UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | |
(Mark One) | | |
⌧ | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the quarterly period ended | ||
OR | ||
◻ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period | ||
Commission file number:File Number: 814-00939
MSC Income Fund, Inc.
(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)
| |
Maryland (State or incorporation or | 45-3999996 (I.R.S. Employer Identification No.) |
1300 Post Oak Boulevard, 8th Floor Houston, TX principal executive offices)(Address of | 77056 |
(713) 350-6000
(Registrant’s telephone number including area code)
n/a
(Former name, former address and formalformer fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which | ||
None | | N/A | | N/A |
Indicate by check mark whether the registrant: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 ⌧þ No o◻
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
| | | | |
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. ◻o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ◻o No þ⌧
The issuer had 80,334,279number of shares outstanding of the issuer’s common stock outstanding as of November 10, 2017.
TABLE OF CONTENTS
| | | ||
| ||||
| Consolidated Balance Sheets—March 31, 2021 (unaudited) and December 31, 2020 | 1 | ||
| Consolidated Statements of Operations (unaudited)—Three months ended March 31, 2021 and 2020 | |||
| ||||
| Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2021 and 2020 | |||
| Consolidated Schedule of Investments (unaudited)—March 31, 2021 | 5 | ||
| 20 | |||
| 33 | |||
| 65 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 71 | ||
Quantitative and Qualitative Disclosures | 82 | |||
83 | ||||
83 | ||||
83 | ||||
| Item 2. | 83 | |||
84 | ||||
85 | ||||
| ||||
86 | ||||
MSC Income Fund, Inc.
Consolidated Balance Sheets
(dollars in thousands, except shareshares and per share amounts)
| | | | | | |
| | March 31, | | December 31, | ||
|
| 2021 |
| 2020 | ||
| | (unaudited) | | | | |
ASSETS |
| | |
| |
|
Investments at fair value: |
| | |
| |
|
Control investments (cost: $18,163 and $18,152 as of March 31, 2021 and December 31, 2020, respectively) | | $ | 33,776 | | $ | 33,831 |
Affiliate investments (cost: $156,007 and $143,740 as of March 31, 2021 and December 31, 2020, respectively) | |
| 170,959 | |
| 157,690 |
Non‑Control/Non‑Affiliate investments (cost: $685,503 and $678,764 as of March 31, 2021 and December 31, 2020, respectively) | |
| 644,997 | |
| 634,001 |
Total investments (cost: $859,673 and $840,656 as of March 31, 2021 and December 31, 2020, respectively) | |
| 849,732 | |
| 825,522 |
Cash and cash equivalents | |
| 28,604 | |
| 8,586 |
Restricted cash | | | — | | | 40,480 |
Dividends and interest receivable | |
| 10,659 | |
| 8,303 |
Deferred financing costs (net of accumulated amortization of $4,740 and $4,443 as of March 31, 2021 and December 31, 2020, respectively) | |
| 3,975 | |
| 2,691 |
Prepaids and other assets | | | 1,520 | | | 2,439 |
Receivable for investments sold | | | 1,789 | | | — |
Total assets | | $ | 896,279 | | $ | 888,021 |
LIABILITIES | |
| | |
| |
Credit facilities payable | | $ | 284,688 | | $ | 301,816 |
Accounts payable and other liabilities | |
| 2,854 | |
| 2,093 |
Interest payable | |
| 1,771 | |
| 286 |
Dividend payable | |
| 7,961 | |
| — |
Base management and incentive fees payable | | | 3,903 | | | 4,202 |
Payable for investment purchases | | | 10,782 | | | — |
Total liabilities | |
| 311,959 | |
| 308,397 |
Commitments and contingencies (Note I) | |
| | |
| |
NET ASSETS | |
| | |
| |
Common stock, $0.001 par value per share (150,000,000 shares authorized; 79,608,304 and 79,608,304 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively) | |
| 80 | |
| 80 |
Additional paid‑in capital | |
| 682,028 | |
| 682,028 |
Total undistributed (overdistributed) earnings | |
| (97,788) | |
| (102,484) |
Total net assets | |
| 584,320 | |
| 579,624 |
Total liabilities and net assets | | $ | 896,279 | | $ | 888,021 |
NET ASSET VALUE PER SHARE | | $ | 7.34 | | $ | 7.28 |
| September 30, 2017 | December 31, 2016 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Portfolio investments at fair value: | |||||||
| Non-Control/Non-Affiliate investments (amortized cost: $996,358 and $935,741 as of September 30, 2017 and December 31, 2016, respectively) | $ | 967,475 | $ | 916,393 | |||
| Affiliate investments (amortized cost: $69,734 and $53,771 as of September 30, 2017 and December 31, 2016, respectively) | 74,104 | 56,312 | |||||
| Control investments (amortized cost: $44,794 and $12,883 as of September 30, 2017 and December 31, 2016, respectively) | 49,127 | 16,542 | |||||
| Total portfolio investments (amortized cost: $1,110,886 and $1,002,395 as of September 30, 2017 and December 31, 2016, respectively) | 1,090,706 | 989,247 | |||||
| Cash and cash equivalents | 39,709 | 23,719 | |||||
| Interest receivable | 9,652 | 7,204 | |||||
| Receivable for securities sold | 12,835 | 7,610 | |||||
| Prepaid and other assets | 1,698 | 1,268 | |||||
| Deferred offering costs (net of accumulated amortization of $0 and $9,919 as of September 30, 2017 and December 31, 2016, respectively) | — | 680 | |||||
| Deferred financing costs (net of accumulated amortization of $2,551 and $2,862 as of September 30, 2017 and December 31, 2016, respectively) | 3,488 | 3,840 | |||||
| Total assets | $ | 1,158,088 | $ | 1,033,568 | |||
| LIABILITIES | |||||||
| Accounts payable and other liabilities | $ | 1,608 | $ | 1,164 | |||
| Payable for unsettled trades | 152 | 932 | |||||
| Stockholder distributions payable | 4,565 | 4,354 | |||||
| Base management fees payable | 5,682 | 5,054 | |||||
| Due to affiliates | 306 | 184 | |||||
| Directors’ fees payable | 24 | 12 | |||||
| Payable for securities purchased | 9,806 | 11,035 | |||||
| Notes payable | 490,000 | 413,000 | |||||
| Total liabilities | 512,143 | 435,735 | |||||
| Commitments and Contingencies (Note 12) | |||||||
| NET ASSETS | |||||||
| Common stock, $.001 par value; 150,000,000 shares authorized, 79,204,960 and 73,382,971 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 79 | 73 | |||||
| Additional paid-in capital | 682,790 | 633,855 | |||||
| Accumulated distributions in excess of net investment income | (16,266 | ) | (22,602 | ) | |||
| Net unrealized depreciation | (20,658 | ) | (13,493 | ) | |||
| Total net assets | 645,945 | 597,833 | |||||
| Total liabilities and net assets | $ | 1,158,088 | $ | 1,033,568 | |||
| Net asset value per share | $ | 8.16 | $ | 8.15 | |||
The accompanying notes to the condensedare an integral part of these consolidated financial statements.
1
MSC Income Fund, Inc.
Consolidated Statements of Operations
(dollars in thousands, except shareshares and per share amounts)
(unaudited)
| | | | | | | |
| | Three Months Ended | | ||||
|
| March 31, | | ||||
|
| 2021 |
| 2020 |
| ||
INVESTMENT INCOME: |
| |
|
| |
|
|
Interest, fee and dividend income: |
| | | | | |
|
Control investments | | $ | 600 | | $ | 591 | |
Affiliate investments | |
| 3,650 | | | 3,540 | |
Non‑Control/Non‑Affiliate investments | |
| 16,022 | | | 19,869 | |
Total investment income | |
| 20,272 | | | 24,000 | |
EXPENSES: | |
| | | | | |
Interest | |
| 3,164 | | | 5,229 | |
Base management fees | |
| 3,903 | | | 4,994 | |
Internal administrative service expenses | | | 1,055 | | | 784 | |
Offering costs | | | — | | | 88 | |
Professional fees | | | 558 | | | 710 | |
Insurance | | | 114 | | | 103 | |
Board of director fees | | | 108 | | | 102 | |
Other general and administrative | | | 483 | | | 240 | |
Total expenses before fee and expense waivers | | | 9,385 | | | 12,250 | |
Waiver of internal administrative services expenses | |
| (1,055) | | | (784) | |
Total expenses, net of fee and expense waivers | |
| 8,330 | | | 11,466 | |
NET INVESTMENT INCOME | |
| 11,942 | | | 12,534 | |
NET REALIZED GAIN (LOSS): | |
| | | | | |
Affiliate investments | |
| — | | | (3,044) | |
Non‑Control/Non‑Affiliate investments | |
| (1,991) | | | (321) | |
Realized loss on extinguishment of debt | | | (2,091) | | | — | |
Total net realized loss | |
| (4,082) | | | (3,365) | |
NET UNREALIZED APPRECIATION (DEPRECIATION): | |
| | | | | |
Control investments | |
| (66) | | | (998) | |
Affiliate investments | |
| 1,003 | | | (3,254) | |
Non‑Control/Non‑Affiliate investments | |
| 4,256 | | | (90,657) | |
Total net change in unrealized appreciation (depreciation) | |
| 5,193 | | | (94,909) | |
INCOME TAXES: | |
| | | | | |
Federal and state income, excise and other taxes | |
| 396 | | | 76 | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 12,657 | | $ | (85,816) | |
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED | | $ | 0.15 | | $ | 0.16 | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER | | $ | 0.16 | | $ | (1.09) | |
WEIGHTED AVERAGE SHARES | |
| 79,608,304 | | | 78,607,063 | |
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||
| INVESTMENT INCOME: | |||||||||||||||
| From non-control/non-affiliate investments: | |||||||||||||||
| Interest income | $ | 22,752 | $ | 20,055 | $ | 67,852 | $ | 59,731 | |||||||
| Fee income | 145 | 134 | 1,682 | 641 | |||||||||||
| Dividend income | 188 | 250 | 572 | 436 | |||||||||||
| From affiliate investments: | |||||||||||||||
| Interest income | 1,307 | 1,085 | 3,408 | 2,080 | |||||||||||
| Fee income | 53 | 37 | 156 | 170 | |||||||||||
| Dividend income | 582 | 406 | 1,563 | 939 | |||||||||||
| From control investments: | |||||||||||||||
| Interest income | 164 | 177 | 502 | 567 | |||||||||||
| Fee income | 15 | 20 | 56 | 60 | |||||||||||
| Dividend income | 125 | 70 | 452 | 70 | |||||||||||
| Total interest, fee and dividend income | 25,331 | 22,234 | 76,243 | 64,694 | |||||||||||
| EXPENSES: | |||||||||||||||
| Interest expense | 5,004 | 3,905 | 13,342 | 11,219 | |||||||||||
| Base management and incentive fees | 5,648 | 4,905 | 18,419 | 14,585 | |||||||||||
| Administrative services expenses | 694 | 529 | 2,228 | 1,636 | |||||||||||
| Offering costs | 881 | 290 | 1,679 | 422 | |||||||||||
| Professional fees | 141 | 162 | 465 | 833 | |||||||||||
| Insurance | 47 | 48 | 143 | 143 | |||||||||||
| Other general and administrative | 509 | 387 | 1,128 | 1,112 | |||||||||||
| Expenses before fee and expense waivers | 12,924 | 10,226 | 37,404 | 29,950 | |||||||||||
| Waiver of incentive fees | — | — | (2,318 | ) | (493 | ) | |||||||||
| Waiver of administrative services expenses | (694 | ) | (529 | ) | (2,228 | ) | (1,636 | ) | |||||||
| Total expenses, net of fee and expense waivers | 12,230 | 9,697 | 32,858 | 27,821 | |||||||||||
| Net investment income before taxes | 13,101 | 12,537 | 43,385 | 36,873 | |||||||||||
| Income tax expense (benefit), including excise tax | 61 | 19 | 139 | 67 | |||||||||||
| NET INVESTMENT INCOME | 13,040 | 12,518 | 43,246 | 36,806 | |||||||||||
| NET REALIZED GAIN (LOSS) FROM INVESTMENTS | |||||||||||||||
| Non-Control/Non-Affiliate investments | (227 | ) | (1,949 | ) | 2,408 | (11,964 | ) | ||||||||
| Affiliate investments | 951 | — | 951 | — | |||||||||||
| Control investments | — | — | — | — | |||||||||||
| Total realized gain (loss) from investments | 724 | (1,949 | ) | 3,359 | (11,964 | ) | |||||||||
| NET REALIZED INCOME | 13,764 | 10,569 | 46,605 | 24,842 | |||||||||||
| NET UNREALIZED APPRECIATION (DEPRECIATION) | |||||||||||||||
| Non-Control/Non-Affiliate investments | (5,533 | ) | 11,891 | (9,663 | ) | 11,187 | |||||||||
| Affiliate investments | (48 | ) | (108 | ) | 1,824 | 438 | |||||||||
| Control investments | 531 | (7 | ) | 674 | 1,304 | ||||||||||
| Total net unrealized appreciation (depreciation) | (5,050 | ) | 11,776 | (7,165 | ) | 12,929 | |||||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 8,714 | $ | 22,345 | $ | 39,440 | $ | 37,771 | |||||||
| PER SHARE INFORMATION - BASIC AND DILUTED | |||||||||||||||
| NET INVESTMENT INCOME PER SHARE | $ | 0.16 | $ | 0.18 | $ | 0.56 | $ | 0.55 | |||||||
| NET REALIZED INCOME PER SHARE | $ | 0.18 | $ | 0.15 | $ | 0.61 | $ | 0.37 | |||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE (EARNINGS PER SHARE) | $ | 0.11 | $ | 0.32 | $ | 0.51 | $ | 0.57 | |||||||
| DISTRIBUTIONS DECLARED PER SHARE | $ | 0.17 | $ | 0.17 | $ | 0.52 | $ | 0.52 | |||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED | 78,807,225 | 69,729,799 | 76,899,096 | 66,576,489 | |||||||||||
The accompanying notes to the condensedare an integral part of these consolidated financial statements.
2
MSC Income Fund, Inc.
Consolidated Statements of Changes in Net Assets
(dollars in thousands, except numbershares)
(unaudited)
| | | | | | | | | | | | | | |
| | | | | | | | | | Total | | | | |
| | Common Stock | | Additional | | Undistributed | | | | |||||
| | Number of | | Par | | Paid‑In | | (Overdistributed) | | Total Net | ||||
|
| Shares |
| Value |
| Capital |
| Earnings |
| Asset Value | ||||
Balances at December 31, 2019 |
| 78,463,377 | | $ | 78 | | $ | 675,554 | | $ | (66,327) | | $ | 609,305 |
Dividend reinvestment |
| 751,240 | | | 1 | | | 5,898 | | | — | | | 5,899 |
Common stock repurchased |
| (791,488) | | | (1) | | | (6,094) | | | — | | | (6,095) |
Net decrease resulting from operations |
| — | | | — | | | — | | | (85,816) | | | (85,816) |
Dividends to stockholders |
| — | | | — | | | — | | | (13,729) | | | (13,729) |
Balances at March 31, 2020 |
| 78,423,129 | | $ | 78 | | $ | 675,358 | | $ | (165,872) | | $ | 509,564 |
| | | | | | | | | | | | | | |
Balances at December 31, 2020 |
| 79,608,304 | | $ | 80 | | $ | 682,028 | | $ | (102,484) | | $ | 579,624 |
Net increase resulting from operations | | — | | | — | | | — | | | 12,657 | | | 12,657 |
Dividends to stockholders | | — | | | — | | | — | | | (7,961) | | | (7,961) |
Balances at March 31, 2021 | | 79,608,304 | | $ | 80 | | $ | 682,028 | | $ | (97,788) | | $ | 584,320 |
| | | | | | | | | | | | | | |
The accompanying notes are an integral part of shares)
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||||
| Change in Net Assets from Operations: | ||||||||
| Net investment income | $ | 43,246 | $ | 36,806 | ||||
| Net realized gain (loss) on investments | 3,359 | (11,964 | ) | |||||
| Net unrealized appreciation (depreciation) | (7,165 | ) | 12,929 | |||||
| Net increase in net assets resulting from operations | 39,440 | 37,771 | ||||||
| Change in Net Assets from Stockholders’ Distributions: | ||||||||
| Distributions from net investment income | (36,911 | ) | (34,994 | ) | ||||
| Distributions from net realized gain on investments | (3,359 | ) | — | |||||
| Net decrease in net assets resulting from stockholders’ distributions | (40,270 | ) | (34,994 | ) | ||||
| Change in Net Assets from Capital Share Transactions: | ||||||||
| Issuance of common stock, net of issuance costs | 42,366 | 57,705 | ||||||
| Reinvestment of stockholder distributions | 20,594 | 18,263 | ||||||
| Repurchase of common stock | (14,018 | ) | (8,423 | ) | ||||
| Net increase in net assets resulting from capital share transactions | 48,942 | 67,545 | ||||||
| Total Increase in Net Assets | 48,112 | 70,322 | ||||||
| Net Assets at beginning of the period | 597,833 | 491,652 | ||||||
| Net Assets at end of the period | $ | 645,945 | $ | 561,974 | ||||
| NAV per share at end of the period | $ | 8.16 | $ | 7.92 | ||||
| Common shares outstanding, beginning of the period | 73,382,971 | 62,382,044 | ||||||
| Issuance of common shares | 5,063,398 | 7,328,503 | ||||||
| Issuance of common shares pursuant to distribution reinvestment plan | 2,466,862 | 2,311,510 | ||||||
| Repurchase of common shares | (1,708,271 | ) | (1,079,994 | ) | ||||
| Common shares outstanding, end of the period | 79,204,960 | 70,942,063 | ||||||
3
MSC Income Fund, Inc.
Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
| | | | | | |
| | Three Months Ended | ||||
| | March 31, | ||||
| | 2021 | | 2020 | ||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | |
Net increase (decrease) in net assets resulting from operations | | $ | 12,657 | | $ | (85,816) |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash generated from operating activities: | | | | | | |
Investments in portfolio companies | | | (79,381) | | | (46,895) |
Proceeds from sales and repayments of debt investments in portfolio companies | | | 60,744 | | | 86,496 |
Net change in unrealized (appreciation) depreciation | | | (5,193) | | | 94,909 |
Net realized loss on the sale of portfolio investments | | | 1,991 | | | 3,365 |
Realized loss on extinguishment of debt | | | 2,091 | | | — |
Amortization of deferred financing costs | | | 311 | | | 351 |
Amortization of deferred offering costs | | | — | | | 88 |
Accretion of unearned income | | | (959) | | | (2,021) |
Payment-in-kind interest | | | (1,412) | | | (828) |
Changes in other assets and liabilities: | | | | | | |
Dividends and interest receivable | | | (2,356) | | | 99 |
Receivable for investments sold | | | (1,789) | | | — |
Prepaid and other assets | | | 919 | | | 875 |
Payable for investments purchased | | | 10,782 | | | — |
Base management and incentive fees payable | | | (299) | | | (394) |
Interest payable | | | 1,485 | | | — |
Accounts payable and other liabilities | | | 620 | | | 652 |
Net cash provided by (used in) operating activities | | | 211 | | | 50,881 |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | |
Redemption of common stock | | | — | | | (6,094) |
Payment of offering costs | | | — | | | (88) |
Dividends paid | | | — | | | (7,831) |
Repayments on Credit Facilities payable | | | (311,816) | | | (117,000) |
Proceeds from Credit Facilities payable | | | 294,688 | | | 75,000 |
Payment of deferred financing costs | | | (3,545) | | | (462) |
Net cash provided by (used in) financing activities | | | (20,673) | | | (56,475) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | (20,462) | | | (5,594) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD | | | 49,066 | | | 21,846 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE END OF THE PERIOD | | $ | 28,604 | | $ | 16,252 |
| | | | | | |
Supplemental cash flow disclosures: | | | | | | |
Cash paid for interest | | $ | 1,369 | | $ | 4,493 |
Cash paid for taxes | | $ | 396 | | $ | 685 |
Non-cash financing activities: | | | | | | |
Dividends declared and unpaid | | $ | 7,961 | | $ | 4,669 |
Shares issued pursuant to the dividend reinvestment plan | | $ | — | | $ | 751 |
The accompanying notes are an integral part of these consolidated financial statements
4
MSC Income Fund, Inc.
Consolidated Schedule of Investments
March 31, 2021
(dollars in thousands)
(unaudited)
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net increase in net assets resulting from operations | $ | 39,440 | $ | 37,771 | |||
| Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | |||||||
| Principal repayments received and proceeds from sales of investments in portfolio companies | 370,941 | 222,423 | |||||
| Investments in portfolio companies | (470,875 | ) | (275,098 | ) | |||
| Net unrealized (appreciation) depreciation of portfolio investments | 7,165 | (12,929 | ) | ||||
| Net realized (gain) loss on sale of portfolio investments | (3,359 | ) | 11,964 | ||||
| Amortization of deferred financing costs | 1,013 | 1,115 | |||||
| Amortization of deferred offering costs | 1,679 | 422 | |||||
| Accretion of unearned income | (10,793 | ) | (7,778 | ) | |||
| Net payment-in-kind interest accrual | (897 | ) | (255 | ) | |||
| Changes in other assets and liabilities: | |||||||
| Interest receivable | (2,448 | ) | 873 | ||||
| Prepaid and other assets | (390 | ) | (9 | ) | |||
| Base management fees payable | 628 | (149 | ) | ||||
| Due to affiliates | (83 | ) | 491 | ||||
| Directors’ fees payable | 12 | 15 | |||||
| Accounts payable and other liabilities | 285 | 166 | |||||
| Payable for unsettled trades | (780 | ) | 709 | ||||
| Net cash used in operating activities | (68,462 | ) | (20,269 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from issuance of common stock | 46,041 | 63,447 | |||||
| Redemption of common shares | (14,018 | ) | (8,423 | ) | |||
| Payment of selling commissions and dealer manager fees | (3,511 | ) | (5,687 | ) | |||
| Payment of offering costs | (959 | ) | (1,226 | ) | |||
| Payment of stockholder distributions | (19,465 | ) | (16,375 | ) | |||
| Repayments on notes payable | (339,000 | ) | (255,000 | ) | |||
| Proceeds from notes payable | 416,000 | 260,000 | |||||
| Payment of deferred financing costs | (636 | ) | (428 | ) | |||
| Net cash provided by financing activities | 84,452 | 36,308 | |||||
| Net increase in cash and cash equivalents | 15,990 | 16,039 | |||||
| CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 23,719 | 24,001 | |||||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | $ | 39,709 | $ | 40,040 | |||
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Control Investments (5) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (CTMH, LP) | 38.8% | | | | | $ | 835 | $ | 710 | (31) |
| | | | | | | | | | | | | | |
GRT Rubber Technologies LLC ("GRT") | | December 19, 2014 | Manufacturer of Engineered Rubber Products | | | | | | | | | | | |
| | | | Secured Debt | | 7.12% (L+7.00%) | 12/31/2023 | $ | 8,262 | | 8,247 | | 8,262 | |
| | | | Member Units | 5,879 | | | | | | 6,435 | | 22,120 | (8) |
| | | | | | | | | | | 14,682 | | 30,382 | |
| | | | | | | | | | | | | | |
Harris Preston Fund Investments | (12) (13) | October 1, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (2717 MH, L.P.) | 49.3% | | | | | | 2,646 | | 2,684 | (31) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Subtotal Control Investments (5.8% of net assets at fair value) | | | | | | | | | | $ | 18,163 | $ | 33,776 | |
| | | | | | | | | | | | | | |
Affiliate Investments (6) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
AFG Capital Group, LLC | | November 7, 2014 | Provider of Rent-to-Own Financing Solutions and Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% | 5/25/2022 | | 101 | | 101 | | 101 | |
| | | | Preferred Member Units | 186 | | | | | | 300 | | 1,580 | |
| | | | | | | | | | | 401 | | 1,681 | |
| | | | | | | | | | | | | | |
Analytical Systems Keco, LLC | | August 16, 2019 | Manufacturer of Liquid and Gas Analyzers | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+10.00%, Floor 2.00%) | 8/16/2024 | | 1,289 | | 1,219 | | 1,219 | (9) |
| | | | Preferred Member Units | 3,200 | | | | | | 800 | | 680 | |
| | | | Warrants | 420 | | 8/16/2029 | | | | 79 | | - | (27) |
| | | | | | | | | | | 2,098 | | 1,899 | |
| | | | | | | | | | | | | | |
Brewer Crane Holdings, LLC | | January 9, 2018 | Provider of Crane Rental and Operating Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 1/9/2023 | | 2,108 | | 2,090 | | 2,090 | (9) |
| | | | Preferred Member Units | 2,950 | | | | | | 1,070 | | 1,370 | (8) |
| | | | | | | | | | | 3,160 | | 3,460 | |
| | | | | | | | | | | | | | |
Centre Technologies Holdings, LLC | | January 4, 2019 | Provider of IT Hardware Services and Software Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+10.00%, Floor 2.00%) | 1/4/2024 | | 2,869 | | 2,833 | | 2,833 | (9) |
| | | | Preferred Member Units | 12,696 | | | | | | 1,460 | | 1,540 | |
| | | | | | | | | | | 4,293 | | 4,373 | |
| | | | | | | | | | | | | | |
5
HMS Income Fund, Inc. Condensed Consolidated Schedule of Investments | ||||||||||||
| As of September 30, 2017 | ||||||||||||
(dollars in thousands) (Unaudited) | ||||||||||||
| Portfolio Company (1) (3) | Business Description | Type of Investment (2) (3) | Index Rate (22) | Principal (7) | Cost (7) | Fair Value (27) | ||||||
| Control Investments (6) | ||||||||||||
| Copper Trail Energy Fund I, LP (9)(15)(16) | Investment Partnership | LP Interests (Copper Trail Energy Fund I, LP) (Fully diluted 30.1%) | — | $ | — | $ | 2,500 | $ | 2,500 | |||
| GRT Rubber Technologies, LLC (8) (10) (13) | Engineered Rubber Product Manufacturer | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.24%, Secured Debt (Maturity - December 19, 2019) | 1 month LIBOR | 5,925 | 5,859 | 5,925 | ||||||
| Member Units (2,896 shares) | — | — | 6,435 | 10,186 | ||||||||
| 12,294 | 16,111 | |||||||||||
| HMS-ORIX SLF LLC (9) (15) (23) | Investment Partnership | Membership Interests (Fully diluted 60.00%) (16) | — | — | 30,000 | 30,516 | ||||||
| Subtotal Control Investments (6) (5% of total investments at fair value) | $ | 44,794 | $ | 49,127 | ||||||||
| Affiliate Investments (4) | ||||||||||||
| AFG Capital Group, LLC (10) (13) | Provider of Rent-to-Own Financing Solutions and Services | Member Units (46 shares) (16) | — | $ | — | $ | 300 | $ | 782 | |||
| Warrants (10 equivalent shares, Expiration - November 7, 2024) | — | — | 65 | 187 | ||||||||
| 365 | 969 | |||||||||||
| Charps, LLC (10) (13) | Pipeline Maintenance and Construction | 12.00% Secured Debt (Maturity - January 31, 2022) | None | 4,600 | 4,492 | 4,495 | ||||||
| Preferred Member Units (400 units) | — | — | 100 | 100 | ||||||||
| 4,592 | 4,595 | |||||||||||
| Clad-Rex Steel, LLC (10) (13) | Specialty Manufacturer of Vinyl-Clad Metal | LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity - December 20, 2021) (8) | 1 month LIBOR | 3,420 | 3,360 | 3,420 | ||||||
| Member Units (179 units) (16) | — | — | 1,820 | 2,130 | ||||||||
| 10.00% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity - December 19, 2036) | None | 297 | 293 | 294 | ||||||||
| Member Units (Clad-Rex Steel RE Investor, LLC) (200 units) | — | — | 53 | 53 | ||||||||
| 5,526 | 5,897 | |||||||||||
| Freeport First Lien Loan Fund III, LP (9) (15) | Investment Partnership | LP Interests (Freeport First Lien Loan Fund III, LP) (Fully diluted 5.60%) (16) | — | — | 7,559 | 7,507 | ||||||
| Gamber-Johnson Holdings, LLC (8) (10) (13) | Manufacturer of Ruggedized Computer Mounting Systems | LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.23%, Secured Debt (Maturity - June 24, 2021) | 1 month LIBOR | 5,920 | 5,816 | 5,920 | ||||||
| Member Units (2,155 units) (16) | — | — | 3,711 | 5,740 | ||||||||
| 9,527 | 11,660 | |||||||||||
| Guerdon Modular Holdings, Inc. (10) (13) | Multi-Family and Commercial Modular Construction Company | 13.00% Secured Debt (Maturity - August 13, 2019) | None | 2,677 | 2,640 | 2,658 | ||||||
| Common Stock (53,008 shares) | — | — | 746 | — | ||||||||
| Class B Preferred Stock (101,250 shares) | — | — | 285 | 237 | ||||||||
| 3,671 | 2,895 | |||||||||||
| Gulf Publishing Investor, LLC (10) (13) | Energy Focused Media and Publishing | 12.50% Secured Debt (Maturity - April 29, 2021) | None | 3,200 | 3,148 | 3,148 | ||||||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity - April 29, 2021) (8) | 3 month LIBOR | 20 | 20 | 20 | ||||||||
| Member Units (781 shares) | — | — | 920 | 1,082 | ||||||||
| 4,088 | 4,250 | |||||||||||
| Harris Preston & Partners Capital Funds (15)(16) | Investment Partnership | LP Interests (HPEP 3, LP) (Fully diluted 9.60%) (9) | — | — | 943 | 943 | ||||||
| LP Interests (2717 MH, LP)(Fully diluted 7.00%) | — | — | 400 | 400 | ||||||||
| 1,343 | 1,343 | |||||||||||
| Hawk Ridge Systems, LLC (9) (10) (13) | Value-Added Reseller of Engineering Design and Manufacturing Solutions | 10.00% Secured Debt (Maturity - December 2, 2021) | None | $ | 2,375 | $ | 2,334 | $ | 2,334 | |||
| Preferred Member Units (56 units)(16) | — | — | 713 | 808 | ||||||||
| Preferred Member Units (HRS Services, ULC) (56 units)(16) | — | — | 38 | 43 | ||||||||
| 3,085 | 3,185 | |||||||||||
| HW Temps LLC (8) (10) (13) | Temporary Staffing Solutions | LIBOR Plus 13.00% (Floor 1.00%), Current Coupon 14.24%, Secured Debt (Maturity - July 2, 2020) | 1 month LIBOR | 2,494 | 2,451 | 2,451 | ||||||
| Preferred Member Units (800 shares) (16) | — | — | 986 | 985 | ||||||||
| 3,437 | 3,436 | |||||||||||
| Market Force Information, Inc. (8)(10)(13) | Provider of Customer Experience Management Services | LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.32%, Secured Debt (Maturity - July 28, 2022) | 3 month LIBOR | 5,880 | 5,766 | 5,766 | ||||||
| LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity - July 28, 2022) | 1 month LIBOR | 128 | 128 | 128 | ||||||||
| Member Units (170,000 units) | — | — | 3,675 | 3,675 | ||||||||
| 9,569 | 9,569 | |||||||||||
| M.H. Corbin, Inc. (10) (13) | Manufacturer and Distributor of Traffic Safety Products | 10.00% Secured Debt (Maturity - August 31, 2020) | None | 3,194 | 3,172 | 3,172 | ||||||
| Preferred Member Units (1,000 shares) | — | — | 1,500 | 1,500 | ||||||||
| 4,672 | 4,672 | |||||||||||
| Mystic Logistics, Inc. (10) (13) | Logistics and Distribution Services Provider for Large Volume Mailers | 12.00% Secured Debt (Maturity - August 15, 2019) | None | 1,942 | 1,910 | 1,942 | ||||||
| Common Stock (1,468 shares) (16) | — | — | 680 | 1,648 | ||||||||
| 2,590 | 3,590 | |||||||||||
| NuStep, LLC (10) (13) | Designer, Manufacturer and Distributor of Fitness Equipment | 12.00% Secured Debt (Maturity - January 31, 2022) | None | 5,150 | 5,041 | 5,042 | ||||||
| Preferred Member Units (102 units) | — | — | 2,550 | 2,550 | ||||||||
| 7,591 | 7,592 | |||||||||||
| SoftTouch Medical Holdings LLC (8) (10) (13) | Home Provider of Pediatric Durable Medical Equipment | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.24%, Secured Debt (Maturity - October 31, 2019) | 1 month LIBOR | 1,260 | 1,249 | 1,260 | ||||||
| Member Units (785 units) (16) | — | — | 870 | 1,684 | ||||||||
| 2,119 | 2,944 | |||||||||||
| Subtotal Affiliate Investments (4) (7% of total investments at fair value) | $ | 69,734 | $ | 74,104 | ||||||||
| Non-Control/Non-Affiliate Investments (5) | ||||||||||||
| AAC Holding Corp. (8) | Substance Abuse Treatment Service Provider | LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.06%, Secured Debt (Maturity - June 30, 2023) | 3 month LIBOR | $ | 11,826 | $ | 11,538 | $ | 11,826 | |||
| Adams Publishing Group, LLC (8) (11) | Local Newspaper Operator | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity - November 3, 2020) | 3 month LIBOR | 8,572 | 8,336 | 8,411 | ||||||
| ADS Tactical, Inc. (8) (11) | Value-Added Logistics and Supply Chain Solutions Provider | LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 8.83%, Secured Debt (Maturity - December 31, 2022) | 3 month LIBOR | 13,010 | 12,687 | 12,753 | ||||||
| Aethon United BR, LP (8)(11) | Oil & Gas Exploration & Production | LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.98%, Secured Debt (Maturity - September 8, 2023) (14) | 3 month LIBOR | 3,438 | 3,386 | 3,386 | ||||||
| Ahead, LLC (8) (11) | IT Infrastructure Value Added Reseller | LIBOR Plus 6.50%, Current Coupon 7.84%, Secured Debt (Maturity - November 2, 2020) | 3 month LIBOR | 9,125 | 8,937 | 9,122 | ||||||
| Allflex Holdings III Inc. (8) | Manufacturer of Livestock Identification Products | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.31%, Secured Debt (Maturity - July 19, 2021) (14) | 3 month LIBOR | 14,640 | 14,730 | 14,744 | ||||||
| American Scaffold Holdings, Inc. (8) (11) | Marine Scaffolding Service Provider | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.83%, Secured Debt (Maturity - March 31, 2022) | 3 month LIBOR | 7,125 | 7,037 | 7,089 | ||||||
| American Teleconferencing Services, Ltd. (8) | Provider of Audio Conferencing and Video Collaboration Solutions | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.78%, Secured Debt (Maturity - December 8, 2021) | 2 month LIBOR | $ | 9,663 | $ | 8,858 | $ | 9,349 | |||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity - June 6, 2022) (14) | 1 month LIBOR | 5,571 | 5,324 | 5,533 | ||||||||
| 14,182 | 14,882 | |||||||||||
| Apex Linen Service, Inc. (10) (13) | Industrial Launderers | 13.00% Secured Debt (Maturity - October 30, 2022) | None | 3,604 | 3,550 | 3,550 | ||||||
| LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.24%, Secured Debt (Maturity - October 30, 2022) (8) | 1 month LIBOR | 600 | 600 | 600 | ||||||||
| 4,150 | 4,150 | |||||||||||
| Arcus Hunting, LLC (8) (11) | Manufacturer of Bowhunting and Archery Products and Accessories | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.30%, Secured Debt (Maturity - November 13, 2019) | 1 month LIBOR | 6,521 | 6,439 | 6,521 | ||||||
| LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 7.84%, Secured Debt (Maturity - November 13, 2019) | 1 month LIBOR | 2,048 | 2,041 | 2,041 | ||||||||
| 8,480 | 8,562 | |||||||||||
| ATI Investment Sub, Inc. (8) | Manufacturer of Solar Tracking Systems | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.49%, Secured Debt (Maturity - June 22, 2021) | 1 month LIBOR | 7,614 | 7,462 | 7,595 | ||||||
| ATX Networks Corp. (8) (9) | Provider of Radio Frequency Management Equipment | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33%, Secured Debt (Maturity - June 11, 2021) | 3 month LIBOR | 14,588 | 14,390 | 14,442 | ||||||
| BarFly Ventures, LLC (11) | Casual Restaurant Group | 12.00% Secured Debt (Maturity - August 31, 2020) | None | 2,905 | 2,860 | 2,905 | ||||||
| Warrants (.410 equivalent units, Expiration - August 31, 2025) | — | — | 158 | 148 | ||||||||
| Options (.731 equivalent units) | — | — | 133 | 262 | ||||||||
| 3,151 | 3,315 | |||||||||||
| BBB Tank Services, LLC (10) (13) | Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market | 15.00% Secured Debt (Maturity - April 8, 2021) | None | 1,007 | 992 | 999 | ||||||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity - April 9, 2018) (8) | 1 month LIBOR | 200 | 200 | 200 | ||||||||
| Member Units (200,000 units) | — | — | 200 | 145 | ||||||||
| 1,392 | 1,344 | |||||||||||
| Berry Aviation, Inc. (11) | Airline Charter Service Operator | 12.00% Current / 1.75% PIK, Current Coupon 13.75%, Secured Debt (Maturity - January 30, 2020) (14) | None | 1,407 | 1,393 | 1,407 | ||||||
| Common Stock (138 shares) | — | — | 100 | 220 | ||||||||
| 1,493 | 1,627 | |||||||||||
| BigName Commerce, LLC (8) (11) | Provider of Envelopes and Complimentary Stationery Products | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.55%, Secured Debt (Maturity - May 11, 2022) | 1 month LIBOR | 2,503 | 2,474 | 2,474 | ||||||
| Binswanger Enterprises, LLC (8) (11) | Glass Repair and Installation Service Provider | LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.33%, Secured Debt (Maturity - March 9, 2022) | 3 month LIBOR | 15,325 | 15,046 | 15,047 | ||||||
| Member Units (1,050,000 Class A units) | — | — | 1,050 | 940 | ||||||||
| 16,096 | 15,987 | |||||||||||
| Bluestem Brands, Inc. (8) | Multi-Channel Retailer of General Merchandise | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.77%, Secured Debt (Maturity - November 6, 2020) | 3 month LIBOR | 13,206 | 13,024 | 9,366 | ||||||
| Boccella Precast Products, LLC (8)(10)(13) | Manufacturer of Precast Hollow Core Concrete | LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity - June 30, 2022) | 1 month LIBOR | 4,100 | 4,000 | 4,011 | ||||||
| Member Units (540,000 units) | — | — | 540 | 540 | ||||||||
| 4,540 | 4,551 | |||||||||||
| Brightwood Capital Fund Investments (9) (15) | Investment Partnership | LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 0.52%) (16) | — | — | $ | 4,075 | $ | 3,443 | ||||
| LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 1.58%) (16) | — | — | 1,037 | 1,037 | ||||||||
| 5,112 | 4,480 | |||||||||||
| Brundage-Bone Concrete Pumping, Inc. | Construction Services Provider | 10.38% Secured Debt (Maturity - September 1, 2021) (14) | None | 12,000 | 12,076 | 12,360 | ||||||
| Buca C, LLC (8) (10) (13) | Casual Restaurant Group | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity - June 30, 2020) | 1 month LIBOR | 14,136 | 13,965 | 13,965 | ||||||
| Preferred Member Units (4 units, 6.00% cumulative) (16) | — | — | 2,702 | 2,740 | ||||||||
| 16,667 | 16,705 | |||||||||||
| CAI Software, LLC (10) (13) | Provider of Specialized Enterprise Resource Planning Software | 12.00% Secured Debt (Maturity - October 10, 2019) | None | 871 | 859 | 871 | ||||||
| Member Units (16,339 units) (16) | — | — | 163 | 760 | ||||||||
| 1,022 | 1,631 | |||||||||||
| CapFusion Holding, LLC (9) (10) (13) (18) | Business Lender | 13.00% Secured Debt (Maturity - March 25, 2021) (18) | None | 2,830 | 2,555 | 1,661 | ||||||
| Warrants (400 equivalent units, Expiration - March 24, 2026) | — | — | 300 | — | ||||||||
| 2,855 | 1,661 | |||||||||||
| CDHA Management, LLC (8) (11) | Dental Services | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.68%, Secured Debt (Maturity - December 5, 2021) | 6 month LIBOR | 4,345 | 4,245 | 4,345 | ||||||
| Cengage Learning, Inc. (8) | Provider of Educational Print and Digital Services | LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.49%, Secured Debt (Maturity - June 7, 2023) | 1 month LIBOR | 9,794 | 9,259 | 9,056 | ||||||
| Cenveo Corporation | Provider of Commercial Printing, Envelopes, Labels, Printed Office Products | 6.00% Secured Debt (Maturity - August 1, 2019) | None | 15,000 | 13,526 | 11,888 | ||||||
| Charlotte Russe, Inc. (8) | Fast-Fashion Retailer to Young Women | LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.82%, Secured Debt (Maturity - May 22, 2019) | 3 month LIBOR | 14,972 | 14,845 | 6,635 | ||||||
| Clarius BIGS, LLC (11) (18) | Prints & Advertising Film Financing | 15.00% PIK Secured Debt (Maturity - January 5, 2015) (18) | None | 2,140 | 1,882 | 64 | ||||||
| 20.00% PIK Secured Debt (Maturity - January 5, 2015) (18) | None | 773 | 680 | 23 | ||||||||
| 2,562 | 87 | |||||||||||
| Construction Supply Investments, LLC (9)(11) | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.23%, Secured Debt (Maturity - June 30, 2023)(8) | — | 7,313 | 7,276 | 7,276 | ||||||
| Member units (20,000 units) | — | — | 3,723 | 3,723 | ||||||||
| 10,999 | 10,999 | |||||||||||
| ContextMedia Health, LLC (8) | Provider of Healthcare Media Content | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity - December 23, 2021) | 1 month LIBOR | 9,625 | 8,743 | 9,589 | ||||||
| Covenant Surgical Partners, Inc. | Ambulatory Surgical Centers | 8.75% Secured Debt (Maturity - August 1, 2019) | None | 9,500 | 9,500 | 9,812 | ||||||
| CST Industries, Inc. (8) | Storage Tank Manufacturer | Prime Plus 5.25% (Floor 2.50%), Current Coupon 9.50%, Secured Debt (Maturity - May 22, 2017) | PRIME | 2,759 | 2,768 | 2,690 | ||||||
| Prime Plus 5.25% (Floor 2.50%), Current Coupon 4.10%, Secured Debt (Maturity - October 14, 2017) | PRIME | 482 | 482 | 482 | ||||||||
| 3,250 | 3,172 | |||||||||||
| CTVSH, PLLC (8)(11) | Emergency Care and Specialty Service Animal Hospital | LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.31%, Secured Debt (Maturity - August 3, 2022) | 1 month LIBOR | 3,000 | 2,942 | 2,942 | ||||||
| Datacom, LLC (10) (13) | Technology and Telecommunications Provider | 5.25% Current / 5.25% PIK, Current Coupon 10.50% Secured Debt (Maturity - May 30, 2019) | None | $ | 1,348 | $ | 1,338 | $ | 1,263 | |||
| 8.00% Secured Debt (Maturity - May 30, 2018) | None | 150 | 150 | 150 | ||||||||
| Class A Preferred Member Units (1,530 units, 15.00% cumulative) (16) | — | — | 131 | 151 | ||||||||
| Class B Preferred Member Units (717 units) | — | — | 670 | — | ||||||||
| 2,289 | 1,564 | |||||||||||
| Digital River, Inc. (8) | Provider of Outsourced e-Commerce Solutions and Services | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity - February 12, 2021) | 3 month LIBOR | 14,586 | 14,496 | 14,659 | ||||||
| Digital Room, LLC (8) | Organic Lead Generation for Online Postsecondary Schools | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.24%, Secured Debt (Maturity - November 21, 2022) | 1 month LIBOR | 7,339 | 7,207 | 7,302 | ||||||
| East West Copolymer & Rubber, LLC (10) (13) (18) | Manufacturer of Synthetic Rubbers | 12.00% Secured Debt (Maturity - October 17, 2019) (18) | None | 909 | 859 | — | ||||||
| Warrants (627,697 equivalent shares, Expiration - October 15, 2024) | — | — | 13 | — | ||||||||
| 872 | — | |||||||||||
| ECP-PF Holdings Groups, Inc. (8)(11) | Fitness Club Operator | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.30%, Secured Debt (Maturity - November 26, 2019) | 1 month LIBOR | 1,875 | 1,866 | 1,875 | ||||||
| Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft) (8) (9) | Technology-Based Performance Support Solutions | LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.49%, Secured Debt (Maturity - April 28, 2022) (14) | 1 month LIBOR | 10,901 | 10,492 | 8,971 | ||||||
| Extreme Reach, Inc. (8)(12) | Integrated TV and Video Advertising Platform | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.59%, Secured Debt (Maturity - February 7, 2020) | 3 month LIBOR | 8,849 | 8,834 | 8,845 | ||||||
| Felix Investments Holdings II, LLC (8)(11) | Oil and Gas Exploration and Production | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.81%, Secured Debt (Maturity - August 9, 2022) | 3 month LIBOR | 3,333 | 3,264 | 3,264 | ||||||
| Flavors Holdings, Inc. (8) | Global Provider of Flavoring and Sweetening Products and Solutions | LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.08%, Secured Debt (Maturity - April 3, 2020) | 3 month LIBOR | 12,592 | 11,979 | 11,994 | ||||||
| GST Autoleather, Inc. (8) | Automotive Leather Manufacturer | Prime Plus 6.50% (Floor 2.00%), Current Coupon 10.75%, Secured Debt (Maturity - July 10, 2020) | PRIME | 17,297 | 16,784 | 13,405 | ||||||
| Guitar Center, Inc. | Musical Instruments Retailer | 6.50% Secured Debt (Maturity - April 15, 2019) | None | 15,015 | 14,395 | 13,626 | ||||||
| Hojeij Branded Foods, LLC (8) (11) | Multi-Airport, Multi-Concept Restaurant Operator | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.31%, Secured Debt (Maturity - July 20, 2022) | 3 month LIBOR | 16,957 | 16,756 | 16,957 | ||||||
| Hoover Group, Inc. (8) (9) (11) | Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.56%, Secured Debt (Maturity - January 28, 2021) | 3 month LIBOR | 14,886 | 14,011 | 13,695 | ||||||
| Hunter Defense Technologies, Inc. (8) | Provider of Military and Commercial Shelters and Systems | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.31%, Secured Debt (Maturity - August 5, 2019) | 3 month LIBOR | 15,000 | 14,551 | 14,888 | ||||||
| Hydrofarm Holdings, LLC (8) (11) | Wholesaler of Horticultural Products | LIBOR Plus 7.00%, Current Coupon 8.24%, Secured Debt (Maturity - May 12, 2022) | 1 month LIBOR | 6,708 | 6,582 | 6,582 | ||||||
| iEnergizer Limited (8) (9) | Provider of Business Outsourcing Solutions | LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity - May 1, 2019) | 1 month LIBOR | 11,209 | 10,898 | 11,181 | ||||||
