Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period           to          

 

Commission File No. 814-00663

 

ARES CAPITAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

Maryland

 

33-1089684

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

245 Park Avenue, 44th Floor, New York, NY 10167

(Address of principal executive office)   (Zip Code)

 

(212) 750-7300

(Registrant’s telephone number, including area code)

 


 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes  x  No  o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes o  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer x

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at November 4, 2013

Common stock, $0.001 par value

 

281,246,111

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of September 30, 2013 (unaudited) and December 31, 2012

2

 

 

 

 

Consolidated Statement of Operations for the three and nine months ended September 30, 2013 (unaudited) and September 30, 2012 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of September 30, 2013 (unaudited) and December 31, 2012

5

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2013 (unaudited)

38

 

 

 

 

Consolidated Statement of Cash Flows for the nine months ended September 30, 2013 (unaudited) and September 30, 2012 (unaudited)

39

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

40

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

65

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

89

 

 

 

Item 4.

Controls and Procedures

90

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

90

 

 

 

Item 1A.

Risk Factors

90

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

90

 

 

 

Item 3.

Defaults Upon Senior Securities

91

 

 

 

Item 4.

Mine Safety Disclosures

91

 

 

 

Item 5.

Other Information

91

 

 

 

Item 6.

Exhibits

91

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

September 30, 2013

 

December 31, 2012

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

5,016,880

 

$

3,822,715

 

Non-controlled affiliate company investments

 

278,630

 

323,059

 

Controlled affiliate company investments

 

2,089,775

 

1,778,781

 

Total investments at fair value (amortized cost of $7,277,712 and $5,823,451, respectively)

 

7,385,285

 

5,924,555

 

Cash and cash equivalents

 

135,487

 

269,043

 

Receivable for open trades

 

13,121

 

131

 

Interest receivable

 

120,503

 

108,998

 

Other assets

 

99,749

 

98,497

 

Total assets

 

$

7,754,145

 

$

6,401,224

 

LIABILITIES

 

 

 

 

 

Debt

 

$

3,137,883

 

$

2,195,872

 

Management and incentive fees payable

 

136,196

 

131,585

 

Accounts payable and other liabilities

 

58,202

 

53,178

 

Interest and facility fees payable

 

28,860

 

30,603

 

Payable for open trades

 

648

 

1,640

 

Total liabilities

 

3,361,789

 

2,412,878

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 500,000 common shares authorized 268,596 and 248,653 common shares issued and outstanding, respectively

 

269

 

249

 

Capital in excess of par value

 

4,465,173

 

4,117,517

 

Accumulated overdistributed net investment income

 

(7,317

)

(27,910

)

Accumulated net realized loss on investments, foreign currency transactions, extinguishment of debt and other assets

 

(173,342

)

(202,614

)

Net unrealized gain on investments

 

107,573

 

101,104

 

Total stockholders’ equity

 

4,392,356

 

3,988,346

 

Total liabilities and stockholders’ equity

 

$

7,754,145

 

$

6,401,224

 

NET ASSETS PER SHARE

 

$

16.35

 

$

16.04

 

 

See accompanying notes to consolidated financial statements.

 

2



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

 

 

 

For the three months ended

 

For the nine months ended

 

 

 

September 30, 2013

 

September 30, 2012

 

September 30, 2013

 

September 30, 2012

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

$

102,222

 

$

84,767

 

$

281,734

 

$

234,127

 

Capital structuring service fees

 

18,257

 

20,324

 

35,888

 

40,769

 

Dividend income

 

4,486

 

3,821

 

13,583

 

11,144

 

Management and other fees

 

286

 

334

 

949

 

994

 

Other income

 

3,612

 

2,156

 

12,944

 

9,371

 

Total investment income from non- controlled/non-affiliate company investments

 

128,863

 

111,402

 

345,098

 

296,405

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

4,097

 

6,185

 

15,748

 

16,444

 

Capital structuring service fees

 

 

 

 

895

 

Dividend income

 

5,258

 

147

 

6,421

 

786

 

Management and other fees

 

 

63

 

 

189

 

Other income

 

37

 

38

 

166

 

332

 

Total investment income from non- controlled affiliate company investments

 

