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 811-21992
TENNENBAUM OPPORTUNITIES PARTNERS V, LP
(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 PARTNERS V, LP
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, 2009
Date of reporting period: JUNE 30, 2009
ITEM 1. reports to stockholders.
Semi-Annual Report
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
June 30, 2009
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Semi-Annual Report
June 30, 2009
Contents
| Portfolio Asset Allocation | 2 |
| | |
| Unaudited Financial Statements | |
| | |
| Statement of Assets and Liabilities | 3 |
| Statement of Investments | 4 |
| Statement of Operations | 11 |
| Statements of Changes in Net Assets | 12 |
| Statement of Cash Flows | 13 |
| Notes to Financial Statements | 14 |
| | |
| Supplemental Information | |
| | |
| Approval of Investment Management Agreements | 25 |
Tennenbaum Opportunities Partners V, LP (the “Partnership”) files its complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) for the first and third quarters of each fiscal year on Form N-Q. The Partnership’s Forms N-Q are available on the SEC’s website at http://www.sec.gov. The Partnership’s Forms N-Q 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 Partnership’s proxy voting guidelines and information regarding how the Partnership voted proxies relating to portfolio investments during the most recent twelve-month period may be obtained without charge on the SEC’s website at http://www.sec.gov, or by calling the Partnership’s advisor, Tennenbaum Capital Partners, LLC, at (310) 566-1000. Collect calls for this purpose are accepted.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Portfolio Asset Allocation (Unaudited)
June 30, 2009
Portfolio Holdings by Investment Type (% of Cash and Investments) |
Portfolio Holdings by Industry (% of Cash and Investments) |
| Wired Telecommunications Carriers | | | 16.5 | % |
| Data Processing, Hosting and Related Services | | | 10.3 | % |
| Satellite Telecommunications | | | 8.0 | % |
| Communications Equipment Manufacturing | | | 7.2 | % |
| Gambling Industries | | | 5.0 | % |
| Cable and Other Subscription Programming | | | 4.5 | % |
| Architectural, Engineering, and Related Services | | | 4.0 | % |
| Other Electrical Equipment and Component Manufacturing | | | 4.0 | % |
| Sporting Goods, Hobby and Musical Instrument Stores | | | 3.0 | % |
| Petroleum and Coal Products Manufacturing | | | 2.8 | % |
| Industrial Machinery Manufacturing | | | 2.7 | % |
| Motor Vehicle Parts Manufacturing | | | 2.6 | % |
| Offices of Real Estate Agents and Brokers | | | 2.1 | % |
| Computer and Peripheral Equipment Manufacturing | | | 1.9 | % |
| Semiconductor and Other Electronic Component Manufacturing | | | 1.9 | % |
| Depository Credit Intermediation | | | 1.2 | % |
| Nondepository Credit Intermediation | | | 1.1 | % |
| Full Service Restaurants | | | 0.9 | % |
| Management, Scientific, and Technical Consulting Services | | | 0.9 | % |
| Radio and Television Broadcasting | | | 0.7 | % |
| Activities Related to Credit Intermediation | | | 0.6 | % |
| Securities and Commodity Contracts Intermediation and Brokerage | | | 0.6 | % |
| Motor Vehicle Manufacturing | | | 0.5 | % |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing | | | 0.2 | % |
| Metalworking Machinery Manufacturing | | | 0.1 | % |
| Other Amusement and Recreation Industries | | | 0.1 | % |
| Plastics Product Manufacturing | | | 0.0 | % |
| Home Furnishings Stores | | | 0.0 | % |
| Cash and Cash Equivalents | | | 16.6 | % |
| | | | | |
| Total | | | 100.0 | % |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Assets and Liabilities (Unaudited)
June 30, 2009
| Assets | | | |
| Investments, at fair value: | | | |
| Unaffiliated issuers (cost $1,252,933,963) | | $ | 995,970,490 | |
| Affiliates (cost $17,246,051) | | | 186,027 | |
| Total investments (cost $1,270,180,014) | | | 996,156,517 | |
| | | | | |
| Cash and cash equivalents | | | 197,699,842 | |
| Receivable for open trades | | | 21,498,929 | |
| Accrued interest income on investments in unaffiliated issuers | | | 19,749,641 | |
| Deferred debt issuance costs | | | 5,902,984 | |
| Receivable from parent | | | 1,311,997 | |
| Prepaid expenses and other assets | | | 266,575 | |
| Total assets | | | 1,242,586,485 | |
| | | | | |
| Liabilities | | | | |
| Credit facility payable | | | 95,424,400 | |
| Payable for investments purchased | | | 31,729,971 | |
| Distributions payable | | | 15,325,277 | |
| Management and advisory fees payable | | | 2,387,500 | |
| Payable to parent | | | 1,736,726 | |
| Interest payable | | | 116,901 | |
| Accrued expenses and other liabilities | | | 616,541 | |
| Total liabilities | | | 147,337,316 | |
| | | | | |
| Preferred equity facility | | | | |
| Series A preferred interests; $20,000/interest liquidation preference; 25,000 interests authorized, 18,450 interests issued and outstanding | | | 369,000,000 | |
| Accumulated distributions on Series A preferred interests | | | 783,205 | |
| Total preferred limited partner interests | | | 369,783,205 | |
| | | | | |
| Net assets applicable to common limited and general partners | | $ | 725,465,964 | |
| | | | | |
| Composition of net assets applicable to common limited and general partners | | | | |
| Paid-in capital | | $ | 1,081,728,330 | |
| Accumulated net investment income | | | 4,465,814 | |
| Accumulated net realized loss | | | (89,715,151 | ) |
| Accumulated net unrealized depreciation | | | (271,013,029 | ) |
| Net assets applicable to common limited and general partners | | $ | 725,465,964 | |
| | | | | |
| See accompanying notes. | | | | |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | Fair | | | Percent of Cash | |
Investment | | Amount | | | Value | | | and Investments | |
| | | | | | | | | | |
Debt Investments (81.08%) | | | | | | | | | |
| | | | | | | | | |
| Activities Related to Credit Intermediation (0.03%) | | | | | | �� | | | |
| OpenSolutions, Inc., Tranche B Term Loan, LIBOR + 2.125%, due 1/23/14 | | | | | | | | | |
| (Acquired 5/12/09, Amortized Cost $310,000) | | $ | 500,000 | | | $ | 335,000 | | | | 0.03 | % |
| | | | | | | | | | | | | |
| Architectural, Engineering, and Related Services (2.19%) | | | | | | | | | | | | |
| Alion Science & Technology Corporation, 1st Lien Term Loan, LIBOR + 6%, due 2/6/13 | | | | | | | | | | | | |
| (Acquired 6/4/09, 6/18/09 and 6/23/09, Amortized Cost $8,562,080) | | $ | 10,936,335 | | | | 9,131,210 | | | | 0.76 | % |
| ESP Holdings, Inc., 2nd Lien Term Loan, LIBOR + 10%, due 9/12/14 | | | | | | | | | | | | |
| (Acquired 2/6/09, Amortized Cost $14,299,412) | | $ | 17,023,109 | | | | 17,023,109 | | | | 1.43 | % |
| Total Architectural, Engineering, and Related Services | | | | | | | 26,154,319 | | | | | |
| | | | | | | | | | | | | |
| Cable and Other Subscription Programming (4.52%) | | | | | | | | | | | | |
| Bresnan Communications, LLC, 2nd Lien Term Loan, LIBOR + 4.5%, due 3/29/14 | | | | | | | | | | | | |
| (Acquired 11/22/06, Amortized Cost $9,926,094) | | $ | 9,750,000 | | | | 8,872,500 | | | | 0.74 | % |
| Primacom AG, Mezzanine Term Loan, EURIBOR + 3.5% Cash + 7% PIK, due 11/21/17 | | | | | | | | | | | | |
(Acquired 12/28/07, Amortized Cost $47,858,918) - (Germany) (3) | | € | 32,549,726 | | | | 45,106,067 | | | | 3.78 | % |
| Total Cable and Other Subscription Programming | | | | | | | 53,978,567 | | | | | |
| | | | | | | | | | | | | |
| Communications Equipment Manufacturing (7.18%) | | | | | | | | | | | | |
