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 March 31, 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 May 6, 2013

Common stock, $0.001 par value

 

268,043,157

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

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

2

 

 

 

 

Consolidated Statement of Operations for the three months ended March 31, 2013 (unaudited) and March 31, 2012 (unaudited)

3

 

 

 

 

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

4

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2013 (unaudited)

34

 

 

 

 

Consolidated Statement of Cash Flows for the three months ended March 31, 2013 (unaudited) and March 31, 2012 (unaudited)

35

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

36

 

 

 

Item 2.

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

59

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

78

 

 

 

Item 4.

Controls and Procedures

79

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

80

 

 

 

Item 1A.

Risk Factors

80

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

80

 

 

 

Item 3.

Defaults Upon Senior Securities

80

 

 

 

Item 4.

Mine Safety Disclosures

80

 

 

 

Item 5.

Other Information

80

 

 

 

Item 6.

Exhibits

80

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

March 31, 2013

 

December 31, 2012

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

3,982,686

 

$

3,822,715

 

Non-controlled affiliate company investments

 

290,932

 

323,059

 

Controlled affiliate company investments

 

1,756,841

 

1,778,781

 

Total investments at fair value (amortized cost of $5,959,788 and $5,823,451, respectively)

 

6,030,459

 

5,924,555

 

Cash and cash equivalents

 

102,451

 

269,043

 

Receivable for open trades

 

50

 

131

 

Interest receivable

 

115,991

 

108,998

 

Other assets

 

104,111

 

98,497

 

Total assets

 

$

6,353,062

 

$

6,401,224

 

LIABILITIES

 

 

 

 

 

Debt

 

$

2,179,127

 

$

2,195,872

 

Management and incentive fees payable

 

112,600

 

131,585

 

Accounts payable and other liabilities

 

49,262

 

53,178

 

Interest and facility fees payable

 

27,976

 

30,603

 

Payable for open trades

 

5,500

 

1,640

 

Total liabilities

 

2,374,465

 

2,412,878

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 500,000 common shares authorized 248,896 and 248,653 common shares issued and outstanding, respectively

 

249

 

249

 

Capital in excess of par value

 

4,121,914

 

4,117,517

 

Accumulated overdistributed net investment income

 

(23,301

)

(27,910

)

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

 

(190,936

)

(202,614

)

Net unrealized gain on investments

 

70,671

 

101,104

 

Total stockholders’ equity

 

3,978,597

 

3,988,346

 

Total liabilities and stockholders’ equity

 

$

6,353,062

 

$

6,401,224

 

NET ASSETS PER SHARE

 

$

15.98

 

$

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

 

 

 

March 31, 2013

 

March 31, 2012

 

 

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

Interest income from investments

 

$

85,122

 

$

72,168

 

Capital structuring service fees

 

4,104

 

7,877

 

Dividend income

 

4,024

 

3,802

 

Management and other fees

 

4,498

 

328

 

Other income

 

2,011

 

2,748

 

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

 

99,759

 

86,923

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

6,016

 

4,592

 

Dividend income

 

603

 

316

 

Management and other fees

 

 

63

 

Other income

 

91

 

25

 

Total investment income from non-controlled affiliate company investments

 

6,710

 

4,996

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

Interest income from investments

 

53,039

 

56,125

 

Capital structuring service fees

 

1,887

 

9,783

 

Dividend income

 

27,462

 

5,101

 

Management and other fees

 

 

4,541

 

Other income

 

6,198

 

269

 

Total investment income from controlled affiliate company investments

 

88,586

 

75,819

 

 

 

 

 

 

 

Total investment income

 

195,055

 

167,738

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

Interest and credit facility fees

 

39,347

 

32,776

 

Base management fees

 

23,218

 

19,986

 

Incentive fees

 

20,085

 

26,386

 

Professional fees

 

3,144

 

3,686

 

Administrative fees

 

2,592

 

2,320

 

Other general and administrative

 

3,768

 

2,801

 

Total expenses

 

92,154

 

87,955

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

102,901

 

79,783

 

 

 

 

 

 

 

Income tax expense, including excise tax

 

3,804

 

2,745

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

99,097

 

77,038

 

 

 

 

 

 

 

