UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21960
TENNENBAUM OPPORTUNITIES FUND V, LLC
(Exact Name of Registrant as Specified in Charter)
2951 28TH STREET, SUITE 1000
SANTA MONICA, CALIFORNIA 90405
(Address of Principal Executive Offices) (Zip Code)
ELIZABETH GREENWOOD, SECRETARY
TENNENBAUM OPPORTUNITIES FUND V, LLC
2951 28TH STREET, SUITE 1000
SANTA MONICA, CALIFORNIA 90405
(Name and Address of Agent for Service)
Registrant's telephone number, including area code: (310) 566-1000
Copies to:
RICHARD T. PRINS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
Date of fiscal year end: DECEMBER 31, 2015
Date of reporting period: JUNE 30, 2015
| ITEM 1. | REPORTS TO STOCKHOLDERS. |
Semi-annual Shareholder report
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
June 30, 2015
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Semi-Annual Shareholder Report
June 30, 2015
Contents
Tennenbaum Opportunities Fund V, LLC (the “Company”) files a schedule of its investment in Tennenbaum Opportunities Partners V, LP (the “Partnership”) with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. Investments listed in the Consolidated Schedule of Investments are held by the Partnership, which also files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Forms N-Q of the Company and the Partnership are available on the SEC’s website at http://www.sec.gov. The Forms N-Q of the Company and the Partnership may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
A free copy of the proxy voting guidelines of the Company and the Partnership and information regarding how the Company and the Partnership voted proxies relating to portfolio investments during the most recent 12-month period may be obtained without charge on the SEC’s website at http://www.sec.gov, or by calling the advisor of the Company and the Partnership, Tennenbaum Capital Partners, LLC, at (310) 566-1000. Collect calls for this purpose are accepted.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Portfolio Asset Allocation (Unaudited)
June 30, 2015
| Industry | Percent of Cash
and Investments |
| Cable and Other Subscription Programming | 10.1% |
| Gaming Industries | 8.2% |
| Wired Telecommunications Carriers | 6.0% |
| Artificial Synthetic Fibers and Filaments Manufacturing | 5.6% |
| Pharmaceutical and Medicine Manufacturing | 5.3% |
| Full-Service Restaurants | 4.7% |
| Deep Sea, Coastal, and Great Lakes Water Transportation | 4.1% |
| Structured Note Funds | 4.0% |
| Oil and Gas Extraction | 3.5% |
| Highway, Street, and Bridge Construction | 3.2% |
| Wireless Telecommunications Carriers | 2.9% |
| Coal Mining | 2.9% |
| Motion Picture and Video Industries | 2.5% |
| Software Publishers | 2.5% |
| Wireless Telecommunications Carriers (except Satellite) | 2.3% |
| Radio and Television Broadcasting | 2.0% |
| Semiconductor and Other Electronic Component Manufacturing | 1.8% |
| Electric Power Generation, Transmission and Distribution | 1.6% |
| Specialty Hospitals | 1.6% |
| Nonscheduled Air Transportation | 1.1% |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing | 1.1% |
| Architectural, Engineering, and Related Services | 1.0% |
| Petroleum and Coal Products Manufacturing | 1.0% |
| Scheduled Air Transportation | 1.0% |
| Business Support Services | 0.9% |
| Newspaper, Periodical, Book, and Directory Publishers | 0.7% |
| Financial Investment Activities | 0.6% |
| Other Investment Pools and Funds | 0.6% |
| Metal Ore Mining | 0.5% |
| Accounting, Tax Preparation, Bookkeeping, and Payroll Services | 0.1% |
| Retail | 0.1% |
| Depository Credit Intermediation | 0.0% |
| Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing | 0.0% |
| Traveler Accommodation | 0.0% |
| Telecommunications | 0.0% |
| Miscellaneous Securities | 0.2% |
| Cash and Cash Equivalents | 16.3% |
| Total | 100.0% |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Assets and Liabilities (Unaudited)
June 30, 2015
| Assets | | | | |
| Investments, at fair value: | | | | |
| Companies less than 5% owned (cost $530,248,983) | | $ | 337,730,734 | |
| Companies 5% to 25% owned (cost $400,909,730) | | | 347,921,734 | |
| Companies more than 25% owned (cost $73,860,809) | | | 56,313,907 | |
| Total investments (cost $1,005,019,522) | | | 741,966,375 | |
| Cash and cash equivalents | | | 144,275,189 | |
| Accrued interest income: | | | | |
| Companies less than 5% owned | | | 4,926,445 | |
| Companies 5% to 25% owned | | | 567,305 | |
| Companies more than 25% owned | | | 402,462 | |
| Foreign currency options at fair value | | | 5,580,593 | |
| Receivable for investments sold | | | 3,759,572 | |
| Deferred debt issuance costs | | | 997,717 | |
| Prepaid expenses and other assets | | | 1,019,815 | |
| Total assets | | | 903,495,473 | |
| | | | | |
| Liabilities | | | | |
| Credit facility payable | | | 76,998,351 | |
| Management and advisory fees payable | | | 1,736,116 | |
| Equity placement costs payable | | | 543,163 | |
| Unrealized loss on foreign currency forward exchange contracts | | | 538,971 | |
| Payable to the Investment Manager | | | 405,887 | |
| Payable for investments purchased | | | 330,608 | |
| Interest payable | | | 315,423 | |
| Accrued expenses and other liabilities | | | 2,895,292 | |
| Total liabilities | | | 83,763,811 | |
| | | | | |
| Preferred stock | | | | |
| Series Z; $500/share liquidation preference; 560 shares authorized, issued and outstanding | | | 280,000 | |
| Accumulated dividends on Series Z preferred stock | | | 12,111 | |
| Total preferred stock | | | 292,111 | |
| | | | | |
| Preferred equity facility | | | | |
| Series A preferred interests in Tennenbaum Opportunities Partners V, LP; $20,000/interest liquidation preference; 25,000 interest authorized, 12,814 interests issued and outstanding | | | 256,271,574 | |
| Accumulated dividends on Series A preferred equity facility | | | 613,181 | |
| Total preferred limited partner interests | | | 256,884,755 | |
| Net assets applicable to common shareholders | | $ | 562,554,796 | |
| | | | | |
| Composition of net assets applicable to common shareholders | | | | |
| Common stock, $0.001 par value; unlimited shares authorized, 78,287.806 shares issued and outstanding | | $ | 78 | |
| Paid-in capital in excess of par | | | 956,454,767 | |
| Accumulated net investment income | | | 1,731,894 | |
| Accumulated net realized loss | | | (146,831,611 | ) |
| Accumulated net unrealized depreciation | | | (248,788,221 | ) |
| Accumulated dividends to Series Z preferred shareholders | | | (12,111 | ) |
| Net assets applicable to common shareholders | | $ | 562,554,796 | |
| | | | | |
| Common stock, NAV per share | | | 7,185.73 | |
See accompanying notes.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Principal | | | Value | | | % of
Cash and
Investments | | | Notes |
| | | | | | | | | | | | | | | | | | | | | | | |
| Debt Investments (A) | | | | | | | | | | | | | | | | | | | | | | |
| Accounting, Tax Preparation, Bookkeeping, and Payroll Services | | | | | | | | | | | | | | |
| EGS Holdings, Inc. | | Holdco PIK Notes | | LIBOR (A) | | | 3.00 | % | | 10.00% | | 10/3/2018 | | $ | 133,556 | | | $ | 133,556 | | | | 0.02 | % | | |
| Expert Global Solutions, LLC | | Second Lien Term Loan | | LIBOR (Q) | | | 1.50 | % | | 11.00% | | 10/3/2018 | | $ | 1,000,000 | | | | 1,010,000 | | | | 0.11 | % | | |
| | | | | | | | | | | | | | | | | | | | 1,143,556 | | | | 0.13 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Artificial Synthetic Fibers and Filaments Manufacturing | | | | | | | | | | | | | | |
| AGY Holding Corp. | | Second Lien Notes | | Fixed | | | - | | | 11.00% | | 11/15/2016 | | $ | 32,444,500 | | | | 32,444,500 | | | | 3.66 | % | | B/E |
| AGY Holding Corp. | | Sr Secured Term Loan | | Fixed | | | - | | | 12.00% | | 9/15/2016 | | $ | 17,046,935 | | | | 17,046,935 | | | | 1.92 | % | | B |
| | | | | | | | | | | | | | | | | | | | 49,491,435 | | | | 5.58 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cable and Other Subscription Programming | | | | | | | | | | | | | | |
| Medfort, S.a.r.l (Primacom) (Germany) | | First Lien Term Loan A | | Fixed | | | - | | | 15.00% PIK | | 11/21/2017 | | € | 3,423,334 | | | | 3,815,990 | | | | 0.43 | % | | B/C/D |
| Medfort, S.a.r.l (Primacom) (Germany) | | First Lien Term Loan A2 | | Fixed | | | - | | | 15.00% PIK | | 11/21/2017 | | € | 12,035,724 | | | | 13,416,222 | | | | 1.51 | % | | B/C/D |
| Medfort, S.a.r.l (Primacom) (Germany) | | First Lien Term Loan B | | Fixed | | | - | | | 1.00% PIK | | 11/21/2017 | | € | 27,623,608 | | | | 4,842,048 | | | | 0.55 | % | | B/C/D |
| Medfort, S.a.r.l (Primacom) (Germany) | | First Lien Term Loan B2 | | Fixed | | | - | | | 1.00% PIK | | 11/21/2017 | | € | 11,785,943 | | | | - | | | | - | | | B/C/D |
| Primacom Finance (Lux) S.A. (Luxembourg) | | Super Senior Facility | | Fixed | | | - | | | 1.00% | | 4/30/2034 | | € | 9,660,998 | | | | 10,769,114 | | | | 1.22 | % | | B/D |
| | | | | | | | | | | | | | | | | | | | 32,843,374 | | | | 3.71 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Coal Mining | | | | | | | | | | | | | | | | | | | | | | | | |
| Eagle Coal Company, Inc. | | First Lien Term Loan | | LIBOR (Q) | | | 1.50 | % | | 10.00% | | 7/10/2018 | | $ | 10,609,359 | | | | 10,422,104 | | | | 1.18 | % | | |
| Oxford Mining Company, LLC | | First Lien Delayed Draw Term Loan | | LIBOR (Q) | | | 0.75 | % | | 8.50% Cash + 3.00% PIK | | 12/31/2018 | | $ | 14,441,858 | | | | 14,529,332 | | | | 1.64 | % | | |
| | | | | | | | | | | | | | | | | | | | 24,951,436 | | | | 2.82 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Financial Investment Activities | | | | | | | | | | | | | | | | | | | |
| Marsico Capital Management | | First Lien Term Loan | | LIBOR (M) | | | - | | | 5.00% | | 12/31/2022 | | $ | 29,641,171 | | | | 5,137,704 | | | | 0.58 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Full-Service Restaurants | | | | | | | | | | | | | | | | | | | | | | |
| RM OpCo, LLC (Real Mex) | | Convertible Second Lien Term Loan Tranche B-1 | | Fixed | | | - | | | 8.50% | | 3/30/2018 | | $ | 4,810,806 | | | | 4,810,806 | | | | 0.54 | % | | F |
| RM OpCo, LLC (Real Mex) | | Convertible Second Lien Term Loan B | | Fixed | | | - | | | 8.50% | | 3/30/2018 | | $ | 3,683,980 | | | | 3,683,980 | | | | 0.42 | % | | F |
| RM OpCo, LLC (Real Mex) | | First Lien Term Loan Tranche A | | Fixed | | | - | | | 7.00% | | 3/21/2016 | | $ | 10,730,279 | | | | 10,730,279 | | | | 1.21 | % | | F |
| RM OpCo, LLC (Real Mex) | | Second Lien Term Loan Tranche B | | Fixed | | | - | | | 8.50% | | 3/30/2018 | | $ | 23,970,579 | | | | 14,739,509 | | | | 1.66 | % | | F |
| RM OpCo, LLC (Real Mex) | | Second Lien Term Loan Tranche B-1 | | Fixed | | | - | | | 8.50% | | 3/30/2018 | | $ | 7,549,159 | | | | 7,549,159 | | | | 0.85 | % | | F |
| | | | | | | | | | | | | | | | | | | | 41,513,733 | | | | 4.68 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gaming Industries | | | | | | | | | | | | | | | | | | | | | | |
| Harrah's Operating Company, Inc. | | Second Priority Secured Notes | | Fixed | | | - | | | 10.00% | | 12/15/2018 | | $ | 80,839,000 | | | | 22,331,774 | | | | 2.52 | % | | C |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metal Ore Mining | | | | | | | | | | | | | | | | | | | | | | |
| Molycorp, Inc. | | First Lien Notes | | Fixed | | | - | | | 10.00% | | 6/1/2020 | | $ | 5,000,000 | | | | 1,250,000 | | | | 0.14 | % | | C |
| Molycorp, Inc. | | Sr Unsecured Convertible Notes | | Fixed | | | - | | | 6.00% | | 9/1/2017 | | $ | 29,127,000 | | | | 844,683 | | | | 0.10 | % | | C |
| | | | | | | | | | | | | | | | | | | | 2,094,683 | | | | 0.24 | % | | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited) (Continued)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Principal | | | Value | | | % of
Cash and
Investments | | | Notes |
| | | | | | | | | | | | | | | | | | | | | | | |
| Debt Investments (continued) | | | | | | | | | | | | | | | | | | | | | | |
| Motion Picture and Video Industries | | | | | | | | | | | | | | | | |
| CORE Entertainment, Inc. | | First Lien Term Loan | | Fixed | | | - | | | 9.00% | | 6/21/2017 | | $ | 26,627,910 | | | $ | 17,939,223 | | | | 2.02 | % | | |
| CORE Entertainment, Inc. | | Second Lien Term Loan | | Fixed | | | - | | | 13.50% | | 6/21/2018 | | $ | 21,302,328 | | | | 4,049,573 | | | | 0.46 | % | | C |
| | | | | | | | | | | | | | | | | | | | 21,988,796 | | | | 2.48 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonscheduled Air Transportation | | | | | | | | | | | | | | | | |
| One Sky Flight, LLC | | Second Lien Term Loan | | Fixed | | | - | | | 12.00% Cash + 3.00% PIK | | 6/3/2019 | | $ | 5,192,348 | | | | 5,348,119 | | | | 0.60 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oil and Gas Extraction | | | | | | | | | | | | | | | | | | | | | | |
| Linc Energy Finance (USA), Inc. | | First Lien Notes | | Fixed | | | - | | | 9.63% | | 10/31/2017 | | $ | 8,380,000 | | | | 7,332,500 | | | | 0.83 | % | | E |
| Linc Energy Finance, Inc. | | Sr Secured Notes | | Fixed | | | - | | | 12.50% | | 10/31/2017 | | $ | 19,261,000 | | | | 5,056,012 | | | | 0.57 | % | | E |
