials | 596 | 8 | % | 402 | 5 | % | ||||||||||
Energy | 212 | 3 | % | 328 | 4 | % | ||||||||||
Food & Staples Retailing | 201 | 3 | % | 223 | 3 | % | ||||||||||
Food, Beverage & Tobacco | 120 | 1 | % | 132 | 2 | % | ||||||||||
Health Care Equipment & Services | 727 | 10 | % | 888 | 10 | % | ||||||||||
Household & Personal Products | 108 | 1 | % | 1 | 0 | % | ||||||||||
Insurance | 232 | 3 | % | 220 | 3 | % | ||||||||||
Materials | 134 | 2 | % | 354 | 4 | % | ||||||||||
Media & Entertainment | 335 | 4 | % | 409 | 5 | % | ||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 81 | 1 | % | 187 | 2 | % | ||||||||||
Real Estate | 210 | 3 | % | 122 | 1 | % | ||||||||||
Retailing | 349 | 4 | % | 435 | 5 | % | ||||||||||
Semiconductors & Semiconductor Equipment | — | — | 3 | 0 | % | |||||||||||
Software & Services | 875 | 12 | % | 874 | 10 | % | ||||||||||
Technology Hardware & Equipment | 138 | 2 | % | 174 | 2 | % | ||||||||||
Telecommunication Services | 137 | 2 | % | 154 | 2 | % | ||||||||||
Transportation | 138 | 2 | % | 143 | 2 | % | ||||||||||
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Total | $ | 7,464 | 100 | % | $ | 8,591 | 100 | % | ||||||||
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Credit Opportunities Partners, LLC
On September 30, 2019, Credit Opportunities Partners, LLC, or COP, a joint venture between the Company and South Carolina Retirement Systems Group Trust, or SCRS, was formed pursuant to the terms of a limited liability company agreement between the Company and SCRS, or the COP Agreement. The COP Agreement requires the Company and SCRS to provide capital to COP of up to $1,000 in the aggregate where the Company and SCRS would provide 87.5% and 12.5%, respectively, of the committed capital. Pursuant to the terms of the COP Agreement, the Company and SCRS each have 50% voting control of COP and are required to agree on all investment decisions as well as certain other significant actions for COP. COP invests its capital in a range of investments, including senior secured loans (both first lien and second lien) to middle market companies, broadly syndicated loans, equity, warrants and other investments. As administrative agent of COP, the Company performscertain day-to-day management responsibilities on behalf of COP and is entitled to a fee of 0.25% of COP’s assets under administration, calculated and payable quarterly in arrears. As of March 31, 2020, the Company and SCRS have funded approximately $575.0 to COP, of which $503.1 was from the Company.
| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||||||||||||||
Industry Classification | | | Fair Value | | | Percentage of Portfolio | | | Fair Value | | | Percentage of Portfolio | | ||||||||||||
Automobiles & Components | | | | $ | 35,674 | | | | | | 1% | | | | | $ | 34,508 | | | | | | 1% | | |
Capital Goods | | | | | 620,383 | | | | | | 15% | | | | | | 893,250 | | | | | | 21% | | |
Commercial & Professional Services | | | | | 280,551 | | | | | | 7% | | | | | | 328,760 | | | | | | 8% | | |
Consumer Durables & Apparel | | | | | 218,800 | | | | | | 5% | | | | | | 227,470 | | | | | | 5% | | |
Consumer Services | | | | | 246,322 | | | | | | 6% | | | | | | 231,589 | | | | | | 5% | | |
Diversified Financials | | | | | 162,990 | | | | | | 4% | | | | | | 277,500 | | | | | | 6% | | |
Energy | | | | | 341,367 | | | | | | 8% | | | | | | 372,720 | | | | | | 9% | | |
Food & Staples Retailing | | | | | 145,449 | | | | | | 4% | | | | | | 6,797 | | | | | | 0% | | |
Food, Beverage & Tobacco | | | | | 97,460 | | | | | | 2% | | | | | | 96,787 | | | | | | 2% | | |
Health Care Equipment & Services | | | | | 356,370 | | | | | | 9% | | | | | | 361,228 | | | | | | 8% | | |
Insurance | | | | | 63,625 | | | | | | 2% | | | | | | 117,149 | | | | | | 3% | | |
Materials | | | | | 191,169 | | | | | | 5% | | | | | | 295,084 | | | | | | 7% | | |
Media | | | | | 254,816 | | | | | | 6% | | | | | | 254,278 | | | | | | 6% | | |
Pharmaceuticals, Biotechnology & Life Sciences | | | | | 22,417 | | | | | | 1% | | | | | | 20,012 | | | | | | 0% | | |
Real Estate | | | | | 30,931 | | | | | | 1% | | | | | | — | | | | | | — | | |
Retailing | | | | | 297,447 | | | | | | 7% | | | | | | 257,260 | | | | | | 6% | | |
Semiconductors & Semiconductor Equipment | | | | | — | | | | | | — | | | | | | 14,155 | | | | | | 0% | | |
Software & Services | | | | | 451,265 | | | | | | 11% | | | | | | 339,451 | | | | | | 8% | | |
Technology Hardware & Equipment | | | | | 81,509 | | | | | | 2% | | | | | | 46,178 | | | | | | 1% | | |
Telecommunication Services | | | | | 121,790 | | | | | | 3% | | | | | | 168,930 | | | | | | 4% | | |
Transportation | | | | | 20,374 | | | | | | 1% | | | | | | 16,174 | | | | | | 0% | | |
Total | | | | $ | 4,040,709 | | | | | | 100% | | | | | $ | 4,359,280 | | | | | | 100% | | |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
On May 15, 2017, Green Creek LLC, or Green Creek, then a wholly-owned special-purpose financing subsidiary of the Company, entered into a revolving credit facility with Goldman Sachs Bank, or Goldman Sachs, as lender, sole lead arranger and administrative agent, and Wells Fargo Bank, National Association, or Wells Fargo, as collateral administrator and collateral agent. On December 19, 2019, the Company contributed all of its outstanding equity in Green Creek to COP. As a result, Green Creek became a wholly-owned special-purpose financing subsidiary of COP. Concurrently, Green Creek amended and restated its revolving credit facility, or the Green Creek Credit Facility.
The Green Creek Credit Facility provides for borrowings in U.S. dollars, and certain agreed upon foreign currencies, in an aggregate principal amount up to $500 on a committed basis. The end of the reinvestment period and the maturity date for the Green Creek Credit Facility are November 15, 2020 and December 15, 2020, respectively. U.S. dollar borrowings bear interest at the rate of three-month LIBOR (subject to a 0% floor) plus 2.50% per annum. Foreign currency borrowings bear interest at the rate of the relevant reference rate (subject to a 0% floor) plus the spread applicable to the specified currency. During the reinvestment period, Green Creek is subject to unused fees in an amount equal to the sum of (i) 2.50% per annum on the average daily unborrowed portion of the facility amount up to 85% of the facility amount, or the Green Creek Minimum Utilization Amount, plus (ii) 0.50% per annum on the average daily unborrowed portion of the facility amount above the Green Creek Minimum Utilization Amount. Borrowings under the Green Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Green Creek, including its portfolio of assets. As of March 31, 2020, total outstanding borrowings under the Green Creek Credit Facility were $400.
On March 11, 2020, Big Cedar Creek LLC, or Big Cedar Creek, a wholly-owned special-purpose financing subsidiary of COP, entered into a revolving credit facility, or the Big Cedar Creek Credit Facility, with BNP Paribas, as lender and administrative agent, each of the lenders from time to time party thereto, COP, as equityholder and servicer, and Wells Fargo, as collateral agent. The Big Cedar Creek Credit Facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate principal amount up to $300 on a committed basis. The end of the reinvestment period and the maturity date for the Big Cedar Creek Credit Facility are March 11, 2023 and March 11, 2025, respectively. Under the Big Cedar Creek Credit Facility, borrowings bear interest at the rate of LIBOR (or the relevant reference rate for any foreign currency borrowings) (subject to a 0% floor) plus a spread of (i) during the reinvestment period, 1.85% to 2.55% per annum, and (ii) after the reinvestment period, 2.00% to 2.65% per annum, in each case, determined based on the currency of the borrowing and the composition of the collateral portfolio. During the reinvestment period, Big Cedar Creek is subject to an unused fee ranging from 0.375% to 1.00% per annum on the average daily unborrowed portion of the facility amount below 85% of the facility amount. Borrowings under the Big Cedar Creek Credit Facility are secured by a first priority security interest in substantially all of the assets of Big Cedar Creek, including its portfolio of assets. As of March 31, 2020, total outstanding borrowings under the Big Cedar Creek Credit Facility were $0.
During the three months ended March 31, 2020, the Company sold investments with a cost of $303.5 for proceeds of $252.6 to COP and recognized a net realized gain (loss) of $(50.9) in connection with the transactions. As of March 31, 2020, $252.6 of these sales to COP are included in receivable for investments sold in the consolidated statements of assets and liabilities.
As of March 31, 2020, COP had total investments with a fair value of $1,085.7. As of March 31, 2020, COP had no investmentson non-accrual status.
Below is a summary of COP’s portfolio, followed by a listing of the individual loans in COP’s portfolio as of March 31, 2020 and December 31, 2019:
As of | ||||||||
March 31, 2020 | December 31, 2019 | |||||||
Total debt investments(1) | $ | 1,115.8 | $ | 899.4 | ||||
Weighted average current interest rate on debt investments(2) | 10.4 | % | 9.2 | % | ||||
Number of portfolio companies in COP | 68 | 37 | ||||||
Largest investment in a single portfolio company(1) | $ | 69.4 | $ | 69.3 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
(1) | Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments. |
(2) | Computed as the (a) annual stated interest rate on accruing debt, divided by (b) total debt at par amount. |
Credit Opportunities Partners, LLC Portfolio
As of March 31, 2020 (Unaudited) (in millions)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||
Senior Secured Loans—First Lien—136.4% | ||||||||||||||||||||||
ABB CONCISE Optical Group LLC | (j) | Retailing | L+500 | 1.0% | 6/15/23 | $ | 3.6 | $ | 2.8 | $ | 2.7 | |||||||||||
Alstom SA | (j) | Transportation | L+450 | 1.0% | 8/29/21 | 6.2 | 4.5 | 4.4 | ||||||||||||||
Ammeraal Beltech Holding BV | (i)(j) | Capital Goods | E+375 | 7/30/25 | € | 4.8 | 4.4 | 4.0 | ||||||||||||||
Apex Group Limited | (e)(i) | Diversified Financials | L+700 | 1.0% | 6/15/25 | $ | 21.5 | 21.5 | 20.9 | |||||||||||||
Apex Group Limited | (e)(i) | Diversified Financials | L+700 | 1.3% | 6/15/25 | 7.4 | 7.4 | 7.2 | ||||||||||||||
Apex Group Limited | (e)(i) | Diversified Financials | L+700 | 1.5% | 6/15/25 | £ | 22.1 | 29.1 | 27.3 | |||||||||||||
Arrotex Australia Group Pty Ltd | (e)(i) | Pharmaceuticals, Biotechnology & Life Sciences | B+525 | 1.0% | 7/10/24 | A$ | 47.3 | 31.9 | 27.7 | |||||||||||||
Brand Energy & Infrastructure Services Inc | (j) | Capital Goods | L+425 | 1.0% | 6/21/24 | $ | 23.5 | 17.6 | 19.1 | |||||||||||||
Cambium Learning Group Inc | (i) | Consumer Services | L+450 | 12/18/25 | 55.6 | 53.4 | 45.9 | |||||||||||||||
Conservice LLC | (e)(i) | Consumer Services | L+525 | 11/29/24 | 8.7 | 8.7 | 8.7 | |||||||||||||||
CSM Bakery Products | (i)(j) | Food, Beverage & Tobacco | L+400 | 1.0% | 7/3/20 | 7.7 | 7.2 | 6.4 | ||||||||||||||
Diamond Resorts International Inc | (i) | Consumer Services | L+375 | 1.0% | 9/2/23 | 13.9 | 13.6 | 9.7 | ||||||||||||||
Distribution International Inc | (j) | Retailing | L+575 | 1.0% | 12/15/23 | 14.1 | 11.4 | 11.4 | ||||||||||||||
Eagleclaw Midstream Ventures LLC | (i) | Energy | L+425 | 1.0% | 6/24/24 | 11.3 | 10.5 | 5.1 | ||||||||||||||
EaglePicher Technologies LLC | (j) | Capital Goods | L+325 | 3/8/25 | - | - | - | |||||||||||||||
EIF Van Hook Holdings LLC | (i) | Energy | L+525 | 9/5/24 | 7.1 | 6.8 | 5.1 | |||||||||||||||
Electronics For Imaging Inc | (i) | Technology Hardware & Equipment | L+500 | 7/23/26 | 15.4 | 14.5 | 12.9 | |||||||||||||||
Entertainment Benefits Group LLC | (e)(i) | Media & Entertainment | L+575 | 1.0% | 9/30/25 | 2.5 | 2.5 | 2.3 | ||||||||||||||
Fox Head Inc | (e)(i) | Consumer Durables & Apparel | L+850 | 1.0% | 12/19/20 | 20.3 | 20.1 | 18.9 | ||||||||||||||
Industria Chimica Emiliana Srl | (e)(i) | Pharmaceuticals, Biotechnology & Life Sciences | L+650 | 6/30/26 | € | 51.4 | 55.9 | 53.3 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||
Jostens Inc | (j) | Consumer Services | L+550 | 12/19/25 | $ | 3.6 | $ | 2.7 | $ | 2.8 | ||||||||||||||||
Laird PLC | (j) | Technology Hardware & Equipment | L+450 | 7/9/25 | 4.3 | 3.7 | 3.7 | |||||||||||||||||||
LBM Borrower LLC | (j) | Capital Goods | L+375 | 1.0% | 8/20/22 | 8.4 | 7.1 | 7.5 | ||||||||||||||||||
LD Intermediate Holdings Inc | (j) | Software & Services | L+588 | 1.0% | 12/9/22 | 31.1 | 25.6 | 26.7 | ||||||||||||||||||
Lipari Foods LLC | (e)(i) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | 44.2 | 44.2 | 42.5 | ||||||||||||||||||
Lipari Foods LLC | (e)(i) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | 22.4 | 22.4 | 21.6 | ||||||||||||||||||
MedAssets Inc | (j) | Health Care Equipment & Services | L+450 | 1.0% | 10/20/22 | 5.7 | 4.8 | 4.8 | ||||||||||||||||||
MI Windows & Doors Inc | (j) | Capital Goods | L+550 | 1.0% | 11/6/26 | 5.0 | 4.2 | 4.3 | ||||||||||||||||||
Monitronics International Inc | (i)(j) | Commercial & Professional Services | L+500 | 1.5% | 7/3/24 | 33.5 | 29.6 | 25.6 | ||||||||||||||||||
NaviHealth Inc. | (j) | Health Care Equipment & Services | L+500 | 8/1/25 | 25.2 | 22.1 | 23.5 | |||||||||||||||||||
Ontic Engineering & Manufacturing Inc | (j) | Capital Goods | L+475 | 10/30/26 | 2.2 | 1.8 | 2.0 | |||||||||||||||||||
Onvoy LLC | (j) | Telecommunication Services | L+450 | 1.0% | 2/10/24 | 0.2 | 0.1 | 0.1 | ||||||||||||||||||
Parts Town LLC | (e)(i) | Retailing | L+550 | 1.0% | 10/15/25 | 24.9 | 24.8 | 23.6 | ||||||||||||||||||
Qdoba Restaurant Corp | (j) | Consumer Services | L+700 | 1.0% | 3/21/25 | 2.0 | 1.7 | 1.7 | ||||||||||||||||||
Sequa Corp | (i)(j) | Materials | L+500 | 1.0% | 11/28/21 | 33.9 | 31.2 | 27.9 | ||||||||||||||||||
Smart & Final Stores LLC | (i)(j) | Food & Staples Retailing | L+675 | 6/20/25 | 25.4 | 23.9 | 22.5 | |||||||||||||||||||
Staples Canada | (e)(j) | Retailing | L+700 | 1.0% | 9/12/24 | C$ | 47.8 | 36.8 | 34.0 | |||||||||||||||||
Sutherland Global Services Inc | (j) | Software & Services | L+538 | 1.0% | 4/23/21 | $ | 25.2 | 19.9 | 18.8 | |||||||||||||||||
Syncsort Inc | (j) | Software & Services | L+600 | 1.0% | 8/16/24 | 10.7 | 8.6 | 8.6 | ||||||||||||||||||
Total Safety US Inc | (j) | Capital Goods | L+600 | 1.0% | 8/16/25 | 8.0 | 6.5 | 6.6 | ||||||||||||||||||
Trace3 Inc | (e)(i) | Software & Services | L+675 | 1.0% | 8/3/24 | 34.2 | 33.9 | 33.4 | ||||||||||||||||||
Transaction Services Group Ltd | (e)(i) | Consumer Services | L+600 | 10/15/26 | A$ | 62.5 | 42.0 | 35.2 | ||||||||||||||||||
WireCo WorldGroup Inc | (j) | Capital Goods | L+500 | 1.0% | 9/29/23 | $ | 0.1 | 0.1 | 0.1 | |||||||||||||||||
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Total Senior Secured Loans—First Lien | 721.5 | 670.5 | ||||||||||||||||||||||||
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Senior Secured Loans—Second Lien—56.4% | ||||||||||||||||||||||||||
Access CIG LLC | (j) | Commercial & Professional Services | L+775 | 2/27/26 | 1.9 | 1.6 | 1.7 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
Albany Molecular Research Inc | (j) | Pharmaceuticals, Biotechnology & Life Sciences | L+700 | 1.0% | 8/30/25 | $ | 0.9 | $ | 0.7 | $ | 0.7 | |||||||||||||||||
American Bath Group LLC | (j) | Capital Goods | L+975 | 1.0% | 9/30/24 | 10.0 | 9.0 | 9.0 | ||||||||||||||||||||
Ammeraal Beltech Holding BV | (e)(i) | Capital Goods | L+800 | 7/27/26 | 52.3 | 50.5 | 48.6 | |||||||||||||||||||||
BCA Marketplace PLC | (e)(i) | Retailing | L+825 | 11/7/27 | £ | 29.9 | 38.6 | 34.8 | ||||||||||||||||||||
EaglePicher Technologies LLC | (j) | Capital Goods | L+725 | 3/8/26 | $ | 0.4 | 0.4 | 0.4 | ||||||||||||||||||||
Electronics For Imaging Inc | (i) | Technology Hardware & Equipment | L+900 | 7/23/27 | 3.9 | 3.7 | 3.1 | |||||||||||||||||||||
Emerald Performance Materials LLC | (j) | Materials | L+775 | 1.0% | 8/1/22 | 5.7 | 4.7 | 4.7 | ||||||||||||||||||||
Excelitas Technologies Corp | (j) | Technology Hardware & Equipment | L+750 | 1.0% | 12/1/25 | 7.5 | 5.7 | 5.9 | ||||||||||||||||||||
LBM Borrower LLC | (i)(j) | Capital Goods | L+925 | 1.0% | 8/20/23 | 14.9 | 14.4 | 13.6 | ||||||||||||||||||||
Misys Ltd | (i)(j) | Software & Services | L+725 | 1.0% | 6/13/25 | 12.5 | 10.6 | 9.6 | ||||||||||||||||||||
New Arclin US Holding Corp | (j) | Materials | L+875 | 1.0% | 2/14/25 | 0.3 | 0.2 | 0.2 | ||||||||||||||||||||
OPE Inmar Acquisition Inc | (j) | Software & Services | L+800 | 1.0% | 5/1/25 | 9.6 | 7.1 | 7.1 | ||||||||||||||||||||
Paradigm Acquisition Corp | (j) | Health Care Equipment & Services | L+750 | 10/26/26 | 0.5 | 0.5 | 0.4 | |||||||||||||||||||||
Pure Fishing Inc | (e)(i) | Consumer Durables & Apparel | L+838 | 1.0% | 12/31/26 | 46.8 | 40.6 | 37.5 | ||||||||||||||||||||
Rise Baking Company | (e)(i) | Food, Beverage & Tobacco | L+800 | 1.0% | 8/9/26 | 18.0 | 17.7 | 17.3 | ||||||||||||||||||||
Sequa Corp | (i)(j) | Materials | L+900 | 1.0% | 4/28/22 | 18.9 | 15.5 | 13.8 | ||||||||||||||||||||
Transplace | (j) | Transportation | L+875 | 1.0% | 10/6/25 | 3.3 | 2.5 | 2.5 | ||||||||||||||||||||
Wittur Holding GmbH | (e)(i) | Capital Goods | E+850, 0.5% PIK (0.5% Max PIK) | 9/23/27 | € | 64.3 | 69.4 | 66.4 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Senior Secured Loans—Second Lien | 293.4 | 277.3 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Other Senior Secured Debt—3.2% | ||||||||||||||||||||||||||||
Velvet Energy Ltd | (e)(i) | Energy | 9.0% | 10/5/23 | 15.0 | 15.3 | 12.8 | |||||||||||||||||||||
Vivint Inc | (i) | Commercial & Professional Services | 7.9% | 12/1/22 | 3.0 | 3.0 | 2.8 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Other Senior Secured Debt | 18.3 | 15.6 | ||||||||||||||||||||||||||
|
|
|
|
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
Subordinated Debt—9.8% | ||||||||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp | (i) | Energy | 10.0% | 4/1/22 | $ | 26.0 | $ | 25.9 | $ | 14.1 | ||||||||||||||||||
Diamond Resorts International Inc | (i) | Consumer Services | 10.8% | 9/1/24 | 3.0 | 3.0 | 1.9 | |||||||||||||||||||||
GFL Environmental Inc | (i) | Commercial & Professional Services | 8.5% | 5/1/27 | 5.3 | 5.8 | 5.4 | |||||||||||||||||||||
LifePoint Hospitals Inc | (j) | Health Care Equipment & Services | 9.8% | 12/1/26 | 10.7 | 9.3 | 10.2 | |||||||||||||||||||||
MultiPlan Inc | (j) | Health Care Equipment & Services | 7.1% | 6/1/24 | 7.1 | 5.7 | 6.2 | |||||||||||||||||||||
Plastipak Holdings Inc | (j) | Materials | 6.3% | 10/15/25 | 1.0 | 0.7 | 0.9 | |||||||||||||||||||||
Ply Gem Holdings Inc | (j) | Capital Goods | 8.0% | 4/15/26 | 0.2 | 0.2 | 0.2 | |||||||||||||||||||||
SRS Distribution Inc | (j) | Capital Goods | 8.3% | 7/1/26 | 5.7 | 4.4 | 5.2 | |||||||||||||||||||||
Vivint Inc | (i) | Commercial & Professional Services | 7.6% | 9/1/23 | 5.0 | 4.4 | 3.9 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Subordinated Debt | 59.4 | 48.0 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Asset Based Finance—5.1% | ||||||||||||||||||||||||||||
NewStar Clarendon2014-1A Class D | (e)(h)(i) | Diversified Financials | 1/25/27 | $ | 12.1 | 1.6 | 4.0 | |||||||||||||||||||||
Pretium Partners LLC P1, Structured Mezzanine | (e)(i) | Real Estate | 2.8%, 5.3% PIK (5.3% Max PIK) | 10/22/26 | $ | 6.8 | 6.8 | 6.5 | ||||||||||||||||||||
Pretium Partners LLC P2, Structured Mezzanine | (e)(i) | Real Estate | 2.0%, 7.5% PIK (7.5% Max PIK) | 5/29/25 | $ | 14.6 | 14.8 | 14.6 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Asset Based Finance | 23.2 | 25.1 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Equity/Other—10.0% | ||||||||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock | (e)(h)(i) | Energy | 13,556 | 3.6 | 2.7 | |||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim | (e)(h)(i) | Energy | 115,178,571 | 30.5 | 23.2 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