9,392

 

6,433

 

22,335

 

18,646

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest income from investments

 

63,304

 

53,686

 

174,287

 

164,994

 

Capital structuring service fees

 

13,298

 

9,251

 

25,807

 

26,838

 

Dividend income

 

25,104

 

5,432

 

62,711

 

15,627

 

Management and other fees

 

5,098

 

4,310

 

13,926

 

12,968

 

Other income

 

1,742

 

58

 

3,815

 

387

 

Total investment income from controlled affiliate company investments

 

108,546

 

72,737

 

280,546

 

220,814

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

246,801

 

190,572

 

647,979

 

535,865

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

44,424

 

35,702

 

124,032

 

103,496

 

Base management fees

 

27,467

 

22,316

 

75,587

 

63,113

 

Incentive fees

 

35,199

 

34,139

 

88,658

 

83,258

 

Professional fees

 

3,143

 

1,923

 

10,023

 

9,157

 

Administrative fees

 

3,346

 

2,269

 

8,544

 

6,806

 

Other general and administrative

 

3,009

 

2,726

 

10,525

 

8,001

 

Total expenses

 

116,588

 

99,075

 

317,369

 

273,831

 

 

3



Table of Contents

 

 

 

For the three months ended

 

For the nine months ended

 

 

 

September 30, 2013

 

September 30, 2012

 

September 30, 2013

 

September 30, 2012

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

130,213

 

91,497

 

330,610

 

262,034

 

 

 

 

 

 

 

 

 

 

 

Income tax expense, including excise tax

 

3,991

 

2,037

 

11,714

 

7,635

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

126,222

 

89,460

 

318,896

 

254,399

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

7,877

 

26,134

 

24,305

 

(8,444

)

Non-controlled affiliate company investments

 

63

 

51

 

208

 

122

 

Controlled affiliate company investments

 

1,006

 

1,482

 

4,759

 

(10,579

)

Net realized gains (losses)

 

8,946

 

27,667

 

29,272

 

(18,901

)

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

3,817

 

14,293

 

27,915

 

53,515

 

Non-controlled affiliate company investments

 

(7,812

)

2,425

 

(9,745

)

16,556

 

Controlled affiliate company investments

 

9,624

 

2,710

 

(11,701

)

30,143

 

Net unrealized gains

 

5,629

 

19,428

 

6,469

 

100,214

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains from investments

 

14,575

 

47,095

 

35,741

 

81,313

 

 

 

 

 

 

 

 

 

 

 

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

 

 

 

 

(2,678

)

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

140,797

 

$

136,555

 

$

354,637

 

$

333,034

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 9)

 

$

0.52

 

$

0.59

 

$

1.36

 

$

1.49

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING — BASIC AND DILUTED (Note 9)

 

268,312

 

233,126

 

261,120

 

224,049

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGILE Fund I, LLC (9)

 

Investment partnership

 

Member interest (0.50% interest)

 

 

 

4/1/2010

 

$

 113

 

$

 21

(2)

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 units)

 

 

 

9/7/2007

 

962

 

2,908

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

826

 

936

(2)

 

 

Dynamic India Fund IV, LLC (9)

 

Investment company

 

Member interest (5.44% interest)

 

 

 

4/1/2010

 

4,822

 

3,228

 

 

 

HCI Equity, LLC (7)(8)(9)

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

182

 

350

 

 

 

Imperial Capital Private Opportunities, LP (9)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

5,731

 

12,571

(2)

 

 

Partnership Capital Growth Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

1,424

 

3,938

(2)

 

 

Partnership Capital Growth Investors III, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

2,632

 

2,610

(2)

 

 

Piper Jaffray Merchant Banking Fund I, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

596

 

547

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)

 

Co-investment vehicle

 

Subordinated certificates ($1,570,285 par due 12/2022)

 

8.27% (Libor + 8.00%/Q)(22)

 

10/30/2009

 

1,568,578

 

1,593,839

 

 

 

 

 

 

 

Membership interest (87.50% interest)

 

 

 

10/30/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,568,578

 

1,593,839

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

619

 

1,175

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,586,485

 

1,622,123

 

36.93

%

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AxelaCare Holdings, Inc. and AxelaCare Investment Holdings, L.P.