| Implus Footcare, LLC (8) (11) | Provider of Footwear and Other Accessories | LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.08%, Secured Debt (Maturity - April 30, 2021) | 3 month LIBOR | 14,529 | 14,326 | 14,326 | ||||||
| Indivior Finance, LLC (8) (9) | Specialty Pharmaceutical Company Treating Opioid Dependence | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.32%, Secured Debt (Maturity - December 19, 2019) | 3 month LIBOR | 7,628 | 7,393 | 7,694 | ||||||
| Industrial Services Acquisitions, LLC (11) | Industrial Cleaning Services | 11.25% Current / 0.75% PIK, Current Coupon 12.00%, Unsecured Debt (Maturity - December 17, 2022) (17) | None | 10,583 | 10,403 | 10,583 | ||||||
| Member units (Industrial Services Investments, LLC) (2,100,000 units) | — | — | 2,100 | 1,890 | ||||||||
| 12,503 | 12,473 | |||||||||||
| Inn of the Mountain Gods Resort and Casino | Hotel & Casino Owner & Operator | 9.25% Secured Debt (Maturity - November 30, 2020) | None | 10,749 | 10,610 | 9,674 | ||||||
| Intertain Group Limited (8) (9) | Business-to-Consumer Online Gaming Operator | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.74%, Secured Debt (Maturity - April 8, 2022) | 1 month LIBOR | $ | 8,028 | $ | 7,891 | $ | 8,118 | |||
| iPayment, Inc. (8) | Provider of Merchant Acquisition | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.31%, Secured Debt (Maturity - April 11, 2023) | 3 month LIBOR | 12,000 | 11,887 | 12,150 | ||||||
| iQor US Inc. (8) | Business Process Outsourcing Services Provider | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.30%, Secured Debt (Maturity - April 1, 2021) | 3 month LIBOR | 7,698 | 7,336 | 7,648 | ||||||
| IronGate Energy Services, LLC (18) | Oil and Gas Services | 11.00% Secured Debt (Maturity - July 1, 2018) (18) | None | 5,825 | 5,827 | 2,039 | ||||||
| Jackmont Hospitality, Inc. (8) (11) | Franchisee of Casual Dining Restaurants | LIBOR Plus 6.75% (Floor 1.00%)/ 2.50% PIK , Current Coupon 7.99%, Secured Debt (Maturity - May 26, 2021) | 1 month LIBOR | 8,780 | 8,755 | 8,780 | ||||||
| Jacuzzi Brands Corp. (8) | Manufacturer of Bath and Spa Products | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity - June 28, 2023) | 3 month LIBOR | 5,963 | 5,845 | 5,933 | ||||||
| Joerns Healthcare, LLC (8) | Manufacturer and Distributor of Health Care Equipment & Supplies | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity - May 9, 2020) | 3 month LIBOR | 11,119 | 10,931 | 10,429 | ||||||
| Kellermeyer Bergensons Services, LLC (8) | Outsourced Janitorial Services to Retail/Grocery Customers | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.81%, Secured Debt (Maturity - April 29, 2022) (14) | 3 month LIBOR | 14,700 | 14,615 | 14,333 | ||||||
| Keypoint Government Solutions, Inc. (8) (11) | Provider of Pre-Employment Screening Services | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity - April 18, 2024) | 3 month LIBOR | 12,188 | 12,072 | 12,072 | ||||||
| LaMi Products, LLC (8) (11) | General Merchandise Distribution | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity -September 16, 2020) | 3 month LIBOR | 11,239 | 11,105 | 11,214 | ||||||
| Larchmont Resources, LLC (8) | Oil & Gas Exploration & Production | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.22%, Secured Debt (Maturity - August 7, 2020) | 3 month LIBOR | 4,013 | 4,013 | 3,933 | ||||||
| Member units (Larchmont Intermediate Holdco, LLC) (4,806 units) | — | — | 601 | 1,658 | ||||||||
| 4,614 | 5,591 | |||||||||||
| Legendary Pictures Funding, LLC (8) (11) | Producer of TV, Film, and Comic Content | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33%, Secured Debt (Maturity - April 22, 2020) | 3 month LIBOR | 8,020 | 7,928 | 7,920 | ||||||
| LJ Host Merger Sub, Inc. (8) | Managed Services and Hosting Provider | LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.08%, Secured Debt (Maturity - December 13, 2019) | 3 month LIBOR | 16,137 | 15,694 | 15,714 | ||||||
| LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.06%, Secured Debt (Maturity - December 13, 2018) | 3 month LIBOR | 2,433 | 2,339 | 2,293 | ||||||||
| 18,033 | 18,007 | |||||||||||
| Logix Acquisition Company, LLC (8) (11) | Competitive Local Exchange Carrier | LIBOR Plus 8.29% (Floor 1.00%), Current Coupon 9.53%, Secured Debt (Maturity - June 24, 2021) (24) | 1 month LIBOR | 8,358 | 8,241 | 8,358 | ||||||
| LSF9 Atlantis Holdings, LLC (8) | Provider of Wireless Telecommunications Carrier Services | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.24%, Secured Debt (Maturity - May 1, 2023) | 1 month LIBOR | 13,913 | 13,805 | 13,997 | ||||||
| Lulu’s Fashion Lounge, LLC (8)(11) | Fast Fashion E-Commerce Retailer | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.24%, Secured Debt (Maturity - August 23, 2022) | 1 month LIBOR | 6,818 | 6,616 | 6,767 | ||||||
| Meisler Operating, LLC (10) (13) | Provider of Short Term Trailer and Container Rental | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.80%, Secured Debt (Maturity - June 7, 2022) (8) | 3 month LIBOR | 4,200 | 4,091 | 4,100 | ||||||
| Member Units (Milton Meisler Holdings, LLC) (8,000 units) | — | — | 800 | 800 | ||||||||
| 4,891 | 4,900 | |||||||||||
| MHVC Acquisition Corp. (8) | Provider of Differentiated Information Solutions, Systems Engineering and Analytics | LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.49%, Secured Debt (Maturity - April 29, 2024) | 1 month LIBOR | 10,474 | 10,424 | 10,592 | ||||||
| Minute Key, Inc. (10) (13) | Operator of Automated Key Duplication Kiosk | 12.00% Secured Debt (Maturity - September 19, 2019) (14) | None | 4,146 | 4,079 | 4,146 | ||||||
| Warrants (359,352 equivalent units, Expiration - May 20, 2025) | — | — | 70 | 263 | ||||||||
| 4,149 | 4,409 | |||||||||||
| NBG Acquisition, Inc. (8) | Wholesaler of Home Decor Products | LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.91%, Secured Debt (Maturity - April 26, 2024) | 6 month LIBOR | $ | 4,430 | $ | 4,361 | $ | 4,408 | |||
| New Media Holdings II LLC (8) (9) | Local Newspaper Operator | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.49%, Secured Debt (Maturity - July 14, 2022) | 1 month LIBOR | 17,075 | 16,791 | 17,102 | ||||||
| NNE Issuer, LLC (8) (11) | Oil & Gas Exploration & Production | LIBOR Plus 8.00%, Current Coupon 9.32%, Secured Debt (Maturity - March 2, 2022) | 3 month LIBOR | 10,500 | 10,407 | 10,407 | ||||||
| North American Lifting Holdings, Inc. (8) | Crane Service Provider | LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.83%, Secured Debt (Maturity - November 27, 2020) | 3 month LIBOR | 6,326 | 5,634 | 5,836 | ||||||
| Novetta Solutions, LLC (8)(12) | Provider of Advanced Analytics Solutions for Defense Agencies | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.34%, Secured Debt (Maturity - October 17, 2022) | 3 month LIBOR | 8,649 | 8,421 | 8,411 | ||||||
| NTM Acquisition Corp. (8) | Provider of B2B Travel Information Content | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.55%, Secured Debt (Maturity - June 7, 2022) | 3 month LIBOR | 11,052 | 10,935 | 10,997 | ||||||
| Pardus Oil & Gas, LLC | Oil & Gas Exploration and Production | 13.00% PIK, Secured Debt (Maturity - November 12, 2021) | None | 1,053 | 1,053 | 693 | ||||||
| 5.00% PIK, Secured Debt (Maturity - May 13, 2022) (14) | None | 543 | 543 | 70 | ||||||||
| Class A units (1,331 units) | — | — | 1,331 | — | ||||||||
| 2,927 | 763 | |||||||||||
| Paris Presents, Inc. (8) | Branded Cosmetic and Bath Accessories | LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.99%, Secured Debt (Maturity - December 31, 2021) (14) | 1 month LIBOR | 10,000 | 9,894 | 9,900 | ||||||
| Parq Holdings, LP (8) (9) | Hotel and Casino Operator | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.73%, Secured Debt (Maturity - December 17, 2020) | 1 month LIBOR | 12,500 | 12,337 | 12,469 | ||||||
| Permian Holdco 2, Inc. | Storage Tank Manufacturer | 14.00% PIK Unsecured Debt (Maturity - October 15, 2021) (17) | None | 548 | 548 | 548 | ||||||
| Series A Preferred Shares (Permian Holdco 1, Inc.) (386,255 units) (12.00% Cumulative) (16) | — | — | 2,109 | 2,109 | ||||||||
| Common Shares (Permian Holdco 1, Inc.) (386,255 units) | — | — | — | — | ||||||||
| 2,657 | 2,657 | |||||||||||
| Permian Holdings, Inc. | Storage Tank Manufacturer | 10.50% Secured Debt (Maturity - January 15, 2018) | None | 1,000 | 760 | 290 | ||||||
| Pernix Therapeutics Holdings, Inc. (11) | Pharmaceutical Royalty - Anti-Migraine | 12.00% Secured Debt (Maturity - August 1, 2020) | None | 2,737 | 2,716 | 1,725 | ||||||
| PPC/Shift, LLC (8) (11) | Provider of Digital Solutions to Automotive Industry | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33%, Secured Debt (Maturity - December 22, 2021) | 3 month LIBOR | 6,869 | 6,749 | 6,869 | ||||||
| Prowler Acquisition Corporation (8) | Specialty Distributor to the Energy Sector | LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.83%, Secured Debt (Maturity - January 28, 2020) | 3 month LIBOR | 12,445 | 11,101 | 11,076 | ||||||
| PSC Industrial Holdings Corp. (8) | Diversified Industrial Service Provider | LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.99%, Secured Debt (Maturity - December 5, 2020) | 1 month LIBOR | 5,596 | 5,275 | 5,587 | ||||||
| Redbox Automated Retail, LLC (8) | Operator of Home Media Entertainment Kiosks | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity - September 27, 2021) | 1 month LIBOR | 10,500 | 10,176 | 10,605 | ||||||
| Renaissance Learning, Inc. (8) | Technology-based K-12 Learning Solutions | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity - April 11, 2022) (14) | 3 month LIBOR | 12,695 | 12,344 | 12,854 | ||||||
| Resolute Industrial, LLC (8) (11) | HVAC Equipment Rental and Remanufacturing | LIBOR Plus 6.40% (Floor 1.00%), Current Coupon 7.73%, Secured Debt (Maturity - July 26, 2022) (25) | 3 month LIBOR | 17,167 | 16,622 | 16,730 | ||||||
| Common Stock (601 units) | — | — | 750 | 750 | ||||||||
| 17,372 | 17,480 | |||||||||||
| RGL Reservoir Operations, Inc. (8) (9) | Oil & Gas Equipment & Services | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.32%, Secured Debt (Maturity - August 13, 2021) | 3 month LIBOR | 3,880 | 3,808 | 698 | ||||||
| RM Bidder, LLC (11) | Full-scale Film and Television Production and Distribution | Common Stock (1,854 units) | — | $ | — | $ | 31 | $ | 17 | |||
| Series A Warrants (124,915 equivalent units, Expiration - October 20, 2025) | — | — | 284 | — | ||||||||
| Series B Warrants (93,686 equivalent units, Expiration - October 20, 2025) | — | — | — | — | ||||||||
| 315 | 17 | |||||||||||
| Salient Partners, LP (8) | Provider of Asset Management Services | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.80%, Secured Debt (Maturity - June 9, 2021) | 3 month LIBOR | 11,200 | 10,884 | 10,864 | ||||||
| Sigma Electric Manufacturing Corp. (8) (9) (11) | Manufacturer and Distributor of Electrical Fittings and Parts | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.58%, Secured Debt (Maturity - October 13, 2021) | 3 Month LIBOR | 12,437 | 12,176 | 12,437 | ||||||
| Smart Modular Technologies, Inc. (8)(9)(11) | Provider of Specialty Memory Solutions | LIBOR Plus 6.25%, (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity - August 9, 2022) | 3 month LIBOR | 15,000 | 14,708 | 14,925 | ||||||
| Sorenson Communications, Inc. | Manufacturer of Communication Products for Hearing Impaired | 9.00% Secured Debt (Maturity - October 31, 2020) (14) | None | 13,210 | 12,857 | 12,879 | ||||||
| LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity - April 30, 2020) | 3 month LIBOR | 2,954 | 2,938 | 2,975 | ||||||||
| 15,795 | 15,854 | |||||||||||
| Strike, LLC (8) | Pipeline Construction and Maintenance Services | LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - November 30, 2022) | 3 month LIBOR | 9,625 | 9,363 | 9,769 | ||||||
| LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity - May 30, 2019) | 3 month LIBOR | 500 | 475 | 513 | ||||||||
| 9,838 | 10,282 | |||||||||||
| Synagro Infrastructure Company, Inc. (8) | Waste Management Services | LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.58%, Secured Debt (Maturity - August 22, 2020) | 3 month LIBOR | 5,384 | 5,250 | 5,142 | ||||||
| TE Holdings, LLC | Oil & Gas Exploration & Production | Common Units (72,785 units) | — | — | 728 | 218 | ||||||
| Teleguam Holdings, LLC (8) | Cable and Telecom Services Provider | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.73%, Secured Debt (Maturity - July 25, 2024) (14) | 1 month LIBOR | 7,750 | 7,598 | 7,828 | ||||||
| TMC Merger Sub Corp (8) | Refractory & Maintenance Services Provider | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - October 31, 2022) (26) | 1 month LIBOR | 14,734 | 14,602 | 14,808 | ||||||
| TOMS Shoes, LLC (8) | Global Designer, Distributor, and Retailer of Casual Footwear | LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.82%, Secured Debt (Maturity - October 30, 2020) | 3 month LIBOR | 4,875 | 4,595 | 2,331 | ||||||
| Turning Point Brands, Inc. (8) (9) (11) | Marketer/Distributor of Tobacco Products | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.32%, Secured Debt (Maturity - May 17, 2022) (25) | 3 month LIBOR | 8,458 | 8,381 | 8,436 | ||||||
| TVG-I-E CMN Acquisition, LLC (8)(11) | Organic Lead Generation for Online Postsecondary Schools | LIBOR Plus 6.00%, (Floor 1.00%), Current Coupon 7.24%, Secured Debt (Maturity - November 3, 2021) | 1 month LIBOR | 6,338 | 6,229 | 6,338 | ||||||
| U.S. Telepacific Corp. (8) | Provider of Communications and Managed Services | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.32%, Secured Debt (Maturity - May 2, 2023) | 3 month LIBOR | 14,963 | 14,597 | 14,611 | ||||||
| USJ-IMECO Holding Company, LLC (8) | Marine Interior Design and Installation | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity - April 16, 2020) | 3 month LIBOR | 8,264 | 8,243 | 8,202 | ||||||
| Valley Healthcare Group, LLC (8) (10) (13) | Provider of Durable Medical Equipment | LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.74%, Secured Debt (Maturity - December 29, 2020) | 1 month LIBOR | 2,962 | 2,918 | 2,918 | ||||||
| Preferred Member Units (Valley Healthcare Holding, LLC) (400 units) | — | — | 400 | 400 | ||||||||
| 3,318 | 3,318 | |||||||||||
| VIP Cinema Holdings, Inc. (8) | Supplier of Luxury Seating to the Cinema Industry | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity - March 1, 2023) | 3 month LIBOR | 9,750 | 9,705 | 9,854 | ||||||
| Vistar Media, Inc. (8) (11) | Operator of Digital Out-of-Home Advertising Platform | LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.33%, Secured Debt (Maturity - February 16, 2022) | 3 month LIBOR | $ | 3,375 | $ | 3,086 | $ | 3,088 | |||
| Warrants (64,025 equivalent units, Expiration - February 17, 2027) | — | — | 331 | 331 | ||||||||
| 3,417 | 3,419 | |||||||||||
| Volusion, LLC (10) (13) | Provider of Online Software-as-a-Service eCommerce Solutions | 11.50% Secured Debt (Maturity - January 24, 2020) | None | 7,172 | 6,385 | 6,385 | ||||||
| Preferred Member Units (2,090,001 units) | — | — | 6,000 | 6,000 | ||||||||
| Warrants (784,866.80 equivalent units, Expiration - January 26, 2025) | — | — | 1,104 | 960 | ||||||||
| 13,489 | 13,345 | |||||||||||
| Wellnext, LLC (8) (11) | Manufacturer of Supplements and Vitamins | LIBOR Plus 7.50% (Floor 0.50%), Current Coupon 8.74%, Secured Debt (Maturity - July 21, 2022) (24) | 1 month LIBOR | 9,930 | 9,852 | 9,930 | ||||||
| Wireless Vision Holdings, LLC (8)(11) | Provider of Wireless Telecommunications Carrier Services | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.83%, Secured Debt (Maturity - September 29, 2022) (24) | 3 month LIBOR | 6,711 | 6,369 | 6,369 | ||||||
| Wirepath, LLC (8) | E-Commerce Provider Into Connected Home Market | LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.56%, Secured Debt (Maturity - August 5, 2024) | 3 month LIBOR | 11,500 | 11,443 | 11,593 | ||||||
| Subtotal Non-Control/Non-Affiliate Investments (5) (89% of total portfolio investments at fair value) | $ | 996,358 | $ | 967,475 | ||||||||
| Total Portfolio Investments | $ | 1,110,886 | $ | 1,090,706 | ||||||||
| Short Term Investments (20) | ||||||||||||
| Fidelity Institutional Money Market Funds (21) | — | Prime Money Market Portfolio, Class III Shares | — | — | $ | 21,316 | $ | 21,316 | ||||
| UMB Bank Money Market Account (21) | — | — | 532 | 532 | ||||||||
| US Bank Money Market Account (21) | — | — | — | — | 14,409 | 14,409 | ||||||
| Total Short Term Investments | $ | 36,257 | $ | 36,257 | ||||||||
MSC Income producing through dividends or distributions.
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||
| Company | Fair Value at December 31, 2016 | Contributions (Cost) | Redemptions (Cost) | Net Unrealized Gain (Loss) | Fair Value at September 30, 2017 | Net Realized Gain (Loss) | Dividend Income | ||||||||||||||||||||
HMS-ORIX SLF LLC* | $ | — | $ | 30,000 | $ | — | $ | 516 | $ | 30,516 | $ | — | $ | — | |||||||||||||
Consolidated Schedule of Investments above reflects such higher rate.(Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Chamberlin Holding LLC | | February 26, 2018 | Roofing and Waterproofing Specialty Contractor | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 2/26/2023 | | 3,803 | | 3,751 | | 3,803 | (9) |
| | | | Member Units | 4,347 | | | | | | 2,860 | | 7,070 | (8) |
| | | | Member Units | 1,047,146 | | | | | | 330 | | 332 | (8) (30) |
| | | | | | | | | | | 6,941 | | 11,205 | |
| | | | | | | | | | | | | | |
Charlotte Russe, Inc | (11) | May 28, 2013 | Fast-Fashion Retailer to Young Women | | | | | | | | | | | |
| | | | Common Stock | 19,041 | | | | | | 2,470 | | - | |
| | | | | | | | | | | | | | |
Charps, LLC | | February 3, 2017 | Pipeline Maintenance and Construction | | | | | | | | | | | |
| | | | Preferred Member Units | 1,600 | | | | | | 100 | | 2,830 | (8) |
| | | | | | | | | | | | | | |
Clad-Rex Steel, LLC | | December 20, 2016 | Specialty Manufacturer of Vinyl-Clad Metal | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (L+9.50%, Floor 1.00%) | 1/15/2024 | | 2,720 | | 2,710 | | 2,710 | (9) |
| | | | Member Units | 717 | | | | | | 1,820 | | 2,152 | (8) |
| | | | Secured Debt | | 10.00% | 12/20/2036 | | 276 | | 273 | | 273 | (30) |
| | | | Member Units | 800 | | | | | | 53 | | 132 | (30) |
| | | | | | | | | | | 4,856 | | 5,267 | |
| | | | | | | | | | | | | | |
Cody Pools, Inc. | | March 6, 2020 | Designer of Residential and Commercial Pools | | | | | | | | | | | |
| | | | Secured Debt | | 12.25% (L+10.50%, Floor 1.75%) | 3/6/2025 | | 3,504 | | 3,442 | | 3,504 | (9) |
| | | | Preferred Member Units | 587 | | | | | | 2,079 | | 4,720 | |
| | | | | | | | | | | 5,521 | | 8,224 | |
| | | | | | | | | | | | | | |
Colonial Electric Company LLC | | March 31, 2021 | Provider of Electrical Contracting Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 3/31/2026 | | 6,300 | | 6,143 | | 6,143 | |
| | | | Preferred Member Units | 17,280 | | | | | | 1,920 | | 1,920 | |
| | | | | | | | | | | 8,063 | | 8,063 | |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Copper Trail Energy Fund I, LP) | 12.4% | | | | | | 2,161 | | 1,843 | (8) (31) |
| | | | | | | | | | | - | | - | |
Datacom, LLC | | May 30, 2014 | Technology and Telecommunications Provider | | | | | | | | | | | |
| | | | Secured Debt | | 5.00% | 12/31/2025 | | 997 | | 901 | | 901 | |
| | | | Preferred Member Units | 9,000 | | | | | | 290 | | 290 | |
| | | | | | | | | | | 1,191 | | 1,191 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
6
MSC Income Fund, Inc.
Consolidated Schedule of Investments above.(Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Digital Products Holdings LLC | | April 1, 2018 | Designer and Distributor of Consumer Electronics | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 4/1/2023 | | 4,461 | | 4,416 | | 4,416 | (9) |
| | | | Preferred Member Units | 3,857 | | | | | | 2,375 | | 2,459 | (8) |
| | | | | | | | | | | 6,791 | | 6,875 | |
| | | | | | | | | | | | | | |
Direct Marketing Solutions, Inc. | | February 13, 2018 | Provider of Omni-Channel Direct Marketing Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+11.00%, Floor 1.00%) | 2/13/2023 | | 3,772 | | 3,723 | | 3,723 | (9) |
| | | | Preferred Stock | 8,400 | | | | | | 2,100 | | 4,460 | |
| | | | | | | | | | | 5,823 | | 8,183 | |
| | | | | | | | | | | | | | |
Freeport Financial Funds | (12) (13) | July 31, 2015 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Freeport First Lien Loan Fund III LP) | 6.0% | | | | | | 9,387 | | 8,923 | (8) (31) |
| | | | | | | | | | | | | | |
Gamber-Johnson Holdings, LLC ("GJH") | | June 24, 2016 | Manufacturer of Ruggedized Computer Mounting Systems | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+7.00%, Floor 2.00%) | 6/24/2021 | | 5,160 | | 5,148 | | 5,160 | (9) |
| | | | Member Units | 9,042 | | | | | | 4,423 | | 13,810 | (8) |
| | | | | | | | | | | 9,571 | | 18,970 | |
| | | | | | | | | | | | | | |
GFG Group, LLC. | | March 31, 2021 | Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 3/31/2026 | | 3,936 | | 3,818 | | 3,818 | |
| | | | Preferred Member Units | 226 | | | | | | 1,225 | | 1,225 | |
| | | | | | | | | | | 5,043 | | 5,043 | |
| | | | | | | | | | | | | | |
Gulf Publishing Holdings, LLC | | April 29, 2016 | Energy Industry Focused Media and Publishing | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) | 9/30/2020 | | 64 | | 64 | | 64 | (9) (17) (19) |
| | | | Secured Debt | | 12.50% (6.25% Cash, 6.25% PIK) | 4/29/2021 | | 3,320 | | 3,319 | | 3,048 | (19) |
| | | | Member Units | 3,681 | | | | | | 920 | | - | |
| | | | | | | | | | | 4,303 | | 3,112 | |
| | | | | | | | | | | | | | |
Harris Preston Fund Investments | (12) (13) | August 9, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (HPEP 3, L.P.) | 8.2% | | | | | | 3,445 | | 3,632 | (31) |
| | | | | | | | | | | | | | |
7
MSC Income Fund, Inc.
Consolidated Schedule of Investments above reflects such lower rate.
March 31, 2021
(dollars in thousands)
(unaudited)
| HMS Income Fund, Inc. Condensed Consolidated Schedule of Investments | ||||||||||||
| As of December 31, 2016 | ||||||||||||
| (dollars in thousands) | ||||||||||||
| Portfolio Company (1) (3) | Business Description | Type of Investment (2) (3) | Index Rate (22) | Principal (7) | Cost (7) | Fair Value | ||||||
| Control Investments (6) | ||||||||||||
| GRT Rubber Technologies, LLC (8) (10) (13) | Engineered Rubber Product Manufacturer | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity - December 19, 2019) | 1 month LIBOR | $ | 6,538 | $ | 6,448 | $ | 6,538 | |||
| Member Units (2,896 shares) | — | — | 6,435 | 10,004 | ||||||||
| 12,883 | 16,542 | |||||||||||
| Subtotal Control Investments (6) (2% of total investments at fair value) | $ | 12,883 | $ | 16,542 | ||||||||
| Affiliate Investments (4) | ||||||||||||
| AFG Capital Group, LLC (10) (13) | Provider of Rent-to-Own Financing Solutions and Services | Member Units (46 shares) | — | $ | — | $ | 300 | $ | 687 | |||
| Warrants (10 equivalent shares, Expiration - November 7, 2024) | — | — | 65 | 167 | ||||||||
| 365 | 854 | |||||||||||
| Clad-Rex Steel, LLC (10) (13) | Specialty Manufacturer of Vinyl-Clad Metal | LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity - December 20, 2021) (8) | 1 month LIBOR | 3,520 | 3,449 | 3,449 | ||||||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity - December 20, 2018) (8) | 1 month LIBOR | 100 | 99 | 99 | ||||||||
| Member Units (179 units) | — | — | 1,820 | 1,820 | ||||||||
| 10.00% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity - December 20, 2036) | None | 301 | 298 | 298 | ||||||||
| Member Units (Clad-Rex Steel RE Investor, LLC) (200 units) | — | — | 53 | 53 | ||||||||
| 5,719 | 5,719 | |||||||||||
| EIG Traverse Co-Investment, LP (9) (15) | Investment Partnership | LP Interests (EIG Traverse Co-Investment, LP) (Fully diluted 22.20%) (16) | — | — | 9,805 | 9,905 | ||||||
| Freeport First Lien Loan Fund III, LP (9) (15) | Investment Partnership | LP Interests (Freeport First Lien Loan Fund III, LP) (Fully diluted 5.60%) (16) | — | — | 4,763 | 4,763 | ||||||
| Gamber-Johnson Holdings, LLC (8) (10) (13) | Manufacturer of Ruggedized Computer Mounting Systems | LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.00%, Secured Debt (Maturity - June 24, 2021) | 1 month LIBOR | 6,020 | 5,902 | 5,964 | ||||||
| Member Units (2,155 units) | — | 3,711 | 4,730 | |||||||||
| 9,613 | 10,694 | |||||||||||
| Guerdon Modular Holdings, Inc. (10) (13) | Multi-Family and Commercial Modular Construction Company | 9.00% Current / 4.00% PIK Secured Debt (Maturity - August 13, 2019) | None | 2,668 | 2,621 | 2,642 | ||||||
| Common Stock (53,008 shares) | — | — | 746 | 20 | ||||||||
| Class B Preferred Stock (101,250 shares) | — | — | 285 | 285 | ||||||||
| 3,652 | 2,947 | |||||||||||
| Gulf Publishing Holdings, LLC (10) (13) | Energy Focused Media and Publishing | 12.50% Secured Debt (Maturity - April 29, 2021) | None | 2,500 | 2,455 | 2,455 | ||||||
| Member Units (781 shares) | — | 781 | 781 | |||||||||
| 3,236 | 3,236 | |||||||||||
| Hawk Ridge Systems, LLC (9) (10) (13) | Value-Added Reseller of Engineering Design and Manufacturing Solutions | 10.00% Secured Debt (Maturity - December 2, 2021) | None | 2,500 | 2,451 | 2,451 | ||||||
| Preferred Member Units (56 units) | — | — | 713 | 713 | ||||||||
| Preferred Member Units (HRS Services, ULC) (56 units) | — | — | 38 | 38 | ||||||||
| 3,202 | 3,202 | |||||||||||
| HW Temps LLC (8) (10) (13) | Temporary Staffing Solutions | LIBOR Plus 13.00% (Floor 1.00%), Current Coupon 14.00%, Secured Debt (Maturity - July 2, 2020) | 1 month LIBOR | 2,644 | 2,591 | 2,591 | ||||||
| Preferred Member Units (800 shares) (16) | — | — | 986 | 985 | ||||||||
| 3,577 | 3,576 | |||||||||||
| M.H. Corbin Holding, LLC (10) (13) | Manufacturer and Distributor of Traffic Safety Products | 10.00% Secured Debt (Maturity - August 31, 2021) | None | 3,325 | 3,299 | 3,299 | ||||||
| Preferred Member Units (1,000 shares) | — | 1,500 | 1,500 | |||||||||
| 4,799 | 4,799 | |||||||||||
| Mystic Logistics, Inc. (10) (13) | Logistics and Distribution Services Provider for Large Volume Mailers | 12.00% Secured Debt (Maturity - August 15, 2019) | None | $ | 2,294 | $ | 2,246 | $ | 2,294 | |||
| Common Stock (1,468 shares) (16) | — | — | 680 | 1,445 | ||||||||
| 2,926 | 3,739 | |||||||||||
| SoftTouch Medical Holdings LLC (8) (10) (13) | Home Provider of Pediatric Durable Medical Equipment | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity - October 31, 2019) | 1 month LIBOR | 1,260 | 1,244 | 1,260 | ||||||
| Member Units (785 units) (16) | — | — | 870 | 1,618 | ||||||||
| 2,114 | 2,878 | |||||||||||
| Subtotal Affiliate Investments (4) (6% of total investments at fair value) | $ | 53,771 | $ | 56,312 | ||||||||
| Non-Control/Non-Affiliate Investments (5) | ||||||||||||
| Adams Publishing Group, LLC (8) (11) | Local Newspaper Operator | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - November 3, 2020) | 3 month LIBOR | $ | 7,589 | $ | 7,459 | $ | 7,589 | |||
| ADS Tactical, Inc. (8) (11) | Value-Added Logistics and Supply Chain Solutions Provider | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity - December 31, 2022) | 3 month LIBOR | 10,000 | 9,750 | 9,750 | ||||||
| Ahead, LLC (8) (11) | IT Infrastructure Value Added Reseller | LIBOR Plus 6.50%, Current Coupon 7.50%, Secured Debt (Maturity - November 2, 2020) | 3 month LIBOR | 9,500 | 9,267 | 9,536 | ||||||
| Allflex Holdings III Inc. (8) | Manufacturer of Livestock Identification Products | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - July 19, 2021) (14) | 6 month LIBOR | 14,922 | 15,012 | 14,936 | ||||||
| American Scaffold Holdings, Inc. (8) (11) | Marine Scaffolding Service Provider | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - March 31, 2022) | 1 month LIBOR | 7,359 | 7,257 | 7,323 | ||||||
| American Teleconferencing Services, Ltd. (8) | Provider of Audio Conferencing and Video Collaboration Solutions | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - December 8, 2021) | 3 month LIBOR | 10,056 | 9,122 | 9,848 | ||||||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity - June 6, 2022) (14) | 3 month LIBOR | 5,571 | 5,353 | 5,353 | ||||||||
| 14,475 | 15,201 | |||||||||||
| AmeriTech College Operations, LLC (10) (13) | For-Profit Nursing and Healthcare College | 13.00% Secured Debt (Maturity - January 31, 2020) | None | 375 | 375 | 375 | ||||||
| 10.00% Secured Debt (Maturity - November 30, 2019) | None | 61 | 61 | 61 | ||||||||
| 13.00% Secured Debt (Maturity - November 30, 2019) | None | 64 | 64 | 64 | ||||||||
| Preferred Member Units (364 units, 5.00% cumulative) (16) | — | — | 284 | 284 | ||||||||
| 784 | 784 | |||||||||||
| AP Gaming I, LLC (8) (11) | Developer, Manufacturer and Operator of Gaming Machines | LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity - December 21, 2020) | 3 month LIBOR | 11,291 | 11,194 | 11,267 | ||||||
| Apex Linen Service, Inc. (10) (13) | Industrial Launderers | 13.00% Secured Debt (Maturity - October 30, 2022) | None | 3,604 | 3,545 | 3,545 | ||||||
| LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - October 30, 2022) | 1 month LIBOR | 600 | 600 | 600 | ||||||||
| 4,145 | 4,145 | |||||||||||
| Arcus Hunting, LLC (8) (11) | Manufacturer of Bowhunting and Archery Products and Accessories | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - November 13, 2019) | 1 month LIBOR | 6,973 | 6,850 | 6,973 | ||||||
| Artel, LLC (8) (12) | Provider of Secure Satellite Network and IT Solutions | LIBOR Plus 7.00% (Floor 1.25%), 7.25% Current/1.00% PIK, Current Coupon 8.25%, Secured Debt (Maturity - November 27, 2017) | 3 month LIBOR | 5,173 | 5,000 | 4,837 | ||||||
| ATI Investment Sub, Inc. (8) | Manufacturer of Solar Tracking Systems | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity - June 22, 2021) | 1 month LIBOR | 9,500 | 9,322 | 9,476 | ||||||
| ATX Networks Corp. (8) (9) | Provider of Radio Frequency Management Equipment | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - June 11, 2021) | 3 month LIBOR | 14,775 | 14,541 | 14,516 | ||||||
| BarFly Ventures, LLC (11) | Casual Restaurant Group | 12.00% Secured Debt (Maturity - August 30, 2020) | None | $ | 1,986 | $ | 1,953 | $ | 1,942 | |||
| Warrants (.410 equivalent units, Expiration - August 31, 2025) | — | — | 158 | 94 | ||||||||
| Options (.731 equivalent units) | — | — | 133 | 164 | ||||||||
| 2,244 | 2,200 | |||||||||||
| BBB Tank Services, LLC (10) (13) | Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market | 15% Current Secured Debt (Maturity - April 8, 2021) | None | 1,007 | 989 | 989 | ||||||
| LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity - April 8, 2021) | 1 month LIBOR | 200 | 200 | 200 | ||||||||
| Member Units (200,000 units) | — | — | 200 | 200 | ||||||||
| 1,389 | 1,389 | |||||||||||
| Berry Aviation, Inc. (11) | Airline Charter Service Operator | 12.00% Current / 1.75% PIK, Current Coupon 13.75%, Secured Debt (Maturity - January 30, 2020) (14) | None | 1,407 | 1,390 | 1,407 | ||||||
| Common Stock (138 shares) | — | — | 100 | 205 | ||||||||
| 1,490 | 1,612 | |||||||||||
| Bluestem Brands, Inc. (8) | Multi-Channel Retailer of General Merchandise | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity - November 6, 2020) | 3 month LIBOR | 13,812 | 13,582 | 12,039 | ||||||
| Brightwood Capital Fund III, LP (9) (15) | Investment Partnership | LP Interests (Brightwood Capital Fund III, LP) (Fully diluted .52%) (16) | — | — | 4,075 | 3,698 | ||||||
| Brundage-Bone Concrete Pumping, Inc. | Construction Services Provider | 10.38% Secured Debt (Maturity - September 1, 2021) (14) | None | 12,000 | 12,088 | 12,960 | ||||||
| Buca C, LLC (8) (10) (13) | Casual Restaurant Group | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity - June 30, 2020) | 1 month LIBOR | 15,114 | 14,889 | 15,114 | ||||||
| Preferred Member Units (4 units, 6.00% cumulative) (16) | — | — | 2,547 | 3,110 | ||||||||
| 17,436 | 18,224 | |||||||||||
| CAI Software, LLC (10) (13) | Provider of Specialized Enterprise Resource Planning Software | 12.00% Secured Debt (Maturity - October 10, 2019) | None | 921 | 904 | 921 | ||||||
| Member Units (16,339 units) | — | — | 163 | 620 | ||||||||
| 1,067 | 1,541 | |||||||||||
| CapFusion Holding, LLC (9) (10) (13) | Business Lender | 13.00% Secured Debt (Maturity - March 25, 2021) | None | 3,600 | 3,289 | 3,289 | ||||||
| Warrants (400 equivalent units, Expiration - March 24, 2026) | — | — | 300 | 300 | ||||||||
| 3,589 | 3,589 | |||||||||||
| CDHA Management, LLC (8) (11) | Dental Services | Prime Plus 6.25% (Floor 3.75%), Current Coupon 10.00%, Secured Debt (Maturity - December 5, 2021) | PRIME | 4,491 | 4,376 | 4,376 | ||||||
| Prime Plus 6.25% (Floor 3.75%), Current Coupon 10.00%, Secured Debt (Maturity - December 5, 2021) | PRIME | — | — | — | ||||||||
| 4,376 | 4,376 | |||||||||||
| Cenveo Corporation | Provider of Commercial Printing, Envelopes, Labels, Printed Office Products | 6.00% Secured Debt (Maturity - August 1, 2019) | None | 15,000 | 13,013 | 13,388 | ||||||
| Charlotte Russe, Inc. (8) | Fast-Fashion Retailer to Young Women | LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity - May 22, 2019) | 3 month LIBOR | 15,101 | 14,918 | 9,184 | ||||||
| CJ Holding Company (8) | Oil and Gas Equipment and Services | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity - March 31, 2017) | 3 month LIBOR | 83 | 85 | 83 | ||||||
| Clarius BIGS, LLC (11) (18) | Prints & Advertising Film Financing | 15.00% PIK Secured Debt (Maturity - January 5, 2015) (18) | None | 2,144 | 1,886 | 64 | ||||||
| 20.00% PIK Secured Debt (Maturity - January 5, 2015) (18) | None | 774 | 681 | 23 | ||||||||
| 2,567 | 87 | |||||||||||
| Compuware Corporation (8) | Provider of Software and Supporting Services | LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity - December 15, 2019) | 3 month LIBOR | 12,265 | 12,004 | 12,341 | ||||||
| Construction Supply Investments, LLC (8) (11) | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors | LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity - June 30, 2023) | 3 month LIBOR | $ | 8,500 | $ | 8,305 | $ | 8,330 | |||
| Member units (20,000 units) | — | — | 2,000 | 2,000 | ||||||||
| 10,305 | 10,330 | |||||||||||
| ContextMedia Health, LLC (8) (12) | Provider of Healthcare Media Content | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - December 21, 2021) | 1 month LIBOR | 10,000 | 9,000 | 9,150 | ||||||
| Covenant Surgical Partners, Inc. | Ambulatory Surgical Centers | 8.75% Secured Debt (Maturity - August 1, 2019) | None | 9,500 | 9,500 | 9,168 | ||||||
| CRGT, Inc. (8) | Provider of Custom Software Development | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - December 18, 2020) | 1 month LIBOR | 9,642 | 9,492 | 9,666 | ||||||
| CST Industries, Inc. (8) | Storage Tank Manufacturer | LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity - May 22, 2017) | 3 month LIBOR | 2,759 | 2,766 | 2,759 | ||||||
| Datacom, LLC (10) (13) | Technology and Telecommunications Provider | 5.25% Current / 5.25% PIK, Current Coupon 10.50% Secured Debt (Maturity - May 30, 2019) | None | 1,296 | 1,282 | 1,222 | ||||||
| 8.00% Secured Debt (Maturity - May 30, 2017) | — | 100 | 100 | 100 | ||||||||
| Class A Preferred Member Units (1,530 units, 15.00% cumulative) (16) | — | — | 131 | 152 | ||||||||
| Class B Preferred Member Units (717 units) | — | — | 670 | 170 | ||||||||
| 2,183 | 1,644 | |||||||||||
| Digital River, Inc. (8) | Provider of Outsourced e-Commerce Solutions and Services | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - February 12, 2021) | 3 month LIBOR | 14,586 | 14,477 | 14,713 | ||||||
| Digital Room, LLC (8) | Organic Lead Generation for Online Postsecondary Schools | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - November 21, 2022) | 3 month LIBOR | 7,625 | 7,475 | 7,549 | ||||||
| East West Copolymer & Rubber, LLC (10) (13) | Manufacturer of Synthetic Rubbers | 12.00% Current / 2.00% PIK, Current Coupon 14.00%, Secured Debt (Maturity - October 17, 2019) | None | 2,400 | 2,351 | 2,136 | ||||||
| Warrants (627,697 equivalent shares, Expiration - October 15, 2024) | — | — | 13 | — | ||||||||
| 2,364 | 2,136 | |||||||||||
| ECP-PF Holdings Groups, Inc. (11) | Fitness Club Operator | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity - November 26, 2019) | 3 month LIBOR | 1,875 | 1,863 | 1,875 | ||||||
| Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft) (8) (9) | Technology-Based Performance Support Solutions | LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.34%, Secured Debt (Maturity - April 28, 2022) (14) | 6 month LIBOR | 10,902 | 10,443 | 8,214 | ||||||
| Flavors Holdings, Inc. (8) | Global Provider of Flavoring and Sweetening Products and Solutions | LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity - April 3, 2020) | 3 month LIBOR | 11,774 | 11,236 | 9,596 | ||||||
| GST Autoleather, Inc. (8) | Automotive Leather Manufacturer | LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity - July 10, 2020) | 3 month LIBOR | 12,204 | 12,073 | 11,929 | ||||||
| Guitar Center, Inc. | Musical Instruments Retailer | 6.50% Secured Debt (Maturity - April 15, 2019) | None | 15,015 | 14,128 | 13,626 | ||||||
| Hojeij Branded Foods, LLC (8) (11) | Multi-Airport, Multi-Concept Restaurant Operator | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - July 28, 2021) | 3 month LIBOR | 5,419 | 5,376 | 5,419 | ||||||
| Hoover Group, Inc. (8) (9) (11) | Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity - January 28, 2021) | 3 month LIBOR | 15,000 | 13,961 | 13,961 | ||||||
| Horizon Global Corporation (8) (9) | Auto Parts Manufacturer | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - June 30, 2021) | 1 month LIBOR | 12,098 | 11,893 | 12,325 | ||||||
| Hunter Defense Technologies, Inc. (8) | Provider of Military and Commercial Shelters and Systems | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - August 5, 2019) | 3 Month LIBOR | 13,847 | 13,255 | 12,878 | ||||||
| Hygea Holdings Corp. (8) (11) | Provider of Physician Services | LIBOR Plus 9.25%, Current Coupon 10.17%, Secured Debt (Maturity - February 24, 2019) | 3 Month LIBOR | 7,875 | 7,378 | 7,615 | ||||||
| Warrants (5,910,453 equivalent shares, Expiration - February 24, 2023) | — | — | 369 | 1,531 | ||||||||
| 7,747 | 9,146 | |||||||||||
| iEnergizer Limited (8) (9) | Provider of Business Outsourcing Solutions | LIBOR 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity - May 1, 2019) | 1 month LIBOR | $ | 8,569 | $ | 8,110 | $ | 8,312 | |||
| Indivior Finance, LLC (8) (9) | Specialty Pharmaceutical Company Treating Opioid Dependence | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - December 19, 2019) | 3 month LIBOR | 9,000 | 8,644 | 9,079 | ||||||
| Industrial Container Services, LLC (8) (11) | Steel Drum Reconditioner | LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity - December 31, 2018) | 3 month LIBOR | 8,927 | 8,871 | 8,927 | ||||||
| Industrial Services Acquisitions, LLC (11) | Industrial Cleaning Services | 11.25% Current / 0.75% PIK, Current Coupon 12.00%, Unsecured Debt (Maturity - December 17, 2022) (17) | None | 10,523 | 10,325 | 10,325 | ||||||
| Member units (Industrial Services Investments, LLC) (2,100,000 units) | — | — | 2,100 | 2,100 | ||||||||
| 12,425 | 12,425 | |||||||||||
| Inn of the Mountain Gods Resort and Casino | Hotel & Casino Owner & Operator | 9.25% Secured Debt (Maturity - November 30, 2020) | None | 10,749 | 10,583 | 9,782 | ||||||
| Intertain Group Limited (8) (9) | Business-to-Consumer Online Gaming Operator | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - April 8, 2022) | 3 month LIBOR | 8,799 | 8,633 | 8,876 | ||||||
| iPayment, Inc. (8) | Provider of Merchant Acquisition | LIBOR Plus 5.25% (Floor 1.50%), Current Coupon 6.75%, Secured Debt (Maturity - May 8, 2017) | 3 month LIBOR | 15,007 | 14,986 | 14,481 | ||||||
| Ipreo Holdings, LLC | Application Software for Capital Markets | 7.25% Unsecured Debt (Maturity - August 1, 2022) (17) | None | 6,250 | 5,318 | 5,266 | ||||||
| iQor US Inc. (8) | Business Process Outsourcing Services Provider | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity - April 1, 2021) | 1 month LIBOR | 7,757 | 7,331 | 7,442 | ||||||
| IronGate Energy Services, LLC (18) | Oil and Gas Services | 11.00% Secured Debt (Maturity - July 1, 2018) (18) | None | 5,825 | 5,827 | 1,631 | ||||||
| Jackmont Hospitality, Inc. (8) (11) | Franchisee of Casual Dining Restaurants | LIBOR Plus 4.25% (Floor 1.00%)/ 2.50% PIK , Current Coupon 7.75%, Secured Debt (Maturity - May 26, 2021) | 1 month LIBOR | 8,891 | 8,861 | 8,891 | ||||||
| Joerns Healthcare, LLC (8) | Manufacturer and Distributor of Health Care Equipment & Supplies | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity - May 9, 2020) | 3 month LIBOR | 12,172 | 11,947 | 11,442 | ||||||
| JSS Holdings, Inc. (8) | Aircraft Maintenance Program Provider | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - August 31, 2021) | 3 month LIBOR | 13,828 | 13,550 | 13,759 | ||||||
| Kellermeyer Bergensons Services, LLC (8) | Outsourced Janitorial Services to Retail/Grocery Customers | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - April 29, 2022) (14) | 3 month LIBOR | 14,700 | 14,603 | 13,964 | ||||||
| Kendra Scott, LLC (8) | Jewelry Retail Stores | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - July 17, 2020) | 3 month LIBOR | 9,375 | 9,305 | 9,328 | ||||||
| Keypoint Government Solutions, Inc. (8) | Provider of Pre-Employment Screening Services | LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity - November 13, 2017) | 3 month LIBOR | 1,761 | 1,757 | 1,752 | ||||||
| LaMi Products, LLC (8) (11) | General Merchandise Distribution | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - September 16, 2020) | 3 month LIBOR | 10,735 | 10,564 | 10,730 | ||||||
| Larchmont Resources, LLC (8) | Oil & Gas Exploration & Production | LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00% PIK, Secured Debt (Maturity - August 7, 2020) | 3 month LIBOR | 3,816 | 3,816 | 3,731 | ||||||
| Member units (Larchmont Intermediate Holdo, LLC) (4,806 units) | — | — | 601 | 2,027 | ||||||||
| 4,417 | 5,758 | |||||||||||
| Legendary Pictures Funding, LLC (8) (11) | Producer of TV, Film, and Comic Content | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - April 22, 2020) | 3 month LIBOR | 8,020 | 7,905 | 8,030 | ||||||
