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 811-21603
SPECIAL VALUE OPPORTUNITIES FUND, 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)
DAVID A. HOLLANDER, SECRETARY
SPECIAL VALUE OPPORTUNITIES FUND, 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, 2005
Date of reporting period: JUNE 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMI-ANNUAL SHAREHOLDER REPORT
Special Value Opportunities Fund, LLC
June 30, 2005
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Semi-Annual Shareholder Report
(unaudited)
June 30, 2005
Contents
Unaudited Financial Statements
Statement of Assets and Liabilities ...........................................1
Statement of Investments in Securities of Unaffiliated Issuers ................2
Statement of Investments in Securities of Affiliates ..........................4
Statement of Operations........................................................5
Statements of Changes in Net Assets............................................6
Statement of Cash Flows........................................................7
Notes to Financial Statements..................................................8
Supplemental Information
Portfolio Asset Allocation ...................................................23
Special Value Opportunities Fund, LLC (the "Company") 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
Company's Forms N-Q are available on the SEC's website at http://www.sec.gov.
The Company'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 fund's proxy voting guidelines may be obtained on the SEC's
website at www.sec.gov, or by calling the Company's adviser, Tennenbaum Capital
Partners, LLC, at (310) 566-1000. Collect calls for this purpose are accepted.
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Assets and Liabilities (unaudited)
June 30, 2005
Cost Fair Value
------------ -------------
Assets
Investments in securities of unaffiliated issuers
Debt securities $308,504,627 $ 316,099,290
------------------------------
Total investments in securities of unaffiliated issuers 308,504,627 316,099,290
Investments in affiliates
Debt securities 22,823,517 23,206,904
Equity securities 29,617,982 37,610,094
------------------------------
Total investments in affiliates 52,441,499 60,816,998
------------------------------
Total investments 360,946,126 376,916,288
Cash and cash equivalents 217,797,353
Accrued interest income on securities of unaffiliated issuers 3,021,142
Accrued interest income on securities of affiliated issuers 89,718
Prepaid expenses and other assets 52,382
Deferred debt issuance costs 6,679,752
-------------
Total assets 604,556,635
-------------
Liabilities
Credit facility payable 130,000,000
Payable for investment securities purchased 56,730,426
Management and advisory fees payable 1,481,250
Accrued expenses and other liabilities 898,930
-------------
Total liabilities 189,110,606
-------------
Preferred Stock
Auction rate money market preferred stock; $25,000/share liquidation preference;
9,520 shares authorized, 4,284 shares issued and outstanding 107,100,000
Accumulated dividends on auction rate money market preferred stock 98,631
Series S; $1,000/share liquidation preference; 1 share authorized, no shares issued
and outstanding --
Series Z; $500/share liquidation preference; 400 shares authorized, issued and
outstanding 200,000
Accumulated dividends on Series Z preferred stock 7,844
-------------
Total preferred stock 107,406,475
-------------
Net assets applicable to common shareholders $ 308,039,554
=============
Composition of net assets applicable to common shareholders:
Common stock, $0.001 par value, unlimited shares authorized, 16,924.787 shares
issued and outstanding $ 17
Paid-in capital in excess of par 294,422,657
Distributions in excess of net investment income (2,869,157)
Accumulated net realized gain on investments 622,350
Accumulated net unrealized gain on investments 15,970,162
Accumulated dividends to preferred shareholders (106,475)
-------------
Net assets applicable to common shareholders $ 308,039,554
=============
Common stock, NAV per share $ 18,200.50
See accompanying notes.
1
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Investments in Securities of Unaffiliated Issuers (unaudited)
June 30, 2005
Showing Percentage of Total Cash and Investments of the Company
Percent of
Principal Fair Cash and
Security Amount Value Investments
- -----------------------------------------------------------------------------------------------------------------------
Debt Securities (53.15%)
Bank Debt (34.30%) (1)
Machinery (Nonagriculture, Nonconstruction, Nonelectronic) (11.07%)
Ahern Rentals, Inc. Senior Secured Notes, 12% Cash + 2.5% PIK, due 10/29/09
(Acquired 10/29/04, Amortized Cost $64,076,451) $64,360,845 $65,849,190 11.07%
Personal Transportation (9.13%)
Northwest Airlines, Inc. 1st Preferred Mortgage, 12.19%, due 10/12/16
(Acquired 10/12/04, Amortized Cost $30,550,998) $30,835,910 30,720,276 5.17%
Northwest Airlines, Inc. 1st Preferred Mortgage, 12.19%, due 11/19/17
(Acquired 11/19/04, Amortized Cost $17,526,937) $17,737,868 17,671,351 2.97%
(Acquired 2/28/05, Amortized Cost $2,655,718) $ 2,687,678 2,677,599 0.45%
(Acquired 6/22/05, Amortized Cost $3,193,305) $ 3,231,735 3,219,616 0.54%
-----------
Total Personal Transportation 54,288,842
Telecommunications (4.89%)
Integra Telecom, Inc. 1st Lien Senior Secured Term Loan,
LIBOR + 7% Cash + 2% PIK, due 9/14/09
(Acquired 9/20/04, Amortized Cost $29,315,704) $29,700,889 29,106,871 4.89%
Utilities (9.21%)
La Paloma Generating Co.