 

Provider of home infusion services

 

First lien senior secured loan ($7,453 par due 4/2019)

 

5.75% (Libor + 4.50%/Q)

 

4/12/2013

 

7,453

 

7,453

(2)(21)

 

 

 

 

 

 

Preferred units (7,425,000 units)

 

 

 

4/12/2013

 

742

 

885

(2)

 

 

 

 

 

 

Common units (75,000 units)

 

 

 

4/12/2013

 

7

 

9

(2)

 

 

 

 

 

 

 

 

 

 

 

 

8,202

 

8,347

 

 

 

California Forensic Medical Group, Incorporated

 

Correctional facility healthcare operator

 

First lien senior secured loan ($53,775 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

53,775

 

53,775

(3)(21)

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

602

 

1,475

(2)

 

 

CT Technologies Intermediate Holdings, Inc. and CT Technologies Holdings LLC (6)

 

Healthcare analysis services provider

 

First lien senior secured loan ($5,102 par due 3/2017)

 

8.75% (Base Rate + 5.50%/M)

 

3/15/2011

 

5,102

 

5,102

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($4,837 par due 3/2017)

 

8.75% (Base Rate + 5.50%/M)

 

3/15/2011

 

4,837

 

4,837

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($2,348 par due 3/2017)

 

7.75% (Libor + 6.50%/M)

 

3/15/2011

 

2,348

 

2,348

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($2,226 par due 3/2017)

 

7.75% (Libor + 6.50%/M)

 

3/15/2011

 

2,226

 

2,226

(3)(21)

 

 

 

 

 

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

6,448

(2)

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

1,778

(2)

 

 

 

 

 

 

 

 

 

 

 

 

18,513

 

22,739

 

 

 

Dialysis Newco, Inc.

 

Dialysis provider

 

First lien senior secured loan ($27,245 par due 8/2020)

 

6.50% (Base Rate + 3.25%/Q)

 

8/16/2013

 

27,245

 

27,245

(2)(21)

 

 

 

 

 

 

Second lien senior secured loan ($56,500 par due 2/2021)

 

9.75% (Libor + 8.50%/Q)

 

8/16/2013

 

56,500

 

56,500

(2)(21)

 

 

 

 

 

 

 

 

 

 

 

 

83,745

 

83,745

 

 

 

Genocea Biosciences, Inc.

 

Vaccine discovery technology company

 

First lien senior secured loan ($3,500 par due 4/2017)

 

8.00%

 

9/30/2013

 

3,430

 

3,500

(2)

 

 

 

 

 

 

Warrant to purchase up to 689,655 shares of Series C convertible preferred stock

 

 

 

9/30/2013

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,430

 

3,500

 

 

 

 

5



Table of Contents

 

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Common stock (1,410,000 shares)

 

 

 

9/27/2010

 

1,512

 

1,381

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

Second lien senior secured loan ($112,000 par due 6/2019)

 

10.25% (Libor + 9.00%/Q)

 

12/27/2012

 

112,000

 

112,000

(2)(21)

 

 

JHP Group Holdings, Inc.

 

Marketer and manufacturer of branded and generic specialty pharmaceutical products

 

Series A preferred stock (1,000,000 shares)

 

6.00% PIK

 

2/19/2013

 

1,000

 

1,470

(2)

 

 

LM Acquisition Holdings, LLC

 

Developer and manufacturer of medical equipment

 

Class A units (426 units)

 

 

 

9/27/2013

 

1,000

 

1,000

(2)

 

 

Magnacare Holdings, Inc., Magnacare Administrative Services, LLC, and Magnacare, LLC

 

Healthcare professional provider

 

First lien senior secured loan ($135,610 par due 3/2018)

 

9.00% (Libor + 8.00%/Q)

 

9/15/2010

 

136,251

 

135,610

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($57,017 par due 3/2018)

 

9.00% (Libor + 8.00%/Q)

 

9/15/2010

 

57,017

 

57,017

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($4,747 par due 3/2018)

 

9.00% (Libor + 8.00%/Q)

 

3/16/2012

 

4,747

 

4,747

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

198,015

 

197,374

 

 

 

MW Dental Holding Corp.