| Dialogic Corporation, Senior Secured Notes, 17%, due 9/30/10 | | | | | | | | | | | | |
| (Acquired 12/05/08, Amortized Cost $5,387,879) | | $ | 5,387,879 | | | | 5,315,142 | | | | 0.45 | % |
| Dialogic Corporation, Senior Secured Notes, LIBOR + 12%, due 9/30/10 | | | | | | | | | | | | |
| (Acquired 9/9/08 and 9/10/08, Amortized Cost $39,960,669) | | $ | 40,404,933 | | | | 39,526,126 | | | | 3.31 | % |
| Mitel Networks Corporation, 1st Lien Term Loan, LIBOR + 3.25%, due 8/10/14 | | | | | | | | | | | | |
| (Acquired 12/13/07, Amortized Cost $49,733,325) | | $ | 52,907,792 | | | | 40,871,269 | | | | 3.42 | % |
| Total Communications Equipment Manufacturing | | | | | | | 85,712,537 | | | | | |
| | | | | | | | | | | | | |
| Computer and Peripheral Equipment Manufacturing (1.87%) | | | | | | | | | | | | |
| Palm, Inc., Tranche B Term Loan, LIBOR + 3.5%, due 4/24/14 | | | | | | | | | | | | |
| (Acquired 12/13/07, Amortized Cost $27,030,444) | | $ | 30,033,827 | | | | 22,375,201 | | | | 1.87 | % |
| | | | | | | | | | | | | |
| Data Processing, Hosting and Related Services (7.02%) | | | | | | | | | | | | |
| GXS Worldwide, Inc., 1st Lien Term Loan, Prime + 4.75%, due 3/31/13 | | | | | | | | | | | | |
(Acquired 10/12/07, Amortized Cost $21,955,613) (8) | | $ | 22,449,605 | | | | 20,990,380 | | | | 1.76 | % |
| GXS Worldwide, Inc., 2nd Lien Term Loan, LIBOR + 10.25%, due 9/30/13 | | | | | | | | | | | | |
(Acquired 10/12/07, Amortized Cost $65,940,204) (8) | | $ | 68,264,167 | | | | 62,803,034 | | | | 5.26 | % |
| Total Data Processing, Hosting and Related Services | | | | | | | 83,793,414 | | | | | |
| | | | | | | | | | | | | |
| Gambling Industries (3.06%) | | | | | | | | | | | | |
| Gateway Casinos, Inc., 1st Lien Delayed Draw Term Loan, LIBOR + 2.5%, due 9/30/14 | | | | | | | | | | | | |
| (Acquired 6/8/08, Amortized Cost $108,618) - (Canada) | | $ | 168,400 | | | | 106,653 | | | | 0.01 | % |
| Gateway Casinos, Inc., 1st Lien Term Loan, LIBOR + 2.5%, due 9/30/14 | | | | | | | | | | | | |
| (Acquired 6/8/08, Amortized Cost $536,382) - (Canada) | | $ | 831,600 | | | | 526,680 | | | | 0.04 | % |
| Gateway Casinos, Inc., 2nd Lien Term Loan, LIBOR + 5.5%, due 3/31/15 | | | | | | | | | | | | |
| (Acquired 5/30/08, 6/5/08, 6/12/08 and 6/26/08, Amortized Cost $41,466,250) - (Canada) | | $ | 61,000,000 | | | | 33,129,100 | | | | 2.77 | % |
| Tropicana Entertainment, Term Loan, Prime + 3.25%, due 1/3/12 | | | | | | | | | | | | |
(Acquired 12/7/07 and 12/11/07, Amortized Cost $9,612,500) (4) | | $ | 10,000,000 | | | | 2,831,250 | | | | 0.24 | % |
| Total Gambling Industries | | | | | | | 36,593,683 | | | | | |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | Fair | | | Percent of Cash | |
Investment | | Amount | | | Value | | | and Investments | |
| | | | | | | | | | |
Debt Investments (continued) | | | | | | | | | |
| Industrial Machinery Manufacturing (1.14%) | | | | | | | | | |
| Edwards Limited 2nd Lien Term Loan, LIBOR + 5.75%, due 11/30/14 | | | | | | | | | |
| (Acquired 7/15/08, 8/14/08, 9/03/08, 5/13/09, 5/26/09, 6/12/09, 6/19/09 and 6/22/09, Amortized Cost $20,376,250) | | $ | 39,000,000 | | | $ | 13,650,000 | | | | 1.14 | % |
| | | | | | | | | | | | | |
| Management, Scientific, and Technical Consulting Services (0.94%) | | | | | | | | | | | | |
| Booz Allen Hamilton Mezzanine Loan, 13%, due 7/31/16 | | | | | | | | | | | | |
| (Acquired 8/1/08, Amortized cost $11,240,578) | | $ | 11,354,118 | | | | 11,202,734 | | | | 0.94 | % |
| | | | | | | | | | | | | |
| Metalworking Machinery Manufacturing (0.13%) | | | | | | | | | | | | |
| Mold-Masters Group, 1st Lien Term Loan, LIBOR + 3.5%, due 10/11/14 | | | | | | | | | | | | |
| (Acquired 6/22/09, Amortized Cost $1,220,939) | | $ | 2,180,248 | | | | 1,580,680 | | | | 0.13 | % |
| | | | | | | | | | | | | |
| Motor Vehicle Manufacturing (0.50%) | | | | | | | | | | | | |
| General Motors Corporation, Revolver, LIBOR + 2.5%, due 7/20/11 | | | | | | | | | | | | |
| (Acquired 9/26/07, 9/27/07, 10/18/07, 11/07/07, 12/04/07, and 12/14/07, Amortized Cost $5,379,541) | | $ | 6,000,000 | | | | 5,939,541 | | | | 0.50 | % |
| | | | | | | | | | | | | |
| Motor Vehicle Parts Manufacturing (2.56%) | | | | | | | | | | | | |
| Visteon Corporation, 1st Lien Term Loan, LIBOR + 3%, due 6/13/13 | | | | | | | | | | | | |
(Acquired 11/16/07, 11/20/07, 12/14/07, 12/19/07, and 12/20/07, Amortized Cost $61,610,533) (4) | | $ | 71,627,582 | | | | 30,531,257 | | | | 2.56 | % |
| | | | | | | | | | | | | |
| Offices of Real Estate Agents and Brokers (1.54%) | | | | | | | | | | | | |
| Realogy Corporation, Revolver, LIBOR + 2.25%, due 4/10/13 | | | | | | | | | | | | |
| (Acquired 6/28/07, 7/9/07, 7/13/07, 8/17/07, 3/25/09 and 4/20/09, | | | | | | | | | | | | |
| Amortized Cost $25,762,083) | | $ | 40,000,000 | | | | 18,333,333 | | | | 1.54 | % |
| | | | | | | | | | | | | |
| Other Electrical Equipment and Component Manufacturing (3.97%) | | | | | | | | | | | | |
| EaglePicher Corporation, 1st Lien Tranche B Term Loan, LIBOR + 4.5%, 12/31/12 | | | | | | | | | | | | |
| (Acquired 12/31/07, Amortized Cost $23,602,970) | | $ | 23,602,970 | | | | 22,599,844 | | | | 1.89 | % |
| EaglePicher Corporation, 2nd Lien Term Loan, LIBOR + 7.5%, 12/31/13 | | | | | | | | | | | | |
| (Acquired 12/31/07 and 2/6/09, Amortized Cost $26,850,250) | | $ | 28,000,000 | | | | 24,850,000 | | | | 2.08 | % |
| Total Other Electrical Equipment and Component Manufacturing | | | | | | | 47,449,844 | | | | | |
| | | | | | | | | | | | | |
| Petroleum and Coal Products Manufacturing (2.85%) | | | | | | | | | | | | |
| Building Materials Corporation of America, 2nd Lien Term Loan, LIBOR + 5.75%, due 9/15/14 | | | | | | | | | | | | |
| (Acquired 6/11/08, 6/12/08, 4/14/09, 4/22/09, 5/20/09, 5/28/09 and 6/2/09, Amortized Cost $32,528,679) | | $ | 42,383,183 | | | | 34,012,504 | | | | 2.85 | % |
| | | | | | | | | | | | | |
| Radio and Television Broadcasting (0.30%) | | | | | | | | | | | | |
| High Plains Broadcasting Operating Company, Term Loan, Prime + 4%, due 9/14/16 | | | | | | | | | |
| (Acquired 9/15/08, Amortized Cost $977,509) | | $ | 1,074,186 | | | | 751,930 | | | | 0.06 | % |
| Newport Television LLC, Term Loan B, Prime + 5%, due 9/14/16 | | | | | | | | | | | | |
| (Acquired 5/1/08 and 5/29/08, Amortized Cost $3,692,389) | | $ | 4,057,570 | | | | 2,840,299 | | | | 0.24 | % |
| Total Radio and Television Broadcasting | | | | | | | 3,592,229 | | | | | |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | Fair | | | Percent of Cash | |
Investment | | Amount | | | Value | | | and Investments | |
| | | | | | | | | | |
Debt Investments (continued) | | | | | | | | | |
| Satellite Telecommunications (5.41%) | | | | | | | | | |
| WildBlue Communications, Inc., 1st Lien Delayed Draw Term Loan, | | | | | | | | | |
| LIBOR + 4% Cash + 2.5% PIK, due 12/31/09 | | | | | | | | | |
(Acquired 6/28/07, Amortized Cost $29,470,960) (8) | | $ | 31,008,352 | | | $ | 30,053,294 | | | | 2.52 | % |
| WildBlue Communications, Inc., 2nd Lien Delayed Draw Term Loan, | | | | | | | | | | | | |
| 8.5% Cash + 7.25% PIK, due 8/15/11 | | | | | | | | | | | | |
(Acquired 6/28/07, Amortized Cost $32,488,912) (8) | | $ | 34,169,931 | | | | 34,463,792 | | | | 2.89 | % |
| Total Satellite Telecommunications | | | | | | | 64,517,086 | | | | | |
| | | | | | | | | | | | | |
| Semiconductor and Other Electronic Component Manufacturing (1.88%) | | | | | | | | | | | | |