| Sunshine Oilsands Ltd. | | Sr Secured Notes | | Fixed | | | - | | | 10.00% | | 8/1/2017 | | $ | 27,051,000 | | | | 18,597,562 | | | | 2.10 | % | | E |
| | | | | | | | | | | | | | | | | | | | 30,986,074 | | | | 3.50 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Petroleum and Coal Products Manufacturing | | | | | | | | | | | | | | | | | | | |
| Boomerang Tube, LLC | | Second Lien Term Loan | | LIBOR (Q) | | | 1.50 | % | | 9.50% | | 10/11/2017 | | $ | 12,714,288 | | | | 6,675,001 | | | | 0.75 | % | | C |
| Boomerang Tube, LLC | | Super Priority Debtor-in-Possession | | LIBOR (Q) | | | - | | | 11.00% | | 10/7/2015 | | $ | 2,180,037 | | | | 2,105,293 | | | | 0.24 | % | | |
| | | | | | | | | | | | | | | | | | | | 8,780,294 | | | | 0.99 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pharmaceutical and Medicine Manufacturing | | | | | | | | | | | | | | | | |
| Novasep Holdings SAS (France) | | First Lien Notes | | Fixed | | | - | | | 8.00% | | 12/15/2016 | | $ | 24,483,000 | | | | 24,452,396 | | | | 2.76 | % | | B/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Radio and Television Broadcasting | | | | | | | | | | | | | | | | |
| Fuse, LLC | | Sr Secured Notes | | Fixed | | | - | | | 10.38% | | 7/1/2019 | | $ | 15,000,000 | | | | 12,525,000 | | | | 1.41 | % | | E |
| The Tennis Channel, Inc. | | First Lien Term Loan | | LIBOR (Q) | | | - | | | 8.50% | | 5/29/2017 | | $ | 5,351,255 | | | | 5,384,701 | | | | 0.61 | % | | |
| | | | | | | | | | | | | | | | | | | | 17,909,701 | | | | 2.02 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing | | | | | | | |
| GSE Environmental, Inc. | | First Lien Term Loan | | LIBOR (M) | | | 1.00 | % | | 10.00% | | 8/11/2021 | | $ | 8,823,529 | | | | 8,702,206 | | | | 0.98 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Scheduled Air Transportation | | | | | | | | | | | | | | | | | | | |
| Aircraft Leased to Delta Air Lines, Inc. | | | | | | | | | | | | | | | | | | | | | | | |
| N913DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 3/15/2017 | | $ | 311,669 | | | | 317,460 | | | | 0.04 | % | | F |
| N918DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 8/15/2018 | | $ | 532,384 | | | | 544,649 | | | | 0.06 | % | | F |
| N954DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 3/20/2019 | | $ | 744,833 | | | | 761,706 | | | | 0.09 | % | | F |
| N955DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 6/20/2019 | | $ | 791,195 | | | | 809,414 | | | | 0.09 | % | | F |
| N956DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 5/20/2019 | | $ | 785,180 | | | | 803,293 | | | | 0.09 | % | | F |
| N957DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 6/20/2019 | | $ | 798,115 | | | | 816,496 | | | | 0.09 | % | | F |
| N959DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 7/20/2019 | | $ | 810,939 | | | | 829,567 | | | | 0.09 | % | | F |
| N960DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 10/20/2019 | | $ | 855,855 | | | | 875,265 | | | | 0.10 | % | | F |
| N961DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 8/20/2019 | | $ | 837,566 | | | | 856,740 | | | | 0.10 | % | | F |
| N976DL | | Aircraft Secured Mortgage | | Fixed | | | - | | | 8.00% | | 2/15/2018 | | $ | 509,220 | | | | 520,506 | | | | 0.06 | % | | F |
| | | | | | | | | | | | | | | | | | | | 7,135,096 | | | | 0.81 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Semiconductor and Other Electronic Component Manufacturing | | | | | | | | | | | | | | |
| Soraa, Inc. | | Sr Secured Term Loan | | LIBOR (M) | | | - | | | 10.27% | | 9/1/2017 | | $ | 15,000,000 | | | | 14,382,000 | | | | 1.62 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Software Publishers | | | | | | | | | | | | | | | | | | | | | | |
| Coreone Technologies, LLC | | First Lien Term Loan | | LIBOR (Q) | | | 1.00 | % | | 3.75% Cash + 5.00% PIK | | 9/4/2018 | | $ | 21,919,832 | | | | 21,837,632 | | | | 2.47 | % | | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited) (Continued)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Principal
Amount or
Shares | | | Value | | | % of
Cash and
Investments | | | Notes |
| | | | | | | | | | | | | | | | | | | | | | | |
| Debt Investments (continued) | | | | | | | | | | | | | | | | | | | | | | |
| Specialty Hospitals | | | | | | | | | | | | | | | | | | | | | | | | |
| UBC Healthcare Analytics, Inc. (Evidera) | | First Lien Term Loan | | LIBOR (Q) | | | 1.00 | % | | 9.00% | | 7/1/2018 | | $ | 14,499,094 | | | $ | 14,567,965 | | | | 1.64 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Structured Note Funds | | | | | | | | | | | | | | | | | | | |
| Magnolia Finance V plc (Cayman Islands) | | Asset-Backed Credit Linked Notes | | Fixed | | | - | | | 13.13% | | 8/2/2021 | | $ | 35,000,000 | | | | 35,213,500 | | | | 3.97 | % | | E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Wireless Telecommunications Carriers | | | | | | | | | | | | | | | | |
| Gogo, LLC | | First Lien Term Loan | | LIBOR (Q) | | | 1.50 | % | | 9.75% | | 3/21/2018 | | $ | 24,637,294 | | | | 25,622,786 | | | | 2.89 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Miscellaneous Securities | | | | | | | | | | | | | | $ | 7,682,000 | | | | 1,920,500 | | | | 0.22 | % | | C/H |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Debt Investments (Cost $632,852,987) | | | | | | | | | 418,354,760 | | | | 47.21 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Securities | | | | | | | | | | | | | | | | | | | | | | |
| Architectural, Engineering, and Related Services | | | | | | | | | | | | |
| Alion Science & Technology Corp. | | Warrants | | | | | | | | | | | | | 10,375 | | | | 104 | | | | - | | | C |
| Global Geophysical Services, Inc. | | Common Stock | | | | | | | | | | | | | 1,122,447 | | | | 9,079,137 | | | | 1.02 | % | | B/C/E |
| Global Geophysical Services, Inc. | | Warrants to Purchase Stock | | | | | | | | | | | | | 69,158 | | | | 7 | | | | - | | | B/C/E |
| | | | | | | | | | | | | | | | | | | | 9,079,248 | | | | 1.02 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Business Support Services | | | | | | | | | | | | | | | | | | | | | | |
| Findly Talent, LLC | | Membership Units | | | | | | | | | | | | | 1,993,022 | | | | 456,402 | | | | 0.05 | % | | C/E |
| STG-Fairway Holdings, LLC (First Advantage) | | Class A Units | | | | | | | | | | | | | 2,368,001 | | | | 7,576,182 | | | | 0.86 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | 8,032,584 | | | | 0.91 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cable and Other Subscription Programming | | | | | | | | | | | | | | | | |
| Perseus Holdings S.A. (Primacom) (Luxembourg) | | Common Stock | | | | | | | | | | | | | 78,000 | | | | 4,866,332 | | | | 0.55 | % | | B/C/D/E |
| Primacom Finance (Lux) S.A. (Finance) (Luxembourg) | | Common Equity | | | | | | | | | | | | | 10,442,055 | | | | 35,457,033 | | | | 4.00 | % | | B/C/D/E |
| Primacom Finance (Lux) S.A. (Finance) (Luxembourg) | | Warrants to Purchase Ordinary Shares | | | | | | | | | | | | | 18,677 | | | | 16,032,798 | | | | 1.81 | % | | B/C/D/E |
| | | | | | | | | | | | | | | | | | | | 56,356,163 | | | | 6.36 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Coal Mining | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oxford Resources Partners, LP | | Warrants to Purchase Common Units | | | | | | | | | | | | | 59,790 | | | | 649,914 | | | | 0.07 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Deep Sea, Coastal, and Great Lakes Water Transportation | | | | | | | | | | |
| Blue Wall Shipping Limited (Marshall Islands) | | Common Stock | | | | | | | | | | | | | 1,339,286 | | | | 12,334,824 | | | | 1.39 | % | | B/C |
| Tanker Investments Ltd. (Marshall Islands) | | Common Stock | | | | | | | | | | | | | 1,442,327 | | | | 18,917,128 | | | | 2.13 | % | | C |
| TCP KC, LLC (Marshall Islands) | | Membership Units | | | | | | | | | | | | | 4,521,396 | | | | 5,379,557 | | | | 0.61 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | 36,631,509 | | | | 4.13 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Depository Credit Intermediation | | | | | | | | | | | | |
| Doral Financial Corp. (Puerto Rico) | | Common Stock | | | | | | | | | | | | | 120,539 | | | | 42,189 | | | | 0.01 | % | | C |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Electric Power Generation, Transmission and Distribution | | | | | | | | | | | | | | | | |
| Longview Intermediate Holdings C, LLC | | Common Stock | | | | | | | | | | | | | 1,238,605 | | | | 13,779,481 | | | | 1.56 | % | | C/E |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited) (Continued)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Shares | | | Value | | | % of
Cash and
Investments | | | Notes |
| | | | | | | | | | | | | | | | | | | | | | | |
| Equity Securities (continued) | | | | | | | | | | | | | | | | |
| Financial Investment Activities | | | | | | | | | | | | | | | | |
| Marsico Holdings, LLC | | Common Interest Units | | | | | | | | | | | | | 474,738 | | | $ | 9,495 | | | | - | | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Full-Service Restaurants | | | | | | | | | | | | | | | | |
| RM Holdco, LLC (Real Mex) | | Equity Participation | | | | | | | | | | | | | 76 | | | | 25 | | | | - | | | C/E/F |
| RM Holdco, LLC (Real Mex) | | Membership Units | | | | | | | | | | | | | 42,552,000 | | | | - | | | | - | | | C/E/F |
| | | | | | | | | | | | | | | | | | | | 25 | | | | - | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gaming Industries | | | | | | | | | | | | | | | | |
| TOPV New World Holdings, LLC (Gateway Casinos) (Canada) | | Membership Interests | | | | | | | | | | | | | 6,843,047 | | | | 47,897,225 | | | | 5.40 | % | | B/C/E |
| Tropicana Entertainment, Inc. | | Common Stock | | | | | | | | | | | | | 180,844 | | | | 2,902,546 | | | | 0.33 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | 50,799,771 | | | | 5.73 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Highway, Street, and Bridge Construction | | | | | | | | | | | | | | |
| Contech Holdings, Inc. | | Common Stock | | | | | | | | | | | | | 711,255 | | | | 27,889,944 | | | | 3.15 | % | | B/C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Machine Shops; Turned Product; and Screw, Nut, and Bolt Manufacturing | | | | | | | | | | | | | | |
| Precision Holdings, LLC | | Class C Membership Interests | | | | | | | | | | | | | 94 | | | | - | | | | - | | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metal Ore Mining | | | | | | | | | | | | | | | | |
| St Barbara Ltd. (Australia) | | Common Stock | | | | | | | | | | | | | 6,254,591 | | | | 2,747,636 | | | | 0.31 | % | | C/D |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Newspaper, Periodical, Book, and Directory Publishers | | | | | | | | | | | | | | |
| HW Topco, Inc. | | Common Stock | | | | | | | | | | | | | 868,872 | | | | 6,221,124 | | | | 0.70 | % | | C/E |
| HW Topco, Inc. | | Preferred Stock | | | | | | | | | | | | | 1,693 | | | | 12,122 | | | | - | | | E |
| TBC Holdings I, Inc. | | Common Stock | | | | | | | | | | | | | 2,967 | | | | 74,768 | | | | 0.01 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | 6,308,014 | | | | 0.71 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonscheduled Air Transportation | | | | | | | | | | | | | | |
| Flight Options Holdings I, Inc. (One Sky) | | Warrants to Purchase Common Stock | | | | | | | | | | | | | 2,329 | | | | 4,159,146 | | | | 0.47 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Oil and Gas Extraction | | | | | | | | | | | | | | | | |
| Woodbine Intermediate Holdings, LLC | | Membership Units | | | | | | | | | | | | | 576 | | | | 354,823 | | | | 0.04 | % | | C/E/F |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Investment Pools and Funds | | | | | | | | | | | | | | |
| TCP Delos Cayman Holdings (Beverly Shipping) (Cayman Islands) | | Partnership Interest | | | | | | | | | | | | | 551,799 | | | | 879,580 | | | | 0.10 | % | | C/D/E/F |
| TCP Delos Cayman Holdings (King B) (Cayman Islands) | | Partnership Interest | | | | | | | | | | | | | 726,529 | | | | 558,047 | | | | 0.06 | % | | C/E/F |
| TCP Delos Delaware Holdings, LLC (Raven Hill) | | Partnership Interest | | | | | | | | | | | | | 2,394,699 | | | | 3,817,200 | | | | 0.43 | % | | C/D/E/F |
| | | | | | | | | | | | | | | | | | | | 5,254,827 | | | | 0.59 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pharmaceutical and Medicine Manufacturing | | | | | | | | | | | | | | |
| NVHL S.A. (Novasep) (Luxembourg) | | Common Shares | | | | | | | | | | | | | 5,127,200 | | | | 22,309,062 | | | | 2.52 | % | | B/C/D/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Radio and Television Broadcasting | | | | | | | | | | | | | | | | |
| SCG Financial Acquisition Corp. | | Common Stock | | | | | | | | | | | | | 146,428 | | | | 124,625 | | | | 0.01 | % | | C |
| Fuse Media, LLC | | Warrants to Purchase Common Stock | | | | | | | | | | | | | 786,791 | | | | 79 | | | | - | | | C/E |
| | | | | | | | | | | | | | | | | | | | 124,704 | | | | 0.01 | % | | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited) (Continued)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Shares | | | Value | | | % of
Cash and
Investments | | | Notes |
| Equity Securities (continued) | | | | | | | | | | | | | | | | |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing | | | | | | | |
| KAGY Holding Company, Inc. | | Series A Preferred Stock | | | | | | | | | | | | | 34,229 | | | $ | 1,208,641 | | | | 0.14 | % | | B/C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Retail | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shop Holding, LLC (Connexity) | | Class A Units | | | | | | | | | | | | | 1,427,232 | | | | 797,109 | | | | 0.09 | % | | C/E |
| Shop Holding, LLC (Connexity) | | Warrants to Purchase Class A Units | | | | | | | | | | | | | 919,351 | | | | 33,097 | | | | - | | | C/E |
| | | | | | | | | | | | | | | | | | | | 830,206 | | | | 0.09 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Scheduled Air Transportation | | | | | | | | | | | | | | | | | | | |
| Aircraft Leased to Delta Air Lines, Inc. | | | | | | | | | | | | | | | | | | | | | | | |
| N913DL | | Trust Beneficial Interests | | | | | | | | | | | | | 2,251 | | | | 218,628 | | | | 0.03 | % | | E/F |
| N918DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,822 | | | | 255,918 | | | | 0.03 | % | | E/F |
| N954DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,695 | | | | 145,718 | | | | 0.02 | % | | E/F |
| N955DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,633 | | | | 212,632 | | | | 0.03 | % | | E/F |
| N956DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,648 | | | | 205,016 | | | | 0.02 | % | | E/F |
| N957DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,633 | | | | 206,692 | | | | 0.02 | % | | E/F |
| N959DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,619 | | | | 208,415 | | | | 0.02 | % | | E/F |
| N960DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,577 | | | | 207,448 | | | | 0.02 | % | | E/F |
| N961DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,604 | | | | 198,218 | | | | 0.02 | % | | E/F |
| N976DL | | Trust Beneficial Interests | | | | | | | | | | | | | 1,949 | | | | 196,718 | | | | 0.02 | % | | E/F |
| | | | | | | | | | | | | | | | | | | | 2,055,403 | | | | 0.23 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Semiconductor and Other Electronic Component Manufacturing | | | | | | | | | | | |
| Soraa, Inc. | | Warrants to Purchase Common Stock | | | | | | | | | | | | | 210,000 | | | | 52,563 | | | | - | | | C/E |
| TPG Hattrick Holdco, LLC (Isola) | | Common Units | | | | | | | | | | | | | 1,935,857 | | | | 1,219,590 | | | | 0.14 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | 1,272,153 | | | | 0.14 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Telecommunications | | | | | | | | | | | | | | | | | | | | | | | | |
| LightSquared Inc. | | Call Option | | | | | | | | | | | | | 475,268 | | | | - | | | | - | | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Traveler Accommodation | | | | | | | | | | | | | | | | | | | |
| Buffets Restaurants Holdings, Inc. | | Common Stock | | | | | | | | | | | | | 139,526 | | | | 313,933 | | | | 0.04 | % | | C/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Wired Telecommunications Carriers | | | | | | | | | | | | | | | | |
| Integra Telecom, Inc. | | Common Stock | | | | | | | | | | | | | 10,080,250 | | | | 41,676,794 | | | | 4.70 | % | | B/C/E |
| Integra Telecom, Inc. | | Warrants | | | | | | | | | | | | | 3,018,747 | | | | 1,924,451 | | | | 0.22 | % | | B/C/E |
| V Telecom Investment S.C.A. (Vivacom) (Luxembourg) | | Common Shares | | | | | | | | | | | | | 3,741 | | | | 9,343,218 | | | | 1.05 | % | | C/D/E |
| | | | | | | | | | | | | | | | | | | | 52,944,463 | | | | 5.97 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Wireless Telecommunications Carriers (except Satellite) | | | | | | | | | | | | | | |
| Mid-Bowline Group Corp. (WIND Mobile) (Canada) | | Class A Voting Shares | | | | | | | | | | | | | 16,597,778 | | | | 20,458,281 | | | | 2.31 | % | | B/C/D/E |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Equity Securities (Cost $372,166,535) | | | | | | | | | 323,611,615 | | | | 36.51 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Investments (Cost $1,005,019,522) | | | | | | | 741,966,375 | | | | 83.72 | % | | G |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Investments (Unaudited) (Continued)
June 30, 2015
Showing Percentage of Total Cash and Investments of the Company
| Issuer | | Instrument | | Ref | | Floor | | | Spread | | Maturity | | Shares | | | Value | | | % of
Cash and
Investments | | | Notes |
| Cash and Cash Equivalents | | | | | | | | | | | | | | | | | | | |
| Union Bank of California | | Commercial Paper | | Fixed | | | - | | | 0.05% | | 7/1/2015 | | | | | | $ | 29,000,000 | | | | 3.27 | % | | |
| Cash Denominated in Foreign Currency | | | | | | | | | | | | | | | | | | | 245,937 | | | | 0.03 | % | | |
| Cash Held on Account at Various Institutions | | | | | | | | | | | | | | | | | | | 115,029,252 | | | | 12.98 | % | | |
| Total Cash and Cash Equivalents | | | | | | | | | | | | 144,275,189 | | | | 16.28 | % | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Cash and Investments | | | | | | | | | | | $ | 886,241,564 | | | | 100.00 | % | | |
Notes to Schedule of Investments:
| (A) | Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower. |
| (B) | Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer). |
| (C) | Non-income producing security. |
| (D) | Principal amount or shares denominated in foreign currency. Cost and fair value converted to U.S. dollars. |
| (E) | Restricted security – See Note 2, Summary of Significant Accounting Policies. |
| (F) | Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of more than 25% of the outstanding voting securities of this issuer). |
| (G) | Includes investments with an aggregate fair value of $22,331,774 that have been segregated to collateralize certain unfunded commitments. |
| (H) | Miscellaneous Securities are comprised of certain unrestricted security positions that have not previously been publicly disclosed. |
Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $13,939,170, and $238,613,777, respectively, for the period ended June 30, 2015. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments. The total value of restricted securities and bank debt as of June 30, 2015 was $681,452,912 or 76.9% of total cash and investments of the Company.
Derivative instruments at June 30, 2015 were as follows:
| | | Notional | | | | |
| Instruments | | Amount | | | Fair Value | |
| Buy EUR vs. USD Put Option at a strike rate of 1.3139 expiring September 1, 2017 | | € | 25,000,000 | | | $ | 4,560,590 | |
| Sell EUR vs. USD Call Option at a strike rate of 1.3844 expiring September 1, 2017 | | € | 25,000,000 | | | $ | (188,150 | ) |
| Buy EUR vs. USD Put Option at a strike rate of 1.2161 expiring September 1, 2017 | | € | 4,000,000 | | | $ | 441,036 | |
| Sell EUR vs. USD Call Option at a strike rate of 1.2765 expiring September 1, 2017 | | € | 4,000,000 | | | $ | (88,778 | ) |
| Buy EUR vs. USD Put Option at a strike rate of 1.1626 expiring September 1, 2017 | | € | 8,000,000 | | | $ | 641,621 | |
| Sell EUR vs. USD Call Option at a strike rate of 1.2150 expiring September 1, 2017 | | € | 8,000,000 | | | $ | (318,014 | ) |
| Buy EUR vs. USD Put Option at a strike rate of 1.0975 expiring September 1, 2017 | | € | 5,000,000 | | | $ | 263,874 | |
| Sell EUR vs. USD Call Option at a strike rate of 1.1525 expiring September 1, 2017 | | € | 5,000,000 | | | $ | (334,823 | ) |
| Buy EUR vs. USD Put Option at a strike rate of 1.1375 expiring March 30, 2018 | | € | 12,500,000 | | | $ | 893,271 | |
| Sell EUR vs. USD Call Option at a strike rate of 1.2050 expiring March 30, 2018 | | € | 12,500,000 | | | $ | (718,967 | ) |
| Buy CAD vs. USD Put Option at a strike rate of 1.2900 expiring April 19, 2018 | | CAD | 60,000,000 | | | $ | 2,286,558 | |
| Sell CAD vs. USD Call Option at a strike rate of 1.6000 expiring April 19, 2018 | | CAD | 60,000,000 | | | $ | (438,971 | ) |
| Sell CAD vs. USD Call Option at a strike rate of 1.1500 expiring April 19, 2018 | | CAD | 60,000,000 | | | $ | (1,418,654 | ) |
| Foreign Currency Forward Exchange Contract, sell EUR vs. USD at 1.0819 for settlement on September 1, 2017 | | € | 8,000,000 | | | $ | (489,059 | ) |
| Foreign Currency Forward Exchange Contract, sell EUR vs. USD at 1.1206 for settlement on September 1, 2017 | | € | 8,000,000 | | | $ | (184,459 | ) |
| Foreign Currency Forward Exchange Contract, sell CAD vs. USD at 1.1761 for settlement on December 17, 2018 | | CAD | 3,397,778 | | | $ | 134,547 | |
| | | | | | | $ | 5,041,622 | |
See accompanying notes.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Operations (Unaudited)
Six Months Ended June 30, 2015
| Investment income | | | | |
| Interest income: | | | | |
| Companies less than 5% owned | | $ | 24,774,259 | |
| Companies 5% to 25% owned | | | 3,841,160 | |
| Companies more than 25% owned | | | 2,389,438 | |
| Dividend income: | | | | |
| Companies less than 5% owned | | | 522 | |
| Companies more than 25% owned | | | 1,823,436 | |
| Lease income: | | | | |
| Companies more than 25% owned | | | 121,144 | |
| Other income: | | | | |
| Companies less than 5% owned | | | 53,219 | |
| Total investment income | | | 33,003,178 | |
| | | | | |
| Operating expenses | | | | |
| Management and advisory fees | | | 11,043,260 | |
| Interest expense | | | 1,191,632 | |
| Amortization of deferred debt issuance costs | | | 533,136 | |
| Commitment fees | | | 409,503 | |
| Legal fees, professional fees and due diligence expenses | | | 339,038 | |
| Insurance expense | | | 136,913 | |
| Director fees | | | 141,500 | |
| Custody fees | | | 88,000 | |
| Other operating expenses | | | 284,811 | |
| Total operating expenses | | | 14,167,793 | |
| | | | | |
| Net investment income | | | 18,835,385 | |
| | | | | |
| Net realized and unrealized gain (loss) | | | | |
| Net realized gain (loss) from: | | | | |
| Investments in companies less than 5% owned | | | (6,737,387 | ) |
| Foreign currency transactions | | | 28,453 | |
| Net realized loss | | | (6,708,934 | ) |
| | | | | |
| Net change in net unrealized appreciation/depreciation on: | | | | |
| Investments | | | (25,844,796 | ) |
| Foreign currency | | | (6,117,199 | ) |
| Net change in net unrealized appreciation/depreciation | | | (31,961,995 | ) |
| | | | | |
| Net realized and unrealized loss | | | (38,670,929 | ) |
| | | | | |
| Gain on retirement of Series A preferred interests | | | 334,010 | |
| Dividends paid on Series A preferred equity facility | | | (1,635,128 | ) |
| Net change in accumulated dividends on Series A preferred equity facility | | | 269,428 | |
| Net change in reserve for dividends to Series Z preferred shareholders | | | (11,250 | ) |
| | | | | |
| Net decrease in net assets applicable to common shareholders resulting from operations | | $ | (20,878,484 | ) |
See accompanying notes.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Statements of Changes in Net Assets (Unaudited)
| | | Six Months | | | | |
| | | Ended | | | | |
| | | June 30, 2015 | | | Year Ended | |
| | | (Unaudited) | | | December 31, 2014 | |
| | | | | | | |
| Net assets applicable to common shareholders, beginning of period | | $ | 643,433,280 | | | $ | 804,021,225 | |
| | | | | | | | | |
| Net investment income | | | 18,835,385 | | | | 97,636,935 | |
| Net realized loss | | | (6,708,934 | ) | | | (24,340,815 | ) |
| Net change in net unrealized appreciation/depreciation | | | (31,961,995 | ) | | | (49,431,757 | ) |
| Gain on retirement of Series A preferred interests | | | 334,010 | | | | 2,066,688 | |
| Dividends paid on Series A preferred equity facility from net investment income | | | (1,635,128 | ) | | | (3,513,112 | ) |
| Net change in accumulated dividends on Series A preferred equity facility | | | 269,428 | | | | 16,827 | |
| Dividends paid to Series Z preferred shareholders from net investment income | | | - | | | | (44,548 | ) |
| Net change in reserve for dividends to Series Z preferred shareholders | | | (11,250 | ) | | | 21,837 | |
| Net increase (decrease) in net assets applicable to common shareholders resulting from operations | | | (20,878,484 | ) | | | 22,412,055 | |
| | | | | | | | | |
| Distributions to common shareholders from: | | | | | | | | |
| Net investment income | | | (16,000,000 | ) | | | (102,220,850 | ) |
| Returns of capital | | | (44,000,000 | ) | | | (80,779,150 | ) |
| Total distributions to common shareholders | | | (60,000,000 | ) | | | (183,000,000 | ) |
| | | | | | | | | |
| Net assets applicable to common shareholders, end of period (including accumulated net investment income of $1,731,894 and $262,209, respectively) | | $ | 562,554,796 | | | $ | 643,433,280 | |
See accompanying notes.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Statement of Cash Flows (Unaudited)
Six Months Ended June 30, 2015
| Operating activities | | | | |
| Net decrease in net assets applicable to common shareholders resulting from operations | | $ | (20,878,484 | ) |
| Adjustments to reconcile net decrease in net assets applicable to common shareholders resulting from operations to net cash provided by operating activities: | | | | |
| Net realized loss | | | 6,708,934 | |
| Net change in net unrealized appreciation/depreciation | | | 33,417,649 | |
| Gain on retirement of Series A preferred interests | | | (334,010 | ) |