Cert. Residual (Acquired 2/2/05, Cost $0) (2) $ 541,095 560,034 0.09%
Priority W/Cap
(Acquired 2/2/05, Cost $1,874,245) $ 1,874,245 1,892,987 0.32%
(Acquired 5/6/05, Cost $151,886) $ 151,886 153,405 0.03%
Tranche A Hedge Roll Up (Acquired 2/2/05, Cost $10,806,557) (2) $ 8,619,704 10,947,024 1.84%
Tranche A Residual
(Acquired 2/2/05, Cost $6,925,178) (2) $ 7,501,124 7,013,551 1.18%
(Acquired 3/18/05, Cost $4,651,972) (2) $ 5,138,705 4,804,689 0.81%
(Acquired 5/6/05, Cost $1,375,305) (2) $ 1,536,258 1,436,402 0.24%
Tranche B Hedge Residual (Acquired 2/2/05, Cost $7,031,575) (2) $ 7,044,078 7,783,706 1.31%
Tranche B Hedge Roll Up (Acquired 2/2/05, Cost $441,168) (2) $ 351,892 446,903 0.08%
Tranche B Residual
(Acquired 2/2/05, Cost $9,227,538) (2) $ 9,217,963 10,185,850 1.71%
(Acquired 3/18/05, Cost $1,123,508) (2) $ 1,122,930 1,240,838 0.21%
(Acquired 5/6/05, Cost $326,999) (2) $ 335,655 370,900 0.06%
Tranche B Roll Up
(Acquired 2/2/05, Cost $441,168) (2) $ 351,892 446,903 0.08%
(Acquired 3/18/05, Cost $3,814,260) (2) $ 3,048,788 3,871,961 0.65%
(Acquired 5/6/05, Cost $1,140,121) (2) $ 911,314 1,157,370 0.19%
Tranche C Roll Up (Acquired 2/2/05, Cost $2,409,594) (2) $ 1,921,980 2,440,915 0.41%
-----------
Total Utilities 54,753,438
2
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Investments in Securities of Unaffiliated Issuers
(unaudited) (continued)
June 30, 2005
Showing Percentage of Total Cash and Investments of the Company
Principal Fair Cash and
Security Amount Value Investments
- ------------------------------------------------------------------------------------------------------------------------
Corporate Fixed Income Securities (18.85%)
Automobiles (4.82%)
EaglePicher Holdings Senior Notes, 9.75%, due 9/1/13 (2) $ 40,958,000 $ 28,670,600 4.82%
Diversified/Conglomerate Manufacturing (2.41%)
Mastec, Inc. Senior Sub. Notes, 7.75%, due 2/1/08 $ 14,644,000 14,351,120 2.41%
Leisure, Amusement, Motion Pictures and Entertainment (5.10%)
Bally Total Fitness Holdings, Inc. Senior Sub. Notes, 9.875%, due 10/15/07 $ 34,685,000 30,306,019 5.10%
Utilities (6.52%)
Calpine Generating Co.
Secured Floating Rate Notes, LIBOR + 9%, due 4/11/11 $ 11,292,000 10,219,260 1.72%
Secured Notes, 11.50%, due 4/11/11 $ 31,292,000 28,553,950 4.80%
------------
Total Utilities 38,773,210
------------
Total Debt Securities of Unaffiliated Issuers (cost $308,504,627) 316,099,290
------------
Cash and Cash Equivalents (36.62%)
Abbey National Commercial Paper, 3.27%, due 7/7/05 $ 28,000,000 27,982,197 4.70%
American Express Commercial Paper, 3.06%, due 7/8/05 $ 28,000,000 27,935,076 4.70%
GECC Commercial Paper, 3.06%, due 7/8/05 $ 28,000,000 27,938,000 4.70%
UBS Finance Commercial Paper, 3.245%, due 7/27/05 $ 28,000,000 27,924,283 4.70%
United States Government Treasury Bill, 2.70%, due 7/7/05 $ 78,000,000 77,959,050 13.11%
Wells Fargo Bank Overnight REPO $ 26,841,516 26,841,516 4.51%
Cash Held on Account at Various Institutions $ 1,217,231 1,217,231 0.20%
------------
Total Cash and Cash Equivalents 217,797,353
------------
Total Cash and Investments in Securities of Unaffiliated Issuers $533,896,643 89.77%
============
Notes to Statement of Investments in Securities of Unaffiliated Issuers:
(1) Certain investments in bank debt may be considered to be subject to
contractual restrictions, and such investments are bought and sold among
institutional investors in transactions not subject to registration under
the Securities Act of 1933. Such transactions are generally limited to
commercial lenders or accredited investors and often require approval of
the agent or borrower.
(2) Non-income producing security.
Aggregate purchases and aggregate sales of investment securities of unaffiliated
issuers, other than Government securities, totaled $141,978,717 and $26,315,400
respectively. Aggregate purchases includes securities received as payment in
kind. Aggregate sales includes principal paydowns on debt securities.
The total value of restricted securities of unaffiliated issuers as of June 30,
2005 was $203,998,341, or 34.30% of total cash and investments of the Company.
See accompanying notes.