 

Dental services provider

 

First lien senior secured revolving loan ($3,500 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

3,500

 

3,500

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($57,605 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

57,605

 

57,605

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($48,881 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

48,881

 

48,881

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($9,825 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,825

 

9,825

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

119,811

 

119,811

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

First lien senior secured loan ($23,555 par due 4/2018)

 

6.50% (Libor + 5.25%/Q)

 

4/15/2011

 

23,555

 

23,555

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($33,350 par due 4/2018)

 

6.50% (Libor + 5.25%/Q)

 

4/15/2011

 

33,283

 

33,350

(3)(21)

 

 

 

 

 

 

Common units (5,000 units)

 

 

 

4/15/2011

 

5,000

 

7,140

(2)

 

 

 

 

 

 

 

 

 

 

 

 

61,838

 

64,045

 

 

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

First lien senior secured loan ($2,851 par due 12/2017)

 

7.25% (Libor + 6.00%/Q)

 

12/18/2012

 

2,851

 

2,851

(2)(18)(21)

 

 

 

 

 

 

First lien senior secured loan ($36,492 par due 12/2017)

 

7.25% (Libor + 6.00%/Q)

 

12/18/2012

 

36,492

 

36,492

(2)(18)(21)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

2,539

(2)

 

 

 

 

 

 

 

 

 

 

 

 

41,843

 

41,882

 

 

 

New Trident Holdcorp, Inc.

 

Provider of outsourced mobile diagnostic healthcare services

 

Second lien senior secured loan ($80,000 par due 7/2020)

 

10.25% (Libor + 9.00%/Q)

 

8/6/2013

 

78,425

 

80,000

(2)(21)

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Common stock (857,143 shares)

 

 

 

8/18/2006

 

3,000

 

(2)

 

 

Passport Health Communications, Inc., Passport Holding Corp. and Prism Holding Corp.

 

Healthcare technology provider

 

Series A preferred stock (1,594,457 shares)

 

10.00% PIK

 

7/30/2008

 

5,560

 

7,025

(2)

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,660

 

7,025

 

 

 

PG Mergersub, Inc. and PGA Holdings, Inc.

 

Provider of patient surveys, management reports and national databases for the integrated healthcare delivery system

 

Second lien senior secured loan ($21,316 par due 10/2018)

 

8.25% (Libor + 7.00%/Q)

 

4/19/2012

 

21,316

 

21,316

(2)(21)

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

16

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

821

(2)

 

 

 

 

 

 

 

 

 

 

 

 

21,608

 

22,153

(2)

 

 

POS I Corp. (fka Vantage Oncology, Inc.)

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

2,263

(2)

 

 

RCHP, Inc.

 

Operator of general acute care hospitals

 

First lien senior secured loan ($14,925 par due

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

14,925

 

14,925

(2)(21)

 

 

 

6



Table of Contents

 

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

11/2018)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien senior secured loan ($60,670 par due 11/2018)

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

60,647

 

60,670

(3)(21)

 

 

 

 

 

 

Second lien senior secured loan ($85,000 par due 5/2019)

 

11.50% (Libor + 10.00%/Q)

 

11/4/2011

 

85,000

 

85,000

(2)(21)

 

 

 

 

 

 

 

 

 

 

 

 

160,572

 

160,595

 

 

 

Reed Group, Ltd.

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

First lien senior secured loan ($4,400 par due 7/2015)

 

11.00%

 

6/28/2012

 

4,383

 

4,400

(2)

 

 

 

 

 

 

Warrants to purchase up to 99,094 shares of Series C preferred stock

 

 

 

6/28/2012

 

38

 

29

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,421

 

4,429

 

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Second lien senior secured loan ($75,000 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

75,000

 

75,000

(2)(21)

 

 

Sorbent Therapeutics, Inc.