| Dividends paid on Series A preferred equity facility | | | 1,635,128 | |
| Net change in accumulated dividends on Series A preferred equity facility | | | (269,428 | ) |
| Net change in reserve for dividends to Series Z preferred shareholders | | | 11,250 | |
| Interest income paid in kind | | | (3,576,090 | ) |
| Net accretion of market discount | | | (338,602 | ) |
| Accretion of original issue discount | | | (1,742,318 | ) |
| Amortization of deferred debt issuance costs | | | 533,136 | |
| Changes in assets and liabilities: | | | | |
| Purchases of investments | | | (10,363,080 | ) |
| Proceeds from sales, maturities and paydowns of investments | | | 238,613,777 | |
| Increase in receivable for investments sold | | | (3,759,572 | ) |
| Decrease in accrued interest income - companies less than 5% owned | | | 3,504,660 | |
| Decrease in accrued interest income - companies 5% to 25% owned | | | 5,651 | |
| Increase in accrued interest income - companies more than 25% owned | | | (47,930 | ) |
| Increase in prepaid expenses and other assets | | | (3,674 | ) |
| Decrease in management and advisory fees payable | | | (358,814 | ) |
| Increase in payable for investments purchased | | | 18,439 | |
| Increase in payable to the Investment Manager | | | 28,159 | |
| Decrease in interest payable | | | (233,241 | ) |
| Decrease in accrued expenses and other liabilities | | | (1,903,211 | ) |
| Net cash provided by operating activities | | | 240,668,329 | |
| | | | | |
| Financing activities | | | | |
| Proceeds from draws on credit facility | | | 5,000,000 | |
| Principal repayments on credit facility | | | (30,998,148 | ) |
| Dividends paid on preferred equity facility | | | (1,635,128 | ) |
| Repurchase of interests on preferred equity facility | | | (110,327,728 | ) |
| Distributions to common shareholders | | | (110,000,000 | ) |
| Net cash used in financing activities | | | (247,961,004 | ) |
| | | | | |
| Net decrease in cash and cash equivalents | | | (7,292,675 | ) |
| Cash and cash equivalents at beginning of period | | | 151,567,864 | |
| Cash and cash equivalents at end of period | | $ | 144,275,189 | |
| | | | | |
| Supplemental disclosure: | | | | |
| Interest payments | | $ | 1,424,873 | |
See accompanying notes.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2015
1. Organization and Nature of Operations
Tennenbaum Opportunities Fund V, LLC (the “Company”), a Delaware Limited Liability Company, is registered as a nondiversified, closed-end management investment company under the Investment Company Act of 1940 (the “1940 Act”). The Company has elected to be treated as a regulated investment company (“RIC”) for U.S. federal income tax purposes. As a RIC, the Company will not be taxed on its income to the extent that it distributes such income each year and satisfies other applicable income tax requirements. The Company was formed to acquire a portfolio of investments consisting primarily of bank loans, distressed debt, stressed high yield debt, mezzanine investments and public equities. The stated objective of the Company is to achieve high total returns while minimizing losses.
The Company’s investment operations commenced on October 10, 2006. On December 15, 2006, the Company contributed substantially all of its assets to Tennenbaum Opportunities Partners V, LP, a Delaware Limited Partnership (the “Partnership”), in exchange for 100% of the Partnership’s common limited partner interests in a nontaxable transaction. The Partnership is also registered as a nondiversified, closed-end management investment company under the 1940 Act, but has elected to be treated as a partnership for U.S. federal income tax purposes. Following the asset transfer, all portfolio activity has been conducted by and in the Partnership.
These consolidated financial statements include the accounts of the Company and the Partnership. All significant intercompany transactions and balances have been eliminated in the consolidation.
The General Partner of the Partnership is SVOF/MM, LLC (“SVOF/MM”). The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (“TCP”), which serves as the Investment Manager of both the Company and the Partnership. Babson Capital Management LLC serves as Co-Manager of both the Company and the Partnership. Substantially all of the equity interests in the General Partner are owned directly or indirectly by TCP, Babson Capital Management LLC and employees of TCP.
Company management consists of the Investment Manager and the Board of Directors. Partnership management consists of the General Partner and the Board of Directors. The Investment Manager and the General Partner direct and execute the day-to-day operations of the Company and the Partnership, respectively, subject to oversight from the respective Board of Directors, which sets the broad policies of the Company and performs certain functions required by the 1940 Act in the case of the Partnership. The Board of Directors of the Partnership has delegated investment management of the Partnership’s assets to the Investment Manager and the Co-Manager. Each Board of Directors consists of four persons, three of whom are independent. If the Company or the Partnership has preferred equity interests outstanding, as each currently does, the holders of the preferred interests voting separately as a class are entitled to elect two of the Directors. The remaining directors are subject to election by holders of the common interests and preferred interests voting together as a single class.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
1. Organization and Nature of Operations (continued)
Company Structure
At June 30, 2015, total capitalization of the consolidated Company was approximately $1.39 billion, consisting of $980 million of unreturned equity, $256 million of preferred limited partner interests in the Partnership (the “Series A Preferred”), $150 million under a senior secured revolving credit facility issued by the Partnership (the “Senior Facility”) and $280,000 in Series Z preferred shares of the Company. The contributed common equity, preferred equity and the amount drawn under the Senior Facility are used to purchase Partnership investments and to pay certain fees and expenses of the Partnership and the Company. Most of the cash and investments of the Partnership are included in the collateral for the Senior Facility.
The Company will liquidate and distribute its assets and will be dissolved on October 10, 2016, subject to up to two one-year extensions if requested by the Investment Manager and approved by the outstanding common shares. The Partnership will liquidate and distribute its assets and will be dissolved on October 10, 2016, subject to up to two one-year extensions if requested by the General Partner and approved by the Company as the holder of the common limited partner interests in the Partnership. However, the Operating Agreement and Partnership Agreement will prohibit liquidation of the Company and the Partnership, respectively, prior to October 10, 2016 if the Series A Preferred are not redeemed in full prior to such liquidation.
Preferred Equity Facility
At June 30, 2015, the Partnership had 12,814 Series A preferred limited partner interests (the “Series A Preferred”) issued and outstanding with a liquidation preference of $20,000 per interest. The Series A Preferred are redeemable at the option of the Partnership, subject to certain conditions. Additionally, under certain conditions, the Partnership may be required to either redeem certain of the Series A Preferred or repay indebtedness, at the Partnership’s option. Such conditions would include a failure by the Partnership to maintain adequate collateral as required by its credit facility agreement or by the Statement of Preferences of the Series A Preferred, or a failure by the Partnership to maintain sufficient asset coverage as required by the 1940 Act. At June 30, 2015, the Partnership was in full compliance with such requirements. On March 31, 2015, the Partnership repurchased and retired 3,340 of the Series A Preferred. A gain of $334,010 on the retirement of these interests is reflected in the Consolidated Statement of Operations.
The Series A Preferred accrue dividends at an annual rate equal to LIBOR plus 0.75%, or in the case of any holders of Series A Preferred that are CP Conduits (as defined in the leveraging documents), the higher of (i) LIBOR plus 0.75% or (ii) the CP Conduit’s cost of funds rate plus 0.75%, subject to certain limitations and adjustments.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The following is a summary of the significant accounting policies of the Company and the Partnership.
Use of Estimates
The preparation of the financial statements 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 as well as the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates and assumptions to be reasonable, actual results could differ from those estimates.
Investment Valuation
All of the Company’s investments are generally held by the Partnership. Management values investments held by the Partnership at fair value based upon the principles and methods of valuation set forth in policies adopted by the Partnership’s Board of Directors and in conformity with procedures set forth in the Senior Facility and Statement of Preferences for the Series A Preferred. Fair value is generally defined as the amount for which an investment would be sold in an orderly transaction between market participants at the measurement date.
Investments listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued for financial reporting purposes as of the last business day of the reporting period using the closing price on the date of valuation. Liquid investments not listed on a recognized exchange or market quotation system are priced by a nationally recognized pricing service or by using quotations from broker-dealers. Investments not priced by a pricing service or for which market quotations are either not readily available or are determined to be unreliable are valued by independent valuation services or, for investments aggregating less than 5% of the total capitalization of the Partnership, by the Investment Manager.
Fair valuations of investments are determined under guidelines adopted by the Partnership’s Board of Directors, and are subject to their approval. Generally, to increase objectivity in valuing the Partnership’s investments, the Investment Manager will utilize external measures of value, such as public markets or third-party transactions, whenever possible. The Investment Manager’s valuation is not based on long-term work-out value, immediate liquidation value, nor incremental value for potential changes that may take place in the future. The values assigned to investments that are valued by the Investment Manager are based on available information and do not
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated. The foregoing policies apply to all investments, including those in companies and groups of affiliated companies aggregating more than 5% of the Partnership’s assets.
Fair valuations of investments in each asset class are determined using one or more methodologies including the market approach, income approach, or, in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that may be taken into account include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market and enterprise values, among other factors.
Unobservable inputs used in the fair value measurement of the Partnership’s Level 3 investments as of June 30, 2015 included the following:
| | | Fair Value | | | Valuation Technique | | Unobservable Input | | Range
(Weighted Average) |
| Bank Debt | | $ | 251,248,629 | | | Market rate approach | | Market yields | | 6.3% - 23.2% (13.3%) |
| | | | | | | Market quotations | | Indicative bid/ask quotes | | 1 - 2 (1) |
| | | | | | | Market comparable companies | | Revenue multiples | | 0.4x - 0.4x (0.4x) |
| | | | | | | Market comparable companies | | EBITDA multiples | | 3.8x – 9.4x (7.4x) |
| Other Corp Debt | | | 110,707,958 | | | Market quotations | | Indicative bid/ask quotes | | 1 - 1 (1) |
| | | | | | | Market comparable companies | | EBITDA multiples | | 8.3x - 8.3x (8.3x) |
| Equity | | | 298,877,491 | | | Market rate approach | | Market yields | | 16.5% - 18.0% (16.9%) |
| | | | | | | Market quotations | | Indicative bid/ask quotes | | 1 - 2 (1) |
| | | | | | | Market comparable companies | | Revenue multiples | | 0.4x - 0.4x (0.4x) |
| | | | | | | Market comparable companies | | EBITDA multiples | | 2.0x – 13.5x (8.8x) |
Generally, a change in an unobservable input may result in a change to the value of an investment as follows:
| Input | | Impact to Value if Input Increases | | Impact to Value if Input Decreases |
| Market yields | | Decrease | | Increase |
| Revenue multiples | | Increase | | Decrease |
| EBITDA multiples | | Increase | | Decrease |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
Investments of the Partnership may be categorized based on the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels are recognized as of the beginning of the reporting period.