| Isola USA Corporation, 1st Lien Term Loan, Prime + 9.75%, due 12/18/12 | | | | | | | | | | | | |
| (Acquired 1/24/08 and 6/29/09, Amortized Cost $33,908,912) | | $ | 41,288,733 | | | | 20,644,366 | | | | 1.73 | % |
| Isola USA Corporation, Revolver, LIBOR + 4.75%, due 12/18/12 | | | | | | | | | | | | |
| (Acquired 6/29/09, Amortized Cost $1,864,366) | | $ | 3,691,815 | | | | 1,845,907 | | | | 0.15 | % |
| Total Semiconductor and Other Electronic Component Manufacturing | | | | | | | 22,490,273 | | | | | |
| | | | | | | | | | | | | |
| Sporting Goods, Hobby and Musical Instrument Stores (0.24%) | | | | | | | | | | | | |
| Toys R Us, Real Estate Term Loan, LIBOR + 3%, due 12/8/09 | | | | | | | | | | | | |
| (Acquired 10/18/06, Amortized Cost $2,930,434) | | $ | 2,923,126 | | | | 2,893,895 | | | | 0.24 | % |
| | | | | | | | | | | | | |
| Wired Telecommunications Carriers (11.81%) | | | | | | | | | | | | |
| Cavalier Telephone Corporation, Senior Secured 1st Lien Term Loan, | | | | | | | | | | | | |
| Prime + 6.25%, due 12/31/12 | | | | | | | | | | | | |
| (Acquired 4/18/08 and 4/24/08, Amortized Cost $1,806,262) | | $ | 2,311,420 | | | | 1,298,249 | | | | 0.11 | % |
| Global Crossing Limited, Tranche B Term Loan, LIBOR + 6.25%, due 5/9/12 | | | | | | | | | | | | |
| (Acquired 6/4/07, Amortized Cost $34,406,615) | | $ | 39,177,470 | | | | 33,261,672 | | | | 2.79 | % |
| Hawaiian Telcom Communications Inc., Revolver, Prime + 1.25%, due 4/30/12 | | | | | | | | | | | | |
| (Acquired 5/9/08 and 5/16/08, Cost $3,800,986) | | $ | 4,888,984 | | | | 2,919,842 | | | | 0.24 | % |
| Hawaiian Telcom Communications Inc., Tranche C Term Loan, LIBOR + 2.25%, due 4/30/12 | | | | | | | | | | | | |
| (Acquired 4/22/08, 4/25/08, 4/28/08, 4/30/08, 5/15,08 and 5/19/08, Amortized Cost $2,227,525) | | $ | 2,923,641 | | | | 1,732,257 | | | | 0.15 | % |
| Integra Telecom, Inc., Term Loan, LIBOR + 10% PIK, due 8/31/14 | | | | | | | | | | | | |
| (Acquired 9/05/07, Amortized Cost $43,496,782) | | $ | 43,816,782 | | | | 7,142,136 | | | | 0.60 | % |
| Integra Telecom, Inc., 1st Lien Term Loan, Prime + 3.75%, due 8/31/13 | | | | | | | | | | | | |
| (Acquired 5/20/09 and 6/3/09, Amortized Cost $1,195,641) | | $ | 1,371,770 | | | | 1,248,258 | | | | 0.10 | % |
| Integra Telecom, Inc., 2nd Lien Term Loan, Prime + 6%, due 2/28/14 | | | | | | | | | | | | |
(Acquired 8/1/06, 4/22/09, 6/17/09 and 6/30/09, Amortized Cost $28,367,682) (4) | | $ | 32,729,423 | | | | 23,663,373 | | | | 1.98 | % |
| Interstate Fibernet, Inc., 1st Lien Term Loan, LIBOR + 4%, due 7/31/13 | | | | | | | | | | | | |
(Acquired 8/01/07, Amortized Cost $29,175,093) (8) | | $ | 30,000,095 | | | | 24,813,829 | | | | 2.08 | % |
| Interstate Fibernet, Inc., 2nd Lien Term Loan, LIBOR + 7.5%, due 7/31/14 | | | | | | | | | | | | |
(Acquired 7/31/07, Amortized Cost $44,251,265) (8) | | $ | 44,752,265 | | | | 40,746,937 | | | | 3.41 | % |
| NEF Telecom Company BV, 2nd Lien Tranche D Term Loan, | | | | | | | | | | | | |
| EURIBOR + 5.5%, due 2/16/17 | | | | | | | | | | | | |
(Acquired 8/29/07, Amortized Cost $5,607,877) - (Netherlands) (3) | | € | 4,103,088 | | | | 4,183,088 | | | | 0.35 | % |
| Total Wired Telecommunications Carriers | | | | | | | 141,009,641 | | | | | |
| | | | | | | | | | | | | |
| Total Bank Debt (Cost $850,929,421) | | | | | | | 706,145,738 | | | | | |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | Fair | | | Percent of Cash | |
Investment | | Amount | | | Value | | | and Investments | |
| | | | | | | | | | |
Debt Investments (continued) | | | | | | | | | |
| Other Corporate Debt Securities (21.94%) | | | | | | | | | |
| Architectural, Engineering, and Related Services (1.83%) | | | | | | | | | |
| Alion Science & Technology Corporation, Senior Notes, 10.25%, due 2/1/15 | | $ | 54,707,000 | | | $ | 21,882,800 | | | | 1.83 | % |
| | | | | | | | | | | | | |
| Data Processing, Hosting and Related Services (2.78%) | | | | | | | | | | | | |
| Terremark Worldwide, Inc., Senior Secured Notes, 12%, due 6/15/17 | | | | | | | | | | | | |
(Acquired 6/17/09, Amortized Cost $33,236,014) (5) | | $ | 34,936,000 | | | | 33,189,200 | | | | 2.78 | % |
| | | | | | | | | | | | | |
| Depository Credit Intermediation (0.86%) | | | | | | | | | | | | |
| Wells Fargo & Company, FDIC Guaranteed Notes, 3%, due 12/9/11 | | $ | 10,000,000 | | | | 10,297,400 | | | | 0.86 | % |
| | | | | | | | | | | | | |
| Full-Service Restaurants (0.93%) | | | | | | | | | | | | |
| Landry's Restaurant, Inc., Senior Secured Notes, 14%, due 8/15/11 | | | | | | | | | | | | |
(Acquired 6/9/09, Amortized Cost $11,112,000) (5) | | $ | 11,575,000 | | | | 11,112,000 | | | | 0.93 | % |
| | | | | | | | | | | | | |
| Gambling Industries (1.97%) | | | | | | | | | | | | |
| Harrah's Operating Company Inc., Senior Secured Notes, 10%, due 12/15/18 | | | | | | | | | | | | |
(Acquired 6/25/09, Amortized Cost $48,954,024) (5) | | $ | 39,875,000 | | | | 23,526,250 | | | | 1.97 | % |
| | | | | | | | | | | | | |
| Home Furnishings Stores (0.04%) | | | | | | | | | | | | |
Linens 'n Things, Inc., Senior Secured Notes, LIBOR + 5.625%, due 1/15/14 (4) | | $ | 9,189,000 | | | | 512,379 | | | | 0.04 | % |
| | | | | | | | | | | | | |
Industrial Machinery Manufacturing (1.53%) | | | | | | | | | | | | |
| GSI Group Corporation, Senior Notes, 11%, due 8/20/13 | | | | | | | | | | | | |
(Acquired 8/20/08, Amortized Cost $18,090,735) (5) | | $ | 20,743,000 | | | | 18,274,583 | | | | 1.53 | % |
| | | | | | | | | | | | | |
| Nondepository Credit Intermediation (1.08%) | | | | | | | | | | | | |
| General Electric Capital Corp., FDIC Guaranteed Notes, 1.8%, due 3/11/11 | | $ | 2,500,000 | | | | 2,524,700 | | | | 0.21 | % |
| General Electric Capital Corp., FDIC Guaranteed Notes, 3%, due 12/9/11 | | $ | 10,000,000 | | | | 10,331,400 | | | | 0.87 | % |
| Total Nondepository Credit Intermediation | | | | | | | 12,856,100 | | | | | |
| | | | | | | | | | | | | |
| Offices of Real Estate Agents and Brokers (0.54%) | | | | | | | | | | | | |
| Realogy Corporation, Senior Notes, 10.5%, due 4/15/14 | | $ | 6,284,000 | | | | 2,733,540 | | | | 0.23 | % |
| Realogy Corporation, Senior Subordinated Notes, 12.375%, due 4/15/15 | | $ | 13,099,000 | | | | 3,667,720 | | | | 0.31 | % |
| Total Offices of Real Estate Agents and Brokers | | | | | | | 6,401,260 | | | | | |
| | | | | | | | | | | | | |
| Other Amusement and Recreation Industries (0.06%) | | | | | | | | | | | | |
| Bally Total Fitness Holdings, Inc., Senior Subordinated Notes, | | | | | | | | | | | | |
| 14% Cash or 15.625% PIK, due 10/1/13 | | | | | | | | | | | | |
(Acquired 10/01/07, Amortized Cost $13,374,972) (4), (5) | | $ | 13,097,333 | | | | 667,964 | | | | 0.06 | % |
| | | | | | | | | | | | | |
| Plastics Product Manufacturing (0.05%) | | | | | | | | | | | | |
Pliant Corporation, Senior Secured 2nd Lien Notes, 11.125%, due 9/1/09 (4) | | $ | 6,115,000 | | | | 611,500 | | | | 0.05 | % |
| | | | | | | | | | | | | |
| Radio and Television Broadcasting (0.37%) | | | | | | | | | | | | |
| Radio One Inc., Senior Subordinated Notes, 8.875%, due 7/1/11 | | $ | 11,050,000 | | | | 4,420,000 | | | | 0.37 | % |
| | | | | | | | | | | | | |
| Resin, Synthetic Rubber, and Artificial Synthetic Fibers and Filaments Manufacturing (0.19%) | | | | | | | | | | | | |
| AGY Holding Corp., Senior Secured 2nd Lien Notes, 11%, due 11/15/14 | | $ | 2,896,000 | | | | 2,324,040 | | | | 0.19 | % |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | | | | | |
| | | Amount | | | Fair | | | Percent of Cash | |