REALIZED AND UNREALIZED NET GAINS (LOSSES) ON INVESTMENTS:

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

10,651

 

462

 

Non-controlled affiliate company investments

 

17

 

3

 

Controlled affiliate company investments

 

1,010

 

(8,136

)

Net realized gains (losses)

 

11,678

 

(7,671

)

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

5,949

 

6,017

 

Non-controlled affiliate company investments

 

(1,353

)

10,093

 

Controlled affiliate company investments

 

(35,029

)

20,070

 

Net unrealized gains (losses)

 

(30,433

)

36,180

 

 

 

 

 

 

 

Net realized and unrealized gains (losses) on investments

 

(18,755

)

28,509

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

80,342

 

$

105,547

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 9)

 

$

0.32

 

$

0.49

 

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

 

248,658

 

217,044

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 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

 

$

 122

 

$

 27

(2)

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 unit)

 

 

 

9/7/2007

 

1,050

 

2,120

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

1,059

 

1,170

(2)

 

 

Dynamic India Fund IV, LLC (9)

 

Investment company

 

Member interest (5.44% interest)

 

 

 

4/1/2010

 

4,822

 

2,962

 

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

452

 

426

 

 

 

Imperial Capital Private Opportunities, LP (9)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

5,971

 

10,037

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

1,596

 

4,059

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

2,379

 

2,341

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (2.00% interest)

 

 

 

8/16/2012

 

389

 

341

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)

 

Co-investment vehicle

 

Subordinated certificates ($1,250,904 par due 12/2022)

 

8.31% (Libor + 8.00%/Q)(22)

 

10/30/2009

 

1,244,833

 

1,269,667

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

661

 

1,197

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,263,332

 

1,294,347

 

32.53

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California Forensic Medical Group, Incorporated

 

Correctional facility healthcare operator

 

Senior secured loan ($54,047 par due 11/2018)

 

9.25% (Libor + 8.00%/Q)

 

11/16/2012

 

54,047

 

54,047

(3)(21)

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

602

 

1,293

(2)

 

 

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

 

Healthcare analysis services

 

Senior secured loan ($7,546 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,546

 

7,471

(2)(21)

 

 

 

 

 

 

Senior secured loan ($7,154 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,154

 

7,082

(3)(21)

 

 

 

 

 

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

4,931

(2)

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

1,359

(2)

 

 

 

 

 

 

 

 

 

 

 

 

18,700

 

20,843

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Common stock (1,410,000 shares)

 

 

 

9/27/2010

 

1,512

 

996

(2)

 

 

Intermedix Corporation

 

Revenue cycle management provider to the emergency healthcare industry

 

Junior 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.

 

Manufacturer of specialty pharmaceutical products

 

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

 

6.00% PIK

 

2/19/2013

 

1,000

 

1,000

(2)

 

 

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

 

Healthcare professional provider

 

Senior secured loan ($69,971 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

69,971

 

69,971

(2)(21)

 

 

 

 

 

 

Senior secured loan ($57,900 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

57,900

 

57,900

(3)(21)

 

 

 

 

 

 

Senior secured loan ($4,825 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

3/16/2012

 

4,825

 

4,825

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

132,696

 

132,696

 

 

 

MW Dental Holding Corp.

 

Dental services

 

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)

 

 

 

 

 

 

Senior secured loan ($54,885 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

54,885

 

54,885

(2)(21)

 

 

 

 

 

 

Senior secured loan ($49,129 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

49,129

 

49,129

(3)(21)

 

 

 

 

 

 

Senior secured loan ($9,875 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,875

 

9,875

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

117,389

 

117,389

 

 

 

Napa Management Services

 

Anesthesia management

 

Senior secured loan

 

6.50% (Libor +

 

4/15/2011

 

23,674

 

23,674

(2)(21)

 

 

 

4



Table of Contents

 

As of March 31, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Corporation

 

services provider

 

($23,674 par due 4/2018)

 

5.25%/Q)

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured loan ($33,518 par due 4/2018)

 

6.50% (Libor + 5.25%/Q)

 

4/15/2011

 

33,445

 

33,518

(3)(21)

 

 

 

 

 

 

Common units (5,000 units)

 

 

 