At June 30, 2015, the investments of the Partnership were categorized as follows:
| Level | | Basis for Determining Fair Value | | Bank Debt | | | Other
Corporate Debt | | | Equity
Securities | |
| 1 | | Quoted prices in active markets for identical assets | | $ | - | | | $ | - | | | $ | 21,831,578 | |
| 2 | | Other observable market inputs* | | | 5,137,704 | | | | 51,260,469 | | | | 2,902,546 | |
| 3 | | Independent third-party pricing sources that employ significant unobservable inputs | | | 249,143,336 | | | | 110,707,958 | | | | 277,099,062 | |
| 3 | | Investment Manager valuations with significant unobservable inputs | | | 2,105,293 | | | | - | | | | 21,778,429 | |
| Total | | | | $ | 256,386,333 | | | $ | 161,968,427 | | | $ | 323,611,615 | |
* E.g., quoted prices in inactive markets or quotes for comparable instruments
Changes in investments categorized as Level 3 during the six months ended June 30, 2015 were as follows:
| | | Independent Third-Party Valuation | |
| | | Bank Debt | | | Other
Corporate Debt | | | Equity
Securities | |
| Beginning balance | | $ | 467,527,298 | | | $ | 105,516,490 | | | $ | 264,368,978 | |
| Net realized and unrealized gains (losses) | | | (34,121,899 | ) | | | (2,188,007 | ) | | | 2,960,195 | |
| Acquisitions | | | 8,397,060 | | | | 558,800 | | | | 3,508,169 | |
| Dispositions | | | (192,659,123 | ) | | | (205,825 | ) | | | (6,338,524 | ) |
| Transfers into Level 3 ǂ | | | - | | | | 21,014,000 | | | | 12,600,244 | |
| Transfers out of Level 3† | | | - | | | | (13,987,500 | ) | | | - | |
| Ending balance | | $ | 249,143,336 | | | $ | 110,707,958 | | | $ | 277,099,062 | |
| | | | | | | | | | | | | |
| Net change in unrealized losses during the period on investments still held at period end (included in net realized and unrealized gains (losses), above) | | $ | (34,180,567 | ) | | $ | (2,203,341 | ) | | $ | (655,566 | ) |
ǂ Comprised of two investments that were transferred from Level 2 due to reduced trading volumes.
† Comprised of one investment that was transferred to Level 2 due to increased observable market activity.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
| | | Investment Manager Valuation | |
| | | Bank Debt | | | Other
Corporate Debt | | | Equity
Securities | |
| Beginning balance | | $ | - | | | $ | 2,713,503 | | | $ | 18,348,935 | |
| Net realized and unrealized gains (losses) | | | (12,673 | ) | | | (327,515 | ) | | | 2,507,144 | |
| Acquisitions | | | 2,117,966 | | | | 282,849 | | | | 1,638,318 | |
| Dispositions | | | - | | | | (2,668,837 | ) | | | (715,968 | ) |
| Ending balance | | $ | 2,105,293 | | | $ | - | | | $ | 21,778,429 | |
| | | | | | | | | | | | | |
| Net change in unrealized losses during the period on investments still held at period end (included in net realized and unrealized gains (losses), above) | | $ | (12,673 | ) | | $ | - | | | $ | (621,371 | ) |
Investment Transactions
The Partnership records investment transactions on the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the investment transaction. Realized gains and losses on investments are recorded based on the specific identification method, which typically allocates the highest cost inventory to the basis of investments sold.
Cash and Cash Equivalents
Cash consists of amounts held in accounts with the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of generally three months or less.
Restricted Investments
The Partnership may invest without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally may be resold to institutional investors in transactions exempt from registration or to the public if the securities are registered. Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted investments is included at the end of the Consolidated Schedule of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
Foreign Investments
The Partnership may invest in instruments traded in foreign countries and denominated in foreign currencies. At June 30, 2015, the Partnership held foreign currency denominated investments comprising approximately 20.05% of the Partnership’s total investments by fair value. Such positions were converted at the closing rate in effect at June 30, 2015 and reported in U.S. dollars. Purchases and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S. dollars on the respective dates of such transactions. The Company and the Partnership report that portion of the results of operations resulting from foreign exchange rates on investments separately from the gains or losses arising from changes in market prices of investments held.
Investments in foreign companies and securities of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include, among other things, revaluation of currencies, less reliable information about issuers, different transactions clearance and settlement practices, and potential future adverse political and economic developments. Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.
Derivatives
In order to mitigate certain currency exchange risks associated with foreign currency denominated investments, the Partnership has entered into certain foreign currency forward exchange and option transactions. The Company recognizes all derivatives as either assets or liabilities in the Consolidated Statement of Assets and Liabilities. The transactions are accounted for using the mark-to-market method with the resulting change in fair value recognized in earnings for the current period. Risks may arise upon entering into these contracts from potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of foreign currency relative to the U.S. dollar.
Gains and losses from derivative transactions during the six months ended June 30, 2015 were included in net realized and unrealized gain (loss) on investments in the Consolidated Statement of Operations as follows:
| Instrument | | Realized | | | Unrealized | |
| Foreign currency forward exchange contract (CAD) | | $ | - | | | $ | 159,489 | |
| Foreign currency forward exchange contracts (EUR) | | | - | | | | (673,518 | ) |
| Foreign currency option contracts (EUR) | | | - | | | | 3,139,327 | |
| Foreign currency option contracts (CAD) | | | - | | | | 59,747 | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
Valuations of foreign currency option contracts at June 30, 2015 were determined using observable market inputs other than quoted prices in active markets for identical assets and, accordingly, were classified as Level 2 in the GAAP valuation hierarchy. Valuations of foreign currency forward exchange contracts were determined using quoted prices in active markets for identical assets and, accordingly, were classified as Level 1 in the GAAP valuation hierarchy.
Debt Issuance Costs
Costs of approximately $10.2 million were incurred in connection with the initial placement and the subsequent extension of the Partnership’s Senior Facility. These costs were deferred and are being amortized on a straight-line basis through the amended maturity of the Senior Facility on June 15, 2016, adjusting for scheduled decreases in the size of the Senior Facility over its remaining life (Note 5).
Revenue Recognition
Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment. Other fees, including certain amendment fees, prepayment fees, and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income received upon the early repayment of a loan or debt security are included in interest income.
Certain of the Partnership’s debt investments are purchased at a considerable discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. GAAP generally requires that discounts on the acquisition of corporate bonds, municipal bonds and treasury bonds be amortized using the effective-interest or constant-yield method. GAAP also requires the Partnership to consider the collectability of interest when making accruals. Accordingly, when accounting for purchase discounts, the Partnership recognizes discount accretion income when it is probable that such amounts will be collected, generally at disposition. When the Partnership receives principal payments on a loan in an amount in excess of the loan’s amortized cost, it records the excess principal payments as interest income.
Income Taxes
The Company intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all federal income taxes. Accordingly, no provision for income taxes is required in the consolidated financial statements. The Partnership’s
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
2. Summary of Significant Accounting Policies (continued)
income or loss is reported in the partners’ income tax returns. In accordance with ASC Topic 740 - Income Taxes, the Company and the Partnership recognize in their consolidated financial statements the effect of a tax position when it is determined that such position is more likely than not, based on the technical merits, to be sustained upon examination. As of June 30, 2015, all tax years of the Company and the Partnership since January 1, 2011 remain subject to examination by federal tax authorities. No such examinations are currently pending.
Cost and unrealized appreciation (depreciation) of the investments of the Partnership (including derivatives) at June 30, 2015 for U.S. federal income tax purposes were as follows:
| Unrealized appreciation | | $ | 105,808,870 | |
| Unrealized depreciation | | | (364,189,581 | ) |
| Net unrealized depreciation | | | (258,380,711 | ) |
| | | | | |
| Cost | | $ | 1,005,388,708 | |
3. Allocations and Distributions
Net income and gains of the Partnership are distributed first to the Company until it has received an 8% annual weighted-average return on its undistributed contributed equity, and then to the General Partner of the Partnership until it has received 20% of all cumulative income and gain distributions (the “Hurdle”). 80% of all remaining net income and gain distributions are allocated to the Company, with the remaining 20% allocated to the General Partner. For purposes of determining whether the 8% return to the Company has been exceeded and whether the General Partner has received the catch-up amount, the performance of the Partnership includes the performance of the Company for periods prior to the inception of the Partnership. Net investment income or loss, realized gain or loss on investments and appreciation or depreciation on investments for the period are allocated to the Company and the General Partner in a manner consistent with that used to determine distributions. As of June 30, 2015, the Hurdle exceeded the cumulative performance of the Partnership; accordingly, no performance allocation was recorded.
Common distributions are generally based on the estimated taxable earnings of the Company and are recorded on the ex-dividend date. The timing of distributions to the Company is determined by the General Partner, which has provided the Investment Manager with certain criteria for such distributions. The timing and amount to be paid by the Company as a distribution to its shareholders is determined by its Board of Directors, which has provided the Investment Manager with certain criteria for such distributions, and are generally based on amounts received from the Partnership, less any Company expenses and dividends to Series Z preferred Shareholders. Any
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
3. Allocations and Distributions (continued)
net long-term capital gains are distributed at least annually. As of June 30, 2015, the Company had distributed $841,690,955 to the common shareholders since inception.
The Company’s Series Z share dividend rate is fixed at 8% per annum.
4. Management and Advisory Fees and Other Expenses
The Investment Manager receives an annual management and advisory fee, payable monthly in arrears, equal to 1.5% of the sum of the committed common equity (reduced after the ramp-up by returns of contributed capital), the maximum amount available under the Senior Facility, and the maximum amount of the Series A Preferred, subject to reduction by the amount of the Senior Facility commitment when the Senior Facility is no longer outstanding and the amount of the Series A Preferred when less than $1 million in liquidation preference of preferred securities remains outstanding. In addition to the management fee, the General Partner of the Partnership is entitled to a performance allocation as discussed in Note 3, above. As compensation for its services, the Co-Manager receives a portion of the management fees paid to the Investment Manager. The Co-Manager also receives a portion of any performance allocation paid to the General Partner.
The Company and the Partnership pay all respective expenses incurred in connection with the business of the Company and the Partnership, including fees and expenses of outside contracted services, such as custodian, administrative, legal, audit and tax preparation fees, costs of valuing investments, insurance costs, brokers’ and finders’ fees relating to investments and any other transaction costs associated with the purchase and sale of investments of the Partnership.
5. Senior Secured Revolving Credit Facility
The Senior Facility is a senior secured revolving credit facility issued by the Partnership. The Partnership currently has a $150 million Senior Facility maturing on June 15, 2016. The commitment is scheduled to be reduced to $130 million on March 15, 2016. Advances under the Senior Facility bear interest at LIBOR or EURIBOR plus 2.50% per annum, except in the case of loans from CP Conduits, which bear interest at the higher of (i) LIBOR or EURIBOR (as applicable) plus 2.50% or (ii) the CP Conduit’s cost of funds plus 2.50% subject to certain limitations. Also, the Senior Facility accrues commitment fees at a rate of 0.75% per annum on the unused portion of the Senior Facility, or 2.50% per annum when less than 50% of the Senior Facility commitment in borrowings are outstanding. The weighted-average interest rate on outstanding borrowings at June 30, 2015 was 2.60%. The Senior Facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Partnership fail to
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
5. Senior Secured Revolving Credit Facility (continued)
satisfy certain financial or other covenants. As of June 30, 2015, the Partnership was in full compliance with such covenants.
Foreign currency advances are reported in U.S. dollars using the closing rate in effect on the date of valuation. At June 30, 2015, outstanding borrowings were comprised of €30,500,000 ($33,998,351) and $43,000,000. Accrued interest was comprised of €2,118 ($2,361) and $313,062.
6. Commitments, Concentration of Credit Risk and Off-Balance Sheet Risk
The Partnership conducts business with brokers and dealers that are primarily headquartered in New York and Los Angeles and are members of the major securities exchanges. Banking activities are conducted with a firm headquartered in the San Francisco area.
In the normal course of business, the Partnership’s investment activities involve executions, settlement and financing of various investment transactions resulting in receivables from, and payables to, brokers, dealers and the Partnership’s custodian. These activities may expose the Company and the Partnership to risk in the event such parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with whom it conducts business.
The Consolidated Schedule of Investments includes certain revolving loan facilities held by the Partnership with aggregate unfunded balances of approximately $19.1 million.