3
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Investments in Affiliates(1) (unaudited)
June 30, 2005
Showing Percentage of Total Cash and Investments of the Company
Principal Percent of
Amount Fair Cash and
Security or Shares Value Investments
- -------------------------------------------------------------------------------------------------------------------------------
Debt Securities (3.91%)
Bank Debt (3.25%) (2)
Diversified/Conglomerate Manufacturing (3.25%)
Intentia International AB Secured Notes, LIBOR + 9%, due 9/14/09
(Acquired 9/13/04, Amortized Cost $18,422,247) - (Sweden) $18,835,419 $19,306,304 3.25%
Corporate Fixed Income Securities (0.66%)
Diversified/Conglomerate Manufacturing (0.66%)
International Wire Group Senior Secured Notes, 10%, due 10/15/11
(Received 10/20/04, Cost $4,401,270) (3), (4) $ 3,940,000 3,900,600 0.66%
-----------
Total Debt Securities of Affiliates (cost $22,823,517) 23,206,904
-----------
Common Stock (6.32%)
Diversified/Conglomerate Manufacturing (6.32%)
Put/Call Agreement for 816,615 Intentia International AB Series A Common,
expires 7/9/05 (Acquired 2/12/05) - (Sweden) (3), (4), (5), (6) 1 -- 0.00%
Intentia International AB Series A Common
(Acquired 2/12/05, Cost $3,723,408) - (Sweden) (3), (4), (5), (6) 1,635,573 3,776,201 0.64%
(Acquired 9/13/04, Cost $436,499) - (Sweden) (3), (4), (5), (6)
Intentia International AB Series B Common
(Acquired 9/13/04, Cost $15,876,598) - (Sweden) (3), (4), (5), (6) 13,090,237 26,984,305 4.53%
International Wire Group, Inc. Common Stock
(Received 10/20/04, Cost $9,581,477) (3), (4), (6) 637,171 6,849,588 1.15%
-----------
Total Common Stock of Affiliates (cost $29,617,982) 37,610,094
-----------
Total Investments in Securities of Affiliated Issuers (cost $52,441,499) $60,816,998 10.23%
===========
Notes to Statement of 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 more than 5% of the issuer's voting securities.
(2) Certain investments in bank debt may be considered to be subject to
contractual restrictions, and such investments are bought and sold among
institutional investors in transactions not subject to registration under
the Securities Act of 1933. Such transactions are generally limited to
commercial lenders or accredited investors and often require approval of
the agent or borrower.
(3) Investment is not a controlling position.
(4) Securities regulations temporarily restrict the sale of this security due
to membership on the Board of Directors of the issuer by an affiliate of
the Company.
(5) Denominated in Swedish Kronor, and converted to US Dollars.
(6) Non-income producing security.
Aggregate purchases and aggregate sales of investment securities of affiliated
issuers, other than Government securities, totaled $3,723,408 and zero,
respectively. Aggregate purchases includes securities received as payment in
kind. Aggregate sales includes principal paydowns on debt securities.
The total value of restricted securities of affiliated issuers as of June 30,
2005 was $60,816,998, or 10.23% of total cash and investments of the Company.
See accompanying notes.
4
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2005
Investment income:
Interest income from investments in securities of unaffiliated issuers $ 13,206,564
Interest income from investments in affiliates 1,319,244
Income from original issue discount 100,922
------------
Total interest and related investment income 14,626,730
------------
Operating expenses:
Management and advisory fees 8,887,500
Credit enhancement fees 804,692
Amortization of deferred debt issuance costs 470,625
Commitment fees 460,711
Legal fees, professional fees and due diligence expenses 430,254
Interest expense 228,276
Insurance expense 224,016
Director fees 107,500
Other operating expenses 346,260
------------
Total expenses 11,959,834
------------
Net investment income 2,666,896
Net realized and unrealized gain (loss) on investments:
Net realized gain on investments:
Proceeds from sales, maturities and paydowns 26,315,400
Cost of investments sold, paid down, or matured 25,693,050
------------
Net realized gain on investments 622,350
Change in net unrealized gain:
Net unrealized gain, beginning of period 17,235,561
Net unrealized gain, end of period 15,970,162
------------
Net change in unrealized gain on investments (1,265,399)
------------
Net realized and unrealized gain (loss) on investments (643,049)
------------
Distributions to preferred shareholders (1,036,053)
Net change in reserve for potential distributions to preferred shareholders 1,644,187
Net increase in net assets applicable to common shareholders ------------
resulting from operations $ 2,631,981
============
See accompanying notes.
5
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statements of Changes in Net Assets
Six
Months Ended
June 30, 2005
(unaudited) 2004(1)
------------- -------------
Total common shareholder committed capital $ 711,000,000 $ 711,000,000
============= =============
Net assets applicable to common shareholders, beginning of period $ 235,307,573 $ --
Common shareholder contributions, gross 71,100,000 248,850,000
Equity placement and offering costs charged to paid-in capital -- (18,609,176)
------------- -------------
Common shareholder contributions, net 71,100,000 230,240,824
Net investment income (loss) 2,666,896 (6,788,961)
Net realized gain on investments 622,350 301,860
Net change in unrealized gain on investments (1,265,399) 17,235,561
Distributions to preferred shareholders from:
Net investment income (1,036,053) --
Returns of capital -- (432,049)
------------- -------------
Total distributions to preferred shareholders (1,036,053) (432,049)
Net change in reserve for potential distributions to preferred shareholders 1,644,187 (1,749,662)
------------- -------------
Net increase in net assets applicable to common shareholders resulting
from operations 2,631,981 8,566,749
Distributions to common shareholders from net investment income (1,000,000) (3,500,000)
Net assets applicable to common shareholders, end of period (including
distributions in excess of net investment income of $2,869,157 and ------------- -------------
$3,500,000, respectively) $ 308,039,554 $ 235,307,573
============= =============
See accompanying notes.