4/15/2011

 

5,000

 

6,324

(2)

 

 

 

 

 

 

 

 

 

 

 

 

62,119

 

63,516

 

 

 

Netsmart Technologies, Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

Senior secured loan ($39,844 par due 12/2017)

 

7.25% (Libor + 6.00%/Q)

 

12/18/2012

 

39,844

 

39,844

(2)(18)(21)

 

 

 

 

 

 

Senior secured loan ($18 par due 12/2017)

 

8.25% (Base Rate + 5.00%/Q)

 

12/18/2012

 

18

 

18

(2)(18)(21)

 

 

 

 

 

 

Senior secured loan ($232 par due 12/2017)

 

8.25% (Base Rate + 5.00%/Q)

 

12/18/2012

 

232

 

232

(2)(18)(21)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

3,106

(2)

 

 

 

 

 

 

 

 

 

 

 

 

42,594

 

43,200

 

 

 

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)

 

 

 

7/30/2008

 

11,156

 

12,388

(2)

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

11,256

 

12,388

 

 

 

PG Mergersub, Inc. and PGA Holdings, Inc.

 

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

 

Junior secured loan ($45,000 par due 10/2018)

 

8.25% (Libor + 7.00%/Q)

 

4/19/2012

 

45,000

 

45,000

(2)(21)

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

14

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

703

(2)

 

 

 

 

 

 

 

 

 

 

 

 

45,292

 

45,717

 

 

 

RCHP, Inc.

 

Operator of general acute care hospitals

 

Senior secured loan ($9,975 par due 11/2018)

 

7.00% (Libor + 5.75%/Q)

 

11/4/2011

 

9,950

 

9,975

(2)(21)

 

 

 

 

 

 

Junior secured loan ($65,000 par due 5/2019)

 

11.50% (Libor + 10.00%/S)

 

11/4/2011

 

65,000

 

65,000

(2)(21)

 

 

 

 

 

 

 

 

 

 

 

 

74,950

 

74,975

 

 

 

Reed Group, Ltd.

 

Medical disability management services provider

 

Equity interests

 

 

 

4/1/2010

 

 

(2)

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

Senior secured loan ($5,600 par due 7/2015)

 

11.00%

 

6/28/2012

 

5,574

 

5,600

(2)

 

 

 

 

 

 

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

 

 

 

6/26/2012

 

38

 

30

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,612

 

5,630

 

 

 

Sage Products Holdings III, LLC

 

Patient infection control and preventive care solutions provider

 

Junior secured loan ($75,000 par due 6/2020)

 

9.25% (Libor + 8.00%/Q)

 

12/13/2012

 

75,000

 

75,000

(2)(21)

 

 

Soteria Imaging Services, LLC (6)

 

Outpatient medical imaging provider

 

Junior secured loan ($2,521 par due 11/2010)

 

 

 

4/1/2010

 

2,051

 

671

(2)(20)

 

 

 

 

 

 

Preferred member units (1,823,179 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,051

 

671

 

 

 

SurgiQuest, Inc.

 

Medical device company

 

Senior secured loan ($7,000 par due 10/2016)

 

10.00%

 

9/28/2012

 

6,812

 

7,000

(2)

 

 

 

 

 

 

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

 

 

 

9/28/2012

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,812

 

7,000

 

 

 

U.S. Anesthesia Partners, Inc.

 

Anesthesiology service provider

 

Senior secured loan ($14,962 par due 12/2018)

 

6.50% (Libor + 5.50%/Q)

 

12/27/2012

 

14,962

 

14,962

(2)(21)

 

 

Vantage Oncology, Inc.

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

2,252

(2)

 

 

Young Innovations, Inc.