Consistent with standard business practice, the Company and the Partnership enter into contracts that contain a variety of indemnifications and are engaged from time to time in various legal actions. The maximum exposure of the Company and the Partnership under these arrangements and activities is unknown. However, the Company and the Partnership expect the risk of material loss to be remote.
7. Related Parties
The Company, the Partnership, the Investment Manager, the General Partner and their members and affiliates may be considered related parties. From time to time, the Partnership makes payments to third parties on behalf of the Company which are funded by or reimbursable through contributions from or deductions from distributions to the Company. At June 30, 2015, the Company had a receivable from the Partnership, and the Partnership had a liability to the Company, in the amount of $543,163 as reflected in the Consolidating Statement of Assets and Liabilities. From time to time, the Investment Manager advances payments to third parties on
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
June 30, 2015
7. Related Parties (continued)
behalf of the Company and the Partnership and receives reimbursement from the Company and the Partnership. At June 30, 2015, such reimbursable amounts totaled $405,887 as reflected in the Consolidated Statement of Assets and Liabilities.
In connection with the planned wind down of the Company and the Partnership, the Company and the Partnership obtained an exemptive order (the “Order”) from the Securities and Exchange Commission permitting the Company and the Partnership to sell certain investments to affiliated investment companies at fair value. The Order exempts the Company and the Partnership from provisions of Sections 17(a) and 57(a) of the 1940 Act which would otherwise restrict such transfers. All such sales are subject to the conditions set forth in the Order, which among others include certain procedures to verify that the sale is done at the current market price of the investment.
During the six months ended June 30, 2015, the Partnership received approximately $94.6 million on the sale of certain investments to affiliates (as defined in the 1940 Act), which included a net realized gain of approximately $3.8 million. All of the transfers were consummated in accordance with the provisions of the Order and were accounted for as a sale in accordance with ASC 860, Transfers and Servicing. The Partnership has no continuing involvement in the transferred assets.
8. Series Z Preferred Capital
In addition to the Series A Preferred of the Partnership described in Note 1, the Company had 560 Series Z preferred shares authorized, issued and outstanding as of June 30, 2015. The Series Z preferred shares have a liquidation preference of $500 per share plus accumulated but unpaid dividends and pay dividends at an annual rate equal to 8% of liquidation preference. The Series Z preferred shares are redeemable at any time at the option of the Company and may only be transferred with the consent of the Company.
9. Subsequent Events
On July 16, 2015, the Partnership entered into an agreement to sell its various investments in Primacom (the “Primacom Investments”) at an aggregate estimated price range of approximately $120 million to $140 million, subject to tax analyses and fluctuations in the euro/dollar exchange rate, representing an approximately $30 million to $50 million increase over the aggregate fair value of the Primacom Investments at June 30, 2015. On a pro-forma basis, the return to common shareholders of the Company for the six months ended June 30, 2015 would have been 2.0% to 5.5% if the sale price were reflected in the valuation of the investments at June 30, 2015.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
9. Financial Highlights
| | | Six Months | | | | | | | | | | | | | |
| | | Ended | | | | | | | | | | | | | |
| | | June 30, 2015 | | | Year Ended December 31, | |
| | | (Unaudited) | | | 2014 | | | 2013 | | | 2012 | | | 2011 | |
| Per Common Share (1) | | | | | | | | | | | | | | | | | | | | |
| Net asset value, beginning of period | | $ | 8,218.82 | | | $ | 10,270.07 | | | $ | 9,864.31 | | | $ | 10,660.86 | | | $ | 12,902.36 | |
| | | | | | | | | | | | | | | | | | | | | |
| Investment operations: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | 240.59 | | | | 1,247.15 | | | | 1,396.58 | | | | 1,218.35 | | | | 1,249.82 | |
| Net realized and unrealized gain (loss) | | | (493.96 | ) | | | (942.33 | ) | | | 327.56 | | | | (487.30 | ) | | | (1,650.35 | ) |
| Gain on retirement of Series A preferred shares | | | 4.27 | | | | 26.40 | | | | - | | | | - | | | | - | |
| Dividends on Series A preferred equity facility | | | (20.89 | ) | | | (44.87 | ) | | | (47.57 | ) | | | (45.18 | ) | | | (44.00 | ) |
| Net change in accumulated dividends on Series A preferred equity facility | | | 3.44 | | | | 0.22 | | | | 0.40 | | | | (0.42 | ) | | | (0.39 | ) |
| Dividends to Series Z preferred shareholders | | | - | | | | (0.57 | ) | | | - | | | | (0.57 | ) | | | - | |
| Net change in reserve for dividends to Series Z preferred shareholders | | | (0.14 | ) | | | 0.28 | | | | (0.26 | ) | | | 0.28 | | | | (0.29 | ) |
| Total from investment operations | | | (266.69 | ) | | | 286.28 | | | | 1,676.71 | | | | 685.16 | | | | (445.21 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Distributions to common shareholders from: | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | (204.37 | ) | | | (1,305.71 | ) | | | (1,270.95 | ) | | | (1,481.71 | ) | | | (1,195.69 | ) |
| Net realized gain | | | - | | | | - | | | | - | | | | - | | | | (600.60 | ) |
| Returns of capital | | | (562.03 | ) | | | (1,031.82 | ) | | | - | | | | - | | | | - | |
| Net asset value, end of period | | $ | 7,185.73 | | | $ | 8,218.82 | | | $ | 10,270.07 | | | $ | 9,864.31 | | | $ | 10,660.86 | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on invested assets (2), (6) | | | (0.8 | )% | | | 4.6 | % | | | 12.7 | % | | | 7.6 | % | | | (0.8 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Total return to common shareholders (3), (6) | | | (3.3 | )% | | | 3.3 | % | | | 17.7 | % | | | 6.6 | % | | | (4.2 | )% |
| Less: performance allocation | | | - | | | | - | | | | - | | | | - | | | | - | |
| Return to common shareholders (6) | | | (3.3 | )% | | | 3.3 | % | | | 17.7 | % | | | 6.6 | % | | | (4.2 | )% |
| | | | | | | | | | | | | | | | | | | | | |
| Ratios to average common equity: (4), (7) | | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | 6.3 | % | | | 12.9 | % | | | 13.5 | % | | | 11.5 | % | | | 10.1 | % |
| Expenses | | | 4.8 | % | | | 4.6 | % | | | 4.2 | % | | | 4.0 | % | | | 3.4 | % |
| Expenses and General Partner allocation | | | 4.8 | % | | | 4.6 | % | | | 4.2 | % | | | 4.0 | % | | | 3.4 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Ending common shareholder equity | | $ | 562,554,796 | | | $ | 643,433,280 | | | $ | 804,021,225 | | | $ | 772,254,941 | | | $ | 834,615,259 | |
| Portfolio turnover rate (6) | | | 1.6 | % | | | 23.5 | % | | | 31.2 | % | | | 41.8 | % | | | 41.1 | % |
| Weighted-average debt outstanding | | $ | 90,828,446 | | | $ | 129,844,307 | | | $ | 225,346,892 | | | $ | 87,573,428 | | | $ | 88,160,550 | |
| Weighted-average interest rate | | | 2.7 | % | | | 2.1 | % | | | 0.6 | % | | | 0.8 | % | | | 1.5 | % |
| Weighted-average number of shares | | | 78,287.8060 | | | | 78,287.8060 | | | | 78,287.8060 | | | | 78,287.8060 | | | | 78,287.8060 | |
| Average debt per share | | $ | 1,160 | | | $ | 1,659 | | | $ | 2,878 | | | $ | 1,119 | | | $ | 1,126 | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Notes to Consolidated Financial Statements (Unaudited) (Continued)
9. Financial Highlights (continued)
| Annualized Inception to Date Performance Data as of June 30, 2015: | | |
| Return on invested assets (2) | 5.5% | |
| Internal rate of return (5) | 4.4% | |
| | | |
| (1) | Per share changes in net asset value are computed based on the actual number of shares subscribed and outstanding during the time in which such activity occurred. |
| (2) | Return on invested assets is a time-weighted, geometrically linked rate of return and excludes cash and cash equivalents. |
| (3) | Returns (net of dividends on the preferred equity facility, allocations to the General Partner, and fund expenses, including financing costs and management fees) calculated on a monthly geometrically linked, time-weighted basis. |
| (4) | These ratios included interest expense but do not reflect the effect of dividend payments on the preferred equity facility. |
| (5) | Net of dividends on the preferred equity facility, allocations to the General Partner and fund expenses, including financing costs and management fees. Internal rate of return (“IRR”) is the imputed annual return over an investment period and, mathematically, is the rate of return at which the discounted cash flows equal the initial cash outlays. The IRR presented assumes liquidation of the fund at net asset value as of the balance sheet date. |
| (6) | Not annualized for periods of less than one year. |
| (7) | Annualized for periods of less than one year, except for allocations to the General Partner. |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Changes in Investments in Affiliates (1) (Unaudited)
Six Months Ended June 30, 2015
| | | Value, | | | | | | | | | Value, | |
| | | Beginning of | | | | | | | | | End of | |
| Investment | | Period | | | Acquisitions | | | Dispositions | | | Period | |
| AGY Holding Corp., Second Lien Notes, 11%, due 11/15/16 | | $ | 31,568,499 | | | $ | - | | | $ | - | | | $ | 32,444,500 | |
| AGY Holding Corp., Sr Secured Term Loan, 12%, due 9/15/16 | | | 17,046,935 | | | | - | | | | - | | | | 17,046,935 | |
| Aircraft Leased to Delta Air Lines, Inc. | | | | | | | | | | | | | | | | |
| N913DL Aircraft Secured Mortgage, 8%, due 3/15/17 | | | 406,032 | | | | - | | | | (86,477 | ) | | | 317,460 | |
| N918DL Aircraft Secured Mortgage, 8%, due 8/15/18 | | | 622,030 | | | | - | | | | (76,551 | ) | | | 544,649 | |
| N954DL Aircraft Secured Mortgage, 8%, due 3/20/19 | | | 849,611 | | | | - | | | | (87,946 | ) | | | 761,706 | |
| N955DL Aircraft Secured Mortgage, 8%, due 6/20/19 | | | 893,442 | | | | - | | | | (84,597 | ) | | | 809,414 | |
| N956DL Aircraft Secured Mortgage, 8%, due 5/20/19 | | | 888,868 | | | | - | | | | (86,004 | ) | | | 803,293 | |
| N957DL Aircraft Secured Mortgage, 8%, due 6/20/19 | | | 901,256 | | | | - | | | | (85,337 | ) | | | 816,496 | |
| N959DL Aircraft Secured Mortgage, 8%, due 7/20/19 | | | 913,519 | | | | - | | | | (84,676 | ) | | | 829,567 | |
| N960DL Aircraft Secured Mortgage, 8%, due 10/20/19 | | | 957,502 | | | | - | | | | (83,428 | ) | | | 875,265 | |
| N961DL Aircraft Secured Mortgage, 8%, due 8/20/19 | | | 941,292 | | | | - | | | | (85,442 | ) | | | 856,740 | |
| N976DL Aircraft Secured Mortgage, 8%, due 2/15/18 | | | 610,672 | | | | - | | | | (88,862 | ) | | | 520,506 | |
| N913DL Trust Beneficial Interest | | | 228,083 | | | | 86,477 | | | | (91,267 | ) | | | 218,628 | |
| N918DL Trust Beneficial Interest | | | 263,750 | | | | 76,551 | | | | (86,710 | ) | | | 255,918 | |
| N954DL Trust Beneficial Interest | | | 140,936 | | | | 87,946 | | | | (104,582 | ) | | | 145,718 | |
| N955DL Trust Beneficial Interest | | | 215,490 | | | | 84,597 | | | | (103,307 | ) | | | 212,632 | |
| N956DL Trust Beneficial Interest | | | 207,319 | | | | 86,004 | | | | (104,730 | ) | | | 205,016 | |
| N957DL Trust Beneficial Interest | | | 209,028 | | | | 85,337 | | | | (104,296 | ) | | | 206,692 | |
| N959DL Trust Beneficial Interest | | | 210,771 | | | | 84,676 | | | | (103,867 | ) | | | 208,415 | |
| N960DL Trust Beneficial Interest | | | 209,385 | | | | 83,428 | | | | (103,540 | ) | | | 207,448 | |
| N961DL Trust Beneficial Interest | | | 199,604 | | | | 85,442 | | | | (105,353 | ) | | | 198,218 | |
| N976DL Trust Beneficial Interest | | | 197,984 | | | | 88,862 | | | | (99,543 | ) | | | 196,718 | |
| Blue Wall Shipping Limited, Common Stock | | | 13,533,485 | | | | - | | | | - | | | | 12,334,824 | |
| Contech Holdings, Inc., Common Stock | | | 26,543,752 | | | | - | | | | - | | | | 27,889,944 | |
| Global Geophysical Services, Inc., Common Stock | | | 4,238,713 | | | | 13,811,321 | | | | - | | | | 9,079,137 | |
| Global Geophysical Services, Inc., Senior Unsecured Notes, 10.5%, due 5/1/17 | | | 1,638,318 | | | | - | | | | (13,528,472 | ) | | | - | |
| Global Geophysical Services, Inc., Warrants to Purchase Stock | | | - | | | | - | | | | - | | | | 7 | |
| Integra Telecom, Inc., Common Stock | | | 41,882,431 | | | | - | | | | - | | | | 41,676,794 | |
| Integra Telecom, Inc., Warrants | | | 1,970,638 | | | | - | | | | - | | | | 1,924,451 | |
| KAGY Holding Company, Inc., Series A Preferred Stock | | | 426,999 | | | | - | | | | - | | | | 1,208,641 | |
| Medfort, S.a.r.l (Primacom), First Lien Term Loan A, 15% PIK, due 11/21/17 | | | 4,141,549 | | | | - | | | | - | | | | 3,815,990 | |
| Medfort, S.a.r.l (Primacom), First Lien Term Loan A2, 15% PIK, due 11/21/17 | | | 14,560,819 | | | | - | | | | - | | | | 13,416,222 | |