 

Orally-administered drug developer

 

First lien senior secured loan ($6,500 par due 9/2016)

 

10.25%

 

4/23/2013

 

6,500

 

6,500

(2)

 

 

 

 

 

 

Warrant to purchase up to 727,272 shares of Series C preferred stock

 

 

 

4/23/2013

 

 

25

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

6,525

 

 

 

Soteria Imaging Services, LLC (6)

 

Outpatient medical imaging provider

 

Second lien senior secured loan ($916 par due 11/2010)

 

 

 

4/1/2010

 

714

 

71

(20)

 

 

 

 

 

 

Second lien senior secured loan ($1,309 par due 11/2010)

 

 

 

4/1/2010

 

1,095

 

101

(20)

 

 

 

 

 

 

Preferred member units (1,823,179 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,809

 

172

 

 

 

SurgiQuest, Inc.

 

Medical device company

 

First lien senior secured loan ($6,767 par due 10/2016)

 

10.00%

 

9/28/2012

 

6,596

 

6,767

(2)

 

 

 

 

 

 

First lien senior secured loan ($2,000 par due 10/2017)

 

10.69%

 

9/28/2012

 

1,950

 

2,000

(2)

 

 

 

 

 

 

Warrants to purchase up to 54,672 shares of Series D-4 convertible preferred stock

 

 

 

9/28/2012

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

8,546

 

8,767

 

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

First lien senior secured loan ($14,925 par due 12/2018)

 

6.50% (Libor + 5.50%/Q)

 

12/27/2012

 

14,925

 

14,925

(2)(21)

 

 

Young Innovations, Inc.

 

Dental supplies and equipment manufacturer

 

First lien senior secured loan ($30 par due 1/2019)

 

6.75% (Base Rate + 3.50%/Q)

 

1/31/2013

 

30

 

30

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($20 par due 1/2019)

 

6.75% (Base Rate + 3.50%/Q)

 

1/31/2013

 

20

 

20

(4)(21)

 

 

 

 

 

 

First lien senior secured loan ($20,576 par due 1/2019)

 

5.75% (Libor + 4.50%/M)

 

1/31/2013

 

20,576

 

20,576

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($13,938 par due 1/2019)

 

5.75% (Libor + 4.50%/M)

 

1/31/2013

 

13,938

 

13,938

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

34,564

 

34,564

 

 

 

 

 

 

 

 

 

 

 

 

 

1,124,986

 

1,128,962

 

25.70

%

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC

 

Records and information management services provider

 

First lien senior secured loan ($992 par due 10/2017)

 

7.00% (Libor + 5.75%/Q)

 

10/5/2012

 

992

 

992

(2)(21)

 

 

BluePay Processing, Inc.

 

Technology-enabled payment processing solutions provider

 

First lien senior secured loan ($7,500 par due 8/2019)

 

5.00% (Libor + 4.00%/Q)

 

8/30/2013

 

7,500

 

7,500

(2)(21)

 

 

Cast & Crew Payroll, LLC and Centerstage Co-Investors, L.L.C. (6)

 

Payroll and accounting services provider to the entertainment industry

 

First lien senior secured loan ($18,360 par due 12/2017)

 

7.50% (Libor + 6.50%/Q)

 

12/24/2012

 

18,360

 

18,360

(2)(16)(21)

 

 

 

 

 

 

First lien senior secured loan ($890 par due 12/2017)

 

8.75% (Base Rate + 5.50%/Q)

 

12/24/2012

 

890

 

890

(2)(16)(21)

 

 

 

 

 

 

First lien senior secured loan ($45,900 par due 12/2017)

 

7.50% (Libor + 6.50%/Q)

 

12/24/2012

 

45,900

 

45,900

(3)(16)(21)

 

 

 

 

 

 

First lien senior secured loan ($2,225 par due

 

8.75% (Base Rate + 5.50%/Q)

 

12/24/2012

 

2,225

 

2,225

(3)(16)(21)

 

 

 

7



Table of Contents

 

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

12/2017)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A membership units (2,500,000 units)

 

 

 

12/24/2012

 

2,500

 

2,748

(2)

 

 

 

 

 

 

Class B membership units (2,500,000 units)

 

 

 

12/24/2012

 

2,500

 

2,748

(2)

 

 

 

 

 

 

 

 

 

 

 

 

72,375

 

72,871

 

 

 

CIBT Investment Holdings, LLC

 

Expedited travel document processing services

 

Class A shares (2,500 shares)

 

 

 

12/15/2011

 