 

Dental equipment manufacturer

 

Senior secured loan ($15,000 par due 1/2019)

 

6.25% (Libor + 5.00%/M)

 

1/31/2013

 

15,000

 

15,000

(2)(21)

 

 

 

 

 

 

Senior secured loan ($22,143 par due 1/2019)

 

6.25% (Libor + 5.00%/M)

 

1/31/2013

 

22,143

 

22,143

(3)(21)

 

 

 

 

 

 

 

 

 

 

 

 

37,143

 

37,143

 

 

 

 

 

 

 

 

 

 

 

 

 

823,407

 

822,718

 

20.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Academy Holdings,

 

Provider of education,

 

Senior secured revolving

 

7.25% (Base

 

3/18/2011

 

4,850

 

4,850

(2)(21)

 

 

 

5



Table of Contents

 

As of March 31, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

LLC

 

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

 

loan ($4,850 par due 3/2019)

 

Rate + 4.00%/Q)

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior secured loan ($7,800 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

7,800

 

7,800

(2)(21)

 

 

 

 

 

 

Senior secured loan ($5,985 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

5,985

 

5,985

(2)(21)

 

 

 

 

 

 

Senior secured loan ($10,331 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

10,331

 

10,331

(2)(21)

 

 

 

 

 

 

Senior secured loan ($60,752 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

60,752

 

60,752

(3)(21)

 

 

 

 

 

 

Senior secured loan ($4,770 par due 3/2019)

 

6.00% (Libor + 5.00%/Q)

 

3/18/2011

 

4,770

 

4,770

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

94,488

 

94,488

 

 

 

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

 

Education software developer

 

Preferred stock (485,159 shares)

 

 

 

2/8/2008

 

10,520

 

5,461

(2)

 

 

Community Education Centers, Inc.

 

Offender re-entry and in-prison treatment services provider

 

Senior secured loan ($15,000 par due 12/2014)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

15,000

 

15,000

(2)(15)(21)

 

 

 

 

 

 

Senior secured loan ($714 par due 12/2014)

 

7.50% (Base Rate + 4.25%/Q)

 

12/10/2010

 

714

 

714

(2)(15)(21)

 

 

 

 

 

 

Junior secured loan ($33,599 par due 12/2015)

 

15.30% (Libor + 15.00%/Q)

 

12/10/2010

 

33,599

 

30,912

(2)

 

 

 

 

 

 

Junior secured loan ($10,139 par due 12/2015)

 

15.29% (Libor + 15.00%/Q)

 

12/10/2010

 

10,139

 

9,329

(2)

 

 

 

 

 

 

Warrants to purchase up to 654,618 shares

 

 

 

12/10/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

59,452

 

55,955

 

 

 

eInstruction Corporation

 

Developer, manufacturer and retailer of educational products

 

Senior secured loan ($17,000 par due 7/2014)

 

 

 

4/1/2010

 

15,258

 

(2)(20)

 

 

 

 

 

 

Senior subordinated loan ($33,305 par due 1/2015)

 

 

 

4/1/2010

 

24,152

 

(2)(20)

 

 

 

 

 

 

Common stock (2,406 shares)

 

 

 

4/1/2010

 

926

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

40,336

 

 

 

 

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

 

10,845

 

12,119

(2)

 

 

 

 

 

 

Common stock (50,800 shares)

 

 

 

8/1/2011

 

51

 

3,290

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,896

 

15,409

 

 

 

Infilaw Holding, LLC

 

Operator of three for-profit law schools

 

Senior secured loan ($1 par due 8/2016)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

1

 

1

(2)(21)

 

 

 

 

 

 

Senior secured loan ($19,086 par due 8/2016)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

19,086

 

19,086

(3)(21)

 

 

 

 

 

 

Series A preferred units (124,890 units)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

124,890

 

124,890

(2)(21)

 

 

 

 

 

 

Series B preferred stock (3.91 units)

 

 

 

10/19/2012

 

9,245

 

9,884

(2)

 

 

 

 

 

 

 

 

 

 

 

 

153,222

 

153,861

 

 

 

Instituto de Banca y Comercio, Inc. & Leeds IV Advisors, Inc.