- ----------
(1) The Fund commenced operations on July 13, 2004
6
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Statement of Cash Flows (unaudited)
For the Six Months Ended June 30, 2005
Operating activities:
Net increase in net assets applicable to common shareholders resulting from operations $ 2,631,981
Adjustments to reconcile net increase in net assets resulting from
operations to net cash used in operating activities:
Net realized gain on investments (622,350)
Net change in unrealized gain on investments 1,265,399
Dividends paid to auction rate money market preferred shareholders 1,036,053
Change in reserve for potential dividends to preferred shareholders (1,644,187)
Income from original issue discount (100,922)
Income from paid in-kind capitalization (1,095,148)
Amortization of deferred debt issuance costs 470,625
Changes in assets and liabilities:
Purchases of investment securities (145,702,125)
Proceeds from sales, maturities and paydowns of investment securities 26,315,400
Decrease in prepaid expenses and other assets 347,760
Increase in accrued interest income on securities of unaffiliated issuers (1,417,258)
Increase in accrued interest income on securities of affiliated issuers (5,963)
Increase in payable for investment securities purchased 41,744,176
Decrease in directors fees payable (53,750)
Increase in accrued expenses and other liabilities 99,678
-------------
Net cash used in operating activities (76,730,631)
-------------
Financing activities:
Proceeds from draws on credit facility 210,000,000
Payments to credit facility (171,000,000)
Proceeds from issuance of common shares 71,100,000
Proceeds from issuance of auction rate money market preferred shares 34,600,000
Dividends paid to common shareholders (4,500,000)
Dividends paid to auction rate money market preferred shareholders (1,036,053)
-------------
Net cash provided by financing activities 139,163,947
-------------
Net increase in cash and cash equivalents 62,433,316
Cash and cash equivalents at beginning of period 155,364,037
-------------
Cash and cash equivalents at end of period $ 217,797,353
=============
See accompanying notes.
7
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements (unaudited)
June 30, 2005
1. Organization and Nature of Operations
Special Value Opportunities Fund, 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. 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 Certificate of Formation of the Company was filed with the Delaware
Secretary of State on February 18, 2004. Investment operations commenced and
initial funding was received on July 13, 2004. 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 generate current income as well as long-term
capital appreciation using a leveraged capital structure.
Tennenbaum Capital Partners, LLC ("TCP") serves as the Investment Manager of the
Company. Babson Capital Management LLC serves as Co-Manager. TCP is controlled
and managed by Tennenbaum & Co., LLC ("Tennenbaum & Co.") and certain
affiliates. The Company, TCP, Tennenbaum & Co., and their members and affiliates
may be considered related parties.
Company management consists of the Investment Manager and the Board of
Directors. The Investment Manager directs and executes the day-to-day operations
of the Company, subject to oversight from the Board of Directors, which sets the
broad policies for the Company. The Board of Directors consists of four persons,
three of whom are independent. If the Company has preferred shares outstanding,
as it currently does, the holders of the preferred shares voting separately as a
class will be entitled to elect two of the Company's Directors. Holders of
common shares and preferred shares vote together as a single class.
Company Structure
Total maximum capitalization of the Company is $1.422 billion, consisting of
$711 million of capital committed by investors to purchase the Company's common
shares, $238 million of Auction Rate Money Market Preferred Shares ("APS"), $473
million under a Senior Secured Revolving Credit Facility (the "Senior
Facility"), $200,000 of Series Z Preferred Stock and $1,000 of Series S
Preferred Stock (see Note 7). The contributed investor capital, APS and the
amount drawn under the Senior Facility are to be used to purchase Company
investments and to pay certain fees and expenses of the Company. Substantially
all of these investments will be included in the collateral for the
8
1. Organization and Nature of Operations (continued)
Senior Facility and are available to pay certain fees and expenses of the
Company incurred in connection with its organization and capitalization. At June
30, 2005, there was $130 million outstanding under the Senior Facility.
Credit enhancement with respect to the APS and Senior Facility is provided by a
AAA/Aaa rated monoline insurer (the "Insurer") through surety policies issued
pursuant to an insurance and indemnity agreement between the Company and the
Insurer. Under the surety policies, the Insurer will guarantee payment of the
liquidation preference and unpaid dividends on the APS and amounts drawn under
the Senior Facility. The cost of the surety polices is 0.20% for unutilized
portions of the Money Market preferred shares and the Senior Facility and 0.40%
for the outstanding portions of those sources of capital.
The Company will liquidate and distribute its assets and will be dissolved at
July 13, 2014, subject to up to two one-year extensions if requested by the
Investment Manager and approved by a majority of the Company's equity interests.
However, the Operating Agreement will prohibit the liquidation of the Company
prior to July 13, 2014 if the APS are not redeemed in full prior to such
liquidation.
Investor Capital
Investors have committed to purchase $711 million of the Company's common shares
over a two-year period on dates specified by the Company. On July 13, 2004, each
investor contributed 20% of its capital commitment to purchase common shares.
The Company called an additional 15% of the common share commitment which was
received by the Company during the week of November 15, 2004. On March 18, 2005,
the Company called an additional 10% of the common share commitment which was
received by the Company on or about April 29, 2005. The Company expects to call
and receive the remaining 55% of the common share commitments by July 12, 2006.
The ratio of capital contributed and subscribed to committed capital as of June
30, 2005 was 0.45:1.
Auction Rate Money Market Preferred Capital
At June 30, 2005, the Company had 4,284 shares of APS issued and outstanding
with a liquidation preference of $25,000 per share (plus an amount equal to
accumulated but unpaid dividends upon liquidation). The APS are redeemable at
the option of the Company, subject to certain limitations. Additionally, under
certain conditions, the Company may be required to either redeem certain of the
APS or repay indebtedness, at the Company's option. Such conditions would
include a failure by the Company to maintain adequate collateral as required by
its credit facility agreement or by the
9
1. Organization and Nature of Operations (continued)
Statement of Preferences of the APS, or a failure by the Company to maintain
sufficient asset coverage as required by the 1940 Act. As of June 30, 2005, the
Company was in full compliance with such requirements.