2,500

 

3,587

(2)

 

 

CitiPostal Inc. (7)

 

Document storage and management services

 

First lien senior secured revolving loan ($500 par due 12/2013)

 

6.50% (Libor + 4.50%/M)

 

4/1/2010

 

500

 

500

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($53,623 par due 12/2013)

 

8.50% Cash, 5.50% PIK

 

4/1/2010

 

53,623

 

53,623

(2)

 

 

 

 

 

 

Senior subordinated loan ($19,399 par due 12/2015)

 

 

 

4/1/2010

 

13,038

 

1,655

(2)(20)

 

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,161

 

55,778

 

 

 

Command Alkon, Inc.

 

Software solutions provider to the ready-mix concrete industry

 

Second lien senior secured loan ($39,130 par due 3/2018)

 

9.75% (Libor + 8.50%/Q)

 

9/28/2012

 

39,130

 

39,130

(2)(21)

 

 

Cornerstone Records Management, LLC

 

Physical records storage and management service provider

 

First lien senior secured loan ($16,397 par due 12/2015)

 

9.50% (Libor + 8.00%/Q)

 

8/12/2011

 

16,397

 

16,397

(2)(21)

 

 

Coverall North America, Inc.

 

Commercial janitorial services provider

 

Letter of credit facility

 

 

 

1/17/2013

 

 

(2)(25)

 

 

HCPro, Inc. and HCP Acquisition Holdings, LLC (7)

 

Healthcare compliance advisory services

 

Senior subordinated loan ($8,907 par due 8/2014)

 

 

 

3/5/2013

 

2,691

 

552

(2)(20)

 

 

 

 

 

 

Class A units (14,293,110 units)

 

 

 

6/26/2008

 

12,793

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

15,484

 

552

 

 

 

IfByPhone Inc.

 

Voice-based marketing automation software provider

 

First lien senior secured loan ($1,733 par due 11/2015)

 

11.00%

 

10/15/2012

 

1,678

 

1,733

(2)

 

 

 

 

 

 

First lien senior secured loan ($933 par due 1/2016)

 

11.00%

 

10/15/2012

 

933

 

933

(2)

 

 

 

 

 

 

Warrant to purchase up to 124,300 shares of Series C preferred stock

 

 

 

10/15/2012

 

88

 

71

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,699

 

2,737

 

 

 

Impact Innovations Group, LLC

 

IT consulting and outsourcing services

 

Member interest (50.00% interest)

 

 

 

4/1/2010

 

 

200

 

 

 

Investor Group Services, LLC (6)

 

Business consulting for private equity and corporate clients

 

Limited liability company membership interest (8.5% interest)

 

 

 

6/22/2006

 

 

624

 

 

 

IronPlanet, Inc.

 

Online auction platform provider for used heavy equipment

 

First lien senior secured loan ($5,000 par due 7/2017)

 

9.25%

 

9/24/2013

 

4,687

 

4,800

(2)

 

 

 

 

 

 

Warrant to purchase to up to 133,333 shares of Series C preferred stock

 

 

 

9/24/2013

 

214

 

214

(2)

 

 

 

 

 

 

 

 

 

 

 

 

4,901

 

5,014

 

 

 

Itel Laboratories, Inc.

 

Data services provider for building materials to property insurance industry

 

Preferred units (1,798,391 units)

 

 

 

6/29/2012

 

1,000

 

1,052

(2)

 

 

Keynote Systems, Inc. and Hawaii Ultimate Parent Corp., Inc.

 

Web and mobile cloud performance testing and monitoring services provider

 

First lien senior secured loan ($175,000 par due 2/2020)

 

9.50% (Libor + 8.50%/S)

 

8/22/2013

 

175,000

 

175,000

(2)(21)

 

 

 

 

 

 

Class A common stock (2,970 shares)

 

 

 

8/22/2013

 

2,970

 

2,970

(2)

 

 

 

 

 

 

Class B common stock (1,956,522 shares)

 

 

 

8/22/2013

 

30

 

30

(2)

 

 

 

 

 

 

 

 

 

 

 

 

178,000

 

178,000

 

 

 

Multi-Ad Services, Inc. (6)

 