| LJ Host Merger Sub, Inc. (8) | Managed Services and Hosting Provider | LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity - December 13, 2019) | 3 month LIBOR | 4,846 | 4,837 | 4,595 | ||||||
| Logix Acquisition Company, LLC (8) (11) | Competitive Local Exchange Carrier | LIBOR Plus 8.28% (Floor 1.00%), Current Coupon 9.28%, Secured Debt (Maturity - June 24, 2021) | 3 month LIBOR | 8,593 | 8,455 | 8,593 | ||||||
| Minute Key, Inc. (10) (13) | Operator of Automated Key Duplication Kiosk | 10.00% Current / 2.00% PIK Secured Debt (Maturity - September 19, 2019) (14) | None | 3,905 | 3,821 | 3,821 | ||||||
| Warrants (359,352 equivalent units, Expiration - May 20, 2025) | — | — | 70 | 117 | ||||||||
| 3,891 | 3,938 | |||||||||||
| Mood Media Corporation (8) (9) | Provider of Electronic Equipment | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - May 1, 2019) | 3 month LIBOR | $ | 14,822 | $ | 14,741 | $ | 14,328 | |||
| New Media Holdings II LLC (8) (9) | Local Newspaper Operator | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity - June 4, 2020) | 3 month LIBOR | 14,706 | 14,578 | 14,633 | ||||||
| North American Lifting Holdings, Inc. (8) | Crane Service Provider | LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity - November 27, 2020) | 3 month LIBOR | 2,405 | 2,016 | 2,101 | ||||||
| North Atlantic Trading Company, Inc. (8) | Marketer/Distributor of Tobacco | Prime Plus 5.50% (Floor 3.75%), Current Coupon 9.25%, Secured Debt (Maturity - January 13, 2020) | PRIME | 10,897 | 10,913 | 10,829 | ||||||
| Novitex Acquisition, LLC (8) | Provider of Document Management Services | LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity - July 7, 2020) | 3 month LIBOR | 13,322 | 13,004 | 12,823 | ||||||
| NTM Acquisition Corp. (8) | Provider of B2B Travel Information Content | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity - June 7, 2022) | 3 month LIBOR | 4,144 | 4,085 | 4,128 | ||||||
| Pardus Oil & Gas, LLC | Oil & Gas Exploration and Production | 13.00% PIK, Secured Debt (Maturity - November 12, 2021) | None | 989 | 989 | 989 | ||||||
| 5.00% PIK, Secured Debt (Maturity - May 13, 2022) (14) | None | 517 | 517 | 293 | ||||||||
| Class A units (1,331 units) | — | — | 1,331 | 523 | ||||||||
| 2,837 | 1,805 | |||||||||||
| Paris Presents, Inc. (8) | Branded Cosmetic and Bath Accessories | LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity - December 31, 2021) (14) | 1 month LIBOR | 7,500 | 7,382 | 7,350 | ||||||
| Parq Holdings, LP (8) (9) | Hotel and Casino Operator | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity - December 17, 2020) | 1 month LIBOR | 12,500 | 12,378 | 12,313 | ||||||
| Permian Holdco 2, Inc. | Storage Tank Manufacturer | 14.00% PIK Unsecured Debt (Maturity - October 15, 2021) | None | 483 | 483 | 483 | ||||||
| Series A Preferred Shares (Permian Holdco 1, Inc.) (386,255 units) (12.00% Cumulative) (16) | — | — | 997 | 997 | ||||||||
| Common Shares (Permian Holdco 1, Inc.) (386,255 units) | — | — | 997 | 997 | ||||||||
| 2,477 | 2,477 | |||||||||||
| Permian Holdings, Inc. | Storage Tank Manufacturer | 10.50% Secured Debt (Maturity - January 15, 2018) | None | 1,000 | 338 | 338 | ||||||
| Pernix Therapeutics Holdings, Inc. (11) | Pharmaceutical Royalty - Anti-Migraine | 12.00% Secured Debt (Maturity - August 1, 2020) | None | 3,016 | 2,990 | 2,910 | ||||||
| Pike Corporation (8) | Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - June 22, 2022) (14) | 1 month LIBOR | 13,334 | 13,070 | 13,411 | ||||||
| Polycom, Inc. (8) | Provider of Audio and Video Communication Solutions | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - September 27, 2023) | 3 month LIBOR | 12,089 | 11,617 | 12,194 | ||||||
| PPC/Shift, LLC (8) (11) | Provider of Digital Solutions to Automotive Industry | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - December 22, 2021) | 3 month LIBOR | 7,000 | 6,851 | 6,851 | ||||||
| Premier Dental Services, Inc. (8) | Dental Care Services | LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - November 1, 2018) | 3 month LIBOR | 4,511 | 4,497 | 4,494 | ||||||
| Prowler Acquisition Corporation (8) | Specialty Distributor to the Energy Sector | LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity - January 28, 2020) | 3 month LIBOR | 11,329 | 9,896 | 8,383 | ||||||
| Raley’s, Inc. (8) | Family-Owned Supermarket Chain in California | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity - May 18, 2022) | 3 month LIBOR | 4,195 | 4,125 | 4,242 | ||||||
| Redbox Automated Retail, LLC (8) | Operator of Home Media Entertainment Kiosks | LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity - September 27, 2021) | 3 month LIBOR | 14,344 | 13,925 | 13,989 | ||||||
| Renaissance Learning, Inc. (8) | Technology-based K-12 Learning Solutions | LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - April 11, 2022) (14) | 3 month LIBOR | 12,950 | 12,548 | 12,896 | ||||||
| RGL Reservoir Operations, Inc. (8) (9) | Oil & Gas Equipment & Services | LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity - August 13, 2021) | 3 month LIBOR | 3,910 | 3,826 | 880 | ||||||
| RM Bidder, LLC (11) | Full-scale Film and Television Production and Distribution | Common Stock (1,854 units) | — | $ | — | $ | 31 | $ | 29 | |||
| Series A Warrants (124,915 equivalent units, Expiration - October 20, 2025) | — | — | 284 | 200 | ||||||||
| Series B Warrants (93,686 equivalent units, Expiration - October 20, 2025) | — | — | — | — | ||||||||
| 315 | 229 | |||||||||||
| Salient Partners, LP (8) | Provider of Asset Management Services | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - June 9, 2021) | 3 month LIBOR | 11,842 | 11,527 | 11,338 | ||||||
| School Specialty, Inc. (8) | Distributor of Education Supplies and Furniture | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - June 11, 2019) | 1 month LIBOR | 5,467 | 5,396 | 5,536 | ||||||
| Sigma Electric Manufacturing Corp. (8) (11) | Manufacturer and Distributor of Electrical Fittings and Parts | LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity - May 13, 2019) | 3 Month LIBOR | 12,500 | 12,199 | 12,199 | ||||||
| Sorenson Communications, Inc. | Manufacturer of Communication Products for Hearing Impaired | 9.00% Secured Debt (Maturity - October 31, 2020) (14) | None | 11,710 | 11,308 | 10,305 | ||||||
| LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity - April 30, 2020) | 3 month LIBOR | 2,977 | 2,957 | 2,955 | ||||||||
| 14,265 | 13,260 | |||||||||||
| Strike, LLC (8) | Pipeline Construction and Maintenance Services | LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.29%, Secured Debt (Maturity - November 30, 2022) | 6 month LIBOR | 10,000 | 9,667 | 9,900 | ||||||
| Synagro Infrastructure Company, Inc. (8) | Waste Management Services | LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity - August 22, 2020) | 3 month LIBOR | 2,704 | 2,687 | 2,372 | ||||||
| TaxAct, Inc. (8) | Provider of Tax Preparation Solutions | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - January 3, 2023) | 1 month LIBOR | 6,500 | 6,369 | 6,549 | ||||||
| TE Holdings, LLC | Oil & Gas Exploration & Production | Common Units (72,785 units) | — | — | 728 | 546 | ||||||
| Teleguam Holdings, LLC (8) | Cable and Telecom Services Provider | LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity - June 10, 2019) (14) | 1 month LIBOR | 6,397 | 6,387 | 6,268 | ||||||
| LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity - December 10, 2018) | 1 month LIBOR | 7,481 | 7,335 | 7,406 | ||||||||
| 13,722 | 13,674 | |||||||||||
| TMC Merger Sub Corp (8) | Refractory & Maintenance Services Provider | LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity - October 31, 2022) | 1 week LIBOR | 12,500 | 12,376 | 12,438 | ||||||
| The Topps Company, Inc. (8) | Trading Cards & Confectionary | LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity - October 2, 2018) | 3 month LIBOR | 1,109 | 1,104 | 1,113 | ||||||
| TOMS Shoes, LLC (8) | Global Designer, Distributor, and Retailer of Casual Footwear | LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity - October 30, 2020) | 3 month LIBOR | 4,913 | 4,573 | 3,635 | ||||||
| Travel Leaders Group, LLC (8) | Travel Agency Network Provider | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - December 7, 2020) | 1 month LIBOR | 15,988 | 15,900 | 15,960 | ||||||
| TVG-I-E CMN Acquisition, LLC (8) (11) | Organic Lead Generation for Online Postsecondary Schools | LIBOR Plus 6.00%, Current Coupon 7.00%, Secured Debt (Maturity - November 3, 2021) | 1 month LIBOR | 6,459 | 6,333 | 6,333 | ||||||
| Unirush LLC (10) (13) | Provider of Prepaid Debit Card Solutions | 12.00% Secured Debt (Maturity Date - February 1, 2019) | None | 3,000 | 2,745 | 3,000 | ||||||
| Warrants (111,181 equivalent units, Expiration - February 2, 2026) | — | — | 313 | 313 | ||||||||
| 3,058 | 3,313 | |||||||||||
| U.S. Telepacific Corp. (8) (11) | Provider of Communications and Managed Services | LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - February 24, 2021) | 3 month LIBOR | 7,500 | 7,367 | 7,367 | ||||||
| USJ-IMECO Holding Company, LLC (8) | Marine Interior Design and Installation | LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - April 16, 2020) | 3 month LIBOR | 8,857 | 8,829 | 8,813 | ||||||
| Valley Healthcare Group, LLC (8) (10) (13) | Provider of Durable Medical Equipment | LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.12%, Secured Debt (Maturity - December 29, 2020) | 1 month LIBOR | $ | 3,239 | $ | 3,183 | $ | 3,183 | |||
| Preferred Member Units (Valley Healthcare Holding, LLC) (400 units) | — | — | 400 | 400 | ||||||||
| 3,583 | 3,583 | |||||||||||
| VCVH Holding Corp. (8) | Healthcare Technology Services Focused on Revenue Maximization | LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.25%, Secured Debt (Maturity - June 1, 2024) (14) | 3 month LIBOR | 3,500 | 3,417 | 3,474 | ||||||
| Volusion, LLC (10) (13) | Provider of Online Software-as-a-Service eCommerce Solutions | 11.50% Secured Debt (Maturity - January 24, 2020) | None | 7,500 | 6,484 | 6,484 | ||||||
| Preferred Member Units (2,090,001 units) | — | — | 6,000 | 6,000 | ||||||||
| Warrants (784,866.80 equivalent units, Expiration - January 26, 2025) | — | — | 1,104 | 1,104 | ||||||||
| 13,588 | 13,588 | |||||||||||
| Wellnext, LLC (8) (11) | Manufacturer of Supplements and Vitamins | LIBOR Plus 9.00% (Floor 0.50%), Current Coupon 9.85%, Secured Debt (Maturity - May 23, 2021) | 3 month LIBOR | 10,058 | 9,966 | 10,058 | ||||||
| Worley Claims Services, LLC (8) (11) | Insurance Adjustment Management and Services Provider | LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity - October 31, 2020) | 1 month LIBOR | 6,370 | 6,326 | 6,370 | ||||||
| YP Holdings LLC (8) | Online and Offline Advertising Operator | LIBOR Plus 11.00% (Floor 1.25%), Current Coupon 12.25%, Secured Debt (Maturity - June 4, 2018) | 1 month LIBOR | 15,280 | 15,016 | 15,241 | ||||||
| Subtotal Non-Control/Non-Affiliate Investments (5) (91% of total portfolio investments at fair value) | $ | 935,741 | $ | 916,393 | ||||||||
| Total Portfolio Investments | $ | 1,002,395 | $ | 989,247 | ||||||||
| Short Term Investments (20) | ||||||||||||
| Fidelity Institutional Money Market Funds (21) | — | Prime Money Market Portfolio, Class III Shares | — | — | $ | 9,775 | $ | 9,775 | ||||
| UMB Bank Money Market Account (21) | — | — | 642 | 642 | ||||||||
| US Bank Money Market Account (21) | — | — | — | — | 10,672 | 10,672 | ||||||
| Total Short Term Investments | $ | 21,089 | $ | 21,089 | ||||||||
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Hawk Ridge Systems, LLC | (13) | December 2, 2016 | Value-Added Reseller of Engineering Design and Manufacturing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% | 12/2/2023 | | 3,350 | | 3,339 | | 3,350 | |
| | | | Preferred Member Units | 226 | | | | | | 713 | | 2,330 | (8) |
| | | | Preferred Member Units | 226 | | | | | | 38 | | 120 | (30) |
| | | | | | | | | | | 4,090 | | 5,800 | |
| | | | | | | | | | | | | | |
J&J Services, Inc. | | October 31, 2019 | Provider of Dumpster and Portable Toilet Rental Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 10/31/2024 | | 3,200 | | 3,152 | | 3,200 | |
| | | | Preferred Stock | 2,814 | | | | | | 1,771 | | 3,170 | |
| | | | | | | | | | | 4,923 | | 6,370 | |
| | | | | | | | | | | | | | |
Kickhaefer Manufacturing Company, LLC | | October 31, 2018 | Precision Metal Parts Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 10/31/2023 | | 5,604 | | 5,508 | | 5,508 | |
| | | | Member Units | 581 | | | | | | 3,060 | | 3,060 | |
| | | | Secured Debt | | 9.00% | 10/31/2048 | | 986 | | 976 | | 976 | |
| | | | Member Units | 800 | | | | | | 248 | | 290 | (8) (30) |
| | | | | | | | | | | 9,792 | | 9,834 | |
| | | | | | | | | | | | | | |
Market Force Information, LLC | | July 28, 2017 | Provider of Customer Experience Management Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% PIK | 7/28/2023 | | 6,520 | | 6,463 | | 3,317 | (14) (19) |
| | | | Member Units | 743,921 | | | | | | 4,160 | | - | |
| | | | | | | | | | | 10,623 | | 3,317 | |
| | | | | | | | | | | | | | |
MH Corbin Holding LLC | | August 31, 2015 | Manufacturer and Distributor of Traffic Safety Products | | | | | | | | | | | |
| | | | Secured Debt | | 13.00% (10.00% Cash, 3.00% PIK) | 3/31/2022 | | 2,123 | | 2,113 | | 2,052 | (19) |
| | | | Preferred Member Units | 66,000 | | | | | | 1,100 | | 300 | |
| | | | Preferred Member Units | 4,000 | | | | | | 1,500 | | - | |
| | | | | | | | | | | 4,713 | | 2,352 | |
| | | | | | | | | | | | | | |
Mystic Logistics Holdings, LLC | | August 18, 2014 | Logistics and Distribution Services Provider for Large Volume Mailers | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 1/17/2022 | | 1,683 | | 1,682 | | 1,682 | |
| | | | Common Stock | 587278.0% | | | | | | 680 | | 1,820 | (8) |
| | | | | | | | | | | 2,362 | | 3,502 | |
| | | | | | | | | | | | | | |
NexRev LLC | | February 28, 2018 | Provider of Energy Efficiency Products & Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% | 2/28/2023 | | 4,220 | | 4,181 | | 4,173 | |
| | | | Preferred Member Units | 86,400,000 | | | | | | 1,720 | | 820 | (8) |
| | | | | | | | | | | 5,901 | | 4,993 | |
| | | | | | | | | | | | | | |
8
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
NuStep, LLC | | January 31, 2017 | Designer, Manufacturer and Distributor of Fitness Equipment | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 1/31/2022 | | 4,310 | | 4,293 | | 4,293 | |
| | | | Preferred Member Units | 406 | | | | | | 2,550 | | 2,850 | |
| | | | | | | | | | | 6,843 | | 7,143 | |
| | | | | | | | | | | | | | |
Project BarFly, LLC | (10) | August 31, 2015 | Casual Restaurant Group | | | | | | | | | | | |
| | | | Member Units | 12 | | | | | | 528 | | 528 | |
| | | | | | | | | | | | | | |
SI East, LLC | | August 31, 2018 | Rigid Industrial Packaging Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% | 8/31/2023 | | 9,738 | | 9,654 | | 9,738 | |
| | | | Preferred Member Units | 157 | | | | | | 2,000 | | 3,390 | (8) |
| | | | | | | | | | | 11,654 | | 13,128 | |
| | | | | | | | | | | | | | |
Tedder Industries, LLC | | August 31, 2018 | Manufacturer of Firearm Holsters and Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 8/31/2023 | | 3,700 | | 3,636 | | 3,638 | |
| | | | Preferred Member Units | 479 | | | | | | 2,034 | | 2,034 | |
| | | | | | | | | | | 5,670 | | 5,672 | |
| | | | | | | | | | | | | | |
Trantech Radiator Topco, LLC | | May 31, 2019 | Transformer Cooling Products and Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 5/31/2024 | | 2,180 | | 2,126 | | 2,126 | |
| | | | Common Stock | 615 | | | | | | 1,164 | | 1,420 | (8) |
| | | | | | | | | | | 3,290 | | 3,546 | |
| | | | | | | | | | | | | | |
Subtotal Affiliate Investments (29.3% of net assets at fair value) | | | | | | | | | | $ | 156,007 | $ | 170,959 | |
| | | | | | | | | | | | | | |
Non-Control/Non-Affiliate Investments (7) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
AAC Holdings, Inc. | (11) | June 30, 2017 | Substance Abuse Treatment Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 18.00% (10.00% Cash, 8.00% PIK) | 6/25/2025 | | 3,422 | | 3,085 | | 3,404 | (19) |
| | | | Common Stock | 593,928 | | | | | | 3,148 | | 1,930 | |
| | | | Warrants | 554,353 | | 12/11/2025 | | | | - | | 643 | (27) |
| | | | | | | | | | | 6,233 | | 5,977 | |
| | | | | | | | | | | | | | |
Adams Publishing Group, LLC | (10) | November 19, 2015 | Local Newspaper Operator | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (L+7.00%, Floor 1.75%) | 7/3/2023 | | 5,644 | | 5,537 | | 5,599 | (9) |
| | | | | | | | | | | | | | |
ADS Tactical, Inc. | (11) | March 7, 2017 | Value-Added Logistics and Supply Chain Provider to the Defense Industry | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 3/19/2026 | | 19,231 | | 18,847 | | 19,135 | (9) |
| | | | | | | | | | | | | | |
American Nuts, LLC | (10) | April 10, 2018 | Roaster, Mixer and Packager of Bulk Nuts and Seeds | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 4/10/2023 | | 12,100 | | 11,910 | | 12,100 | (9) |
| | | | | | | | | | | | | | |
9
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
American Teleconferencing Services, Ltd. | (11) | May 19, 2016 | Provider of Audio Conferencing and Video Collaboration Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 6/8/2023 | | 14,118 | | 13,826 | | 7,500 | (9) |
| | | | | | | | | | | | | | |
American Trailer Rental Group LLC | | June 7, 2017 | Provider of Short-term Trailer and Container Rental | | | | | | | | | | | |
| | | | Member Units | 73,493 | | | | | | 2,149 | | 4,470 | (30) |
| | | | | | | | | | | | | | |
Arcus Hunting LLC | (10) | January 6, 2015 | Manufacturer of Bowhunting and Archery Products and Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 3/31/2022 | | 5,504 | | 5,464 | | 5,504 | (9) |
| | | | | | | | | | | | | | |
ASC Ortho Management Company, LLC | (10) | August 31, 2018 | Provider of Orthopedic Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% (L+7.50%, Floor 1.00%) | 8/31/2023 | | 5,177 | | 5,127 | | 5,125 | (9) |
| | | | Secured Debt | | 13.25% PIK | 12/1/2023 | | 2,118 | | 2,085 | | 2,118 | (19) |
| | | | | | | | | | | 7,212 | | 7,243 | |
| | | | | | | | | | | | | | |
ATX Networks Corp. | (11) (13) (21) | June 30, 2015 | Provider of Radio Frequency Management Equipment | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%) | 12/31/2023 | | 13,346 | | 13,258 | | 12,212 | (9) (19) |
| | | | | | | | | | | | | | |
BBB Tank Services, LLC | | April 8, 2016 | Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market | | | | | | | | | | | |
| | | | Unsecured Debt | | 12.00% (L+11.00%, Floor 1.00%) | 4/8/2021 | | 1,200 | | 1,200 | | 1,186 | (9) |
| | | | Preferred Stock (non-voting) | | 15.00% PIK | | | | | 39 | | 39 | (8) (19) |
| | | | Member Units | 800,000 | | | | | | 200 | | 70 | |
| | | | | | | | | | | 1,439 | | 1,295 | |
| | | | | | | | | | | | | | |
Berry Aviation, Inc. | (10) | July 6, 2018 | Charter Airline Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (10.50% Cash, 1.5% PIK) | 1/6/2024 | | 4,635 | | 4,595 | | 4,635 | (19) |
| | | | Preferred Member Units | 122,416 | 16.00% PIK | | | | | 151 | | 151 | (8) (19) (30) |
| | | | Preferred Member Units | 1,548,387 | 8.00% PIK | | | | | 1,548 | | 1,438 | (19) (30) |
| | | | | | | | | | | 6,294 | | 6,224 | |
| | | | | | | | | | | | | | |
BLST Operating Company, LLC. | (11) | December 19, 2013 | Multi-Channel Retailer of General Merchandise | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% (L+8.50%, Floor 1.50%) | 8/28/2025 | | 6,304 | | 6,304 | | 5,800 | (9) |
| | | | Common Stock | 653,184 | | | | | | - | | 315 | |
| | | | | | | | | | | 6,304 | | 6,115 | |
| | | | | | | | | | | | | | |
10
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
BigName Commerce, LLC | (10) | May 11, 2017 | Provider of Envelopes and Complimentary Stationery Products | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+7.25%, Floor 1.00%) | 5/11/2022 | | 1,985 | | 1,979 | | 1,985 | (9) |
| | | | | | | | | | | | | | |
Binswanger Enterprises, LLC | (10) | March 10, 2017 | Glass Repair and Installation Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 3/9/2022 | | 12,765 | | 12,641 | | 12,765 | (9) |
| | | | Member Units | 1,050,000 | | | | | | 1,050 | | 730 | |
| | | | | | | | | | | 13,691 | | 13,495 | |
| | | | | | | | | | | | | | |
Boccella Precast Products LLC | | June 30, 2017 | Manufacturer of Precast Hollow Core Concrete | | | | | | | | | | | |
| | | | Member Units | 2,160,000 | | | | | | 564 | | 1,438 | (8) |
| | | | | | | | | | | | | | |
Brightwood Capital Fund Investments | (12) (13) | July 21, 2014 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Brightwood Capital Fund III, LP) | 1.6% | | | | | | 3,095 | | 2,067 | (8) (31) |
| | | | LP Interests (Brightwood Capital Fund IV, LP) | 0.6% | | | | | | 9,037 | | 9,000 | (8) (31) |
| | | | | | | | | | | 12,132 | | 11,067 | |
| | | | | | | | | | | | | | |
Buca C, LLC | | June 30, 2015 | Casual Restaurant Group | | | | | | | | | | | |
| | | | Secured Debt | | 10.25% (2.56% Cash, 7.69% PIK) (L+9.25%, Floor 1.00%) | 6/30/2020 | | 12,670 | | 12,670 | | 9,255 | (9) (17) (19) |
| | | | Preferred Member Units | 6 | 6.00% PIK | | | | | 3,040 | | - | (19) |
| | | | | | | | | | | 15,710 | | 9,255 | |
| | | | | | | | | | | | | | |
Cadence Aerospace LLC | (10) | November 14, 2017 | Aerostructure Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (4.25% Cash, 5.25% PIK) (5.25% PIK + L+3.25%, Floor 1.00%) | 11/14/2023 | | 19,952 | | 19,814 | | 18,317 | (9) (19) |
| | | | | | | | | | | | | | |
CAI Software LLC | | October 10, 2014 | Provider of Specialized Enterprise Resource Planning Software | | | | | | | | | | | |
| | | | Secured Debt | | 12.50% | 12/7/2023 | | 1,939 | | 1,952 | | 1,939 | |
| | | | Member Units | 77,960 | | | | | | 188 | | 1,600 | |
| | | | | | | | | | | 2,140 | | 3,539 | |
| | | | | | | | | | | | | | |
Cenveo Corporation | (11) | September 4, 2015 | Provider of Digital Marketing Agency Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (L+9.50%, Floor 1.00%) | 6/7/2023 | | 4,117 | | 3,946 | | 4,077 | (9) |
| | | | Common Stock | 177,130 | | | | | | 4,163 | | 1,852 | |
| | | | | | | | | | | 8,109 | | 5,929 | |
| | | | | | | | | | | | | | |
11
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Chisholm Energy Holdings, LLC | (10) | May 15, 2019 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% (L+6.25%, Floor 1.50%) | 5/15/2026 | | 2,857 | | 2,811 | | 2,573 | (9) |
| | | | | | | | | | | | | | |
Clarius BIGS, LLC | (10) | September 23, 2014 | Prints & Advertising Film Financing | | | | | | | | | | | |
| | | | Secured Debt | | 15.00% PIK | 1/5/2015 | | 2,849 | | 2,498 | | 31 | (14) (17) (19) |
| | | | | | | | | | | | | | |
Classic H&G Holdings, LLC | | March 12, 2020 | Provider of Engineered Packaging Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 3/12/2025 | | 6,200 | | 6,040 | | 6,200 | |
| | | | Preferred Member Units | 154 | | | | | | 1,440 | | 2,800 | (8) |
| | | | | | | | | | | 7,480 | | 9,000 | |
| | | | | | | | | | | | | | |
Clickbooth.com, LLC | (10) | December 5, 2017 | Provider of Digital Advertising Performance Marketing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 1/31/2025 | | 7,800 | | 7,688 | | 7,800 | (9) |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (CTEF I, LP) | 375 | | | | | | - | | 67 | |
| | | | | | | | | | | | | | |
Corel Corporation | (11) (13) (21) | July 13, 2020 | Publisher of Desktop and Cloud-based Software | | | | | | | | | | | |
| | | | Secured Debt | | 5.19% (L+5.00%) | 7/2/2026 | | 1,950 | | 1,857 | | 1,944 | |
| | | | | | | | | | | | | | |
Digital River, Inc. | (11) | February 24, 2015 | Provider of Outsourced e-Commerce Solutions and Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+7.00%, Floor 1.00%) | 2/12/2023 | | 8,377 | | 8,291 | | 8,335 | (9) |
| | | | | | | | | | | | | | |
DTE Enterprises, LLC | (10) | April 13, 2018 | Industrial Powertrain Repair and Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% (L+8.50%, Floor 1.50%) | 4/13/2023 | | 9,333 | | 9,244 | | 8,937 | (9) |
| | | | Class AA Preferred Member Units (non-voting) | | 10.00% PIK | | | | | 974 | | 974 | (8) (19) |
| | | | Class A Preferred Member Units | 776,316 | | | | | | 776 | | 800 | |
| | | | | | | | | | | 10,994 | | 10,711 | |
| | | | | | | | | | | | | | |
Dynamic Communities, LLC | (10) | July 17, 2018 | Developer of Business Events and Online Community Groups | | | | | | | | | | | |
| | | | Secured Debt | | 12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%) | 7/17/2023 | | 5,530 | | 5,475 | | 5,222 | (9) (19) |
| | | | | | | | | | | | | | |
EPIC Y-Grade Services, LP | (11) | June 22, 2018 | NGL Transportation & Storage | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 6/30/2027 | | 6,944 | | 6,857 | | 6,041 | (9) |
| | | | | | | | | | | | | | |
12
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Flip Electronics LLC | (10) | January 4, 2021 | Distributor of Hard-to-Find and Obsolete Electronic Components | | | | | | | | | | | |
| | | | Secured Debt | | 9.17% (L+8.09%, Floor 1.00%) | 1/5/2026 | | 6,000 | | 5,875 | | 5,875 | (33) |
| | | | | | | | | | | | | | |
GoWireless Holdings, Inc. | (11) | December 31, 2017 | Provider of Wireless Telecommunications Carrier Services | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 12/22/2024 | | 13,876 | | 13,797 | | 13,859 | (9) |
| | | | | | | | | | | | | | |
Gexpro Services | (10) | February 24, 2020 | Distributor of Industrial and Specialty Parts | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+6.50%, Floor 1.50%) | 2/24/2025 | | 12,474 | | 12,187 | | 12,390 | (9) |
| | | | | | | | | | | | | | |
HDC/HW Intermediate Holdings | (10) | December 21, 2018 | Managed Services and Hosting Provider | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% (L+7.50%, Floor 1.00%) | 12/21/2023 | | 1,947 | | 1,923 | | 1,885 | (9) |
| | | | | | | | | | | | | | |
Hunter Defense Technologies, Inc. | (10) | March 29, 2018 | Provider of Military and Commercial Shelters and Systems | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 3/29/2023 | | 16,563 | | 16,414 | | 16,563 | (9) |
| | | | | | | | | | | | | | |
HW Temps LLC | | July 2, 2015 | Temporary Staffing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% | 3/29/2023 | | 2,420 | | 2,393 | | 2,221 | |
| | | | | | | | | | | | | | |
Hyperion Materials & Technologies, Inc. | (11) (13) | September 12, 2019 | Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds | | | | | | | | | | | |
| | | | Secured Debt | | 6.50% (L+5.50%, Floor 1.00%) | 8/28/2026 | | 7,406 | | 7,285 | | 7,388 | (9) |
| | | | | | | | | | | | | | |
Implus Footcare, LLC | (10) | June 1, 2017 | Provider of Footwear and Related Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (L+7.75%, Floor 1.00%) | 4/30/2024 | | 17,221 | | 17,172 | | 15,796 | (9) |
| | | | | | | | | | | | | | |
Independent Pet Partners Intermediate Holdings, LLC | (10) | November 20, 2018 | Omnichannel Retailer of Specialty Pet Products | | | | | | | | | | | |
| | | | Secured Debt | | 6.00% PIK | 11/20/2023 | | 9,960 | | 9,092 | | 9,092 | (19) |
| | | | Preferred Stock (non-voting) | | | | | | | 2,470 | | 2,470 | |
| | | | Preferred Stock (non-voting) | | | | | | | - | | - | |
| | | | Member Units | 1,558,333 | | | | | | 1,192 | | - | |
| | | | | | | | | | | 12,754 | | 11,562 | |
| | | | | | | | | | | | | | |
Industrial Services Acquisition, LLC | (10) | June 17, 2016 | Industrial Cleaning Services | | | | | | | | | | | |
| | | | Unsecured Debt | | 13.00% (6.00% Cash, 7.00% PIK) | 12/17/2022 | | 13,123 | | 13,104 | | 13,123 | (19) |
| | | | Preferred Member Units | 144 | 10.00% PIK | | | | | 265 | | 343 | (8) (19) (30) |
| | | | Preferred Member Units | 80 | 20.00% PIK | | | | | 171 | | 199 | (8) (19) (30) |
| | | | Member Units | 900 | | | | | | 2,100 | | 1,610 | (30) |
| | | | | | | | | | | 15,640 | | 15,275 | |
| | | | | | | | | | | | | | |
13
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Interface Security Systems, L.L.C | (10) | August 7, 2019 | Commercial Security & Alarm Services | | | | | | | | | | | |
| | | | Secured Debt | | 9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK + L+7.00%, Floor 1.75%) | 8/7/2023 | | 7,278 | | 7,188 | | 7,278 | (9) (19) |
| | | | | | | | | | | | | | |
Intermedia Holdings, Inc. | (11) | August 3, 2018 | Unified Communications as a Service | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 7/19/2025 | | 7,374 | | 7,351 | | 7,391 | (9) |
| | | | | | | | | | | | | | |
Invincible Boat Company, LLC. | (10) | August 28, 2019 | Manufacturer of Sport Fishing Boats | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+6.50%, Floor 1.50%) | 8/28/2025 | | 8,661 | | 8,585 | | 8,661 | (9) |
| | | | | | | | | | | | | | |
Isagenix International, LLC | (11) | June 21, 2018 | Direct Marketer of Health & Wellness Products | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 6/14/2025 | | 5,469 | | 5,432 | | 4,127 | (9) |
| | | | | | | | | | | | | | |
Jackmont Hospitality, Inc. | (10) | May 26, 2015 | Franchisee of Casual Dining Restaurants | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% (L+6.75%, Floor 1.00%) | 5/26/2021 | | 7,855 | | 7,854 | | 6,274 | (9) |
| | | | | | | | | | | | | | |
Joerns Healthcare, LLC | (11) | April 3, 2013 | Manufacturer and Distributor of Health Care Equipment & Supplies | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/21/2024 | | 3,336 | | 3,296 | | 3,226 | (9) |
| | | | Common Stock | 472,579 | | | | | | 3,678 | | 1,861 | |
| | | | | | | | | | | 6,974 | | 5,087 | |
| | | | | | | | | | | | | | |
Kemp Technologies Inc. | (10) | June 27, 2019 | Provider of Application Delivery Controllers | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 3/29/2024 | | 7,369 | | 7,269 | | 7,369 | (9) |
| | | | | | | | | | | | | | |
Knight Energy Services LLC | (11) | November 14, 2018 | Oil and Gas Equipment & Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% PIK | 2/9/2024 | | 902 | | 902 | | 683 | (17) (19) |
| | | | Common Stock | 25,692 | | | | | | 1,843 | | - | |
| | | | | | | | | | | 2,745 | | 683 | |
| | | | | | | | | | | | | | |
Kore Wireless Group Inc. | (11) | December 31, 2018 | Mission Critical Software Platform | | | | | | | | | | | |
| | | | Secured Debt | | 5.70% (L+5.50%) | 12/20/2024 | | 5,984 | | 5,965 | | 5,977 | |
| | | | | | | | | | | | | | |
Larchmont Resources, LLC | (11) | August 13, 2013 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 8/9/2021 | | 3,715 | | 3,754 | | 1,690 | (9) |
| | | | Member Units | 2,828 | | | | | | 601 | | 192 | (30) |
| | | | | | | | | | | 4,355 | | 1,882 | |
| | | | | | | | | | | | | | |
Laredo Energy VI, LP | (10) | January 15, 2019 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Member Units | 1,155,952 | | | | | | 11,560 | | 10,118 | |
| | | | | | | | | | | | | | |
14
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Lightbox Holdings, L.P. | (11) | May 23, 2019 | Provider of Commercial Real Estate Software | | | | | | | | | | | |
| | | | Secured Debt | | 5.20% (L+5.00%) | 5/9/2026 | | 4,913 | | 4,854 | | 4,863 | |
| | | | | | | | | | | | | | |
LL Management, Inc. | (10) | May 2, 2019 | Medical Transportation Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+7.25%, Floor 1.00%) | 9/25/2023 | | 14,441 | | 14,335 | | 14,441 | (9) |
| | | | | | | | | | | | | | |
Logix Acquisition Company, LLC | (10) | June 24, 2016 | Competitive Local Exchange Carrier | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 12/22/2024 | | 12,586 | | 12,530 | | 12,146 | (9) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Lulu's Fashion Lounge, LLC | (10) | August 31, 2017 | Fast Fashion E-Commerce Retailer | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%) | 8/28/2022 | | 5,530 | | 5,459 | | 4,728 | (9) (19) |
| | | | | | | | | | | | | | |
Lynx FBO Operating LLC | (10) | September 30, 2019 | Fixed Based Operator in the General Aviation Industry | | | | | | | | | | | |
| | | | Secured Debt | | 7.25% (L+5.75%, Floor 1.50%) | 9/30/2024 | | 13,589 | | 13,361 | | 13,589 | (9) |
| | | | Member Units | 4,872 | | | | | | 500 | | 594 | |
| | | | | | | | | | | 13,861 | | 14,183 | |
| | | | | | | | | | | | | | |
Mac Lean-Fogg Company | (10) | April 22, 2019 | Manufacturer and Supplier for Auto and Power Markets | | | | | | | | | | | |
| | | | Secured Debt | | 5.63% (L+5.00%, Floor 0.625%) | 12/22/2025 | | 7,357 | | 7,316 | | 7,357 | (9) |
| | | | Preferred Stock | | 13.75% (4.50% Cash, 9.25% PIK) | | | 782 | | 782 | | 782 | (8) (19) |
| | | | | | | | | | | 8,098 | | 8,139 | |
| | | | | | | | | | | | | | |
Mako Steel, LP | (10) | March 15, 2021 | Self-Storage Design & Construction | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+7.25%, Floor 0.75%) | 3/15/2026 | | 18,863 | | 18,437 | | 18,437 | |
| | | | | | | | | | | | | | |
MB2 Dental Solutions, LLC | (11) | January 28, 2021 | Dental Partnership Organization | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 1/29/2027 | | 8,322 | | 8,144 | | 8,144 | |
| | | | | | | | | | | | | | |
Mills Fleet Farm Group, LLC | (10) | October 24, 2018 | Omnichannel Retailer of Work, Farm and Lifestyle Merchandise | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 10/24/2024 | | 15,094 | | 14,831 | | 14,854 | (9) |
| | | | | | | | | | | | | | |
NinjaTrader, LLC | (10) | December 18, 2019 | Operator of Futures Trading Platform | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+6.75%, Floor 1.50%) | 12/18/2024 | | 16,875 | | 16,541 | | 16,829 | (9) |
| | | | | | | | | | | | | | |
NNE Partners, LLC | (10) | March 2, 2017 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 9.44% (4.94% Cash, 4.50% PIK) (4.50% PIK + L+4.75%) | 12/31/2023 | | 20,881 | | 20,834 | | 18,981 | (19) |
| | | | | | | | | | | | | | |
15
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Novetta Solutions, LLC | (11) | June 21, 2017 | Provider of Advanced Analytics Solutions for Defense Agencies | | | | | | | | | | | |
| | | | Secured Debt | | 6.00% (L+5.00%, Floor 1.00%) | 10/17/2022 | | 14,630 | | 14,488 | | 14,602 | (9) |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 10/16/2023 | | 1,069 | | 1,069 | | 1,070 | |
| | | | | | | | | | | 15,557 | | 15,672 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
NTM Acquisition Corp. | (11) | July 12, 2016 | Provider of B2B Travel Information Content | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%) | 6/7/2024 | | 4,321 | | 4,309 | | 4,213 | (9) (19) |
| | | | | | | | | | | | | | |
Research Now Group, Inc. and Survey Sampling International, LLC | (11) | December 31, 2017 | Provider of Outsourced Online Surveying | | | | | | | | | | | |
| | | | Secured Debt | | 6.50% (L+5.50%, Floor 1.00%) | 12/20/2024 | | 10,000 | | 10,000 | | 9,947 | (9) |
| | | | | | | | | | | | | | |
RM Bidder, LLC | (10) | November 12, 2015 | Scripted and Unscripted TV and Digital Programming Provider | | | | | | | | | | | |
| | | | Warrants | 187,161 | | 10/20/2025 | | | | 284 | | - | (26) |
| | | | Member Units | 2,779 | | | | | | 31 | | 23 | |
| | | | | | | | | | | 315 | | 23 | |
| | | | | | | | | | | | | | |
Salient Partners L.P. | (11) | June 25, 2015 | Provider of Asset Management Services | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/31/2021 | | 6,251 | | 6,269 | | 3,374 | (9) |
| | | | | | | | | | | | | | |
Signal Peak CLO 7, Ltd. (Mariner) | (12) (13) | May 8, 2019 | Structured Finance | | | | | | | | | | | |
| | | | Subordinated Structured Notes | | 12.00% | 4/30/2032 | | 25,935 | | 21,481 | | 17,735 | (16) |
| | | | | | | | | | | - | | - | |
Slick Innovations, LLC | | September 13, 2018 | Text Message Marketing Platform | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 9/13/2023 | | 1,390 | | 1,220 | | 1,390 | |
| | | | Common Stock | 70,000 | | | | | | 175 | | 380 | |
| | | | Warrants | 18,084 | | 9/13/2028 | | | | 45 | | 100 | (27) |
| | | | | | | | | | | 1,440 | | 1,870 | |
| | | | | | | | | | | | | | |
TGP Holdings III LLC | (11) | September 30, 2017 | Outdoor Cooking & Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 9/25/2025 | | 5,000 | | 5,000 | | 4,966 | (9) |
| | | | | | | | | | | | | | |
Time Manufacturing Acquisition LLC | (11) | February 24, 2021 | Manufacturer and Distributor of Utility Equipment | | | | | | | | | | | |
| | | | Secured Debt | | 6.00% (L+5.00%, Floor 1.00%) | 2/3/2023 | | 1,498 | | 1,494 | | 1,504 | |
| | | | | | | | | | | | | | |
The Pasha Group | (11) | February 2, 2018 | Diversified Logistics and Transportation Provided | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 1/26/2023 | | 7,361 | | 7,140 | | 7,306 | (9) |
| | | | | | | | | | | | | | |
16
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
U.S. TelePacific Corp. | (11) | September 14, 2016 | Provider of Communications and Managed Services | | | | | | | | | | | |
| | | | Secured Debt | | 6.50% (L+5.50%, Floor 1.00%) | 5/2/2023 | | 12,500 | | 12,346 | | 11,608 | (9) |
| | | | | | | | | | | | | | |
USA DeBusk LLC | (10) | October 22, 2019 | Provider of Industrial Cleaning Services | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 10/22/2024 | | 16,590 | | 16,346 | | 16,417 | (9) |
| | | | | | | | | | | | | | |
Vida Capital, Inc | (11) | October 10, 2019 | Alternative Asset Manager | | | | | | | | | | | |
| | | | Secured Debt | | 6.11% (L+6.00%) | 10/1/2026 | | 7,134 | | 7,048 | | 6,885 | |
| | | | | | | | | | | | | | |
Vistar Media, Inc. | (10) | February 17, 2017 | Operator of Digital Out-of-Home Advertising Platform | | | | | | | | | | | |
| | | | Secured Debt | | 13.00% (9.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 2.00%) | 4/3/2023 | | 4,697 | | 4,610 | | 4,697 | (9) (19) |
| | | | Preferred Stock | 70,207 | | | | | | 767 | | 910 | |
| | | | Warrants | 69,675 | | 4/3/2029 | | | | - | | 920 | (25) |
| | | | | | | | | | | 5,377 | | 6,527 | |
| | | | | | | | | | | | | | |
Volusion, LLC | | January 26, 2015 | Provider of Online Software-as-a-Service eCommerce Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 1/26/2020 | | 8,672 | | 8,654 | | 8,246 | (17) |
| | | | Unsecured Convertible Debt | | 8.00% | 11/16/2023 | | 175 | | 175 | | 125 | |
| | | | Preferred Member Units | 4,876,670 | | | | | | 6,000 | | 2,570 | |
| | | | Warrants | 1,831,355 | | 1/26/2025 | | | | 1,104 | | - | (27) |
| | | | | | | | | | | 15,933 | | 10,941 | |
| | | | | | | | | | | | | | |
White Cap Parent, LLC | (10) | December 29, 2016 | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors | | | | | | | | | | | (8) |
| | | | Member Units | | | | | | | 3,335 | | 6,050 | |
| | | | | | | | | | | | | | |
YS Garments, LLC | (11) | August 22, 2018 | Designer and Provider of Branded Activewear | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/9/2024 | | 6,952 | | 6,908 | | 6,430 | (9) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Subtotal Non-Control/Non-Affiliate Investments (110.4% of net assets at fair value) | | | | | | | | | | $ | 685,503 | $ | 644,997 | |
| | | | | | | | | | | | | | |
Total Portfolio Investments, March 31, 2021 (145.4% of net assets at fair value) | | | | | | | | | | $ | 859,673 | $ | 849,732 | |
| | | | | | | | | | | | | | |
Short Term Investments (34) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Fidelity Institutional Money Market Funds (35) | | | | Prime Money Market Portfolio | | | | | | $ | 19,892 | $ | 19,892 | |
| | | | | | | | | | | | | | |
USBank Money Market Account (35) | | | | | | | | | | | 6,001 | | 6,001 | |
17
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
| | | | | | | | | | | | | | |
Total Short Term Investments | | | | | | | | | | $ | 25,893 | $ | 25,893 | |
| | |
(1) | All investments are Lower Middle Market portfolio investments, unless otherwise noted. See C.2 for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered as security for the Company’s Credit Facilities. | |
(2) | | Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted. |
(3) | | See Note C.2 and Schedule 12-14 for a summary of geographic location of portfolio companies. |
(4) | | Principal is net of repayments. Cost is net of repayments and accumulated unearned income. |
(5) | | Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act"), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. |
(6) | | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. |
(7) | | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. |
(8) | | Income producing through dividends or distributions. |
(9) | | Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference tto either the London Interbank Offered Rate (“LIBOR”) or or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at March 31, 2021. As noted in this schedule, 76% of the loans (based on the par amount) contain LIBOR floors which range between 0.63% and 2.00%, with a weighted-average LIBOR floor of approximately 1.10%. |
(10) | | Private Loan portfolio investment. See Note C.2 for a description of Private Loan portfolio investments. |
(11) | | Middle Market portfolio investment. See Note C.2 for a description of Middle Market portfolio investments. |
(12) | | Other Portfolio investment. See Note C.2 for a description of Other Portfolio investments. |
(13) | | Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
(14) | | Non-accrual and non-income producing investment. |
(15) | | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” |
(16) | | Our CLO equity position is entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying assets less contractual payments to debt holders and CLO expenses. The effective yield is estimated based upon the current projection of the amount and timing of these recurring distributions in addition to the estimated amount of terminal principal payment. We monitor the anticipated cash flows from our CLO equity position and adjust our effective yield periodically as needed on a prospective basis. The estimated yield and investment cost may ultimately not be realized. |
(17) | | Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. |
(18) | | Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C.1 for further discussion. |
(19) | | PIK interest income and cumulative dividend income represent income not paid currently in cash. |
(20) | | All portfolio company headquarters are based in the United States, unless otherwise noted. |
(21) | | Portfolio company headquarters are located outside of the United States. |
18
MSC Income Fund, Inc.