SSC (Lux) Limited S.a r.l., Common Stock | (e)(h)(i) | Health Care Equipment & Services | 261,364 | $ | 8.1 | $ | 7.9 | |||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | (e)(h)(i) | Software & Services | 620,025 | 7.1 | 6.5 | |||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series F | (e)(h)(i) | Software & Services | 563,932 | 6.4 | 8.9 | |||||||||||||||||||||||
Zeta Interactive Holdings Corp, Warrant | (e)(h)(i) | Software & Services | 4/20/27 | 84,590 | 0.2 | — | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Equity/Other | 55.9 | 49.2 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
TOTAL INVESTMENTS—220.9% | $ | 1,171.7 | $ | 1,085.7 | ||||||||||||||||||||||||
|
|
|
|
(a) | Security may be an obligation of one or more entities affiliated with the named company. |
(b) | Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2020, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.45% , the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.36)%, and the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.42%,. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. |
(c) | Denominated in U.S. dollars unless otherwise noted. |
(d) | Fair value determined by the Company’s board of directors. See Note 8. |
(e) | Investments classified as Level 3. |
(f) | Not used. |
(g) | Not used. |
(h) | Security is non-income producing. |
(i) | Security or portion thereof held within Green Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Goldman Sachs Bank. |
(j) | Security or portion thereof held within Big Cedar Creek LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with BNP Paribas. |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Credit Opportunities Partners, LLC Portfolio
As of December 31, 2019 (in millions)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
Senior Secured Loans—First Lien—93.9% | ||||||||||||||||||||||||||||
Ammeraal Beltech Holding BV | Capital Goods | E + 375 | 7/30/25 | € | 1.5 | $ | 1.6 | $ | 1.6 | |||||||||||||||||||
Apex Group Limited | (e) | Diversified Financials | L+700 | 1.5% | 6/15/25 | £ | 22.2 | 29.2 | 29.6 | |||||||||||||||||||
Apex Group Limited | (e) | Diversified Financials | L+700 | 1.3% | 6/15/25 | $ | 29.0 | 29.0 | 29.0 | |||||||||||||||||||
Arrotex Australia Group Pty Ltd | (e) | Pharmaceuticals, Biotechnology & Life Sciences | B+525 | 1.0% | 7/10/24 | A$ | 47.3 | 31.9 | 32.7 | |||||||||||||||||||
ATX Networks Corp. | Technology Hardware & Equipment | L+600, 1.0% PIK (1.0% Max PIK) | 1.0% | 6/11/21 | $ | 25.9 | 24.4 | 24.3 | ||||||||||||||||||||
Conservice LLC | (e) | Consumer Services | L+525 | 11/29/24 | 8.7 | 8.8 | 8.8 | |||||||||||||||||||||
CSM Bakery Products | Food, Beverage & Tobacco | L+400 | 1.0% | 7/3/20 | 5.0 | 5.2 | 4.8 | |||||||||||||||||||||
Diamond Resorts International Inc | Consumer Services | L+375 | 1.0% | 9/2/23 | 13.9 | 13.7 | 13.7 | |||||||||||||||||||||
Eagleclaw Midstream Ventures LLC | Energy | L+425 | 1.0% | 6/24/24 | 11.3 | 10.4 | 10.5 | |||||||||||||||||||||
EIF Van Hook Holdings LLC | Energy | L+525 | 9/5/24 | 7.1 | 6.8 | 6.8 | ||||||||||||||||||||||
Electronics For Imaging Inc | Technology Hardware & Equipment | L+500 | 7/23/26 | 15.5 | 14.4 | 14.4 | ||||||||||||||||||||||
Entertainment Benefits Group LLC | (e) | Media & Entertainment | L+575 | 1.0% | 9/30/25 | $ | 2.5 | $ | 2.5 | $ | 2.5 | |||||||||||||||||
Fox Head Inc | (e) | Consumer Durables & Apparel | L+850 | 1.0% | 12/19/20 | 20.4 | 20.1 | 20.1 | ||||||||||||||||||||
Industria Chimica Emiliana Srl | (e) | Pharmaceuticals, Biotechnology & Life Sciences | L+650 | 6/30/26 | € | 51.4 | 55.9 | 56.2 | ||||||||||||||||||||
Lipari Foods LLC | (e) | Food & Staples Retailing | L+588 | 1.0% | 1/6/25 | $ | 66.6 | 66.6 | 66.6 | |||||||||||||||||||
Monitronics International Inc | Commercial & Professional Services | L+500 | 1.5% | 7/3/24 | 17.7 | 17.7 | 17.7 | |||||||||||||||||||||
Parts Town LLC | (e) | Retailing | L+550 | 1.0% | 10/15/25 | 25.0 | 24.9 | 24.9 | ||||||||||||||||||||
Sequa Corp | Materials | L+500 | 1.0% | 11/28/21 | 17.8 | 17.9 | 17.9 | |||||||||||||||||||||
Smart & Final Stores LLC | Food & Staples Retailing | L+675 | 6/20/25 | 17.7 | 17.1 | 17.1 | ||||||||||||||||||||||
Staples Canada | (e) | Retailing | L+700 | 1.0% | 9/12/24 | C$ | 49.0 | 37.8 | 38.7 | |||||||||||||||||||
Trace3 Inc | (e) | Software & Services | L+675 | 1.0% | 8/3/24 | $ | 34.3 | 34.0 | 34.0 | |||||||||||||||||||
Transaction Services Group Ltd | (e) | Consumer Services | L+600 | 10/15/26 | A$ | 62.5 | 42.0 | 43.0 | ||||||||||||||||||||
Vertiv Group Corp | Technology Hardware & Equipment | L+400 | 1.0% | 11/30/23 | $ | 13.7 | 13.7 | 13.7 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
Vivint Inc | Commercial & Professional Services | L+500 | 4/1/24 | $ | 18.4 | $ | 18.3 | $ | 18.4 | |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Senior Secured Loans—First Lien | 543.9 | 547.0 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Senior Secured Loans—Second Lien—41.8% |
| |||||||||||||||||||||||||||
Ammeraal Beltech Holding BV | (e) | Capital Goods | L+800 | 7/27/26 | 52.3 | 50.5 | 50.5 | |||||||||||||||||||||
BCA Marketplace PLC | (e) | Retailing | L+825 | 9/24/27 | £ | 29.9 | 38.6 | 39.2 | ||||||||||||||||||||
Electronics For Imaging Inc | Technology Hardware & Equipment | L+900 | 7/23/27 | $ | 3.9 | 3.7 | 3.7 | |||||||||||||||||||||
LBM Borrower, LLC | Capital Goods | L+925 | 1.0% | 8/20/23 | 10.0 | 9.9 | 9.9 | |||||||||||||||||||||
Misys Ltd | Software & Services | L+725 | 1.0% | 6/13/25 | 4.7 | 4.6 | 4.6 | |||||||||||||||||||||
Pure Fishing Inc | (e) | Consumer Durables & Apparel | L+838 | 1.0% | 12/31/26 | 46.8 | 40.4 | 40.4 | ||||||||||||||||||||
Rise Baking Company | (e) | Food, Beverage & Tobacco | L+800 | 1.0% | 8/9/26 | 18.0 | 17.7 | 17.7 | ||||||||||||||||||||
Sequa Corp | Materials | L+900 | 1.0% | 4/28/22 | 7.5 | 7.4 | 7.4 | |||||||||||||||||||||
Wittur Holding GmbH | (e) | Capital Goods | E+850, 0.5% PIK (0.5% Max PIK) | 9/23/27 | € | 64.3 | 69.3 | 70.0 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Senior Secured Loans—Second Lien | 242.1 | 243.4 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Other Senior Secured Debt—4.1% | ||||||||||||||||||||||||||||
Velvet Energy Ltd | (e) | Energy | 9.0% | 10/5/23 | $ | 15.0 | $ | 15.3 | $ | 15.3 | ||||||||||||||||||
Vivint Inc | Commercial & Professional Services | 7.9% | 12/1/22 | 3.9 | 3.9 | 4.0 | ||||||||||||||||||||||
Vivint Inc | Commercial & Professional Services | 7.6% | 9/1/23 | 5.0 | 4.4 | 4.7 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Other Senior Secured Debt | 23.6 | 24.0 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Subordinated Debt—11.1% | ||||||||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp | Energy | 10.0% | 4/1/22 | 26.0 | 25.8 | 26.0 | ||||||||||||||||||||||
Diamond Resorts International Inc | Consumer Services | 10.8% | 9/1/24 | 3.0 | 3.0 | 3.2 | ||||||||||||||||||||||
GFL Environmental Inc | Commercial & Professional Services | 8.5% | 5/1/27 | 8.8 | 9.7 | 9.7 | ||||||||||||||||||||||
Vertiv Group Corp. | Technology Hardware & Equipment | 9.3% | 10/15/24 | 16.6 | 17.8 | 17.8 |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
Company(a) | Footnotes | Industry | Interest Rate(b) | Base Rate Floor(b) | Maturity Date | No. Shares/ Principal Amount(c) | Cost | Fair Value(d) | ||||||||||||||||||||
Vivint Inc | Commercial & Professional Services | 8.8% | 12/1/20 | $ | 7.8 | $ | 7.5 | $ | 7.8 | |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Subordinated Debt | 63.8 | 64.5 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Asset Based Finance—4.4% | ||||||||||||||||||||||||||||
NewStar Clarendon2014-1A Class D | (e) | Diversified Financials | 1/25/27 | $ | 12.1 | 4.9 | 4.8 | |||||||||||||||||||||
Pretium Partners LLC P1, Structured Mezzanine | (e) | Real Estate | 2.8%, 5.3% PIK (5.3% Max PIK) | 10/22/26 | $ | 6.8 | 6.8 | 6.8 | ||||||||||||||||||||
Pretium Partners LLC P2, Structured Mezzanine | (e) | Real Estate | 2.0%, 7.5%PIK (7.5% Max PIK) | 5/29/25 | $ | 14.1 | 14.3 | 14.3 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Asset Based Finance | 26.0 | 25.9 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Equity/Other—9.6% | ||||||||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Common Stock | (e) | Energy | 13,556 | 3.6 | 3.6 | |||||||||||||||||||||||
Ascent Resources Utica Holdings LLC / ARU Finance Corp, Trade Claim | (e) | Energy | 115,178,571 | 30.5 | 30.5 | |||||||||||||||||||||||
ATX Networks Corp, Common Stock | (e) | Technology Hardware & Equipment | 72,635 | 0.1 | 0.1 | |||||||||||||||||||||||
SSC (Lux) Limited S.a r.l., Common Stock | (e) | Health Care Equipment & Services | 261,364 | 8.1 | 8.1 | |||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series E—1 | (e) | Software & Services | 620,025 | 7.1 | 7.1 | |||||||||||||||||||||||
Zeta Interactive Holdings Corp, Preferred Stock, Series F | (e) | Software & Services | 563,932 | 6.4 | 6.4 | |||||||||||||||||||||||
Zeta Interactive Holdings Corp, Warrant | (e) | Software & Services | 4/20/27 | 84,590 | 0.2 | 0.2 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Equity/Other | 56.0 | 56.0 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
TOTAL INVESTMENTS—164.9% | 955.4 | 960.8 | ||||||||||||||||||||||||||
|
|
|
|
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 6. Investment Portfolio (continued)
(a) | Security may be an obligation of one or more entities affiliated with the named company. |
(b) | Certain variable rate securities in the Company’s portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2019, the three-month London Interbank Offered Rate, or LIBOR or “L”, was 1.91%, the Euro Interbank Offered Rate, or EURIBOR or “E”, was (0.38)% and the Australian Bank Bill Swap Bid Rate, or BBSY or “B”, was 0.92%,. PIK meanspaid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. |
(c) | Denominated in U.S. dollars unless otherwise noted. |
(d) | Fair value determined by the Company’s board of directors. See Note 8. |
(e) | Investments classified as Level 3. |
Below is selected balance sheet information for COP as of March 31, 2020 and December 31, 2019:
As of | ||||||||
March 31, 2020 | December 31, 2019 | |||||||
Selected Balance Sheet Information | ||||||||
Investments at fair value | $ | 1,085.7 | $ | 960.8 | ||||
Cash and other assets | 79.8 | 98.7 | ||||||
|
|
|
| |||||
Total assets | 1,165.5 | 1,059.5 | ||||||
|
|
|
| |||||
Debt | 400.0 | 475.0 | ||||||
Other liabilities | 273.9 | 1.7 | ||||||
|
|
|
| |||||
Total liabilities | 673.9 | 476.7 | ||||||
|
|
|
| |||||
Member’s equity | $ | 491.6 | $ | 582.8 | ||||
|
|
|
|
Below is selected statement of operations information for COP for the three months ended March 31, 2020:
March 31, 2020 | ||||
Selected Statement of Operations Information | ||||
Total investment income | $ | 22.3 | ||
Expenses | ||||
Interest expense | 5.3 | |||
Administrative services | 0.7 | |||
Custody and administrative fees | — | |||
Other | 0.1 | |||
|
| |||
Total expenses | 6.1 | |||
|
| |||
Net investment income | 16.2 | |||
Net realized and unrealized losses | (92.4 | ) | ||
|
| |||
Net increase in net assets resulting from operations | $ | (76.2 | ) | |
|
|
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 7. Financial Instruments
The following is a summary of the fair value and location of the Company’s derivative instruments in the consolidated balance sheets held as of June 30, 2019March 31, 2020 and December 31, 2018:
Derivative Instrument | | | Statement Location | | | Fair Value | | |||||||||
| June 30, 2019 (Unaudited) | | | December 31, 2018 | | |||||||||||
Interest rate swaps | | | Unrealized appreciation on interest rate swaps | | | | $ | — | | | | | $ | — | | |
Interest rate swaps | | | Unrealized depreciation on interest rate swaps | | | | | (12,396) | | | | | | (1,743) | | |
Total | | | | | | | $ | (12,396) | | | | | $ | (1,743) | | |
Fair Value | ||||||||||
Derivative Instrument | Statement Location | March 31, 2020 (Unaudited) | December 31, 2019 | |||||||
Interest rate swaps | Unrealized appreciation on interest rate swaps | $ | — | $ | — | |||||
Interest rate swaps | Unrealized depreciation on interest rate swaps | (59 | ) | (29 | ) | |||||
Foreign currency forward contracts | Unrealized appreciation on foreign currency forward contracts | 1 | — | |||||||
Foreign currency forward contracts | Unrealized depreciation on foreign currency forward contracts | — | (1 | ) | ||||||
|
|
|
| |||||||
Total | $ | (58 | ) | $ | (30 | ) | ||||
|
|
|
|
Net realized and unrealized gains and losses on derivative instruments recorded by the Company for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 are in the following locations in the consolidated statements of operations:
Net Realized Gains (Losses) | ||||||||||
Three Months Ended March 31, | ||||||||||
Derivative Instrument | Statement Location | 2020 | 2019 | |||||||
Interest Rate Swaps | Net realized gains (losses) on interest rate swaps | $ | (2 | ) | $ | — | ||||
Foreign currency forward contracts | Net realized gains (losses) on foreign currency forward contracts | 0 | — | |||||||
|
|
|
| |||||||
Total | $ | (2 | ) | $ | — | |||||
|
|
|
|
Net Unrealized Gains (Losses) | ||||||||||
Three Months Ended March 31, | ||||||||||
Derivative Instrument | Statement Location | 2020 | 2019 | |||||||
Interest Rate Swaps | Net change in unrealized appreciation (depreciation) on interest rate swaps | $ | (30 | ) | $ | (4 | ) | |||
Foreign currency forward contracts | Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 2 | — | |||||||
|
|
|
| |||||||
Total | $ | (28 | ) | $ | (4 | ) | ||||
|
|
|
|
| | | | | | Net Realized Gains (Losses) | | | Net Realized Gains (Losses) | | ||||||||||||||||||
| | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
Derivative Instrument | | | Statement Location | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Interest Rate Swaps | | | Net realized gains (losses) on interest rate swaps | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total | | | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
|
| | | | | | Net Unrealized Gains (Losses) | | | Net Unrealized Gains (Losses) | | ||||||||||||||||||
| | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
Derivative Instrument | | | Statement Location | | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Interest Rate Swaps | | | Net change in unrealized appreciation (depreciation) on interest rate swaps | | | | $ | (6,657) | | | | | $ | — | | | | | $ | (10,653) | | | | | $ | — | | |
Total | | | | | | | $ | (6,657) | | | | | $ | — | | | | | $ | (10,653) | | | | | $ | — | | |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 7. Financial Instruments (continued)
Offsetting of Derivative Instruments
The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the condensed consolidated statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of June 30, 2019March 31, 2020 and December 31, 2018:
As of March 31, 2020 (Unaudited) | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to Master Netting Agreement | Derivatives Available for Offset | Non-cash Collateral Received(1) | Cash Collateral Received(1) | Net Amount of Derivative Assets(2) | |||||||||||||||
JP Morgan Chase Bank | $ | 0 | $ | — | $ | — | $ | — | $ | 0 | ||||||||||
ING Capital Markets | 1 | (1 | ) | — | — | 0 | ||||||||||||||
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|
|
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| |||||||||||
Total | $ | 1 | $ | (1 | ) | $ | — | $ | — | $ | — | |||||||||
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|
|
|
Counterparty | Derivative Liabilities Subject to Master Netting Agreement | Derivatives Available for Offset | Non-cash Collateral Pledged(1) | Cash Collateral Pledged(1) | Net Amount of Derivative Liabilities(3) | |||||||||||||||
JP Morgan Chase Bank | $ | (27 | ) | $ | — | $ | — | $ | (27 | ) | $ | — | ||||||||
ING Capital Markets | (32 | ) | 1 | — | (31 | ) | — | |||||||||||||
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|
|
|
|
|
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|
|
| |||||||||||
Total | $ | (59 | ) | $ | 1 | $ | — | $ | (58 | ) | $ | — | ||||||||
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|
|
As of December 31, 2019 | ||||||||||||||||||||
Counterparty | Derivative Assets Subject to Master Netting Agreement | Derivatives Available for Offset | Non-cash Collateral Received(1) | Cash Collateral Received(1) | Net Amount of Derivative Assets(2) | |||||||||||||||
JP Morgan Chase Bank | $ | 0 | $ | — | $ | — | $ | — | $ | 0 | ||||||||||
ING Capital Markets | 0 | — | — | — | 0 | |||||||||||||||
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|
|
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| |||||||||||
Total | $ | 0 | $ | — | $ | — | $ | — | $ | 0 | ||||||||||
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|
|
|
|
Counterparty | Derivative Liabilities Subject to Master Netting Agreement | Derivatives Available for Offset | Non-cash Collateral Pledged(1) | Cash Collateral Pledged(1) | Net Amount of Derivative Liabilities(3) | |||||||||||||||
JP Morgan Chase Bank | $ | (14 | ) | $ | — | $ | — | $ | 14 | $ | — | |||||||||
ING Capital Markets | (16 | ) | — | — | 15 | (1 | ) | |||||||||||||
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| |||||||||||
Total | $ | (30 | ) | $ | — | $ | — | $ | 29 | $ | (1 | ) | ||||||||
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|
|
In some instances, the actual amount of | |||||||||||||||||||||||||||||||
Counterparty | | | Derivative Liabilities Subject to Master Netting Agreement | | | Derivatives Available for Offset | | | Non-cash Collateral Received(1) | | | Cash Collateral Pledged(1) | | | Net Amount of Derivative Liabilities(3) | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 6,043 | | | | | $ | — | | | | | $ | — | | | | | $ | 6,043 | | | | | $ | — | | |
ING Capital Markets | | | | | 6,353 | | | | | | — | | | | | | — | | | | | | 6,353 | | | | | | — | | |
Total | | | | $ | 12,396 | | | | | $ | — | | | | | $ | — | | | | | $ | 12,396 | | | | | $ | — | | |
|
Net amount of | ||||||||||||||||||||||||||||||||||
the Company in the event of | ||||||||||||||||||||||||||||||||||
Counterparty | | | Derivative Liabilities Subject to Master Netting Agreement | | | Derivatives Available for Offset | | | Non-cash Collateral Received(1) | | | Cash Collateral Pledged(1) | | | Net Amount of Derivative Liabilities(3) | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 1,743 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 1,743 | | |
Total | | | | $ | 1,743 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 1,743 | | |
(3) | Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default. |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 7. Financial Instruments (continued)
Interest Rate Swaps
Interest rate swap contracts are privately negotiated agreements between the Company and a counterparty. Pursuant to interest rate swap agreements, the Company makes fixed-rate payments to a counterparty in exchange for payments on a floating benchmark interest rate. Payments received or made are recorded as realized gains or losses. During the term of the outstanding swap agreement, changes in the underlying value of the swap are recorded as unrealized gains or losses. The value of the swap is determined by changes in the relationship between two rates of interest. The Company is exposed to credit loss in the event ofnon-performance by the swap counterparty. Risk may also arise from movements in interest rates. The Company attempts to limit counterparty risk by dealing only with well-known counterparties.