The auction agent receives a fee from the Company for its services in connection
with auctions of APS and compensates broker-dealers at an annual rate of 0.25%
of the purchase price of the shares of the APS that are issued and outstanding.
The Company has entered into an agreement with a major broker-dealer to
underwrite initial issuances of the APS for a two year period based on an agreed
upon drawdown schedule and subject to certain criteria.
The issuances of the APS will total $238 million of the Company's total
capitalization. On July 13, 2004, $37.5 million of the total expected APS
issuance was received upon issuance of 1,500 shares. On October 20, 2004, the
Company received $35.0 million upon issuance of an additional 1,400 shares of
APS. On June 21, 2005, the Company received $34.6 million upon issuance of an
additional 1,384 shares of APS.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). In the opinion of the Investment Manager, the financial
results of the Company included herein contain all adjustments necessary to
present fairly the financial position of the Company as of June 30, 2005, and
the results of its operations, changes in net assets and cash flows for the six
months ended June 30, 2005. The results of operations for the six months ended
June 30, 2005 are not necessarily indicative of the operating results to be
expected for a full year. The following is a summary of the significant
accounting policies of the Company.
Investment Valuation
Management values investments held by the Company based upon the principles and
methods of valuation set forth in policies adopted by the Company's Board of
Directors and in conformity with the Senior Facility and Statement of
Preferences for the APS.
Investments listed on a recognized exchange, 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.
10
2. Summary of Significant Accounting Policies (continued)
Liquid investments not listed on a recognized exchange are valued by an approved
nationally recognized security pricing service or by using either the average of
the bid prices on the date of valuation, as supplied by three approved
broker-dealers, or the lower of two quotes from approved broker-dealers. At June
30, 2005, all but 1.81% of the investments of the Company were valued based on
prices from a nationally recognized exchange or nationally recognized
third-party pricing service.
Investments not listed on a recognized exchange or priced by an approved source
("Unquoted Investments") are valued as follows for purposes of inclusion as
permitted collateral in the borrowing base of the Senior Facility:
a) for semi-liquid investment positions with a value of $35 million or
greater but less than $70 million, the most recent quote provided by an
approved investment banking firm;
b) for semi-liquid investment positions with a value greater than $70
million, the most recent valuation provided by an approved third-party
appraisal; and
c) for illiquid investment positions with a value of $35 million or greater,
the most recent valuation provided by an approved third-party appraisal.
However, notwithstanding items (a) through (c), above, the Investment Manager
may determine the market value of Unquoted Investments without obtaining a third
party quote or appraisal, up to an aggregate of 5% of the total capitalization
of the Company.
Investments for which market quotations are not readily available or are
determined to be unreliable are valued at fair value under guidelines adopted by
the Board of Directors. Fair value is generally defined as the amount that an
investment could be sold for in an orderly disposition over a reasonable time.
Generally, to increase objectivity in valuing the Company's assets, 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. The Investment Manager generally uses three methods to fair
value securities:
11
2. Summary of Significant Accounting Policies (continued)
(i) Cost Method. The cost method is based on the original cost of the securities
to the Company. This method is generally used in the early stages of a portfolio
company's development until significant positive or negative events occur
subsequent to the date of the original investment by the Company in such company
that dictate a change to another valuation method.
(ii) Private Market Method. The private market method uses actual, executed,
historical transactions in a portfolio company's securities by responsible third
parties as a basis for valuation. In connection with utilizing the private
market method, the Investment Manager may also use, where applicable,
unconditional firm offers by responsible third parties as a basis for valuation.
(iii) Analytic Method. The analytical method is generally used by the Investment
Manager to value an investment position when there is no established public or
private market in the portfolio company's securities or when the factual
information available to the Investment Manager dictates that an investment
should no longer be valued under either the cost or private market method. This
valuation method is based on the judgment of the Investment Manager, using data
available for the applicable portfolio securities.
Investment Transactions
The Company 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 securities 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 Company's
policy that its custodian takes possession of the underlying collateral
securities, for which the fair value exceeds the principal amount of the
repurchase transaction, including accrued
12
2. Summary of Significant Accounting Policies (continued)
interest, at all times. If the seller defaults, and the fair value of the
collateral declines, realization of the collateral by the Company may be delayed
or limited.
Investments in Foreign Securities
The Company invests in securities traded in foreign countries and denominated in
foreign currencies. At June 30, 2005, investments denominated in foreign
currencies totaled approximately 5.17% of the Company's total cash and
investments. All such open positions are converted at the closing rate in effect
on June 30, 2005 and reported in U.S. dollars. Purchases and sales of investment
securities and income and expense items denominated in foreign currencies are
translated into U.S dollars on the respective dates of such transactions. As
such, foreign security positions and transactions are susceptible to foreign
currency as well as overall market risk. Accordingly, potential unrealized gains
and losses from foreign security transactions may be affected by fluctuations in
foreign exchange rates. Such fluctuations are included in the net realized and
unrealized gain or loss from investments. Net unrealized foreign currency losses
of $1,256,132 were included in net unrealized gains on investments at June 30,
2005.
Securities of foreign companies and 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 securities transactions clearance and settlement practices,
and potential future adverse political and economic developments. Moreover,
securities of some foreign companies and foreign governments and their markets
may be less liquid and their prices more volatile than those of securities of
comparable U.S. companies and the U.S. government.