| Investment | | or Shares | | | Value | | | and Investments | |
| | | | | | | | | | |
Debt Investments (continued) | | | | | | | | | |
| Satellite Telecommunications (2.37%) | | | | | | | | | |
| Satelites Mexicanos, Senior Secured FRN, LIBOR + 8.75%, due 11/30/11 | | $ | 35,199,380 | | | $ | 28,245,742 | | | | 2.37 | % |
| | | | | | | | | | | | | |
| Securities and Commodity Contracts Intermediation and Brokerage (0.63%) | | | | | | | | | | | | |
| Goldman Sachs Group, Inc., FDIC Guaranteed Notes, 1.7%, due 3/15/11 | | $ | 2,500,000 | | | | 2,515,550 | | | | 0.21 | % |
| JP Morgan Chase & Co., FDIC Guaranteed Notes, 1.65%, due 2/23/11 | | $ | 5,000,000 | | | | 5,029,200 | | | | 0.42 | % |
| Total Securities and Commodity Contracts Intermediation and Brokerage | | | | | | | 7,544,750 | | | | | |
| | | | | | | | | | | | | |
| Sporting Goods, Hobby and Musical Instrument Stores (2.74%) | | | | | | | | | | | | |
| Michaels Stores, Inc., Senior Unsecured Notes, 10%, due 11/1/14 | | $ | 6,265,000 | | | | 5,260,908 | | | | 0.44 | % |
| Michaels Stores, Inc., Senior Subordinated Notes, 11.375%, due 11/1/16 | | $ | 42,000,000 | | | | 27,507,480 | | | | 2.30 | % |
| Total Sporting Goods, Hobby and Musical Instrument Stores | | | | | | | 32,768,388 | | | | | |
| | | | | | | | | | | | | |
| Wired Telecommunications Carriers (3.97%) | | | | | | | | | | | | |
| Hawaiian Telcom Communications, Senior FRN, LIBOR + 5.5%, due 5/1/13 | | | | | | | | | | | | |
(Acquired 6/5/08, 6/10/08, 6/12/08 and 6/13/08 Amortized Cost $5,025,972) (4), (5) | | $ | 12,870,000 | | | | 273,488 | | | | 0.02 | % |
| NEF Telecom Company BV, Mezzanine Term Loan, EURIBOR + 10% PIK, due 8/16/17 | | | | | | | | | | | | |
(Acquired 8/29/07, Amortized Cost $55,675,570) - (Netherlands) (3) | | € | 40,419,884 | | | | 47,163,697 | | | | 3.95 | % |
| Total Wired Telecommunications Carriers | | | | | | | 47,437,185 | | | | | |
| | | | | | | | | | | | | |
| Total Other Corporate Debt Securities (Cost $354,361,805) | | | | | | | 262,071,541 | | | | | |
| | | | | | | | | | | | | |
| Total Debt Investments (Cost $1,205,291,226) | | | | | | | 968,217,279 | | | | | |
| | | | | | | | | | | | | |
Equity Securities (2.34%) | | | | | | | | | | | | |
| Activities Related to Credit Intermediation (0.58%) | | | | | | | | | | | | |
Online Resources Corporation, Common Stock (4) | | | 1,113,900 | | | | 6,950,736 | | | | 0.58 | % |
| | | | | | | | | | | | | |
| Data Processing, Hosting, and Related Services (0.46%) | | | | | | | | | | | | |
| GXS Holdings, Inc., Common Stock | | | | | | | | | | | | |
(Acquired 3/28/08, Cost $2,510,633) (4), (5), (9) | | | 2,611,059 | | | | 5,274,339 | | | | 0.44 | % |
| GXS Holdings, Inc., Series A Preferred Stock | | | | | | | | | | | | |
(Acquired 3/28/08, Cost $100,425) (4), (5), (9) | | | 104,442 | | | | 210,973 | | | | 0.02 | % |
| Total Data Processing, Hosting, and Related Services | | | | | | | 5,485,312 | | | | | |
| | | | | | | | | | | | | |
| Depository Credit Intermediation (0.34%) | | | | | | | | | | | | |
| Doral GP Ltd., GP Interest | | | | | | | | | | | | |
(Acquired 7/12/07, Cost $225) (2), (4), (5), (6) | | | 100 | | | | 225 | | | | 0.00 | % |
| Doral Holdings, LP Interest | | | | | | | | | | | | |
(Acquired 7/12/07, Cost $24,911,825) (4), (5) | | | 24,911,825 | | | | 4,008,060 | | | | 0.34 | % |
| Total Depository Credit Intermediation | | | | | | | 4,008,285 | | | | | |
| | | | | | | | | | | | | |
| Industrial Machinery Manufacturing (0.02%) | | | | | | | | | | | | |
| GSI Group, Inc., Common Stock | | | | | | | | | | | | |
(Acquired 8/20/08, Cost $3,030,191) (4), (5) | | | 578,680 | | | | 286,447 | | | | 0.02 | % |
| | | | | | | | | | | | | |
| Motor Vehicle Manufacturing (0.02%) | | | | | | | | | | | | |
Fleetwood Enterprises, Inc., Common Stock (2), (4), (6) | | | 23,225,225 | | | | 185,802 | | | | 0.02 | % |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
| | | Principal | | | | | | | |
| | | Amount | | | Fair | | | Percent of Cash | |
| Investment | | or Shares | | | Value | | | and Investments | |
| | | | | | | | | | |
Equity Securities (continued) | | | | | | | | | |
| Satellite Telecommunications (0.18%) | | | | | | | | | |
| WildBlue Communications, Inc., Warrants to Purchase Common Stock | | | | | | | | | |
(Acquired 8/16/08, Cost $219,103) (4), (5), (8) | | | 16,893 | | | $ | 2,177,170 | | | | 0.18 | % |
| | | | | | | | | | | | | |
| Wired Telecommunications Carriers (0.74%) | | | | | | | | | | | | |
| ITC^DeltaCom, Inc., Common Stock | | | | | | | | | | | | |
| (Acquired 11/21/08, 11/25/08, 12/5/08, 12/8/08, 12/9/08, 12/19/08, 12/31/08, 3/25/09, 3/27/09, | | | | | | | | | | | | |
(3/30/09, 3/31/09, 5/27/09, 5/29/09, 6/3/09, 6/5/09, 6/9/09, 6/10/09, Cost $621,900) (4), (5), (10) | | | 1,120,569 | | | | 1,120,569 | | | | 0.09 | % |
| NEF Kamchia Co-Investment Fund, LP Interest | | | | | | | | | | | | |
(Acquired 7/31/07, Amortized Cost $8,982,701) - (Cayman Islands) (3), (4), (5) | | | 6,550,500 | | | | 7,724,917 | | | | 0.65 | % |
| Total Wired Telecommunications Carriers | | | | | | | 8,845,486 | | | | | |
| | | | | | | | | | | | | |
| Total Equity Securities (Cost $64,888,788) | | | | | | | 27,939,238 | | | | | |
| | | | | | | | | | | | | |
Total Investments (Cost $1,270,180,014) (7) | | | | | | | 996,156,517 | | | | | |
| | | | | | | | | | | | | |
Cash and Cash Equivalents (16.58%) | | | | | | | | | | | | |
| Wells Fargo & Company, Overnight Repurchase Agreement, 0.05%, | | | | | | | | | | | | |
| Collateralized by Federal Home Loan Bank Discount Note | | $ | 3,903,072 | | | | 3,903,072 | | | | 0.33 | % |
| Chevron Funding Corporation, Commercial Paper, 0.17%, due 7/1/09 | | $ | 10,000,000 | | | | 10,000,000 | | | | 0.84 | % |
| Chevron Funding Corporation, Commercial Paper, 0.22%, due 7/1/09 | | $ | 25,000,000 | | | | 25,000,000 | | | | 2.09 | % |
| Wells Fargo & Company, Commercial Paper, 0.05%, due 7/1/09 | | $ | 3,000,000 | | | | 3,000,000 | | | | 0.25 | % |
| Citicorp, Commercial Paper, 0.35%, due 7/7/09 | | $ | 20,000,000 | | | | 19,998,833 | | | | 1.68 | % |
| General Electric Capital Corporation, Commercial Paper, 0.18%, due 7/8/09 | | $ | 10,000,000 | | | | 9,999,650 | | | | 0.84 | % |
| Union Bank of California, Commercial Paper, 0.20%, due 7/8/09 | | $ | 10,000,000 | | | | 9,999,611 | | | | 0.84 | % |
| General Electric Capital Corporation, Commercial Paper, 0.15%, due 7/10/09 | | $ | 16,000,000 | | | | 15,999,400 | | | | 1.34 | % |
| Toyota Motor Credit Corporation, Commercial Paper, 0.21%, due 7/15/09 | | $ | 11,000,000 | | | | 10,999,102 | | | | 0.92 | % |
| Toyota Motor Credit Corporation, Commercial Paper, 0.22%, due 7/15/09 | | $ | 13,000,000 | | | | 12,998,888 | | | | 1.09 | % |
| Toyota Motor Credit Corporation, Commercial Paper, 0.23%, due 7/15/09 | | $ | 15,000,000 | | | | 14,998,658 | | | | 1.26 | % |
| Wells Fargo & Company, Commercial Paper, 0.20%, due 7/22/09 | | $ | 25,000,000 | | | | 24,997,083 | | | | 2.09 | % |
| UBS Finance, Commercial Paper, 0.25%, due 7/24/09 | | $ | 5,000,000 | | | | 4,999,201 | | | | 0.42 | % |
| Union Bank of California, Certificate of Deposit, 0.25%, due 7/30/09 | | $ | 25,000,000 | | | | 25,000,000 | | | | 2.09 | % |
| Cash Denominated in Foreign Currency (Cost $1,595,212) | | € | 1,153,440 | | | | 1,618,624 | | | | 0.14 | % |
| Cash Held on Account at Various Institutions | | $ | 4,187,720 | | | | 4,187,720 | | | | 0.36 | % |
| Total Cash and Cash Equivalents | | | | | | | 197,699,842 | | | | | |