The average notional balance for interest rate swaps open at the end of the period are generally indicative of the volume of activity during the period.
As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s open interest rate swaps were as follows:
As of March 31, 2020 (Unaudited) | ||||||||||||||||||||||||||||
Counterparty | Notional Amount | Company Receives Floating Rate | Company Pays Fixed Rate | Termination Date | Premiums Paid/ (Received) | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
JP Morgan Chase Bank | $200 | 3-Month LIBOR | 2.78 | % | 12/18/2023 | $ | — | $ | (18 | ) | $ | (18 | ) | |||||||||||||||
JP Morgan Chase Bank | $200 | 3-Month LIBOR | 2.81 | % | 12/18/2021 | — | (9 | ) | (9 | ) | ||||||||||||||||||
ING Capital Markets | $250 | 3-Month LIBOR | 2.59 | % | 1/14/2024 | — | (22 | ) | (22 | ) | ||||||||||||||||||
ING Capital Markets | $250 | 3-Month LIBOR | 2.62 | % | 1/14/2022 | — | (10 | ) | (10 | ) | ||||||||||||||||||
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| |||||||||||||||||||||||
$ | — | $ | (59 | ) | $ | (59 | ) | |||||||||||||||||||||
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|
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As of December 31, 2019 | ||||||||||||||||||||||||||||
Counterparty | Notional Amount | Company Receives Floating Rate | Company Pays Fixed Rate | Termination Date | Premiums Paid/ (Received) | Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||
JP Morgan Chase Bank | $200 | 3-Month LIBOR | 2.78 | % | 12/18/2023 | $ | — | $ | (9 | ) | $ | (9 | ) | |||||||||||||||
JP Morgan Chase Bank | $200 | 3-Month LIBOR | �� | 2.81 | % | 12/18/2021 | — | (5 | ) | (5 | ) | |||||||||||||||||
ING Capital Markets | $250 | 3-Month LIBOR | 2.59 | % | 1/14/2024 | — | (8 | ) | (8 | ) | ||||||||||||||||||
ING Capital Markets | $250 | 3-Month LIBOR | 2.62 | % | 1/14/2022 | — | (7 | ) | (7 | ) | ||||||||||||||||||
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| |||||||||||||||||||||||
$ | — | $ | (29 | ) | $ | (29 | ) | |||||||||||||||||||||
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Foreign Currency Forward Contracts
The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts aremarked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties.
The average notional balance for foreign currency forward contracts during the three months ended March 31, 2020 and March 31, 2019 was $15 and $0, respectively.
As of June 30, 2019 (Unaudited) | | ||||||||||||||||||||||||||||||||||||
Counterparty | | | Notional Amount | | | Company Receives Floating Rate | | | Company Pays Fixed Rate | | | Termination Date | | | Premiums Paid/ (Received) | | | Value | | | Unrealized Appreciation (Depreciation) | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.78% | | | | 12/18/2023 | | | | $ | — | | | | | $ | (3,881) | | | | | $ | (3,881) | | |
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.81% | | | | 12/18/2021 | | | | | — | | | | | | (2,162) | | | | | | (2,162) | | |
ING Capital Markets | | | | $ | 100,000 | | | | 3-Month LIBOR | | | | | 2.59% | | | | 1/14/2024 | | | | | — | | | | | | (4,055) | | | | | | (4,055) | | |
ING Capital Markets | | | | $ | 100,000 | | | | 3-Month LIBOR | | | | | 2.62% | | | | 1/14/2022 | | | | | — | | | | | | (2,298) | | | | | | (2,298) | | |
| | | | | | | | | | | | | | | | | | | | | | $ | — | | | | | $ | (12,396) | | | | | $ | (12,396) | | |
|
As of December 31, 2018 | | ||||||||||||||||||||||||||||||||||||
Counterparty | | | Notional Amount | | | Company Receives Floating Rate | | | Company Pays Fixed Rate | | | Termination Date | | | Premiums Paid/ (Received) | | | Value | | | Unrealized Appreciation (Depreciation) | | |||||||||||||||
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.78% | | | | 12/18/2023 | | | | $ | — | | | | | $ | (1,090) | | | | | $ | (1,090) | | |
JP Morgan Chase Bank | | | | $ | 80,000 | | | | 3-Month LIBOR | | | | | 2.81% | | | | 12/18/2021 | | | | | — | | | | | | (653) | | | | | | (653) | | |
| | | | | | | | | | | | | | | | | | | | | | $ | — | | | | | $ | (1,743) | | | | | $ | (1,743) | | |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 7. Financial Instruments (continued)
As of March 31, 2020 and December 31, 2019, the Company’s open foreign currency forward contracts were as follows:
As of March 31, 2020 (Unaudited) | ||||||||||||||||||||||||||||
Foreign Currency | Settlement Date | Counterparty | Amount and Transaction | US$ Value at Settlement Date | US$ Value at March 31, 2020 | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
AUD | 4/8/2020 | ING Capital LLC | A$ | 6.8 Sold | $ | 4.6 | $ | 4.2 | $ | 0.4 | ||||||||||||||||||
EUR | 4/8/2020 | ING Capital LLC | € | 5.6 Sold | 6.3 | 6.2 | 0.1 | |||||||||||||||||||||
GBP | 4/8/2020 | ING Capital LLC | £ | 0.4 Sold | 0.5 | 0.4 | 0.1 | |||||||||||||||||||||
EUR | 7/17/2023 | JP Morgan Chase Bank | € | 0.1 Sold | 0.1 | 0.1 | — | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total | $ | 11.5 | $ | 10.9 | $ | 0.6 | ||||||||||||||||||||||
|
|
|
|
|
|
As of December 31, 2019 | ||||||||||||||||||||||||||||
Foreign Currency | Settlement Date | Counterparty | Amount and Transaction | US$ Value at Settlement Date | US$ Value at December 31, 2019 | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 4.8 Sold | $ | 3.3 | 3.4 | (0.1 | ) | |||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 1.9 Sold | 1.3 | 1.3 | — | |||||||||||||||||||||
AUD | 1/14/2020 | ING Capital LLC | A$ | 0.3 Sold | 0.2 | 0.2 | — | |||||||||||||||||||||
AUD | 4/8/2020 | ING Capital LLC | A$ | 6.8 Sold | 4.6 | 4.8 | (0.2 | ) | ||||||||||||||||||||
CAD | 1/14/2020 | JP Morgan Chase Bank | C$ | 5.7 Sold | 4.3 | 4.4 | (0.1 | ) | ||||||||||||||||||||
CAD | 1/14/2020 | ING Capital LLC | C$ | 1.5 Sold | 1.2 | 1.2 | — | |||||||||||||||||||||
CAD | 1/14/2020 | ING Capital LLC | C$ | 3.9 Sold | 3.0 | 3.0 | — | |||||||||||||||||||||
EUR | 1/14/2020 | ING Capital LLC | € | 1.0 Sold | 1.1 | 1.1 | — | |||||||||||||||||||||
EUR | 1/14/2020 | ING Capital LLC | € | 0.8 Sold | 0.9 | 0.9 | — | |||||||||||||||||||||
EUR | 4/8/2020 | ING Capital LLC | € | 5.6 Sold | 6.3 | 6.3 | — | |||||||||||||||||||||
EUR | 7/17/2023 | JP Morgan Chase Bank | € | 0.1 Sold | 0.1 | 0.1 | — | |||||||||||||||||||||
GBP | 1/14/2020 | ING Capital LLC | £ | 2.9 Sold | 3.6 | 3.9 | (0.3 | ) | ||||||||||||||||||||
GBP | 1/14/2020 | ING Capital LLC | £ | 3.3 Sold | 4.1 | 4.4 | (0.3 | ) | ||||||||||||||||||||
GBP | 4/8/2020 | ING Capital LLC | £ | 0.4 Sold | 0.5 | 0.5 | — | |||||||||||||||||||||
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|
|
|
|
| |||||||||||||||||||||||
Total | $ | 34.5 | $ | 35.5 | $ | (1.0 | ) | |||||||||||||||||||||
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|
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|
|
|
Note 8. Fair Value of Financial Instruments
Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:
Level 1: 1: Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: 2: Inputs that are quoted prices for similar assets or liabilities in active markets.
Level 3: 3: Inputs that are unobservable for an asset or liability.
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 8. Fair Value of Financial Instruments (continued)
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s investments were categorized as follows in the fair value hierarchy:
Valuation Inputs | | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||
Level 1—Price quotations in active markets | | | | $ | 233 | | | | | $ | 517 | | |
Level 2—Significant other observable inputs | | | | | 825,998 | | | | | | 906,192 | | |
Level 3—Significant unobservable inputs | | | | | 3,214,478 | | | | | | 3,452,571 | | |
Total | | | | $ | 4,040,709 | | | | | $ | 4,359,280 | | |
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||
Valuation Inputs | Investments | Total Return Swap | Investments | Total Return Swap | ||||||||||||
Level 1—Price quotations in active markets | $ | — | $ | — | $ | 7 | $ | — | ||||||||
Level 2—Significant other observable inputs | 796 | — | 1,594 | — | ||||||||||||
Level 3—Significant unobservable inputs | 6,238 | (1 | ) | 6,480 | (4 | ) | ||||||||||
Investments measured at net asset value(1) | 430 | — | 510 | — | ||||||||||||
|
|
|
|
|
|
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| |||||||||
Total | $ | 7,464 | $ | (1 | ) | $ | 8,591 | $ | (4 | ) | ||||||
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|
|
(1) | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient 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 in the consolidated balance sheet. |
As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s interest rate swaps were categorized as follows in the fair value hierarchy:
| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||||||||||||||
Valuation Inputs | | | Assets | | | Liability | | | Asset | | | Liability | | ||||||||||||
Level 1—Price quotations in active markets | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Level 2—Significant other observable inputs | | | | | — | | | | | | (12,396) | | | | | | — | | | | | | (1,743) | | |
Level 3—Significant unobservable inputs | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | — | | | | | $ | (12,396) | | | | | $ | — | | | | | $ | (1,743) | | |
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||
Valuation Inputs | Assets | Liability | Asset | Liability | ||||||||||||
Level 1—Price quotations in active markets | $ | — | $ | — | $ | — | $ | — | ||||||||
Level 2—Significant other observable inputs | — | (59 | ) | — | (29 | ) | ||||||||||
Level 3—Significant unobservable inputs | — | — | — | — | ||||||||||||
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| |||||||||
Total | $ | — | $ | (59 | ) | $ | — | $ | (29 | ) | ||||||
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The Company’s investments consist primarily of debt investments that were acquired directly from the issuer. Debt investments, for which broker quotes are not available, are valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, the borrower’s ability to adequately service its debt, prevailing interest rates for like investments, expected cash flows, call features, anticipated repayments and other relevant terms of the investments. Except as described below, all of the Company’s equity/other investments are also valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. An investment that is newly issued and purchased near the date of the financial statements is valued at cost if the Company’s board of directors determines that the cost of such investment is the best indication of its fair value. Such investments described above are typically classified as Level 3 within the fair value hierarchy. Investments that are traded on an active public market are valued at their closing price as of the date of the financial statements and are classified as Level 1 within the fair value hierarchy. Except as described above, the Company typically values its other investments and interest rate swaps by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which are provided by independent third-party pricing services and screened for validity by such services and are typically classified as Level 2 within the fair value hierarchy.
The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing services and/or dealers and independent valuation firms as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company’s management in purchasing and selling these investments, the Company
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 8. Fair Value of Financial Instruments (continued)
selling these investments, the Company believes that these prices are reliable indicators of fair value. The valuation committee and the board of directors reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Company’s valuation policy.
The following is a reconciliation for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:
For the Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||
Senior Secured Loans—First Lien | Senior Secured Loans—Second Lien | Other Senior Secured Debt | Subordinated Debt | Asset Based Finance | Equity/ Other | Total | ||||||||||||||||||||||
Fair value at beginning of period | $ | 4,905 | $ | 570 | $ | 95 | $ | 80 | $ | 485 | $ | 345 | $ | 6,480 | ||||||||||||||
Accretion of discount (amortization of premium) | 2 | 0 | 0 | 0 | 0 | 0 | 2 | |||||||||||||||||||||
Net realized gain (loss) | (189 | ) | 0 | — | — | 1 | 6 | (182 | ) | |||||||||||||||||||
Net change in unrealized appreciation (depreciation) | (101 | ) | (58 | ) | (28 | ) | (8 | ) | (35 | ) | (98 | ) | (328 | ) | ||||||||||||||
Purchases | 1,007 | 13 | — | 55 | 146 | 18 | 1,239 | |||||||||||||||||||||
Paid-in-kind interest | 1 | 0 | 3 | 2 | 8 | 3 | 17 | |||||||||||||||||||||
Sales and repayments | (930 | ) | 0 | — | (27 | ) | (18 | ) | (15 | ) | (990 | ) | ||||||||||||||||
Net transfers in or out of Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||
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| |||||||||||||||
Fair value at end of period | $ | 4,695 | $ | 525 | $ | 70 | $ | 102 | $ | 587 | $ | 259 | $ | 6,238 | ||||||||||||||
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The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | $ | (219 | ) | $ | (53 | ) | $ | (28 | ) | $ | (3 | ) | $ | (25 | ) | $ | (84 | ) | $ | (412 | ) | |||||||
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For the Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||
Senior Secured Loans—First Lien | Senior Secured Loans—Second Lien | Other Senior Secured Debt | Subordinated Debt | Asset Based Finance | Equity/ Other | Total | ||||||||||||||||||||||
Fair value at beginning of period | $ | 2,828 | $ | 212 | $ | 95 | $ | 6 | $ | 46 | $ | 265 | $ | 3,452 | ||||||||||||||
Accretion of discount (amortization of premium) | 1 | 0 | 0 | 0 | 0 | 0 | 1 | |||||||||||||||||||||
Net realized gain (loss) | (2 | ) | — | — | — | 0 | (10 | ) | (12 | ) | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) | (9 | ) | (1 | ) | (3 | ) | 1 | 0 | 23 | 11 | ||||||||||||||||||
Purchases | 291 | 65 | 1 | 33 | — | 4 | 394 | |||||||||||||||||||||
Paid-in-kind interest | 1 | 0 | 1 | — | 1 | 2 | 5 | |||||||||||||||||||||
Sales and repayments | (87 | ) | — | — | — | (1 | ) | — | (88 | ) | ||||||||||||||||||
Net transfers in or out of Level 3 | 2 | — | — | — | — | — | 2 | |||||||||||||||||||||
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Fair value at end of period | $ | 3,025 | $ | 276 | $ | 94 | $ | 40 | $ | 46 | $ | 284 | $ | 3,765 | ||||||||||||||
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The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | $ | 0 | $ | 14 | $ | (3 | ) | $ | (9 | ) | $ | (1 | ) | $ | 0 | $ | 1 | |||||||||||
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| | | For the Six Months Ended June 30, 2019 | | |||||||||||||||||||||||||||||||||||||||
| | | Senior Secured Loans— First Lien | | | Senior Secured Loans— Second Lien | | | Other Senior Secured Debt | | | Subordinated Debt | | | Asset Based Finance | | | Equity/ Other | | | Total | | |||||||||||||||||||||
Fair value at beginning of period | | | | $ | 2,827,812 | | | | | $ | 212,290 | | | | | $ | 95,132 | | | | | $ | 6,201 | | | | | $ | 48,160 | | | | | $ | 262,976 | | | | | $ | 3,452,571 | | |
Accretion of discount (amortization of premium) | | | | | 1,412 | | | | | | 150 | | | | | | 251 | | | | | | 4 | | | | | | 1 | | | | | | 207 | | | | | | 2,025 | | |
Net realized gain (loss) | | | | | (1,587) | | | | | | — | | | | | | 26 | | | | | | — | | | | | | 114 | | | | | | (10,181) | | | | | | (11,628) | | |
Net change in unrealized appreciation (depreciation) | | | | | (2,993) | | | | | | (9,934) | | | | | | (1,960) | | | | | | 784 | | | | | | (1,760) | | | | | | 22,218 | | | | | | 6,355 | | |
Purchases | | | | | 388,555 | | | | | | 75,744 | | | | | | 14,371 | | | | | | 32,615 | | | | | | 48,649 | | | | | | 5,136 | | | | | | 565,070 | | |
Paid-in-kind interest | | | | | 1,616 | | | | | | 1,110 | | | | | | 1,180 | | | | | | 306 | | | | | | 1,076 | | | | | | 3,604 | | | | | | 8,892 | | |
Sales and repayments | | | | | (797,836) | | | | | | (5,979) | | | | | | (1,185) | | | | | | — | | | | | | (1,765) | | | | | | (3,775) | | | | | | (810,540) | | |
Net transfers in or out of Level 3 | | | | | 1,733 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,733 | | |
Fair value at end of period | | | | $ | 2,418,712 | | | | | $ | 273,381 | | | | | $ | 107,815 | | | | | $ | 39,910 | | | | | $ | 94,475 | | | | | $ | 280,185 | | | | | $ | 3,214,478 | | |
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | | | | $ | (6,300) | | | | | $ | (10,038) | | | | | $ | (3,005) | | | | | $ | 465 | | | | | $ | (1,537) | | | | | $ | 14,679 | | | | | $ | (5,736) | | |
|
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 8. Fair Value of Financial Instruments (continued)
| | | For the Six Months Ended June 30, 2018 | | |||||||||||||||||||||||||||||||||||||||
| | | Senior Secured Loans— First Lien | | | Senior Secured Loans— Second Lien | | | Other Senior Secured Debt | | | Subordinated Debt | | | Asset Based Finance | | | Equity/ Other | | | Total | | |||||||||||||||||||||
Fair value at beginning of period | | | | $ | 3,436,962 | | | | | $ | 311,243 | | | | | $ | 125,003 | | | | | $ | 345,263 | | | | | $ | 52,779 | | | | | $ | 319,976 | | | | | $ | 4,591,226 | | |
Accretion of discount (amortization of premium) | | | | | 321 | | | | | | 30 | | | | | | 302 | | | | | | — | | | | | | 3 | | | | | | 24 | | | | | | 680 | | |
Net realized gain (loss) | | | | | (25,735) | | | | | | 611 | | | | | | (1,852) | | | | | | — | | | | | | — | | | | | | 13,751 | | | | | | (13,225) | | |
Net change in unrealized appreciation (depreciation) | | | | | (60,268) | | | | | | (32,049) | | | | | | (3,462) | | | | | | (596) | | | | | | (3,186) | | | | | | (7,301) | | | | | | (106,862) | | |
Purchases | | | | | 391,526 | | | | | | 18,824 | | | | | | — | | | | | | 18,783 | | | | | | 575 | | | | | | 31,202 | | | | | | 460,910 | | |
Paid-in-kind interest | | | | | 2,472 | | | | | | 844 | | | | | | 1,650 | | | | | | — | | | | | | 1,545 | | | | | | 1,473 | | | | | | 7,984 | | |
Sales and repayments | | | | | (421,497) | | | | | | (38,711) | | | | | | (18,155) | | | | | | (58,151) | | | | | | (1,034) | | | | | | (71,409) | | | | | | (608,957) | | |
Net transfers in or out of Level 3 | | | | | (392,341) | | | | | | (82,452) | | | | | | (7,058) | | | | | | (303,910) | | | | | | — | | | | | | (5,686) | | | | | | (791,447) | | |
Fair value at end of period | | | | $ | 2,931,440 | | | | | $ | 178,340 | | | | | $ | 96,428 | | | | | $ | 1,389 | | | | | $ | 50,682 | | | | | $ | 282,030 | | | | | $ | 3,540,309 | | |
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date | | | | $ | (57,506) | | | | | $ | (31,176) | | | | | $ | (4,508) | | | | | $ | — | | | | | $ | (3,186) | | | | | $ | (4,896) | | | | | $ | (101,272) | | |
The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of June 30, 2019March 31, 2020 and December 31, 20182019 were as follows:
Type of Investment | Fair Value at March 31, 2020 (Unaudited)(1) | Valuation | Unobservable Input | Range (Weighted Average)(3) | Impact to Valuation from an Increase in Input(4) | |||||||||||
Senior Debt | $ | 4,552 | Discounted Cash Flow | Discount Rate | 6.7% - 23.2% (9.3%) | Decrease | ||||||||||
573 | Waterfall | EBITDA Multiple | 0.1x - 12.5x (6.9x) | Increase | ||||||||||||
165 | Other | |||||||||||||||
Subordinated Debt | 102 | Discounted Cash Flow | Discount Rate | 10.6% - 17.5% (12.6%) | Decrease | |||||||||||
0 | Waterfall | EBITDA Multiple | 9.3x - 9.3x (9.3x) | Increase | ||||||||||||
Asset Based Finance | 312 | Waterfall | EBITDA Multiple | 1.0x - 9.5x (2.3x) | Increase | |||||||||||
181 | Discounted Cash Flow | Discount Rate | 7.0% - 15.6% (10.1%) | Decrease | ||||||||||||
54 | Cost | |||||||||||||||
37 | Other | |||||||||||||||
3 | Indicative Dealer Quotes | 33.0% - 33.0% (33.0%) | Increase | |||||||||||||
Equity/Other | 227 | Waterfall | EBITDA Multiple | 2.8x - 11.5x (7.1x) | Increase | |||||||||||
27 | Option Pricing Model | Equity Illiquidity Discount | 50.0% - 60.0% (59.8%) | Decrease | ||||||||||||
3 | Discounted Cash Flow | Discount Rate | 16.7% - 16.7% (16.7%) | Decrease | ||||||||||||
2 | Other | |||||||||||||||
|
| |||||||||||||||
Total | $ | 6,238 | ||||||||||||||
|
|