Consolidated Schedule of Investments (Continued)
March 31, 2021
(dollars in thousands)
(unaudited)
(22) | | Not used |
(23) | | Not used |
(24) | | Investment date represents the date of initial investment in the portfolio company. |
(25) | | Warrants are presented in equivalent shares with a strike price of $10.92 per share. |
(26) | | Warrants are presented in equivalent units with a strike price of $14.28 per unit. |
(27) | | Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. |
(28) | | Not used |
(29) | | Not used |
(30) | | Shares/Units represent ownership in an underlying Real Estate or HoldCo entity. |
(31) | | Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. |
(32) | | Not used |
(33) | | The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate. |
(34) | | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less. These short term investments are included as Cash and cash equivalents. |
(35) | | Effective yield as of March 31, 2021 was approximately 0.05% at USBank Money Market Account and 0.01% at Fidelity Institutional Money Market Funds. |
| | |
19
MSC Income Fund
Consolidated Schedule of Investments
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Control Investments (5) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (CTMH, LP) | 38.8% | | | | | $ | 872 | $ | 747 | (31) |
| | | | | | | | | | | | | | |
GRT Rubber Technologies LLC ("GRT") | | December 19, 2014 | Manufacturer of Engineered Rubber Products | | | | | | | | | | | |
| | | | Secured Debt | | 7.15% (L+7.00%) | 12/31/2023 | $ | 8,262 | | 8,246 | | 8,262 | |
| | | | Member Units | 2,896 | | | | | | 6,435 | | 22,120 | (8) |
| | | | | | | | | | | 14,681 | | 30,382 | |
| | | | | | | | | | | | | | |
Harris Preston Fund Investments | (12) (13) | October 1, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (2717 MH, L.P.) | 49.3% | | | | | | 2,599 | | 2,702 | (31) |
| | | | | | | | | | | | | | |
Subtotal Control Investments (5.8% of net assets at fair value) | | | | | | | | | | $ | 18,152 | $ | 33,831 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Affiliate Investments (6) | | | | | | | | | | | | | | |
AFG Capital Group, LLC | | November 7, 2014 | Provider of Rent-to-Own Financing Solutions and Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% | 5/25/2022 | | 123 | | 123 | | 123 | |
| | | | Preferred Member Units | 46 | | | | | | 300 | | 1,450 | |
| | | | | | | | | | | 423 | | 1,573 | |
| | | | | | | | | | | | | | |
Analytical Systems Keco, LLC | | August 16, 2019 | Manufacturer of Liquid and Gas Analyzers | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+10.00%, Floor 2.00%) | 8/16/2024 | | 1,289 | | 1,180 | | 1,180 | (9) |
| | | | Preferred Member Units | 800 | | | | | | 800 | | 800 | |
| | | | Warrants | 105 | | 8/16/2029 | | | | 79 | | - | (27) |
| | | | | | | | | | | 2,059 | | 1,980 | |
| | | | | | | | | | | | | | |
Brewer Crane Holdings, LLC | | January 9, 2018 | Provider of Crane Rental and Operating Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 1/9/2023 | | 2,139 | | 2,119 | | 2,119 | (9) |
| | | | Preferred Member Units | 737 | | | | | | 1,070 | | 1,460 | (8) |
| | | | | | | | | | | 3,189 | | 3,579 | |
| | | | | | | | | | | | | | |
Centre Technologies Holdings, LLC | | January 4, 2019 | Provider of IT Hardware Services and Software Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+10.00%, Floor 2.00%) | 1/4/2024 | | 2,907 | | 2,868 | | 2,868 | (9) |
| | | | Preferred Member Units | 3,174 | | | | | | 1,460 | | 1,540 | |
| | | | | | | | | | | 4,328 | | 4,408 | |
| | | | | | | | | | | | | | |
Chamberlin Holding LLC | | February 26, 2018 | Roofing and Waterproofing Specialty Contractor | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 2/26/2023 | | 3,803 | | 3,745 | | 3,803 | (9) |
| | | | Member Units | 1,087 | | | | | | 2,860 | | 7,020 | (8) |
| | | | Member Units | 1 | | | | | | 330 | | 318 | (8) (30) |
| | | | | | | | | | | 6,935 | | 11,141 | |
| | | | | | | | | | | | | | |
20
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Charlotte Russe, Inc | (11) | May 28, 2013 | Fast-Fashion Retailer to Young Women | | | | | | | | | | | |
| | | | Common Stock | 14,973 | | | | | | 2,470 | | - | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Charps, LLC | | February 3, 2017 | Pipeline Maintenance and Construction | | | | | | | | | | | |
| | | | Secured Debt | | 15.00% | 6/5/2022 | | 167 | | 167 | | 167 | |
| | | | Preferred Member Units | 400 | | | | | | 100 | | 2,630 | (8) |
| | | | | | | | | | | 267 | | 2,797 | |
| | | | | | | | | | | | | | |
Clad-Rex Steel, LLC | | December 20, 2016 | Specialty Manufacturer of Vinyl-Clad Metal | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (L+9.50%, Floor 1.00%) | 12/20/2021 | | 2,720 | | 2,706 | | 2,706 | (9) |
| | | | Member Units | 179 | | | | | | 1,820 | | 2,153 | (8) |
| | | | Secured Debt | | 10.00% | 12/20/2036 | | 278 | | 275 | | 275 | (30) |
| | | | Member Units | 200 | | | | | | 53 | | 132 | (30) |
| | | | | | | | | | | 4,854 | | 5,266 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Cody Pools, Inc. | | March 6, 2020 | Designer of Residential and Commercial Pools | | | | | | | | | | | |
| | | | Secured Debt | | 12.25% (L+10.50%, Floor 1.75%) | 3/6/2025 | | 3,554 | | 3,488 | | 3,554 | (9) |
| | | | Preferred Member Units | 147 | | | | | | 2,079 | | 3,740 | |
| | | | | | | | | | | 5,567 | | 7,294 | |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Copper Trail Energy Fund I, LP) | 12.4% | | | | | | 2,161 | | 1,782 | (8) (31) |
| | | | | | | | | | | | | | |
Digital Products Holdings LLC | | April 1, 2018 | Designer and Distributor of Consumer Electronics | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 4/1/2023 | | 4,543 | | 4,493 | | 4,493 | (9) |
| | | | Preferred Member Units | 964 | | | | | | 2,375 | | 2,459 | (8) |
| | | | | | | | | | | 6,868 | | 6,952 | |
| | | | | | | | | | | | | | |
Direct Marketing Solutions, Inc. | | February 13, 2018 | Provider of Omni-Channel Direct Marketing Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (L+11.00%, Floor 1.00%) | 2/13/2023 | | 3,772 | | 3,717 | | 3,717 | (9) |
| | | | Preferred Stock | 2,100 | | | | | | 2,100 | | 4,840 | |
| | | | | | | | | | | 5,817 | | 8,557 | - |
| | | | | | | | | | | | | | |
Freeport Financial Funds | (12) (13) | July 31, 2015 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Freeport First Lien Loan Fund III LP) | 6.0% | | | | | | 10,785 | | 10,321 | (8) (31) |
| | | | | | | | | | | | | | |
Gamber-Johnson Holdings, LLC ("GJH") | | June 24, 2016 | Manufacturer of Ruggedized Computer Mounting Systems | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+7.00%, Floor 2.00%) | 6/24/2021 | | 4,960 | | 4,935 | | 4,960 | (9) |
| | | | Member Units | 9,042 | | | | | | 3,711 | | 13,120 | (8) |
21
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
| | | | | | | | | | | 8,646 | | 18,080 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Gulf Publishing Holdings, LLC | | April 29, 2016 | Energy Industry Focused Media and Publishing | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) | 9/30/2020 | | 63 | | 63 | | 63 | (9) (17) (19) |
| | | | Secured Debt | | 12.50% (6.25% Cash, 6.25% PIK) | 4/29/2021 | | 3,269 | | 3,264 | | 2,988 | (19) |
| | | | Member Units | 920 | | | | | | 920 | | - | |
| | | | | | | | | | | 4,247 | | 3,051 | |
| | | | | | | | | | | | | | |
Harris Preston Fund Investments | (12) (13) | August 9, 2017 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (HPEP 3, L.P.) | 8.2% | | | | | | 3,071 | | 3,258 | (31) |
| | | | | | | | | | | | | | |
Hawk Ridge Systems, LLC | (13) | December 2, 2016 | Value-Added Reseller of Engineering Design and Manufacturing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% | 12/2/2023 | | 3,350 | | 3,335 | | 3,350 | |
| | | | Preferred Member Units | 56 | | | | | | 713 | | 2,008 | (8) |
| | | | Preferred Member Units | 56 | | | | | | 38 | | 105 | (30) |
| | | | | | | | | | | 4,086 | | 5,463 | |
| | | | | | | | | | | | | | |
J&J Services, Inc. | | October 31, 2019 | Provider of Dumpster and Portable Toilet Rental Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 10/31/2024 | | 3,200 | | 3,150 | | 3,200 | |
| | | | Preferred Stock | 695 | | | | | | 1,771 | | 3,170 | |
| | | | | | | | | | | 4,921 | | 6,370 | |
| | | | | | | | | | | | | | |
Kickhaefer Manufacturing Company, LLC | | October 31, 2018 | Precision Metal Parts Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 10/31/2023 | | 5,604 | | 5,500 | | 5,500 | |
| | | | Member Units | 145 | | | | | | 3,060 | | 3,060 | |
| | | | Secured Debt | | 9.00% | 10/31/2048 | | 988 | | 978 | | 978 | |
| | | | Member Units | 200 | | | | | | 248 | | 290 | (8) (30) |
| | | | | | | | | | | 9,786 | | 9,828 | |
| | | | | | | | | | | | | | |
Market Force Information, LLC | | July 28, 2017 | Provider of Customer Experience Management Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% PIK | 7/28/2023 | | 6,520 | | 6,463 | | 3,391 | (14) (19) |
| | | | Member Units | 185,980 | | | | | | 4,160 | | - | |
| | | | | | | | | | | 10,623 | | 3,391 | |
| | | | | | | | | | | | | | |
MH Corbin Holding LLC | | August 31, 2015 | Manufacturer and Distributor of Traffic Safety Products | | | | | | | | | | | |
| | | | Secured Debt | | 13.00% (10.00% Cash, 3.00% PIK) | 3/31/2022 | | 2,143 | | 2,131 | | 2,070 | (19) |
| | | | Preferred Member Units | 16,500 | | | | | | 1,100 | | 590 | |
| | | | Preferred Member Units | 1,000 | | | | | | 1,500 | | - | |
| | | | | | | | | | | 4,731 | | 2,660 | |
| | | | | | | | | | | | | | |
Mystic Logistics Holdings, LLC | | August 18, 2014 | Logistics and Distribution Services Provider for Large Volume Mailers | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 1/17/2022 | | 1,683 | | 1,682 | | 1,682 | |
| | | | Common Stock | 1,468 | | | | | | 680 | | 2,248 | (8) |
22
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
| | | | | | | | | | | 2,362 | | 3,930 | |
| | | | | | | | | | | | | | |
NexRev LLC | | February 28, 2018 | Provider of Energy Efficiency Products & Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% | 2/28/2023 | | 4,274 | | 4,231 | | 4,177 | |
| | | | Preferred Member Units | 21,600,000 | | | | | | 1,720 | | 370 | (8) |
| | | | | | | | | | | 5,951 | | 4,547 | |
| | | | | | | | | | | | | | |
NuStep, LLC | | January 31, 2017 | Designer, Manufacturer and Distributor of Fitness Equipment | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 1/31/2022 | | 4,310 | | 4,288 | | 4,288 | |
| | | | Preferred Member Units | 102 | | | | | | 2,550 | | 2,700 | |
| | | | | | | | | | | 6,838 | | 6,988 | |
| | | | | | | | | | | | | | ��� |
Project BarFly, LLC | (10) | August 31, 2015 | Casual Restaurant Group | | | | | | | | | | | |
| | | | Member Units | 12 | | | | | | 528 | | 528 | |
| | | | | | | | | | | | | | |
SI East, LLC | | August 31, 2018 | Rigid Industrial Packaging Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% | 8/31/2023 | | 10,988 | | 10,884 | | 10,986 | |
| | | | Preferred Member Units | 52 | | | | | | 2,000 | | 3,260 | (8) |
| | | | | | | | | | | 12,884 | | 14,246 | |
| | | | | | | | | | | | | | |
Tedder Industries, LLC | | August 31, 2018 | Manufacturer of Firearm | Secured Debt | | 12.00% | 8/31/2023 | | 4,100 | | 4,023 | | 4,025 | |
| | | | Preferred Member Units | 120 | | | | | | 2,034 | | 2,034 | |
| | | | | | | | | | | 6,057 | | 6,059 | |
| | | | | | | | | | | | | | |
Trantech Radiator Topco, LLC | | May 31, 2019 | Transformer Cooling Products and Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 5/31/2024 | | 2,180 | | 2,122 | | 2,131 | |
| | | | Common Stock | 154 | | | | | | 1,164 | | 1,510 | (8) |
| | | | | | | | | | | 3,286 | | 3,641 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Subtotal Affiliate Investments (27.2% of net assets at fair value) | | | | | | | | | | $ | 143,740 | $ | 157,690 | |
| | | | | | | | | | | | | | |
Non-Control/Non-Affiliate Investments (7) | | | | | | | | | | | | | | |
| | | | | �� | | | | | | | | | |
AAC Holdings, Inc. | (11) | June 30, 2017 | Substance Abuse Treatment Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 18.00% (10.00% Cash, 8.00% PIK) | 6/25/2025 | | 3,354 | | 2,998 | | 2,998 | (19) |
| | | | Common Stock | 593,927 | | | | | | 3,148 | | 3,148 | |
| | | | Warrants | 197,717 | | 12/11/2025 | | | | - | | 1,048 | (27) |
| | | | | | | | | | | 6,146 | | 7,194 | |
| | | | | | | | | | | | | | |
Adams Publishing Group, LLC | (10) | November 19, 2015 | Local Newspaper Operator | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (L+7.00%, Floor 1.75%) | 7/3/2023 | | 5,863 | | 5,742 | | 5,813 | (9) |
| | | | | | | | | | | | | | |
ADS Tactical, Inc. | (10) | March 7, 2017 | Value-Added Logistics and Supply Chain Provider to the Defense Industry | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.25%, Floor 0.75%) | 7/26/2023 | | 15,659 | | 15,700 | | 15,659 | (9) |
| | | | | | | | | | | | | | |
23
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Aethon United BR LP | (10) | September 8, 2017 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% (L+6.75%, Floor 1.00%) | 9/8/2023 | | 7,000 | | 6,938 | | 6,852 | (9) |
| | | | | | | | | | | | | | |
American Nuts, LLC | (10) | April 10, 2018 | Roaster, Mixer and Packager of Bulk Nuts and Seeds | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 4/10/2023 | | 12,128 | | 11,916 | | 12,109 | (9) |
American Teleconferencing Services, Ltd. | (11) | May 19, 2016 | Provider of Audio Conferencing and Video Collaboration Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 6/8/2023 | | 14,125 | | 13,803 | | 6,568 | (9) |
| | | | | | | | | | | | | | |
American Trailer Rental Group LLC | | June 7, 2017 | Provider of Short-term Trailer and Container Rental | | | | | | | | | | | |
| | | | Member Units | 18,373 | | | | | | 2,149 | | 4,000 | (30) |
| | | | | | | | | | | | | | |
APTIM Corp. | (11) | August 17, 2018 | Engineering, Construction & Procurement | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% | 6/15/2025 | | 6,952 | | 6,356 | | 5,434 | |
| | | | | | | | | | | | | | |
Arcus Hunting LLC | (10) | January 6, 2015 | Manufacturer of Bowhunting and Archery Products and Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% (L+10.00%, Floor 1.00%) | 3/31/2021 | | 5,504 | | 5,455 | | 5,504 | (9) |
| | | | | | | | | | | | | | |
ASC Ortho Management Company, LLC | (10) | August 31, 2018 | Provider of Orthopedic Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% (L+7.50%, Floor 1.00%) | 8/31/2023 | | 5,206 | | 5,151 | | 5,149 | (9) |
| | | | Secured Debt | | 13.25% PIK | 12/1/2023 | | 2,047 | | 2,011 | | 2,047 | (19) |
| | | | | | | | | | | 7,162 | | 7,196 | |
| | | | | | | | | | | | | | |
ATX Networks Corp. | (11) (13) (21) | June 30, 2015 | Provider of Radio Frequency Management Equipment | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%) | 12/31/2023 | | 13,435 | | 13,338 | | 12,293 | (9) (19) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
BBB Tank Services, LLC | | April 8, 2016 | Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market | | | | | | | | | | | |
| | | | Unsecured Debt | | 12.00% (L+11.00%, Floor 1.00%) | 4/8/2021 | | 1,200 | | 1,200 | | 1,177 | (9) |
| | | | Preferred Stock (non-voting) | | 15.00% PIK | | | | | 38 | | 38 | (8) (19) |
| | | | Member Units | 200,000 | | | | | | 200 | | 70 | |
| | | | | | | | | | | 1,438 | | 1,285 | |
| | | | | | | | | | | | | | |
Berry Aviation, Inc. | (10) | July 6, 2018 | Charter Airline Services | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (10.50% Cash, 1.5% PIK) | 1/6/2024 | | 4,618 | | 4,575 | | 4,618 | (19) |
| | | | Preferred Member Units | 122,416 | 16.00% PIK | | | | | 143 | | 143 | (8) (19) (30) |
| | | | Preferred Member Units | 1,548,387 | 8.00% PIK | | | | | 1,548 | | 904 | (19) (30) |
| | | | | | | | | | | 6,266 | | 5,665 | |
| | | | | | | | | | | | | | |
24
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
BigName Commerce, LLC | (10) | May 11, 2017 | Provider of Envelopes and Complimentary Stationery Products | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+7.25%, Floor 1.00%) | 5/11/2022 | | 2,037 | | 2,030 | | 2,004 | (9) |
| | | | | | | | | | | | | | |
Binswanger Enterprises, LLC | (10) | March 10, 2017 | Glass Repair and Installation Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 3/9/2022 | | 12,958 | | 12,801 | | 12,958 | (9) |
| | | | Member Units | 1,050,000 | | | | | | 1,050 | | 670 | |
| | | | | | | | | | | 13,851 | | 13,628 | |
| | | | | | | | | | | | | | |
BLST Operating Company, LLC. | (11) | December 19, 2013 | Multi-Channel Retailer of General Merchandise | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% (L+8.50%, Floor 1.50%) | 8/28/2025 | | 6,304 | | 6,304 | | 6,304 | (9) |
| | | | Common Stock | 700 | | | | | | - | | - | |
| | | | | | | | | | | 6,304 | | 6,304 | |
| | | | | | | | | | | | | | |
Boccella Precast Products LLC | | June 30, 2017 | Manufacturer of Precast Hollow Core Concrete | | | | | | | | | | | |
| | | | Member Units | 564,000 | | | | | | 564 | | 1,510 | (8) |
| | | | | | | | | | | | | | |
Brightwood Capital Fund Investments | (12) (13) | July 21, 2014 | Investment Partnership | | | | | | | | | | | |
| | | | LP Interests (Brightwood Capital Fund III, LP) | 1.2% | | | | | | 3,695 | | 2,867 | (8) (31) |
| | | | LP Interests (Brightwood Capital Fund IV, LP) | 0.5% | | | | | | 10,037 | | 9,490 | (8) (31) |
| | | | | | | | | | | 13,732 | | 12,357 | |
| | | | | | | | | | | | | | |
Buca C, LLC | | June 30, 2015 | Casual Restaurant Group | | | | | | | | | | | |
| | | | Secured Debt | | 10.25% (L+9.25%, Floor 1.00%) | 6/30/2020 | | 12,670 | | 12,670 | | 9,504 | (9) (17) |
| | | | Preferred Member Units | 4 | 6.00% PIK | | | | | 3,040 | | - | (8) (19) |
| | | | | | | | | | | 15,710 | | 9,504 | |
| | | | | | | | | | | | | | |
Cadence Aerospace LLC | (10) | November 14, 2017 | Aerostructure Manufacturing | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (4.25% Cash, 5.25% PIK) (5.25% PIK + L+3.25%, Floor 1.00%) | 11/14/2023 | | 19,687 | | 19,538 | | 18,732 | (9) (19) |
| | | | | | | | | | | | | | |
CAI Software LLC | | October 10, 2014 | Provider of Specialized Enterprise Resource Planning Software | | | | | | | | | | | |
| | | | Secured Debt | | 12.50% | 12/7/2023 | | 2,086 | | 2,101 | | 2,086 | |
| | | | Member Units | 16,742 | | | | | | 188 | | 1,510 | (8) |
| | | | | | | | | | | 2,289 | | 3,596 | |
| | | | | | | | | | | | | | |
Cenveo Corporation | (11) | September 4, 2015 | Provider of Digital Marketing Agency Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (L+9.50%, Floor 1.00%) | 6/7/2023 | | 4,117 | | 3,929 | | 3,849 | (9) |
| | | | Common Stock | 138,889 | | | | | | 4,163 | | 2,049 | |
| | | | | | | | | | | 8,092 | | 5,898 | |
| | | | | | | | | | | | | | |
25
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Chisholm Energy Holdings, LLC | (10) | May 15, 2019 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% (L+6.25%, Floor 1.50%) | 5/15/2026 | | 3,571 | | 3,512 | | 3,274 | (9) |
| | | | | | | | | | | | | | |
Clarius BIGS, LLC | | | | | | | | | | | | | | |
| (10) | September 23, 2014 | Prints & Advertising Film Financing | | | | | | | | | | | |
| | | | Secured Debt | | 15.00% PIK | 1/5/2015 | | 2,849 | | 2,498 | | 31 | (14) (17) (19) |
| | | | | | | | | | | | | | |
Classic H&G Holdings, LLC | | March 12, 2020 | Provider of Engineered Packaging Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 3/12/2025 | | 6,200 | | 6,033 | | 6,200 | |
| | | | Preferred Member Units | 39 | | | | | | 1,440 | | 2,380 | (8) |
| | | | | | | | | | | 7,473 | | 8,580 | |
| | | | | | | | | | | | | | |
Clickbooth.com, LLC | (10) | December 5, 2017 | Provider of Digital Advertising Performance Marketing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 1/31/2025 | | 7,850 | | 7,731 | | 7,850 | (9) |
| | | | | | | | | | | | | | |
Copper Trail Fund Investments | (12) (13) | July 17, 2017 | | | | | | | | | | | | |
| | | Investment Partnership | LP Interests (CTEF I, LP) | 375 | | | | | | - | | 67 | |
| | | | | | | | | | | | | | |
Corel Corporation | (11) (13) (21) | July 13, 2020 | Publisher of Desktop and Cloud-based Software | | | | | | | | | | | |
| | | | Secured Debt | | 5.23% (L+5.00%) | 7/2/2026 | | 1,962 | | 1,866 | | 1,934 | |
| | | | | | | | | | | | | | |
Datacom, LLC | | May 30, 2014 | Technology and Telecommunications Provider | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% | 5/31/2021 | | 200 | | 200 | | 179 | (14) |
| | | | Secured Debt | | 10.50% PIK | 5/31/2021 | | 1,376 | | 1,369 | | 1,159 | (14) (19) |
| | | | Class A Preferred Member Units | - | | | | | | 144 | | - | |
| | | | Class B Preferred Member Units | 717 | | | | | | 670 | | - | |
| | | | | | | | | | | 2,383 | | 1,338 | |
| | | | | | | | | | | | | | |
Digital River, Inc. | (11) | February 24, 2015 | Provider of Outsourced e-Commerce Solutions and Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+7.00%, Floor 1.00%) | 2/12/2023 | | 8,377 | | 8,344 | | 8,335 | (9) |
| | | | | | | | | | | | | | |
DTE Enterprises, LLC | (10) | April 13, 2018 | Industrial Powertrain Repair and Services | | | | | | | | | | | |
| | | | Secured Debt | | 10.00% (L+8.50%, Floor 1.50%) | 4/13/2023 | | 9,324 | | 9,225 | | 9,011 | (9) |
| | | | Class AA Preferred Member Units (non-voting) | | 10.00% PIK | | | | | 951 | | 951 | (8) (19) |
| | | | Class A Preferred Member Units | 776,316 | | | | | | 776 | | 880 | |
| | | | | | | | | | | 10,952 | | 10,842 | |
| | | | | | | | | | | | | | |
Dynamic Communities, LLC | (10) | July 17, 2018 | Developer of Business Events and Online Community Groups | | | | | | | | | | | |
| | | | Secured Debt | | 12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%) | 7/17/2023 | | 5,425 | | 5,364 | | 5,020 | (9) (19) |
26
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
| | | | | | | | | | | | | | |
EPIC Y-Grade Services, LP | (11) | June 22, 2018 | NGL Transportation & Storage | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 6/30/2027 | | 6,944 | | 6,855 | | 5,798 | (9) |
| | | | | | | | | | | | | | |
GoWireless Holdings, Inc. | (11) | December 31, 2017 | Provider of Wireless Telecommunications Carrier Services | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 12/22/2024 | | 14,083 | | 13,998 | | 13,970 | (9) |
| | | | | | | | | | | | | | |
Gexpro Services | (10) | February 24, 2020 | Distributor of Industrial and Specialty Parts | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+6.50%, Floor 1.50%) | 2/24/2025 | | 12,506 | | 12,202 | | 12,408 | (9) |
| | | | | | | | | | | | | | |
HDC/HW Intermediate Holdings | (10) | December 21, 2018 | Managed Services and Hosting Provider | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% (L+7.50%, Floor 1.00%) | 12/21/2023 | | 1,951 | | 1,926 | | 1,883 | (9) |
| | | | | | | | | | | | | | |
Hunter Defense Technologies, Inc. | (10) | March 29, 2018 | Provider of Military and Commercial Shelters and Systems | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+7.00%, Floor 1.00%) | 3/29/2023 | | 16,583 | | 16,416 | | 16,583 | (9) |
| | | | | | | | | | | | | | |
HW Temps LLC | | July 2, 2015 | Temporary Staffing Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% | 3/29/2023 | | 2,450 | | 2,420 | | 2,248 | |
| | | | | | | | | | | | | | |
Hyperion Materials & Technologies, Inc. | (11) (13) | September 12, 2019 | Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds | | | | | | | | | | | |
| | | | Secured Debt | | 6.50% (L+5.50%, Floor 1.00%) | 8/28/2026 | | 7,425 | | 7,299 | | 6,938 | (9) |
| | | | | | | | | | | | | | |
Implus Footcare, LLC | (10) | June 1, 2017 | Provider of Footwear and Related Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 8.75% (L+7.75%, Floor 1.00%) | 4/30/2024 | | 17,264 | | 17,113 | | 15,694 | (9) |
| | | | | | | | | | | | | | |
Independent Pet Partners Intermediate Holdings, LLC | (10) | November 20, 2018 | Omnichannel Retailer of Specialty Pet Products | | | | | | | | | | | |
| | | | Secured Debt | | 6.00% PIK | 11/20/2023 | | 9,944 | | 8,992 | | 8,992 | (19) |
| | | | Preferred Stock (non-voting) | | | | | | | 2,470 | | 2,470 | |
| | | | Preferred Stock (non-voting) | | | | | | | - | | - | |
| | | | Member Units | 1,191,667 | | | | | | 1,192 | | - | |
| | | | | | | | | | | 12,654 | | 11,462 | |
| | | | | | | | | | | | | | |
Industrial Services Acquisition, LLC | (10) | June 17, 2016 | Industrial Cleaning Services | | | | | | | | | | | |
| | | | Unsecured Debt | | 13.00% (6.00% Cash, 7.00% PIK) | 12/17/2022 | | 12,892 | | 12,871 | | 12,892 | (19) |
| | | | Preferred Member Units | 336 | 10.00% PIK | | | | | 202 | | 202 | (8) (19) (30) |
| | | | Preferred Member Units | 187 | 20.00% PIK | | | | | 124 | | 124 | (8) (19) (30) |
| | | | Member Units | 2,100 | | | | | | 2,100 | | 1,237 | (30) |
| | | | | | | | | | | 15,297 | | 14,455 | |
| | | | | | | | | | | | | | |
Interface Security Systems, L.L.C | (10) | August 7, 2019 | Commercial Security & Alarm Services | | | | | | | | | | | |
| | | | Secured Debt | | 11.75% (8.75% Cash, 3.00% PIK) (3.00% PIK + L+7.00%, Floor 1.75%) | 8/7/2023 | | 7,266 | | 7,168 | | 7,266 | (9) (19) |
| | | | | | | | | | | | | | |
27
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Intermedia Holdings, Inc. | (11) | August 3, 2018 | Unified Communications as a Service | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 7/19/2025 | | 3,480 | | 3,456 | | 3,478 | (9) |
| | | | | | | | | | | | | | |
Invincible Boat Company, LLC. | (10) | August 28, 2019 | Manufacturer of Sport Fishing Boats | | | | | | | | | | | |
| | | | Secured Debt | | 8.00% (L+6.50%, Floor 1.50%) | 8/28/2025 | | 8,876 | | 8,797 | | 8,876 | (9) |
| | | | | | | | | | | | | | |
Isagenix International, LLC | (11) | June 21, 2018 | Direct Marketer of Health & Wellness Products | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 6/14/2025 | | 5,572 | | 5,533 | | 3,130 | (9) |
| | | | | | | | | | | | | | |
Jackmont Hospitality, Inc. | (10) | May 26, 2015 | Franchisee of Casual Dining Restaurants | | | | | | | | | | | |
| | | | Secured Debt | | 7.75% (L+6.75%, Floor 1.00%) | 5/26/2021 | | 7,908 | | 7,906 | | 6,315 | (9) |
| | | | | | | | | | | | | | |
Joerns Healthcare, LLC | (11) | April 3, 2013 | Manufacturer and Distributor of Health Care Equipment & Supplies | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/21/2024 | | 3,336 | | 3,294 | | 3,336 | (9) |
| | | | Common Stock | 392,514 | | | | | | 3,678 | | 2,322 | |
| | | | | | | | | | | 6,972 | | 5,658 | |
| | | | | | | | | | | | | | |
Kemp Technologies Inc. | (10) | June 27, 2019 | Provider of Application Delivery Controllers | | | | | | | | | | | |
| | | | Secured Debt | | 7.50% (L+6.50%, Floor 1.00%) | 3/29/2024 | | 7,388 | | 7,280 | | 7,388 | (9) |
| | | | | | | | | | | | | | |
Knight Energy Services LLC | (11) | November 14, 2018 | Oil and Gas Equipment & Services | | | | | | | | | | | |
| | | | Secured Debt | | 8.50% PIK | 2/9/2024 | | 828 | | 882 | | 745 | (17) (19) |
| | | | Common Stock | 25,692 | | | | | | 1,843 | | - | - |
| | | | | | | | | | | 2,725 | | 745 | - |
| | | | | | | | | | | | | | |
Kore Wireless Group Inc. | (11) | December 31, 2018 | Mission Critical Software Platform | | | | | | | | | | | |
| | | | Secured Debt | | 5.75% (L+5.50%) | 12/20/2024 | | 6,000 | | 5,979 | | 5,917 | |
| | | | | | | | | | | | | | |
Larchmont Resources, LLC | (11) | August 13, 2013 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 11.00% PIK (L+10.00% PIK, Floor 1.00%) | 8/9/2021 | | 3,715 | | 3,780 | | 1,672 | (9) (19) |
| | | | Member Units | 4,806 | | | | | | 601 | | 192 | (30) |
| | | | | | | | | | | 4,381 | | 1,864 | |
| | | | | | | | | | | | | | |
Laredo Energy VI, LP | (10) | January 15, 2019 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Member Units | 1,155,952 | | | | | | 11,560 | | 10,238 | |
| | | | | | | | | | | | | | |
Lightbox Holdings, L.P. | (11) | May 23, 2019 | Provider of Commercial Real Estate Software | | | | | | | | | | | |
| | | | Secured Debt | | 5.15% (L+5.00%) | 5/9/2026 | | 4,925 | | 4,864 | | 4,777 | |
| | | | | | | | | | | | | | |
LL Management, Inc. | (10) | May 2, 2019 | Medical Transportation Service Provider | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+7.25%, Floor 1.00%) | 9/25/2023 | | 13,581 | | 13,485 | | 13,581 | (9) |
| | | | | | | | | | | | | | |
Logix Acquisition Company, LLC | (10) | June 24, 2016 | Competitive Local Exchange Carrier | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 12/22/2024 | | 12,620 | | 12,560 | | 11,673 | (9) |
| | | | | | | | | | | | | | |
28
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
LSF9 Atlantis Holdings, LLC | (11) | May 17, 2017 | Provider of Wireless Telecommunications Carrier Services | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 5/1/2023 | | 12,600 | | 12,555 | | 12,561 | (9) |
| | | | | | | | | | | | | | |
Lulu's Fashion Lounge, LLC | (10) | August 31, 2017 | Fast Fashion E-Commerce Retailer | | | | | | | | | | | |
| | | | Secured Debt | | 10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%) | 8/28/2022 | | 5,622 | | 5,539 | | 4,807 | (9) (19) |
| | | | | | | | | | | | | | |
Lynx FBO Operating LLC | (10) | September 30, 2019 | Fixed Based Operator in the General Aviation Industry | | | | | | | | | | | |
| | | | Secured Debt | | 7.25% (L+5.75%, Floor 1.50%) | 9/30/2024 | | 13,613 | | 13,370 | | 13,521 | (9) |
| | | | Member Units | 3,704 | | | | | | 500 | | 594 | |
| | | | | | | | | | | 13,870 | | 14,115 | |
| | | | | | | | | | | | | | |
Mac Lean-Fogg Company | (10) | April 22, 2019 | Manufacturer and Supplier for Auto and Power Markets | | | | | | | | | | | |
| | | | Secured Debt | | 5.63% (L+5.00%, Floor 0.625%) | 12/22/2025 | | 7,375 | | 7,332 | | 7,375 | (9) |
| | | | Preferred Stock | | 13.75% (4.50% Cash, 9.25% PIK) | | | 1 | | 793 | | 780 | (8) (19) |
| | | | | | | | | | | 8,125 | | 8,155 | |
| | | | | | | | | | | | | | |
Mills Fleet Farm Group, LLC | (10) | October 24, 2018 | Omnichannel Retailer of Work, Farm and Lifestyle Merchandise | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 10/24/2024 | | 13,875 | | 13,599 | | 13,623 | (9) |
| | | | | | | | | | | | | | |
NinjaTrader, LLC | (10) | December 18, 2019 | Operator of Futures Trading Platform | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (L+6.75%, Floor 1.50%) | 12/18/2024 | | 16,875 | | 16,520 | | 16,828 | (9) |
| | | | | | | | | | | | | | |
NNE Partners, LLC | (10) | March 2, 2017 | Oil & Gas Exploration & Production | | | | | | | | | | | |
| | | | Secured Debt | | 9.48% (4.75% Cash, 4.50% PIK) (4.50% PIK + L+4.75%) | 12/31/2023 | | 20,649 | | 20,590 | | 18,331 | (19) |
| | | | | | | | | | | | | | |
Novetta Solutions, LLC | (11) | June 21, 2017 | Provider of Advanced Analytics Solutions for Defense Agencies | | | | | | | | | | | |
| | | | Secured Debt | | 6.00% (L+5.00%, Floor 1.00%) | 10/17/2022 | | 14,668 | | 14,504 | | 14,638 | (9) |
| | | | | | | | | | | | | | |
NTM Acquisition Corp. | (11) | July 12, 2016 | Provider of B2B Travel Information Content | | | | | | | | | | | |
| | | | Secured Debt | | 8.25% (7.25% Cash, 1.00% PIK) (1.00% PIK + L+6.25%, Floor 1.00%) | 6/7/2024 | | 4,347 | | 4,332 | | 3,912 | (9) (19) |
| | | | | | | | | | | | | | |
PricewaterhouseCoopers Public Sector LLP | (11) | May 24, 2018 | Provider of Consulting Services to Governments | | | | | | | | | | | |
| | | | Secured Debt | | 8.15% (L+8.00%) | 5/1/2026 | | 14,100 | | 14,063 | | 14,100 | |
| | | | | | | | | | | | | | |
RM Bidder, LLC | (10) | November 12, 2015 | Scripted and Unscripted TV and Digital Programming Provider | | | | | | | | | | | |
| | | | Warrants | 218,601 | | 10/20/2025 | | | | 284 | | - | (26) |
| | | | Member Units | 1,854 | | | | | | 31 | | 17 | |
| | | | | | | | | | | 315 | | 17 | |
| | | | | | | | | | | | | | |
29
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
Salient Partners L.P. | (11) | June 25, 2015 | Provider of Asset Management Services | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/31/2021 | | 6,450 | | 6,505 | | 4,542 | (9) |
| | | | | | | | | | | | | | |
Signal Peak CLO 7, Ltd. (Mariner) | (12) (13) | May 8, 2019 | Structured Finance | | | | | | | | | | | |
| | | | Subordinated Structured Notes | | 8.30% | 4/30/2032 | | 25,935 | | 21,705 | | 19,300 | - |
| | | | | | | | | | | | | | |
Slick Innovations, LLC | | September 13, 2018 | Text Message Marketing Platform | | | | | | | | | | | |
| | | | Secured Debt | | 13.00% | 9/13/2023 | | 1,430 | | 1,241 | | 1,430 | |
| | | | Common Stock | 17,500 | | | | | | 175 | | 330 | |
| | | | Warrants | 4,521 | | 9/13/2028 | | | | 45 | | 90 | (27) |
| | | | | | | | | | | 1,461 | | 1,850 | |
| | | | | | | | | | | | | | - |
TGP Holdings III LLC | (11) | September 30, 2017 | Outdoor Cooking & Accessories | | | | | | | | | | | |
| | | | Secured Debt | | 9.50% (L+8.50%, Floor 1.00%) | 9/25/2025 | | 5,000 | | 5,000 | | 4,825 | (9) |
| | | | | | | | | | | | | | |
The Pasha Group | (11) | February 2, 2018 | Diversified Logistics and Transportation Provided | | | | | | | | | | | |
| | | | Secured Debt | | 9.00% (L+8.00%, Floor 1.00%) | 1/26/2023 | | 7,031 | | 6,916 | | 6,451 | (9) |
| | | | | | | | | | | | | | |
USA DeBusk LLC | (10) | October 22, 2019 | Provider of Industrial Cleaning Services | | | | | | | | | | | |
| | | | Secured Debt | | 6.75% (L+5.75%, Floor 1.00%) | 10/22/2024 | | 16,632 | | 16,373 | | 16,394 | (9) |
| | | | | | | | | | | | | | |
U.S. TelePacific Corp. | (11) | September 14, 2016 | Provider of Communications and Managed Services | | | | | | | | | | | |
| | | | Secured Debt | | 6.50% (L+5.50%, Floor 1.00%) | 5/2/2023 | | 12,500 | | 12,329 | | 11,328 | (9) |
| | | | | | | | | | | | | | |
Vida Capital, Inc | (11) | October 10, 2019 | Alternative Asset Manager | | | | | | | | | | | |
| | | | Secured Debt | | 6.15% (L+6.00%) | 10/1/2026 | | 7,238 | | 7,145 | | 7,002 | |
| | | | | | | | | | | | | | |
Vistar Media, Inc. | (10) | February 17, 2017 | Operator of Digital Out-of-Home Advertising Platform | | | | | | | | | | | |
| | | | Secured Debt | | 12.00% (8.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 1.00%) | 4/3/2023 | | 4,656 | | 4,550 | | 4,656 | (9) (19) |
| | | | Preferred Stock | 70,207 | | | | | | 767 | | 910 | |
| | | | Warrants | 69,675 | | 4/3/2029 | | | | - | | 920 | (25) |
| | | | | | | | | | | 5,317 | | 6,486 | |
| | | | | | | | | | | | | | |
Volusion, LLC | | January 26, 2015 | Provider of Online Software-as-a-Service eCommerce Solutions | | | | | | | | | | | |
| | | | Secured Debt | | 11.50% | 1/26/2020 | | 8,672 | | 8,646 | | 8,247 | (17) |
| | | | Unsecured Convertible Debt | | 8.00% | 11/16/2023 | | 175 | | 175 | | 124 | |
| | | | Preferred Member Units | 2,090,001 | | | | | | 6,000 | | 2,570 | |
| | | | Warrants | 784,867 | | 1/26/2025 | | | | 1,104 | | - | (27) |
| | | | | | | | | | | 15,925 | | 10,941 | |
| | | | | | | | | | | | | | |
White Cap Parent, LLC | (10) | December 29, 2016 | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors | | | | | | | | | | | |
| | | | Member Units | | | | | | | 5,637 | | 8,617 | |
| | | | | | | | | | | | | | |
30
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Portfolio Company (1) (20) | | Investment Date (24) | Business Description | Type of Investment (2) (3) (15) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | | |||
YS Garments, LLC | (11) | August 22, 2018 | Designer and Provider of Branded Activewear | | | | | | | | | | | |
| | | | Secured Debt | | 7.00% (L+6.00%, Floor 1.00%) | 8/9/2024 | | 6,998 | | 6,951 | | 6,457 | (9) |
| | | | | | | | | | | | | | |
Subtotal Non-Control/Non-Affiliate Investments (109.4% of net assets at fair value) | | | | | | | | | | $ | 678,764 | $ | 634,001 | |
| | | | | | | | | | | | | | |
Total Portfolio Investments, December 31, 2020 (142.4% of net assets at fair value) | | | | | | | | | | $ | 840,656 | $ | 825,522 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Short Term Investments (33) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Fidelity Institutional Money Market Funds (34) | | | | Prime Money Market Portfolio | | | | | | $ | 3,989 | $ | 3,989 | |
| | | | | | | | | | | | | | |
US Bank Money Market Account (34) | | | | | | | | | | | 40,217 | | 40,217 | |
| | | | | | | | | | | | | | |
Total Short Term Investments | | | | | | | | | | $ | 44,206 | $ | 44,206 | |
| |
(1) | All investments are Lower Middle Market portfolio investments, unless otherwise noted. See C.2 for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility. |
(2) | Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted. |
(3) | See C.2 and Schedule 12-14 for a summary of geographic location of portfolio companies. |
(4) | Principal is net of repayments. Cost is net of repayments and accumulated unearned income. |
(5) | Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act"), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. |
(6) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. |
(7) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. |
(8) | Income producing through dividends or distributions. |
(9) | Index based floating interest rate is subject to contractual minimum interest rate, or floors. |
(10) | Private Loan portfolio investment. See C.2 for a description of Private Loan portfolio investments. |
(11) | Middle Market portfolio investment. See C.2 for a description of Middle Market portfolio investments. |
(12) | Other Portfolio investment. See C.2 for a description of Other Portfolio investments. |
(13) | Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
(14) | Non-accrual and non-income producing investment. |
(15) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” |
(16) | Not used |
(17) | Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. |
(18) | Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See C.1 for further discussion. |
(19) | PIK interest income and cumulative dividend income represent income not paid currently in cash. |
(20) | All portfolio company headquarters are based in the United States, unless otherwise noted. |
31
MSC Income Fund
Consolidated Schedule of Investments (Continued)
December 31, 2020
(dollars in thousands)
(21) | Portfolio company headquarters are located outside of the United States. |
(22) | Not used |
(23) | Not used |
(24) | Investment date represents the date of initial investment in the portfolio company. |
(25) | Warrants are presented in equivalent shares with a strike price of $10.92 per share. |
(26) | Warrants are presented in equivalent units with a strike price of $14.28 per unit. |
(27) | Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. |
(28) | Not used |
(29) | Not used |
(30) | Shares/Units represent ownership in an underlying Real Estate or HoldCo entity. |
(31) | Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. |
(32) | Not used |
(33) | Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less. These short term investments are included as Cash and cash equivalents. |
(34) | Effective yield as of December 31, 2020 was approximately .05% at US Bank Money Market Account and .01% at Fidelity Institutional Money Market Funds. |
32
MSC Income Fund, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE A—ORGANIZATION AND BASIS OF PRESENTATION
1. Organization
MSC Income Fund, Inc. (formerly known as HMS Income Fund, Inc. (the “Company”through October 30, 2020) (“MSC Income Fund”) are encumbered as security for the Company’s credit agreements. See Note 5 - Borrowings.
The Company’s primary investment objective is to generate current income through debt and equity investments. A secondary objective of the Company is to generate current dividend income and long-term capital appreciation through suchdirect equity investments and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities. The Company’s portfolio strategy is to invest primarily in illiquid debt and equity securities issued by lower middle market (“LMM”) companies, which generally have annual revenues between $10 million and $150 million, and debt securities issued by middle market (“Middle Market”) companies that are generally larger in size than the LMM companies, with annual revenues typically between $10 million and $3 billion. Ourcompanies. The Company’s LMM and Middle Market portfolio investments generally range in size from $1 million to $15 million. The Company categorizes some of its investments in LMM companies and Middle Market companies as private loan (“Private Loan”) portfolio investments. Private Loan investments, often referred to in the debt markets as “club deals,” are investments, generally in debt instruments, that the Company originates on a collaborative basis with other investment funds. Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s portfolio also includes other portfolio (“Other Portfolio”) investments primarily consisting of the Company’s investment in HMS-ORIX (see Note 4 -
MSC Income Fund has three wholly-ownedsix wholly owned subsidiaries. HMS Funding I LLC (“HMS Funding”) and, MSIF Funding LLC (“MSIF Funding”), MSC Equity Holding, LLC (“MSC Equity Holding”) (formerly known as HMS Equity Holding, LLC) and MSC California Holdings GP LLC (“MSC California Holdings GP”) (formerly known as HMS Equity Holding”) were bothCalifornia Holdings, GP LLC) are each organized as Delaware limited liability companies, andMSC Equity Holding II, Inc. (“MSC Equity Holding II”) (formerly known as HMS Equity Holding II, Inc. (“HMS Equity Holding II”) wasis organized as a Delaware corporation.corporation and MSC California Holdings LP (“MSC California Holdings”) (formerly known as HMS California Holdings LP) is organized as a Delaware limited partnership. MSC Equity Holding and MSC Equity Holding II, (the “Taxable Subsidiaries”), which have elected to be taxable entities, primarily hold equity investments in portfolio companies which are “pass through” entities for tax purposes. HMS Funding was created pursuant toin connection with the EverBankDeutsche Bank Credit Facility (as defined below in Note 5 -
Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” and the “Company” refer to MSC Income Fund and its consolidated subsidiaries.
33
Prior to October 30, 2020, the business of the Company iswas managed by HMS Adviser LP (the “Adviser”(“HMS Adviser”), a Texas limited partnership and affiliate of Hines Interests Limited Partnership (“Hines”), under an Investment Advisory and Administrative Services Agreement dated May 31, 2012 (as amended, the “Investment“Original Investment Advisory Agreement”). ThePrior to October 30, 2020, the Company and theHMS Adviser have retained MSC Adviser I, LLC (the “Sub-Adviser”(“MSC Adviser”), a wholly owned subsidiary of Main Street Capital Corporation (“Main Street”), a New York Stock Exchange listed BDC, as the Company’s investment sub-adviser, pursuant to an Investment Sub-Advisory Agreement (the “Sub-Advisory Agreement”), to identify, evaluate, negotiate and structure prospective investments, make investment and portfolio management recommendations for approval by theHMS Adviser, monitor the Company’s investment portfolio and provide certain ongoing administrative services to theHMS Adviser. TheHMS Adviser and the Sub-AdviserMSC Adviser are collectively referred to as the “Advisers,” and each is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Upon the execution of the Sub-Advisory Agreement, Main Street became an affiliate of the Company. The Company’s board of directors most recently reapproved the Investment Advisory Agreement and Sub-Advisory Agreement on May 12, 2017. The Company engaged Hines Securities, Inc. (the “Dealer Manager”), an affiliate of theHMS Adviser, to serve as the Dealer Manager for previously offered and sold shares of its common stock on a continuous basis pursuant to registration statements on Form N-2 that were filed with and declared effective by the Offering.SEC.
HMS Adviser entered into an asset purchase agreement, dated June 26, 2020 (the “Purchase Agreement”), with MSC Adviser, Main Street (solely for the purposes set forth in the Purchase Agreement) and Hines (solely for the purposes set forth in the Purchase Agreement). The Dealer Manager is responsible for marketingPurchase Agreement contemplated that, subject to approval by the Company’s common stock.
On June 29, 2020, the Company’s Board of Directors, including all of its independent directors, unanimously approved and recommended to the stockholders of the Company for approval the Investment Advisory Agreement. On October 28, 2020, the Company’s stockholders approved the Investment Advisory Agreement to take effect upon the closing of the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”). Upon the closing of the Transaction on October 30, 2020, the Company entered into the Investment Advisory Agreement with MSC Adviser and MSC Adviser became the sole investment adviser to the Company. See “Note J — Related Party Transactions” for additional information regarding the Investment Advisory Agreement.
2. Basis of Presentation
The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting and Summaryreporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of Significant Accounting Policies
The accompanying condensedunaudited consolidated financial statements of the Company have beenare presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the instructionsopinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results to Form 10-Qbe expected for the full year. Also, the unaudited financial statements and accounting principles generally acceptednotes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures
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reported in the United States of America (“GAAP”)financial statements and includeaccompanying notes. Such estimates and assumptions could change in the accounts offuture as more information becomes known, which could impact the amounts reported and disclosed herein.
Certain prior period information has been reclassified to conform to the current period presentation. The reclassification has no effect on the Company’s wholly-owned consolidated subsidiaries, HMS Funding, HMS Equity Holding and HMS Equity Holding II. All intercompany accounts and transactions have been eliminated in consolidation. financial position or the consolidated results of operations as previously reported.
Principles of Consolidation
Under the 1940 Act rules, regulations pursuant to Articles 6 and 10 of Regulation S-X and TopicASC 946,Financial Services- Investment Companies, of the Accounting Standards Codification, as amended (the “ASC”), of the Financial Accounting Standards Board (the “FASB”), the Company is precluded from consolidating portfolio companyother entities in which it has equity investments, including those in which the Companyit has a controlling interest, unless the portfolio companyother entity is a wholly-ownedanother investment company. An exception to this general principle in ASC 946 occurs if the Company ownsholds a controlledcontrolling interest in an operating company whose purpose is to providethat provides all or substantially all of its services directly to the Company suchor to its portfolio companies. The Company has determined that none of its portfolio investments qualify for this exception as an investment adviser or transfer agent. None of March 31, 2021. Accordingly, as noted above, the Company’s investments qualifiesconsolidated financial statements include the financial position and operating results for this exception.its wholly-owned subsidiaries, including the Taxable Subsidiaries. Therefore, the Company’s portfolio company investments, including those in which the Company has a controlling interest, areInvestment Portfolio is carried on the Condensed Consolidated Balance Sheetconsolidated balance sheet at fair value, as discussed below,further in Note B.1., with changesany adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” on the Condensed Consolidated Statementsconsolidated statements of Operationsoperations until the investment is realized, usually upon exit, resulting in any gain or loss on exit being recognized as a realized gain“Net Realized Gain (Loss).”
Portfolio Investment Classification
The Company classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which the Company owns more than 25% of the voting securities or loss. However,has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which the Company owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, the Company has excluded consideration of any voting securities or board appointment rights held by Main Street and other funds advised by Main Street.
NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Valuation of the Investment Portfolio
The Company accounts for its Investment Portfolio at fair value. As a result, the Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that the portfolio investment is to be sold in the eventprincipal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. Pursuant to its internal valuation process and the requirements under the 1940 Act, the Company performs valuation procedures on each of its portfolio investments quarterly.
The Company’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. The Company categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private
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Loan portfolio investments, including investments which may be managed by third parties. The Company’s portfolio investments may be subject to restrictions on resale.
Private Loan investments may include investments which have no established trading market or have established markets that are not active. LMM investments and Other Portfolio investments (excluding the Company’s investment in Signal Peak CLO 7, Ltd. (the “Signal CLO”)) generally have no established trading market while Middle Market investments and the Signal CLO generally have established markets that are not active. The Company determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. The Company’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of the Company’s Investment Portfolio.
For LMM portfolio investments, the Company generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a yield-to-maturity model (“Yield-to-Maturity”) for its LMM debt investments. For Middle Market portfolio investments, the Company primarily uses quoted prices in the valuation process. The Company determines the appropriateness of the use of third-party broker quotes, if any, controlled subsidiary exceedsin determining fair value based on its understanding of the testslevel of significanceactual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, the Company generally calculates the fair value of the investment primarily based on the net asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for the Company’s portfolio investments estimate the value of the investment as if the Company were to sell, or exit, the investment as of the measurement date.
These valuation approaches consider the value associated with the Company’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments are composed of debt and equity securities in companies for which the Company has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies for which the Company does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors.
Under the Waterfall valuation method, the Company estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, the Company analyzes various factors including the portfolio company’s historical and projected financial results. Due to SEC deadlines for the Company’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment from the Company’s management. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, the Company also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, the Company allocates the
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enterprise value to investments in order of the legal priority of the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, the Company assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which the Company believes is consistent with its past transaction history and standard industry practices.
Under the Yield-to-Maturity valuation method, the Company also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in Rules 3-09 or 4-08(g)the associated loan agreements, as well as the financial position and credit risk of Regulation S-X,the portfolio company. The Company’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as the Company generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. The Company will include required financial informationgenerally use the value determined by the Yield-to-Maturity analysis as the fair value for such subsidiarythat security; however, because of the Company’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the notesassumptions that the Company uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, the Company may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.
Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment’s fair value for factors known to the Company that would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if the Company holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, the Company considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of the Company’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an attachmentimplied market return on equity required by market participants, or other uncertainties surrounding the Company’s ability to realize the full NAV of its interests in the investment fund.
For valuation purposes, all of the Company’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.
In addition to its condensed consolidatedinternal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, the Company, among other things, consults with a nationally recognized independent financial statements.advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company’s determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to the Company’s investments in each Private Loan portfolio company at least once every calendar year, and for the Company’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of the Company’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. The Company consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of seven Private Loan portfolio companies for the three months ended March 31, 2021, representing approximately 21% of the total Private Loan portfolio at fair value as of March 31, 2021, and on a total of nine Private Loan portfolio companies for the three months ended March 31, 2020,
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representing approximately 20% of the total Private Loan portfolio at fair value as of March 31, 2020. Excluding its investments in Private Loan portfolio companies that, as of March 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2021 and 2020 was 23% and 25% of the total Private Loan portfolio at fair value as of March 31, 2021 and 2020, respectively.