Marketing services and software provider

 

Preferred units (1,725,280 units)

 

 

 

4/1/2010

 

788

 

2,102

 

 

 

 

 

 

 

Common units (1,725,280 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

788

 

2,102

 

 

 

MVL Group, Inc. (7)

 

Marketing research provider

 

Senior subordinated loan ($37,467 par due 7/2012)

 

 

 

4/1/2010

 

34,636

 

6,952

(2)(20)

 

 

 

 

 

 

Junior subordinated loan ($185 par due 7/2012)

 

 

 

4/1/2010

 

 

(2)(20)

 

 

 

 

 

 

Common stock (560,716 shares)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

34,636

 

6,952

 

 

 

NComputing, Inc.

 

Desktop virtualization hardware and software

 

First lien senior secured loan ($6,500 par due

 

10.50%

 

3/20/2013

 

6,500

 

6,500

(2)

 

 

 

8



Table of Contents

 

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

technology service provider

 

7/2016)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant to purchase up to 462,726 shares of Series C preferred stock

 

 

 

3/20/2013

 

 

6

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

6,506

 

 

 

Pillar Processing LLC and PHL Investors, Inc. (6)

 

Mortgage services

 

First lien senior secured loan ($6,262 par due 11/2018)

 

 

 

7/31/2008

 

5,688

 

4,764

(2)(20)

 

 

 

 

 

 

First lien senior secured loan ($7,375 par due 5/2019)

 

 

 

11/20/2007

 

5,862

 

(2)(20)

 

 

 

 

 

 

Class A common stock (576 shares)

 

 

 

7/31/2012

 

3,768

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

15,318

 

4,764

 

 

 

Powersport Auctioneer Holdings, LLC

 

Powersport vehicle auction operator

 

Common units (1,972 units)

 

 

 

3/2/2012

 

1,000

 

816

(2)

 

 

PSSI Holdings, LLC

 

Provider of mission-critical outsourced cleaning and sanitation services to the food processing industry

 

First lien senior secured loan ($1,000 par due 6/2018)

 

6.00% (Libor + 5.00%/Q)

 

8/7/2013

 

1,000

 

1,000

(2)(21)

 

 

R2 Acquisition Corp.

 

Marketing services

 

Common stock (250,000 shares)

 

 

 

5/29/2007

 

250

 

141

(2)

 

 

Rainstor, Inc.

 

Database solutions provider

 

First lien senior secured loan ($3,000 par due 4/2016)

 

11.25%

 

3/28/2013

 

2,925

 

3,000

(2)

 

 

 

 

 

 

Warrant to purchase up to 142,210 shares of Series C preferred stock

 

 

 

3/28/2013

 

88

 

70

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,013

 

3,070

 

 

 

Strident Holding, Inc.

 

Recovery audit services provider to commercial and governmental healthcare payors

 

First lien senior secured loan ($7,639 par due 7/2018)

 

6.50% (Libor + 5.25%/Q)

 

7/26/2012

 

7,639

 

7,639

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($9,603 par due 7/2018)

 

6.50% (Libor + 5.25%/Q)

 

7/26/2012

 

9,603

 

9,603

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

17,242

 

17,242

 

 

 

Summit Business Media Parent Holding Company LLC

 

Business media consulting services

 

Limited liability company membership interest (45.98% interest)

 

 

 

5/20/2011

 

 

1,489

(2)

 

 

TOA Technologies, Inc.

 

Cloud based, mobile workforce management applications provider

 

First lien senior secured loan ($12,892 par due 11/2016)

 

10.25%

 

10/31/2012

 

12,404

 

12,892

(2)

 

 

 

 

 

 

Warrant to purchase up to 2,509,770 shares of Series D preferred stock

 

 

 

10/31/2012

 

605

 

1,032

(2)

 

 

 

 

 

 

 

 

 

 

 

 

13,009

 

13,924

 

 

 

Tripwire, Inc.