(1) | Certain investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value. |
(2) | For the assets and investments that have more than one valuation technique, the Company may rely on the stated techniques individually or in the aggregate based on a weight ascribed to each valuation technique, ranging from 0—100%. Indicative dealer quotes obtained for valuation purposes are reviewed by the Company relative to other valuation techniques. |
(3) | Weighted average amounts are based on the estimated fair values. |
(4) | This column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. |
(5) | Fair value based on expected outcome of proposed corporate transactions and/or other factors. |
Type of Investment | Fair Value at December 31, 2019 | Valuation | Unobservable Input | Range (Weighted Average) | Impact to Valuation from an Increase in Input(2) | |||||||||||
Senior Debt | $ | 4,816 | Discounted Cash Flow | Discount Rate | 6.4% - 27.5% (9.9%) | Decrease | ||||||||||
362 | Cost | |||||||||||||||
257 | Waterfall | EBITDA Multiple | 0.1x - 8.5x (5.5x) | Increase | ||||||||||||
135 | Other(3) | |||||||||||||||
Subordinated Debt | 80 | Discounted Cash Flow | Discount Rate | 9.3% - 20.8% (13.9%) | Decrease | |||||||||||
Asset Based Finance | 229 | Waterfall | EBITDA Multiple | 1.0x - 13.0x (1.4x) | Increase | |||||||||||
105 | Cost | |||||||||||||||
102 | Discounted Cash Flow | Discount Rate | 7.8% - 12.9% (9.8%) | Decrease | ||||||||||||
46 | Other(3) | |||||||||||||||
3 | Indicative Dealer Quotes | 61.0% - 61.0% (61.0%) | Increase | |||||||||||||
Equity/Other | 314 | Waterfall | EBITDA Multiple | 0.5x - 14.0x (7.7x) | Increase | |||||||||||
29 | Other(3) | |||||||||||||||
2 | Option Pricing Model | Equity Illiquidity Discount | 30.0% - 30.0% (30.0%) | Decrease | ||||||||||||
|
| |||||||||||||||
Total | $ | 6,480 | ||||||||||||||
|
| |||||||||||||||
Total Return Swap | $ | (4 | ) | Indicative Dealer Quotes | 0.0% - 100.6% (70.0%) | Increase | ||||||||||
|
|
(1) | Investments using a market quotes valuation technique were primarily valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by independent third-party pricing services and screened for validity by such services. Investments valued using an EBITDA multiple or a revenue multiple pursuant to the market comparables valuation technique may be conducted using an enterprise valuation waterfall analysis. |
Type of Investment | | | Fair Value at June 30, 2019 (Unaudited)(1) | | | Valuation Technique(2) | | | Unobservable Input | | | Range(3) | | | Impact to Valuation from an Increase in Input(4) | | |||
Senior Debt | | | | $ | 2,493,050 | | | | Discounted Cash Flow | | | Discount Rate | | | 7.3% – 16.5% (10.2%) | | | Decrease | |
| | | | | 244,930 | | | | Waterfall | | | EBITDA Multiple | | | 0.1x – 12.5x (5.0x) | | | Increase | |
| | | | | 46,502 | | | | Cost | | | | | ||||||
| | | | | 9,859 | | | | Other(5) | | | | | ||||||
| | | | | 5,567 | | | | Indicative Dealer Quotes | | | | | | 84.9% – 84.9% (84.9%) | | | Increase | |
Subordinated Debt | | | | | 39,704 | | | | Discounted Cash Flow | | | Discount Rate | | | 13.8% – 18.8% (14.1%) | | | Decrease | |
| | | | | 206 | | | | Waterfall | | | EBITDA Multiple | | | 10.2x – 10.2x (10.2x) | | | Increase | |
Asset Based Finance | | | | | 44,784 | | | | Cost | | | | | ||||||
| | | | | 26,337 | | | | Waterfall | | | EBITDA Multiple | | | 1.0x – 12.5x (1.3x) | | | Increase | |
| | | | | 19,198 | | | | Indicative Dealer Quotes | | | | | | 49.6% – 63.0% (55.0%) | | | Increase | |
| | | | | 3,608 | | | | Discounted Cash Flow | | | Discount Rate | | | 7.9% – 7.9% (7.9%) | | | Decrease | |
| | | | | 548 | | | | Other(5) | | | | | ||||||
Equity/Other | | | | | 222,847 | | | | Waterfall | | | EBITDA Multiple | | | 0.7x – 14.5x (7.0x) | | | Increase | |
| | | | | 56,934 | | | | Other(5) | | | | | ||||||
| | | | | 404 | | | | Option Pricing Model | | | Equity Illiquidity Discount | | | 15.0% – 15.0% (15.0%) | | | Decrease | |
Total | | | | $ | 3,214,478 | | | | | | |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 8. Fair Value of Financial Instruments (continued)
Type of Investment | | | Fair Value at December 31, 2018 | | | Valuation Technique(1) | | | Unobservable Input | | | Range | | | Weighted Average | | |||
Senior Secured Loans— First Lien | | | | $ | 2,668,002 | | | | Market Comparables | | | Market Yield (%) | | | 5.5% – 16.8% | | | 10.5% | |
| | | | | | | | | | | | EBITDA Multiples (x) | | | 5.3x – 9.5x | | | 6.9x | |
| | | | | | | | | | | | Revenue Multiples (x) | | | 0.1x – 0.1x | | | 0.1x | |
| | | | | 61,692 | | | | Other(2) | | | Other | | | N/A | | | N/A | |
| | | | | 98,118 | | | | Cost | | | Cost | | | 99.0% – 100.0% | | | 99.5% | |
Senior Secured Loans— Second Lien | | | | | 157,615 | | | | Market Comparables | | | Market Yield (%) | | | 8.9% – 15.0% | | | 12.6% | |
| | | | | 8,316 | | | | Other(2) | | | Other | | | N/A | | | N/A | |
| | | | | 46,359 | | | | Cost | | | Cost | | | 98.5% – 98.5% | | | 98.5% | |
Other Senior Secured Debt | | | | | 95,132 | | | | Market Comparables | | | Market Yield (%) | | | 8.2% – 13.6% | | | 9.7% | |
| | | | | | | | | | | | EBITDA Multiples (x) | | | 7.0x – 8.5x | | | 7.5x | |
Subordinated Debt | | | | | 6,201 | | | | Market Comparables | | | Market Yield (%) | | | 12.0% – 20.0% | | | 14.3% | |
| | | | | | | | | | | | EBITDA Multiples (x) | | | 9.6x – 10.1x | | | 9.9x | |
Asset Based Finance | | | | | 24,385 | | | | Market Comparables | | | Market Yield (%) | | | 17.7% – 19.0% | | | 18.4% | |
| | | | | | | | | | | | Net Aircraft Book Value Multiple (x) | | | 1.0x – 1.0x | | | 1.0x | |
| | | | | 21,767 | | | | Market Quotes | | | Indicative Dealer Quotes | | | 51.8% – 99.6% | | | 61.9% | |
Equity/Other | | | | | 223,197 | | | | Market Comparables | | | Capacity Multiple ($/kW) | | | $1,875.0 – $2,125.0 | | | $2,000.0 | |
| | | | | | | | | | | | EBITDA Multiples (x) | | | 4.0x – 14.3x | | | 7.6x | |
| | | | | | | | | | | | Net Aircraft Book Value Multiple (x) | | | 1.0x – 1.0x | | | 1.0x | |
| | | | | | | | | | | | Price to Book Multiple (x) | | | 1.0x – 1.0x | | | 1.0x | |
| | | | | | | | | | | | Production Multiples (Mboe/d) | | | $25,000.0 – $38,750.0 | | | $28,034.2 | |
| | | | | | | | | | | | Production Multiples (MMcfe/d) | | | $4,708.0 – $5,167.0 | | | $4,937.5 | |
| | | | | | | | | | | | Proved Reserves Multiples (Bcfe) | | | $1.2 – $1.3 | | | $1.2 | |
| | | | | | | | | | | | Proved Reserves Multiples (Mmboe) | | | $3.5 – $13.8 | | | $5.4 | |
| | | | | | | | | | | | PV-10 Multiples (x) | | | 0.8x – 2.3x | | | 1.7x | |
| | | | | 19,929 | | | | Discounted Cash Flow | | | Discount Rate (%) | | | 11.8% – 13.8% | | | 12.8% | |
| | | | | 471 | | | | Option Valuation Model | | | Volatility (%) | | | 30.0% – 30.0% | | | 30.0% | |
| | | | | 20,251 | | | | Other(2) | | | Other | | | N/A | | | N/A | |
| | | | | 1,136 | | | | Cost | | | Cost | | | 100.0% – 100.0% | | | 100.0% | |
Total | | | | $ | 3,452,571 | | | | | | |
(2) | Represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. |
(3) | Fair value based on expected outcome of proposed corporate transactions and/or other factors. |
Note 9. Financing Arrangements
The following tables present summary information with respect to the Company’s outstanding financing arrangements as of June 30, 2019March 31, 2020 and December 31, 2018.2019. For additional information regarding these financing arrangements, see the notes to the Company’s audited consolidated financial statements contained in its annual report on Form10-K for the year ended December 31, 2018.2019. Any significant changes to the Company’s financing arrangements during the three months ended June 30, 2019March 31, 2020 are discussed below.
As of March 31, 2020 (Unaudited) | ||||||||||||||||
Arrangement | Type of Arrangement | Rate(1) | Amount Outstanding | Amount Available | Maturity Date | |||||||||||
Senior Secured Revolving Credit Facility(2) | Revolving Credit Facility | L+2.00% - 2.25%(3) | $ | 837 | (4) | $ | 928 | November 7, 2024 | ||||||||
Germantown Credit Facility(2) | Term Loan Credit Facility | L+2.50% | 300 | — | December 15, 2020 | |||||||||||
Darby Creek Credit Facility(2) | Revolving Credit Facility | L+1.95% | 220 | 30 | February 26, 2024 | |||||||||||
Dunlap Credit Facility(2) | Revolving Credit Facility | L+2.00% | 400 | 100 | February 26, 2024 | |||||||||||
Jefferson Square Credit Facility(2) | Revolving Credit Facility | L+2.50% | 320 | 80 | July 15, 2022 | |||||||||||
Juniata River Credit Facility(2) | Revolving Credit Facility | L+2.45% | 720 | 130 | October 11, 2021 | |||||||||||
Burholme Prime Brokerage Facility(2) | Prime Brokerage Facility | L+1.25% | 67 | 33 | September 26, 2020(6) | |||||||||||
Broomall Prime Brokerage Facility(2) | Prime Brokerage Facility | L+1.25% | 12 | 38 | December 26, 2020(7) | |||||||||||
Ambler Credit Facility(2) | Revolving Credit Facility | L+2.25% | 123 | 77 | November 22, 2024 | |||||||||||
Meadowbrook Run Credit Facility(2) | Revolving Credit Facility | L+2.25% | 160 | 140 | November 22, 2024 | |||||||||||
4.250% Notes due 2025(8) | Unsecured Notes | 4.250% | 475 | — | February 14, 2025 | |||||||||||
|
|
|
| |||||||||||||
Total | $ | 3,634 | $ | 1,556 | ||||||||||||
|
|
|
| |||||||||||||
Center City Total Return Swap | Total Return Swap | L+1.55% | $ | — | $ | — | N/A(9) | |||||||||
Cheltenham Total Return Swap | Total Return Swap | L+1.60% | $ | — | $ | — | N/A(10) |
As of December 31, 2019 | ||||||||||||||||
Arrangement(2) | Type of Arrangement | Rate(1) | Amount Outstanding | Amount Available | Maturity Date | |||||||||||
Senior Secured Revolving Credit Facility | Revolving Credit Facility | L+2.00% - 2.25%(3) | $ | 1,516 | (5) | $ | 159 | November 7, 2024 | ||||||||
Germantown Credit Facility | Term Loan Credit Facility | L+2.50% | 300 | — | December 15, 2020 | |||||||||||
Darby Creek Credit Facility | Revolving Credit Facility | L+1.95% | 215 | 35 | February 26, 2024 | |||||||||||
Dunlap Credit Facility | Revolving Credit Facility | L+2.00% | 405 | 95 | February 26, 2024 | |||||||||||
Jefferson Square Credit Facility | Revolving Credit Facility | L+2.50% | 370 | 30 | July 15, 2022 | |||||||||||
Juniata River Credit Facility | Revolving Credit Facility | L+2.45% | 730 | 120 | October 11, 2021 | |||||||||||
Burholme Prime Brokerage Facility | Prime Brokerage Facility | L+1.25% | 100 | — | June 27, 2020(6) | |||||||||||
Broomall Prime Brokerage Facility | Prime Brokerage Facility | L+1.25% | 38 | 12 | September 26, 2020(7) | |||||||||||
Ambler Credit Facility | Revolving Credit Facility | L+2.25% | 85 | 115 | November 22, 2024 | |||||||||||
Meadowbrook Run Credit Facility | Revolving Credit Facility | L+2.25% | 50 | 250 | November 22, 2024 | |||||||||||
|
|
|
| |||||||||||||
Total | $ | 3,809 | $ | 816 | ||||||||||||
|
|
|
| |||||||||||||
Center City Total Return Swap | Total Return Swap | L+1.55% | $ | — | $ | — | N/A(9) | |||||||||
Cheltenham Total Return Swap | Total Return Swap | L+1.60% | $ | 94 | $ | 81 | N/A(10) |
(1) | LIBOR is subject to a 0% floor. |
(2) | The carrying amount outstanding under the facility approximates its fair value. |
(3) | The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company. |
| | | As of June 30, 2019 (Unaudited) | | ||||||||||||||||||
Arrangement(1) | | | Type of Arrangement | | | Rate | | | Amount Outstanding | | | Amount Available | | | Maturity Date | | ||||||
Green Creek Credit Facility | | | Term Loan Credit Facility | | | L+2.50% | | | | $ | 500,000 | | | | | $ | — | | | | December 15, 2019 | |
Cooper River Credit Facility | | | Revolving Credit Facility | | | L+2.25% | | | | | 87,500 | | | | | | 112,500 | | | | March 31, 2021 | |
Darby Creek Credit Facility | | | Revolving Credit Facility | | | L+1.95% | | | | | 185,000 | | | | | | 65,000 | | | | February 26, 2024 | |
Juniata River Credit Facility | | | Revolving Credit Facility | | | L+2.68% | | | | | 680,000 | | | | | | 170,000 | | | | October 11, 2020 | |
Senior Secured Revolving Credit Facility | | | Revolving Credit Facility | | | L+2.00% – 2.25%(2) | | | | | 296,256(3) | | | | | | 428,744 | | | | August 9, 2023 | |
Total | | | | | | | | | | $ | 1,748,756 | | | | | $ | 776,244 | | | |
| | | As of December 31, 2018 | | ||||||||||||||||||
Arrangement(1) | | | Type of Arrangement | | | Rate | | | Amount Outstanding | | | Amount Available | | | Maturity Date | | ||||||
Green Creek Credit Facility | | | Term Loan Credit Facility | | | L+2.50% | | | | $ | 500,000 | | | | | $ | — | | | | December 15, 2019 | |
Cooper River Credit Facility | | | Revolving Credit Facility | | | L+2.25% | | | | | 107,000 | | | | | | 93,000 | | | | May 29, 2020 | |
Darby Creek Credit Facility | | | Revolving Credit Facility | | | L+2.50% | | | | | 135,000 | | | | | | 115,000 | | | | August 19, 2020 | |
Juniata River Credit Facility | | | Term Loan Credit Facility | | | L+2.68% | | | | | 850,000 | | | | | | — | | | | October 11, 2020 | |
Senior Secured Revolving Credit Facility | | | Revolving Credit Facility | | | L+2.00% – 2.25%(2) | | | | | 298,254(4) | | | | | | 351,746 | | | | August 9, 2023 | |
Total | | | | | | | | | | $ | 1,890,254 | | | | | $ | 559,746 | | | |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 9. Financing Arrangements (continued)
(4) | Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €231 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $148 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.71 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $245 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.61 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £183 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.25 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. |
(5) | Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €232 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.12 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $151 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.77 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $238 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.70 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £112 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.33 as of December 31, 2019 to reflect total amount outstanding in U.S. dollars. |
(6) | The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility. |
(7) | The Broomall Prime Brokerage Facility generally is terminable upon 270 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility. |
(8) | As of March 31, 2020, the fair value of the 4.250% notes was approximately $366. The valuation is considered a Level 2 valuation within the fair value hierarchy. |
(9) | Center City Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past September 30, 2019 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. |
(10) | Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. |
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 9. Financing Arrangements (continued)
For the three months ended June 30,March 31, 2020 and 2019, and 2018, the components of total interest expense for the Company’s financing arrangements were as follows:
| | | Three Months Ended June 30, | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | ||||||||||||||||||||||||||||||
Arrangement(1) | | | Direct Interest Expense(2) | | | Amortization of Deferred Financing Costs | | | Total Interest Expense | | | Direct Interest Expense(2) | | | Amortization of Deferred Financing Costs | | | Total Interest Expense | | ||||||||||||||||||
Green Creek Credit Facility | | | | $ | 6,552 | | | | | $ | 135 | | | | | $ | 6,687 | | | | | $ | 6,077 | | | | | $ | 1 | | | | | $ | 6,078 | | |
Cooper River Credit Facility | | | | | 1,214 | | | | | | 128 | | | | | | 1,342 | | | | | | 2,278 | | | | | | 116 | | | | | | 2,394 | | |
Wissahickon Creek Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 2,612 | | | | | | 264 | | | | | | 2,876 | | |
Darby Creek Credit Facility | | | | | 2,236 | | | | | | 130 | | | | | | 2,366 | | | | | | 2,730 | | | | | | 138 | | | | | | 2,868 | | |
Dunning Creek Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 1,281 | | | | | | 44 | | | | | | 1,325 | | |
Juniata River Credit Facility | | | | | 9,810 | | | | | | 372 | | | | | | 10,182 | | | | | | 10,618 | | | | | | 364 | | | | | | 10,982 | | |
FSIC II Revolving Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 315 | | | | | | 13 | | | | | | 328 | | |
Senior Secured Revolving Credit Facility | | | | | 4,672 | | | | | | 254 | | | | | | 4,926 | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | 24,484 | | | | | $ | 1,019 | | | | | $ | 25,503 | | | | | $ | 25,911 | | | | | $ | 940 | | | | | $ | 26,851 | | |
| | | Six Months Ended June 30, | | |||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | ||||||||||||||||||||||||||||||
Arrangement(1) | | | Direct Interest Expense(2) | | | Amortization of Deferred Financing Costs | | | Total Interest Expense | | | Direct Interest Expense(2) | | | Amortization of Deferred Financing Costs | | | Total Interest Expense | | ||||||||||||||||||
Green Creek Credit Facility | | | ��� | $ | 12,989 | | | | | $ | 268 | | | | | $ | 13,257 | | | | | $ | 11,038 | | | | | $ | 268 | | | | | $ | 11,306 | | |
Cooper River Credit Facility | | | | | 2,909 | | | | | | 253 | | | | | | 3,162 | | | | | | 3,975 | | | | | | 230 | | | | | | 4,205 | | |
Wissahickon Creek Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 5,224 | | | | | | 526 | | | | | | 5,750 | | |
Darby Creek Credit Facility | | | | | 4,709 | | | | | | 260 | | | | | | 4,969 | | | | | | 5,516 | | | | | | 388 | | | | | | 5,904 | | |
Dunning Creek Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 2,646 | | | | | | 136 | | | | | | 2,782 | | |
Juniata River Credit Facility | | | | | 21,502 | | | | | | 733 | | | | | | 22,235 | | | | | | 19,860 | | | | | | 725 | | | | | | 20,585 | | |
FSIC II Revolving Credit Facility | | | | | — | | | | | | — | | | | | | — | | | | | | 477 | | | | | | 25 | | | | | | 502 | | |
Senior Secured Revolving Credit Facility | | | | | 10,960 | | | | | | 495 | | | | | | 11,455 | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | 53,069 | | | | | $ | 2,009 | | | | | $ | 55,078 | | | | | $ | 48,736 | | | | | $ | 2,298 | | | | | $ | 51,034 | | |
Three Months Ended March 31, | ||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||
Arrangement(1) | Direct Interest Expense(2) | Amortization of Deferred Financing Costs and Discount | Total Interest Expense | Direct Interest Expense(2) | Amortization of Deferred Financing Costs and Discount | Total Interest Expense | ||||||||||||||||||
Green Creek Credit Facility | $ | — | $ | — | $ | — | $ | 7 | $ | 0 | $ | 7 | ||||||||||||
Germantown Credit Facility | 3 | — | 3 | — | — | — | ||||||||||||||||||
Cooper River Credit Facility | — | — | — | 2 | 0 | 2 | ||||||||||||||||||
Darby Creek Credit Facility | 2 | 0 | 2 | 2 | 0 | 2 | ||||||||||||||||||
Dunlap Credit Facility | 4 | — | 4 | — | — | — | ||||||||||||||||||
Jefferson Square Credit Facility | 4 | — | 4 | — | — | — | ||||||||||||||||||
Juniata River Credit Facility | 8 | 1 | 9 | 12 | 1 | 13 | ||||||||||||||||||
Senior Secured Revolving Credit Facility | 11 | 0 | 11 | 6 | 0 | 6 | ||||||||||||||||||
Burholme Prime Brokerage Facility | 1 | — | 1 | — | — | — | ||||||||||||||||||
Broomall Prime Brokerage Facility | 0 | — | — | — | — | — | ||||||||||||||||||
Ambler Credit Facility | 1 | 0 | 1 | — | — | — | ||||||||||||||||||
Meadowbrook Run Credit Facility | 2 | 0 | 2 | — | — | — | ||||||||||||||||||
4.250% Notes due 2025 | 3 | 0 | 3 | — | — | — | ||||||||||||||||||
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Total | $ | 39 | $ | 1 | $ | 40 | $ | 29 | $ | 1 | $ | 30 | ||||||||||||
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(1) | Borrowings of each of the Company’s wholly owned, special-purpose financing subsidiaries are considered borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act. |
(2) | Direct interest expense includes the effect ofnon-usage fees. |
The Company’s average borrowings and weighted average interest rate, including the effect ofnon-usage fees, for the sixthree months ended June 30, 2019March 31, 2020 were $2,018,950$4,035 and 5.23%3.92%, respectively. As of June 30,March 31, 2020, the Company’s weighted average effective interest rate on borrowings, including the effect ofnon-usage fees, was 3.94%.