In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, the Company, among other things, consults with a nationally recognized independent financial advisory services firm. The unaudited condensednationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company’s determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to the Company’s investments in each LMM portfolio company at least once every calendar year, and for the Company’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of the Company’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. The Company consulted with and received an assurance certification from its independent financial advisory services firm in arriving at the Company’s determination of fair value on its investments in a total of nine LMM portfolio companies for the three months ended March 31, 2021, representing approximately 28% of the total LMM portfolio at fair value as of March 31, 2021, and on a total of nine LMM portfolio companies for the three months ended March 31, 2020, representing approximately 31% of the total LMM portfolio at fair value as of March 31, 2020. Excluding its investments in LMM portfolio companies that, as of March 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2021 and 2020 was 30% and 35% of the total LMM portfolio at fair value as of March 31, 2021 and 2020, respectively.
For valuation purposes, all of the Company’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, the Company uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 92% and 88% of the Middle Market portfolio investments as of March 31, 2021 and December 31, 2020, respectively), the Company generally does not consult with any financial advisory services firms in connection with determining the fair value of its Middle Market investments.
For valuation purposes, all of the Company’s Other Portfolio investments are non-control investments. The Company’s Other Portfolio investments comprised 5.5% and 6.1% of the Company’s Investment Portfolio at fair value as of March 31, 2021 and December 31, 2020, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments, except for the Signal CLO, are generally not readily available. For its Other Portfolio equity investments, except for the Signal CLO, the Company generally determines the fair value of these investments using the NAV valuation method. For the Signal CLO, the Company determines the appropriateness of the use of the third-party broker quote in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. The Company often cannot observe the inputs considered by the third party in determining their quotes.
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Due to the inherent uncertainty in the valuation process, the Company’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. The Company determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.
MSC Adviser, the Company’s investment adviser, uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for the Company’s LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.
The Board of Directors of the Company has the final responsibility for overseeing, reviewing and approving, in good faith, the Company’s determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. The Company believes its Investment Portfolio as of March 31, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which the Company operates and other conditions in existence on those reporting dates.
2. Use of Estimates
The preparation of financial statements in conformity with U.S. 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 revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements reflect all normal recurring adjustments, which are,include investments in the opinionInvestment Portfolio whose values have been estimated by the Company with the oversight, review and approval by the Company’s Board of management, necessaryDirectors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the fair presentationsecurities existed.
The COVID-19 pandemic, and the related effect on the U.S. and global economies, has impacted, and threatens to continue to impact, the businesses and operating results of certain of the Company’s resultsportfolio companies, as well as market interest rate spreads. As a result of these and other current effects of the COVID-19 pandemic, as well as the uncertainty regarding the extent and duration of its impact, the valuation of the Company’s Investment Portfolio has been experiencing increased volatility since the beginning of the COVID-19 pandemic.
3. Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.
At March 31, 2021, cash balances totaling $2.7 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote. At March 31, 2021, the Company had investments in short-term money market accounts totaling $25.9 million classified as cash equivalents.
Amounts included in restricted cash at December 31, 2020 represented balances in the cash accounts held at HMS Funding, which had been set aside pursuant to an amendment to the Deutsche Bank Credit Facility effective April 24, 2020 (see Note E — Debt) (i) as a reserve for the interim periods presented. The results of operations for interim periods are not indicative of resultsdraws on unfunded commitments related to investments held by HMS Funding or (ii) to be expected forapplied against outstanding advances on the full year.facility. On February 3, 2021, the Deutsche Bank Credit Facility was fully repaid through the use of restricted cash and proceeds from borrowings under the JPM SPV Facility and accordingly, the Company has no other restrictions on cash (or restricted cash requirement) upon the extinguishment of the Deutsche Bank Credit Facility.
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4. Interest, Dividend and transactions have been eliminated in consolidation. Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. Fee Income
The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, these financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on March 7, 2017.
As of September 30, 2017,March 31, 2021, the CompanyCompany’s total Investment Portfolio had five debttwo investments in four portfolio companies that were on non-accrual status, including four debt investments in three portfolio companies that were more than 90 days past due. Eachwhich comprised approximately 0.4% of these portfolio companies experienced a significant decline in credit quality raising doubt regarding the Company’s ability to collect the principalits fair value and interest contractually due. Given the credit deterioration1.0% of these portfolio companies, the Company ceased accruing interest income on the non-accrual debt investments and wrote off any previously accrued interest deemed uncollectible. As of September 30, 2017, the Company is not aware of any other material changes to the creditworthiness of the borrowers underlying its debt investments.
Interest income from investments in four portfolio companies that were more than 90 days past due (twothe “equity” class of which weresecurity of collateralized loan obligation (“CLO”) funds (typically subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing estimated projected cash flows in accordance with ASC 325-40, Beneficial Interests in Securitized Financial Assets. The Company monitors the oilexpected cash inflows from its investment in a CLO, including the expected residual payments, and gas industry), including threethe effective yield is determined and updated periodically.
The Company holds certain debt investments in two portfolio companies that were on non-accrual status. Each of these portfolio companies experienced a significant decline in credit quality raising doubt regarding the Company’s ability to collect the principal and interest contractually due. Given the credit deterioration, the Company ceased accruing interest income on the non-accrual debt investments and wrote off any previously accrued interest deemed uncollectible.
The Company may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. The income from such services is non-recurring. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. For the three months ended September 30, 2017 and 2016, the Company recognized $213,000 and $191,000, respectively, of non-recurring fee income received from its portfolio companies or other third parties, which accounted for approximately 0.8% and 0.9%, respectively, of the Company’s total investment income during such period. For the nine months ended September 30, 2017 and 2016, the Company recognized $1.9 million and $871,000 respectively, of non-recurring fee income received from its portfolio companies or other third parties, which accounted for approximately 2.5% and 1.3%, respectively, of the Company’s total investment income during such period. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into interest income over the life of the financing.
A presentation of total investment income the Company received from its Investment Portfolio in each of the periods presented is as follows:
| | | | | | | |
| | Three Months Ended | | ||||
| | March 31, | | ||||
|
| 2021 |
| 2020 |
| ||
| | (dollars in thousands) | |||||
Interest, fee and dividend income: | | | | | | | |
Interest income | | $ | 16,080 | | $ | 21,785 | |
Dividend income | |
| 3,952 | |
| 1,640 | |
Fee income | |
| 240 | |
| 575 | |
Total interest, fee and dividend income | | $ | 20,272 | | $ | 24,000 | |
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5. Deferred Financing Costs
Deferred financing costs represent fees and other direct costs incurred in connection with arranging the Company’s borrowings. These costs were incurred in connection with the Company’s Credit Facilities (see Note E — Debt) and have been capitalized. The deferred financing costs are being amortized to interest expense using the straight-line method over the life of the related credit facility, which the Company believes is materially consistent with the effective interest method.
6. Equity Offering Costs
In accordance with the Original Investment Advisory Agreement and the Sub-Advisory Agreement, the Company had historically reimbursed HMS Adviser for any offering costs that were paid on the Company’s behalf, which consist of, among other costs, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature and other offering costs. In connection with the Transaction, HMS Adviser has agreed to permanently waive its right to receive reimbursement for any and all accrued and unpaid or unreimbursed expenses under the Original Investment Advisory Agreement, except for certain organizational and offering expenses described further in “Note J - Related Party Transactions.
Deferred offering costs were fully amortized to expense upon the closing of the our prior public continuous offering of common stock to new investors. Any future offering costs will be currently expensed as incurred by the Company or as it becomes obligated to reimburse MSC Adviser for such costs.
7. Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value
The Company capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.
In connection with its portfolio debt investments, the Company sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When the Company receives nominal cost equity, it allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.
The Company may purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, the Company records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, the Company records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.
To maintain RIC tax treatment (as discussed in Note B.8. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though the Company may not have collected the interest income. For the three months ended March 31, 2021 and 2020, approximately 4.8% and 8.4%, respectively, of the Company’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.
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8. Income Taxes
The Company has elected to be treated for U.S. federal income tax purposes as a RIC. The Company’s taxable income includes the FASB issuedtaxable income generated by the Company and certain of its subsidiaries, which are treated as disregarded entities for tax purposes. As a RIC, the Company generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that the Company distributes to its stockholders. The Company must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.
The Taxable Subsidiaries primarily hold certain portfolio investments for the Company. The Taxable Subsidiaries permit the Company to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with the Company for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in the Company’s consolidated financial statements as portfolio investments and are recorded at fair value. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in the Company’s consolidated financial statements.
The Taxable Subsidiaries use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. Our stockholder’s equity includes an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.
9. Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.
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10. Fair Value of Financial Instruments
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The Company believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.
11. Earnings per Share
Net increase (decrease) in net assets resulting from operations per share and net investment income per share, are calculated based upon the weighted average number of shares of common stock outstanding during the reporting period.
12. Recently Issued or Adopted Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers (Topic 606). ASU 2014‑09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry‑specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized.
In March 2016,2020, the FASB issued ASU 2016-08, Revenue from Contracts2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with Customers (Topic 606): Principal versus Agent Considerations
In May 2016,2020, the FASB issued ASUSEC published Release No. 2016‑12,
In December 2020, the SEC published Release No. IC-34084 (the “December 2020 Release”) Use of Derivatives by Registered Investment Companies and Business Development Companies, announcing its adoption of Rule 18f-4 and amendment of Rule 6c-11 under the 1940 Act to provide an updated, comprehensive approach to the regulation of registered investment companies’, including BDCs’, use of derivatives and address investor protection concerns. In part, the rules adopted pursuant to the December 2020 Release require that funds using derivatives generally will have to adopt a derivatives risk management program that a derivatives risk manager administers and that the fund’s board of directors oversees, and comply with Customers (Topic 606)-Narrow‑Scope Improvementsan outer limit on fund leverage. Funds that use derivatives only in a limited manner will not be subject to these requirements, but they will have to adopt and Practical Expedients
From time to time, new accounting pronouncements are issued by the FASB or other standards settingstandard-setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.
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NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION
ASC Topic 820
1. Fair Value Hierarchy
In accordance with ASC 820, the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.
Investments recorded on the Company’s balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level 1—Investments whose values are based on unadjusted quoted prices for identical assets or liabilitiesin an active market that the Company has the ability to access.
Level 2—ValuationsInvestments whose values are based on inputs other than quoted prices in markets that are not active markets, whichor model inputs that are observable either directly or indirectly observable for essentiallysubstantially the full term of the investment. Level 2 inputs include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in non-active markets (for example, thinly traded public companies), pricingthe following:
| ● | Quoted prices for similar assets in active markets (for example, investments in restricted stock); |
| ● | Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies); |
| ● | Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and |
| ● | Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment. |
Level 3—Investments whose inputsvalues are observable for substantially the full term of the investment, and pricing models whose inputs are derived principally from or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.
As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, gainsunrealized appreciation and losses fordepreciation related to such investments categorized within the Level 3 tabletables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). The Company conducts reviews of fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain investments.
As of September 30, 2017March 31, 2021 and December 31, 2016,2020, the Company’s investmentPrivate Loan portfolio was comprisedinvestments primarily consisted of debt securities, equity investments and Other Portfolioin interest-bearing secured debt investments. The fair value determination for these investments primarily consisted of unobservable (Level 3) inputs.
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As of September 30, 2017March 31, 2021 and December 31, 2016,2020, all of the Company’s Other PortfolioLMM portfolio investments consisted of illiquid securities issued by private companies.privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of the Company’s LMM portfolio investments were categorized as Level 3 as of March 31, 2021 and December 31, 2020.
As of March 31, 2021 and December 31, 2020, the Company’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The Company relies primarily on information provided by managers of private investment funds in valuingfair value determination for these investments and considers whether it is appropriate,the Signal CLO consisted of a combination of observable inputs in lightnon-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all relevant circumstances, to valueof the Company’s in Middle Market portfolio investments were categorized as Level 3 as of March 31, 2021 and December 31, 2020.
As of March 31, 2021 and December 31, 2020, the Company’s Other Portfolio investments at(other than the net asset value (“NAV”) reportedSignal CLO) consisted of illiquid securities issued by privately held companies and the private investment fund at the time of valuation or to adjust the value to reflect a premium or discount. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of the Company’s Other Portfolio equity investments were categorized as Level 3 as of September 30, 2017March 31, 2021 and December 31, 2016.
The fair value determination of theeach portfolio investment categorized as Level 3 securities required one or more of the following unobservable inputs:
| ● | Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers; |
| ● | Current and projected financial condition of the portfolio company; |
| ● | Current and projected ability of the portfolio company to service its debt obligations; |
| ● | Type and amount of collateral, if any, underlying the investment; |
| ● | Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment; |
| ● | Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio); |
| ● | Pending debt or capital restructuring of the portfolio company; |
| ● | Projected operating results of the portfolio company; |
| ● | Current information regarding any offers to purchase the investment; |
| ● | Current ability of the portfolio company to raise any additional financing as needed; |
| ● | Changes in the economic environment which may have a material impact on the operating results of the portfolio company; |
| ● | Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company; |
| ● | Qualitative assessment of key management; |
| ● | Contractual rights, obligations or restrictions associated with the investment; and |
| ● | Other factors deemed relevant. |
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The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the portfolio company;
| Fair Value Measurements | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| First lien secured debt investments | $ | — | $ | — | $ | 866,403 | $ | 866,403 | |||||||
| Second lien secured debt investments | — | — | 108,411 | 108,411 | |||||||||||
| Unsecured debt investments | — | — | 11,131 | 11,131 | |||||||||||
Equity investments(1) | — | — | 104,761 | 104,761 | |||||||||||
| Total | $ | — | $ | — | $ | 1,090,706 | $ | 1,090,706 | |||||||
| Fair Value Measurements | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| First lien secured debt investments | $ | — | $ | — | $ | 791,126 | $ | 791,126 | |||||||
| Second lien secured debt investments | — | — | 114,652 | 114,652 | |||||||||||
| Unsecured debt investments | — | — | 16,074 | 16,074 | |||||||||||
| Equity investments | — | — | 67,395 | 67,395 | |||||||||||
| Total | $ | — | $ | — | $ | 989,247 | $ | 989,247 | |||||||
| Fair Value Measurements | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| LMM portfolio investments | $ | — | $ | — | $ | 138,943 | $ | 138,943 | |||||||
| Private Loan investments | — | — | 313,734 | 313,734 | |||||||||||
| Middle Market investments | — | — | 591,683 | 591,683 | |||||||||||
| Other Portfolio investments | — | — | 46,346 | 46,346 | |||||||||||
| Total | $ | — | $ | — | $ | 1,090,706 | $ | 1,090,706 | |||||||
| Fair Value Measurements | |||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| LMM portfolio investments | $ | — | $ | — | $ | 116,060 | $ | 116,060 | |||||||
| Private Loan investments | — | — | 211,357 | 211,357 | |||||||||||
| Middle Market investments | — | — | 643,464 | 643,464 | |||||||||||
| Other Portfolio investments | — | — | 18,366 | 18,366 | |||||||||||
| Total | $ | — | $ | — | $ | 989,247 | $ | 989,247 | |||||||
The following table, which is not intended to be all inclusive, presentstables provide a summary of the significant unobservable inputs ofused to fair value the Company’s Level 3 portfolio investments as of September 30, 2017 (dollars in thousands):March 31, 2021 and December 31, 2020:
| | | | | | | | | | | | | | |
|
| Fair Value as of |
| |
| |
| |
| |
| | | |
| | March 31, | | | | | | | | | | |
| |
Type of | | 2021 | | | | Significant | | | | Weighted | | |
| |
Investment |
| (in thousands) | | Valuation Technique | | Unobservable Inputs | | Range | | Average(3) | | Median(3) | | |
Equity investments | | $ | 185,855 |
| Discounted cash flow |
| WACC |
| 11.4% - 19.9% |
| 14.1 | % | 15.2 | % |
| | | |
| Market comparable / Enterprise Value |
| EBITDA multiple(1) |
| 4.9x - 8.5x(2) |
| 6.9x |
| 6.4x | |
Debt investments | | $ | 464,730 |
| Discounted cash flow |
| Risk adjusted discount factor |
| 6.6% - 15.0%(2) |
| 10.4 | % | 10.0 | % |
| | | | | |
| Expected principal recovery percentage |
| 1.1% - 100.0% |
| 99.6 | % | 100.0 | % |
Debt investments | | $ | 199,147 |
| Market approach |
| Third‑party quote |
| 45.5 - 100.4 |
| 94.5 |
| 99.1 | |
Total Level 3 investments | | $ | 849,732 | | | | | | | | | | | |
| (1) | EBITDA may include pro forma adjustments and/or other addbacks based on specific circumstances related to each investment. |
| (2) | Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 11.9x and the range for risk adjusted discount factor is 5.1% - 31.7%. |
| (3) | Does not include investments for which the valuation technique does not include the use of the applicable fair value input. |
| | | | | | | | | | | | | | |
|
| Fair Value as of |
| |
| |
| |
| |
| |
| |
| | December 31, | | | | | | | | | | |
| |
Type of | | 2020 | | | | Significant | | | | Weighted | | |
| |
Investment |
| (in thousands) | | Valuation Technique | | Unobservable Inputs | | Range(3) | | Average(3) | | Median(3) | | |
Equity investments | | $ | 187,099 |
| Discounted cash flow |
| WACC |
| 11.3%-19.9% |
| 14.1 | % | 15.3 | % |
| | | |
| Market comparable / Enterprise Value |
| EBITDA multiple(1) |
| 5.2x-8.5x(2) |
| 6.9x |
| 6.4x | |
Debt investments | | $ | 456,576 |
| Discounted cash flow |
| Risk adjusted discount factor |
| 7.4%-14.2%(2) |
| 10.3 | % | 10.2 | % |
| | | | | |
| Expected principal recovery percentage |
| 1.1%-100.0% |
| 99.3 | % | 100.0 | % |
Debt investments | | $ | 181,847 |
| Market approach |
| Third‑party quote |
| 45.0 - 100.0 |
| 92.0 | % | 93.4 | |
Total Level 3 investments | | $ | 825,522 | | | | | | | | | | | |
| (1) | EBITDA may include pro forma adjustments and/or other addbacks based on specific circumstances related to each investment. |
| (2) | Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 11.9x and the range for risk adjusted discount factor is 5.4% - 25.0%. |
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| (3) | Does not include investments for which the valuation technique does not include the use of the applicable fair value input. |
| Fair Value | Valuation Technique | Significant Unobservable Inputs | Range | Weighted Average (2) | |||||||
| LMM equity investments | $ | 46,149 | Discounted Cash Flow | WACC | 11.4% - 16.1% | 12.7% | |||||
| Market Approach/Enterprise Value | EBITDA Multiples (1) | 4.0x - 10.0x | 7.2x | ||||||||
| LMM debt investments | 92,794 | Discounted Cash Flow | Expected Principal Recovery | 0.0% - 100.0% | 97.7% | ||||||
| Risk Adjusted Discount Factor | 10.0% - 16.5% | 11.9% | |||||||||
| Private Loan debt investments | 250,780 | Discounted Cash Flow | Expected Principal Recovery | 3.0% - 100.0% | 99.7% | ||||||
| Risk Adjusted Discount Factor | 4.5% - 28.1% | 8.0% | |||||||||
| 54,673 | Market Approach | Third Party Quotes | 92.0% - 100.0% | 97.4% | |||||||
| Private Loan equity investments | 8,281 | Market Approach/Enterprise Value | EBITDA Multiples (1) | 5.0x - 9.5x | 8.1x | ||||||
| Discounted Cash Flow | WACC | 9.9% - 12.8% | 10.8% | ||||||||
| Middle Market debt investments | 587,698 | Market Approach | Third Party Quotes | 18.0% - 103.3% | 95.8% | ||||||
| Middle Market equity investments | 3,985 | Market Approach | Third Party Quotes | $3.0 - $345.0 | $305.3 | ||||||
Other Portfolio investments(3) | 46,346 | Market Approach | NAV (1) | 86.1% - 101.7% | 100.0% | ||||||
| $ | 1,090,706 | ||||||||||
The following table, which is not intended to be all inclusive, presents the significant unobservable inputs of the Company’s Level 3 investments as of December 31, 2016 (dollars in thousands):
| Fair Value | Valuation Technique | Significant Unobservable Inputs | Range | Weighted Average (2) | |||
| LMM equity investments | $ | 37,616 | Discounted Cash Flows | WACC | 10.7% - 16.6% | 12.7% | |
Market Approach/ Enterprise Value | EBITDA Multiples (1) | 3.3x - 11.5x | 6.9x | ||||
| LMM debt portfolio investments | 78,444 | Discounted Cash Flows | Expected Principal Recovery | 100.0% - 100.0% | 100.0% | ||
| Risk Adjusted Discount Factor | 8.5% - 21.0% | 11.3% | |||||
| Private Loan debt investments | 165,968 | Discounted Cash Flows | Expected Principal Recovery | 3.0% - 100.0% | 99.9% | ||
| Risk Adjusted Discount Factor | 4.8% - 14.2% | 8.3% | |||||
| 39,066 | Market Approach | Third Party Quotes | 96.5% - 100.4% | 99.7% | |||
| Private Loan equity investments | 6,323 | Market Approach/ Enterprise Value | EBITDA Multiples (1) | 5.0x - 9.5x | 8.3x | ||
| Discounted Cash Flows | WACC | 10.6% - 13.2% | 11.8% | ||||
| Middle Market debt investments | 638,374 | Market Approach | Third Party Quotes | 22.5% - 108.0% | 95.7% | ||
| Middle Market equity investments | 5,090 | Market Approach | Third Party Quotes | 75.0% - 337.5% | 281.8% | ||
| Other Portfolio investments | 18,366 | Market Approach | NAV (1) | 92.5% - 101.0% | 99.0% | ||
| $ | 989,247 | ||||||
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Net | | | | | | | | | | |
| | Fair Value | | Transfers | | | | | | | | Changes | | Net | | | | | Fair Value | |||||
| | as of | | Into | | | | | | | | from | | Unrealized | | | | | as of | |||||
Type of |
| December 31, |
| Level 3 |
| Redemptions/ |
| New |
| Unrealized |
| Appreciation | | | |
| March 31, | |||||||
Investment |
| 2020 |
| Hierarchy |
| Repayments |
| Investments |
| to Realized |
| (Depreciation) |
| Other(1) |
| 2021 | ||||||||
Debt | | $ | 638,423 | | $ | — | | $ | ($ 63,307) | | $ | $ 83,329 | | $ | $ 2,125 | | $ | $ 3,597 | | $ | (290) | | $ | 663,877 |
Equity(2) | | | 185,041 | | | — | | | ($ 6,385) | | | $ 4,421 | | | $ 814 | | | $ 12 | | | 290 | | | 184,192 |
Equity Warrant | | | 2,058 | | | — | | | — | | | — | | | — | | | ($ 395) | | | — | | | 1,663 |
| | $ | 825,522 | | $ | — | | $ | (69,692) | | $ | 87,750 | | $ | 2,939 | | $ | 3,214 | | $ | — | | $ | 849,732 |
| (1) | Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows. |
| (2) | Includes the Company’s investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.) |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| | |
| | |
| | |
| | |
| Net |
| | |
| | |
| | | |
| | Fair Value | | Transfers | | | | | | | | Changes | | Net | | | | | Fair Value | |||||
| | as of | | Into | | | | | | | | from | | Unrealized | | | | | as of | |||||
Type of | | December 31, | | Level 3 | | Redemptions/ | | New | | Unrealized | | Appreciation | | | | | March 31, | |||||||
Investment | | 2019 | | Hierarchy | | Repayments | | Investments |
| to Realized | | (Depreciation) | | Other(1) | | 2020 | ||||||||
Debt | | $ | 848,265 | | $ | — | | $ | (90,042) | | $ | 43,357 | | $ | 2,021 | | $ | (72,050) | | $ | — | | $ | 731,551 |
Equity(2) | |
| 177,993 | |
| — | | | (246) | | | 6,265 | | | — | | | (22,250) | | | — | | | 161,762 |
Equity Warrant | |
| 1,339 | |
| — | | | — | | | — | | | — | | | 212 | | | — | | | 1,551 |
| | $ | 1,027,597 | | $ | — | | $ | (90,288) | | $ | 49,622 | | $ | 2,021 | | $ | (94,088) | | $ | — | | $ | 894,864 |
| (1) | Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows. |
| (2) | Includes the Company’s investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.) |
At March 31, 2021 and December 31, 2020, the Company's investments were categorized as follows in the fair value hierarchy for ASC 820 purposes:
| | | | | | | | | | | | |
| | | | | Fair Value Measurements | |||||||
| | | | | (in thousands) | |||||||
|
| | |
| Quoted Prices in |
| | |
| Significant | ||
| | | |
| Active Markets for |
| Significant Other |
| Unobservable | |||
| | | |
| Identical Assets |
| Observable Inputs |
| Inputs | |||
At March 31, 2021 | | Fair Value |
| (Level 1) | | (Level 2) |
| (Level 3) | ||||
LMM portfolio investments | | $ | 230,445 | | $ | — | | $ | — | | $ | 230,445 |
Middle Market portfolio investments | |
| 203,810 | |
| — | |
| — | |
| 203,810 |
Private Loan portfolio investments | |
| 368,816 | |
| — | |
| — | |
| 368,816 |
Other Portfolio investments(1) | |
| 46,661 | |
| — | |
| — | |
| 46,661 |
Total investments | | $ | 849,732 | | $ | — | | $ | — | | $ | 849,732 |
(1) Includes the Company's investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.)
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| | | | | | | | | | | | |
|
| | | | Fair Value Measurements | |||||||
| | | | | (in thousands) | |||||||
| | | | | Quoted Prices in | | | | | Significant | ||
| | | |
| Active Markets for |
| Significant Other | | Unobservable | |||
| | | |
| Identical Assets |
| Observable Inputs |
| Inputs | |||
At December 31, 2020 | | Fair Value |
| (Level 1) |
| (Level 2) |
| (Level 3) | ||||
LMM portfolio investments | | $ | 217,036 | | $ | — | | $ | — | | $ | 217,036 |
Middle Market portfolio investments | |
| 191,304 | |
| — | |
| — | |
| 191,304 |
Private Loan portfolio investments | |
| 366,649 | |
| — | |
| — | |
| 366,649 |
Other Portfolio investments(1) | |
| 50,533 | |
| — | |
| — | |
| 50,533 |
Total investments | | $ | 825,522 | | $ | — | | $ | — | | $ | 825,522 |
(1) Includes the Company's investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.)
2. Investment Portfolio Composition
The Company’s Private Loan portfolio investments are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.
The Company’s LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. The Company’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, the Company receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.
The Company’s Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in the Company’s LMM portfolio. The Company’s Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $20 million. The Company’s Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.
The Company’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, the Company may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, the Company generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.
Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment
48
income in any given year could also be highly concentrated among several portfolio companies. For the three months ended September 30, 2017 (dollarsMarch 31, 2021 and 2020, the Company did not record investment income from any single portfolio company in thousands):
| Type of Investment | January 1, 2017 Fair Value | PIK Interest Accrual | New Investments(1) | Sales/ Repayments | Net Unrealized Appreciation (Depreciation)(2) | Net Realized Gain (Loss) | September 30, 2017 Fair Value | ||||||||||||||||||||
| LMM Equity | $ | 37,616 | $ | 154 | $ | 8,276 | $ | (622 | ) | $ | 1,170 | $ | (445 | ) | $ | 46,149 | |||||||||||
| LMM Debt | 78,444 | 102 | 25,191 | (9,057 | ) | (1,886 | ) | — | 92,794 | ||||||||||||||||||
| Private Loan Equity | 6,323 | — | 3,855 | (2,917 | ) | (1,528 | ) | 2,548 | 8,281 | ||||||||||||||||||
| Private Loan Debt | 205,034 | 181 | 169,214 | (68,482 | ) | (494 | ) | — | 305,453 | ||||||||||||||||||
| Middle Market Debt | 638,374 | 377 | 236,193 | (284,372 | ) | (3,180 | ) | 306 | 587,698 | ||||||||||||||||||
| Middle Market Equity | 5,090 | 83 | 33 | — | (1,221 | ) | — | 3,985 | |||||||||||||||||||
Other Portfolio(3) | 18,366 | — | 37,677 | (10,756 | ) | 109 | 950 | 46,346 | |||||||||||||||||||
| Total | $ | 989,247 | $ | 897 | $ | 480,439 | $ | (376,206 | ) | $ | (7,030 | ) | $ | 3,359 | $ | 1,090,706 | |||||||||||
Investment in HMS-ORIX SLF LLC)
The following table providestables provide a summary of changesthe Company’s investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments which are discussed further below):
| | | | | | | | | | |
|
| As of March 31, 2021 |
| |||||||
| | LMM (a) | | Middle Market | | Private Loan |
| |||
| | (dollars in millions) |
| |||||||
Number of portfolio companies | | | 36 |
| | 29 |
| | 40 | |
Fair value | | $ | 230.4 |
| $ | 203.8 |
| $ | 368.8 | |
Cost | | $ | 201.9 |
| $ | 226.3 |
| $ | 379.4 | |
Debt investments as a % of portfolio (at cost) | | | 66.2 | % | | 93.8 | % | | 92.0 | % |
Equity investments as a % of portfolio (at cost) | | | 33.8 | % | | 6.2 | % | | 8.0 | % |
% of debt investments at cost secured by first priority lien | | | 99.8 | % | | 97.1 | % | | 93.5 | % |
Weighted-average annual effective yield(b) | | | 11.1 | % | | 7.9 | % | | 9.3 | % |
Average EBITDA(c) | | $ | 6.7 |
| $ | 79.1 |
| $ | 38.0 | |
| (a) | At March 31, 2021, the Company had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 9%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of the Company’s common stock will realize on its investment because it does not reflect the Company’s expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for The Company’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
| | | | | | | | | | |
|
| As of December 31, 2020 |
| |||||||
| | LMM (a) | | Middle Market | | Private Loan |
| |||
| | (dollars in millions) |
| |||||||
Number of portfolio companies | | | 34 |
| | 28 |
| | 40 | |
Fair value | | $ | 217.0 |
| $ | 191.3 |
| $ | 366.6 | |
Cost | | $ | 191.2 |
| $ | 216.4 |
| $ | 378.2 | |
Debt investments as a % of portfolio (at cost) | | | 66.0 | % | | 93.5 | % | | 91.4 | % |
Equity investments as a % of portfolio (at cost) | | | 34.0 | % | | 6.5 | % | | 8.6 | % |
% of debt investments at cost secured by first priority lien | | | 99.7 | % | | 90.6 | % | | 91.3 | % |
Weighted-average annual effective yield (b) | | | 11.1 | % | | 8.2 | % | | 9.2 | % |
Average EBITDA (c) | | $ | 6.2 |
| $ | 78.5 |
| $ | 54.1 | |
| (a) | At December 31, 2020, the Company had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 10%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2020, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in |
49
| shares of the Company’s common stock will realize on its investment because it does not reflect the Company’s expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, one Middle Market portfolio companies and four Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for the Company’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
As of March 31, 2021, the Company had Other Portfolio investments in five companies, collectively totaling approximately $46.7 million in fair value and approximately $52.1 million in cost basis and which comprised approximately 5.5% of the Company’s Level 3 portfolioInvestment Portfolio at fair value. As of December 31, 2020, the Company had Other Portfolio investments forin five companies, collectively totaling approximately $50.5 million in fair value and approximately $54.9 million in cost basis and which comprised approximately 6.1% of the nine months ended September 30, 2016 (dollars in thousands):
| Type of Investment | January 1, 2016 Fair Value | PIK Interest Accrual | New Investments(1) | Sales/ Repayments | Net Unrealized Appreciation (Depreciation) (2) | Net Realized Gain (Loss) | September 30, 2016 Fair Value | ||||||||||||||||||||
| LMM Equity | $ | 24,165 | $ | (72 | ) | $ | 5,457 | $ | — | $ | 2,463 | $ | — | $ | 32,013 | ||||||||||||
| LMM Debt | 61,295 | 134 | 16,058 | (7,481 | ) | 245 | — | 70,251 | |||||||||||||||||||
| Private Loan Equity | 530 | — | 2,602 | — | 99 | — | 3,231 | ||||||||||||||||||||
| Private Loan Debt | 110,558 | 169 | 92,104 | (25,952 | ) | 887 | (122 | ) | 177,644 | ||||||||||||||||||
| Middle Market Debt | 645,913 | 24 | 176,767 | (190,142 | ) | 9,761 | (11,842 | ) | 630,481 | ||||||||||||||||||
| Middle Market Equity | — | — | 2,059 | — | (200 | ) | — | 1,859 | |||||||||||||||||||
| Other Portfolio | 10,527 | — | 6,537 | — | 60 | — | 17,124 | ||||||||||||||||||||
| Total | $ | 852,988 | $ | 255 | $ | 301,584 | $ | (223,575 | ) | $ | 13,315 | $ | (11,964 | ) | $ | 932,603 | |||||||||||
The following tables summarize the net accretion of discounts/premiums and amortization of fees.
| Investments at Cost | Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||
| First lien secured debt investments | $ | 892,121 | 80.3 | % | $ | 866,403 | 79.5 | % | |||||
| Second lien secured debt investments | 109,331 | 9.8 | 108,411 | 9.9 | |||||||||
| Unsecured debt investments | 10,951 | 1.0 | 11,131 | 1.0 | |||||||||
Equity investments(1) | 96,158 | 8.7 | 102,872 | 9.4 | |||||||||
| Equity warrants | 2,325 | 0.2 | 1,889 | 0.2 | |||||||||
| Total | $ | 1,110,886 | 100.0 | % | $ | 1,090,706 | 100.0 | % | |||||
| | | | | |
Cost: |
| March 31, 2021 |
| December 31, 2020 | |
First lien debt |
| 82.5 | % | 79.5 | % |
Equity |
| 13.7 | % | 13.9 | % |
Second lien debt |
| 1.9 | % | 4.6 | % |
Equity warrants |
| 0.2 | % | 0.2 | % |
Other |
| 1.7 | % | 1.8 | % |
|
| 100.0 | % | 100.0 | % |
| | | | | |
Fair Value: |
| March 31, 2021 |
| December 31, 2020 | |
First lien debt |
| 79.1 | % | 76.0 | % |
Equity |
| 17.1 | % | 17.3 | % |
Second lien debt |
| 1.9 | % | 4.6 | % |
Equity warrants |
| 0.2 | % | 0.3 | % |
Other |
| 1.7 | % | 1.8 | % |
|
| 100.0 | % | 100.0 | % |
The following tables summarize the composition of the Company’s total combined LMM portfolio investments, asMiddle Market portfolio investments and Private Loan portfolio investments by geographic region of December 31, 2016,the United States and other countries at cost and fair value was as follows (dollars in thousands):
| | | | | | |
|
| |
| |
| |
Cost: |
| March 31, 2021 |
| December 31, 2020 | | |
Southwest |
| 23.2 | % | 24.9 | % |
|
Northeast |
| 17.6 | % | 18.9 | % |
|
West |
| 19.7 | % | 17.5 | % |
|
Midwest |
| 20.6 | % | 18.2 | % |
|
Southeast |
| 17.0 | % | 18.8 | % |
|
Canada |
| 1.9 | % | 1.7 | % |
|
Other Non-United States |
| — | % | — | % |
|
|
| 100.0 | % | 100.0 | % |
|
| Investments at Cost | Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||
| First lien secured debt investments | $ | 809,280 | 80.7 | % | $ | 791,126 | 80.0 | % | |||||
| Second lien secured debt investments | 117,339 | 11.7 | 114,652 | 11.6 | |||||||||
| Unsecured debt investments | 16,126 | 1.6 | 16,074 | 1.6 | |||||||||
| Equity investments | 56,974 | 5.7 | 63,569 | 6.4 | |||||||||
| Equity warrants | 2,676 | 0.3 | 3,826 | 0.4 | |||||||||
| Total | $ | 1,002,395 | 100.0 | % | $ | 989,247 | 100.0 | % | |||||
50
| | | | | | |
Fair Value: | | March 31, 2021 | | | December 31, 2020 | |
Aerospace & Defense |
| 8.7 | % | | 8.5 | % |
Machinery |
| 8.5 | % | | 8.5 | % |
Commercial Services & Supplies |
| 7.1 | % | | 7.9 | % |
Internet Software & Services |
| 5.9 | % | | 4.8 | % |
Construction & Engineering |
| 5.1 | % | | 4.1 | % |
Oil, Gas & Consumable Fuels |
| 5.1 | % | | 6.1 | % |
Communications Equipment |
| 4.6 | % | | 4.6 | % |
Health Care Providers & Services |
| 4.5 | % | | 3.6 | % |
Specialty Retail |
| 3.9 | % | | 4.1 | % |
Leisure Equipment & Products |
| 3.4 | % | | 3.5 | % |
Diversified Telecommunication Services |
| 3.4 | % | | 5.2 | % |
Diversified Financial Services |
| 3.2 | % | | 3.3 | % |
Distributors |
| 3.1 | % | | 3.1 | % |
Building Products |
| 3.0 | % | | 0.7 | % |
Transportation Infrastructure |
| 2.7 | % | | 2.7 | % |
IT Services |
| 2.6 | % | | 4.0 | % |
Media |
| 2.5 | % | | 2.7 | % |
Computers & Peripherals |
| 2.4 | % | | 2.3 | % |
Hotels, Restaurants & Leisure |
| 2.0 | % | | 2.1 | % |
Software |
| 1.6 | % | | 1.7 | % |
Containers & Packaging |
| 1.6 | % | | 1.8 | % |
Trading Companies & Distributors |
| 1.5 | % | | 1.6 | % |
Food & Staples Retailing |
| 1.5 | % | | 1.6 | % |
Internet & Catalog Retail |
| 1.4 | % | | 1.4 | % |
Professional Services |
| 1.2 | % | | 1.2 | % |
Electrical Equipment |
| 1.2 | % | | 0.5 | % |
Air Freight & Logistics | | 1.2 | % | | 1.2 | % |
Electronic Equipment, Instruments & Components | | 1.1 | % | | 1.2 | % |
Diversified Consumer Services | | 1.0 | % | | 0.9 | % |
Construction Materials | | 0.9 | % | | 1.3 | % |
Other (1) | | 4.1 | % | | 3.8 | % |
|
| 100.0 | % | | 100.0 | % |
| | | | | |
Fair Value: |
| March 31, 2021 |
| December 31, 2020 | |
Southwest |
| 24.5 | % | 25.7 | % |
West |
| 17.8 | % | 19.2 | % |
Northeast |
| 18.5 | % | 16.3 | % |
Midwest |
| 18.7 | % | 20.1 | % |
Southeast |
| 18.7 | % | 17.1 | % |
Canada |
| 1.8 | % | 1.6 | % |
Other Non-United States |
| — | % | — | % |
|
| 100.0 | % | 100.0 | % |
The Company’s LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of the Company’s total combined LMM portfolio investments, Middle Market portfolio investments and
51
Private Loan portfolio investments by geographic region as of September 30, 2017,industry at cost and fair value was as follows (dollars in thousands) (sinceof March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments do not represent a single geographic region, this information excludes Otherinvestments).
| | | | | | |
Cost: | | March 31, 2021 | | | December 31, 2020 | |
Aerospace & Defense |
| 8.7 | % | | 8.4 | % |
Commercial Services & Supplies |
| 7.1 | % | | 8.1 | % |
Machinery |
| 6.5 | % | | 6.5 | % |
Internet Software & Services |
| 6.5 | % | | 5.4 | % |
Oil, Gas & Consumable Fuels |
| 5.9 | % | | 7.0 | % |
Communications Equipment |
| 5.5 | % | | 5.7 | % |
Health Care Providers & Services |
| 4.4 | % | | 3.4 | % |
Specialty Retail |
| 4.3 | % | | 4.5 | % |
Construction & Engineering |
| 4.3 | % | | 3.4 | % |
Diversified Telecommunication Services |
| 3.5 | % | | 5.4 | % |
Leisure Equipment & Products |
| 3.3 | % | | 3.5 | % |
Distributors |
| 3.1 | % | | 3.1 | % |
Hotels, Restaurants & Leisure |
| 3.0 | % | | 3.1 | % |
Diversified Financial Services |
| 3.0 | % | | 3.1 | % |
Building Products |
| 2.9 | % | | 0.6 | % |
IT Services |
| 2.6 | % | | 4.0 | % |
Transportation Infrastructure |
| 2.6 | % | | 2.6 | % |
Media |
| 2.4 | % | | 2.5 | % |
Professional Services |
| 2.1 | % | | 2.2 | % |
Trading Companies & Distributors |
| 1.5 | % | | 1.6 | % |
Electronic Equipment, Instruments & Components |
| 1.5 | % | | 1.5 | % |
Food & Staples Retailing |
| 1.5 | % | | 1.5 | % |
Internet & Catalog Retail |
| 1.5 | % | | 1.5 | % |
Containers & Packaging |
| 1.4 | % | | 1.6 | % |
Software |
| 1.2 | % | | 1.2 | % |
Computers & Peripherals |
| 1.2 | % | | 1.1 | % |
Air Freight & Logistics | | 1.1 | % | | 1.1 | % |
Electrical Equipment | | 1.1 | % | | 0.4 | % |
Other (1) | | 6.3 | % | | 6.0 | % |
|
| 100.0 | % | | 100.0 | % |
| (1) | Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date. |
52
| | | | | | |
Fair Value: | | March 31, 2021 | | | December 31, 2020 | |
Aerospace & Defense |
| 8.7 | % | | 8.5 | % |
Machinery |
| 8.5 | % | | 8.5 | % |
Commercial Services & Supplies |
| 7.1 | % | | 7.9 | % |
Internet Software & Services |
| 5.9 | % | | 4.8 | % |
Construction & Engineering |
| 5.1 | % | | 4.1 | % |
Oil, Gas & Consumable Fuels |
| 5.1 | % | | 6.1 | % |
Communications Equipment |
| 4.6 | % | | 4.6 | % |
Health Care Providers & Services |
| 4.5 | % | | 3.6 | % |
Specialty Retail |
| 3.9 | % | | 4.1 | % |
Leisure Equipment & Products |
| 3.4 | % | | 3.5 | % |
Diversified Telecommunication Services |
| 3.4 | % | | 5.2 | % |
Diversified Financial Services |
| 3.2 | % | | 3.3 | % |
Distributors |
| 3.1 | % | | 3.1 | % |
Building Products |
| 3.0 | % | | 0.7 | % |
Transportation Infrastructure |
| 2.7 | % | | 2.7 | % |
IT Services |
| 2.6 | % | | 4.0 | % |
Media |
| 2.5 | % | | 2.7 | % |
Computers & Peripherals |
| 2.4 | % | | 2.3 | % |
Hotels, Restaurants & Leisure |
| 2.0 | % | | 2.1 | % |
Software |
| 1.6 | % | | 1.7 | % |
Containers & Packaging |
| 1.6 | % | | 1.8 | % |
Trading Companies & Distributors |
| 1.5 | % | | 1.6 | % |
Food & Staples Retailing |
| 1.5 | % | | 1.6 | % |
Internet & Catalog Retail |
| 1.4 | % | | 1.4 | % |
Professional Services |
| 1.2 | % | | 1.2 | % |
Electrical Equipment |
| 1.2 | % | | 0.5 | % |
Air Freight & Logistics | | 1.2 | % | | 1.2 | % |
Electronic Equipment, Instruments & Components | | 1.1 | % | | 1.2 | % |
Diversified Consumer Services | | 1.0 | % | | 0.9 | % |
Construction Materials | | 0.9 | % | | 1.3 | % |
Other (1) | | 4.1 | % | | 3.8 | % |
|
| 100.0 | % | | 100.0 | % |
| (1) | Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date. |
At March 31, 2021 and December 31, 2020, the Company had no portfolio investment that was greater than 10% of the Investment Portfolio investments):
| Investments at Cost | Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||
| Northeast | $ | 162,546 | 15.3 | % | $ | 161,056 | 15.4 | % | |||||
| Southeast | 205,226 | 19.3 | 212,068 | 20.3 | |||||||||
| West | 195,171 | 18.3 | 181,527 | 17.4 | |||||||||
| Southwest | 190,375 | 17.9 | 183,679 | 17.6 | |||||||||
| Midwest | 246,739 | 23.2 | 243,600 | 23.3 | |||||||||
| Non-United States | 64,315 | 6.0 | 62,430 | 6.0 | |||||||||
| Total | $ | 1,064,372 | 100.0 | % | $ | 1,044,360 | 100.0 | % | |||||
3. Unconsolidated Significant Subsidiaries
In evaluating its unconsolidated controlled portfolio companies in accordance with the Regulation S-X, there are two tests that the Company must utilize to determine if any of the Company’s investmentsControl Investments (as defined in Note A, including those unconsolidated portfolio companies defined as Control Investments in which the Company does not own greater than 50% of the voting securities or maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by geographic region as of December 31, 2016, at cost and fairdividing the Company’s investment in the Control Investment by the value was as follows (dollars in thousands) (since the Other Portfolio investments do not represent a single geographic region, this information excludes Other Portfolio investments):
| Investments at Cost | Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||
| Northeast | $ | 144,465 | 14.6 | % | $ | 141,637 | 14.6 | % | |||||
| Southeast | 185,803 | 18.9 | 193,616 | 19.9 | |||||||||
| West | 177,572 | 18.1 | 167,544 | 17.3 | |||||||||
| Southwest | 188,455 | 19.2 | 181,894 | 18.7 | |||||||||
| Midwest | 217,603 | 22.1 | 218,540 | 22.5 | |||||||||
| Non-United States | 69,854 | 7.1 | 67,650 | 7.0 | |||||||||
| Total | $ | 983,752 | 100.0 | % | $ | 970,881 | 100.0 | % | |||||
53
As of March 31, 2021 and December 31, 2016, at cost and fair value was2020, the Company had no single investment that qualified as follows (sincea significant subsidiary under either the Other Portfolio investments do not represent a single industry, this information excludes Other Portfolio investments):
| Cost | Fair Value | ||||||||||
| September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | ||||||||
| Commercial Services and Supplies | 7.5 | % | 9.1 | % | 7.5 | % | 9.2 | % | |||
| Hotels, Restaurants, and Leisure | 7.3 | 8.0 | 7.4 | 8.1 | |||||||
| Media | 5.4 | 7.7 | 5.3 | 7.6 | |||||||
| Construction and Engineering | 5.0 | 4.6 | 5.1 | 4.8 | |||||||
| Diversified Consumer Services | 4.7 | 2.8 | 4.7 | 2.7 | |||||||
| IT Services | 4.2 | 4.6 | 4.4 | 4.7 | |||||||
| Communications Equipment | 3.9 | 4.7 | 4.1 | 4.9 | |||||||
| Diversified Telecommunication Services | 3.7 | 3.1 | 3.7 | 3.0 | |||||||
| Energy Equipment and Services | 3.6 | 3.7 | 2.9 | 2.8 | |||||||
| Professional Services | 3.4 | 1.0 | 3.4 | 1.0 | |||||||
| Machinery | 3.3 | 1.5 | 3.8 | 1.9 | |||||||
| Internet Software and Services | 3.2 | 5.1 | 3.3 | 5.2 | |||||||
| Aerospace and Defense | 3.1 | 1.9 | 3.2 | 1.8 | |||||||
| Distributors | 3.0 | 1.6 | 3.1 | 1.7 | |||||||
| Leisure Equipment and Products | 3.0 | 0.8 | 3.1 | 0.8 | |||||||
| Specialty Retail | 2.8 | 3.9 | 1.9 | 3.3 | |||||||
| Food Products | 2.5 | 2.7 | 2.6 | 2.5 | |||||||
| Oil, Gas, and Consumable Fuels | 2.4 | 0.9 | 2.4 | 0.9 | |||||||
| Health Care Providers and Services | 2.3 | 2.2 | 2.4 | 2.4 | |||||||
| Computers and Peripherals | 2.3 | 1.0 | 2.6 | 1.1 | |||||||
| Auto Components | 2.2 | 3.1 | 1.9 | 3.2 | |||||||
| Electronic Equipment, Instruments & Components | 2.0 | 3.7 | 2.1 | 3.7 | |||||||
| Health Care Equipment and Supplies | 1.9 | 2.2 | 2.0 | 2.3 | |||||||
| Internet and Catalog Retail | 1.9 | 1.4 | 1.5 | 1.2 | |||||||
| Construction Materials | 1.5 | 1.0 | 1.5 | 1.1 | |||||||
| Household Durables | 1.5 | — | 1.5 | — | |||||||
| Diversified Financial Services | 1.4 | 1.9 | 1.3 | 1.9 | |||||||
| Trading Companies and Distributors | 1.2 | 1.0 | 1.2 | 1.0 | |||||||
| Capital Markets | 1.0 | 1.2 | 1.0 | 1.2 | |||||||
| Food & Staples Retailing | 0.9 | 1.4 | 1.0 | 1.5 | |||||||
| Personal Products | 0.9 | 0.8 | 0.9 | 0.8 | |||||||
| Pharmaceuticals | 0.9 | 1.2 | 0.9 | 1.2 | |||||||
| Healthcare Technology | 0.8 | 1.3 | 0.9 | 1.3 | |||||||
| Marine | 0.8 | 0.9 | 0.8 | 0.9 | |||||||
| Tobacco | 0.8 | 1.1 | 0.8 | 1.1 | |||||||
| Electrical Equipment | 0.7 | 0.9 | 0.7 | 1.0 | |||||||
| Building Products | 0.5 | 0.6 | 0.6 | 0.6 | |||||||
| Road & Rail | 0.5 | — | 0.5 | — | |||||||
| Software | 0.4 | 2.6 | 0.5 | 2.7 | |||||||
| Textiles, Apparel & Luxury Goods | 0.4 | 0.5 | 0.2 | 0.4 | |||||||
| Publishing | 0.4 | 0.3 | 0.4 | 0.3 | |||||||
| Containers and Packaging | 0.3 | 0.3 | 0.3 | 0.3 | |||||||
| Air Freight & Logistics | 0.2 | 0.3 | 0.3 | 0.4 | |||||||
| Airlines | 0.1 | 0.2 | 0.2 | 0.2 | |||||||
| Chemicals | 0.1 | 0.2 | — | 0.2 | |||||||
| Oil and Gas Exploration and Production | 0.1 | 0.1 | — | 0.1 | |||||||
| Insurance | — | 0.6 | — | 0.6 | |||||||
| Consumer Finance | — | 0.3 | 0.1 | 0.4 | |||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||
Note 4 —D – Investment in HMS-ORIX SLF LLC
On April 4, 2017, the Company and ORIX Funds Corp. (“Orix”), entered into a limited liability company agreement to co-manage HMS-ORIX SLF LLC (“HMS-ORIX”), which investsinvested primarily in broadly-syndicated loans. Pursuant to the terms of the limited liability agreement and through representation on the HMS-ORIX Board of Managers, the Company and Orix each havehad 50% voting control of HMS-ORIX and together arewere required to agree on all portfolio and investment decisions as well as all other significant actions for HMS-ORIX. The Company doesdid not operationallyhave sole control of significant actions of HMS-ORIX and, accordingly, doesdid not consolidate the operations of HMS-ORIX within the consolidated financial statements. The Company and Orix have committed to provide, and have funded an aggregate of $50.0 million of equity to HMS-ORIX, with the Company providing $30.0 million (60% of the equity) and Orix providing $20.0 million (40% of the equity).