Debt Issuance Costs
Costs of $7.6 million were incurred in connection with placing the Company's
Senior Facility. These costs are being deferred and are 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 Company's
operations.
Equity Placement and Offering Costs
Placement costs for the Company's common equity and APS capital, were $14.0
million and $3.6 million, respectively. Offering costs totaled $1.0 million.
These costs were charged to paid-in capital.
13
2. Summary of Significant Accounting Policies (continued)
Organization Costs
Organization costs of $2.8 million were incurred in connection with the
formation of the Company and expensed to operations.
Purchase Discounts
The majority of the Fund's high yield and distressed debt securities 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 security 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 Company considers it prudent to follow GAAP guidance that requires the
Investment Manager to consider the collectibility of interest when making
accruals. Statement of Position 93-1 discusses financial accounting and
reporting for high yield debt securities and notes for which, because of the
credit risks associated with high yield and distressed debt securities, income
recognition must be carefully considered and constantly evaluated for
collectibility.
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 year-end to reflect purchase discounts on all realized investments.
For income tax purposes, the economic gain resulting from the sale of debt
securities purchased at a discount is allocated between interest income and
realized gains.
Dividends to Common Shareholders
Dividends and distributions to common shareholders are recorded on the
ex-dividend date. The amount to be paid out as a dividend is determined by the
Board of Directors and is generally based upon the taxable earnings estimated by
the Investment Manager. Net realized capital gains are distributed at least
annually. On December 30, 2004, the Board of Directors declared a dividend to
common shareholders in the amount of $3.5 million, which was paid on January 31,
2005. The Company paid a second dividend to common shareholders in the amount of
$1.0 million on June 30, 2005.
14
2. Summary of Significant Accounting Policies (continued)
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 and excise taxes. Accordingly, no provision for
income taxes is required in the financial statements.
Income and capital gain distributions are determined in accordance with income
tax regulations, which may differ from accounting principles generally accepted
in the United States of America. Capital accounts within the financial
statements are adjusted for permanent and temporary book and tax differences.
These adjustments have no impact on net assets or the results of operations.
Temporary differences are attributable to differing book and tax treatments for
the timing of the recognition of gains and losses on certain investment
transactions and the timing of the deductibility of certain expenses, and will
reverse in subsequent periods.
Permanent book and tax basis differences may result in reclassifications among
undistributed (or distributions in excess of) net investment income (or
accumulated net investment loss), accumulated net realized gain (loss), and
paid-in capital. These differences are primarily due to non-deductible expenses
and a 2004 tax-basis net operating loss.
Cost and unrealized appreciation (depreciation) for U.S. Federal income tax
purposes of the investments of the Company at June 30, 2005 were as follows:
Unrealized appreciation $ 21,120,328
Unrealized depreciation (5,150,166)
-------------
Net unrealized appreciation (depreciation) 15,970,162
-------------
Cost $ 360,946,126
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 and the reported amounts of revenues and expenses
during the reporting period. Although management believes these estimates and
assumptions to be reasonable and accurate, actual results
15
2. Summary of Significant Accounting Policies (continued)
could differ from those estimates.
3. Allocations and Distributions
On May 9, 2005, the Series S preferred share (see Note 7) was retired and the
Investment Management Agreement was amended such that all amounts formerly
distributable to the Series S preferred shareholder as set forth in such
agreement became payable to the Investment Manager as a performance fee.
Accordingly, distributions made to common shareholders and performance fees
distributable to the Investment Manager with respect to any accounting period
are determined as follows:
a) First, 100% to the common shareholders based on their respective
proportionate capital contributions as of the end of such accounting
period until the amount distributed to each common shareholder, together
with amounts previously distributed to such shareholder, equals an 8%
annual weighted average return on undistributed capital attributable to
the common shares.
b) Then, 100% to the Investment Manager as a performance fee until the
cumulative amount of such fees equals 25% of all amounts previously
distributed to the common shareholders pursuant to clause (a) above; and
c) All remaining amounts: (i) 80% to the common shareholders based on their
proportionate capital contributions as of the end of such accounting
period and (ii) 20% to the Investment Manager as a performance fee.
The timing of distributions is determined by the Board of Directors. If the
Company had liquidated all assets at June 30, 2005, no undistributed performance
fees would have been payable to the Investment Manager.
The retirement of the Series S share and corresponding amendment to the
Investment Management Agreement as discussed above had no impact on any
shareholder other than the Series S preferred shareholder.
APS dividend rates are determined by auction at periodic intervals and ranged
from 3.24% to 3.37% per annum as of June 30, 2005.
The Series Z share dividend rate is fixed at 4% per annum.
16
4. Management Fees and Other Expenses
Pursuant to the advisory agreement, the Investment Manager is entitled to
receive an annual management and advisory fee, payable monthly in arrears, equal
to 1.25% of the sum of the total common commitments, APS and debt potentially
issuable in respect of such common commitments, subject to reduction by the
amount of the debt when no facility is outstanding and by the amount of APS when
less than $1 million in liquidation value of preferred stock is outstanding. For
purposes of computing the management fee, total committed capital is $1.422
billion consisting of $711 million of capital committed by investors to purchase
the Company's common shares, $238 million of APS and $473 million of debt. In
addition, the Investment Manager is entitled to a performance fee as discussed
in Note 3, above.
The Company pays all expenses incurred in connection with the business of the
Company, including fees and expenses of outside contracted services, such as
custodian, trustee, 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 Company.