The Company’s average borrowings and weighted average interest rate, including the effect ofnon-usage fees, for the three months ended March 31, 2019 were $2,154 and 5.31%, respectively. As of March 31, 2019, the Company’s weighted average effective interest rate on borrowings, including the effect ofnon-usage fees, was 5.21%5.29%.
Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar financing arrangements. The Company was in compliance with all covenants required by its financing arrangements as of June 30, 2019March 31, 2020 and December 31, 2018.2019.
Senior Secured Revolving Credit Facility
On March 3, 2020, the Company entered into a Commitment Increase Agreement in connection with its senior secured revolving credit facility, or as amended and restated, the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., as an additional borrower, JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto, which, among other things, increased the total facility amount from $3,890 to $3,980 and increased the sublimit of the total facility amount available for the Company to borrow from $1,675 to $1,765.
4.250% Notes due 2025
On February 14, 2020, the Company issued $475 aggregate principal amount of 4.250% notes due 2025, or the Unsecured Notes. The Unsecured Notes will mature on February 14, 2025 and may be redeemed in whole or in part at the Company’s option
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 9. Financing Arrangements (continued)
at any time or from time to time at the applicable redemption price set forth in the indenture governing the Unsecured Notes. The Unsecured Notes bear interest at a rate of 4.250% per year, payable semi-annually.
The Unsecured Notes are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.
The Unsecured Notes contain certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as amended, whether or not it is subject to those requirements, and to provide financial information to the holders of the Unsecured Notes if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. These covenants are subject to important limitations and exceptions that are described in the indenture governing the Unsecured Notes.
In addition, on the occurrence of a “change of control repurchase event,” as defined in the indenture governing the Unsecured Notes, the Company will generally be required to make an offer to purchase the outstanding Unsecured Notes at a price equal to 100% of the principal amount of such Unsecured Notes plus accrued and unpaid interest to the repurchase date.
Center City Funding Total Return Swap
Counterparty | Description | Termination Date | Value as of March 31, 2020 | |||||
Citibank | A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate. | Prior to September 30, 2019 Citibank and Center City Funding mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. | $ | 1 |
On June 26, 2014, the Company’s wholly-owned financing subsidiary, Center City Funding LLC, or Center City Funding, a wholly owned special purpose financing subsidiary of the Company, entered into a TRS for a portfolio of primarily senior secured floating rate loans with Citibank, which has subsequently been amended.
As of March 31, 2020, the fair value of the TRS was $1 which is reflected in the Company’s consolidated balance sheets as unrealized appreciation (depreciation) on total return swap. As of March 31, 2020, the payable due on the TRS was $0 which is reflected within other accrued expenses and liabilities on the Company’s consolidated balance sheets. As of March 31, 2020, all assets held within the TRS were sold.
As of March 31, 2020, the Company posted $1 in cash collateral held by Citibank (of which only $0 and was required to be posted). The cash collateral held by Citibank is reflected in the Company’s consolidated balance sheets as due from counterparty. The Company does not offset collateral posted in relation to the TRS with any unrealized appreciation (depreciation) outstanding on the consolidated balance sheets as of March 31, 2020.
FS KKR Capital Corp. II
Notes to Consolidated Financial Statements (continued)
(in millions, except share and per share amounts)
Note 9. Financing Arrangements (continued)
For the three months ended March 31, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $(1) and net change unrealized appreciation (depreciation) on total return swap of $0 which are reflected in the Company’s consolidated statements of operations.
Cheltenham Funding Total Return Swap
Counterparty | Description | Termination Date | Value as of March 31, 2020 | |||||
Citibank | A TRS is a contract in which one party agrees to make periodic payments to another party based on the change in the market value of the assets underlying the TRS, which may include a specified security, basket of securities or securities indices during a specified period, in return for periodic payments based on a fixed or variable interest rate. | Prior to February 1, 2020 Citibank and Cheltenham Funding mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Cheltenham Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. | $ | (2 | ) |
On January 19, 2016, the Company’s wholly-owned financing subsidiary, Cheltenham Funding LLC, or Cheltenham Funding, a wholly owned special purpose financing subsidiary of the Company, entered into a TRS for a portfolio of primarily senior secured floating rate loans with Citibank, which has subsequently been amended.
As of March 31, 2020, the fair value of the TRS was $(2) which is reflected in the Company’s consolidated balance sheets as unrealized appreciation (depreciation) on total return swap. As of March 31, 2020, the payable due on the TRS was $1 which is reflected within other accrued expenses and liabilities on the Company’s consolidated balance sheets. As of March 31, 2020, all assets held within the TRS were sold.
As of March 31, 2020, the Company posted $4 in cash collateral held by Citibank (of which only $4 and was required to be posted). The cash collateral held by Citibank is reflected in the Company’s consolidated balance sheets as due from counterparty. The Company does not offset collateral posted in relation to the TRS with any unrealized appreciation (depreciation) outstanding on the consolidated balance sheets as of March 31, 2020.
For the three months ended March 31, 2020, transactions in the TRS resulted in net realized gain (loss) on total return swap of $(1) and net change unrealized appreciation (depreciation) on total return swap of $3 which are reflected in the Company’s consolidated statements of operations.
Note 10. Commitments and Contingencies
The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Advisor has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.
The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 10. Commitments and Contingencies (continued)
Unfunded commitments to provide funds to portfolio companies are not recorded in the Company’s condensed consolidated statements of assets and liabilities.balance sheets. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company has sufficient liquidity to fund these commitments. As of June 30, 2019,March 31, 2020, the Company’s unfunded commitments consisted of the following:
Category/Company(1) | | | Commitment Amount | | |||
Senior Secured Loans—First Lien | | | | | | | |
5 Arch Income Fund 2, LLC | | | | $ | 36,271 | | |
Altus Power America Inc | | | | | 203 | | |
Apex Group Limited | | | | | 2,245 | | |
Aspect Software Inc | | | | | 865 | | |
Conservice LLC | | | | | 5,243 | | |
CSafe Global | | | | | 18,783 | | |
Eagle Family Foods Inc | | | | | 3,089 | | |
Fairway Group Holdings Corp | | | | | 227 | | |
HM Dunn Co Inc | | | | | 2,143 | | |
Kodiak BP LLC | | | | | 7,344 | | |
Lazard Global Compounders Fund | | | | | 5,157 | | |
Lipari Foods LLC | | | | | 25,220 | | |
North Haven Cadence Buyer Inc | | | | | 2,625 | | |
North Haven Cadence Buyer Inc | | | | | 292 | | |
Sungard Availability Services Capital Inc | | | | | 712 | | |
Zeta Interactive Holdings Corp | | | | | 3,286 | | |
Asset Based Finance | | | | | | | |
Home Partners JV, Structured Mezzanine | | | | | 13,030 | | |
Total | | | | $ | 126,735 | | |
Unfunded equity/other commitments | | | | $ | 202,224 | | |
Category/Company(1) | Commitment Amount | |||
Senior Secured Loans—First Lien | ||||
5 Arch Income Fund 2, LLC | $ | 16.2 | ||
All Systems Holding LLC | 3.0 | |||
Apex Group Limited | 2.2 | |||
Aspect Software Inc | 1.9 | |||
Bellatrix Exploration Ltd | 0.8 | |||
Conservice LLC | 2.9 | |||
Conservice LLC | 2.3 | |||
CSafe Global | 13.2 | |||
Eagle Family Foods Inc | 5.2 | |||
Entertainment Benefits Group LLC | 0.9 | |||
Greystone Equity Member Corp | 2.5 | |||
Heniff Transportation Systems LLC | 5.6 | |||
HM Dunn Co Inc | 1.5 | |||
Industria Chimica Emiliana Srl | 14.8 | |||
J S Held LLC | 13.5 | |||
J S Held LLC | 3.3 | |||
Kellermeyer Bergensons Services LLC | 40.6 | |||
Kodiak BP LLC | 10.7 | |||
Lexitas Inc | 4.3 | |||
Lexitas Inc | 2.9 | |||
Monitronics International Inc | 39.3 | |||
Motion Recruitment Partners LLC | 34.6 | |||
P2 Energy Solutions Inc | 5.4 | |||
Pretium Packaging LLC | 22.4 | |||
RSC Insurance Brokerage Inc | 19.1 | |||
RSC Insurance Brokerage Inc | 3.6 | |||
SMART Global Holdings Inc | 0.1 | |||
Sungard Availability Services Capital Inc | 2.3 | |||
Truck-Lite Co LLC | 4.8 | |||
Truck-Lite Co LLC | 18.6 | |||
Zeta Interactive Holdings Corp | 4.4 | |||
Subordinated Debt | ||||
Opendoor Labs Inc | 53.6 | |||
Asset Based Finance | ||||
Home Partners JV, Structured Mezzanine | 19.5 | |||
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Total | $ | 376.0 | ||
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Unfunded Asset Based Finance / Other commitments | $ | 245.1 | ||
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(1) | May be commitments to one or more entities affiliated with the named company. |
FS KKR Capital Corp. II
Notes to one or more entities affiliated with the named company.
(in millions, except share and per share amounts)
Note 10. Commitments and Contingencies (continued)
As of June 30, 2019,March 31, 2020, the Company’s debt commitments are comprised of $96.2 revolving credit facilities and $279.8 of delayed draw term loans, which generally are used for acquisitions or capital expenditures and are subject to certain performance tests. Such unfunded debt commitments have a fair value representing unrealized appreciation (depreciation) of $(227)$(9.4). The Company funds its equity investments as it receives funding noticesCompany’s unfunded Asset Based Finance/Other commitments generally require certain conditions to be met or actual approval from the Advisor prior to funding.
As of March 31, 2020, the Company also has an unfunded commitment to provide $371.9 of capital to COP. The capital commitment can be satisfied with contributions of cash and/or investments. The capital commitments cannot be drawn without an affirmative vote by both the Company’s and SCRS’s representatives on COP’s board of managers.
While the Company does not expect to fund all of its unfunded commitments, there can be no assurance that it will not be required to do so.
In the normal course of business, the Company may enter into guarantees on behalf of portfolio companies. As of June 30, 2019,Under such arrangements, the Company’s unfunded equity/other commitments have a fair value of zero.
Note 11. Financial Highlights
The following is a schedule of financial highlights of the Company for the sixthree months ended June 30, 2019March 31, 2020 and the year ended December 31, 2018:2019:
Three Months Ended March 31, 2020 (Unaudited) | Year Ended December 31, 2019 | |||||||
Per Share Data:(1) | ||||||||
Net asset value, beginning of period | $ | 7.36 | $ | 7.86 | ||||
Results of operations(2) | ||||||||
Net investment income | 0.14 | 0.70 | ||||||
Net realized gain (loss) and unrealized appreciation (depreciation) | (1.18 | ) | (0.42 | ) | ||||
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Net increase (decrease) in net assets resulting from operations | (1.04 | ) | 0.28 | |||||
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Stockholder distributions(3) | ||||||||
Distributions from net investment income | (0.15 | ) | (0.75 | ) | ||||
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Net decrease in net assets resulting from stockholder distributions | (0.15 | ) | (0.75 | ) | ||||
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Capital share transactions | ||||||||
Issuance of common stock(4) | — | — | ||||||
Repurchases of common stock(5) | — | — | ||||||
Deduction of deferred costs(6) | — | (0.03 | ) | |||||
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Net increase (decrease) in net assets resulting from capital share transactions | — | (0.03 | ) | |||||
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Net asset value, end of period | $ | 6.17 | $ | 7.36 | ||||
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Shares outstanding, end of period | 678,379,301 | 678,379,301 | ||||||
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Total return(7) | (14.13 | )% | 2.96 | % | ||||
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Total return (without assuming reinvestment of distributions)(7) | (14.13 | )% | 3.18 | % | ||||
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Ratio/Supplemental Data: | ||||||||
Net assets, end of period | $ | 4,186 | $ | 4,996 | ||||
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Ratio of net investment income to average net assets(8) | 7.58 | % | 9.07 | % | ||||
Ratio of operating expenses and excise taxes to average net assets(8) | 8.31 | % | 8.46 | % | ||||
Ratio of net operating expenses and excise taxes to average net assets(8) | 8.31 | % | 8.46 | % | ||||
Portfolio turnover(9) | 15.67 | % | 53.43 | % | ||||
Total amount of senior securities outstanding, exclusive of treasury securities | $ | 3,636 | $ | 3,809 | ||||
Asset coverage per unit(10) | 2.15 | 2.31 |
| | | Six Months Ended June 30, 2019 (Unaudited) | | | Year Ended December 31, 2018 | | ||||||
Per Share Data:(1) | | | | | | | | | | | | | |
Net asset value, beginning of period | | | | $ | 7.86 | | | | | $ | 8.73 | | |
Results of operations(2) | | | | | | | | | | | | | |
Net investment income | | | | | 0.36 | | | | | | 0.73 | | |
Net realized gain (loss) and unrealized appreciation (depreciation) | | | | | 0.00 | | | | | | (0.85) | | |
Net increase (decrease) in net assets resulting from operations | | | | | 0.36 | | | | | | (0.12) | | |
Stockholder distributions(3) | | | | | | | | | | | | | |
Distributions from net investment income | | | | | (0.38) | | | | | | (0.75) | | |
Net decrease in net assets resulting from stockholder distributions | | | | | (0.38) | | | | | | (0.75) | | |
Capital share transactions | | | | | | | | | | | | | |
Issuance of common stock(4) | | | | | — | | | | | | — | | |
Repurchases of common stock(5) | | | | | — | | | | | | — | | |
Net increase (decrease) in net assets resulting from capital share transactions | | | | | — | | | | | | — | | |
Net asset value, end of period | | | | $ | 7.84 | | | | | $ | 7.86 | | |
Shares outstanding, end of period | | | | | 326,267,116 | | | | | | 326,445,320 | | |
Total return(6) | | | | | 4.52% | | | | | | (1.64)% | | |
Total return (without assuming reinvestment of distributions)(6) | | | | | 4.58% | | | | | | (1.37)% | | |
Ratio/Supplemental Data: | | | | | | | | | | | | | |
Net assets, end of period | | | | $ | 2,557,664 | | | | | $ | 2,567,409 | | |
Ratio of net investment income to average net assets(7) | | | | | 9.09% | | | | | | 8.68% | | |
Ratio of operating expenses and excise taxes to average net assets(7) | | | | | 9.04% | | | | | | 8.12% | | |
Ratio of net operating expenses and excise taxes to average net assets(7) | | | | | 9.04% | | | | | | 7.99% | | |
Portfolio turnover(8) | | | | | 16.70% | | | | | | 43.12% | | |
Total amount of senior securities outstanding, exclusive of treasury securities | | | | $ | 1,748,756 | | | | | $ | 1,890,254 | | |
Asset coverage per unit(9) | | | | | 2.46 | | | | | | 2.36 | | |
FS Investment CorporationKKR Capital Corp. II
Notes to Unaudited Consolidated Financial Statements (continued)
(in thousands,millions, except share and per share amounts)
Note 11. Financial Highlights (continued)
(1) | Per share data may be rounded in order to recompute the ending net asset value per share. |
(2) | The per share data was derived by using the weighted average shares outstanding during the applicable period. |
(3) | The per share data for distributions reflect the actual amount of distributions paid per share during the applicable period. |
(4) | The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock pursuant to the Company’s distribution reinvestment plan. The issuance of common stock at a price that is greater than the net asset value per share results in an increase in net asset value per share. |
(5) | The per share impact of the Company’s distribution reinvestment plan is a reduction to net asset value of less than $0.01 per share during the period. |
(6) | As a result of the purchase price allocation for the Mergers, the Company permanently wrote off approximately $18 of deferred costs and prepaid assets from FSIC III, FSIC IV and CCT II’s balance sheets. |
(7) | The total return based on net asset value for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share that were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the period. Total return based on net asset value does not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of shares of the Company’s common stock. The historical calculation of total return based on net asset value in the table should not be considered a representation of the Company’s future total return based on net asset value, which may be greater or less than the return shown in the table due to a number of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and do not represent an actual return to stockholders. |
(8) | Weighted average net assets during the applicable period are used for this calculation. Ratios for the three months ended March 31, 2020 are annualized. Annualized ratios for the three months ended March 31, 2020 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2020. The following is a schedule of supplemental ratios for the three months ended March 31, 2020 and the year ended December 31, 2019: |
Three Months Ended March 31, 2020 (Unaudited) | Year Ended December 31, 2019 | |||||||
Ratio of subordinated income incentive fees to average net assets | 1.87 | % | 1.11 | % | ||||
Ratio of interest expense to average net assets | 3.26 | % | 4.04 | % | ||||
Ratio of excise taxes to average net assets | — | 0.04 | % |
(9) | Portfolio turnover for the three months ended March 31, 2020 is not annualized. |
(10) | Asset coverage per unit is the ratio of the carrying value of the Company’s total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. |
Note 12. Subsequent Events
On May 5, 2020, the Company entered into that certain Amendment No. 1 to Amended and Restated Senior Secured Revolving Credit Agreement, or the Amendment, to the Senior Secured Revolving Credit Facility, with FS KKR Capital Corp., JPMorgan Chase Bank, N.A., as administrative agent, ING Capital LLC, as collateral agent, and the lenders party thereto to, among other things, (i) reset the minimum shareholders’ equity test at $2,720.9 plus 37.5% of net equity proceeds after April 15, 2021, (ii) remove the 0.9091 multiplier previously applicable to its borrowing base, and (iii) reduce its asset coverage ratio test (for so long as it remains a borrower that has not yet listed on a nationally recognized securities exchange in the table dueUnited States) from a minimum of 200% to a numberminimum of factors, including the Company’s ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company’s expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total return on the Company’s investment portfolio during the applicable period and do not represent an actual return to stockholders.175%.
| | | Six Months Ended June 30, 2019 (Unaudited) | | | Year Ended December 31, 2018 | | ||||||
Ratio of subordinated income incentive fees to average net assets | | | | | 1.55% | | | | | | 0.91% | | |
Ratio of interest expense to average net assets | | | | | 4.31% | | | | | | 3.78% | | |
Ratio of excise taxes to average net assets | | | | | — | | | | | | 0.09% | | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. (in millions, except share and per share amounts) |
Business Combinations—Related Issues. Generally, under asset acquisition accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. The cost of the group of assets acquired in an asset acquisition is allocated to the individual assets acquired or liabilities assumed based on their relative fair values of net identifiable assets acquired other than certain “non-qualifying” assets (for example cash) and does not give rise to goodwill. The final allocation of the purchase price will be determined after the Mergers are completed and after completion of a final analysis to determine the estimated relative fair values of CCT II’s, FSIC III’s and FSIC IV’s assets and liabilities.