 

Private school operator

 

Series B preferred stock (1,750,000 shares)

 

 

 

8/5/2010

 

5,000

 

7,412

(2)

 

 

 

 

 

 

Series C preferred stock (2,512,586 shares)

 

 

 

6/7/2010

 

689

 

34

(2)

 

 

 

 

 

 

Common stock (20 shares)

 

 

 

6/7/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,689

 

7,446

 

 

 

Lakeland Tours, LLC

 

Educational travel provider

 

Senior secured loan ($58,826 par due 12/2016)

 

9.25% (Libor + 8.25%/Q)

 

10/4/2011

 

58,678

 

58,826

(2)(14)(21)

 

 

 

 

 

 

Senior secured loan ($1,760 par due 12/2016)

 

5.25% (Libor + 4.25%/Q)

 

10/4/2011

 

1,756

 

1,760

(2)(21)

 

 

 

 

 

 

Senior secured loan ($40,362 par due 12/2016)

 

9.25% (Libor + 8.25%/Q)

 

10/4/2011

 

40,259

 

40,362

(3)(14)(21)

 

 

 

 

 

 

Senior secured loan ($8,800 par due 12/2016)

 

5.25% (Libor + 4.25%/Q)

 

10/4/2011

 

8,777

 

8,800

(3)(21)

 

 

 

 

 

 

Common stock (5,000 shares)

 

 

 

10/4/2011

 

5,000

 

4,892

(2)

 

 

 

 

 

 

 

 

 

 

 

 

114,470

 

114,640

 

 

 

R3 Education, Inc. and EIC Acquisitions Corp.

 

Medical school operator

 

Preferred stock (8,800 shares)

 

 

 

7/30/2008

 

2,200

 

1,936

(2)

 

 

 

 

 

 

Common membership

 

 

 

9/21/2007

 

15,800

 

29,443

(2)

 

 

 

6



Table of Contents

 

As of March 31, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

interest (26.27% interest) Warrants to purchase up to 27,890 shares

 

 

 

12/8/2009

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

18,000

 

31,379

 

 

 

 

 

 

 

 

 

 

 

 

 

507,073

 

478,639

 

12.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants and Food Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADF Capital, Inc. & ADF Restaurant Group, LLC

 

Restaurant owner and operator

 

Senior secured revolving loan ($1,468 par due 11/2014)

 

6.50% (Libor + 3.50%/Q)

 

11/27/2006

 

1,468

 

1,468

(2)(21)

 

 

 

 

 

 

Senior secured revolving loan ($50 par due 11/2014)

 

6.50% (Base Rate + 2.50%/Q)

 

11/27/2006

 

50

 

50

(2)(21)

 

 

 

 

 

 

Senior secured loan ($9,168 par due 11/2015)

 

12.50% (Libor + 9.50%/Q)

 

11/27/2006

 

9,168

 

9,168

(2)(21)

 

 

 

 

 

 

Senior secured loan ($10,995 par due 11/2015)

 

12.50% (Libor + 9.50%/Q)

 

11/27/2006

 

10,998

 

10,995

(3)(21)

 

 

 

 

 

 

Promissory note ($20,020,806 par due 11/2016)

 

12.00% PIK

 

11/27/2006

 

16,584

 

19,978

(2)

 

 

 

 

 

 

Warrants to purchase up to 0.61 shares

 

 

 

6/1/2006

 

 

2,352

(2)

 

 

 

 

 

 

 

 

 

 

 

 

38,268

 

44,011

 

 

 

Benihana, Inc.

 

Restaurant owner and operator

 

Senior secured loan ($11,715 par due 2/2018)

 

9.25% (Libor + 8.00%/Q)

 

8/21/2012

 

11,715

 

11,715

(2)(21)

 

 

 

 

 

 

Senior secured loan ($10,000 par due 2/2018)

 

9.25% (Libor + 8.00%/Q)

 

8/21/2012

 

10,000

 

10,000

(3)(21)

 

 

 

 

 

 

Senior secured loan ($9,975 par due 2/2018)

 

9.25% (Libor + 8.00%/Q)

 

8/21/2012

 

9,975

 

9,975

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

31,690

 

31,690

 

 

 

Hojeij Branded Foods, Inc.