| | | | | | | | | | | | | |
| Total Cash and Investments | | | | | | $ | 1,193,856,359 | | | | 100.00 | % |
| | | | | | | | | | | | | |
Notes to Statement of Investments:
| (1) | 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. |
| (2) | Affiliated issuer - as defined under the Investment Company Act of 1940 (ownership of 5% or more of the outstanding voting securities of this issuer). |
| (3) | Principal amount denominated in euros. Amortized cost and fair value converted from euros to U.S. dollars. |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Investments (Unaudited) (Continued)
June 30, 2009
Showing Percentage of Total Cash and Investments of the Partnership
Notes to Statement of Investments (continued):
| (4) | Non-income producing security. |
| (6) | Not a controlling position. |
| (7) | Includes investments with an aggregate fair value of $13,383,540 that have been segregated to collateralize certain unfunded commitments. |
| (8) | Priced by an independent third-party pricing service. |
| (9) | Priced by the Investment Manager. |
| (10) | Priced at closing price per Pink Sheets. |
Aggregate purchases and aggregate sales of investments, other than Government securities, totaled $135,016,282 and $76,321,906, respectively.
Aggregate purchases includes investment assets received as payment in-kind. Aggregate sales includes principal paydowns on debt investments.
The total value of restricted securities and bank debt as of June 30, 2009 was $861,155,620 or 72.13% of total cash and investments of the Partnership.
See accompanying notes.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Operations (Unaudited)
Six Months Ended June 30, 2009
| Investment income | | | |
| Interest income | | $ | 54,506,686 | |
| Dividend income | | | 45,371 | |
| Other income | | | 717,883 | |
| Total investment income | | | 55,269,940 | |
| | | | | |
| Operating expenses | | | | |
| Management and advisory fees | | | 14,325,000 | |
| Interest expense | | | 1,140,230 | |
| Amortization of deferred debt issuance costs | | | 530,634 | |
| Commitment fees | | | 332,075 | |
| Legal fees, professional fees and due diligence expenses | | | 156,265 | |
| Insurance expense | | | 106,863 | |
| Custody fees | | | 88,000 | |
| Director fees | | | 57,000 | |
| Other operating expenses | | | 311,184 | |
| Total expenses | | | 17,047,251 | |
| | | | | |
| Net investment income | | | 38,222,689 | |
| | | | | |
| Net realized and unrealized gain | | | | |
| Net realized loss from: | | | | |
| Investments in unaffiliated issuers | | | (7,104,110 | ) |
| Investments in affiliated issuers | | | (523,714 | ) |
| Foreign currency transactions | | | (242,083 | ) |
| Net realized loss | | | (7,869,907 | ) |
| | | | | |
| Net change in net unrealized depreciation on: | | | | |
| Investments | | | 156,265,340 | |
| Foreign currency | | | 895,568 | |
| Net change in net unrealized depreciation | | | 157,160,908 | |
| | | | | |
| Net realized and unrealized gain | | | 149,291,001 | |
| | | | | |
| Dividends paid on preferred equity facility | | | (2,199,358 | ) |
| Net change in accumulated dividends on preferred equity facility | | | 882,040 | |
| | | | | |
| Net increase in net assets applicable to common limited and general partners resulting from operations | | $ | 186,196,372 | |
See accompanying notes.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statements of Changes in Net Assets
| | | Six Months Ended June 30, 2009 (Unaudited) | |
| | | | | | Common | | | | |
| | | | | | Limited | | | General | |
| | | Total | | | Partner | | | Partner | |
| Net assets applicable to common limited and general partners, beginning of period | | $ | 464,632,169 | | | $ | 464,632,169 | | | $ | - | |
| | | | | | | | | | | | | |
| Capital contributions | | | 109,962,700 | | | | 109,962,700 | | | | - | |
| | | | | | | | | | | | | |
| Net investment income | | | 38,222,689 | | | | 38,222,689 | | | | - | |
| Net realized loss | | | (7,869,907 | ) | | | (7,869,907 | ) | | | - | |
| Net change in net unrealized depreciation on investments and foreign currency | | | 157,160,908 | | | | 157,160,908 | | | | - | |
| Dividends paid on preferred equity facility from net investment income | | | (2,199,358 | ) | | | (2,199,358 | ) | | | - | |
| Net change in accumulated dividends on preferred equity facility | | | 882,040 | | | | 882,040 | | | | - | |
| Net increase in net assets applicable to common limited and general partners resulting from operations | | | 186,196,372 | | | | 186,196,372 | | | | - | |
| | | | | | | | | | | | | |
| Distributions to common limited and general partners from: | | | | | | | | | | | | |
| Net investment income | | | (35,325,277 | ) | | | (35,325,277 | ) | | | - | |
| | | | | | | | | | | | | |
| Net assets applicable to common limited and general partners, end of period (including accumulated net investment income of $4,465,814) | | $ | 725,465,964 | | | $ | 725,465,964 | | | $ | - | |
| | | Year Ended December 31, 2008 | |
| | | | | | Common | | | | |
| | | | | | Limited | | | General | |
| | | Total | | | Partner | | | Partner | |
| Net assets applicable to common limited and general partners, beginning of period | | $ | 695,176,734 | | | $ | 695,176,734 | | | $ | - | |
| | | | | | | | | | | | | |
| Capital contributions | | | 219,925,400 | | | | 219,925,400 | | | | - | |
| | | | | | | | | | | | | |
| Net investment income | | | 56,338,253 | | | | 56,338,253 | | | | - | |
| Net realized loss | | | (73,199,739 | ) | | | (73,199,739 | ) | | | - | |
| Net change in net unrealized depreciation on investments and foreign currency | | | (381,468,104 | ) | | | (381,468,104 | ) | | | - | |
| Dividends paid on preferred equity facility from net investment income | | | (5,224,808 | ) | | | (5,224,808 | ) | | | - | |
| Net change in accumulated dividends on preferred equity facility | | | 84,433 | | | | 84,433 | | | | - | |
| Net decrease in net assets applicable to common limited and general partners resulting from operations | | | (403,469,965 | ) | | | (403,469,965 | ) | | | - | |
| | | | | | | | | | | | | |
| Distributions to common limited and general partners from: | | | | | | | | | | | | |
| Net investment income | | | (47,000,000 | ) | | | (47,000,000 | ) | | | - | |
| | | | | | | | | | | | | |
| Net assets applicable to common limited and general partners, end of period (including accumulated net investment income of $2,885,720) | | $ | 464,632,169 | | | $ | 464,632,169 | | | $ | - | |
See accompanying notes.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Statement of Cash Flows (Unaudited)
Six Months Ended June 30, 2009
| Operating activities | | | |
| Net increase in net assets applicable to common limited and general partners resulting from operations | | $ | 186,196,372 | |
| Adjustments to reconcile net increase in net assets applicable to common limited and general partners resulting from operations to net cash used in operating activities: | | | | |
| Net realized loss on investments and foreign currency | | | 7,627,824 | |
| Net change in net unrealized depreciation | | | (156,803,502 | ) |
| Dividends paid on preferred equity facility | | | 2,199,358 | |
| Net change in accumulated dividends on preferred equity facility | | | (882,040 | ) |
| Income from paid in-kind capitalization | | | (16,972,521 | ) |
| Accretion of original issue discount | | | (228,413 | ) |
| Amortization of deferred debt issuance costs | | | 530,634 | |