Forward-Looking Statements
Some of the statements in this quarterly report onForm 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report onForm 10-Q may include statements as to:
our future operating results;
our business prospects and the prospects of the companies in which we may invest;invest, including our and their ability to achieve our respective objectives as a result of the currentCOVID-19 pandemic;
the impact of the investments that we expect to make;
the ability of our portfolio companies to achieve their objectives;
our current and expected financings and investments;
receiving and maintaining corporate credit ratings and changes in the general interest rate environment;
the adequacy of our cash resources, financing sources and working capital;
the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;
our contractual arrangements and relationships with third parties;
actual and potential conflicts of interest with the other funds advised by the Advisor, their respective current or future investment advisersFS Investments, KKR Credit or any of their affiliates.respective affiliates;
the dependence of our future success on the general economy and its effect on the industries in which we may invest;
general economic and political trends and other external factors, including the currentCOVID-19 pandemic and related disruptions caused thereby;
our use of financial leverage;
the ability of the Advisor to locate suitable investments for us and to monitor and administer our investments;
the ability of the Advisor or its affiliates to attract and retain highly talented professionals;
our ability to maintain our qualification as a RIC and as a BDC;
the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued thereunder;
the effect of changes to tax legislation on us and the portfolio companies in which we may invest and our and their tax position; and
the tax status of the enterprises in which we may invest; andinvest.
In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report onForm 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:
changes in the economy;
risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or natural disasters;pandemics; and
future changes in laws or regulations and conditions in our operating areas.
We have based the forward-looking statements included in this quarterly report onForm 10-Q on information available to us on the date of this quarterly report onForm 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the SEC, including annual reports onForm 10-K, quarterly reports onForm 10-Q and current reports onForm 8-K. The forward-looking statements and projections contained in this quarterly report onForm 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Overview
We were incorporated under the general corporation laws of the State of Maryland on July 13, 2011 and formally commenced investment operations on June 18, 2012. We are an externally managed,non-diversified,closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. In March 2014, we closed our continuous public offering of shares of common stock to new investors.
We are externally managed by the Advisor pursuant to an investment advisory agreement, or the investment advisory and administrative services agreement, and supervised by our board of directors, a majority of whom are independent. On April 9, 2018, GSO/Blackstone Debt Funds Management LLC, or GDFM, resigned as our investment sub-adviser and terminated its investment sub-advisory agreement effective April 9, 2018. In connection with GDFM’s resignation as our investment sub-adviser, on April 9, 2018, we entered into the investment advisory and administrative services agreement with the Advisor, which replaced an investment advisory and administrative services agreement, or the FSIC II Advisor investment advisory and administrative services agreement with our former investment adviser, FSIC II Advisor, LLC, or FSIC II Advisor.
Our investment objectives are to generate current income and, to a lesser extent, long-term capital appreciation. We seek to meet our investment objectives by:
utilizing the experience and expertise of the management team of the Advisor;
employing a defensive investment approach focused on long-term credit performance and principal protection;
focusing primarily on debt investments in a broad array of private U.S. companies, including middle-market companies, which we define as companies with annual EBITDA of $25 million to $100 million at the time of investment;
investing primarily in established, stable enterprises with positive cash flows; and
maintaining rigorous portfolio monitoring in an attempt to anticipate andpre-empt negative credit events within our portfolio, such as an event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.
We pursue our investment objective by investing primarily in the debt of middle market U.S. companies with a focus on originated transactions sourced through the network of the Advisor and its affiliates. We define direct originations as any investment where the AdvisorCompany’s investment adviser,sub-adviser or itstheir affiliates negotiateshad negotiated the terms of the transaction beyond just the price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms. These directly originated transactions include participation in other originated transactions where there may be third parties involved, or a bank acting as an intermediary, for a closely held club, or similar transactions.
Our portfolio is comprised primarily of investments in senior secured loans and second lien secured loans of private middle market U.S. companies and, to a lesser extent, subordinated loans and certain-asset based financing loans of private U.S. companies. Although we do not expect a significant portion of our portfolio to be comprised of subordinated loans, there is no limit on the amount of such loans in which we may invest. We may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the “over-the-counter”“over-the-counter” market or directly from our target companies as primary market or directly originated investments. In connection with our debt investments, we may on occasion receive equity interests such as warrants or options as additional consideration. We may also purchase or otherwise acquire interests in the form of common or preferred equity or equity-related securities, such as rights and warrants that may be converted into or exchanged for common stock or other equity or the cash value of common stock or other equity, in our target companies, generally in conjunction with one of our debt investments, including through the restructuring of such investments, or through aco-investment with a financial sponsor such asor possibly the restructuring of, an institutional investor or private equity firm.investment. In addition, a portion of our portfolio may be comprised of corporate bonds, structured products, other debt securities and derivatives, including total return swaps and credit default swaps. The Advisor will seek to tailor our
Depending on market conditions, we may increase or decrease our exposure to less senior portions of the capital structurestructures of our portfolio companies or otherwise make opportunistic investments, such as where the market price of loans, bonds or other securities reflects a lower value than deemed warranted by the Advisor’s fundamental analysis, whichanalysis. Such investment opportunities may occur due to general dislocations in the markets, a misunderstanding by the market of a particular company or an industry being out of favor with the broader investment community and may include event driven investments, anchor orders and structured products. The senior secured loans, second lien secured loans and senior secured bonds in which we invest generally have stated terms of three to seven years and subordinated debt investments that we make generally have stated terms of up to ten years, but the expected average life of such securities is generally between three and sevento four years. However, there is no limit on thewe may invest in loans and securities with any maturity or duration of any security in our portfolio.duration. Our debt investments may be rated by a NRSRO and, in such case, generally will carry a rating below investment grade (rated lower than “Baa3” by Moody’s, or lower than “BBB-“BBB-” by S&P). We alsomay invest without limit in non-rated debt securities.
Acquisitions of FS Investment Corporation III, FS Investment Corporation IV and Corporate Capital Trust II
On December 18, 2019, we completed the Mergers. Pursuant to the Merger Agreement, (i) Merger Sub 1 merged with and into FSIC III, with FSIC III continuing as the surviving company, and, immediately thereafter, FSIC III merged with and into the Company, with the Company continuing as the surviving company, (ii) Merger Sub 2 merged with and into CCT II, with CCT II continuing as the surviving company, and, immediately thereafter, CCT II merged with and into the Company, with the Company continuing as the surviving company, and (iii) Merger Sub 3 merged with and into FSIC IV, with FSIC IV continuing as the surviving company, and, immediately thereafter, FSIC IV merged with and into the Company, with the Company continuing as the surviving company. In accordance with the terms of the Merger Agreement, upon the closing of the transactions contemplated by the Merger Agreement, (i) each outstanding share of FSIC III common stock was converted into the right to receive 0.9804 shares of our common stock, (ii) each outstanding share of beneficial interest of CCT II was converted into the right to receive 1.1319 shares of our common stock and (iii) each outstanding share of FSIC IV common stock was converted into the right to receive 1.3634 shares of our common stock. As a result, we issued an aggregate of approximately 289,084,117 share of our common stock to former FSIC III stockholders, 14,031,781 shares of our common stock to former CCT II stockholders and 43,668,803 shares of our common stock to former FSIC IV stockholders. Following the consummation of the Mergers, we entered into the investment advisory agreement, which replaced the prior investment advisory and administrative services agreement.
Revenues
The principal measure of our financial performance is net increase in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net unrealized appreciation or depreciation on investments and net unrealized appreciationgain or depreciationloss on foreign currency. Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations. Net unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.
We principally generate revenues in the form of interest income on the debt investments we hold. In addition, we generate revenues in the form ofnon-recurring commitment, closing, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. We may also generate revenues in the form of dividends and other distributions on the equity or other securities we hold.
Expenses
Our primary operating expenses include the payment of management and incentive fees and other expenses under the investment advisory agreement and administrative servicesthe administration agreement, interest expense from financing arrangements and other indebtedness, and other expenses necessary for our operations. The management and incentive fees compensate the Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.
The Advisor oversees ourday-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative services. The
Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our stockholders and reports filed with the SEC. In addition, the Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our stockholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.
Pursuant to the investment advisory and administrative servicesadministration agreement, we reimburse the Advisor for expenses necessary to perform services related to our administration and operations, including the Advisor’s allocable portion of the compensation and related expenses of certain personnel of FS Investments and KKR Credit providing administrative services to us on behalf of the Advisor. We
We bear all other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:
In addition, we have contracted with State Street Bank and Trust Company to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial information for review by the Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.
COVID-19 Developments
The rapid spread of theCOVID-19 pandemic, and CCT II
COVID-19 has already had adverse effects on our investment income and we expect that such adverse effects will continue for some time. These adverse effects may require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments. In addition, disruptions in the capital markets have resulted in illiquidity in certain market areas. These market disruptions and illiquidity are likely to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions caused byCOVID-19 can also be expected to increase our funding costs and limit our access to the capital markets. These events have limited our investment originations, which is likely to continue for the immediate future, and have also had a material negative impact on our operating results.
We will continue to carefully monitor the impact of theCOVID-19 pandemic on our business and the Advisor entered intobusiness of our portfolio companies. Because the Merger Agreement. The Merger Agreement providesfull effects of theCOVID-19 pandemic are not capable of being known at this time, we cannot estimate the impacts ofCOVID-19 on our future financial condition, results of operations or cash flows. We do, however, expect that subjectit will continue to the conditions set forth in the Merger Agreement, (i) Merger Sub 1 will merge with and into FSIC III, with FSIC III continuing as the surviving company and ashave a wholly-owned subsidiary of the Company, or Merger 1A, and, immediately thereafter, FSIC III will merge with and into the Company, with the Company continuing as the surviving company, or Merger 1, (ii) Merger Sub 2 will merge with and into CCT II, with CCT II continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 2A, and, immediately thereafter, CCT II will merge with and into the Company, with the Company continuing as the surviving company, or Merger 2, and (iii) Merger Sub 3 will merge with and into FSIC IV, with FSIC IV continuing as the surviving company and as a wholly-owned subsidiary of the Company, or Merger 3A, and, immediately thereafter, FSIC IV will merge with and into the Company, with the Company continuing as the surviving company. See Note 12 for additional information. The parties to the Merger Agreement intend the Mergers to be treated as a “reorganization” within the meaning of Section 368(a) of the Code.
Portfolio Investment Activity for the Three and Six Months Ended June 30, 2019March 31, 2020 and for the Year Ended December 31, 2018
Total Portfolio Activity
The following tables present certain selected information regarding our portfolio investment activity for the three and six months ended June 30, 2019March 31, 2020 and the year ended December 31, 2018:
Net Investment Activity | | | For the Three Months Ended June 30, 2019 | | | For the Six Months Ended June 30, 2019 | | ||||||
Purchases | | | | $ | 275,811 | | | | | $ | 729,410 | | |
Sales and Repayments | | | | | (869,553) | | | | | | (1,072,656) | | |
Net Portfolio Activity | | | | $ | (593,742) | | | | | $ | (343,246) | | |
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| | | For the Three Months Ended June 30, 2019 | | | For the Six Months Ended June 30, 2019 | | ||||||||||||||||||
New Investment Activity by Asset Class | | | Purchases | | | Percentage | | | Purchases | | | Percentage | | ||||||||||||
Senior Secured Loans—First Lien | | | | $ | 170,187 | | | | | | 62% | | | | | $ | 520,699 | | | | | | 71% | | |
Senior Secured Loans—Second Lien | | | | | 3,684 | | | | | | 1% | | | | | | 68,261 | | | | | | 9% | | |
Other Senior Secured Debt | | | | | 40,298 | | | | | | 15% | | | | | | 41,507 | | | | | | 6% | | |
Subordinated Debt | | | | | 15,826 | | | | | | 6% | | | | | | 49,004 | | | | | | 7% | | |
Asset Based Finance | | | | | 45,572 | | | | | | 16% | | | | | | 49,001 | | | | | | 7% | | |
Equity/Other | | | | | 244 | | | | | | 0% | | | | | | 938 | | | | | | 0% | | |
Total | | | | $ | 275,811 | | | | | | 100% | | | | | $ | 729,410 | | | | | | 100% | | |
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Net Investment Activity | For the Three Months Ended March 31, 2020 | For the Year Ended December 31, 2019 | ||||||
Purchases | $ | 1,317 | $ | 6,858 | ||||
Sales and Repayments | (1,643 | ) | (2,540 | ) | ||||
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Net Portfolio Activity | $ | (326 | ) | $ | 4,318 | |||
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For the Three Months Ended March 31, 2020 | For the Year Ended December 31, 2019 | |||||||||||||||
New Investment Activity by Asset Class(1) | Purchases | Percentage | Purchases | Percentage | ||||||||||||
Senior Secured Loans—First Lien | $ | 1,080 | 82 | % | $ | 4,459 | 65 | % | ||||||||
Senior Secured Loans—Second Lien | 36 | 3 | % | 765 | 11 | % | ||||||||||
Other Senior Secured Debt | — | — | 140 | 2 | % | |||||||||||
Subordinated Debt | 56 | 4 | % | 386 | 6 | % | ||||||||||
Asset Based Finance | 145 | 11 | % | 482 | 7 | % | ||||||||||
Credit Opportunities Partners, LLC | — | — | 503 | 7 | % | |||||||||||
Equity/Other | 0 | 0 | % | 123 | 2 | % | ||||||||||
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Total | $ | 1,317 | 100 | % | $ | 6,858 | 100 | % | ||||||||
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(1) | Purchases and new investments for the year ended December 31, 2019 include investments acquired at fair value of $4,425 in connection with the Mergers. |
The following table summarizes the composition of our investment portfolio at cost and fair value as of June 30, 2019March 31, 2020 and December 31, 2018:2019:
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||||||||||
Amortized Cost(1) | Fair Value | Percentage of Portfolio | Amortized Cost(1) | Fair Value | Percentage of Portfolio | |||||||||||||||||||
Senior Secured Loans—First Lien | $ | 5,606 | $ | 5,116 | 69 | % | $ | 6,017 | $ | 5,717 | 67 | % | ||||||||||||
Senior Secured Loans—Second Lien | 914 | 693 | 9 | % | 941 | 809 | 9 | % | ||||||||||||||||
Other Senior Secured Debt | 210 | 150 | 2 | % | 243 | 228 | 3 | % | ||||||||||||||||
Subordinated Debt | 288 | 229 | 3 | % | 479 | 489 | 5 | % | ||||||||||||||||
Asset Based Finance | 671 | 587 | 8 | % | 535 | 485 | 6 | % | ||||||||||||||||
Credit Opportunities Partners, LLC | 503 | 430 | 6 | % | 503 | 510 | 6 | % | ||||||||||||||||
Equity/Other | 327 | 259 | 3 | % | 323 | 353 | 4 | % | ||||||||||||||||
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Total | $ | 8,519 | $ | 7,464 | 100 | % | $ | 9,041 | $ | 8,591 | 100 | % | ||||||||||||
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| | | June 30, 2019 (Unaudited) | | | December 31, 2018 | | ||||||||||||||||||||||||||||||
| | | Amortized Cost(1) | | | Fair Value | | | Percentage of Portfolio | | | Amortized Cost(1) | | | Fair Value | | | Percentage of Portfolio | | ||||||||||||||||||
Senior Secured Loans—First Lien | | | | $ | 2,945,007 | | | | | $ | 2,863,504 | | | | | | 71% | | | | | $ | 3,382,158 | | | | | $ | 3,293,291 | | | | | | 75% | | |
Senior Secured Loans—Second Lien | | | | | 453,302 | | | | | | 371,930 | | | | | | 9% | | | | | | 418,015 | | | | | | 333,986 | | | | | | 8% | | |
Other Senior Secured Debt | | | | | 218,865 | | | | | | 211,199 | | | | | | 5% | | | | | | 207,181 | | | | | | 196,616 | | | | | | 5% | | |
Subordinated Debt | | | | | 219,711 | | | | | | 218,371 | | | | | | 6% | | | | | | 242,792 | | | | | | 221,858 | | | | | | 5% | | |
Asset Based Finance | | | | | 97,842 | | | | | | 94,569 | | | | | | 2% | | | | | | 49,415 | | | | | | 48,160 | | | | | | 1% | | |
Equity/Other | | | | | 255,871 | | | | | | 281,136 | | | | | | 7% | | | | | | 261,044 | | | | | | 265,369 | | | | | | 6% | | |
Total | | | | $ | 4,190,598 | | | | | $ | 4,040,709 | | | | | | 100% | | | | | $ | 4,560,605 | | | | | $ | 4,359,280 | | | | | | 100% | | |
The following table summarizes the composition of the Company’s investment portfolio at cost representsand fair value as of March 31, 2020 and December 31, 2019 to include, on a look-through basis, the original cost adjusted forinvestments underlying the amortizationTRS, as disclosed in Note 9 to our unaudited financial statements included herein. The investments underlying the TRS had a notional amount and market value of premiums and/or accretion$0 and $0, and $94 and $89, respectively, as of discounts, as applicable, on investments.
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||||||||||
Amortized Cost(1) | Fair Value | Percentage of Portfolio | Amortized Cost(1) | Fair Value | Percentage of Portfolio | |||||||||||||||||||
Senior Secured Loans—First Lien | $ | 5,606 | $ | 5,116 | 69 | % | $ | 6,090 | $ | 5,788 | 67 | % | ||||||||||||
Senior Secured Loans—Second Lien | 914 | 693 | 9 | % | 961 | 827 | 10 | % | ||||||||||||||||
Other Senior Secured Debt | 210 | 150 | 2 | % | 243 | 228 | 3 | % | ||||||||||||||||
Subordinated Debt | 288 | 229 | 3 | % | 479 | 489 | 5 | % | ||||||||||||||||
Credit Opportunities Partners, LLC | 671 | 587 | 8 | % | 535 | 485 | 5 | % | ||||||||||||||||
Asset Based Finance | 503 | 430 | 6 | % | 503 | 510 | 6 | % | ||||||||||||||||
Equity/Other | 327 | 259 | 3 | % | 324 | 353 | 4 | % | ||||||||||||||||
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Total | $ | 8,519 | $ | 7,464 | 100 | % | $ | 9,135 | $ | 8,680 | 100 | % | ||||||||||||
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(1) | Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments. |
The following table presents certain selected information regarding the composition of our investment portfolio as of June 30, 2019March 31, 2020 and December 31, 2018:
| | | June 30, 2019 | | | December 31, 2018 | |
Number of Portfolio Companies | | | 164 | | | 160 | |
% Variable Rate Debt Investments (based on fair value)(1)(2) | | | 79.1% | | | 81.4% | |
% Fixed Rate Debt Investments (based on fair value)(1)(2) | | | 14.3% | | | 12.2% | |
% Other Income Producing Investments (based on fair value)(3) | | | 1.1% | | | 0.1% | |
% Non-Income Producing Investments (based on fair value)(2) | | | 5.1% | | | 5.2% | |
% of Investments on Non-Accrual (based on fair value) | | | 0.4% | | | 1.1% | |
Weighted Average Annual Yield on Accruing Debt Investments(2)(4) | | | 10.0% | | | 10.5% | |
Weighted Average Annual Yield on All Debt Investments(5) | | | 9.6% | | | 10.1% | |
March 31, 2020 | December 31, 2019 | |||||||
Number of Portfolio Companies | 179 | 213 | ||||||
% Variable Rate Debt Investments (based on fair value)(1)(2) | 71.5 | % | 72.9 | % | ||||
% Fixed Rate Debt Investments (based on fair value)(1)(2) | 12.0 | % | 14.7 | % | ||||
% Other Income Producing Investments (based on fair value)(3) | 7.0 | % | 6.9 | % | ||||
%Non-Income Producing Investments (based on fair value)(2) | 3.8 | % | 3.4 | % | ||||
% of Investments onNon-Accrual (based on fair value) | 5.7 | % | 2.1 | % | ||||
Weighted Average Annual Yield on Accruing Debt Investments(2)(4) | 8.9 | % | 9.5 | % | ||||
Weighted Average Annual Yield on All Debt Investments(5) | 7.3 | % | 8.8 | % |
(1) | “Debt Investments” means investments that pay or are expected to pay a stated interest rate, stated dividend rate or other similar stated return. |
(2) | Does not include investments onnon-accrual status. |
(3) | “Other Income Producing Investments” means investments that pay or are expected to pay interest, dividends or other income to the Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return. |
(4) | The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period. |
(5) | The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period. |
For the Company on an ongoing basis but do not have a stated interest rate, stated dividend rate or other similar stated return.