On May 8, 2019, HMS-ORIX Holdings I LLC, a wholly owned subsidiary of September 30, 2017, HMS-ORIX, had total assets of $146.4 million and HMS-ORIX’s portfolio consisted of 69 broadly-syndicated loans, all of which were secured by first-priority liens, generally in industries similar to those in which the Company may directly invest. As of September 30, 2017, there were no loans in HMS-ORIX’s portfolio that were on non-accrual status.
| As of September 30, 2017 | |||
Total debt investments (1) | $ | 139,700 | |
Weighted average effective yield on loans(2) | 4.82 | % | |
Largest loan to a single borrower(1) | $ | 3,505 | |
Total of 10 largest loans to borrowers(1) | $ | 31,212 | |
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| Acosta, Inc. | Commercial Services and Supplies | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - September 26, 2021) | $ | 2,000 | $ | 1,873 | $ | 1,778 | |||
| Acrisure, LLC | Insurance | LIBOR (1 month) + 5.00%, Current Coupon 6.27%, Secured Debt (Maturity - November 22, 2023) | 1,990 | 1,997 | 2,017 | ||||||
| Advantage Sales & Marketing Inc. | Commercial Services and Supplies | LIBOR (1 month) + 3.25%, Current Coupon 4.56%, Secured Debt (Maturity - July 23, 2021) | 1,995 | 1,939 | 1,882 | ||||||
| Air Medical Group Holdings Inc | Health Care Providers & Services | LIBOR (6 months) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - April 28, 2022) | 1,995 | 1,985 | 1,996 | ||||||
| Albany Molecular Research, Inc. | Life Sciences Tools and Services | LIBOR (1 month) + 3.25%, Current Coupon 4.58%, Secured Debt (Maturity - August 28, 2024) | 100 | 100 | 100 | ||||||
| Alphabet Holding Company, Inc. | Food Products | LIBOR (3 months) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - September 26, 2024) | 2,000 | 1,990 | 1,980 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| American Seafoods Group LLC | Food Products | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 21, 2023) | $ | 1,500 | $ | 1,493 | $ | 1,510 | |||
| Ancestry.com Operations Inc. | Internet Software & Services | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - October 19, 2023) | 2,000 | 2,019 | 2,017 | ||||||
| Arch Coal, Inc. | Metals & Mining | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - March 7, 2024) | 1,990 | 1,997 | 2,002 | ||||||
| AshCo, Inc. | Specialty Retail | LIBOR (3 months) + 5.00%, Current Coupon 6.30%, Secured Debt (Maturity - December 15, 2023) | 2,000 | 1,955 | 1,889 | ||||||
| Asurion, LLC | Insurance | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - November 3, 2023) | 1,316 | 1,316 | 1,323 | ||||||
| Atkore International, Inc. | Electric Equipment, Instruments & Components | LIBOR (3 months) + 3.00%, Current Coupon 4.34%, Secured Debt (Maturity - December 22, 2023) | 2,985 | 3,014 | 3,006 | ||||||
| Avantor Performance Materials Holdings, Inc. | Biotechnology | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - March 8, 2024) | 2,985 | 3,021 | 2,998 | ||||||
| BCP Renaissance | Oil, Gas and Consumable Fuels | LIBOR (3 months) + 4.00%, Current Coupon 5.32%, Secured Debt (Maturity - September 19, 2024) | 600 | 602 | 607 | ||||||
| BMC Software Finance, Inc. | Software | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - September 12, 2022) | 2,972 | 2,996 | 2,992 | ||||||
| Builders FirstSource, Inc. | Building Products | LIBOR (1 month) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - February 29, 2024) | 2,985 | 2,981 | 2,998 | ||||||
| Calpine Corporation | Independent Power & Renewable Elec. Producers | LIBOR (3 months) + 2.75%, Current Coupon 4.09%, Secured Debt (Maturity - January 15, 2023) | 1,995 | 2,002 | 1,994 | ||||||
| CHS/Community Health Systems, Inc. | Health Care Providers & Services | LIBOR (3 months) + 3.00%, Current Coupon 4.32%, Secured Debt (Maturity - January 27, 2021) | 1,646 | 1,640 | 1,638 | ||||||
| Clubcorp Club Operations, Inc. | Real Estate Management and Development | LIBOR (3 months) + 3.25%, Current Coupon 4.59%, Secured Debt (Maturity - August 16, 2024) | 2,000 | 1,990 | 1,991 | ||||||
| Colorado Buyer Inc | Technology Hardware, Storage & Peripherals | LIBOR (3 months) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - May 1, 2024) | 2,993 | 3,003 | 3,011 | ||||||
| Confie Seguros Holding II Co. | Insurance | LIBOR (1 month) + 5.50%, Current Coupon 6.74%, Secured Debt (Maturity - April 19, 2022) | 1,990 | 1,997 | 1,965 | ||||||
| CPI International, Inc. | Aerospace & Defense | LIBOR (1 month) + 3.50%, Current Coupon 4.74%, Secured Debt (Maturity - July 26, 2024) | 2,000 | 2,000 | 2,003 | ||||||
| Diamond Resorts International, Inc. | Hotels, Restaurants & Leisure | LIBOR (1 month) + 6.00%, Current Coupon 7.24%, Secured Debt (Maturity - September 1, 2023) | 1,990 | 2,019 | 2,004 | ||||||
| Duff & Phelps Corporation | Diversified Financial Services | LIBOR (3 months) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - April 23, 2020) | 1,990 | 2,003 | 1,996 | ||||||
| EFS Cogen Holdings I LLC | Electric Utilities | LIBOR (3 months) + 3.50%, Current Coupon 4.84%, Secured Debt (Maturity - June 28, 2023) | 1,929 | 1,942 | 1,955 | ||||||
| Endo Luxembourg Finance Company I S.a.r.l. | Pharmaceuticals | LIBOR (1 month) + 4.25%, Current Coupon 5.50%, Secured Debt (Maturity - April 29, 2024) | 1,995 | 2,014 | 2,017 | ||||||
| Envision Healthcare Corporation | Health Care Providers & Services | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - December 1, 2023) | 2,487 | 2,488 | 2,499 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| Everi Payments Inc. | Leisure Products | LIBOR (3 months) + 4.50%, Current Coupon 5.74%, Secured Debt (Maturity - May 9, 2024) | $ | 1,995 | $ | 1,988 | $ | 2,015 | |||
| First American Payment Systems, L.P. | Diversified Financial Services | LIBOR (1 month) + 5.75%, Current Coupon 6.98%, Secured Debt (Maturity - January 5, 2024) | 961 | 972 | 963 | ||||||
| Fitness International, LLC | Hotels, Restaurants & Leisure | Prime + 3.25%, Current Coupon 7.50%, Secured Debt (Maturity - July 1, 2020) | 2,000 | 2,027 | 2,013 | ||||||
| Flex Acquisition Company Inc | Containers and Packaging | LIBOR (3 months) + 3.00%, Current Coupon 4.30%, Secured Debt (Maturity - December 29, 2023) | 2,000 | 2,010 | 2,007 | ||||||
| Flexera Software LLC | Software | LIBOR (1 month) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - April 2, 2020) | 1,995 | 2,015 | 2,008 | ||||||
| Gardner Denver, Inc. | Machinery | LIBOR (1 month) + 2.75%, Current Coupon 4.08%, Secured Debt (Maturity - July 30, 2024) | 2,000 | 2,010 | 2,005 | ||||||
| Golden Nugget, Inc. | Hotels, Restaurants & Leisure | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - October 4, 2023) | 1,995 | 1,995 | 2,007 | ||||||
| Greatbatch Ltd. | Health Care Equipment & Supplies | LIBOR (2 months) + 3.50%, Current Coupon 4.74%, Secured Debt (Maturity - October 27, 2022) | 2,794 | 2,811 | 2,814 | ||||||
| GYP Holdings III Corp. | Trading Companies & Distributors | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - March 31, 2023) | 3,491 | 3,516 | 3,521 | ||||||
| Harbor Freight Tools USA, Inc. | Specialty Retail | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 18, 2023) | 1,980 | 1,987 | 1,990 | ||||||
| HD Supply Waterworks, Ltd. | Trading Companies & Distributors | LIBOR (3 months) + 3.00%, Current Coupon 4.46%, Secured Debt (Maturity - August 1, 2024) | 140 | 140 | 140 | ||||||
| Horizon Pharma, Inc. | Pharmaceuticals | LIBOR (1 month) + 3.75%, Current Coupon 5.00%, Secured Debt (Maturity - March 29, 2024) | 1,995 | 2,014 | 2,016 | ||||||
| IG Investments Holdings, LLC | Professional Services | LIBOR (1 month) + 4.00%, Current Coupon 5.33%, Secured Debt (Maturity - October 31, 2021) | 1,990 | 2,001 | 2,012 | ||||||
| Jackson Hewitt Tax Service Inc. | Diversified Consumer Services | LIBOR (1 month) + 7.00%, Current Coupon 8.31%, Secured Debt (Maturity - July 30, 2020) | 1,939 | 1,861 | 1,876 | ||||||
| KC MergerSub, Inc. | Diversified Consumer Services | LIBOR (1 month) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - August 12, 2022) | 2,489 | 2,495 | 2,486 | ||||||
| KMG Chemicals, Inc. | Chemicals | LIBOR (1 month) + 4.25%, Current Coupon 5.49%, Secured Debt (Maturity - June 13, 2024) | 1,304 | 1,299 | 1,326 | ||||||
| LANDesk Group, Inc. | Software | LIBOR (1 month) + 4.25%, Current Coupon 5.49%, Secured Debt (Maturity - January 22, 2024) | 995 | 1,001 | 972 | ||||||
| Learfield Communications LLC | Media | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - December 1, 2023) | 1,995 | 2,015 | 2,009 | ||||||
| LTS Buyer LLC | Diversified Telecommunication Services | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - April 13, 2020) | 2,984 | 3,008 | 2,994 | ||||||
| MA FinanceCo., LLC | Electronic Equipment, Instruments and Components | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - June 21, 2024) | 387 | 387 | 388 | ||||||
| Mohegan Tribal Gaming Authority | Hotels, Restaurants & Leisure | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - October 13, 2023) | 1,990 | 2,009 | 2,013 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| MPH Acquisition Holdings LLC | Health Care Technology | LIBOR (3 months) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - June 7, 2023) | $ | 2,991 | $ | 3,033 | $ | 3,018 | |||
| NAB Holdings, LLC | IT Services | LIBOR (3 months) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - June 14, 2024) | 1,995 | 1,985 | 2,009 | ||||||
| Ortho-Clinical Diagnostics, Inc | Life Sciences Tools and Services | LIBOR (1 month) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - June 30, 2021) | 1,990 | 1,985 | 1,999 | ||||||
| QUIKRETE Holdings, Inc. | Construction Materials | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - November 15, 2023) | 2,985 | 2,985 | 2,988 | ||||||
| Rackspace Hosting, Inc. | Electric Equipment, Instruments & Components | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - November 3, 2023) | 3,292 | 3,318 | 3,291 | ||||||
| Scientific Games International, Inc. | Leisure Products | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 14, 2024) | 400 | 402 | 401 | ||||||
| Seattle Spin Co. | Electronic Equipment, Instruments and Components | LIBOR (3 months) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - June 21, 2024) | 2,613 | 2,616 | 2,622 | ||||||
| SeaWorld Parks & Entertainment, Inc. | Hotels, Restaurants & Leisure | LIBOR (3 months) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - April 1, 2024) | 1,990 | 1,992 | 1,933 | ||||||
| Signode Industrial Group US Inc. | Machinery | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - April 30, 2021) | 2,840 | 2,861 | 2,855 | ||||||
| Staples, Inc. | Distributors | LIBOR (3 month) + 4.00%, Current Coupon 5.31%, Secured Debt (Maturity - August 15, 2024) | 2,000 | 1,995 | 1,993 | ||||||
| Telenet Financing USD LLC | Diversified Telecommunication Services | LIBOR (1 month) + 2.75%, Current Coupon 3.98%, Secured Debt (Maturity - June 30, 2025) | 3,000 | 3,013 | 3,012 | ||||||
| Transdigm, Inc. | Aerospace & Defense | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - June 9, 2023) | 1,990 | 1,997 | 1,997 | ||||||
| LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - August 22, 2024) | 1,003 | 1,000 | 1,005 | ||||||||
| 2,993 | 2,997 | 3,002 | |||||||||
| Travelport Finance (Luxembourg) S.A.R.L. | Internet Software & Services | LIBOR (3 months) + 2.75%, Current Coupon 4.06%, Secured Debt (Maturity - September 2, 2021) | 1,951 | 1,951 | 1,951 | ||||||
| Traverse Midstream Partners LLC | Oil, Gas and Consumable Fuels | LIBOR (3 months) + 4.00%, Current Coupon 5.33%, Secured Debt (Maturity - September 30, 2024) | 781 | 784 | 792 | ||||||
| UFC Holdings, LLC | Media | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 18, 2023) | 1,990 | 2,002 | 2,001 | ||||||
| Ultra Resources, Inc. | Oil, Gas and Consumable Fuels | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - April 12, 2024) | 2,000 | 2,002 | 2,001 | ||||||
| Valeant Pharmaceuticals International, Inc. | Pharmaceuticals | LIBOR (1 month) + 4.75%, Current Coupon 5.99%, Secured Debt (Maturity - April 1, 2022) | 2,547 | 2,559 | 2,596 | ||||||
| Vertiv Group Corporation | Electrical Equipment | LIBOR (3 months) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - November 30, 2023) | 2,000 | 2,019 | 2,018 | ||||||
| Vistra Operations Company LLC | Electric Utilities | LIBOR (2 months) + 2.75%, Current Coupon 3.98%, Secured Debt (Maturity - December 14, 2023) | 1,990 | 2,002 | 1,999 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| WideOpenWest Finance, LLC | Diversified Telecommunication Services | LIBOR (1 month) + 3.25%, Current Coupon 4.48%, Secured Debt (Maturity - August 18, 2023) | $ | 3,505 | $ | 3,516 | $ | 3,504 | |||
| Total Loan Portfolio | $ | 139,954 | $ | 139,728 | |||||||
During the three and nine months ended September 30, 2017,March 31, 2021 and 2020, respectively, the Company did not accrue dividendrecognized approximately $0.6 million and $0.5 million of interest income in respect of its investment in HMS-ORIX.Signal Peak CLO.
NOTE E—DEBT
Summary of debt as of March 31, 2021 is as follows:
| | | | | | | | | | | | |
| | Outstanding Balance | | Unamortized Debt Issuance Costs | | Recorded Value | | Estimated Fair Value (1) | ||||
| (dollars in thousands) | |||||||||||
TIAA Credit Facility | | $ | 34,000 | | $ | (432) | | $ | 33,568 | | $ | 33,568 |
JPM SPV Facility | | | 210,688 | | | (3,157) | | | 207,531 | | | 207,531 |
Main Street Term Loan | | | 40,000 | | | (386) | | | 39,614 | | | 39,614 |
Total Debt | | $ | 284,688 | | $ | (3,975) | | $ | 280,713 | | $ | 280,713 |
(1) | Estimated fair value for outstanding debt if the Company had adopted the fair value option under ASC 825. |
Summary of debt as of December 31, 2020 is as follows:
| | | | | | | | | | | | |
| | Outstanding Balance | | Unamortized Debt Issuance Costs | | Recorded Value | | Estimated Fair Value (1) | ||||
| (dollars in thousands) | |||||||||||
TIAA Credit Facility | | $ | 44,000 | | $ | (491) | | $ | 43,509 | | $ | 43,509 |
54
Deutsche Bank Credit Facility | | | 257,816 | | | (2,200) | | | 255,616 | | | 255,616 |
Total Debt | | $ | 301,816 | | $ | (2,691) | | $ | 299,125 | | $ | 299,125 |
| Balance Sheet Data | As of September 30, 2017 | ||
| Assets | |||
| Portfolio investments at fair value | $ | 139,728 | |
| Cash and cash equivalents | 5,470 | ||
| Deferred financing costs | 989 | ||
| Other assets | 230 | ||
| Total assets | $ | 146,417 | |
| Liabilities | |||
| Debt | $ | 90,000 | |
| Payable for securities purchased | 5,371 | ||
| Accounts payable and accrued expenses | 186 | ||
| Total liabilities | 95,557 | ||
| Net assets | 50,860 | ||
| Total liabilities and net assets | $ | 146,417 | |
(1) | Estimated fair value for outstanding debt if the Company had adopted the fair value option under ASC 825. |
Summarized interest expense on the Company’s debt for the three months ended March 31, 2021 and 2020 is as follows:
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2021 |
| 2020 | ||
| | (dollars in thousands) | ||||
TIAA Credit Facility | | $ | 388 | | $ | 1,141 |
Deutsche Bank Credit Facility | | | 1,046 | | | 4,088 |
JPM SPV Facility | | | 1,367 | | | - |
Main Street Term Loan | | | 364 | | | - |
Total Interest Expense | | $ | 3,165 | | $ | 5,229 |
| Period from inception (April 4, 2017) to September 30, 2017 | |||
| Selected Statement of Operations Information | |||
| Interest income | $ | 2,048 | |
| Dividend income | — | ||
| Total income | 2,048 | ||
| Interest expense | 866 | ||
| Other expenses | 79 | ||
| Total expenses | 945 | ||
| Net investment income | 1,103 | ||
| Unrealized (depreciation) on investments | (226 | ) | |
| Realized (losses) from investments | (17 | ) | |
| Net increase in net assets | $ | 860 | |
1. TIAA Credit Facility
On March 11, 2014,6, 2017, the Company entered into aan amended and restated senior secured revolving credit agreement (as amended, the “TIAA Credit Facility”) with Capital One, National AssociationTIAA, FSB (“Capital One”TIAA Bank”), as administrative agent, and with Capital OneTIAA Bank and other financial institutions as lenders. OnThe TIAA Credit Facility features aggregate revolver commitments of $130.0 million, with an accordion provision allowing increases in aggregate commitments, not to exceed $150.0 million, with lender consent. The revolving period under the TIAA Credit Facility expires on March 6, 2017, this credit facility was amended2022, and restated (as amended and restated, the “EverBank Credit Facility”) to, among other things, extend
The EverBankTIAA Credit Facility permits the creation of certain “Structured Subsidiaries,” which are not guarantors under the EverBankTIAA Credit Facility and which are permitted to incur debt outside of the EverBankTIAA Credit Facility. Borrowings under the EverBankTIAA Credit Facility are secured by all of the Company’s assets, other than the assets of the Structured Subsidiaries, as well as all of the assets, and a pledge of equity ownership interests, of any future subsidiaries of the Company (other than Structured Subsidiaries). The credit agreement for the EverBankTIAA Credit Facility contains affirmative and negative covenants usual and customary for credit facilities of this nature, includingincluding: (i) maintaining a minimum interest coverage ratio of at least 2.00 to 1.00; (ii) maintaining an asset coverage ratio of at least 2.10 to 1.00; and (iii) maintaining a minimum consolidated tangible net worth, excluding Structured Subsidiaries, of at least the greater of (a) the aggregate amount of the revolver commitments or (b) $50.0 million. Further, the EverBankTIAA Credit Facility contains limitations on incurrence of other indebtedness (other than by the Structured Subsidiaries), limitations on industry concentration, and an anti-hoarding provision to protect the collateral under the EverBankTIAA Credit Facility. Additionally, the Company must provide information to EverBankTIAA Bank on a regular basis, preserve its corporate existence, comply with applicable laws, including the 1940 Act, pay obligations when they become due, and invest the proceeds of the sales of common stock in accordance with its investment objectives and strategies (as set forth in the EverBankTIAA Credit Facility). Further, the credit agreement contains usual and customary default provisions including: (i) a default in the payment of interest and principal; (ii) insolvency or bankruptcy of the Company; (iii) a material adverse change in the Company’s business; or (iv) breach of any covenant, representation or warranty in the loan agreement or other credit documents and failure to cure such breach within defined periods. Additionally, the EverBankTIAA Credit Facility requires the companyCompany to obtain written approval from the administrative agent prior to entering into any material amendment, waiver or other modification of any provision of the Investment Advisory Agreement.
55
As of September 30, 2017,March 31, 2021, the interest rate on the TIAA Credit Facility was 2.72%. The average cost of borrowings on the TIAA Credit Facility, excluding amortization of deferred financing costs, was approximately 2.74% and 4.43% per annum for the three months ended March 31, 2021 and 2020 respectively. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the EverBankTIAA Credit Facility.
2. JPM SPV Facility
On June 2, 2014,February 3, 2021, MSIF Funding, the Company’s wholly-owned subsidiary that primarily holds originated loan investments, entered into a senior secured revolving credit facility (as amended from time to time, the “JPM SPV Facility”) by and among JPMorgan Chase Bank, National Association (“JPM”), as administrative agent, and U.S. Bank, N.A., as collateral agent and collateral administrator and the Company as portfolio manager. The revolving period under the JPM SPV Facility expires on February 3, 2024 and the JPM SPV Facility is scheduled to mature on February 3, 2025. Advances under the JPM SPV Facility bear interest at a per annum rate equal to the three-month LIBOR in effect, plus the applicable margin of 2.90% per annum. MSIF Funding will also pay a commitment fee of 0.75% per annum on the average daily unused amount of the financing commitments until the third anniversary of the JPM SPV Facility. The initial commitment amount of the JPM SPV Facility is $300 million. The JPM SPV Facility has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments and borrowing availability under the JPM SPV Facility to up to $450 million.
Initial proceeds from borrowings under the JPM SPV Facility were used to purchase certain investments and participating interest from HMS Funding. HMS Funding, in turn, used the proceeds from these transactions and restricted cash to fully repay its existing indebtedness under the Deutsche Bank Credit Facility (as defined below). Concurrently, the Company and HMS Funding extinguished the Deutsche Bank Credit Facility and transferred certain portfolio investments previously held by HMS Funding to MSIF Funding. The Deutsche Bank Credit Facility had been in an amortization period, requiring that all principal and interest payments received on investments held by HMS Funding be paid to lenders to retire the outstanding balance under the Deutsche Bank Credit Facility, since April 2020.
As of March 31, 2021, the interest rate on the JPM SPV Facility, excluding amortization of deferred financing costs, was 3.10%. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the JPM SPV Facility.
3. Deutsche Bank Credit Facility
On May 18, 2015, HMS Funding entered into aan amended and restated credit agreement (the(as amended, the “Deutsche Bank Credit Facility”) among HMS Funding, as borrower, the Company, as equityholderequity holder and as servicer, Deutsche Bank AG, New York Branch (“Deutsche Bank”), as administrative agent, the financial institutions party thereto as lenders (together with Deutsche Bank, the “HMS Funding Lenders”), and U.S. Bank National Association, as collateral agent and collateral custodian. TheOn April 24, 2020, the Deutsche Bank Credit Facility was amended and restated on May 18, 2015 and subsequently has been amended on multiple occasions, most recently on June 30, 2017, increasingto, among other things, terminate the revolver commitments to $400.0 million. The Company contributes certain assets to HMS Funding from time to time, as permitted undereffective on April 24, 2020 and begin the EverBank Credit Facility, as collateral to secureamortization period, through November 20, 2022, the Deutsche Bank Credit Facility.
On February 3, 2021, the difference betweentotal amount outstanding on the aggregate commitments and the outstanding advances under the facility provided that the undrawn fee relating to any utilization shortfall will not be payable to the extent that the utilization fee relating to such utilization shortfall is incurred. Additionally, per the terms of a fee letter executed on May 18, 2015, HMS Funding pays Deutsche Bank an administrative agent fee of 0.25% of the aggregate revolver commitments.
4. Main Street Term Loan
On January 27, 2021, the Company entered into a term loan agreement (the “Main Street Term Loan”) with Main Street. As of September 30, 2017,March 31, 2021, the Main Street Term Loan was fully drawn at $40.0 million, bearing interest at a fixed rate of 5.00% per annum and maturing on January 27, 2026. The Company paid a 1.0% upfront fee to Main Street on the closing date. Borrowings under the Main Street Term Loan are expressly subordinated and junior in right of payment to all secured indebtedness of the Company and may be prepaid any time after January 27, 2023. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the Deutsche Bank Credit Facility.Main Street Term Loan.
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NOTE F—FINANCIAL HIGHLIGHTS
| | | | | | |
|
| Three Months Ended March 31, | ||||
Per Share Data: |
| 2021 |
| 2020 | ||
NAV at the beginning of the period | | $ | 7.28 | | $ | 7.77 |
Net investment income(1) | |
| 0.15 | | | 0.16 |
Net realized loss(1)(2) | |
| (0.05) | | | (0.04) |
Net unrealized appreciation (depreciation) | |
| 0.07 | | | (1.21) |
Net increase (decrease) in net assets resulting from operations(1) | |
| 0.17 | | | (1.09) |
Dividends paid (1)(3) | |
| (0.10) | | | (0.17) |
Other(4) | |
| (0.01) | | | (0.01) |
NAV at the end of the period | | $ | 7.34 | | $ | 6.50 |
Shares of common stock outstanding at end of period | | | 79,608,304 | | | 78,423,129 |
Weighted average shares of common stock outstanding | |
| 79,608,304 | | | 78,607,063 |
| Per Share Data: | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | |||||
| NAV at beginning of period | $ | 8.15 | $ | 7.88 | |||
| Results from Operations | |||||||
Net investment income (1) (2) | 0.56 | 0.55 | |||||
Net realized appreciation (depreciation) (1) (2) | 0.04 | (0.19 | ) | ||||
Net unrealized appreciation (depreciation) (1) (2) | (0.09 | ) | 0.20 | ||||
| Net increase (decrease) in net assets resulting from operations | 0.51 | 0.56 | |||||
Stockholder distributions (1) (3) | |||||||
Distributions from net investment income (1) (2) | (0.48 | ) | (0.52 | ) | |||
Distributions from realized appreciation (1) (2) | (0.04 | ) | — | ||||
| Net decrease in net assets resulting from stockholder distributions | (0.52 | ) | (0.52 | ) | |||
| Capital share transactions | |||||||
Issuance of common stock above NAV (4), net of offering costs (1) | 0.02 | — | |||||
| Net increase in net assets resulting from capital share transactions | 0.02 | — | |||||
| NAV at end of the period | $ | 8.16 | $ | 7.92 | |||
| Shares outstanding at end of period | 79,204,960 | 70,942,063 | |||||
| Weighted average shares outstanding | 76,899,096 | 66,576,489 | |||||
| (1) | Based on |
| (2) |
| (3) |
| (4) |
| | | | | | | |
| Three Months Ended March 31, | ||||||
| | 2021 | | | | 2020 | |
| (dollars in thousands) | ||||||
| | | | | | | |
NAV at end of period | $ | 584,320 | | | $ | 509,564 | |
Average NAV | $ | 581,972 | | | $ | 559,435 | |
Average outstanding debt | $ | 249,947 | | | $ | 424,000 | |
Ratios to average net assets: | | | | | | | |
Ratio of operating expenses to average NAV(1)(2) | | 1.44 | % | | | 2.06 | % |
Ratio of operating expenses excluding interest expense to NAV(1)(2) | | 0.89 | % | | | 1.13 | % |
Ratio of net investment income to average NAV(2) | | 2.05 | % | | | 2.23 | % |
Portfolio turnover ratio(2) | | 7.25 | % | | | 9.04 | % |
Total return based on change in NAV(2)(3) | | 2.20 | % | | | (14.16) | % |
| (1) | Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the |
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||
| (dollars in thousands) | |||||||
| NAV at end of period | $ | 645,945 | $ | 561,974 | |||
| Average net assets | $ | 625,272 | $ | 519,511 | |||
| Average Credit Facilities borrowings | $ | 426,500 | $ | 391,750 | |||
| Ratios to average net assets: | |||||||
Ratio of total expenses to average net assets (1) | 5.28 | % | 5.37 | % | |||
Ratio of net investment income to average net assets (1) | 6.92 | % | 7.08 | % | |||
| Portfolio turnover ratio | 36.85 | % | 25.02 | % | |||
Total return (2) | 6.50 | % | 7.11 | % | |||
| (2) | Not annualized. |
| Total return is |
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NOTE G—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME
The following table reflects the cash distributions per share thatCompany’s dividends, if any, will be determined by its Board of Directors on a quarterly basis. During 2021, the Company declared on its common stockdividends of $8.0 million, or $0.10 per share, during the ninethree months ended September 30, 2017 and 2016 (dollars in thousands except per share amounts).
| Distributions | |||||||
| Per Share | Amount | ||||||
| 2017 | |||||||
| Three months ended September 30, 2017 | $ | 0.17 | $ | 13,910 | |||
| Three months ended June 30, 2017 | $ | 0.18 | $ | 13,438 | |||
| Three months ended March 31, 2017 | $ | 0.17 | $ | 12,922 | |||
| 2016 | |||||||
| Three months ended September 30, 2016 | $ | 0.17 | $ | 12,307 | |||
| Three months ended June 30, 2016 | $ | 0.18 | $ | 11,650 | |||
| Three months ended March 31, 2016 | $ | 0.17 | $ | 11,037 | |||
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||||||||
| (dollars in thousands) | |||||||||||||
| Source of Distribution | Distribution Amount | Percentage | Distribution Amount | Percentage | |||||||||
| Net realized income from operations (before waiver of incentive fees) | $ | 40,270 | 100 | % | $ | 24,349 | 70 | % | |||||
| Waiver of incentive fees | — | — | 493 | 1 | |||||||||
Distributions in excess of net investment income (1) | — | — | 10,152 | 29 | |||||||||
| Total | $ | 40,270 | 100 | % | $ | 34,994 | 100 | % | |||||
The Company has elected to be treated for U.S. federal income tax purposes as a RIC. The Company’s taxable income includes the taxable income generated by the Company and certain of its subsidiaries which are treated as disregarded entities for tax purposes. As a RIC, the Company generally will not incurpay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that the Company timely distributes each taxable year as dividends to its stockholders. To qualify as a RIC in any taxable year, theThe Company must among other things, satisfy certain source-of-income and asset diversification requirements. In addition, the Company mustgenerally distribute an amount in each taxable year generally at least equal to 90% of its investment“investment company taxable income” (which is generally its net ordinary taxable income determined without regard to any deduction for dividends paid,and realized net short-term capital gains in orderexcess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its ability to be subject to taxation as a RIC.RIC status (pass-through tax treatment for amounts distributed). As a part of maintaining its RIC status, undistributed taxable income (subject to a 4% nondeductible,non-deductible U.S. federal excise tax) pertaining to a given taxablefiscal year may be distributed up to 12 months subsequent to the end of that taxablefiscal year, provided such distributionsdividends are declared on or prior to the earlierlater of eight-and-one-half months after the close of that taxable year or the(i) filing of the U.S. federal income tax return for such prior taxable year. In order to avoid the impositionapplicable fiscal year or (ii) the fifteenth day of the 4% nondeductible, U.S. federal exciseninth month following the close of the year in which such taxable income was generated.
The determination of the tax attributes for The Company’s distributions is made annually, based upon its taxable income for the Company needs to distribute, in respectfull year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of each calendar year, dividendsthe actual tax attributes of an amount at least equaldistributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the sum of: (1) 98.0%extent that the RIC received the income in the form of its net ordinary income (taking into account certain deferralsqualifying dividends from domestic corporations and elections)qualified foreign corporations. The tax attributes for the calendar year, (2) 98.2% of its capital gain in excess of capital loss, or capital gain net income, (adjusted for certain ordinary losses) for the one-year perioddistributions will generally ending on October 31 of that calendar year (or, if the Company so elects for that calendar year) and (3) any netinclude both ordinary income and qualified dividends, but may also include either one or both of capital gain net income for preceding years that was not distributed with respect to such yearsgains and on which the Company incurred no U.S. federal income tax. For the taxable year ended December 31, 2015, the Company distributed $3.8 million, or $0.0615 per share,return of its taxable income in 2016, prior to the filing of its U.S. federal income tax return for the 2015 taxable year. As a result, the Company was subject to a $119,000 4% nondeductible, U.S. federal excise tax for the 2015 taxable year. For the taxable year ended December 31, 2016, the Company distributed $7.3 million, or $0.099478 per share, of its taxable income in 2017, prior to the filing of its U.S. federal income tax return for the 2016 taxable year. As a result, the Company was subject to a 4% nondeductible, U.S federal excise tax liability for the 2016 taxable year of approximately $246,000.
Listed below is a reconciliation of “Net increase (decrease) in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the ninethree months ended September 30, 2017March 31, 2021 and 2016 (dollars in thousands).2020.
| | | | | | | | |
| | Three Months Ended | ||||||
| | | 2021 | | | | 2020 | |
| | (estimated, | ||||||
| | | | | | | | |
| | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | $ | 12,657 | | | $ | (85,816) | |
Net change in unrealized (appreciation) depreciation | | | (5,193) | | | | 94,909 | |
Income tax provision | | | 396 | | | | 76 | |
Pre-tax book (income) loss not consolidated for tax purposes | | | (2,485) | | | | 2,176 | |
Book income (loss) and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates | | | 936 | | | | 509 | |
Estimated taxable income | | | 6,311 | | | | 11,854 | |
Taxable income earned in prior year and carried forward for distribution in current year | | | 29,173 | | | | 17,198 | |
Taxable income earned prior to period end and carried forward for distribution next period | | | (35,484) | | | | (19,991) | |
Dividend accrued as of period end and paid-in the following period | | | 7,961 | | | | 4,669 | |
Taxable income earned to be carried forward | | | (27,523) | | | | (15,322) | |
Total distributions accrued or paid to common stockholders | | $ | 7,961 | | | $ | 13,730 | |
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||
| Net increase (decrease) in net assets resulting from operations | $ | 39,440 | $ | 37,771 | |||
| Net change in unrealized (appreciation) depreciation | 7,165 | (12,929 | ) | ||||
| Income tax (benefit) provision | 139 | 67 | |||||
| Pre-tax book (income) loss not consolidated for tax purposes | 755 | 11,137 | |||||
58
| Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||
| Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates | 1,526 | 427 | |||||
Estimated taxable income (1) | 49,025 | 36,473 | |||||
| Taxable income earned in prior year and carried forward for distribution in current year | 7,238 | 3,855 | |||||
| Taxable income earned prior to period end and carried forward for distribution next period | (20,558 | ) | (9,407 | ) | |||
| Dividend accrued as of period end and paid-in the following period | 4,565 | 4,073 | |||||
| Taxable income earned to be carried forward | (15,993 | ) | (5,334 | ) | |||
| Total distributions accrued or paid to common stockholders | $ | 40,270 | $ | 34,994 | |||
| (1) | The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate. |
The Taxable Subsidiaries primarily hold certain portfolio investments for MSC Income Fund. The Taxable Subsidiaries permit MSC Income Fund to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSC Income Fund for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in the Company’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in The Company’s consolidated financial statements.
The income tax expense (benefit) for the Company is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on the Company’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assetsasset and liabilities generated by HMS Equity Holding and HMS Equity Holding II,the Taxable Subsidiaries, if any, are reflected in The Company’s consolidated statement of operations. The Company’s provision for income taxes was comprised of the Company’s Condensed Consolidated Statement of Operations. Forfollowing for the ninethree months ended September 30, 2017March 31, 2021 and 2016, the Company recognized a net income tax (benefit) provision of $139,000 and $67,000, respectively, related to deferred taxes of $1.5 million and $10.7 million, respectively, and other taxes of $139,000 and $67,000, respectively, offset by a valuation allowance of $(1.5) million and $(10.7) million, respectively. For the nine months ended September 30, 2017 and 2016, the other taxes included $139,000 and $67,000, respectively, related to accruals for state and other taxes.2020 (amounts in thousands):
| | | | | | |
| | Three Months Ended March 31, | ||||
| | 2021 | | 2020 | ||
Current tax expense (benefit): | | | | | | |
Federal | | $ | — | | $ | — |
State | | | 87 | | | 76 |
Excise | | | 309 | | | — |
Total current tax expense (benefit) | | | 396 | | | 76 |
Deferred tax expense (benefit): | | | | | | |
Federal | | | — | | | — |
State | | | — | | | — |
Total deferred tax expense (benefit) | | | — | | | — |
| | | | | | |
Total income tax provision (benefit) | | $ | 396 | | $ | 76 |
The net deferred tax assetliability at both September 30, 2017March 31, 2021 and December 31, 20162020 was $0,$0. Deferred tax asset and liability balances primarily related to net unrealized appreciation or depreciation, loss carryforwards, timingand other temporary book-tax differences in net unrealized depreciation of portfolio investments, and basis differences ofrelating to portfolio investments held by HMS Equity Holding and HMS Equity Holding II, which are “pass through” entities forthe Taxable Subsidiaries. The Company recorded valuation allowance to reduce the carrying value of deferred tax purposes, offset by a valuation allowance. Based on HMS Equity Holding’s and HMS Equity Holding II’s short operating history, management believes it isassets to the amount that more likely than not that there will be inadequate profits in HMS Equity Holding and HMS Equity Holding II against which the deferred tax assets can be offset. Accordingly, the Company recorded a full valuation allowance against such deferred tax assets.
| September 30, 2017 | December 31, 2016 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | 2,654 | $ | 2,258 | ||||
| Capital loss carryforwards | 8,429 | 8,366 | ||||||
| Net basis differences in portfolio investments | — | — | ||||||
| Net unrealized depreciation of portfolio investments | 1,205 | 20 | ||||||
| Total deferred tax assets | 12,288 | 10,644 | ||||||
| Deferred tax liabilities: | ||||||||
| Net basis differences in portfolio investments | (1,294 | ) | (1,119 | ) | ||||
| Net unrealized appreciation of portfolio investments | — | — | ||||||
| Other | — | — | ||||||
| Total deferred tax liabilities | (1,294 | ) | (1,119 | ) | ||||
| Valuation allowance | (10,994 | ) | (9,525 | ) | ||||
| Total net deferred tax assets (liabilities) | $ | — | $ | — | ||||
59
NOTE H—SHARE REPURCHASE PROGRAM
Prior to March 31, 2020, the years ending DecemberCompany historically conducted quarterly tender offers pursuant to its share repurchase program. On March 31, 2016, 2015 and 2014, respectively,2020, the tax characteristicsCompany’s Board of distributions paid to shareholders were as follows (amounts in thousands):
| Year Ended December 31, | |||||||||||||||||
| Tax Characteristics of Distributions | 2016 | 2015 | 2014 | ||||||||||||||
| Ordinary income | $ | 44,848 | 93.90 | % | $ | 34,085 | 99.68 | % | $ | 11,162 | 99.51 | % | |||||
| Capital gain distributions | 2,913 | 6.10 | 110 | 0.32 | 55 | 0.49 | |||||||||||
| Total | $ | 47,761 | 100.00 | % | $ | 34,195 | 100.00 | % | $ | 11,217 | 100.00 | % | |||||
Under the terms of the reinstated plan, the Company will offer to purchase shares at the estimated NAV per share, as determined within 48 hours prior to the repurchase date. The amount of shares of the Company’s common stock to be repurchased during any calendar quarter may be equal to the lesser of (i) the number of shares of common stock the Company could repurchase with the proceeds it received from the issuance of common stock under the Company’s dividend reinvestment plan or (ii) 2.5% of the weighted average number of shares of common stock outstanding in the prior four calendar quarters. Upon resuming making offers to repurchase shares pursuant to the share repurchase program, the Company is initially limiting repurchase offers to the number of shares of common stock it can repurchase with 90% of the cash retained as a result of issuances of common stock under the Company’s dividend reinvestment plan.
At the discretion of the Company’s Board of Directors, the Company may also use cash on hand, cash available from borrowings and cash from the sale of investments as of the end of the applicable period to repurchase shares. The Company’s Board of Directors may amend, suspend or terminate the share repurchase program upon 30 days’ notice. Since inception of its share repurchase program, the Company funded the repurchase of $103.0 million in shares. For the three months ended March 31, 2021 the Company did not repurchase any shares of its common stock. For the three months ended March 31, 2020 the Company funded $6.1 million for shares of its common stock tendered for repurchase under the plan approved by the Board of Directors.
60
NOTE I—COMMITMENTS AND CONTINGENCIES
At March 31, 2021, the Company had the following outstanding commitments (in thousands):
| | | | |
Investments with equity capital commitments that have not yet funded: |
| Amount |
| |
|
| | | |
Brightwood Capital Fund III, LP | | $ | 1,000 | |
Freeport First Lien Loan Fund III LP | | | 3,113 | |
HPEP 3, L.P. | | | 1,555 | |
| | | | |
Total equity commitments | | $ | 5,668 | |
| | | | |
Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded: | | | | |
| | | | |
Adams Publishing Group, LLC | | $ | 5,000 | |
NinjaTrader, LLC | | | 3,078 | |
Mako Steel LP | | | 2,637 | |
MB2 Dental Solutions, LLC | | | 2,569 | |
SI East, LLC | | | 2,500 | |
Lynx FBO Operating LLC | | | 1,875 | |
Hunter Defense Technologies, Inc. | | | 1,770 | |
Arcus Hunting, LLC | | | 1,446 | |
Invincible Boat Company, LLC | | | 1,080 | |
Classic H&G AcquireCo, LLC | | | 1,000 | |
DTE Enterprises, LLC | | | 750 | |
GRT Rubber Technologies LLC | | | 660 | |
Eastern Wholesale Fence LLC | | | 565 | |
Hawk Ridge Systems, LLC | | | 500 | |
Clickbooth.Com, LLC | | | 457 | |
Chamberlin Holdco, LLC | | | 400 | |
Cody Pools Holdings, LLC | | | 400 | |
Direct Marketing Solutions, Inc. | | | 400 | |
Trantech Radiator Topco LLC | | | 400 | |
Gamber-Johnson, LLC | | | 300 | |
Tedder Acquisition, LLC | | | 300 | |
Dynamic Communities, LLC | | | 250 | |
American Nuts, LLC | | | 247 | |
Mystic Logistics Holdings, LLC | | | 200 | |
Klein Hersh, LLC | | | 179 | |
| | | | |
Total loan commitments | | $ | 28,963 | |
| | | | |
Total commitments | | $ | 34,631 | |
The Company will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made annually(which are typically through existing cash and cash equivalents and borrowings under the Credit Facilities). The Company follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had no unrealized depreciation on the outstanding unfunded commitments as of March 31, 2021.
NOTE J - RELATED PARTY TRANSACTIONS
1. Advisory Agreements and Conditional Fee and Expense Reimbursement Waivers
Prior to October 30, 2020, the business of the Company was managed by HMS Adviser (an affiliate of Hines), pursuant to Original Investment Advisory Agreement. On October 30, 2020, the Company entered into the Investment Advisory Agreement with MSC Adviser, which includes similar terms to those contained in Original Investment
61
Advisory Agreement with HMS Adviser. The agreements state that the respective adviser will oversee the management of the Company’s activities and is responsible for making investment decisions with respect to, and providing day-to-day management and administration of, the Company’s investment portfolio. Prior to October 30, 2020, the Company and HMS Adviser had engaged MSC Adviser pursuant to a sub-advisory agreement to identify, evaluate, negotiate and structure the Company’s prospective investments, make investment and portfolio management recommendations for approval by HMS Adviser, monitor the Company’s investment portfolio and provide certain ongoing administrative services to HMS Adviser in exchange for which HMS Adviser agreed to pay MSC Adviser 50.0% of the base management fee and incentive fees described below as compensation for its services.
Pursuant to the Original Investment Advisory Agreement, the Company paid HMS Adviser a base management fee and incentive fees as compensation for the services described above. The base management fee was calculated at an annual rate of 2.0% of the Company’s average gross assets. The term “gross assets” means total assets of the Company as disclosed on the Company’s balance sheet. “Average gross assets” are calculated based on the Company’s gross assets at the end of the Company’s taxable yeartwo most recently completed calendar quarters. The base management fee was payable quarterly in arrears. Under the Investment Advisory Agreement, the Company pays a 1.75% base management fee to MSC Adviser on substantially the same terms as the Original Investment Advisory Agreement. The base management fee is expensed as incurred.
The incentive fee under the Original Investment Advisory Agreement and under the Investment Advisory Agreement is the same. The incentive fees consist of two parts. The first part, referred to as the subordinated incentive fee on income, is calculated and payable quarterly in arrears based upon the Company’s taxableon pre-incentive fee net investment income for the full taxable year and distributions paid for the full taxable year. Therefore, a determination madeimmediately preceding quarter. The subordinated incentive fee on an interim basis may not be representative of the actual tax attributes of distributions for a full year. If the Company had determined the tax attributes of its distributions taxable year-to-date as of September 30, 2017, 100% would be from its current and accumulated earnings and profits. However, there can be no certaintyincome is equal to stockholders that this determination is representative of what the actual tax attributes20.0% of the Company’s anticipated fiscalpre-incentive fee net investment income for the immediately preceding quarter, expressed as a quarterly rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, exceeding 1.875% (or 7.5% annualized), subject to a “catch up” feature (as described below).
For this purpose, pre-incentive fee net investment income means interest income, dividend income and taxable years ending December 31, 2017any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the management fee, expenses payable under any proposed administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments and PIK interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. For purposes of this fee, adjusted capital means cumulative gross proceeds generated from sales of the Company’s common stock (including proceeds from the Company’s dividend reinvestment plan) reduced for non-liquidating distributions, to stockholders will be. The actual tax characteristicsother than distributions of distributions to stockholders will be reportedprofits, paid to the Internal Revenue ServiceCompany’s stockholders and stockholders subjectamounts paid for share repurchases pursuant to information reporting shortly after the closeCompany’s share repurchase program. The subordinated incentive fee on income is expensed in the quarter in which it is incurred.
The calculation of the subordinated incentive fee on income for each quarter is as follows:
No subordinated incentive fee on income shall be payable to MSC Adviser in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle rate of 1.875% (or 7.5% annualized) on adjusted capital;
100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.34375% in any calendar quarter (9.375% annualized) shall be payable to MSC Adviser. This portion of the subordinated incentive fee on income is referred to as the “catch up” and is intended to provide MSC Adviser with an incentive fee of 20.0% on all of the Company’s pre-incentive fee net investment income as if the hurdle rate did not apply when the pre-incentive fee net investment income exceeds 2.34375% (9.375% annualized) in any calendar quarter; and
For any quarter in which the Company’s pre-incentive fee net investment income exceeds 2.34375% (9.375% annualized), the subordinated incentive fee on income shall equal 20.0% of the amount of the
62
Company’s pre-incentive fee net investment income, as the hurdle rate and catch-up will have been achieved.