5. Senior Secured Revolving Credit Facility
The Company has entered into a credit agreement with certain lenders, which
provides for a senior secured revolving credit facility ("Senior Facility"). The
Senior Facility is a revolving extendible credit facility pursuant to which
amounts may be drawn up to $473 million ("Total Maximum Commitment"), subject to
certain draw down criteria. Amounts drawn under the Senior Facility may be
repaid, in whole or in part, at the election of the Company, and redrawn subject
to the draw down criteria. The Senior Facility matures July 13, 2012, subject to
extension by the lenders at the request of the Company for one 12-month period.
Amounts outstanding under the Senior Facility at June 30, 2005 totaled $130
million. Borrowings under the Senior Facility at June 30, 2005 consisted of a
$85 million revolving loan due on July 29, 2005 and $45 million borrowed on the
swingline facility which was due to be repaid or converted to a revolving loan
by the Company no later than July 20, 2005. As of June 30, 2005, interest
payable on amounts outstanding under the Senior Facility was $27,124. During the
six months ended June 30, 2005, daily weighted average debt outstanding was
$14,834,254. The weighted average interest rate on debt outstanding during the
six months ended June 30, 2005 was 3.10%. Interest payments made under the
Senior Facility totaled $220,416 for the period from January 1, 2005 to June 30,
2005.
17
5. Senior Secured Revolving Credit Facility (continued)
Advances under the Senior Facility bear interest, at the issuer's option, at
either (i) the Eurodollar Rate or Commercial Paper Rate for interest periods of
one, two, three, or six months plus 0.43% per annum; or (ii) the higher of (x)
the "Prime Rate" plus 0.43% per annum and (y) the "Federal Funds Effective
Rate," plus 0.50% per annum. Additionally, advances under the swingline facility
will bear interest at the LIBOR Market Index Rate plus 0.43% per annum. Interest
payments vary from monthly to quarterly based on the nature of the advance.
In addition to amounts due on outstanding debt, the Senior Facility accrues fees
of 0.20% per annum for the first 550 days following the inception of the
Company, and 0.30% thereafter, on the difference between the Total Maximum
Commitment and the outstanding balance on the Senior Facility, provided that
certain minimum borrowing amounts are achieved based on the table below. In the
event the minimum borrowing amounts are not met or exceeded during the
respective fee periods, the fees will accrue at 0.43% per annum on the Minimum
Borrowing Amount as defined in the table below, in addition to 0.20% per annum
for the first 550 days following the inception of the Company, and 0.30%
thereafter on the difference between the Total Maximum Commitment and the
Minimum Borrowing Amount.
Period Minimum Borrowing Amount
- --------------------------------------------- --------------------------------
From Closing Date to End of Month 10
following the Closing Date 0% of Total Maximum Commitment
From Beginning of Month 11 to End of Month
15 following the Closing Date 15% of Total Maximum Commitment
From Beginning of Month 16 to End of Month
20 following the Closing Date 30% of Total Maximum Commitment
From Beginning of Month 21 to End of Month
24 following the Closing Date 40% of Total Maximum Commitment
From Beginning of Month 25 to Maturity 75% of Total Maximum Commitment
6. Commitments, Concentration of Credit Risk and Off-Balance Sheet Risk
The Company conducts business with brokers and dealers that are primarily
headquartered in New York and Los Angeles and are members of the major security
exchanges. Banking activities are conducted with a firm headquartered in the New
York area.
18
6. Commitments, Concentration of Credit Risk and Off-Balance Sheet Risk
(continued)
In the normal course of business, the Company's securities activities involve
executions, settlement and financing of various securities transactions
resulting in receivables from, and payables to, brokers, dealers and the
Company's custodian. These activities may expose the Company to risk in the
event such parties are unable to fulfill contractual obligations. Management
does not anticipate any losses from counterparties with whom it conducts
business.
7. Preferred Capital
In addition to the APS capital described in Note 1, the Company had one Series S
preferred share authorized but unissued and 400 Series Z preferred shares
authorized, issued and outstanding as of June 30, 2005.
Series S Preferred Share
The Company had issued one share of its Series S preferred shares to SVOF/MM,
LLC, having a liquidation preference of $1,000 plus accumulated but unpaid
dividends. SVOF/MM, LLC is controlled by the Investment Manager and owned
substantially entirely by the Investment Manager and certain affiliates. On May
9, 2005, the Series S preferred share was retired and assumed the status of an
authorized but unissued share. Prior to retirement, the Series S preferred
shareholder was entitled to receive, as dividends, the amount of the performance
fee currently payable to the Investment Manager pursuant to Note 3, above. The
Series S preferred share ranked on par with the APS and Series Z preferred
shares and voted with them as a single class. The Series S preferred share was
redeemable at liquidation preference at any time if the investment advisory
agreement with TCP was terminated for any reason. The retirement of the Series S
preferred share had no impact on any shareholder other than the Series S
preferred shareholder.
The Company may, if it receives approval from the staff of the SEC for such an
arrangement, again issue a share of its Series S preferred shares, and pay such
dividends on such Series S preferred share as were payable prior to the
retirement of the Series S preferred share. If the Company implements this
structure, the amount of distributions paid by the Company pursuant to Note 3
will not change.
19
7. Preferred Capital (continued)
Series Z Preferred Shares
The Company issued 400 shares of its Series Z preferred shares, having a
liquidation preference of $500 per share plus accumulated but unpaid dividends
and paying dividends at an annual rate equal to 4% of liquidation preference.
The Series Z preferred shares rank on par with the APS with respect to the
payment of dividends and distribution of amounts on liquidation, and votes with
the APS as a single class. 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.