Direct Originations
The following table presents certain selected information regarding our direct originations as of June 30, 2019March 31, 2020 and December 31, 2018:
Characteristics of All Direct Originations Held in Portfolio | | | June 30, 2019 | | | December 31, 2018 | |
Number of Portfolio Companies | | | 78 | | | 74 | |
% of Investments on Non-Accrual (based on fair value) | | | 0.4% | | | 1.2% | |
Total Cost of Direct Originations | | | $3,273,642 | | | $3,615,151 | |
Total Fair Value of Direct Originations | | | $3,141,002 | | | $3,497,141 | |
% of Total Investments, at Fair Value | | | 77.7% | | | 80.2% | |
Weighted Average Annual Yield on Accruing Debt Investments(1) | | | 10.1% | | | 10.5% | |
Weighted Average Annual Yield on All Debt Investments(2) | | | 9.5% | | | 10.1% | |
Characteristics of All Direct Originations Held in Portfolio | March 31, 2020 | December 31, 2019 | ||||||
Number of Portfolio Companies | 113 | 110 | ||||||
% of Investments onNon-Accrual (based on fair value) | 5.2 | % | 2.5 | % | ||||
Total Cost of Direct Originations | $ | 7,227 | $ | 7,161 | ||||
Total Fair Value of Direct Originations | $ | 6,433 | $ | 6,713 | ||||
% of Total Investments, at Fair Value | 86.2 | % | 78.1 | % | ||||
Weighted Average Annual Yield on Accruing Debt Investments(1) | 8.6 | % | 9.3 | % | ||||
Weighted Average Annual Yield on All Debt Investments(2) | 7.0 | % | 8.5 | % |
(1) | The Weighted Average Annual Yield on Accruing Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each accruing Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each accruing Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period. |
(2) | The Weighted Average Annual Yield on All Debt Investments is computed as (i) the sum of (a) the stated annual interest rate, dividend rate or other similar stated return of each Debt Investment, multiplied by its par amount, adjusted to U.S. dollars and for any partial income accrual when necessary, as of the end of the applicable reporting period, plus (b) the annual amortization of the purchase or original issue discount or premium of each Debt Investment; divided by (ii) the total amortized cost of Debt Investments included in the calculated group as of the end of the applicable reporting period. |
Portfolio Composition by Industry Classification
See Note 6 to our unaudited consolidated financial statements included herein for additional information regarding the composition of our investment portfolio by industry classification.
The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2020 and December 31, 2019:
March 31, 2020 (Unaudited) | December 31, 2019 | |||||||||||||||
Industry Classification | Fair Value | Percentage of Portfolio | Fair Value | Percentage of Portfolio | ||||||||||||
Automobiles & Components | $ | 52 | 1 | % | $ | 182 | 2 | % | ||||||||
Capital Goods | 961 | 13 | % | 1,139 | 13 | % | ||||||||||
Commercial & Professional Services | 769 | 10 | % | 861 | 10 | % | ||||||||||
Consumer Durables & Apparel | 351 | 5 | % | 302 | 3 | % | ||||||||||
Consumer Services | 308 | 4 | % | 548 | 6 | % | ||||||||||
Credit Opportunities Partners, LLC | 430 | 6 | % | 510 | 6 | % | ||||||||||
Diversified Financials | 596 | 8 | % | 402 | 5 | % | ||||||||||
Energy | 212 | 3 | % | 328 | 4 | % | ||||||||||
Food & Staples Retailing | 201 | 3 | % | 223 | 3 | % | ||||||||||
Food, Beverage & Tobacco | 120 | 1 | % | 132 | 2 | % | ||||||||||
Health Care Equipment & Services | 727 | 10 | % | 888 | 10 | % | ||||||||||
Household & Personal Products | 108 | 1 | % | 1 | 0 | % | ||||||||||
Insurance | 232 | 3 | % | 220 | 3 | % | ||||||||||
Materials | 134 | 2 | % | 354 | 4 | % | ||||||||||
Media & Entertainment | 335 | 4 | % | 409 | 5 | % | ||||||||||
Pharmaceuticals, Biotechnology & Life Sciences | 81 | 1 | % | 187 | 2 | % | ||||||||||
Real Estate | 210 | 3 | % | 122 | 1 | % | ||||||||||
Retailing | 349 | 4 | % | 435 | 5 | % | ||||||||||
Semiconductors & Semiconductor Equipment | — | — | 3 | 0 | % | |||||||||||
Software & Services | 875 | 12 | % | 874 | 10 | % | ||||||||||
Technology Hardware & Equipment | 138 | 2 | % | 174 | 2 | % | ||||||||||
Telecommunication Services | 137 | 2 | % | 154 | 2 | % | ||||||||||
Transportation | 138 | 2 | % | 143 | 2 | % | ||||||||||
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Total | $ | 7,464 | 100 | % | $ | 8,591 | 100 | % | ||||||||
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Portfolio Asset Quality
In addition to various risk management and monitoring tools, the Advisor uses an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio. The Advisor uses an investment rating scale of 1 to 4. The following is a description of the conditions associated with each investment rating:
Investment Rating | Summary Description | |||
1 | Performing | |||
2 | Performinginvestment-no concern about repayment of both interest and our cost basis but company’s recent performance or trends in the industry require closer monitoring. | |||
3 | Underperforming investment-some loss of interest or dividend possible, but still expecting a positive return on investment. | |||
4 | Underperforming investment-concerns about the recoverability of principal or interest. |
The following table shows the distribution of our investments on the 1 to 4 investment rating scale at fair value as of June 30, 2019March 31, 2020 and December 31, 2018:
| | | June 30, 2019 | | | December 31, 2018 | | ||||||||||||||||||
Investment Rating | | | Fair Value | | | Percentage of Portfolio | | | Fair Value | | | Percentage of Portfolio | | ||||||||||||
1 | | | | $ | 2,501,343 | | | | | | 62% | | | | | $ | 2,817,253 | | | | | | 65% | | |
2 | | | | | 1,384,464 | | | | | | 34% | | | | | | 1,377,931 | | | | | | 32% | | |
3 | | | | | 75,587 | | | | | | 2% | | | | | | 95,013 | | | | | | 2% | | |
4 | | | | | 79,315 | | | | | | 2% | | | | | | 69,083 | | | | | | 1% | | |
Total | | | | $ | 4,040,709 | | | | | | 100% | | | | | $ | 4,359,280 | | | | | | 100% | | |
March 31, 2020 | December 31, 2019 | |||||||||||||||
Investment Rating | Fair Value | Percentage of Portfolio | Fair Value | Percentage of Portfolio | ||||||||||||
1 | $ | 4,357 | 58 | % | $ | 5,299 | 62 | % | ||||||||
2 | 1,884 | 25 | % | 2,624 | 30 | % | ||||||||||
3 | 797 | 11 | % | 356 | 4 | % | ||||||||||
4 | 426 | 6 | % | 312 | 4 | % | ||||||||||
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Total | $ | 7,464 | 100 | % | $ | 8,591 | 100 | % | ||||||||
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The amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values.
Results of Operations
Comparison of the Three and Six Months Ended June 30,March 31, 2020 and 2019 and 2018
Revenues
Our investment income for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 was as follows:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||||||||||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||||||||||||||||||||||||||
| | | Amount | | | Percentage of Total Income | | | Amount | | | Percentage of Total Income | | | Amount | | | Percentage of Total Income | | | Amount | | | Percentage of Total Income | | ||||||||||||||||||||||||
Interest income | | | | $ | 101,290 | | | | | | 90% | | | | | $ | 100,380 | | | | | | 93% | | | | | $ | 209,158 | | | | | | 90% | | | | | $ | 200,536 | | | | | | 89% | | |
Paid-in-kind interest income | | | | | 4,368 | | | | | | 4% | | | | | | 3,213 | | | | | | 3% | | | | | | 9,324 | | | | | | 4% | | | | | | 8,191 | | | | | | 4% | | |
Fee income | | | | | 6,225 | | | | | | 6% | | | | | | 4,509 | | | | | | 4% | | | | | | 13,269 | | | | | | 6% | | | | | | 9,583 | | | | | | 4% | | |
Dividend income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 71 | | | | | | 0% | | | | | | 7,494 | | | | | | 3% | | |
Total investment income(1) | | | | $ | 111,883 | | | | | | 100% | | | | | $ | 108,102 | | | | | | 100% | | | | | $ | 231,822 | | | | | | 100% | | | | | $ | 225,804 | | | | | | 100% | | |
Three Months Ended March 31, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
Amount | Percentage of Total Income | Amount | Percentage of Total Income | |||||||||||||
Interest income | $ | 151 | 77 | % | $ | 108 | 90 | % | ||||||||
Paid-in-kind interest income | 14 | 7 | % | 5 | 4 | % | ||||||||||
Fee income | 15 | 8 | % | 7 | 6 | % | ||||||||||
Dividend income | 15 | 8 | % | 0 | 0 | % | ||||||||||
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Total investment income(1) | $ | 195 | 100 | % | $ | 120 | 100 | % | ||||||||
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(1) | For the three months ended March 31, 2020 and 2019, such revenues represent $172 and $113, respectively, of cash income earned as well as $23 and $7, respectively, innon-cash portions relating to accretion of discount and PIK interest. Cash flows related to suchnon-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized. |
The level of interest income we receive is generally related to the balance of income-producing investments, multiplied by the weighted average yield of our investments. Fee income is transaction based and typically consists of prepayment fees and structuring fees. As such, fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.
The increase in interest income during the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was primarily due to the higher average invested balance during the six months ended June 30, 2019, compared to the six months ended June 30, 2018.
The decreaseincrease in dividend income during the sixthree months ended June 30, 2019March 31, 2020 compared to the sixthree months ended June 30, 2018March 31, 2019 was primarily due to a one-time dividenddividends paid in respect of one ofto our investments during the six months ended June 30, 2018.investment in Credit Opportunities Partners, LLC.
Expenses
Our operating expenses for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 were as follows:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Management fees | | | | $ | 16,982 | | | | | $ | 18,938 | | | | | $ | 34,846 | | | | | $ | 44,172 | | |
Subordinated income incentive fees | | | | | 8,736 | | | | | | 1,480 | | | | | | 19,867 | | | | | | 7,055 | | |
Administrative services expenses | | | | | 647 | | | | | | 790 | | | | | | 1,554 | | | | | | 1,572 | | |
Stock transfer agent fees | | | | | 501 | | | | | | 501 | | | | | | 1,206 | | | | | | 996 | | |
Accounting and administrative fees | | | | | 311 | | | | | | 411 | | | | | | 744 | | | | | | 832 | | |
Interest expense | | | | | 25,503 | | | | | | 26,851 | | | | | | 55,078 | | | | | | 51,034 | | |
Directors’ fees | | | | | 75 | | | | | | 295 | | | | | | 217 | | | | | | 799 | | |
Expenses associated with our independent audit and related fees | | | | | 126 | | | | | | 75 | | | | | | 199 | | | | | | 201 | | |
Legal fees | | | | | 275 | | | | | | 290 | | | | | | 388 | | | | | | 324 | | |
Printing fees | | | | | 205 | | | | | | 140 | | | | | | 548 | | | | | | 193 | | |
Other | | | | | 414 | | | | | | 546 | | | | | | 953 | | | | | | 1,604 | | |
Total operating expenses | | | | $ | 53,775 | | | | | $ | 50,317 | | | | | $ | 115,600 | | | | | $ | 108,782 | | |
Management fee waiver | | | | | — | | | | | | (278) | | | | | | — | | | | | | (3,432) | | |
Net operating expenses | | | | $ | 53,775 | | | | | $ | 50,039 | | | | | $ | 115,600 | | | | | $ | 105,350 | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Management fees | $ | 33 | $ | 18 | ||||
Subordinated income incentive fees | 23 | 11 | ||||||
Administrative services expenses | 2 | 1 | ||||||
Stock transfer agent fees | 1 | 1 | ||||||
Accounting and administrative fees | 1 | 0 | ||||||
Interest expense | 40 | 30 | ||||||
Other | 2 | 1 | ||||||
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Total operating expenses | $ | 102 | $ | 62 | ||||
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The following table reflects selected expense ratios as a percent of average net assets for the three and six months ended June 30, 2019March 31, 2020 and 2018:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Ratio of operating expenses to average net assets | | | | | 2.11% | | | | | | 1.84% | | | | | | 4.52% | | | | | | 3.91% | | |
Ratio of management fee waiver to average net assets | | | | | — | | | | | | (0.01)% | | | | | | — | | | | | | (0.12)% | | |
Ratio of net operating expenses to average net assets | | | | | 2.11% | | | | | | 1.83% | | | | | | 4.52% | | | | | | 3.79% | | |
Ratio of incentive fees and interest expense to average net assets(1) | | | | | 1.35% | | | | | | 1.04% | | | | | | 2.93% | | | | | | 2.09% | | |
Ratio of net operating expenses, excluding certain expenses, to average net assets | | | | | 0.76% | | | | | | 0.79% | | | | | | 1.59% | | | | | | 1.70% | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Ratio of operating expenses to average net assets | 2.08 | % | 2.41 | % | ||||
Ratio of incentive fees and interest expense to average net assets(1) | 1.28 | % | 1.59 | % | ||||
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Ratio of net operating expenses, excluding certain expenses, to average net assets | 0.80 | % | 0.82 | % |
(1) | Ratio data may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets. |
Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in amounts outstanding under our financing arrangements and benchmark interest rates such as LIBOR, among other factors.
Net Investment Income
Our net investment income totaled $58,108$93 ($0.180.14 per share) and $58,063$58 ($0.18 per share) for the three months ended June 30,March 31, 2020 and 2019, and 2018, respectively.
Net Realized Gains or Losses
Our net realized gains (losses) on investments and foreign currency for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 were as follows:
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net realized gain (loss) on investments(1) | $ | (217 | ) | $ | (19 | ) | ||
Net realized gain (loss) on total return swap | (2 | ) | — | |||||
Net realized gain (loss) on foreign currency forward contracts | 0 | — | ||||||
Net realized gain (loss) on interest rate swaps | (2 | ) | — | |||||
Net realized gain (loss) on foreign currency | 1 | 0 | ||||||
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Total net realized gain (loss) | $ | (220 | ) | $ | (19 | ) | ||
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(1) | We sold investments and received principal repayments, respectively, of $953 and $760 during the three months ended March 31, 2020 and $115 and $88 during the three months ended March 31, 2019. |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Net realized gain (loss) on investments(1) | | | | $ | (21,957) | | | | | $ | (10,015) | | | | | $ | (40,443) | | | | | $ | (29,309) | | |
Net realized gain (loss) on foreign currency | | | | | 112 | | | | | | (339) | | | | | | 115 | | | | | | (666) | | |
Total net realized gain (loss) | | | | $ | (21,845) | | | | | $ | (10,354) | | | | | $ | (40,328) | | | | | $ | (29,975) | | |
Net Change in Unrealized Appreciation (Depreciation)
Our net change in unrealized appreciation (depreciation) on investments and interest rate swaps and unrealized gain (loss) on foreign currency for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 were as follows:
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | | ||||||||||||||||||
| | | 2019 | | | 2018 | | | 2019 | | | 2018 | | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | | | | $ | 15,178 | | | | | $ | (17,322) | | | | | $ | 51,436 | | | | | $ | (105,934) | | |
Net change in unrealized appreciation (depreciation) on interest rate swaps | | | | | (6,657) | | | | | | — | | | | | | (10,653) | | | | | | — | | |
Net change in unrealized gain (loss) on foreign currency | | | | | (1,541) | | | | | | 367 | | | | | | (2,665) | | | | | | 777 | | |
Total net change in unrealized appreciation (depreciation) | | | | $ | 6,980 | | | | | $ | (16,955) | | | | | $ | 38,118 | | | | | $ | (105,157) | | |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Net change in unrealized appreciation (depreciation) on investments | $ | (605 | ) | $ | 37 | |||
Net change in unrealized appreciation (depreciation) on total return swap | 3 | — | ||||||
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 2 | — | ||||||
Net change in unrealized appreciation (depreciation) on interest rate swaps | (30 | ) | (4 | ) | ||||
Net change in unrealized gain (loss) on foreign currency | 49 | (1 | ) | |||||
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Total net change in unrealized appreciation (depreciation) | $ | (581 | ) | $ | 32 | |||
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During the three and six months ended June 30, 2019,March 31, 2020, the net change in unrealized appreciation (depreciation) was driven primarily by higher valuationsmark to market declines across the portfolio resulting from Level 2 categorized assets.
Net Increase (Decrease) in Net Assets Resulting from Operations
For the three months ended June 30, 2019 and 2018,March 31, 2020, the net decrease in net assets resulting from operations was $(708) ($(1.04) per share) compared to a net increase in net assets resulting from operations was $43,243of $71 ($0.13 per share) and $30,754 ($0.09 per share), respectively.
This “Results of Operations” section should be read in conjunction with the“COVID-19 Developments” above.
Financial Condition, Liquidity and Capital Resources
Overview
As of June 30, 2019,March 31, 2020, we had $269,385$232 in cash and foreign currency, which we and our wholly-owned financing subsidiaries held in custodial accounts, and $776,244$1,556 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. As of June 30, 2019,March 31, 2020, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of June 30, 2019,March 31, 2020, we had unfunded debt investments with aggregate unfunded commitments of $126,735 and$376.0, unfunded equity/other commitments of $202,224.$245.1, and unfunded commitments of $371.9 of Credit Opportunities Partners, LLC. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.
We currently generate cash primarily from cash flows from fees, interest and dividends earned from our investments as well as from the issuance of shares under the DRP, and principal repayments and proceeds from sales of our investments. To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of the Advisor, but in no event will leverage employed exceed 50% of the value of our assets, as requiredmaximum amount permitted by the 1940 Act. With certain limited exceptions, we are only allowed to borrow amounts or issue debt securities if our asset coverage, as calculated pursuant to the 1940 Act, equals at least 200% immediately after such borrowing. The minimum asset coverage requirement applicable to BDCs under the 1940 Act, however, is currently 150% provided that certain disclosure, approval and other requirements are met. We are currently seeking a vote from our stockholders to reduce the asset coverage ratio applicable to us to 150%, but we do not plan to hold a stockholder vote on the proposal until after our common stock is listed on a national securities exchange, or a Listing. We have announced our intention to list our common stock on the New York Stock Exchange during the first half of 2020, which we continue to evaluate, subject to market conditions and board approval. See “—Financing Arrangements.”
Prior to investing in securities of portfolio companies, we invest the cash received from fees, interest and dividends earned from our investments and from the issuance of shares under the distribution reinvestment plan, as well as principal repayments and proceeds from sales of our investments primarily in cash, cash equivalents, including money market funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.
This “Financial Condition, Liquidity and Capital Resources” section should be read in conjunction with“COVID-19 Developments” above.
Financing Arrangements
The following table presents summary information with respect to our outstanding financing arrangements as of June 30, 2019:March 31, 2020:
Arrangement(1) | Type of Arrangement | Rate(1) | Amount Outstanding | Amount Available | Maturity Date | |||||||||
Senior Secured Revolving Credit Facility(2) | Revolving Credit Facility | L+2.00% - 2.25%(3) | $ | 837 | (4) | $ | 928 | November 7, 2024 | ||||||
Germantown Credit Facility(2) | Term Loan Credit Facility | L + 2.50% | 300 | — | December 15, 2020 | |||||||||
Darby Creek Credit Facility(2) | Revolving Credit Facility | L + 1.95% | 220 | 30 | February 26, 2024 | |||||||||
Dunlap Credit Facility(2) | Revolving Credit Facility | L + 2.00% | 400 | 100 | February 26, 2024 | |||||||||
Jefferson Square Credit Facility(2) | Revolving Credit Facility | L + 2.50% | 320 | 80 | July 15, 2022 | |||||||||
Juniata River Credit Facility(2) | Revolving Credit Facility | L + 2.45% | 720 | 130 | October 11, 2021 | |||||||||
Burholme Prime Brokerage Facility(2) | Prime Brokerage Facility | L + 1.25% | 67 | 33 | September 26, 2020(5) | |||||||||
Broomall Prime Brokerage Facility(2) | Prime Brokerage Facility | L + 1.25% | 12 | 38 | December 26, 2020(6) | |||||||||
Ambler Credit Facility(2) | Revolving Credit Facility | L + 2.25% | 123 | 77 | November 22, 2024 | |||||||||
Meadowbrook Run Credit Facility(2) | Revolving Credit Facility | L + 2.25% | 160 | 140 | November 22, 2024 | |||||||||
4.250% Notes due 2025(7) | Unsecured Notes | 4.250% | 475 | — | February 14, 2025 | |||||||||
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Total | 3,634 | 1,556 | ||||||||||||
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Center City Total Return Swap | Total Return Swap | L + 1.55% | $ | — | $ | — | N/A(8) | |||||||
Cheltenham Total Return Swap | Total Return Swap | L + 1.60% | $ | — | $ | — | N/A(9) |
(1) | LIBOR is subject to a 0% floor. |
(2) | The carrying amount outstanding under the facility approximates its fair value. |
(3) | The spread over LIBOR is determined by reference to the ratio of the value of the borrowing base to the aggregate amount of certain outstanding indebtedness of the Company. |
(4) | Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €231 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $148 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.71 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $245 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.61 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £183 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.25 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. |
(5) | The Burholme Prime Brokerage Facility generally is terminable upon 179 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility. |
(6) | The Broomall Prime Brokerage Facility generally is terminable upon 270 days’ notice by either party. As of March 31, 2020, neither party had provided notice of its intent to terminate the facility. |
(7) | As of March 31, 2020, the fair value of the 4.250% notes was approximately $366. The valuation is considered a Level 2 valuation within the fair value hierarchy. |
(8) | Center City Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past September 30, 2019 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. |
(9) | Cheltenham Funding and Citibank mutually agreed to an orderly winddown of the TRS through purchases of all of the assets underlying the TRS. Accordingly, the parties neither extended the optional termination date under the TRS past February 19, 2020 nor terminated the TRS on that date. The parties plan to terminate the TRS when all assets underlying the TRS have been purchased and any remaining trades have been canceled. Center City Funding has not paid, nor will pay, any termination fee as a result of the orderly winddown and ultimate termination of the TRS. |
Arrangement(1) | | | Type of Arrangement | | | Rate | | | Amount Outstanding | | | Amount Available | | | Maturity Date | | ||||||
Green Creek Credit Facility | | | Term Loan Credit Facility | | | L+2.50% | | | | $ | 500,000 | | | | | $ | — | | | | December 15, 2019 | |
Cooper River Credit Facility | | | Revolving Credit Facility | | | L+2.25% | | | | | 87,500 | | | | | | 112,500 | | | | March 31, 2021 | |
Darby Creek Credit Facility | | | Revolving Credit Facility | | | L+1.95% | | | | | 185,000 | | | | | | 65,000 | | | | February 26, 2024 | |
Juniata River Credit Facility | | | Revolving Credit Facility | | | L+2.68% | | | | | 680,000 | | | | | | 170,000 | | | | October 11, 2020 | |
Senior Secured Revolving Credit Facility | | | Revolving Credit Facility | | | L+2.00% – 2.25%(2) | | | | | 296,256(3) | | | | | | 428,744 | | | | August 9, 2023 | |
Total | | | | | | | | | | $ | 1,748,756 | | | | | $ | 776,244 | | | |
See Note 9 to our unaudited consolidated financial statements included herein.