The second part of the incentive fee, referred to as the incentive fee on capital gains, is an incentive fee on realized capital gains earned from the portfolio of the Company and is determined and payable in arrears as of the end of each calendar year on Form 1099-DIV.
| Supplemental Disclosure of Cash Flow Information | Nine Months Ended September 30, 2017 | Nine Months Ended September 30, 2016 | ||||||
| Cash paid for interest | $ | 12,296 | $ | 10,078 | ||||
| Cash paid for income taxes | 358 | 265 | ||||||
| Supplemental Disclosure of Non-Cash Flow Information | ||||||||
| Stockholder distributions declared and unpaid | 4,565 | 4,073 | ||||||
| Stockholder distributions reinvested | 20,594 | 18,263 | ||||||
| Change in unpaid deferred offering costs | (40 | ) | 1,107 | |||||
| Unpaid deferred financing costs | 25 | 4 | ||||||
| Unpaid sales commissions and dealer manager fee | 251 | 57 | ||||||
For the three months ended September 30, 2017March 31, 2021 and 2016,2020, the Company incurred base management fees of approximately $5.6$3.9 million and $4.9$5.0 million, respectively, and the Advisers waived no base management fees in either period.respectively. For the three months ended September 30, 2017March 31, 2021 and 2016,2020, the Company incurred no capital gains incentive fees ordid not incur subordinated incentive fees on income in either period. For the three months ended September 30, 2017 and 2016, the Advisers waived noor any capital gains incentive fees nor subordinated incentive fees in either period.
Pursuant to the Advisers will not be accrued until the reimbursement of the waived fees becomes probable and estimable, which will be upon approval of the Company’s board of directors. To date, none of the previously waived fees has been approved by the board of directors for reimbursement.
Management Fee (1) | Subordinated Incentive Fee (1) | Capital Gain Incentive Fee (1) | Expense Support (1) | ||||||||||||||||||||||||||||
| Quarter Ended | Waivers | Repaid to Adviser (2) | Waivers | Repaid to Adviser (2) | Waivers | Repaid to Adviser (2) | Payments | Repaid to Adviser (2) | Operating Expense Ratio (3) | Annualized Distribution Rate (4) | Eligible to be Repaid Through | ||||||||||||||||||||
| 6/30/2012 | $ | 31 | $ | — | $ | 18 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.35% | 7.00% | Expired | ||||||||||||
Management Fee (1) | Subordinated Incentive Fee (1) | Capital Gain Incentive Fee (1) | Expense Support (1) | ||||||||||||||||||||||||||||
| Quarter Ended | Waivers | Repaid to Adviser (2) | Waivers | Repaid to Adviser (2) | Waivers | Repaid to Adviser (2) | Payments | Repaid to Adviser (2) | Operating Expense Ratio (3) | Annualized Distribution Rate (4) | Eligible to be Repaid Through | ||||||||||||||||||||
| 9/30/2012 | $ | 97 | $ | — | $ | 52 | $ | — | $ | 3 | $ | — | $ | — | $ | — | 1.97% | 7.00% | Expired | ||||||||||||
| 12/31/2012 | $ | 104 | $ | — | $ | 53 | $ | — | $ | — | $ | — | $ | — | $ | — | 2.96% | 7.00% | Expired | ||||||||||||
| 3/31/2013 | $ | 84 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.86% | 7.00% | Expired | ||||||||||||
| 6/30/2013 | $ | 118 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.36% | 7.00% | Expired | ||||||||||||
| 9/30/2013 | $ | 268 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.22% | 7.00% | Expired | ||||||||||||
| 12/31/2013 | $ | 309 | $ | — | $ | — | $ | — | $ | 5 | $ | — | $ | 153 | $ | — | 0.49% | 7.00% | Expired | ||||||||||||
| 3/31/2014 | $ | 306 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.28% | 7.00% | Expired | ||||||||||||
| 6/30/2014 | $ | 548 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.28% | 7.00% | Expired | ||||||||||||
| 9/30/2014 | $ | 821 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 328 | $ | — | 1.23% | 7.00% | Expired | ||||||||||||
| 12/31/2014 | $ | 148 | $ | — | $ | 451 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.70% | 7.00% | 12/31/2017 | ||||||||||||
| 3/31/2015 | $ | — | $ | — | $ | 358 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.78% | 7.18% | 3/31/2018 | ||||||||||||
| 6/30/2015 | $ | — | $ | — | $ | 930 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.69% | 7.07% | 6/30/2018 | ||||||||||||
| 9/30/2015 | $ | — | $ | — | $ | 155 | $ | — | $ | — | $ | — | $ | — | $ | — | 2.11% | 7.07% | 9/30/2018 | ||||||||||||
| 12/31/2015 | $ | — | $ | — | $ | 1,159 | $ | — | $ | — | $ | — | $ | — | $ | — | 2.27% | 7.78% | 12/31/2018 | ||||||||||||
| 3/31/2016 | $ | — | $ | — | $ | 493 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.83% | 8.14% | 3/31/2019 | ||||||||||||
| 6/30/2016 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.76% | 7.95% | 6/30/2019 | ||||||||||||
| 9/30/2016 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.73% | 7.87% | 9/30/2019 | ||||||||||||
| 12/31/2016 | $ | — | $ | — | $ | 1,196 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.68% | 7.69% | 12/31/2019 | ||||||||||||
| 3/31/2017 | $ | — | $ | — | $ | 1,495 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.68% | 7.53% | 3/31/2020 | ||||||||||||
| 6/30/2017 | $ | — | $ | — | $ | 823 | $ | — | $ | — | $ | — | $ | — | $ | — | 1.67% | 7.53% | 6/30/2020 | ||||||||||||
| 9/30/2017 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | 1.91% | 7.53% | 9/30/2020 | ||||||||||||
| Administrative Services | |||||||||||||
| Quarter Ended | Waivers | Repaid to Adviser | Operating Expense Ratio (1) | Annualized Distribution Rate (2) | Eligible to be Repaid Through (3) | ||||||||
| 6/30/2012 | $ | 25 | $ | — | 1.35% | 7.00% | Not Eligible to be Repaid | ||||||
| 9/30/2012 | $ | 129 | $ | — | 1.97% | 7.00% | Not Eligible to be Repaid | ||||||
| 12/31/2012 | $ | 284 | $ | — | 2.96% | 7.00% | Not Eligible to be Repaid | ||||||
| 3/31/2013 | $ | 233 | $ | — | 1.86% | 7.00% | Not Eligible to be Repaid | ||||||
| 6/30/2013 | $ | 222 | $ | — | 1.36% | 7.00% | Not Eligible to be Repaid | ||||||
| 9/30/2013 | $ | 234 | $ | — | 1.22% | 7.00% | Not Eligible to be Repaid | ||||||
| 12/31/2013 | $ | 329 | $ | — | 0.49% | 7.00% | Not Eligible to be Repaid | ||||||
| 3/31/2014 | $ | 329 | $ | — | 1.28% | 7.00% | Not Eligible to be Repaid | ||||||
| 6/30/2014 | $ | 385 | $ | — | 1.28% | 7.00% | Not Eligible to be Repaid | ||||||
| 9/30/2014 | $ | 371 | $ | — | 1.23% | 7.00% | Not Eligible to be Repaid | ||||||
| 12/31/2014 | $ | 412 | $ | — | 1.70% | 7.00% | Not Eligible to be Repaid | ||||||
| 3/31/2015 | $ | 437 | $ | — | 1.78% | 7.18% | Not Eligible to be Repaid | ||||||
| 6/30/2015 | $ | 480 | $ | — | 1.69% | 7.07% | Not Eligible to be Repaid | ||||||
| 9/30/2015 | $ | 517 | $ | — | 2.11% | 7.07% | Not Eligible to be Repaid | ||||||
| 12/31/2015 | $ | 603 | $ | — | 2.27% | 7.78% | Not Eligible to be Repaid | ||||||
| 3/31/2016 | $ | 533 | $ | — | 1.83% | 8.14% | Not Eligible to be Repaid | ||||||
| 6/30/2016 | $ | 574 | $ | — | 1.76% | 7.95% | Not Eligible to be Repaid | ||||||
| 9/30/2016 | $ | 529 | $ | — | 1.73% | 7.87% | Not Eligible to be Repaid | ||||||
| 12/31/2016 | $ | 679 | $ | — | 1.68% | 7.69% | Not Eligible to be Repaid | ||||||
| 3/31/2017 | $ | 661 | $ | — | 1.68% | 7.53% | Not Eligible to be Repaid | ||||||
| 6/30/2017 | $ | 873 | $ | — | 1.67% | 7.53% | Not Eligible to be Repaid | ||||||
| 9/30/2017 | $ | 694 | $ | — | 1.91% | 7.53% | Not Eligible to be Repaid | ||||||
| Incurred | Incurred | Unpaid as of | |||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | September 30, 2017 | December 31, 2016 | ||||||||||||||||||
| Type and Recipient | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Incentive Fees on Income (1) - the Adviser, Sub-Adviser | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
| Offering Costs - the Adviser, Sub-Adviser | 272 | 405 | 1,000 | 1,226 | 18 | (23 | ) | ||||||||||||||
Other (2) - the Adviser | 81 | 125 | 551 | 278 | 37 | 121 | |||||||||||||||
| Selling Commissions - Dealer Manager | 501 | 1,242 | 2,368 | 3,884 | 127 | 92 | |||||||||||||||
| Dealer Manager Fee - Dealer Manager | 307 | 608 | 1,307 | 1,859 | 124 | (6 | ) | ||||||||||||||
| Due to Affiliates | $ | 306 | $ | 184 | |||||||||||||||||
Base Management Fees (1) - the Adviser, Sub-Adviser | $ | 5,648 | $ | 4,905 | $ | 16,101 | $ | 14,092 | $ | 5,682 | $ | 5,054 | |||||||||
2. Offering Costs
In accordance with the Original Investment Advisory Agreement and the Sub-Advisory Agreement, the Company reimbursesreimbursed the Advisers for any offering costs that are paid on the Company’s behalf, which consistconsisted of, among other costs, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, advertising and sales literature and other costs incurred in connection with an offering costs. Pursuant to the terms of the Investment Advisory Agreement and the Sub-Advisory Agreement, the Company expects to reimburse the Advisers for such costs incurred onincluding the Company’s behalf on a monthly basis, up to a maximum aggregate amount of 1.5% of the gross stock offering proceeds.dividend reinvestment plan. The Advisers arewere responsible for the payment of offering costs to the extent they exceedexceeded 1.5% of the aggregate gross stock offering proceeds.
As of March 31, 2021, the Company has reimbursed theHMS Advisers approximately $11.6$12.8 million since inception for offering costs. As
63
| For the Quarter Ended | Repurchase Date | Shares Repurchased | Percentage of Shares Tendered that were Repurchased | Repurchase Price per Share | Aggregate Consideration for Repurchased Shares | |||||||||
| March 31, 2017 | 3/23/2017 | 614,179.64 | 100% | $ | 8.23 | $ | 5,054,698 | |||||||
| June 30, 2017 | 6/15/2017 and 6/16/2017 | 346,306.52 | 100% | $ | 8.20 | $ | 2,839,713 | |||||||
| September 30, 2017 | 9/21/2017 | 747,784.63 | 100% | $ | 8.19 | $ | 6,124,356 | |||||||
| Commitments and Contingencies | |||||||
| (dollars in thousands) | |||||||
| September 30, 2017 | December 31, 2016 | ||||||
| Unfunded Loan Commitments | |||||||
| Adams Publishing Group, LLC | $ | 2,216 | $ | — | |||
| Apex Linen Services, Inc. | 403 | 397 | |||||
| Arcus Hunting, LLC | 120 | 2,136 | |||||
| BarFly Ventures, LLC | — | 881 | |||||
| BigName Holdings, LLC | 101 | — | |||||
| Boccella Precast Products, LLC | 500 | — | |||||
| Buca C, LLC | — | 1,548 | |||||
| CapFusion Holding, LLC | — | 394 | |||||
| CDHA Management, LLC | 3,373 | 3,259 | |||||
| Charps, LLC | 1,000 | — | |||||
| Clad-Rex Steel, LLC | 100 | — | |||||
| CST Industries, Inc. | 602 | — | |||||
| CTVSH, PLLC | 200 | — | |||||
| Datacom, LLC | 50 | 1,302 | |||||
| Commitments and Contingencies | |||||||
| (dollars in thousands) | |||||||
| September 30, 2017 | December 31, 2016 | ||||||
| Unfunded Loan Commitments | |||||||
| Felix Investments Holdings II LLC | $ | 1,667 | $ | — | |||
| Gamber-Johnson Holdings, LLC | 300 | 300 | |||||
| Guerdon Modular Holdings, Inc. | 400 | 400 | |||||
| Hawk Ridge Systems, LLC | 400 | 400 | |||||
| Hojeij Branded Foods, Inc. | 2,090 | 2,000 | |||||
| Hostway Corporation | 67 | — | |||||
| HW Temps LLC | 200 | 50 | |||||
| Jackmont Hospitality, Inc. | — | 1,200 | |||||
| LaMi Products, LLC | 1,029 | 1,729 | |||||
| Market Force Information, Inc. | 272 | — | |||||
| Meisler Operating, LLC | 400 | — | |||||
| Minute Key, Inc. | 2,000 | 197 | |||||
| Mystic Logistics, Inc. | 200 | 194 | |||||
| NNE Issuer, LLC | 7,000 | — | |||||
| NuStep, LLC | 300 | — | |||||
| Pardus Oil & Gas, LLC | 357 | 357 | |||||
| Permian Holdco 2 | 290 | 290 | |||||
| PPC/Shift, LLC | 500 | 500 | |||||
| Resolute Industrial LLC | 5,750 | — | |||||
| Strike, LLC | — | 2,475 | |||||
| Unirush LLC | — | 980 | |||||
| Volusion, LLC | — | 2,955 | |||||
| Wireless Vision | 8,289 | — | |||||
| Unfunded Capital Commitments | |||||||
| Brightwood Capital Fund III, LP | 1,000 | 1,000 | |||||
| Brightwood Capital Fund IV, LP | 9,000 | 10,000 | |||||
| Copper Trail Energy Fund | 2,500 | — | |||||
| Freeport First Lien Loan Fund III, LP | 4,941 | 7,737 | |||||
| Total | $ | 57,617 | $ | 42,681 | |||
3. Main Street Term Loan
On October 19, 2017,January 27, 2021, the Company entered into an amendmentthe Main Street Term Loan with Main Street. As of March 31, 2021, the Main Street Term Loan was fully drawn at $40.0 million, bearing interest at a fixed rate of 5.00% per annum and maturing on January 27, 2026. The Company paid a 1.0% upfront fee to Main Street on the EverBank Credit Facility, which increasedclosing date. Borrowings under the revolver commitments by the amountMain Street Term Loan are expressly subordinated and junior in right of $25.0 million (from $95.0 millionpayment to $120.0 million).
NOTE K—SUBSEQUENT EVENTS
On October 19, 2017, the Company’s board of directors approved an amendment and restatement of the Company’s distribution reinvestment plan (the “Amended DRP”). Under the Amended DRP, in the event that a continuous offering of the Company’s common stock is suspended or terminated, cash distributions paid to participating stockholders will be reinvested in additional common stock at a purchase price determined by the board of directors, or a committee thereof, in its sole discretion, that is (i) not less than the NAV per share determined in good faith by the board of directors, or a committee thereof, in its sole discretion, within forty-eight hours prior to the payment of the distribution (the “NAV Per Share”) and (ii) not more than 2.5% greater than
On May 11, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.125 per share payable August 2, 2021 to stockholders as of June 30, 2021.
64
Schedule 12-14
MSC Income Fund, Inc.
Consolidated Schedule of Investments In and Advances to Affiliates
March 31, 2021
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Amount of | | | | | | | | | | | | | |
| | | | | | | | | | | | Interest, | | | | | | | | | | | | | |
| | | | | | | | | | | | Fees or | | | | | | | | | | | | | |
| | | | | | Amount of | | Amount of | | Dividends | | December 31, | | | | | | | | March 31, | |||||
| | | | | | Realized | | Unrealized | | Credited to | | 2020 | | Gross | | Gross | | 2021 | |||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||
| |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
GRT Rubber Technologies LLC |
| (L+7.00%) Secured Debt |
| (8) | |
| - | | | (1) | | | 152 | | | 8,262 | | | 3,465 | | | - | | | 8,262 |
|
| Member Units |
| (8) | |
| - | | | - | | | 448 | | | 22,120 | | | - | | | 3,465 | | | 22,120 |
Harris Preston Fund Investments |
| LP Interests (2717 MH, L.P.) |
| (8) | |
| - | | | (65) | | | - | | | 2,702 | | | 47 | | | 65 | | | 2,684 |
Copper Trail Energy Fund I, LP - CTMH |
| LP Interests (CTMH, LP) |
| (9) | |
| - | | | - | | | - | | | 727 | | | - | | | 37 | | | 710 |
Other | | | | | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Total Control Investments | | | | | | $ | - | | $ | (66) | | $ | 600 | | $ | 33,811 | | $ | 3,512 | | $ | 3,567 | | $ | 33,776 |
Affiliate Investments | | | | | | | | | | | | | | | | | | | | | | | | | |
AFG Capital Group, LLC |
| Preferred Member Units |
| (8) | | $ | - | | $ | 130 | | $ | - | | $ | 1,450 | | $ | 130 | | $ | - | | $ | 1,580 |
|
| 10.00% Secured Debt |
| (8) | |
| - | | | - | | | 3 | | | 123 | | | - | | | 22 | | | 101 |
ASK (Analytical Systems Keco Holdings, LLC) |
| Preferred Member Units |
| (8) | |
| - | | | (120) | | | - | | | 800 | | | - | | | 120 | | | 680 |
|
| (L+10.00%, Floor 2.00%) Secured Debt |
| (8) | |
| - | | | - | | | 79 | | | 1,180 | | | 39 | | | - | | | 1,219 |
|
| Warrants |
| (8) | |
| - | | | - | | | - | | | - | | | - | | | - | | | - |
|
| Member Units |
| (5) | |
| - | | | - | | | - | | | 528 | | | - | | | - | | | 528 |
Brewer Crane Holdings, LLC |
| Preferred Member Units |
| (9) | |
| - | | | (90) | | | 8 | | | 1,460 | | | - | | | 90 | | | 1,370 |
|
| (L+10.00%, Floor 1.00%) Secured Debt |
| (9) | |
| - | | | - | | | 63 | | | 2,119 | | | 2 | | | 31 | | | 2,090 |
Centre Technologies Holdings, LLC |
| (L+10.00%, Floor 2.00%) Secured Debt |
| (8) | |
| - | | | - | | | 92 | | | 2,868 | | | 3 | | | 38 | | | 2,833 |
|
| Preferred Member Units |
| (8) | |
| - | | | - | | | - | | | 1,540 | | | - | | | - | | | 1,540 |
Chamberlin Holding LLC |
| (L+8.00%, Floor 1.00%) Secured Debt |
| (8) | |
| - | | | (6) | | | 102 | | | 3,803 | | | 6 | | | 6 | | | 3,803 |
|
| Member Units |
| (8) | |
| - | | | 50 | | | 290 | | | 7,020 | | | 50 | | | - | | | 7,070 |
|
| Member Units |
| (8) | |
| - | | | 15 | | | 4 | | | 317 | | | 15 | | | - | | | 332 |
Charps, LLC |
| Preferred Member Units |
| (5) | |
| - | | | 200 | | | 261 | | | 2,630 | | | 200 | | | - | | | 2,830 |
|
| 0.15 Secured Debt |
| (5) | |
| - | | | - | | | 9 | | | 167 | | | - | | | 167 | | | - |
Clad-Rex Steel, LLC |
| (L+9.50%, Floor 1.00%) Secured Debt |
| (5) | |
| - | | | - | | | 76 | | | 2,706 | | | 4 | | | - | | | 2,710 |
|
| Member Units |
| (5) | |
| - | | | (1) | | | 68 | | | 2,153 | | | - | | | 1 | | | 2,152 |
|
| Member Units |
| (5) | |
| - | | | - | | | - | | | 132 | | | - | | | - | | | 132 |
|
| 10.00% Secured Debt |
| (5) | |
| - | | | - | | | 7 | | | 275 | | | - | | | 2 | | | 273 |
Cody Pools, Inc. |
| (L+10.50%, Floor 1.75%) Secured Debt |
| (8) | | | - | | | (4) | | | 119 | | | 3,554 | | | 4 | | | 54 | | | 3,504 |
|
| Preferred Member Units |
| (8) | | | - | | | 980 | | | - | | | 3,740 | | | 980 | | | - | | | 4,720 |
Colonial Electric Company LLC |
| 12.00% Secured Debt |
| (6) | |
| - | | | - | | | - | | | - | | | 6,143 | | | - | | | 6,143 |
|
| Preferred Member Units |
| (6) | |
| - | | | - | | | - | | | - | | | 1,920 | | | - | | | 1,920 |
Copper Trail Energy Fund I, LP |
| LP Interests (Copper Trail Energy Fund I, LP) |
| (9) | |
| - | | | 61 | | | 98 | | | 1,782 | | | 61 | | | - | | | 1,843 |
Datacom, LLC |
| 8.00% Secured Debt |
| (8) | |
| - | | | - | | | - | | | - | | | - | | | - | | | - |
|
| Preferred Member Units |
| (8) | |
| - | | | - | | | - | | | - | | | 290 | | | - | | | 290 |
|
| 10.50% PIK Secured Debt |
| (8) | |
| - | | | - | | | - | | | - | | | - | | | - | | | - |
|
| Preferred Member Units |
| (8) | |
| - | | | - | | | - | | | - | | | - | | | - | | | - |
|
| Preferred Member Units |
| (8) | |
| - | | | - | | | - | | | - | | | - | | | - | | | - |
|
| 5.00% Secured Debt |
| (8) | |
| - | | | - | | | 4 | | | - | | | 904 | | | 3 | | | 901 |
Digital Products Holdings LLC |
| (L+10.00%, Floor 1.00%) Secured Debt |
| (5) | |
| - | | | - | | | 133 | | | 4,493 | | | 6 | | | 83 | | | 4,416 |
|
| Preferred Member Units |
| (5) | |
| - | | | - | | | 13 | | | 2,459 | | | - | | | - | | | 2,459 |
Direct Marketing Solutions, Inc. |
| Preferred Stock |
| (9) | |
| - | | | (380) | | | - | | | 4,840 | | | - | | | 380 | | | 4,460 |
|
| (L+11.00%, Floor 1.00%) Secured Debt |
| (9) | |
| - | | | - | | | 122 | | | 3,717 | | | 10 | | | 4 | | | 3,723 |
Freeport Financial Funds |
| LP Interests (Freeport First Lien Loan Fund III LP) |
| (5) | |
| - | | | - | | | 274 | | | 10,321 | | | 1,398 | | | - | | | 8,923 |
Gamber-Johnson Holdings, LLC |
| (L+7.00%, Floor 2.00%) Secured Debt |
| (5) | |
| - | | | (12) | | | 127 | | | 4,960 | | | 798 | | | 598 | | | 5,160 |
|
| Member Units |
| (5) | |
| - | | | (22) | | | 119 | | | 13,120 | | | 712 | | | 22 | | | 13,810 |
GFG Group, LLC. |
| Preferred Member Units |
| (5) | |
| - | | | - | | | - | | | - | | | 1,225 | | | - | | | 1,225 |
|
| 12.00% Secured Debt |
| (5) | |
| - | | | - | | | - | | | - | | | 3,818 | | | - | | | 3,818 |
Gulf Publishing Holdings, LLC |
| (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt |
| (8) | |
| - | | | - | | | 2 | | | 63 | | | 1 | | | - | | | 64 |
|
| (6.25% Cash, 6.25% PIK) Secured Debt |
| (8) | |
| - | | | 5 | | | 125 | | | 2,988 | | | 60 | | | - | | | 3,048 |
Hawk Ridge Systems, LLC |
| 10.00% Secured Debt |
| (9) | |
| - | | | - | | | 7 | | | - | | | - | | | - | | | - |
|
| 10.00% Secured Debt |
| (9) | |
| - | | | (4) | | | 98 | | | 3,350 | | | 4 | | | 4 | | | 3,350 |
|
| Preferred Member Units |
| (9) | |
| - | | | 321 | | | 77 | | | 2,008 | | | 322 | | | - | | | 2,330 |
|
| Preferred Member Units |
| (9) | |
| - | | | 15 | | | - | | | 105 | | | 15 | | | - | | | 120 |
HPEP 3, L.P. |
| LP Interests (HPEP 3, L.P.) |
| (8) | |
| - | | | - | | | - | | | 3,258 | | | 374 | | | - | | | 3,632 |
J&J Services, Inc. |
| 11.50% Secured Debt |
| (7) | |
| - | | | (2) | | | 102 | | | 3,200 | | | 2 | | | 2 | | | 3,200 |
|
| Preferred Stock |
| (7) | |
| - | | | - | | | - | | | 3,170 | | | - | | | - | | | 3,170 |
65
Kickhaefer Manufacturing Company, LLC |
| Member Units |
| (5) | |
| - | | | - | | | 4 | | | 3,060 | | | - | | | - | | | 3,060 |
|
| 11.50% Secured Debt |
| (5) | |
| - | | | - | | | 178 | | | 5,500 | | | 5,375 | | | 5,367 | | | 5,508 |
|
| 9.00% Secured Debt |
| (5) | |
| - | | | - | | | 21 | | | 978 | | | - | | | 2 | | | 976 |
|
| Member Units |
| (5) | |
| - | | | - | | | - | | | 290 | | | - | | | - | | | 290 |
|
| PIK Secured Debt |
| (9) | |
| - | | | (74) | | | - | | | 3,391 | | | - | | | 74 | | | 3,317 |
MH Corbin Holding LLC |
| (10.00% Cash, 3.00% PIK) Secured Debt |
| (5) | |
| - | | | - | | | 74 | | | 2,070 | | | 2 | | | 20 | | | 2,052 |
|
| Preferred Member Units |
| (5) | |
| - | | | (290) | | | - | | | 590 | | | - | | | 290 | | | 300 |
Mystic Logistics Holdings, LLC |
| 12.00% Secured Debt |
| (6) | |
| - | | | - | | | 52 | | | 1,682 | | | 248 | | | 248 | | | 1,682 |
|
| Common Stock |
| (6) | |
| - | | | (428) | | | 51 | | | 2,248 | | | - | | | 428 | | | 1,820 |
NexRev LLC |
| Preferred Member Units |
| (8) | |
| - | | | 450 | | | 5 | | | 370 | | | 450 | | | - | | | 820 |
|
| 11.00% Secured Debt |
| (8) | |
| - | | | 46 | | | 125 | | | 4,177 | | | 248 | | | 252 | | | 4,173 |
NuStep, LLC |
| Preferred Member Units |
| (5) | |
| - | | | 150 | | | - | | | 2,700 | | | 150 | | | - | | | 2,850 |
|
| 12.00% Secured Debt |
| (5) | |
| - | | | - | | | 153 | | | 4,288 | | | 5 | | | - | | | 4,293 |
SI East, LLC (Stavig) |
| 9.50% Secured Debt |
| (7) | |
| - | | | (19) | | | 288 | | | 10,987 | | | 20 | | | 1,269 | | | 9,738 |
Tedder Industries, LLC |
| 12.00% Secured Debt |
| (9) | |
| - | | | - | | | 138 | | | 4,025 | | | 13 | | | 400 | | | 3,638 |
|
| Preferred Member Units |
| (9) | |
| - | | | - | | | - | | | 2,034 | | | - | | | - | | | 2,034 |
|
| 12.00% Secured Debt |
| (9) | |
| - | | | - | | | 1 | | | - | | | - | | | - | | | - |
Trantech Radiator Topco, LLC |
| Common Stock |
| (7) | |
| - | | | (90) | | | 7 | | | 1,510 | | | - | | | 90 | | | 1,420 |
|
| 12.00% Secured Debt |
| (7) | |
| - | | | (8) | | | 71 | | | 2,131 | | | 3 | | | 8 | | | 2,126 |
|
| Preferred Member Units |
| (7) | |
| - | | | 130 | | | - | | | 3,260 | | | 130 | | | - | | | 3,390 |
Other | | | | | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Total Affiliate investments | | | | | | $ | - | | $ | 1,003 | | $ | 3,650 | | $ | 157,690 | | $ | 26,140 | | $ | 10,075 | | $ | 170,959 |
| (1) | The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments. |
| (2) | Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred to or from other 1940 Act classifications during the period.” |
| (3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. |
| (4) | Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
| (5) | Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $67,766. This represented 11.6% of net assets as of March 31, 2021. |
| (6) | Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $11,565. This represented 2.0% of net assets as of March 31, 2021. |
| (7) | Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $23,043. This represented 3.9% of net assets as of March 31, 2021. |
| (8) | Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for control investments located in this region was $33,066. This represented 5.7% of net assets as of March 31, 2021. The fair value as of March 31, 2021 for affiliate investments located in this region was $40,310. This represented 6.9% of net assets as of March 31, 2021. |
66
| (9) | Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for control investments located in this region was $710. This represented 0.1% of net assets as of March 31, 2021. The fair value as of March 31, 2021 for affiliate investments located in this region was $28,274. This represented 4.8% of net assets as of March 31, 2021. |
| (10) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. |
| (11) | This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. |
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Schedule 12-14
MSC Income Fund, Inc.
Consolidated Schedule of Investments in and Advances to Affiliates
March 31, 2020
(dollars in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Amount of | | | | | | | | | | | | | |
| | | | | | | | | | | | Interest, | | | | | | | | | | | | | |
| | | | | | | | | | | | Fees or | | | | | | | ��� | | | | | | |
| | | | | | Amount of | | Amount of | | Dividends | | December 31, | | | | | | | | March 31, | |||||
| | | | | | Realized | | Unrealized | | Credited to | | 2019 | | Gross | | Gross | | 2020 | |||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) | | Fair Value | | Additions(3) | | Reductions(4) | | Fair Value | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
GRT Rubber Technologies LLC | | LIBOR Plus 7.00% | | (8) | | $ | - | | $ | (2) | | $ | 180 | | $ | 7,396 | | $ | 868 | | $ | 2 | | $ | 8,262 |
| | Member Units | | (8) | | | - | | | (996) | | | 331 | | - | 23,372 | | - | - | | - | 997 | | - | 22,375 |
Copper Trail Fund Investments | | LP Interests (CTMH, LP) | | (9) | | | - | | | - | | | 80 | | - | 872 | | - | - | | - | - | | - | 872 |
Harris Preston Fund Investments | | LP Interests (2717 MH, L.P.) | | (8) | | | - | | | - | | | - | | - | 3,156 | | - | - | | - | - | | - | 3,156 |
Other | | | | | | | | | | - | | | | | | | | | | | | | | | |
Amounts related to investments transferred to or from other 1940 Act classification during the period | | | | | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Total Control investments | | | | | | $ | - | | $ | (998) | | $ | 591 | | $ | 34,796 | | $ | 868 | | $ | 999 | | $ | 34,665 |
Affiliate Investments | | | | | | | | | | | | | | | | | | | | | | | | | |
AFG Capital Group, LLC | | 10.00% Secured Debt | | (8) | | $ | - | | $ | - | | $ | 5 | | $ | 209 | | $ | - | | $ | 21 | | $ | 188 |
| | Preferred Member Units | | (8) | | | - | | | (30) | | | - | | - | 1,295 | | - | - | | - | 30 | | - | 1,265 |
Analytical Systems Keco, LLC | | LIBOR Plus 10.00% (Floor 2.00%) | | (8) | | | - | | | - | | | 44 | | - | 1,266 | | - | 2 | | - | 17 | | - | 1,251 |
| | Preferred Member Units | | (8) | | | - | | | 215 | | | - | | - | 800 | | - | 215 | | - | - | | - | 1,015 |
| | Warrants | | (8) | | | - | | | 56 | | | - | | - | 79 | | - | 56 | | - | - | | - | 135 |
Brewer Crane Holdings, LLC | | LIBOR Plus 10.00% (Floor 1.00%) | | (9) | | | - | | | - | | | 68 | | - | 2,233 | | - | 2 | | - | 31 | | - | 2,204 |
| | Preferred Member Units | | (9) | | | - | | | - | | | 5 | | - | 1,070 | | - | - | | - | - | | - | 1,070 |
Centre Technologies Holdings, LLC | | LIBOR Plus 10.00% (Floor 2.00%) | | (8) | | | - | | | - | | | 94 | | - | 3,008 | | - | 3 | | - | 39 | | - | 2,972 |
| | Preferred Member Units | | (8) | | | - | | | - | | | 7 | | - | 1,460 | | - | - | | - | - | | - | 1,460 |
Chamberlin Holding LLC | | LIBOR Plus 10.00% (Floor 1.00%) | | (8) | | | - | | | (5) | | | 139 | | - | 4,443 | | - | 5 | | - | 5 | | - | 4,443 |
| | Member Units | | (8) | | | - | | | 28 | | | 46 | | - | 6,009 | | - | 28 | | - | - | | - | 6,037 |
| | Member Units | | (8) | | | - | | | (133) | | | 4 | | - | 363 | | - | - | | - | 133 | | - | 230 |
Charps, LLC | | 15.00% Secured Debt | | (5) | | | - | | | - | | | 19 | | - | 500 | | - | - | | - | - | | - | 500 |
| | Preferred Member Units | | (5) | | | - | | | 160 | | | 6 | | - | 1,730 | | - | 160 | | - | - | | - | 1,890 |
Clad-Rex Steel, LLC | | LIBOR Plus 9.50% (Floor 1.00%) | | (5) | | | - | | | 21 | | | 77 | | - | 2,696 | | - | 24 | | - | - | | - | 2,720 |
| | Member Units | | (5) | | | - | | | (255) | | | 18 | | - | 2,408 | | - | - | | - | 255 | | - | 2,153 |
| | 10% Secured Debt | | (5) | | | - | | | - | | | 7 | | - | 282 | | - | - | | - | 2 | | - | 280 |
| | Member Units | | (5) | | | - | | | - | | | - | | - | 115 | | - | - | | - | - | | - | 115 |
Cody Pools, Inc. | | LIBOR Plus 10.50% (Floor 1.75%) | | (8) | | | - | | | 4 | | | 37 | | - | - | | - | 4,005 | | - | 84 | | - | 3,921 |
| | Preferred Member Units | | (8) | | | - | | | - | | | - | | - | - | | - | 2,079 | | - | - | | - | 2,079 |
Copper Trail Fund Investments | | LP Interests (Copper Trail Energy Fund I, LP) | | (9) | | | - | | | (29) | | | 8 | | - | 1,643 | | - | - | | - | 184 | | - | 1,459 |
Direct Marketing Solutions, Inc. | | LIBOR Plus 11.00% (Floor 1.00%) | | (9) | | | - | | | (6) | | | 132 | | - | 3,929 | | - | 6 | | - | 65 | | - | 3,870 |
| | Preferred Stock | | (9) | | | - | | | (36) | | | - | | - | 5,051 | | - | - | | - | 36 | | - | 5,015 |
Digital Products Holdings LLC | | LIBOR Plus 10.00% (Floor 1.00%) | | (5) | | | - | | | (82) | | | 149 | | - | 4,611 | | - | 5 | | - | 165 | | - | 4,451 |
| | Preferred Member Units | | (5) | | | - | | | (700) | | | 13 | | - | 1,294 | | - | - | | - | 700 | | - | 594 |
| | LP Interests (Freeport First Lien Loan Fund III LP) | | (5) | | | - | | | (1,054) | | | 255 | | - | 9,696 | | - | 989 | | - | 1,054 | | - | 9,631 |
Gamber-Johnson Holdings, LLC | | LIBOR Plus 6.50% (Floor 2.00%) | | (5) | | | - | | | (6) | | | 105 | | - | 4,755 | | - | 6 | | - | 201 | | - | 4,560 |
| | Member Units | | (5) | | | - | | | (41) | | | 514 | | - | 13,352 | | - | - | | - | 41 | | - | 13,311 |
Guerdon Modular Holdings, Inc. | | 16.00% Secured Debt | | (9) | | | (2,792) | | | 3,117 | | | 30 | | - | - | | - | 3,147 | | - | 3,147 | | - | - |
| | LIBOR Plus 8.50% (Floor 1.00%) | | (9) | | | (252) | | | 252 | | | - | | - | - | | - | 253 | | - | 253 | | - | - |
| | Preferred Stock | | (9) | | | - | | | - | | | - | | - | - | | - | - | | - | - | | - | - |
| | Common Stock | | (9) | | | - | | | - | | | - | | - | - | | - | - | | - | - | | - | - |
Gulf Publishing Holdings, LLC | | LIBOR Plus 9.50% (Floor 1.00%) | | (8) | | | - | | | - | | | 2 | | - | 70 | | - | - | | - | 10 | | - | 60 |
| | 12.50% Secured Debt | | (8) | | | - | | | (38) | | | 103 | | - | 3,124 | | - | 4 | | - | 38 | | - | 3,090 |
| | Member Units | | (8) | | | - | | | (605) | | | - | | - | 605 | | - | - | | - | 605 | | - | - |
Harris Preston Fund Investments | | LP Interests (HPEP 3, L.P.) | | (8) | | | - | | | - | | | - | | - | 2,474 | | - | 345 | | - | - | | - | 2,819 |
Hawk Ridge Systems, LLC | | LIBOR Plus 6.00% (Floor 1.00%) | | (9) | | | - | | | - | | | - | | - | 148 | | - | 1 | | - | - | | - | 149 |
| | 11.00% Secured Debt | | (9) | | | - | | | (4) | | | 100 | | - | 3,350 | | - | 4 | | - | 4 | | - | 3,350 |
| | Preferred Member Units | | (9) | | | - | | | (145) | | | - | | - | 1,975 | | - | - | | - | 145 | | - | 1,830 |
| | Preferred Member Units | | (9) | | | - | | | (7) | | | - | | - | 105 | | - | - | | - | 7 | | - | 98 |
J&J Services, Inc. | | 11.50% Secured Debt | | (7) | | | - | | | - | | | 132 | | - | 4,315 | | - | 4 | | - | - | | - | 4,319 |
68
| | Preferred Stock | | (7) | | | - | | | - | | | - | | - | 1,790 | | - | - | | - | - | | - | 1,790 |
Kickhaefer Manufacturing Company, LLC | | 11.50% Secured Debt | | (5) | | | - | | | (5) | | | 191 | | - | 6,146 | | - | 151 | | - | 105 | | - | 6,192 |
| | Member Units | | (5) | | | - | | | - | | | 32 | | - | 290 | | - | - | | - | - | | - | 290 |
| | 9.00% Secured Debt | | (5) | | | - | | | - | | | - | | - | 977 | | - | 8 | | - | 2 | | - | 983 |
| | Member Units | | (5) | | | - | | | (199) | | | 5 | | - | 3,060 | | - | - | | - | 199 | | - | 2,861 |
Market Force Information, LLC | | 8% PIK Secured Debt | | (9) | | | - | | | (94) | | | 15 | | - | 674 | | - | - | | - | 94 | | - | 580 |
| | 12.00% PIK Secured Debt | | (9) | | | - | | | (1,295) | | | 182 | | - | 5,625 | | - | 94 | | - | 1,295 | | - | 4,424 |
| | Member Units | | (9) | | | - | | | (1,319) | | | - | | - | 1,319 | | - | - | | - | 1,319 | | - | - |
MH Corbin Holding LLC | | 13.00% Secured Debt | | (5) | | | - | | | (20) | | | 75 | | - | 2,213 | | - | 12 | | - | 40 | | - | 2,185 |
| | Preferred Member Units | | (5) | | | - | | | (100) | | | - | | - | 1,192 | | - | - | | - | 100 | | - | 1,092 |
| | Preferred Member Units | | (5) | | | - | | | (5) | | | - | | - | 5 | | - | - | | - | 5 | | - | - |
Mystic Logistics Holdings, LLC | | 12.00% Secured Debt | | (6) | | | - | | | (2) | | | 55 | | - | 1,561 | | - | 251 | | - | 76 | | - | 1,736 |
| | Common Stock | | (6) | | | - | | | 444 | | | - | | - | 2,103 | | - | 444 | | - | - | | - | 2,547 |
NexRev LLC | | 11.00% PIK Secured Debt | | (8) | | | - | | | (392) | | | 125 | | - | 4,331 | | - | 5 | | - | 447 | | - | 3,889 |
| | Preferred Member Units | | (8) | | | - | | | (1,577) | | | (24) | | - | 1,577 | | - | - | | - | 1,577 | | - | - |
NuStep, LLC | | 12.00% Secured Debt | | (5) | | | - | | | - | | | 156 | | - | 4,901 | | - | 7 | | - | 40 | | - | 4,868 |
| | Preferred Member Units | | (5) | | | - | | | - | | | - | | - | 2,550 | | - | - | | - | - | | - | 2,550 |
SI East, LLC | | 9.50% Current, Secured Debt | | (7) | | | - | | | (8) | | | 274 | | - | 10,988 | | - | 8 | | - | 8 | | - | 10,988 |
| | Preferred Member Units | | (7) | | | - | | | 150 | | | 119 | | - | 2,734 | | - | 150 | | - | - | | - | 2,884 |
Tedder Industries, LLC | | 12.00% Secured Debt | | (9) | | | - | | | - | | | 130 | | - | 4,066 | | - | 5 | | - | - | | - | 4,071 |
| | 12.00% Secured Debt | | (9) | | | - | | | - | | | 5 | | - | 158 | | - | - | | - | - | | - | 158 |
| | Preferred Member Units | | (9) | | | - | | | - | | | - | | - | 2,034 | | - | - | | - | - | | - | 2,034 |
Trantech Radiator Topco, LLC | | 12% Secured Debt | | (7) | | | - | | | (1) | | | 74 | | - | 2,237 | | - | 5 | | - | 81 | | - | 2,161 |
| | Common Stock | | (7) | | | - | | | 491 | | | 7 | | - | 1,164 | | - | 491 | | - | - | | - | 1,655 |
Other | | | | | | | | | | - | | | | | | | | | | | | | | | |
Amounts related to investments transferred to or from other 1940 Act classification during the period | | | | | | | - | | | - | | | - | | | - | | | - | | | - | | | - |
Total Affiliate investments | | | | | | $ | (3,044) | | $ | (3,254) | | $ | 3,540 | | $ | 154,158 | | $ | 12,974 | | $ | 12,660 | | $ | 154,472 |
| (1) | The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments. |
| (2) | Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred to or from other 1940 Act classifications during the period.” |
| (3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. |
| (4) | Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
| (5) | Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $61,226. This represented 12.0% of net assets as of March 31, 2020. |
| (6) | Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $4,283. This represented 0.8% of net assets as of March 31, 2020. |
| (7) | Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $23,797. This represented 4.7% of net assets as of March 31, 2020. |
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| (8) | Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for control investments located in this region was $33,793. This represented 6.6% of net assets as of March 31, 2020. The fair value as of March 31, 2020 for affiliate investments located in this region was $34,854. This represented 6.8% of net assets as of March 31, 2020. |
| (9) | Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for control investments located in this region was $872. This represented 0.2% of net assets as of March 31, 2020. The fair value as of March 31, 2020 for affiliate investments located in this region was $30,312. This represented 5.9% of net assets as of March 31, 2020. |
| (10) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. |
| (11) | This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. |
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be determined within 48 hoursmaterially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the repurchase date.
We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this Report. Except as required by the federal securities laws,Quarterly Report on Form 10-Q, and we assume no obligation to revise or update any such forward-looking statements, whether as a result of new information, future events or otherwise.
COVID-19 UPDATE
The COVID-19 pandemic, and the related effect on Form 8-K. The forward-looking statementsthe U.S. and projections containedglobal economies, has had, and threatens to continue to have, adverse consequences for our business and operating results, and the businesses and operating results of our portfolio companies. During the quarter ended March 31, 2021, MSC Adviser continued to work collectively with its personnel and portfolio companies to navigate the significant challenges created by the COVID-19 pandemic. MSC Adviser remains focused on ensuring the safety of its personnel and the employees of our portfolio companies, while also managing our ongoing business activities. In this regard, MSC Adviser remains heavily engaged with our portfolio companies. As discussed in this Report are excluded fromour public SEC filings, our investment income, principally our interest and dividend income, was negatively impacted by the safe harbor protection provided by Section 27Aeconomic effects of the Securities ActCOVID-19 pandemic in 2020. However, we maintain access to multiple sources of 1933, as amended,liquidity, including cash and Section 21Eunused capacity under our Credit Facilities. In February 2021 we entered into a $300 million senior secured revolving credit facility with JPM to replace the Deutsche Bank Credit Facility to improve our liquidity. As of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Neither our management, MSC Adviser nor our Board of Directors is able to predict the full impact of the Internal Revenue CodeCOVID-19 pandemic, including its duration and the magnitude of 1986, as amended (the “Code”).its economic and societal impact. As such, while we will continue to monitor the evolving situation and guidance from U.S. authorities, including federal, state and local public health authorities, we are unable to predict with any certainty the extent to which the outbreak will negatively affect our portfolio companies’ operating results and financial condition or the impact that such disruptions may have on our results of operations and financial condition in the future.
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OVERVIEW
Our primary investment objective is to generate current income through debt and equity investments. A secondary objective is to generate long-term capital appreciation through such equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities. Our portfolio strategy calls is to invest primarily in illiquid debt and equity securities issued by lower middle market (“LMM”) companies, which generally have annual revenues between $10 million and $150 million, and middle market (“Middle Market”) companies that are generally larger in size than the LMM companies and have annual revenues typically between $150 million and $1.5 billion. Our LMM and Middle Market companiesportfolio investments generally range in private placements and negotiated transactions, which are traded in private over-the-counter markets for institutional investors. We will also invest in, and a significant portion of our assets are invested in, customized direct secured and unsecured loanssize from $1 million to and equity securities of LMM companies, referred to as LMM securities. Typically, our investments in LMM companies require us to co-invest with Main Street Capital Corporation, a New York Stock Exchange listed BDC (“Main Street”), and/or its affiliates as a result of our sub-advisory relationship described below.$15 million. We categorize some of our investments in LMM companies and Middle Market companies as private loan (“Private Loan”) portfolio investments. Private Loan investments, often referred to in the debt markets as “club deals,” are investments, generally in debt instruments, that we originate on a collaborative basis with other investment funds. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our investment portfolio also includes other portfolio (“Other Portfolio”) investments primarily consisting of our investment in HMS-ORIX SLF LLC (“HMS-ORIX”) and investments managed by third parties, which may differ from the typical profiles for our other types of investments.
The level of new portfolio investment activity will fluctuatefluctuates from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to close onconsummate the identified transactions.opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long-term,long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.
Our LMM investments include customized direct secured and planunsecured loans to continueand equity securities of LMM companies. Companies that issue customized LMM securities to generate, investment income primarilyus are privately held at the time we invest in them. Our investments in LMM companies are co-investments with Main Street and/or its affiliates and, as a result, we obtained an exemptive order from the formSEC, as discussed below, to permit us to do so. While the structure of interest on theour investments in customized LMM securities is likely to vary, we may invest in senior secured debt, securities that we hold, dividendssenior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants and other distributions with respect to any equity interests that we holdinstruments, many of which generate current yields. We will make other investments as allowed by the 1940 Act and capital gains, if any, on our investments. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, and possibly consulting fees and performance-based fees. All such fees will be generated in connectionconsistent with our investments and recognizedcontinued qualification as earned or as additional yield over the lifea RIC. For a discussion of the debt investment. To daterisks inherent in our investment income has been interest income on debtportfolio investments, accretion of original issue discounts, dividend income, amortization of premiums and fees received from transactions and net realized/unrealized appreciation (depreciation).
Our investments may include other equity investments, such as warrants, options to buy a minority interest in Management’s Discussiona portfolio company, or contractual payment rights or rights to receive a proportional interest in the operating cash flow or net income of such company. When determined by MSC Adviser to be in our best interest, we, in conjunction with other investment funds managed by or affiliated with MSC Adviser, may acquire a controlling interest in a portfolio company. Any warrants we receive with our debt securities may require only a nominal cost to exercise, and Analysis of Financial Condition and Results of Operations. There have been no changesthus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We intend to structure such warrants to include provisions protecting our critical accounting policies during 2017, exceptrights as a minority-interest or, if applicable, controlling-interest holder, as well as puts, or rights to sell such securities back to the extent described below.company upon the occurrence of specified events. In addition, we may obtain demand or “piggyback” registration rights in connection with these equity interests.
We plan to hold many of our investments to maturity or repayment but may sell our investments earlier if a liquidity event takes place, such as the sale or recapitalization of a portfolio company, or if we determine the sale to be in our best interest.
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As a BDC, we are subject to certain regulatory restrictions in making our investments, including limitations on our ability to co-invest with certain affiliates. In April 2014, we received an exemptive order from the SEC permitting co-investments by us and Consolidation
In addition to the co-investment program described in this Form 10-Q and in the SEC’s order for co-investment exemptive relief, we may continue to co-invest in syndicated deals and secondary loan market transactions where only price is negotiated by MSC Adviser and its affiliates.
See “Note C.2 – Investment Portfolio Composition” in the notes to consolidated financial statements for a summary of Americathe Company’s investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2021 and December 31, 2020.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations.
Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the accountsInvestment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater detail in Note B to the consolidated financial statements included in “Item 1.– Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.