 

Airport restaurant operator

 

Senior secured revolving loan ($1,900 par due 2/2017)

 

9.00% (Libor + 8.00%/Q)

 

2/15/2012

 

1,900

 

1,900

(2)(21)

 

 

 

 

 

 

Senior secured loan ($25,600 par due 2/2017)

 

9.00% (Libor + 8.00%/Q)

 

2/15/2012

 

25,053

 

25,600

(2)(21)

 

 

 

 

 

 

Warrants to purchase up to 7.5% of membership interest

 

 

 

2/15/2012

 

 

164

(2)

 

 

 

 

 

 

Warrants to purchase up to 324 shares of Class A common stock

 

 

 

2/15/2012

 

669

 

2,362

(2)

 

 

 

 

 

 

 

 

 

 

 

 

27,622

 

30,026

 

 

 

Orion Foods, LLC (7)

 

Convenience food service retailer

 

Senior secured revolving loan ($9,000 par due 9/2014)

 

10.75% (Base Rate + 7.50%/M)

 

4/1/2010

 

9,000

 

9,000

(2)(21)

 

 

 

 

 

 

Senior secured loan ($33,367 par due 9/2014)

 

10.00% (Libor + 8.50%/Q)

 

4/1/2010

 

33,367

 

33,367

(3)(21)

 

 

 

 

 

 

Junior secured loan ($37,552 par due 9/2014)

 

 

 

4/1/2010

 

22,425

 

15,358

(2)(20)

 

 

 

 

 

 

Preferred units (10,000 units)

 

 

 

10/28/2010

 

 

(2)

 

 

 

 

 

 

Class A common units (25,001 units)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

Class B common units (1,122,452 units)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

64,792

 

57,725

 

 

 

OTG Management, LLC

 

Airport restaurant operator

 

Senior secured loan ($25,000 par due 12/2017)

 

8.75% (Libor + 7.25%/Q)

 

12/11/2012

 

25,000

 

25,000

(2)(21)

 

 

 

 

 

 

Common units (3,000,000 units)

 

 

 

1/5/2011

 

3,000

 

1,955

(2)

 

 

 

 

 

 

Warrants to purchase up to 7.73% of common units

 

 

 

6/19/2008

 

100

 

4,151

(2)

 

 

 

 

 

 

 

 

 

 

 

 

28,100

 

31,106

 

 

 

Performance Food Group, Inc. and Wellspring Distribution Corp.

 

Food service distributor

 

Junior secured loan ($50,000 par due 5/2015)

 

11.00%

 

5/30/2012

 

50,000

 

50,000

(2)

 

 

 

 

 

 

Junior secured loan ($112,250 par due 5/2015)

 

11.00%

 

5/23/2008

 

111,327

 

112,250

(2)

 

 

 

 

 

 

Class A non-voting common stock (1,366,120 shares)

 

 

 

5/3/2008

 

7,500

 

6,823

(2)

 

 

 

 

 

 

 

 

 

 

 

 

168,827

 

169,073

 

 

 

Restaurant Holding Company, LLC

 

Fast food restaurant operator

 

Senior secured loan ($60,667 par due 2/2017)

 

9.00% (Libor + 7.50%/M)

 

2/17/2012

 

59,676

 

60,667

(3)(21)

 

 

 

 

 

 

Senior secured loan ($9,333 par due 2/2017)

 

9.00% (Libor + 7.50%/M)

 

2/17/2012

 

9,180

 

9,333

(4)(21)

 

 

 

 

 

 

 

 

 

 

 

 

68,856

 

70,000

 

 

 

S.B. Restaurant Company

 

Restaurant owner and

 

Preferred stock (46,690

 

 

 

4/1/2010

 

 

(2)

 

 

 

7



Table of Contents

 

As of March 31, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

operator

 

shares) Warrants to purchase up to 257,429 shares of common stock

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

428,155

 

433,631

 

10.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AllBridge Financial, LLC (7)

 

Asset management services

 

Equity interests

 

 

 

4/1/2010

 

5,675

 

7,422

 

 

 

Callidus Capital Corporation (7)

 

Asset management services

 

Common stock (100 shares)

 

 

 

4/1/2010

 

3,000

 

1,735

 

 

 

Ciena Capital LLC (7)

 

Real estate and small business loan servicer

 

Senior secured revolving loan ($14,000 par due 12/2014)

 

6.00%

 

11/29/2010

 

14,000

 

14,000

(2)

 

 

 

 

 

 

Senior secured loan ($32,000 par due 12/2016)

 

12.00%

 

11/29/2010

 

32,000

 

32,000

(2)

 

 

 

 

 

 

Equity interests

 

 

 

11/29/2010

 

53,374

 

14,533

(2)

 

 

 

 

 

 

 

 

 

 

 

 

99,374

 

60,533

 

 

 

Commercial Credit Group, Inc.