RIC Status and Distributions
We have elected to be subject to tax as a RIC under Subchapter M of the Code. In order to qualify for RIC tax treatment, we must, among other things, make distributions of an amount at least equal to 90% of our investment company taxable income, determined without regard to any deduction for distributions paid, each tax year. As long as the distributions are declared by the later of the fifteenth day of the ninth month following the close of a tax year or the due date of the tax return for such tax year, including extensions, distributions paid up to twelve months after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. We intend to make sufficient distributions to our stockholders to qualify for and maintain our RIC tax status each tax year. We are also subject to a 4% nondeductible federal excise tax on certain undistributed income unless we make distributions in a timely manner to our stockholders generally of an amount at least equal to the sum of (1) 98% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains in excess of capital losses, or “capital gain net income” (adjusted for certain ordinary losses), for theone-year period ending October 31 of that calendar year and (3) any net ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November or December of any calendar year, payable to stockholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our stockholders, on December 31 of the calendar year in which the distribution was declared. We can offer no assurance that we will achieve results that will permit us to pay any cash distributions. If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.
Subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to authorize, declare and pay regular cash distributions on a quarterly basis and pay such distributions on a monthly basis. We will calculate each stockholder’s specific distribution amount for the period using record and declaration
During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from our investment activities. Each year a statement onForm 1099-DIV identifying the sources of the distributions will be mailed to our stockholders. No portion of the distributions paid during the sixthree months ended June 30,March 31, 2020 or 2019 and 2018 represented a return of capital.
We intend to continue to make our regular distributions in the form of cash, out of assets legally available for distribution, except for those stockholders who receive their distributions in the form of shares of our common stock under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. stockholder.
The following table reflects the cash distributions per share that we have declared and paid on our common stock during the sixthree months ended June 30, 2019March 31, 2020 and 2018:
| | | Distribution | | |||||||||
For the Three Months Ended | | | Per Share | | | Amount | | ||||||
Fiscal 2018 | | | | | | | | | | | | | |
March 31, 2018 | | | | $ | 0.1885 | | | | | $ | 61,153 | | |
June 30, 2018 | | | | | 0.1885 | | | | | | 61,146 | | |
Total | | | | $ | 0.3770 | | | | | $ | 122,299 | | |
Fiscal 2019 | | | | | | | | | | | | | |
March 31, 2019 | | | | $ | 0.1885 | | | | | $ | 61,114 | | |
June 30, 2019 | | | | | 0.1885 | | | | | | 61,108 | | |
Total | | | | $ | 0.3770 | | | | | $ | 122,222 | | |
Distribution | ||||||||
For the Three Months Ended | Per Share | Amount | ||||||
Fiscal 2019 | ||||||||
March 31, 2019 | $ | 0.1885 | $ | 61 | ||||
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Total | $ | 0.1885 | $ | 61 | ||||
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Fiscal 2020 | ||||||||
March 31, 2020 | $ | 0.1500 | $ | 102 | ||||
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Total | $ | 0.1500 | $ | 102 | ||||
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See Note 5 to our unaudited consolidated financial statements included herein for additional information regarding our distributions, including a reconciliationdistributions.
Recent Developments
On May 5, 2020, the Company entered into the Amendment. For additional discussion of our GAAP-basis net investment incomethe Amendment, see Note 12 to our tax-basis net investment income for the six months ended June 30, 2019 and 2018.
Critical Accounting Policies
Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We describe our most significant accounting policies in “Note 2. Summary of Significant Accounting Policies” in our consolidated financial statements. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparingWe evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. We have identified one of our accounting policies, valuation of portfolio investments, as critical because it involves significant judgments and assumptions about highly complex and inherently uncertain matters, and the financial statements, management has madeuse of reasonably different estimates and assumptions that affect thecould have a material impact on our reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations or financial condition. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those of companies in similar businesses.
Valuation of Portfolio Investments
We determine the fairnet asset value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of directors. In connection with that determination, the Advisor provides our board of directors with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent third-party valuation services.
Accounting Standards Codification Topic 820,Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the FASB, clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:
our quarterly fair valuation process begins withby the Advisor reviewingproviding financial and documenting valuations ofoperating information with respect to each portfolio company or investment which valuations are obtained from anto our independent third-party valuation service providers;
our independent third-party valuation service providers review this information, along with other public and private information, and provide the Advisor with a valuation range;range for each portfolio company or investment;
the Advisor then discusses the independent third-party valuation service providers’ valuation ranges and provides the valuation committee of ourthe board of directors, or the valuation committee, with itsa valuation recommendation for each portfolio company or investment, along with supporting materials;
preliminary valuations are then discussed with the valuation committee;
our valuation committee reviews the preliminary valuations and the Advisor, together with our independent third-party valuation services,service providers and, if applicable, supplementsupplements the preliminary valuations to reflect any comments provided by the valuation committee;
following the completion of its review, theour valuation committee will recommendrecommends that our board of directors approve ourapproves the fair valuations;valuations determined by the valuation committee; and
our board of directors discusses the valuations and determines the fair value of each such investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of the Advisor, the valuation committee and anyour independent third-party valuation services, if applicable.service providers.
Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of directors may use any approved independent third-party pricing or valuation services. However, our board of directors is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from the Advisor or any approved independent third-party valuation or pricing service that our board of directors deems to be reliable in determining fair value under the circumstances. Below is a description of factors that the Advisor, any approved independent third party valuation services and our board of directors may consider when determining the fair value of our investments.
Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.
For convertible debt securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.
Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value. Our board of directors, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.
The Advisor, any approved independent third-party valuation services and our board of directors may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. The Advisor, any approved independent third-party valuation services and our board of directors may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of directors, in consultation with the Advisor and any approved independent third party valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.
When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of directors subsequently values these warrants or other equity securities received at their fair value.
The fair values of our investments are determined in good faith by our board of directors. Our board of directors is responsible for the valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of directors has delegatedday-to-day responsibility for implementing our valuation policy to the Advisor, and has authorized the Advisor to utilize independent third-party valuation and pricing services that have been approved by our board of directors. The valuation committee is responsible for overseeing the Advisor’s implementation of the valuation process.
See Note 8 to our unaudited consolidated financial statements included herein for additional information regarding the fair value of our financial instruments.
Contractual Obligations
We have entered into an agreementagreements with the Advisor to provide us with investment advisory and administrative services. Payments for investment advisory services under the investment advisory and administrative services agreement are equal to (a) an annual base management fee based on the average weekly value of our gross assets (excluding cash and cash equivalents) and (b) an incentive fee based on our performance. The Advisor is reimbursed for administrative expenses incurred on our behalf. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of this agreementthese agreements and for the amount of fees and expenses accrued under similarthese agreements with FSIC II Advisor during the three and six months ended June 30, 2019March 31, 2020 and 2018.
A summary of our significant contractual payment obligations related tofor the repayment of our outstanding indebtedness at June 30, 2019March 31, 2020 is as follows:
| | | | | | Payments Due By Period | | |||||||||||||||||||||||||||
| | | Maturity Date(1) | | | Total | | | Less than 1 year | | | 1 – 3 years | | | 3 – 5 years | | | More than 5 years | | |||||||||||||||
Green Creek Credit Facility(2) | | | December 15, 2019 | | | | $ | 500,000 | | | | | $ | 500,000 | | | | | | — | | | | | | — | | | | | | — | | |
Cooper River Credit Facility(3) | | | March 31, 2021 | | | | $ | 87,500 | | | | | | — | | | | | $ | 87,500 | | | | | | — | | | | | | — | | |
Darby Creek Credit Facility(4) | | | February 26, 2024 | | | | $ | 185,000 | | | | | | — | | | | | | — | | | | | $ | 185,000 | | | | | | — | | |
Juniata River Credit Facility(5) | | | October 11, 2020 | | | | $ | 680,000 | | | | | | — | | | | | $ | 680,000 | | | | | | — | | | | | | — | | |
Senior Secured Revolving Credit Facility(6) | | | August 9, 2023 | | | | $ | 296,256 | | | | | | — | | | | | | — | | | | | $ | 296,256 | | | | | | — | | |
Payments Due By Period | ||||||||||||||||
Maturity Date(1) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||
Senior Secured Revolving Credit Facility(2) | November 7, 2024 | $837 | — | — | $837 | — | ||||||||||
Germantown Credit Facility(3) | December 15, 2020 | $300 | $ | 300 | — | — | — | |||||||||
Darby Creek Credit Facility(4) | February 26, 2024 | $220 | — | — | $220 | — | ||||||||||
Dunlap Credit Facility(5) | February 26, 2024 | $400 | — | — | $400 | — | ||||||||||
Jefferson Square Credit Facility(6) | July 15, 2022 | $320 | — | $ | 320 | — | — | |||||||||
Juniata River Credit Facility(7) | October 11, 2021 | $720 | — | $ | 720 | — | — | |||||||||
Burholme Prime Brokerage Facility(8) | September 26, 2020 | $67 | $ | 67 | — | — | — | |||||||||
Broomall Prime Brokerage Facility(9) | December 26, 2020 | $12 | $ | 12 | — | — | — | |||||||||
Ambler Credit Facility(10) | November 22, 2024 | $123 | — | — | $123 | — | ||||||||||
Meadowbrook Run Credit Facility(11) | November 22, 2024 | $160 | — | — | $160 | — | ||||||||||
4.250% Notes due 2025 | February 14, 2025 | $475 | — | — | $475 | — |
(1) | Amounts outstanding under the financing arrangements will mature, and all accrued and unpaid interest thereunder will be due and payable, on the maturity date. |
(2) | At March 31, 2020, $928 remained unused under the Senior Secured Revolving Credit Facility. Amount includes borrowings in U.S. dollars, Euros, Canadian dollars, Australian dollars, and pounds sterling. Euro balance outstanding of €231 has been converted to U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Canadian dollar balance outstanding of CAD $148 has been converted to U.S. dollars at an exchange rate of CAD $1.00 to $0.71 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Australian dollar balance outstanding of AUD $245 has been converted to U.S. dollars at an exchange rate of AUD $1.00 to $0.61 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. Pounds sterling balance outstanding of £183 has been converted to U.S. dollars at an exchange rate of £1.00 to $1.25 as of March 31, 2020 to reflect total amount outstanding in U.S. dollars. |
(3) | At March 31, 2020, no amounts remained unused under the financing arrangement. |
(4) | At March 31, 2020, $30 remained unused under the Darby Creek Credit Facility. |
(5) | At March 31, 2020, $100 remained unused under the Dunlap Credit Facility. |
(6) | At March 31, 2020, $80 remained unused under the Jefferson Square Credit Facility. |
(7) | At March 31, 2020, $130 remained unused under the Juniata River Credit Facility. |
(8) | At March 31, 2020, $33 remained unused under the Burholme Prime Brokerage Facility. |
(9) | At March 31, 2020, $38 remained unused under the Broomall Prime Brokerage Facility. |
(10) | At March 31, 2020, $77 remained unused under the Ambler Credit Facility. |
(11) | At March 31, 2020, $140 remained unused under the Meadowbrook Run Credit Facility. |
Off-Balance Sheet Arrangements
We currently have nooff-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Fair Value Measurement—Disclosures Framework—Changes to Disclosure Requirements for Fair Value Measurement (Topic 820), or ASU 2018-13. ASU 2018-13 introduces new fair value disclosure requirements and eliminates and modifies certain existing fair value disclosure requirements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We are currently evaluating the impact of ASU 2018-13 on our financial statements.
We are subject to financial market risks, including changes in interest rates. As of June 30, 2019, 79.1%March 31, 2020, 71.5% of our portfolio investments (based on fair value) were debt investments paying variable interest rates and 14.3%12.0% were debt investments paying fixed interest rates, while 1.1%7.0% were other income producing investments, 5.1% were3.8% consisted ofnon-income producing investments and the remaining 0.4% consisting5.7% consisted of investments onnon-accrual status. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income, and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to the Advisor with respect to our increasedpre-incentive fee net investment income.
Subject to the requirements of the 1940 Act, we may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts. Although hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the
Pursuant to the terms of all of our financing arrangements, borrowings are at a floating rate based on LIBOR. To the extent that any present or future credit facilities, total return swap agreements or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.
The following table shows the effect over a twelve month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments, and our financing arrangements in effect as of June 30, 2019March 31, 2020 (dollar amounts are presented in thousands)millions):
Basis Point Change in Interest Rates | | | Increase (Decrease) in Interest Income(1) | | | Increase (Decrease) in Interest Expense | | | Increase (Decrease) in Net Interest Income | | | Percentage Change in Net Interest Income | | ||||||||||||
Down 100 basis points | | | | $ | (32,331) | | | | | $ | (17,488) | | | | | $ | (14,843) | | | | | | (5.1)% | | |
No change | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Up 100 basis points | | | | $ | 32,426 | | | | | $ | 17,488 | | | | | $ | 14,938 | | | | | | 5.1% | | |
Up 300 basis points | | | | $ | 98,006 | | | | | $ | 52,463 | | | | | $ | 45,543 | | | | | | 15.5% | | |
Up 500 basis points | | | | $ | 163,758 | | | | | $ | 87,438 | | | | | $ | 76,320 | | | | | | 26.0% | | |
Basis Point Change in Interest Rates | Increase (Decrease) in Interest Income(1) | Increase (Decrease) in Interest Expense | Increase (Decrease) in Net Interest Income | Percentage Change in Net Interest Income | ||||||||||||
Down 100 basis points | $ | (27 | ) | $ | (31 | ) | $ | 4 | 0.9 | % | ||||||
No change | — | — | — | — | ||||||||||||
Up 100 basis points | $ | 54 | $ | 31 | $ | 23 | 5.1 | % | ||||||||
Up 300 basis points | $ | 166 | $ | 92 | $ | 74 | 16.1 | % | ||||||||
Up 500 basis points | $ | 280 | $ | 153 | $ | 127 | 27.6 | % |
(1) | Assumes no defaults or prepayments by portfolio companies over the next twelve months. |
We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations.
Foreign Currency Risk
From time to time, we may make investments that are denominated in a foreign currency that are subject to the effects of exchange rate movements between the foreign currency of each such investment and the U.S. dollar, which may affect future fair values and cash flows, as well as amounts translated into U.S. dollars for inclusion in our consolidated financial statements.
The table below presents the effect that a 10% immediate, unfavorable change in the foreign currency exchange rates (i.e. strengthening of the U.S. dollar) would have on the fair value of our investments denominated in foreign currencies as of
March 31, 2020, by foreign currency, all other valuation assumptions remaining constant. In addition, the table below presents the par value of our investments denominated in foreign currencies and the notional amount of foreign currency forward contracts in local currency in place as of March 31, 2020 to hedge against foreign currency risks.
Investments Denominated in Foreign Currencies As of March 31, 2020 | Hedges As of March 31, 2020 | |||||||||||||||||||||||
Cost in Local Currency | Cost in US$ | Fair Value | Reduction in Fair Value as of March 31, 2020 if 10% Adverse Change in Exchange Rate(1) | Net Foreign Currency Hedge Amount in Local Currency | Net Foreign Currency Hedge Amount in U.S. Dollars | |||||||||||||||||||
Australian Dollars | A$ | 152.6 | $ | 105.0 | $ | 90.0 | $ | 9.0 | A$ | 6.8 | $ | 4.6 | ||||||||||||
British Pound Sterling | £ | 138.7 | 178.9 | 165.5 | 16.6 | £ | 0.4 | 0.5 | ||||||||||||||||
Canadian Dollars | C$ | 118.9 | 89.4 | 77.5 | 7.8 | C$ | — | — | ||||||||||||||||
Euros | € | 135.8 | 136.6 | 129.9 | 13.0 | € | 5.7 | 6.4 | ||||||||||||||||
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Total | $ | 509.9 | $ | 462.9 | $ | 46.4 | $ | 11.5 | ||||||||||||||||
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(1) | Excludes effect, if any, of any foreign currency hedges. |
As illustrated in the table above, we use derivative instruments from time to time, including foreign currency forward contracts, to manage the impact of fluctuations in foreign currency exchange rates. In addition, we have the ability to borrow in foreign currencies under our Senior Secured Revolving Credit Facility, which provides a natural hedge with regard to changes in exchange rates between the foreign currencies and the U.S. dollar and reduces our exposure to foreign exchange rate differences. We are typically a net receiver of these foreign currencies as related to our international investment positions, and, as a result, our investments denominated in foreign currencies, to the extent not hedged, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar.
As of March 31, 2020, the net contractual amount of our foreign currency forward contracts totaled $11.5, all of which related to the hedging of our foreign currency denominated debt investments. As of March 31, 2020, we had outstanding borrowings denominated in foreign currencies of €231, CAD $148, £183 and A$245 under our Senior Secured Revolving Credit Facility.
In addition, we may have risk regarding portfolio valuation. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments.”
As required byRule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2019.
Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined inRules 13a-15(f) or15d-15(f) promulgated under the Exchange Act) that occurred during the three-month period ended June 30, 2019March 31, 2020 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. |
We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material adverse effect upon our financial condition or results of operations.
Item 1A. | Risk Factors. |
In addition to the other information set forth in this Quarterly Report on Form10-Q, you should carefully consider the risk factors set forththat appeared under Item 1A. “Risk Factors” in our annual reportmost recent Annual Report on Form10-K. There are no material changes from the risk factors included within our most recent Annual Report on Form10-K other than the risks described below.
Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of operations.
Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected, and could continue to adversely affect operating results for us and for our portfolio companies. For example,the COVID-19 pandemic has resulted in the following in many affected jurisdictions, including the United States: (i) restrictions on travel and the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories, resulting in significant disruption to the business of many companies, (ii) increased defaults by borrowers, (iii) volatility in credit markets and (iv) rapidly evolving action by government officials to address the economic and market problems. In addition to these developments having adverse consequences for us and our portfolio companies, the operations of the Advisor have been, and could continue to be, adversely impacted, including through quarantine measures and travel restrictions imposed on its personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers.
As the potential impactof COVID-19 is difficult to predict, the extent towhich COVID-19 could negatively affect our and our portfolio companies’ operating results or the duration of any potential business or supply-chain disruption is uncertain. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity ofthe COVID-19 pandemic and the actions taken by authorities and other entities to contain the spreadof COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.
We are currently operating in a period of capital markets disruption and economic uncertainty.
The U.S. capital markets have experienced extreme volatility and disruption following the global outbreakof COVID-19 that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.
If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.
As announced, our next quarterly distribution to stockholders has been reduced to $0.15 per share. Our ability to pay reduced distributions, to resume paying distributions consistent with our historical range or to continue to pay our distribution fully in cash rather than shares of common stock might be adversely affected by the impact of one or more of the risk factors described in this Quarterly Report onForm 10-Q and in our most recent Annual Report onForm 10-K, includingthe COVID-19 pandemic described above. If we are unable to satisfy the asset coverage test applicable to us under the 1940 Act as a business development company or if we violate certain covenants under our existing or future credit facilities or other
leverage, we mayalso be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the year ended December 31, 2018, as supplemented by our definitive proxy statement forfuture sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the Mergers (filed on August 13, 2019).
Period | | | Total Number of Shares Purchased | | | Average Price Paid per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | ||||||||||||
April 1, 2019 through April 30, 2019 | | | | | 3,191,572 | | | | | $ | 8.05 | | | | | | 3,191,572 | | | | (1) | | |||
May 1, 2019 through May 31, 2019 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
June 1, 2019 through June 30, 2019 | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 3,191,572 | | | | | $ | 8.05 | | | | | | 3,191,572 | | | | (1) | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Not applicable.
Other Information. |
Not applicable.
Exhibits. |
* | Filed herewith. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized on August 14, 2019.
By: | /s/ Michael C. Forman | |||||||
Michael C. Forman Chief Executive Officer (Principal Executive Officer) | ||||||||
By: | /s/ Steven Lilly | |||||||
Steven Lilly Chief Financial Officer |
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