| Changes in assets and liabilities: | | | | |
| Purchases of investments | | | (118,043,761 | ) |
| Net proceeds from exchanges, sales, maturities and paydowns of investments | | | 76,206,583 | |
| Increase in receivable for open trades | | | (19,672,630 | ) |
| Decrease in accrued interest income - unaffiliated issuers | | | 4,631,510 | |
| Decrease in receivable from parent | | | 63,633 | |
| Decrease in prepaid expenses and other assets | | | 9,603 | |
| Increase in payable for investments purchased | | | 15,183,071 | |
| Decrease in payable to parent | | | (908,043 | ) |
| Decrease in management fees payable | | | (375,000 | ) |
| Decrease in interest payable | | | (1,497,878 | ) |
| Decrease in accrued expenses and other liabilities | | | (250,163 | ) |
| Net cash used in operating activities | | | (22,985,363 | ) |
| | | | | |
| Financing activities | | | | |
| Proceeds from cash contribution in exchange for common limited partner interests | | | 110,500,000 | |
| Proceeds from draws on credit facility | | | 45,000,000 | |
| Principal repayments on credit facility | | | (157,500,000 | ) |
| Proceeds from draws on preferred equity facility | | | 203,000,000 | |
| Dividends paid on preferred equity facility | | | (2,199,358 | ) |
| Distributions to common limited partner | | | (32,000,000 | ) |
| Payments for equity placement costs | | | (537,300 | ) |
| Net cash provided by financing activities | | | 166,263,342 | |
| | | | | |
| Net increase in cash and cash equivalents | | | 143,277,979 | |
| Cash and cash equivalents at beginning of period | | | 54,421,863 | |
| Cash and cash equivalents at end of period | | $ | 197,699,842 | |
| | | | | |
| Supplemental disclosure: | | | | |
| Interest payments | | $ | 2,638,108 | |
See accompanying notes.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited)
June 30, 2009
1. Organization and Nature of Operations
Tennenbaum Opportunities Partners V, LP (the “Partnership”), a Delaware Limited Partnership, is registered as a nondiversified, closed-end management investment company under the Investment Company Act of 1940 (the “1940 Act”). The Partnership has elected to be treated as a partnership for U.S. federal income tax purposes.
The Certificate of Limited Partnership of the Partnership was filed with the Delaware Secretary of State on September 29, 2006, and the Partnership commenced operations on December 15, 2006. The Partnership 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 Partnership is to achieve high total returns while minimizing losses. Tennenbaum Opportunities Fund V, LLC (“TOF V” or the “Common Limited Partner”) owns the entire common limited partnership interest in the Partnership.
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 the Partnership. Babson Capital Management LLC serves as Co-Manager. 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. The Partnership, TOF V, TCP, SVOF/MM, and their members and affiliates may be considered related parties.
Partnership management consists of the General Partner and the Board of Directors. The General Partner directs and executes the day-to-day operations of the Partnership, subject to oversight from the Board of Directors, which performs certain functions required by the 1940 Act. The Board of Directors has delegated investment management of the Partnership’s assets to the Investment Manager and the Co-Manager. The Board of Directors consists of three persons, two of whom are independent. If the Partnership has preferred limited partner interests outstanding, as it currently does, the holders of the preferred limited partner interests voting separately as a class will be entitled to elect two of the Partnership’s Directors. The remaining directors of the Partnership will be subject to election by holders of the common limited partner interests and preferred limited partner interests voting together as a single class.
Partnership Structure
Total maximum capitalization of the Partnership is approximately $1.91 billion, consisting of $1.105 billion of common limited partner interests (the “Common Limited Interests”) from the Common Limited Partner, $369 million of preferred limited partner interests (the “Preferred Limited Interests”) and $436 million under a senior secured revolving credit facility (the “Senior Facility”). The Common Limited Interests, Preferred Limited Interests and the amount drawn under the Senior Facility are used to purchase Partnership investments and to pay certain fees and expenses of the Partnership. Most of these investments are included in the collateral for the Senior Facility.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
1. Organization and Nature of Operations (continued)
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 TOF V as the holder of the Common Limited Interests. However, the Partnership Agreement will prohibit liquidation of the Partnership prior to October 10, 2016 if the Preferred Limited Interests are not redeemed in full prior to such liquidation.
Common Limited Partner Interests
The Common Limited Partner committed to purchase a total of $1.105 billion of the Common Limited Interests on dates specified by the Partnership over a period ending on or prior to April 10, 2009. The Partnership accepted an initial commitment of $725 million at its inception on December 15, 2006, and received assets from the Common Limited Partner representing 20% of this initial commitment on the same day. The Partnership accepted an additional commitment of $260 million on February 22, 2007, and received an initial 20% of this second commitment on or about February 26, 2007. The Partnership accepted a final commitment of $120 million on or about July 2, 2007, and received an initial 20% of this third commitment on or about July 6, 2007. The Partnership has called and received the remainder of the common shareholder commitments as follows:
| Call Date | | Share Issuance Date | | Percent of Commitment | |
| June 28 / July 2, 2007 | | August 1, 2007 | | 10% | |
| July 27, 2007 | | August 31, 2007 | | 20% | |
| November 29, 2007 | | January 2, 2008 | | 10% | |
| December 28, 2007 | | February 1, 2008 | | 10% | |
| July 31, 2008 | | November 3, 2008 | | 10% | |
| October 10, 2008 | | December 15, 2008 | | 10% | |
| January 2, 2009 | | February 2, 2009 | | 10% | |
Preferred Equity Facility
At June 30, 2009, the Partnership had 18,450 Preferred Limited Interests issued and outstanding with a liquidation preference of $20,000 per interest. The Preferred Limited Interests are redeemable at the option of the Partnership, subject to certain conditions, and, during the ramp-up period, may be reissued. Additionally, under certain conditions, the Partnership may be required to either redeem certain of the Preferred Limited Interests 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 Preferred Limited Interests, or a failure by the Partnership to maintain sufficient asset coverage as required by the 1940 Act. At June 30, 2009, the Partnership was in full compliance with such requirements.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
1. Organization and Nature of Operations (continued)
The Preferred Limited Interests accrue dividends at an annual rate equal to LIBOR plus 0.65%, or in the case of any holders of Preferred Limited Interests that are CP Conduits (as defined in the leveraging documents), the higher of LIBOR plus 0.65% or the CP Conduit’s cost of funds rate plus 0.65%, subject to certain limitations and adjustments.