8. Shareholders' Capital
Issuances of common stock to the Company's investors for the periods ending June
30, 2005 and December 31, 2004 were as follows:
================================================================================
Period from
Period from July 13, 2004
January 1, 2005 (commencement of
to operations) to
June 30, 2005 December 31, 2004
- --------------------------------------------------------------------------------
Number of common shares issued 3,862 13,063
- --------------------------------------------------------------------------------
Gross proceeds from share issuance $ 71,100,000 $ 248,850,000
Offering costs -- (970,426)
Equity Placement Costs -- (14,068,750)
APS placement costs -- (3,570,000)
- --------------------------------------------------------------------------------
Net proceeds $ 71,100,000 $ 230,240,824
================================================================================
20
9. Financial Highlights
Six
Months Ended
June 30, 2005 2004(1)
----------------- ---------------
Net assets applicable to common shareholders, beginning of period $ 235,307,573 $ --
Net common shareholder contributions 71,100,000 230,240,824
Investment operations:
Net investment income (loss) 2,666,896 (6,788,961)
Net realized and unrealized gain (loss) (643,049) 17,537,421
Distributions to preferred shareholders from net investment income (1,036,053) --
Distributions to preferred shareholders from returns of capital -- (432,049)
Net change in reserve for potential distributions to preferred shareholders 1,644,187 (1,749,662)
----------------- ---------------
Net increase in net assets applicable to common shareholders resulting
from operations 2,631,981 8,566,749
Distributions to common shareholders from net investment income (1,000,000) (3,500,000)
----------------- ---------------
Net assets applicable to common shareholders, end of period $ 308,039,554 $ 235,307,573
================= ===============
Per Common Share:(2)
Net asset value, beginning of period $ 18,013.01 $ 17,382.68
Investment operations:
Net investment income (loss) 174.56 (1,009.58)
Net realized and unrealized gain (loss) 26.54 2,092.16
Distributions to preferred shareholders from net investment income (67.37) --
Distributions to preferred shareholders from returns of capital -- (50.38)
Net change in reserve for potential distributions to preferred shareholders 112.84 (133.94)
----------------- ---------------
Total from investment operations 246.57 898.26
Distributions to common shareholders from net investment income (59.08) (267.93)
----------------- ---------------
Net asset value, end of period $ 18,200.50 $ 18,013.01
================= ===============
Period return to common shareholders(3),(4) 0.1% 1.9%
Period return on invested assets(4),(5) 4.4% 14.1%
- ----------
(1) The Fund commenced operations on July 13, 2004.
(2) Per share changes to net asset value are computed based on the actual
number of shares outstanding during the time in which such activity
occurred.
(3) Returns (net of financing costs, fund expenses, management fees, dividends
paid to preferred shareholders, and the reserve for potential dividends to
preferred shareholders) calculated on a monthly time-linked,
dollar-weighted basis as described in Chapter 2 of the AIMR Performance
Presentation Standards Handbook (1997).
(4) Not annualized.
(5) Return on invested assets is a dollar-weighted, time-weighted,
geometrically-linked rate of return.
21
9. Financial Highlights (Continued)
Six
Months Ended
June 30, 2005 2004(1)
--------------- ---------------
Ratios and Supplemental Data:
Ending net assets attributable to common shareholders $ 308,039,554 $ 235,307,574
Total expenses/average common equity(2) 8.8% 17.3%(3)
Net investment income/average common shareholder equity(2) 2.0% -8.7%
Portfolio turnover rate(4) 8.5% 17.8%
Weighted average debt outstanding $ 14,834,254 $ 7,389,535
Weighted average number of shares 15,303 8,737
Average debt per share $ 969.37 $ 845.77
- ----------
(1) The Fund commenced operations on July 13, 2004.
(2) Annualized. These ratios include interest expense but do not reflect the
effect of dividend payments to preferred shareholders. The ratio of
expenses to average net assets is higher in earlier periods, and net
investment income to average net assets is reduced, due to the Company's
relatively smaller base while the Company is ramping up.
(3) Includes organization costs.
(4) Not annualized.
22
Special Value Opportunities Fund, LLC
(A Delaware Limited Liability Company)
Portfolio Asset Allocation (% of Cash and Investments)
(Unaudited)
June 30, 2005
Portfolio Holdings by Investment Type
[The following table was depicted as a pie chart in the printed material.]
Cash and Cash Equivalents .................................... 36.6%
Bank Debt .................................................... 37.6%
Common Stock.................................................. 6.3%
Corporate and Fixed Income Securities ........................ 19.5%
Portfolio Holdings by Industry
[The following table was depicted as a pie chart in the printed material.]
Machinery (Nonagriculture, Nonconstruction, Nonelectronic).... 11.1%
Automobiles .................................................. 4.8%
Diversified/Conglomerate Manufacturing ....................... 12.7%
Personal Transportation ...................................... 9.1%
Telecommunications ........................................... 4.9%
Leisure, Amusement, Motion Pictures and Entertainment ........ 5.1%
Utilities .................................................... 15.7%
Cash and Cash Equivalents .................................... 36.6%
23
ITEM 2. CODE OF ETHICS.
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 Semi-Annual 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 at this time.
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.
ITEM 12. EXHIBITS.
(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.
(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.
Special Value Opportunities Fund, LLC
By: /s/ Hugh Steven Wilson
------------------------------------------
Name: Hugh Steven Wilson
Title: Chief Executive Officer
Date: September 2, 2005
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: September 2, 2005
By: /s/ Robert G. DiPaolo
------------------------------------------
Name: Robert G. DiPaolo
Title: Chief Financial Officer
Date: September 2, 2005