Investment Portfolio Valuation
The most significant determination inherent in the preparation of our wholly-owned consolidated subsidiaries. All intercompany accountsfinancial statements is the valuation of our Investment Portfolio and transactionsthe related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of March 31, 2021 and December 31, 2020, our Investment Portfolio valued at fair value represented approximately 95% and 93% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See “Note B.1.—Valuation of the Investment Portfolio” in
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the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.
Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been eliminateddetermined had a ready market for the securities existed. In addition, changes in consolidation. Underthe market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.
Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of March 31, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.
The SEC recently adopted new Rule 2a-5 under the 1940 Act, rules, regulations pursuant to Articles 6 and 10 of Regulation S-X and Topic 946-Financial Services-Investment Companies which establishes requirements for determining fair value in good faith for purposes of the Accounting Standards Codification, as amended (the “ASC”),1940 Act. The rule permits boards to designate the determination of fair value to a fund’s executive officers or investment adviser, subject to the active oversight of the Financial Accounting Standards Board (“FASB”), weboard. We will comply with the new rule’s valuation requirements on or before the SEC’s required compliance date in 2022.
Revenue Recognition
Interest and Dividend Income
We record interest and dividend income on the accrual basis to the extent amounts are precluded from consolidating portfolio company investments, including those in which we have a controlling interest, unlessexpected to be collected. Dividend income is recorded as dividends are declared by the portfolio company isor at the point an obligation exists for the portfolio company to make a wholly-owned investment company. An exception to this general principle occursdistribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we own a controlled operating company whose purpose isotherwise do not expect the debtor to provide servicesbe able to us such as an investment adviserservice all of its debt or transfer agent. None of our investments qualifies for this exception. Therefore, our portfolio company investments, including those in whichother obligations, we have a controllingwill generally place the loan or debt security on non-accrual status and cease recognizing interest are carriedincome on the Consolidated Balance Sheet at fair value with changes to fair value recognized as “Net Unrealized Appreciation (Depreciation)” on the Consolidated Statements of Operationsthat loan or debt security until the investmentborrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt or other obligations, or if a loan or debt security is realized, usually
Payment-in-Kind (“PIK”) Interest and Cumulative Dividends
We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any gaindividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or loss on exit being recognized as a realized gain or loss. However,sold. To maintain RIC tax treatment (as discussed in the event that any controlled subsidiary exceeds the tests“Income Taxes” within “Note B. Summary of significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, we will include required financial information for such subsidiarySignificant Accounting Policies” in the notes or as an attachment to our condensedthe consolidated financial statements.
INVESTMENT PORTFOLIO INVESTMENT COMPOSITION
Our Middle MarketLMM portfolio investments primarily consist of secured debt, equity warrants and direct or secondary purchasesequity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally
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have annual revenues between $10 million and $150 million, and our LMM investments generally largerrange in size than thefrom $1 million to $15 million. The LMM companies included in our LMM portfolio. While our Middle Market debt investments are generallytypically secured by either a first priority lien, 16.8% of the fair value of our Middle Market portfolio is secured byor second priority liens.
Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the rightUnited States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $1 million to acquire an equity position through warrants.
Our Private Loan equityportfolio investments represent an equity positionare primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the right to acquire an equity position through warrants.
Our Other Portfolio investments primarily consist of our investment in HMS-ORIX (discussed in more detail below) and investments managed by third parties, which differ fromare not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments.investments, including investments which may be managed by third parties. In the Other Portfolio, investments, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.
The result of these transactions further diversified our geographic and industry concentrations and based upon our investment rating system, which is described further below, the weighted average rating of our LMM was approximately 2.7 and 2.6 as of September 30, 2017 and December 31, 2016, respectively. Lastly, the overall weighted average effective yield on our investment portfolio decreased from 8.9% as of December 31, 2016 to 8.5% as of September 30, 2017.
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| | | |
| | | | | |
Cost: |
| March 31, 2021 |
| December 31, 2020 | |
First lien debt |
| 82.5 | % | 79.5 | % |
Equity |
| 13.7 | % | 13.9 | % |
Second lien debt |
| 1.9 | % | 4.6 | % |
Equity warrants |
| 0.2 | % | 0.2 | % |
Other |
| 1.7 | % | 1.8 | % |
|
| 100.0 | % | 100.0 | % |
| September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
| Cost: | LMM | Private Loan | Middle Market | Total | LMM | Private Loan | Middle Market | Total | |||||||||||||||
| First Lien Secured Debt | 67.9 | % | 92.5 | % | 82.8 | % | 83.8 | % | 67.9 | % | 92.0 | % | 81.5 | % | 82.3 | % | |||||||
| Second Lien Secured Debt | 3.1 | 1.5 | 16.3 | 10.3 | 3.5 | 0.7 | 16.9 | 11.9 | |||||||||||||||
| Unsecured Debt | — | 3.3 | 0.1 | 1.0 | — | 4.9 | 0.9 | 1.6 | |||||||||||||||
| Equity | 27.9 | 2.5 | 0.8 | 4.7 | 26.9 | 2.0 | 0.7 | 3.9 | |||||||||||||||
| Equity warrants | 1.1 | 0.2 | — | 0.2 | 1.7 | 0.4 | — | 0.3 | |||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||
| | | | | |
Fair Value: |
| March 31, 2021 |
| December 31, 2020 | |
First lien debt |
| 79.1 | % | 76.0 | % |
Equity |
| 17.1 | % | 17.3 | % |
Second lien debt |
| 1.9 | % | 4.6 | % |
Equity warrants |
| 0.2 | % | 0.3 | % |
Other |
| 1.7 | % | 1.8 | % |
|
| 100.0 | % | 100.0 | % |
| September 30, 2017 | December 31, 2016 | ||||||||||||||||||||||
| Fair Value: | LMM | Private Loan | Middle Market | Total | LMM | Private Loan | Middle Market | Total | |||||||||||||||
| First Lien Secured Debt | 63.8 | % | 92.5 | % | 82.4 | % | 82.9 | % | 64.3 | % | 91.5 | % | 81.3 | % | 81.5 | % | |||||||
| Second Lien Secured Debt | 3.0 | 1.5 | 16.8 | 10.4 | 3.3 | 0.7 | 17.0 | 11.8 | |||||||||||||||
| Unsecured Debt | — | 3.4 | 0.1 | 1.1 | — | 4.9 | 0.9 | 1.7 | |||||||||||||||
| Equity | 32.2 | 2.4 | 0.7 | 5.4 | 30.7 | 2.1 | 0.8 | 4.6 | |||||||||||||||
| Equity warrants | 1.0 | 0.2 | — | 0.2 | 1.7 | 0.8 | — | 0.4 | |||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||
Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment-grade debt and equity investments in our Investment Portfolio. Please see “Item 1A. Risk Factors—Risks Related to Our Investments” contained in our Annual Report on Form 10-K for the tables showing our total investment portfolio composition by geographic region and by industry, see Note 3 -
| As of September 30, 2017 | |||
Total debt investments (1) | $ | 139,700 | |
Weighted average effective yield on loans(2) | 4.82 | % | |
Largest loan to a single borrower(1) | $ | 3,505 | |
Total of 10 largest loans to borrowers(1) | $ | 31,212 | |
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| Acosta, Inc. | Commercial Services and Supplies | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - September 26, 2021) | $ | 2,000 | $ | 1,873 | $ | 1,778 | |||
| Acrisure, LLC | Insurance | LIBOR (1 month) + 5.00%, Current Coupon 6.27%, Secured Debt (Maturity - November 22, 2023) | 1,990 | 1,997 | 2,017 | ||||||
| Advantage Sales & Marketing Inc. | Commercial Services and Supplies | LIBOR (1 month) + 3.25%, Current Coupon 4.56%, Secured Debt (Maturity - July 23, 2021) | 1,995 | 1,939 | 1,882 | ||||||
| Air Medical Group Holdings Inc | Health Care Providers & Services | LIBOR (6 months) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - April 28, 2022) | 1,995 | 1,985 | 1,996 | ||||||
| Albany Molecular Research, Inc. | Life Sciences Tools and Services | LIBOR (1 month) + 3.25%, Current Coupon 4.58%, Secured Debt (Maturity - August 28, 2024) | 100 | 100 | 100 | ||||||
| Alphabet Holding Company, Inc. | Food Products | LIBOR (3 months) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - September 26, 2024) | 2,000 | 1,990 | 1,980 | ||||||
| American Seafoods Group LLC | Food Products | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 21, 2023) | 1,500 | 1,493 | 1,510 | ||||||
| Ancestry.com Operations Inc. | Internet Software & Services | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - October 19, 2023) | 2,000 | 2,019 | 2,017 | ||||||
| Arch Coal, Inc. | Metals & Mining | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - March 7, 2024) | 1,990 | 1,997 | 2,002 | ||||||
| AshCo, Inc. | Specialty Retail | LIBOR (3 months) + 5.00%, Current Coupon 6.30%, Secured Debt (Maturity - December 15, 2023) | 2,000 | 1,955 | 1,889 | ||||||
| Asurion, LLC | Insurance | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - November 3, 2023) | 1,316 | 1,316 | 1,323 | ||||||
| Atkore International, Inc. | Electric Equipment, Instruments & Components | LIBOR (3 months) + 3.00%, Current Coupon 4.34%, Secured Debt (Maturity - December 22, 2023) | 2,985 | 3,014 | 3,006 | ||||||
| Avantor Performance Materials Holdings, Inc. | Biotechnology | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - March 8, 2024) | 2,985 | 3,021 | 2,998 | ||||||
| BCP Renaissance | Oil, Gas and Consumable Fuels | LIBOR (3 months) + 4.00%, Current Coupon 5.32%, Secured Debt (Maturity - September 19, 2024) | 600 | 602 | 607 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| BMC Software Finance, Inc. | Software | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - September 12, 2022) | $ | 2,972 | $ | 2,996 | $ | 2,992 | |||
| Builders FirstSource, Inc. | Building Products | LIBOR (1 month) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - February 29, 2024) | 2,985 | 2,981 | 2,998 | ||||||
| Calpine Corporation | Independent Power & Renewable Elec. Producers | LIBOR (3 months) + 2.75%, Current Coupon 4.09%, Secured Debt (Maturity - January 15, 2023) | 1,995 | 2,002 | 1,994 | ||||||
| CHS/Community Health Systems, Inc. | Health Care Providers & Services | LIBOR (3 months) + 3.00%, Current Coupon 4.32%, Secured Debt (Maturity - January 27, 2021) | 1,646 | 1,640 | 1,638 | ||||||
| Clubcorp Club Operations, Inc. | Real Estate Management and Development | LIBOR (3 months) + 3.25%, Current Coupon 4.59%, Secured Debt (Maturity - August 16, 2024) | 2,000 | 1,990 | 1,991 | ||||||
| Colorado Buyer Inc | Technology Hardware, Storage & Peripherals | LIBOR (3 months) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - May 1, 2024) | 2,993 | 3,003 | 3,011 | ||||||
| Confie Seguros Holding II Co. | Insurance | LIBOR (1 month) + 5.50%, Current Coupon 6.74%, Secured Debt (Maturity - April 19, 2022) | 1,990 | 1,997 | 1,965 | ||||||
| CPI International, Inc. | Aerospace & Defense | LIBOR (1 month) + 3.50%, Current Coupon 4.74%, Secured Debt (Maturity - July 26, 2024) | 2,000 | 2,000 | 2,003 | ||||||
| Diamond Resorts International, Inc. | Hotels, Restaurants & Leisure | LIBOR (1 month) + 6.00%, Current Coupon 7.24%, Secured Debt (Maturity - September 1, 2023) | 1,990 | 2,019 | 2,004 | ||||||
| Duff & Phelps Corporation | Diversified Financial Services | LIBOR (3 months) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - April 23, 2020) | 1,990 | 2,003 | 1,996 | ||||||
| EFS Cogen Holdings I LLC | Electric Utilities | LIBOR (3 months) + 3.50%, Current Coupon 4.84%, Secured Debt (Maturity - June 28, 2023) | 1,929 | 1,942 | 1,955 | ||||||
| Endo Luxembourg Finance Company I S.a.r.l. | Pharmaceuticals | LIBOR (1 month) + 4.25%, Current Coupon 5.50%, Secured Debt (Maturity - April 29, 2024) | 1,995 | 2,014 | 2,017 | ||||||
| Envision Healthcare Corporation | Health Care Providers & Services | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - December 1, 2023) | 2,487 | 2,488 | 2,499 | ||||||
| Everi Payments Inc. | Leisure Products | LIBOR (3 months) + 4.50%, Current Coupon 5.74%, Secured Debt (Maturity - May 9, 2024) | 1,995 | 1,988 | 2,015 | ||||||
| First American Payment Systems, L.P. | Diversified Financial Services | LIBOR (1 month) + 5.75%, Current Coupon 6.98%, Secured Debt (Maturity - January 5, 2024) | 961 | 972 | 963 | ||||||
| Fitness International, LLC | Hotels, Restaurants & Leisure | Prime + 3.25%, Current Coupon 7.50%, Secured Debt (Maturity - July 1, 2020) | 2,000 | 2,027 | 2,013 | ||||||
| Flex Acquisition Company Inc | Containers and Packaging | LIBOR (3 months) + 3.00%, Current Coupon 4.30%, Secured Debt (Maturity - December 29, 2023) | 2,000 | 2,010 | 2,007 | ||||||
| Flexera Software LLC | Software | LIBOR (1 month) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - April 2, 2020) | 1,995 | 2,015 | 2,008 | ||||||
| Gardner Denver, Inc. | Machinery | LIBOR (1 month) + 2.75%, Current Coupon 4.08%, Secured Debt (Maturity - July 30, 2024) | 2,000 | 2,010 | 2,005 | ||||||
| Golden Nugget, Inc. | Hotels, Restaurants & Leisure | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - October 4, 2023) | 1,995 | 1,995 | 2,007 | ||||||
| Greatbatch Ltd. | Health Care Equipment & Supplies | LIBOR (2 months) + 3.50%, Current Coupon 4.74%, Secured Debt (Maturity - October 27, 2022) | 2,794 | 2,811 | 2,814 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| GYP Holdings III Corp. | Trading Companies & Distributors | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - March 31, 2023) | $ | 3,491 | $ | 3,516 | $ | 3,521 | |||
| Harbor Freight Tools USA, Inc. | Specialty Retail | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 18, 2023) | 1,980 | 1,987 | 1,990 | ||||||
| HD Supply Waterworks, Ltd. | Trading Companies & Distributors | LIBOR (3 months) + 3.00%, Current Coupon 4.46%, Secured Debt (Maturity - August 1, 2024) | 140 | 140 | 140 | ||||||
| Horizon Pharma, Inc. | Pharmaceuticals | LIBOR (1 month) + 3.75%, Current Coupon 5.00%, Secured Debt (Maturity - March 29, 2024) | 1,995 | 2,014 | 2,016 | ||||||
| IG Investments Holdings, LLC | Professional Services | LIBOR (1 month) + 4.00%, Current Coupon 5.33%, Secured Debt (Maturity - October 31, 2021) | 1,990 | 2,001 | 2,012 | ||||||
| Jackson Hewitt Tax Service Inc. | Diversified Consumer Services | LIBOR (1 month) + 7.00%, Current Coupon 8.31%, Secured Debt (Maturity - July 30, 2020) | 1,939 | 1,861 | 1,876 | ||||||
| KC MergerSub, Inc. | Diversified Consumer Services | LIBOR (1 month) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - August 12, 2022) | 2,489 | 2,495 | 2,486 | ||||||
| KMG Chemicals, Inc. | Chemicals | LIBOR (1 month) + 4.25%, Current Coupon 5.49%, Secured Debt (Maturity - June 13, 2024) | 1,304 | 1,299 | 1,326 | ||||||
| LANDesk Group, Inc. | Software | LIBOR (1 month) + 4.25%, Current Coupon 5.49%, Secured Debt (Maturity - January 22, 2024) | 995 | 1,001 | 972 | ||||||
| Learfield Communications LLC | Media | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - December 1, 2023) | 1,995 | 2,015 | 2,009 | ||||||
| LTS Buyer LLC | Diversified Telecommunication Services | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - April 13, 2020) | 2,984 | 3,008 | 2,994 | ||||||
| MA FinanceCo., LLC | Electronic Equipment, Instruments and Components | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - June 21, 2024) | 387 | 387 | 388 | ||||||
| Mohegan Tribal Gaming Authority | Hotels, Restaurants & Leisure | LIBOR (1 month) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - October 13, 2023) | 1,990 | 2,009 | 2,013 | ||||||
| MPH Acquisition Holdings LLC | Health Care Technology | LIBOR (3 months) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - June 7, 2023) | 2,991 | 3,033 | 3,018 | ||||||
| NAB Holdings, LLC | IT Services | LIBOR (3 months) + 3.50%, Current Coupon 4.83%, Secured Debt (Maturity - June 14, 2024) | 1,995 | 1,985 | 2,009 | ||||||
| Ortho-Clinical Diagnostics, Inc | Life Sciences Tools and Services | LIBOR (1 month) + 3.75%, Current Coupon 5.08%, Secured Debt (Maturity - June 30, 2021) | 1,990 | 1,985 | 1,999 | ||||||
| QUIKRETE Holdings, Inc. | Construction Materials | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - November 15, 2023) | 2,985 | 2,985 | 2,988 | ||||||
| Rackspace Hosting, Inc. | Electric Equipment, Instruments & Components | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - November 3, 2023) | 3,292 | 3,318 | 3,291 | ||||||
| Scientific Games International, Inc. | Leisure Products | LIBOR (1 month) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 14, 2024) | 400 | 402 | 401 | ||||||
| Seattle Spin Co. | Electronic Equipment, Instruments and Components | LIBOR (3 months) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - June 21, 2024) | 2,613 | 2,616 | 2,622 | ||||||
| SeaWorld Parks & Entertainment, Inc. | Hotels, Restaurants & Leisure | LIBOR (3 months) + 3.00%, Current Coupon 4.33%, Secured Debt (Maturity - April 1, 2024) | 1,990 | 1,992 | 1,933 | ||||||
| HMS-ORIX | |||||||||||
| Loan Portfolio | |||||||||||
| As of September 30, 2017 | |||||||||||
| (dollars in thousands) | |||||||||||
| Portfolio Company | Industry | Type of Investment | Principal | Cost | Fair Value | ||||||
| Signode Industrial Group US Inc. | Machinery | LIBOR (1 month) + 2.75%, Current Coupon 3.99%, Secured Debt (Maturity - April 30, 2021) | $ | 2,840 | $ | 2,861 | $ | 2,855 | |||
| Staples, Inc. | Distributors | LIBOR (3 month) + 4.00%, Current Coupon 5.31%, Secured Debt (Maturity - August 15, 2024) | 2,000 | 1,995 | 1,993 | ||||||
| Telenet Financing USD LLC | Diversified Telecommunication Services | LIBOR (1 month) + 2.75%, Current Coupon 3.98%, Secured Debt (Maturity - June 30, 2025) | 3,000 | 3,013 | 3,012 | ||||||
| Transdigm, Inc. | Aerospace & Defense | LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - June 9, 2023) | 1,990 | 1,997 | 1,997 | ||||||
| LIBOR (1 month) + 3.00%, Current Coupon 4.24%, Secured Debt (Maturity - August 22, 2024) | 1,003 | 1,000 | 1,005 | ||||||||
| 2,997 | 3,002 | ||||||||||
| Travelport Finance (Luxembourg) S.A.R.L. | Internet Software & Services | LIBOR (3 months) + 2.75%, Current Coupon 4.06%, Secured Debt (Maturity - September 2, 2021) | 1,951 | 1,951 | 1,951 | ||||||
| Traverse Midstream Partners LLC | Oil, Gas and Consumable Fuels | LIBOR (3 months) + 4.00%, Current Coupon 5.33%, Secured Debt (Maturity - September 30, 2024) | 781 | 784 | 792 | ||||||
| UFC Holdings, LLC | Media | LIBOR (3 months) + 3.25%, Current Coupon 4.49%, Secured Debt (Maturity - August 18, 2023) | 1,990 | 2,002 | 2,001 | ||||||
| Ultra Resources, Inc. | Oil, Gas and Consumable Fuels | LIBOR (1 month) + 3.00%, Current Coupon 4.31%, Secured Debt (Maturity - April 12, 2024) | 2,000 | 2,002 | 2,001 | ||||||
| Valeant Pharmaceuticals International, Inc. | Pharmaceuticals | LIBOR (1 month) + 4.75%, Current Coupon 5.99%, Secured Debt (Maturity - April 1, 2022) | 2,547 | 2,559 | 2,596 | ||||||
| Vertiv Group Corporation | Electrical Equipment | LIBOR (3 months) + 4.00%, Current Coupon 5.24%, Secured Debt (Maturity - November 30, 2023) | 2,000 | 2,019 | 2,018 | ||||||
| Vistra Operations Company LLC | Electric Utilities | LIBOR (2 months) + 2.75%, Current Coupon 3.98%, Secured Debt (Maturity - December 14, 2023) | 1,990 | 2,002 | 1,999 | ||||||
| WideOpenWest Finance, LLC | Diversified Telecommunication Services | LIBOR (1 month) + 3.25%, Current Coupon 4.48%, Secured Debt (Maturity - August 18, 2023) | 3,505 | 3,516 | 3,504 | ||||||
| Total Loan Portfolio | $ | 139,954 | $ | 139,728 | |||||||
| As of | |||
| Balance Sheet Data | September 30, 2017 | ||
| Assets | |||
| Portfolio investments at fair value | $ | 139,728 | |
| Cash and cash equivalents | 5,470 | ||
| Deferred financing costs | 989 | ||
| Other assets | 230 | ||
| Total assets | $ | 146,417 | |
| Liabilities | |||
| Debt | $ | 90,000 | |
| Payable for securities purchased | 5,371 | ||
| Accounts payable and accrued expenses | 186 | ||
| Total liabilities | 95,557 | ||
| Net assets | 50,860 | ||
| Total liabilities and net assets | $ | 146,417 | |
| Period from inception (April 4, 2017) to September 30, 2017 | |||
| Selected Statement of Operations Information | |||
| Interest income | $ | 2,048 | |
| Dividend income | — | ||
| Total income | 2,048 | ||
| Interest expense | 866 | ||
| Other expenses | 79 | ||
| Total expenses | 945 | ||
| Net investment income | 1,103 | ||
| Unrealized (depreciation) on investments | (226 | ) | |
| Realized (losses) from investments | (17 | ) | |
| Net increase in net assets | $ | 860 | |
PORTFOLIO ASSET QUALITY
We utilize aan internally developed investment rating system developed by our Sub-Adviser to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, and the portfolio company’s future outlook.
As of March 31, 2021, our total Investment Rating 1 represents a LMM portfolio company that is performing in a mannerPortfolio had two investments on non-accrual status, which significantly exceeds expectations.
The following table shows the distributionoperating results of our LMM portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, as it did due to the impact of COVID-19, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the 1 to 5 investment rating scale at fair value asperformance of September 30, 2017 and December 31, 2016 (dollars in thousands):certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.
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| September 30, 2017 | December 31, 2016 | |||||||||||||
| Investment Rating | Investments at Fair Value | Percentage of Total LMM Portfolio | Investments at Fair Value | Percentage of Total LMM Portfolio | ||||||||||
| 1 | $ | 2,600 | 1.9 | % | $ | 1,541 | 1.3 | % | ||||||
| 2 | 44,611 | 32.1 | 56,244 | 48.5 | ||||||||||
| 3 | 84,268 | 60.6 | 50,764 | 43.7 | ||||||||||
| 4 | 5,803 | 4.2 | 7,511 | 6.5 | ||||||||||
| 5 | 1,661 | 1.2 | — | — | ||||||||||
| Total | $ | 138,943 | 100.0 | % | $ | 116,060 | 100.0 | % | ||||||
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Comparison of the three months ended September 30, 2017March 31, 2021 and 2016, our totalMarch 31, 2020
| | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| ||||
| | March 31, | | Net Change | ||||||||
|
| 2021 |
| 2020 |
| Amount |
| % | ||||
| | (dollars in thousands) | ||||||||||
| | | | | | | | | | | | |
Total investment income | | $ | 20,272 | | $ | 24,000 | | $ | (3,728) | | (16) | % |
Total expenses (net of fee and expense waivers) | | | 8,330 | | | 11,466 | | | (3,136) | | (27) | % |
Net investment income | | | 11,942 | | | 12,534 | | | (592) | | (5) | % |
Net realized loss from investments | | | (4,082) | | | (3,365) | | | (717) | | NM | |
Net unrealized appreciation (depreciation) from investments | | | 5,193 | | | (94,909) | | | 100,102 | | NM | |
Income tax benefit (provision) | | | (396) | | | (76) | | | (320) | | NM | |
Net increase (decrease) in net assets resulting from operations | | $ | 12,657 | | $ | (85,816) | | $ | 98,473 | | NM | |
NM | Not Meaningful |
Total Investment Income
Total investment income was approximately $25.3 million and $22.2 million, respectively, consisting predominately of interest income. As of September 30, 2017, the portfolio had a weighted
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | |
| | ||||
| | March 31, | | Net Change | | ||||||||
|
| 2021 |
| 2020 |
| Amount |
| % | | ||||
| | (dollars in thousands) | | ||||||||||
Interest income | | $ | 16,080 | | $ | 21,785 | | $ | (5,705) | | (26) | % | (a) |
Dividend income | |
| 3,952 | | | 1,640 | | | 2,312 | | 141 | % | (b) |
Fee income | | | 240 | | | 575 | | | (335) | | (58) | % | |
Total investment income | | $ | 20,272 | | $ | 24,000 | | $ | (3,728) | | (16) | % | |
| (a) | The decrease in interest income was primarily due to lower floating interest rates on investment portfolio debt investments based upon the decline in the LIBOR and the reduction in our total portfolio debt investments. |
| (b) | The increase in dividend income from equity investments is primarily a result of improved operating results, financial condition and liquidity positions of certain of our portfolio companies. |
77
Expenses
Total expenses, net of fee and expense waivers, for the three months ended March 31, 2021 were $8.3 million, an 27% decrease from the $11.5 million in the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.
| | | | | | | | | | | | | |
| | Three Months Ended | | | | | | | | ||||
| | March 31, | | Net Change | | ||||||||
| | 2021 | | 2020 | | Amount | | % | | ||||
| | | (dollars in thousands) | | | ||||||||
Interest expense | | $ | 3,164 | | $ | 5,229 | | $ | (2,065) | | (39) | % | (a) |
Base management and incentive fees | | | 3,903 | | | 4,994 | | | (1,091) | | (22) | % | (b) |
Internal administrative services fees | | | 1,055 | | | 784 | | | 271 | | 35 | % | |
Offering costs | | | - | | | 88 | | | (88) | | (100) | % | |
Professional fees | | | 558 | | | 710 | | | (152) | | (21) | % | |
Insurance | | | 114 | | | 103 | | | 11 | | 11 | % | |
Board of director fees | | | 108 | | | 102 | | | 6 | | 6 | % | |
Other general and administrative | | | 483 | | | 240 | | | 243 | | 101 | % | |
Total expenses before fee and expense waivers | | | 9,385 | | | 12,250 | | | (2,865) | | (23) | % | |
Waiver of internal administrative services expenses | | | (1,055) | | | (784) | | | (271) | | 35 | % | |
Total expenses | | $ | 8,330 | | $ | 11,466 | | $ | (3,136) | | (27) | % | |
| (a) | The decrease in interest expense was primarily due to lower floating interest rates on our revolving lines of credit based upon the decline in LIBOR and lower amounts outstanding under our Credit Facilities. |
| (b) | The decrease in the base management fees relates to a decrease in the base management fee from 2.00% to 1.75% as the result Main Street becoming the sole investment manager to the Company and lower average gross assets subject to base management fees. |
Net Investment Income
Net investment income for the three months ended March 31, 2021 decreased 5% to $11.9 million, or $0.15 per share, compared to $931.5net investment income of $12.5 million, or $0.16 per share, for the corresponding period of 2020. The decrease in net investment income was principally attributable to the decrease in total investment income partially offset by the decrease in total expenses, both as discussed above.
Net Realized Gain (Loss) from Investments
The following table provides a summary of the primary components of the total net realized loss on investments of $2.0 million (excludes realized loss on extinguishment of debt of $2.1 million) for the three months ended March 31, 2021:
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2021 | |||||||||||||
| | Full Exits | | Restructures | | Total | |||||||||
| | Net Gain/(Loss) | | # of Investments | | Net Gain/(Loss) | | # of Investments | | Net Gain/(Loss) | | # of Investments | |||
| | (dollars in thousands) | |||||||||||||
LMM Portfolio | | $ | — | | — | | $ | (1,193) | | 1 | | $ | (1,193) | | 1 |
Middle Market Portfolio | | | (798) | | 1 | | | — | | — | | | (798) | | 1 |
Total Net Realized Gain/(Loss) | | $ | (798) | | 1 | | $ | (1,193) | | 1 | | $ | (1,991) | | 2 |
| | | | | | | | | | | | | | | |
78
Net Unrealized Appreciation (Depreciation)
The following table provides a summary of the total net unrealized appreciation of $5.2 million for the three months ended September 30, 2016. Additionally,March 31, 2021:
| | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2021 | |||||||||||||
| | | | | Middle | | Private | | | | | | | ||
|
| LMM(a) |
| Market (b) |
| Loan (c) |
| Other | | Total | |||||
|
| (dollars in millions) | |||||||||||||
Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains/income) losses recognized during the current period | | $ | 1.0 | | $ | 0.9 | | $ | 0.1 | | $ | — | | $ | 2.0 |
Net unrealized appreciation (depreciation) relating to portfolio investments | |
| 1.7 | |
| 1.7 | |
| 0.8 | |
| (1.0) | |
| 3.2 |
Total net appreciation depreciation relating to portfolio investments | | $ | 2.7 | | $ | 2.6 | | $ | 0.9 | | $ | (1.0) | | $ | 5.2 |
| | | | | | | | | | | | | | | |
| (a) | LMM includes unrealized appreciation on 16 LMM portfolio investments and unrealized depreciation on 16 LMM portfolio investments. |
| (b) | Middle Market includes unrealized appreciation on 19 Middle Market portfolio investments and unrealized depreciation on 8 Middle Market portfolio investments. |
| (c) | Private Loan includes unrealized appreciation on 17 Private Loan portfolio investments and unrealized depreciation on 19 Private Loan portfolio investments. |
Income Tax Benefit (Provision)
The income tax provision for the three months ended March 31, 2021 of $0.4 million consisted of a current tax provision of $0.4 million, related to a $0.3 million provision for excise tax on our estimated undistributed taxable income and $0.1 million provision for current U.S. federal and state income taxes.
Net Increase (Decrease) in Net Assets Resulting from Operations
The net increase in net assets resulting from operations for the three months ended March 31, 2021 was $12.7 million, or $0.16 per share, compared with a net decrease in net assets of $85.8 million, or $1.09 per share, during the three months ended September 30, 2017 and 2016, we accreted approximately $2.9 million and $2.7 million, respectively,March 31, 2020. The tables above provide a summary of unearned income into interest income. The increase in interest income was primarily due to (i) the growth in our total portfolio resulting from the investment of additional equity capital raised and borrowings under our amended and restated senior secured revolving credit facility (the “EverBank Credit Facility”) entered into by us, HMS Equity Holding, LLC and HMS Equity Holding II, Inc., our wholly-owned subsidiaries, with EverBank Commercial Finance, Inc. as administrative agent and certain financial institutions as lenders, and the amended and restated credit agreement entered into by HMS Funding I, LLC, our wholly owned subsidiary, with Deutsche Bank AG, New York Branch as administrative agent (the “Deutsche Bank Credit Facility,” and, together with our EverBank Credit Facility, the “Credit Facilities”) and (ii) acceleration of the accretion of original issuance discounts primarily resulting from principal repayments on certain portfolio investments. We believe further increases in investment income in future periods may arise due to (i) a growing base of portfolio company investments and (ii) investments being held for the entire period relative to incremental net investment activity during each quarter. For information on the Credit Facilities, see Note 5 - Borrowings to our condensed consolidated financial statements included elsewhere in this report.
Liquidity and Capital Resources
This “Liquidity and Capital Resources” section should be read in conjunction with the net increase in net assets resulting from operations (gross of stockholder distributions declared) was approximately $22.3 million. The increase was primarily attributable to (i) net investment income of approximately $12.5 million“COVID-19 Update” section above.
Cash and (ii) unrealized appreciation on investments of approximately $11.8 million, offset by net realized losses of approximately $1.9 million.
As of September 30, 2017, the portfolio had a weighted average annual effective yield on investments of approximately 8.5% compared to 8.5% as of September 30, 2016, and our average investment portfolio for the nine months ended September 30, 2017 was $1,021.0 million compared to $893.4 million for the nine months ended September 30, 2016. Additionally, during the nine months ended September 30, 2017 and 2016, we accreted approximately $10.8 million and $7.8 million, respectively, of unearned income into interest income. The increase in interest income was primarily due to (i) the growth in our total portfolio resulting from the investment of additional equity capital raised and borrowings under the Credit Facilities and (ii) acceleration of the accretion of original issuance discounts primarily resulting from principal repayments on certain portfolio investments. We believe further increases in investment income in future periods may arise due to (i) a growing base of portfolio company investments and (ii) investments being held for the entire period relative to incremental net investment activity during each quarter.
Cash Flows
For the ninethree months ended September 30, 2017,March 31, 2021, we experienced a net increasedecrease in cash and cash equivalents of approximately $16.0 million. During that period, approximately $68.5$20.5 million, which is the net result of $0.2 million of cash wasprovided by our operating activities and $20.7 million of cash used in our financing activities.
79
The $0.2 million of cash provided by our operating activities resulted primarily from (i) cash proceeds totaling $60.7 million from the sales and repayments of debt investments and sales of and return on capital of equity investments, (ii) cash flows we generated from the operating profits earned totaling $9.5 million, which principally consistedis our net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization of expenses for deferred financing costs and (iii) cash proceeds of $9.4 million related to the change in other assets and liabilities, partially offset by the purchase of new portfolio investments of $470.9$79.4 million.
The $20.7 million and accretion of unearned income of $10.8 million, offset by principal repayments from and sales of investmentsused in portfolio companies of $370.9 million and a net increase in net assets resulting from operations of approximately $39.4 million. During the nine months ended September 30, 2017, approximately
Share Repurchase Program
On March 31, 2020, the Company’s Board of Directors unanimously approved a temporary suspension of the Company’s share repurchase program commencing with the second quarter of 2020. The Board of Directors determined that it was the best interest of the Company to suspend the share repurchase program in order to preserve the financial flexibility and a net $77.0 million increaseliquidity given the prolonged impact of COVID-19.
On March 2, 2021, the Company’s Board of Directors approved the reinstatement of the Company’s share repurchase program commencing in borrowings under the Credit Facilities, offset by $19.5 million in cash distributions paid to stockholders and $14.0 million in cash used for the redemption of our common stock.
Capital Resources
As of March 31, 2021, we experienced a net increasehad $28.6 million in cash and cash equivalents of approximately $16.0 million. During that period, approximately $20.3and $185.3 million of cash was used inunused capacity under our operating activities, which principally consisted of the purchase of new portfolio investments of $275.1 million, offset by principal repayments from and sales of investments in portfolio companies of $222.4 million and a net increase in net assets resulting from operations of approximately $37.8 million. During the nine months ended September 30, 2016, approximately $36.3 million was provided by financing activities, which principally consisted of $56.5 million in net stock offering proceeds received and a net $5.0 million increase in borrowings under the Credit Facilities, offset by $16.4which we maintain to support our investment and operating activities. As of March 31, 2021, our net asset value totaled $584.3 million, in cash distributions paid to stockholders and $8.4 million in cash distributions used for the redemptionor $7.34 per share.
As of our common stock.
| Distributions | |||||||
| Per Share | Amount | ||||||
| 2017 | |||||||
| Three months ended September 30, 2017 | $ | 0.17 | $ | 13,910 | |||
| Three months ended June 30, 2017 | $ | 0.18 | $ | 13,438 | |||
| Three months ended March 31, 2017 | $ | 0.17 | $ | 12,922 | |||
| 2016 | |||||||
| Three months ended September 30, 2016 | $ | 0.17 | $ | 12,307 | |||
| Three months ended June 30, 2016 | $ | 0.18 | $ | 11,650 | |||
| Three months ended March 31, 2016 | $ | 0.17 | $ | 11,037 | |||
| Year Ended December 31, | |||||||||||||||||
| Tax Characteristics of Distributions | 2016 | 2015 | 2014 | ||||||||||||||
| Ordinary income | $ | 44,848 | 93.90 | % | $ | 34,085 | 99.68 | % | $ | 11,162 | 99.51 | % | |||||
| Capital gain distributions | 2,913 | 6.10 | 110 | 0.32 | 55 | 0.49 | |||||||||||
| Total | $ | 47,761 | 100.00 | % | $ | 34,195 | 100.00 | % | $ | 11,217 | 100.00 | % | |||||
We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities and utilization of available borrowings under our Credit Facilities. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and share repurchases under our share repurchase program.
We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments.
In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). AsThis requirement limits the amount that we may borrow.
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Although we have been able to secure access to potential additional liquidity, including through proceeds from the Offering and also by entering into theour Credit Facilities, there is no assurance that equitydebt or debtequity capital will be available to us in the future on favorable terms, or at all.
Recently Issued or Adopted Accounting Standards
See “Note B.12 – Recently Issued or Adopted Accounting Standards” to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently issued or adopted accounting standards.
From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and Agreementsany that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.
Inflation
Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials, third-party services and required energy consumption.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At March 31, 2021, we had a total of $35.2 million in outstanding commitments comprised of (i) twenty-six investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) three investments with equity capital commitments that had not been fully called.
Contractual Obligations
As of March 31, 2021, we had $284.7 million in borrowings outstanding under our Credit Facilities. The TIAA Credit Facility will mature on March 6, 2022. JPM SPV Facility will mature on February 3, 2025. The Main Street Term Loan will mature on January 27, 2026. The Deutsche Bank Credit Facility, which was scheduled to mature on November 20, 2022, was fully repaid on February 3, 2021. See further discussion of the terms of our Credit Facilities in Note E —Debt” to the consolidated financials statements included elsewhere in this Quarterly Report on Form 10-Q.
| | | | | | | | | | | | | | | | | | | | | | |
| | | 2021 |
| 2022 |
| 2023 |
| 2024 |
| 2025 |
| Thereafter |
| Total | |||||||
| | | (dollars in thousands) | |||||||||||||||||||
TIAA Credit Facility | | | $ | — | | $ | — | | $ | 34,000 | | $ | - | | $ | — | | $ | — | | $ | 34,000 |
JPM SPV Facility | | | | — | | | — | | | — | | | 210,688 | | | — | | | — | | | 210,688 |
Main Street Term Loan | | | | — | | | — | | | — | | | - | | | — | | | 40,000 | | | 40,000 |
Interest Due on Main Street Term Loan | | | | 1,883 | | | 2,028 | | | 2,028 | | | 2,033 | | | 2,028 | | | 150 | | | 10,150 |
Total | | | $ | 1,883 | | $ | 2,028 | | $ | 36,028 | | $ | 212,721 | | $ | 2,028 | | $ | 40,150 | | $ | 294,838 |
Related Party Transactions
We have entered into agreements with ourHMS Adviser, our Sub-AdviserMSC Adviser and ourthe Dealer Manager, whereby we pay certain fees and reimbursements to these entities. These includeincluded payments to ourthe Dealer Manager for selling commissions and the Dealer Manager fee and include payments to ourHMS Adviser and MSC Adviser for reimbursement of offering costs. In addition, we make payments for certain services that include the identification, execution, and management of our investments and also the management of our day-to-day operations
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| Payments Due By Period (dollars in thousands) | |||||||||||||||||||
| Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years | |||||||||||||||
EverBank Credit Facility(1) | $ | 95,000 | $ | — | $ | 95,000 | $ | — | $ | — | |||||||||
Deutsche Bank Credit Facility(2) | 395,000 | — | 395,000 | — | — | ||||||||||||||
| Total Credit Facilities | $ | 490,000 | $ | — | $ | 490,000 | $ | — | $ | — | |||||||||
| Commitments and Contingencies | |||||||
| (dollars in thousands) | |||||||
| September 30, 2017 | December 31, 2016 | ||||||
| Unfunded Loan Commitments | |||||||
| Adams Publishing Group, LLC | $ | 2,216 | $ | — | |||
| Apex Linen Services, Inc. | 403 | 397 | |||||
| Arcus Hunting, LLC | 120 | 2,136 | |||||
| BarFly Ventures, LLC | — | 881 | |||||
| BigName Holdings, LLC | 101 | — | |||||
| Boccella Precast Products, LLC | 500 | — | |||||
| Buca C, LLC | — | 1,548 | |||||
| CapFusion Holding, LLC | — | 394 | |||||
| CDHA Management, LLC | 3,373 | 3,259 | |||||
| Charps, LLC | 1,000 | — | |||||
| Clad-Rex Steel, LLC | 100 | — | |||||
| CST Industries, Inc. | 602 | — | |||||
| CTVSH, PLLC | 200 | — | |||||
| Datacom, LLC | 50 | 1,302 | |||||
| Felix Investments Holdings II LLC | 1,667 | — | |||||
| Gamber-Johnson Holdings, LLC | 300 | 300 | |||||
| Guerdon Modular Holdings, Inc. | 400 | 400 | |||||
| Hawk Ridge Systems, LLC | 400 | 400 | |||||
| Commitments and Contingencies | |||||||
| (dollars in thousands) | |||||||
| September 30, 2017 | December 31, 2016 | ||||||
| Hojeij Branded Foods, Inc. | $ | 2,090 | $ | 2,000 | |||
| Hostway Corporation | 67 | — | |||||
| HW Temps LLC | 200 | 50 | |||||
| Jackmont Hospitality, Inc. | — | 1,200 | |||||
| LaMi Products, LLC | 1,029 | 1,729 | |||||
| Market Force Information, Inc. | 272 | — | |||||
| Meisler Operating, LLC | 400 | — | |||||
| Minute Key, Inc. | 2,000 | 197 | |||||
| Mystic Logistics, Inc. | 200 | 194 | |||||
| NNE Issuer, LLC | 7,000 | — | |||||
| NuStep, LLC | 300 | — | |||||
| Pardus Oil & Gas, LLC | 357 | 357 | |||||
| Permian Holdco 2 | 290 | 290 | |||||
| PPC/Shift, LLC | 500 | 500 | |||||
| Resolute Industrial LLC | 5,750 | — | |||||
| Strike, LLC | — | 2,475 | |||||
| Unirush LLC | — | 980 | |||||
| Volusion, LLC | — | 2,955 | |||||
| Wireless Vision | 8,289 | — | |||||
| Unfunded Capital Commitments | |||||||
| Brightwood Capital Fund III, LP | 1,000 | 1,000 | |||||
| Brightwood Capital Fund IV, LP | 9,000 | 10,000 | |||||
| Copper Trail Energy Fund | 2,500 | — | |||||
| Freeport First Lien Loan Fund III, LP | 4,941 | 7,737 | |||||
| Total | $ | 57,617 | $ | 42,681 | |||
Recent Developments and Subsequent Events
On April 10, 2017, we funded approximately $1.9 million in investments and received proceeds from repayments and dispositions of approximately $62.0 million.
On May 11, 2021, our Board of Directors declared a quarterly cash dividend of $0.125 per share payable August 2, 2021 to be determined within 48 hoursstockholders as of the repurchase date.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are subject to financial market risks, in particularincluding changes in interest rates. Changesrates, and changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facilities and our interest income from portfolio investments, the fair value ofinvestments. Our risk management systems and procedures are designed to identify and analyze our fixed income investments,risk, to set appropriate policies and our cost of funding.
The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to make investments,contractual minimum interest rates for the term of the investment. As of March 31, 2021, approximately 83% of our netdebt investment income is partially dependent uponportfolio (at cost) bore interest at floating rates, 92% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the difference betweenpublished LIBOR rate in connection with our Credit Facilities; however, the interest rate at whichon our outstanding Main Street Term Loan is fixed for the life of such debt. As of March 31, 2021, we invest borrowed funds and thehad not entered into any interest rate at which we borrow funds. In periodshedging arrangements. Due to our limited use of rising interest rates and whenderivatives, we have borrowed capital with floating interest rates, our interest expense will increase, which will increase our financing costsclaimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, reduce our net investment income, especiallytherefore, are not subject to the extent we hold fixed-rate debt investments. Asregistration or regulation as a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
| | | | | | | | | | | | |
|
| Increase |
| (Increase) |
| Increase |
| Increase | ||||
| | (Decrease) | | Decrease | | (Decrease) in Net | | (Decrease) in Net | ||||
| | in Interest | | in Interest | | Investment | | Investment | ||||
Basis Point Change |
| Income |
| Expense |
| Income |
| Income per Share | ||||
| | (dollars in thousands, except per share amounts) | | | | |||||||
(150) | | $ | (84) | | $ | 463 | | $ | 379 | | $ | — |
(125) | |
| (84) | |
| 463 | |
| 379 | |
| — |
(100) | |
| (84) | |
| 463 | |
| 379 | |
| — |
(75) | |
| (84) | |
| 463 | |
| 379 | |
| — |
(50) | |
| (84) | |
| 463 | |
| 379 | |
| — |
(25) | |
| (84) | |
| 463 | |
| 379 | |
| — |
25 | |
| 123 | |
| (612) | |
| (489) | |
| (0.01) |
50 | |
| 246 | |
| (1,223) | |
| (977) | |
| (0.01) |
75 | | | 422 | | | (1,835) | | | (1,413) | | | (0.02) |
100 | |
| 1,285 | |
| (2,447) | |
| (1,162) | |
| (0.01) |
125 | | | 2,494 | | | (3,059) | | | (565) | | | (0.01) |
150 | | | 3,833 | | | (3,670) | | | 163 | | | — |
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| Change in interest rates | Increase (Decrease) in Interest Income | Increase (Decrease) in Interest Expense | Net Increase (Decrease) in Net Investment Income | |||||||||
| Down 100 basis points | $ | (2,999 | ) | $ | (4,900 | ) | $ | 1,901 | ||||
| Down 50 basis points | (2,722 | ) | (2,450 | ) | (272 | ) | ||||||
| Up 50 basis points | 4,420 | 2,450 | 1,970 | |||||||||
| Up 100 basis points | 8,844 | 4,900 | 3,944 | |||||||||
| Up 200 basis points | 17,718 | 9,800 | 7,918 | |||||||||
| Up 300 basis points | 26,591 | 14,700 | 11,891 | |||||||||
The hypothetical results assume that this analysis is indicative of our existing sensitivity to interestall LIBOR and prime rate changes it does not adjustwould be effective on the first day of the period. However, the contractual LIBOR and prime rate reset dates would vary throughout the period, on either a monthly or quarterly basis, for both our investments and our Credit Facilities. The hypothetical results would also be impacted by the changes in the credit market, credit quality,amount of debt outstanding under our Credit Facilities (with an increase (decrease) in the size and composition of the assets in our portfolio and other business developments, including borrowingdebt outstanding under the Credit Facilities or other borrowings, that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.
Item 4. Controls and results of operations. Procedures
As of September 30, 2017, we had not entered into any interest rate hedging arrangements.
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. Fromand/or MSC Adviser may, from time to time, we may be party to certain legal proceedings, including proceedings relating to the enforcementinvolved in litigation arising out of our rights under contractsrespective operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect that theseany current matters will materially affect our or MSC Adviser’s financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect uponon our or MSC Adviser’s financial condition or results of operations.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that we filed with the SEC on March 30, 2021, which could materially affect our business, financial condition and/or operating results. There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2020.
The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we filed with the SEC on March 7, 2017.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2021, we issued no shares of our common stock, pursuant toincluding under our tender offer are as follows:dividend reinvestment plan.
During the three months ended March 31, 2021, there were no shares of our common stock repurchased under our share repurchase program.
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| Period | Total Number of Shares Purchased | Average Price per Share | Cumulative Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | |||||||||
| July 1, 2017 through July 31, 2017 | — | $ | — | — | — | ||||||||
| August 1, 2017 through August 31, 2017 | — | $ | — | — | — | ||||||||
| September 1, 2017 through September 30, 2017 | 747,784,633 | $ | 8.19 | 747,784,633 | — | ||||||||
Item 5. Other Information.
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Item 6. Exhibits.
Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
| | |
Exhibit | Description of Exhibit | |
| | |
10.1* | | |
10.2* | | |
10.3* | | |
31.1 | | |
| ||
| ||
32.2 | | |
| | |
| | |
* | | Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | ||
| |||
MSC INCOME FUND, INC. | |||
| | ||
| /s/ | ||
Date: May 14, 2021 | Dwayne L. Hyzak | ||
| Chief Executive Officer | ||
| (principal executive officer) | ||
| /s/ | ||
Date: May 14, 2021 | Brent D. Smith | ||
| Chief Financial Officer and | ||
| (principal financial officer) | ||
| /s/ CORY E. GILBERT | ||
Date: May 14, 2021 | Cory E. Gilbert | ||
| Chief Accounting Officer | ||
| (principal accounting officer) | ||
D
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