| Medfort, S.a.r.l (Primacom), First Lien Term Loan B, 1% PIK, due 11/21/17 | | | 4,695,375 | | | | - | | | | - | | | | 4,842,048 | |
| Medfort, S.a.r.l (Primacom), First Lien Term Loan B2, 1% PIK, due 11/21/17 | | | - | | | | - | | | | - | | | | - | |
| Mid-Bowline Group Corp. (WIND Mobile), Class A Voting Shares | | | 14,282,573 | | | | - | | | | - | | | | 20,458,281 | |
| Novasep Holdings SAS, First Lien Notes, 8%, due 12/15/16 | | | 24,483,000 | | | | - | | | | - | | | | 24,452,396 | |
| NVHL S.A. (Novasep), Common Shares | | | 23,042,483 | | | | - | | | | - | | | | 22,309,062 | |
| Perseus Holdings S.A. (Primacom), Common Stock | | | 4,723,665 | | | | - | | | | - | | | | 4,866,332 | |
| Primacom Finance (Lux) S.A. (Finance), Common Equity | | | 35,959,260 | | | | - | | | | - | | | | 35,457,033 | |
| Primacom Finance (Lux) S.A. (Finance), Warrants to Purchase Ordinary Shares | | | 15,669,331 | | | | - | | | | - | | | | 16,032,798 | |
| Primacom Finance (Lux) S.A., Super Senior Facility, 1%, due 4/30/34 | | | 11,629,084 | | | | 54,544 | | | | - | | | | 10,769,114 | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Changes in Investments in Affiliates (1) (Unaudited) (Continued)
Six Months Ended June 30, 2015
| | | Value, | | | | | | | | | Value, | |
| | | Beginning of | | | | | | | | | End of | |
| Investment | | Period | | | Acquisitions | | | Dispositions | | | Period | |
| RM Holdco, LLC (Real Mex), Equity Participation | | $ | 2,562 | | | $ | - | | | $ | - | | | $ | 25 | |
| RM Holdco, LLC (Real Mex), Membership Units | | | - | | | | - | | | | - | | | | - | |
| RM OpCo, LLC (Real Mex), Convertible Second Lien Term Loan Tranche B-1, 8.5%, due 3/30/18 | | | 4,609,161 | | | | 230,235 | | | | - | | | | 4,810,806 | |
| RM OpCo, LLC (Real Mex), Convertible Second Lien Term Loan B, 8.5%, due 3/30/18 | | | 1,777,860 | | | | 1,906,120 | | | | - | | | | 3,683,980 | |
| RM OpCo, LLC (Real Mex), First Lien Term Loan Tranche A, 7%, due 3/21/16 | | | 10,985,566 | | | | 24,941 | | | | (281,629 | ) | | | 10,730,279 | |
| RM OpCo, LLC (Real Mex), Second Lien Term Loan Tranche B, 8.5%, due 3/30/18 | | | 18,188,954 | | | | 1,004,728 | | | | - | | | | 14,739,509 | |
| RM OpCo, LLC (Real Mex), Second Lien Term Loan Tranche B-1, 8.5%, due 3/30/18 | | | 7,232,736 | | | | 333,685 | | | | - | | | | 7,549,159 | |
| TCP Delos Cayman Holdings (Beverly Shipping), Partnership Interest | | | 640,864 | | | | - | | | | - | | | | 879,580 | |
| TCP Delos Cayman Holdings (King B), Partnership Interest | | | 726,529 | | | | - | | | | (59,102 | ) | | | 558,047 | |
| TCP Delos Delaware Holdings, LLC (Raven Hill), Partnership Interest | | | 2,781,223 | | | | - | | | | (32,079 | ) | | | 3,817,200 | |
| TOPV New World Holdings, LLC (Gateway Casinos), Membership Interests | | | 47,755,574 | | | | - | | | | - | | | | 47,897,225 | |
| Woodbine Intermediate Holdings, LLC, Membership Units | | | 3,548,239 | | | | - | | | | - | | | | 354,823 | |
Note to Schedule of Changes in Investments in Affiliates:
| (1) | The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Company of 5% or more of the issuers' voting securities. |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidated Schedule of Restricted Securities of Unaffiliated Issuers (Unaudited)
Six Months Ended June 30, 2015
| Investment | | Acquisition Date | | Cost | |
| Buffets Restaurants Holdings, Inc., Common Stock | | 8/24/12 | | $ | 3,813,240 | |
| Findly Talent, LLC, Membership Units | | 1/1/14 | | | 649,881 | |
| Flight Options Holdings I, Inc. (One Sky), Warrants to Purchase Common Stock | | 12/4/13 | | | 1,468,901 | |
| HW Topco, Inc., Common Stock | | 1/13/12 & 1/15/13 | | | - | |
| HW Topco, Inc., Preferred Stock | | 1/13/12 | | | 11,398 | |
| LightSquared Inc., Call Option | | 12/31/13 | | | - | |
| Linc Energy Finance (USA), Inc., First Lien Notes, 9.625%, due 10/31/17 | | 8/8/14 | | | 8,380,000 | |
| Linc Energy Finance, Inc., Senior Secured Notes, 12.5%, due 10/31/17 | | 10/5/12 & 3/27/15 | | | 16,631,614 | |
| Longview Intermediate Holdings C, LLC, Common Stock | | 4/13/15 | | | 16,634,465 | |
| Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21 | | 8/1/13 | | | 35,000,000 | |
| Marsico Holdings, LLC, Common Interest Units | | 9/10/12 | | | 485,982 | |
| Oxford Resource Partners, LP, Warrants to Purchase Common Units | | 6/24/13 | | | 959,196 | |
| Precision Holdings, LLC, Class C Membership Interests | | 9/30/10 & 7/25/11 | | | - | |
| Shop Holding, LLC (Connexity), Class A Units | | 6/2/11 & 3/17/14 | | | 1,350,918 | |
| Shop Holding, LLC (Connexity), Warrants to Purchase Class A Units | | 7/1/11 | | | - | |
| Fuse, LLC, Senior Secured Notes, 10.375%, due 7/1/19 | | 6/18/14 | | | 15,000,000 | |
| Fuse Media, LLC, Warrants to Purchase Common Stock | | 8/3/12 | | | 1,012,080 | |
| Soraa, Inc., Warrants to Purchase Common Stock | | 8/29/14 | | | 272,658 | |
| STG-Fairway Holdings, LLC (First Advantage), Class A Units | | 12/30/10 & 10/18/13 | | | 1,136,290 | |
| Sunshine Oilsands, Ltd., Senior Secured Notes, 10%, due 8/1/17 | | 8/4/14 & 6/30/15 | | | 25,696,320 | |
| TBC Holdings I, Inc., Common Stock | | 11/18/11 | | | 281,286 | |
| TCP KC, LLC, Membership Units | | Various 2014 | | | 4,521,396 | |
| TPG Hattrick Holdco, LLC (Isola), Common Units | | 9/30/10 | | | 892,388 | |
| Tropicana Entertainment, Inc., Common Stock | | 3/8/10 | | | 9,612,500 | |
| V Telecom Investment S.C.A. (Vivacom), Common Shares | | 11/9/12 | | | 8,688,957 | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidating Statement of Assets and Liabilities (Unaudited)
June 30, 2015
| | | Tennenbaum | | | Tennenbaum | | | | | | Tennenbaum | |
| | | Opportunities | | | Opportunities | | | | | | Opportunities | |
| | | Fund V, LLC | | | Partners V, LP | | | | | | Fund V, LLC | |
| | | Standalone | | | Standalone | | | Eliminations | | | Consolidated | |
| Assets | | | | | | | | | | | | | | | | |
| Investments: | | | | | | | | | | | | | | | | |
| Companies less than 5% owned | | $ | - | | | $ | 337,730,734 | | | $ | - | | | $ | 337,730,734 | |
| Companies 5% to 25% owned | | | - | | | | 347,921,734 | | | | - | | | | 347,921,734 | |
| Investment in subsidiary | | | 562,932,104 | | | | - | | | | (562,932,104 | ) | | | - | |
| Companies more than 25% owned | | | - | | | | 56,313,907 | | | | - | | | | 56,313,907 | |
| Total investments | | | 562,932,104 | | | | 741,966,375 | | | | (562,932,104 | ) | | | 741,966,375 | |
| | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | | - | | | | 144,275,189 | | | | - | | | | 144,275,189 | |
| Accrued interest income | | | - | | | | 5,896,212 | | | | - | | | | 5,896,212 | |
| Foreign currency options at fair value | | | - | | | | 5,580,593 | | | | - | | | | 5,580,593 | |
| Receivable for investments sold | | | - | | | | 3,759,572 | | | | - | | | | 3,759,572 | |
| Deferred debt issuance costs | | | - | | | | 997,717 | | | | - | | | | 997,717 | |
| Receivable from the Partnership | | | 543,163 | | | | - | | | | (543,163 | ) | | | - | |
| Prepaid expenses and other assets | | | 53,943 | | | | 965,872 | | | | - | | | | 1,019,815 | |
| Total assets | | | 563,529,210 | | | | 903,441,530 | | | | (563,475,267 | ) | | | 903,495,473 | |
| | | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | |
| Credit facility payable | | | - | | | | 76,998,351 | | | | - | | | | 76,998,351 | |
| Management and advisory fees payable | | | - | | | | 1,736,116 | | | | - | | | | 1,736,116 | |
| Equity placement costs payable | | | 543,163 | | | | - | | | | - | | | | 543,163 | |
| Payable to the Company | | | - | | | | 543,163 | | | | (543,163 | ) | | | - | |
| Unrealized loss on foreign currency forward exchange contracts | | | - | | | | 538,971 | | | | - | | | | 538,971 | |
| Payable to the Investment Manager | | | 82,123 | | | | 323,764 | | | | - | | | | 405,887 | |
| Payable for investments purchased | | | - | | | | 330,608 | | | | - | | | | 330,608 | |
| Interest payable | | | - | | | | 315,423 | | | | - | | | | 315,423 | |
| Accrued expenses and other liabilities | | | 57,017 | | | | 2,838,275 | | | | - | | | | 2,895,292 | |
| Total liabilities | | | 682,303 | | | | 83,624,671 | | | | (543,163 | ) | | | 83,763,811 | |
| | | | | | | | | | | | | | | | | |
| Preferred stock | | | | | | | | | | | | | | | | |
| Series Z preferred stock | | | 280,000 | | | | - | | | | - | | | | 280,000 | |
| Accumulated dividends on Series Z preferred stock | | | 12,111 | | | | - | | | | - | | | | 12,111 | |
| Total preferred stock | | | 292,111 | | | | - | | | | - | | | | 292,111 | |
| | | | | | | | | | | | | | | | | |
| Preferred equity facility | | | | | | | | | | | | | | | | |
| Series A preferred limited partner interests | | | - | | | | 256,271,574 | | | | - | | | | 256,271,574 | |
| Accumulated dividends on Series A preferred equity facility | | | - | | | | 613,181 | | | | - | | | | 613,181 | |
| Total preferred limited partner interests | | | - | | | | 256,884,755 | | | | - | | | | 256,884,755 | |
| | | | | | | | | | | | | | | | | |
| Net assets | | $ | 562,554,796 | | | $ | 562,932,104 | | | $ | (562,932,104 | ) | | $ | 562,554,796 | |
| | | | | | | | | | | | | | | | | |
| Composition of net assets | | | | | | | | | | | | | | | | |
| Common stock | | $ | 78 | | | $ | - | | | $ | - | | | $ | 78 | |
| Additional paid-in capital | | | 956,454,767 | | | | 959,349,878 | | | | (959,349,878 | ) | | | 956,454,767 | |
| Accumulated deficit | | | (393,887,938 | ) | | | (396,417,774 | ) | | | 396,417,774 | | | | (393,887,938 | ) |
| Accumulated dividends to Series Z preferred shareholders | | | (12,111 | ) | | | - | | | | - | | | | (12,111 | ) |
| Net assets | | $ | 562,554,796 | | | $ | 562,932,104 | | | $ | (562,932,104 | ) | | $ | 562,554,796 | |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Consolidating Statement of Operations (Unaudited)
Six Months Ended June 30, 2015
| | | Tennenbaum | | | Tennenbaum | | | | | | Tennenbaum | |
| | | Opportunities | | | Opportunities | | | | | | Opportunities | |
| | | Fund V, LLC | | | Partners V, LP | | | | | | Fund V, LLC | |
| | | Standalone | | | Standalone | | | Eliminations | | | Consolidated | |
| Investment income | | | | | | | | | | | | | | | | |
| Interest income: | | | | | | | | | | | | | | | | |
| Companies less than 5% owned | | $ | - | | | $ | 24,774,259 | | | $ | - | | | $ | 24,774,259 | |
| Companies 5% to 25% owned | | | - | | | | 3,841,160 | | | | - | | | | 3,841,160 | |
| Companies more than 25% owned | | | - | | | | 2,389,438 | | | | - | | | | 2,389,438 | |
| Dividend income: | | | | | | | | | | | | | | | | |
| Companies less than 5% owned | | | - | | | | 522 | | | | - | | | | 522 | |
| Companies more than 25% owned | | | - | | | | 1,823,436 | | | | - | | | | 1,823,436 | |
| Lease income: | | | | | | | | | | | | | | | | |
| Companies more than 25% owned | | | - | | | | 121,144 | | | | - | | | | 121,144 | |
| Other income: | | | | | | | | | | | | | | | | |
| Companies less than 5% owned | | | - | | | | 53,219 | | | | - | | | | 53,219 | |
| Total interest and related investment income | | | - | | | | 33,003,178 | | | | - | | | | 33,003,178 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Management and advisory fees | | | - | | | | 11,043,260 | | | | - | | | | 11,043,260 | |
| Interest expense | | | - | | | | 1,191,632 | | | | - | | | | 1,191,632 | |
| Amortization of deferred debt issuance costs | | | - | | | | 533,136 | | | | - | | | | 533,136 | |
| Commitment fees | | | - | | | | 409,503 | | | | - | | | | 409,503 | |
| Legal fees, professional fees and due diligence expenses | | | 50,302 | | | | 288,736 | | | | - | | | | 339,038 | |
| Director fees | | | 47,167 | | | | 94,333 | | | | - | | | | 141,500 | |
| Insurance expense | | | 45,558 | | | | 91,355 | | | | - | | | | 136,913 | |
| Custody fees | | | - | | | | 88,000 | | | | - | | | | 88,000 | |
| Other operating expenses | | | 7,501 | | | | 277,310 | | | | - | | | | 284,811 | |
| Total expenses | | | 150,528 | | | | 14,017,265 | | | | - | | | | 14,167,793 | |
| | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | (150,528 | ) | | | 18,985,913 | | | | - | | | | 18,835,385 | |
| | | | | | | | | | | | | | | | | |
| Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | |
| Net realized gain (loss) from: | | | | | | | | | | | | | | | | |
| Investments in companies less than 5% owned | | | - | | | | (6,737,387 | ) | | | - | | | | (6,737,387 | ) |
| Foreign currency transactions | | | - | | | | 28,453 | | | | - | | | | 28,453 | |
| Net realized loss | | | - | | | | (6,708,934 | ) | | | - | | | | (6,708,934 | ) |
| Net change in net unrealized appreciation/depreciation | | | - | | | | (31,961,995 | ) | | | - | | | | (31,961,995 | ) |
| Net realized and unrealized loss | | | - | | | | (38,670,929 | ) | | | - | | | | (38,670,929 | ) |
| | | | | | | | | | | | | | | | | |
| Interest in losses of subsidiary | | | (20,716,706 | ) | | | - | | | | 20,716,706 | | | | - | |
| Gain on retirement of Series A preferred interests | | | | | | | 334,010 | | | | | | | | 334,010 | |
| Dividends paid on Series A preferred equity facility | | | - | | | | (1,635,128 | ) | | | - | | | | (1,635,128 | ) |
| Net change in accumulated dividends on Series A preferred equity facility | | | - | | | | 269,428 | | | | - | | | | 269,428 | |