2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Partnership have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of the Investment Manager and the General Partner, the financial results of the Partnership included herein contain all adjustments necessary to present fairly the financial position of the Partnership as of June 30, 2009, the results of its operations and its cash flows for the six months then ended, and the changes in net assets for the six months then ended and for the year ended December 31, 2008. We have evaluated subsequent events through August 14, 2009, the date of issuance of the financial statements. The following is a summary of the significant accounting policies of the Partnership.
Investment Valuation
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 Preferred Limited Interests. Fair value is generally defined as the amount for which an investment could 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 one or more independent valuation services or, for investments aggregating less than 5% of the total capitalization of the Company, by the Investment Manager.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
2. Summary of Significant Accounting Policies (continued)
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 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.
On January 1, 2008, the Partnership adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), which defines fair value, expands disclosures about fair value measurements, and establishes a hierarchy that prioritizes the inputs used to measure fair value. The adoption of FAS 157 did not have a material impact on the Partnership's financial statements. The level category in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. At June 30, 2009, the investments of the Partnership were categorized as follows:
| Level | | Basis for Determining Fair Value | | Aggregate Value | |
| 1 | | Quoted prices in active markets for identical assets | | $ | 7,136,538 | |
| 2 | | Other observable market inputs* | | | 448,492,118 | |
| 3 | | Independent third-party pricing sources that employ significant unobservable inputs | | | 500,633,760 | |
| 3 | | Internal valuations with significant unobservable inputs | | | 39,894,101 | |
* 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, 2009 were as follows:
| | | Independent Third Party Valuation | | | Investment Manager Valuation | |
| Beginning balance | | $ | 487,684,039 | | | $ | 54,116,158 | |
| Net realized and unrealized gains (losses) | | | 39,798,234 | | | | 1,576,867 | |
| Net acquisitions and dispositions | | | 33,673,295 | | | | - | |
| Net transfers into (out of) category | | | (60,521,808 | ) | | | (15,798,924 | ) |
| Ending balance | | $ | 500,633,760 | | | $ | 39,894,101 | |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
2. Summary of Significant Accounting Policies (continued)
| Net change in unrealized gains (losses) during the period on investments still held at period end (included in net realized and unrealized gains/losses, above) | | $ | 39,798,234 | | | | $ | 1,576,867 | |
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 brokerage firms and the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of three months or less. For purposes of reporting cash flows, cash consists of the cash held with brokerage firms and the custodian bank, and cash equivalents maturing within 90 days.
Repurchase Agreements
In connection with transactions in repurchase agreements, it is the Partnership’s policy that its custodian take possession of the underlying collateral, the fair value of which is required to exceed the principal amount of the repurchase transaction, including accrued interest, at all times. If the seller defaults, and the fair value of the collateral declines, realization of the collateral by the Partnership may be delayed or limited.
Restricted Investments
The Partnership may invest 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 Statement of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
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, 2009, the Partnership had foreign currency denominated investments with an aggregate fair value of approximately 8.7% of the Partnership’s total cash and investments. Such positions were converted at the closing rate in effect at June 30, 2009 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 Partnership reports 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. During the period ended June 30, 2009, such fluctuations from foreign exchange rates were largely offset by fluctuations in the value of foreign currency advances under the Partnership’s credit facility.
Investments in foreign companies and securities of foreign governments may involve special additional 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 some 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.
Debt Issuance Costs
Costs of $8,501,709 were incurred in connection with placing the Partnership’s Senior Facility. These costs were deferred and are being amortized on a straight-line basis over eight years, the estimated life of the Senior Facility. The impact of utilizing the straight-line amortization method versus the effective-interest method is not expected to be material to the Partnership’s operations.
Purchase Discounts
The majority of the Partnership’s high yield and distressed debt investments are purchased at a considerable discount to par as a result of the underlying credit risks and financial results of the issuer and due to general market factors that influence the financial markets as a whole. GAAP requires that discounts on corporate (investment grade) bonds, municipal bonds and treasury bonds be amortized using the effective-interest or constant-yield method. The process of accreting the purchase discount of a debt investment to par over the holding period results in accounting entries that increase the cost basis of the investment and record a noncash income accrual to the statement of operations. The Partnership considers it prudent to follow GAAP guidance that requires the Investment Manager to consider the collectibility of interest when making accruals. AICPA Statement of Position 93-1 discusses financial accounting and reporting for high yield debt investments for which, because of the credit risks associated with high yield and distressed debt investments, income recognition must be carefully considered and constantly evaluated for collectibility.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
2. Summary of Significant Accounting Policies (continued)
Accordingly, when accounting for purchase discounts, management recognizes discount accretion income when it is probable that such amounts will be collected and when such amounts can be estimated. A reclassification entry is recorded at disposition to reflect purchase discounts on all realized investments. For income tax purposes, the economic gain resulting from the sale of debt investments purchased at a discount is allocated between interest income and realized gains.
Income Taxes
The Partnership’s income or loss is reported in the partners’ income tax returns. Consequently, no income taxes are paid at the Partnership level or reflected in the Partnership’s financial statements. The tax returns, the qualification of the Partnership, and the amount of allocable Partnership income or loss are subject to examination by federal and state taxing authorities for all tax years since inception. No such examinations are currently pending.
Cost and unrealized appreciation (depreciation) for U.S. federal income tax purposes of the investments of the Partnership at June 30, 2009 were as follows:
| Unrealized appreciation | | $ | 13,960,709 | |
| Unrealized depreciation | | | (287,984,206 | ) |
| Net unrealized depreciation | | | (274,023,497 | ) |
| | | | | |
| Cost | | $ | 1,270,180,014 | |
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.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
3. Allocations and Distributions
Net income and gains of the Partnership are distributed first to the Common Limited Partner until it has received an 8% annual weighted-average return on its undistributed contributed equity, and then to the General Partner until it has received 20% of all cumulative income and gain distributions. 80% of all remaining net income and gain distributions are allocated to the Common Limited Partner, with the remaining 20% allocated to the General Partner. Net investment income or loss, realized gain or loss on investments, and appreciation or depreciation on investments for the period are allocated to the Common Limited Partner and the General Partner in a manner consistent with that used to determine distributions.
Distributions to the Common Limited Partner are generally based on the Common Limited Partner’s estimated taxable earnings from its interest in the Partnership, and are recorded on the ex-dividend date. The timing of distributions is determined by the General Partner, which has provided the Investment Manager with certain criteria for such distributions. Any net long-term capital gains are distributed at least annually. As of June 30, 2009, the Partnership had declared $96,888,648 in distributions to the Common Limited Partner since inception.
4. Management Fees and Other Expenses
The Partnership incurs an annual management and advisory fee, payable to the Investment Manager monthly in arrears, equal to 1.5% of the sum of the Common Limited Interest commitments (reduced after the ramp-up period by returns of contributed capital) and the Preferred Limited Interests and debt potentially issuable in respect of such Common Limited Interest commitments, subject to reduction by the amount of the Senior Facility commitment when the Senior Facility is no longer outstanding and the amount of the Preferred Limited Interests when less than $1 million in liquidation preference of Preferred Limited Interests remains outstanding. For purposes of computing the management fee, total committed capital during the period ended June 30, 2009 was $1.91 billion, consisting of $1.105 billion of capital committed by the Common Limited Partner, $369 million of Preferred Limited Interests and $436 million of debt commitments. In addition to the management fee, the General Partner 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 allocation paid to the General Partner.
The Partnership pays all expenses incurred in connection with the business of 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.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
5. Senior Secured Revolving Credit Facility
The Partnership has entered into a credit agreement with certain lenders, which provides for a senior secured revolving credit facility (the “Senior Facility”) pursuant to which amounts may be drawn up to $436 million. The Senior Facility matures December 15, 2014, subject to extension by the lenders at the request of the Partnership for one 364-day period.
Advances under the Senior Facility bear interest at LIBOR or EURIBOR plus 0.35% 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 0.35% or (ii) the CP Conduit’s cost of funds plus 0.35%, subject to certain limitations. Short-term advances under the swingline facility bear interest at the LIBOR Market Index Rate plus 0.35% per annum or the main refinancing rate as set by the European Central Bank for such period, plus 0.85% per annum. In addition to amounts due on outstanding debt, the Senior Facility accrues commitment fees of 0.15% per annum on the unused portion of the Senior Facility, or 0.20% per annum when less than $87,200,000 in borrowings are outstanding.
Foreign currency advances are reported in US dollars using the closing rate in effect on the date of valuation. At June 30, 2009, outstanding borrowings included €68,000,000 (US $95,424,400), and interest payable included €2,140 (US $3,003).