 

IT security software provider

 

First lien senior secured loan ($104,950 par due 5/2018)

 

8.00% (Libor + 6.75%/Q)

 

5/23/2011

 

104,950

 

104,950

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($49,875 par due 5/2018)

 

8.00% (Libor + 6.75%/Q)

 

5/23/2011

 

49,875

 

49,875

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($9,975 par due 5/2018)

 

8.00% (Libor + 6.75%/Q)

 

5/23/2011

 

9,975

 

9,975

(4)(21)

 

 

 

 

 

 

Class A common stock (2,970 shares)

 

 

 

5/23/2011

 

2,970

 

7,555

(2)

 

 

 

 

 

 

Class B common stock (2,655,638 shares)

 

 

 

5/23/2011

 

30

 

76

(2)

 

 

 

 

 

 

 

 

 

 

 

 

167,800

 

172,431

 

 

 

Venturehouse-Cibernet Investors, LLC

 

Financial settlement services for intercarrier wireless roaming

 

Equity interest

 

 

 

4/1/2010

 

 

 

 

 

VSS-Tranzact Holdings, LLC (6)

 

Management consulting services

 

Common membership interest (5.98% interest)

 

 

 

10/26/2007

 

10,204

 

3,479

 

 

 

X Plus Two Solutions, Inc. and X Plus One Solutions, Inc.

 

Provider of open and integrated software for digital marketing optimization

 

First lien senior secured revolving loan ($5,640 par due 9/2014)

 

8.50%

 

4/1/2013

 

5,640

 

5,640

(2)

 

 

 

 

 

 

First lien senior secured loan ($7,000 par due 10/2016)

 

10.00%

 

4/1/2013

 

6,618

 

6,720

(2)

 

 

 

 

 

 

Warrant to purchase up to 999,167 shares of Series C preferred stock

 

 

 

4/1/2013

 

284

 

284

(2)

 

 

 

 

 

 

 

 

 

 

 

 

12,542

 

12,644

 

 

 

 

 

 

 

 

 

 

 

 

 

691,441

 

630,994

 

14.37

%

 

9



Table of Contents

 

As of September 30, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Academy Holdings, LLC

 

Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals

 

First lien senior secured revolving loan ($4,850 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

4,850

 

4,850

(2)(21)

 

 

 

 

 

 

First lien senior secured loan ($59,236 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

59,236

 

59,236

(3)(21)

 

 

 

 

 

 

First lien senior secured loan ($4,651 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

4,651

 

4,651

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

68,737

 

68,737

 

 

 

Campus Management Corp. and Campus Management Acquisition Corp. (6)

 

Education software developer

 

Preferred stock (485,159 shares)

 

 

 

2/8/2008

 

10,520

 

1,942

(2)

 

 

Community Education Centers, Inc.

 

Offender re-entry and in-prison treatment services provider

 

First lien senior secured loan ($14,643 par due 12/2014)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

14,643

 

14,643

(2)(15)(21)

 

 

 

 

 

 

Second lien senior secured loan ($34,706 par due 12/2015)

 

15.27% (Libor + 8.50% Cash, 6.50% PIK/Q)

 

12/10/2010

 

34,706

 

33,665

(2)

 

 

 

 

 

 

Second lien senior secured loan ($10,475 par due 12/2015)

 

15.28% (Libor + 8.50% Cash, 6.50% PIK/Q)

 

12/10/2010

 

10,475

 

10,161

(2)

 

 

 

 

 

 

Warrants to purchase up to 654,618 shares

 

 

 

12/10/2010

 

 

1,090

(2)

 

 

 

 

 

 

 

 

 

 

 

 

59,824

 

59,559

 

 

 

ELC Acquisition Corp., ELC Holdings Corporation, and Excelligence Learning Corporation (6)

 

Developer, manufacturer and retailer of educational products

 

Preferred stock (99,492 shares)

 

12.00% PIK

 

8/1/2011

 

9,949

 

9,949

(2)

 

 

 

 

 

 

Common stock (50,800 shares)

 

 

 

8/1/2011

 

 

2,307

(2)

 

 

 

 

 

 

 

 

 

 

 

 

9,949

 

12,256

 

 

 

Infilaw Holding, LLC

 

Operator of for-profit law schools

 

First lien senior secured revolving loan

 

 

 

8/25/2011

 

 

(2)(23)

 

 

 

 

 

 

First lien senior secured loan ($1 par due 8/2016)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

1

 

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