| Net change in reserve for distributions to Series Z preferred shareholders | | | (11,250 | ) | | | - | | | | - | | | | (11,250 | ) |
| Net decrease in net assets resulting from operations | | $ | (20,878,484 | ) | | $ | (20,716,706 | ) | | $ | 20,716,706 | | | $ | (20,878,484 | ) |
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Approval of Investment Management Agreements
(Unaudited)
On May 6, 2015, the Board of Directors of the Company and the Partnership, including the “non-interested” Directors (the “Independent Directors”), voted to approve the Investment Management Agreement and Co-Management Agreement (each a “Management Agreement” and collectively, the “Management Agreements”) for an additional one-year term.
In considering whether to continue the Company and the Partnership’s Management Agreements, the Independent Directors reviewed the materials provided by the Investment Manager, the Co-Manager, fund counsel and independent director counsel, which included, among other things, (i) fee and expense information of other comparable funds, (ii) a profitability analysis of the Investment Manager in providing services under the Company and the Partnership’s Investment Management Agreements and information regarding the Investment Manager’s financial condition and the financial resources of the Investment Manager and Co-Manager, (iii) information regarding the Investment Manager’s performance respecting other funds and (iv) a memorandum outlining the legal duties of the Directors. The Directors also met with senior personnel of the Investment Manager. The Independent Directors considered factors relating to both the selection of the Investment Manager and Co-Manager and the approval of the compensation paid to the Investment Manager and Co-Manager when reviewing the Management Agreements. In considering approving the renewal of the Management Agreements, the Independent Directors, advised by counsel to the Independent Directors, took into account information furnished to the Independent Directors throughout the year, as well as information prepared specifically in connection with their review of the Management Agreements at this Meeting, both written and verbal. The Independent Directors determined that the materials provided in advance of the meeting, as supplemented by the materials and further discussion by the Investment Manager at the meeting, were sufficiently responsive to their request as to provide all information reasonably necessary for them to evaluate the terms of the Management Agreements. The Independent Directors considered the factors discussed below, among others, but did not identify any single issue or particular piece of information, in isolation, as the controlling factor.
(a) The nature, extent and quality of services provided by the Investment Manager and Co-Manager. The Independent Directors reviewed the services that the Investment Manager and the Co-Manager provide to the Company and the Partnership, including, but not limited to, providing (i) ongoing monitoring and information regarding the investments of the Company and the Partnership, (ii) a well-developed due diligence process for investment opportunities, (iii) well established risk management policies, and (iv) proactive monitoring, reporting and valuation mechanisms. The Independent Directors considered the Investment Manager’s and Co-Manager’s ability to continue to perform the services required by the Company and the Partnership, including the Investment Manager’s financial condition and whether the Investment Manager and the Co-Manager have the financial and other resources necessary to continue to carry out their respective functions under the Management Agreements. Additionally, the Independent Directors considered the services provided by the Investment Manager to other funds and investment vehicles that it manages.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Approval of Investment Management Agreements (Continued)
(Unaudited)
The Independent Directors noted that as a limited life privately offered fund registered under the Investment Company Act, the Company and the Partnership are somewhat unusual investment vehicles. It was also noted that the Investment Manager had developed reporting, valuation and other procedures that were customized to the needs of the Company and the Partnership, and that the Investment Manager had expertise in administering such procedures.
In addition, the Independent Directors considered the size, education, background and experience of the Investment Manager’s and Co-Manager’s staff. They also took into consideration the Investment Manager’s and Co-Manager’s quality of service and longevity in the industry. Lastly, the Independent Directors reviewed the Investment Manager’s ability to attract and retain quality and experienced personnel.
The Independent Directors concluded that the scope of services provided by the Investment Manager and Co-Manager to the Company and the Partnership, including portfolio management and investment advice and compliance with regulatory and tax reporting requirements and investment restrictions, was consistent with the nature, extent and quality of services expected of an investment manager of an investment vehicle such as the Company and the Partnership, and that the level of services provided by the Investment Manager and Co-Manager had not diminished over the past year and was not expected to diminish in the future.
(b) Investment performance of the Company and the Partnership, the Investment Manager and the Co-Manager. The Independent Directors reviewed the past investment performance of the Company and the Partnership, both on an absolute basis and as compared to other funds that had invested in similar investments, as well as general market indices, and the Independent Directors noted that the Company and the Partnership had performed satisfactorily on an absolute basis, and on a relative basis in light of the additional explanations provided by the Investment Manager at the meeting.
The Independent Directors then reviewed the Investment Manager’s and the Co-Manager’s performance with respect to the Company and the Partnership and other clients for which the Investment Manager provides investment advisory services. The Independent Directors recognized that past performance is not an indicator of future performance, but determined that such information was relevant and found that the Investment Manager (and Co-Manager, as relevant) had the necessary expertise to continue to manage and/or provide advice with respect to the Company and the Partnership in accordance with its investment objectives and strategies.
(c) Cost of the services to be provided and profits to be realized by the Investment Manager and the Co-Manager from the relationship with the Company and the Partnership. Next, the Independent Directors considered the cost of the services provided by the Investment Manager and the Co-Manager. As part of their analysis, the Independent Directors gave substantial consideration to the fees payable to the Investment Manager and the Co-Manager. The Independent Directors noted the Investment Manager’s management fee and considered that the Investment Manager is entitled to a potential carried interest after a return to common shareholders.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Approval of Investment Management Agreements (Continued)
(Unaudited)
The Independent Directors also reviewed the amounts to be allocated to SVOF/MM, LLC, General Partner of the Partnership, pursuant to the terms of the Partnership Agreement of the Partnership in furtherance of the provisions of the Investment Management Agreement for the Company and the Partnership. The Independent Directors noted that the Co-Manager receives a portion of amounts allocated to SVOF/MM, LLC from the Company and the Partnership.
In reviewing the management compensation, the Independent Directors considered the management fees and operating expense ratios of other comparable funds (the “Comparable Funds”) managed by the Investment Manager and by other managers. It was noted by the Independent Directors that each of the Comparable Funds were business development companies. Finally, the Independent Directors considered the fact that unlike some of the Comparable Funds, 100% of origination and similar fees are retained by the Company and the Partnership rather than by the Investment Manager or by the Comparable Fund and its investment manager on a shared basis.
Based upon the foregoing, the Independent Directors concluded that the Investment Manager’s and Co-Manager’s management fee and carried interest entitlements were reasonable, compared to those of comparable unaffiliated funds and the management compensation received by the Investment Manager from other funds for which it provides advisory services.
The Independent Directors also reviewed information regarding the profitability to the Investment Manager of its relationship with the Company and the Partnership and information on the financial condition of the Investment Manager. The Independent Directors considered the level of the Investment Manager’s profits and whether the profits were reasonable. The profitability analysis took into consideration a review of the Investment Manager’s methodology for determining allocation of expenses. The Independent Directors found that the profits realized by the Investment Manager from its relationship with the Company and the Partnership were reasonable and consistent with the Investment Manager’s fiduciary duties. The Independent Directors noted that the Co-Manager had advised that it was unable to provide the Directors with the information requested on profitability to the Co-Manager of its relationship with the Company and the Partnership. The Independent Directors also found that the Investment Manager and Co-Manager each had the financial resources necessary to continue to carry out the Investment Manager’s functions under its respective Management Agreement with the Company and the Partnership.
(d) The extent to which economies of scale would be realized as the Company and the Partnership grow and whether fee levels would reflect such economies of scale, and fall out benefits. In light of the predetermined size for the Company and the Partnership and the policy of distributing all realized income, the Independent Directors determined that this factor was not relevant with respect to the current structure of the Company and the Partnership. The Independent Directors also considered whether the fall-out benefits to the Investment Manager, as discussed in the meeting, were appropriate in light of the total fees paid.
Tennenbaum Opportunities Fund V, LLC
(A Delaware Limited Liability Company)
Approval of Investment Management Agreements (Continued)
(Unaudited)
In considering the approval of the continuation of the Management Agreements, no single factor was determinative to the decision of the Directors. Rather, after weighing all of the reasons discussed above, the Independent Directors unanimously determined that the terms of the Management Agreements are fair and reasonable to the Company and the Partnership and that the continuation of the respective Management Agreements for an additional annual period was in the best interests of the Company and the Partnership.
Not applicable for filing of Semi-annual Report to Shareholders.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable for filing of Semi-annual Report to Shareholders.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable for filing of Semi-annual Report to Shareholders.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable for filing of Semi-annual Report to Shareholders.
| ITEM 6. | SCHEDULE OF INVESTMENTS |
(a) Included in Item 1 to this Semi-annual Shareholder Report.
(b) Not applicable.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable for filing of Semi-annual Report to Shareholders.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. |
(a) Not applicable for filing of Semi-annual Report to Shareholders.
(b) None.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
None.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
| ITEM 11. | CONTROLS AND PROCEDURES. |
(a) The Registrant’s Chief Executive Officer and Chief Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule
30a-3(b) under the Investment Company Act of 1940 and Rule 13a-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
(a) (1) Not applicable for filing of Semi-annual Report to Shareholders.
(a) (2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
(a) (3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Tennenbaum Opportunities Fund V, LLC
| By: | /s/ Mark K. Holdsworth | |
| Name: Mark K. Holdsworth | |
| Title: Chief Executive Officer | |
| Date: September 8, 2015 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| By: | /s/ Mark K. Holdsworth | |
| Name: Mark K. Holdsworth | |
| Title: Chief Executive Officer | |
| Date: September 8, 2015 | |
| | |
| By: | /s/ Paul L. Davis | |
| Name: Paul L. Davis | |
| Title: Chief Financial Officer | |
| Date: September 8, 2015 | |