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 New York area.
In the normal course of business, the Partnership’s investment activities involve executions, settlement and financing of various transactions resulting in receivables from, and payables to, brokers, dealers and the Partnership’s custodian. These activities may expose 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.
Consistent with standard business practice, the Partnership enters into contracts that contain a variety of indemnifications. The Partnership’s maximum exposure under these arrangements is unknown. However, the Partnership expects the risk of loss to be remote.
The Statement of Investments includes certain revolving loan facilities held by the Partnership with aggregate unfunded balances of approximately $7.5 million at June 30, 2009. These instruments are reflected at fair value in the Statement of Investments and may be drawn up to the principal amount shown.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
7. Related Parties
From time to time the Partnership advances payments to third parties on behalf of the Common Limited Partner which are reimbursable through deductions from distributions to the Common Limited Partner. The Partnership has also recognized liabilities to third parties for equity placement costs of the Common Limited Partner which will be paid out of contributions by the Common Limited Partner.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Notes to Financial Statements (Unaudited) (Continued)
June 30, 2009
8. Financial Highlights
| | | Six Months | | | | | | | | | December 15, 2006 | |
| | | Ended | | | Year Ended | | | Year Ended | | | (Inception) | |
| | | June 30, 2009 | | | December 31, | | | December 31, | | | to December 31, | |
| | | (Unaudited) | | | 2008 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | |
Period return on invested assets (1), (2) | | | 24.7 | % | | | (32.0 | )% | | | (3.3 | )% | | | 0.5 | % |
| | | | | | | | | | | | | | | | | |
Gross return to common limited partner (1) | | | 33.3 | % | | | (51.0 | )% | | | (18.7 | )% | | | (0.4 | )% |
Less: General Partner allocation (1) | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % |
Period return to common limited partner (1), (3) | | | 33.3 | % | | | (51.0 | )% | | | (18.7 | )% | | | (0.4 | )% |
| | | | | | | | | | | | | | | | | |
| Ratios and Supplemental Data: | | | | | | | | | | | | | | | | |
| Ending net assets attributable to common limited partner | | $ | 725,465,964 | | | $ | 464,632,169 | | | $ | 695,176,734 | | | $ | 145,014,518 | |
| | | | | | | | | | | | | | | | | |
Net investment income (loss) / average common limited partner interest (4), (5) | | | 13.0 | % | | | 8.8 | % | | | 0.3 | % | | | (14.4 | )% |
| | | | | | | | | | | | | | | | | |
| Expenses and General Partner allocation / average common limited partner equity | | | | | | | | | | | | | | | | |
Operating expenses (4), (5) | | | 5.8 | % | | | 7.8 | % | | | 11.5 | % | | | 37.4 | % |
General Partner allocation (1) | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % |
| Total expenses and General Partner allocation | | | 5.8 | % | | | 7.8 | % | | | 11.5 | % | | | 37.4 | % |
| | | | | | | | | | | | | | | | | |
Portfolio turnover rate (1) | | | 9.1 | % | | | 61.5 | % | | | 42.7 | % | | | 3.7 | % |
| Weighted-average debt outstanding | | $ | 152,879,527 | | | $ | 347,492,137 | | | $ | 125,714,977 | | | $ | 20,764,706 | |
| Weighted-average interest rate | | | 1.5 | % | | | 3.8 | % | | | 5.5 | % | | | 5.7 | % |
| | | | | | | | | | | | | | | | | |
| Annualized Inception to Date Performance Data as of June 30, 2009: | | | | | | | | | | | | | | | | |
Return on common limited partner interest (3) | | | (21.0 | )% | | | | | | | | | | | | |
Return on invested assets (2) | | | (7.3 | )% | | | | | | | | | | | | |
Internal rate of return (6) | | | (19.4 | )% | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Not annualized for periods of less than one year. |
| (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 partnership expenses, including financing costs and management fees) are calculated on a monthly geometrically linked, time-weighted basis. |
| (4) | Annualized for periods of less than one year. |
| (5) | These ratios include interest expense but do not reflect the effect of dividends on the preferred equity facility. The ratio of expenses to average common limited equity is higher in earlier periods, and net investment income to common limited equity assets is reduced, due to the Partnership’s relatively smaller capital base while the Partnership is ramping up. |
| (6) | Net of dividends on the preferred equity facility, allocations to the General Partner, and partnership 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 internal rate of return presented assumes liquidation of the partnership at net asset value as of the balance sheet date and is reduced by organizational costs that were expensed at the inception of the Partnership. |
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Approval of Investment Management Agreements
(Unaudited)
On May 6, 2009, the Board of Directors of 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 recommend re-approval of the Management Agreements, the Independent Directors reviewed materials provided by the Investment Manager, the Co-Manager, fund counsel and independent counsel. The Directors also met with senior personnel of the Investment Manager and discussed a number of topics affecting their determination, including the following.
(i) 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 Co-Manager provide to the Partnership. The Independent Directors noted the comprehensive range of such services and that the Investment Manager had developed reporting, valuation and other procedures that were customized to the specialized nature of 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 noted their 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 expected to be provided by the Investment Manager and Co-Manager to the Partnership and the experience and expertise of the personnel performing such services was consistent with the nature, extent and quality expected of an Investment Manager of an investment vehicle such as the Partnership.
(ii) Investment performance of the Partnership and the Investment Manager. The Independent Directors reviewed the past investment performance of the Partnership and other funds for which the Investment Manager provides investment advisory services, 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 Partnership had performed satisfactorily in light of the extremely adverse market conditions during 2008. The Independent Directors discussed the circumstances surrounding the performance of the Partnership as well as actions to be taken and prospects for improved performance in the future.
Tennenbaum Opportunities Partners V, LP
(A Delaware Limited Partnership)
Approval of Investment Management Agreements (Continued)
(Unaudited)
(iii) Cost of the services provided and profits realized by the Investment Manager from the relationship with the Partnership. The Independent Directors considered the cost of the services provided by the Investment Manager. As part of their analysis, the Independent Directors gave substantial consideration to the compensation payable to the Investment Manager, the terms of which are summarized in the footnotes to the financial statements included in this report. The Independent Directors also noted the types of expenses for which the Partnership or the Investment Manager and Co-Manager are responsible. In reviewing the management compensation, the Independent Directors considered the management fees and operating expense ratios of other registered and non-registered funds managed by the Investment Manager and by other managers that had somewhat comparable investment programs. The Independent Directors also noted that the compensation provisions had been subject to extensive discussion with several of the large institutional investors in the Partnership.
The Independent Directors also reviewed information regarding the profitability to the Investment Manager of its relationship with the Partnership and information on the financial condition of the Investment Manager. The Independent Directors noted that the Investment Manager and Co-Manager and their affiliates did not receive revenues from any other source, such as brokerage commissions or origination fees, in relation to the Partnership. The Independent Directors found that the profits realized by the Investment Manager from its relationship with the Partnership were reasonable and consistent with the Investment Manager’s fiduciary duties. The Independent Directors noted that the Co-Manager was unable to provide the Directors with the information requested on the profitability to the Co-Manager of its relationship with 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 their respective functions.
The Independent Directors concluded that the management and performance fees for the Investment Manager and Co-Manager were reasonable.
(iv) The extent to which economies of scale would be realized as the Partnership grows and whether fee levels would reflect such economies of scale. In light of the Partnership’s predetermined size and policy of distributing all realized income, the Independent Directors determined that the possibility of economies of scale was not relevant with respect to the current structure of the Partnership and accordingly did not consider whether fee levels would reflect any economies of scale.
In considering the Partnership’s 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 recommended re-approval of each of the Management Agreements.
Not applicable for filing of Semiannual Reports to Shareholders.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable for filing of Semiannual Reports to Shareholders.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable for filing of Semiannual Reports to Shareholders.
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
| ITEM 6. | SCHEDULE OF INVESTMENTS |
Included in Semiannual Shareholder Report in Item 1.
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable for filing of Semiannual Reports to Shareholders.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. |
Not applicable for filing of Semiannual Reports to Shareholders.
| 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 evaluated the Registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the Registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized, and reported in a timely manner.
(b) None.
(a) (1) Not applicable for filing of Semiannual Reports 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 Partners V, LP
| By: | /s/ Hugh Steven Wilson | |
| Name: | Hugh Steven Wilson | |
| Title: | Chief Executive Officer | |
| Date: | August 28, 2009 | |
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/ Hugh Steven Wilson | |
| Name: | Hugh Steven Wilson |
| Title: | Chief Executive Officer |
| Date: | August 28, 2009 |
| | |
| By: | /s/ Paul L. Davis | |
| Name: | Paul L. Davis |
| Title: | Chief Financial Officer |
| Date: | August 28, 2009 |