 

Commercial equipment finance and leasing company

 

Senior subordinated loan ($28,000 par due 5/2018)

 

12.75%

 

5/10/2012

 

28,000

 

28,000

(2)

 

 

Cook Inlet Alternative Risk, LLC

 

Risk management services

 

Senior subordinated loan ($2,500 par due 9/2015)

 

9.00%

 

9/30/2011

 

2,500

 

2,500

(2)

 

 

Financial Pacific Company

 

Commercial finance leasing

 

Preferred stock (6,500 shares)

 

8.00% PIK

 

10/13/2010

 

3,807

 

14,065

 

 

 

 

 

 

 

Common stock (650,000 shares)

 

 

 

10/13/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,807

 

14,065

 

 

 

Gordian Acquisition Corp.

 

Financial services firm

 

Common stock (526 shares)

 

 

 

11/30/2012

 

 

(2)

 

 

Imperial Capital Group LLC

 

Investment services

 

2006 Class B common units (2,526 units)

 

 

 

5/10/2007

 

3

 

4

(2)

 

 

 

 

 

 

2007 Class B common units (315 units)

 

 

 

5/10/2007

 

 

1

(2)

 

 

 

 

 

 

Class A common units (7,710 units)

 

 

 

5/10/2007

 

14,997

 

18,949

(2)

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

18,954

 

 

 

Ivy Hill Asset Management, L.P. (7)(9)

 

Asset management services

 

Member interest (100.00% interest)

 

 

 

6/15/2009

 

170,961

 

267,839

 

 

 

 

 

 

 

 

 

 

 

 

 

328,317

 

401,048

 

10.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access CIG, LLC

 

Records and information management services provider

 

Senior secured loan ($1,000 par due 10/2017)

 

7.00% (Libor + 5.75%/Q)

 

10/5/2012

 

1,000

 

1,000

(2)(21)

 

 

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

 

Payroll and accounting services provider to the entertainment industry

 

Senior secured loan ($19,750 par due 12/2017)

 

7.50% (Libor + 6.50%/Q)

 

12/24/2012

 

19,750

 

19,750

(2)(16)(21)

 

 

 

 

 

 

Senior secured loan ($49,375 par due 12/2017)

 

7.50% (Libor + 6.50%/Q)

 

12/24/2012

 

49,375

 

49,375

(3)(21)

 

 

 

 

 

 

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

 

 

 

12/24/2012

 

2,500

 

2,500

(2)

 

 

 

 

 

 

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

 

 

 

12/24/2012

 

2,500

 

2,500

(2)

 

 

 

 

 

 

 

 

 

 

 

 

74,125

 

74,125

 

 

 

CIBT Investment Holdings, LLC

 

Expedited travel document processing services

 

Class A shares (2,500 shares)

 

 

 

12/15/2011

 

2,500

 

3,477

(2)

 

 

CitiPostal Inc. (7)

 

Document storage and management services

 

Senior secured revolving loan ($1,000 par due 12/2013)

 

6.50% (Base Rate + 3.25%/Q)

 

4/1/2010

 

1,000

 

1,000

(2)(21)

 

 

 

 

 

 

Senior secured loan ($525 par due 12/2013)

 

8.50% Cash, 5.50% PIK

 

4/1/2010

 

525

 

489

(2)

 

 

 

 

 

 

Senior secured loan ($53,817 par due 12/2013)

 

8.50% Cash, 5.50% PIK

 

4/1/2010

 

53,817

 

50,066

(2)

 

 

 

 

 

 

Senior subordinated loan ($17,936 par due 12/2015)

 

 

 

4/1/2010

 

13,038

 

(2)(20)

 

 

 

 

 

 

Common stock (37,024 shares)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,380

 

51,555

 

 

 

Command Alkon, Inc.

 

Software solutions provider to the ready-mix concrete industry

 

Junior 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

 

Senior secured loan ($18,403 par due 8/2016)

 

12.25% (Base Rate + 9.00%/Q)

 

8/12/2011

 

18,403

 

17,667

(2)(21)

 

 

HCPro, Inc. and HCP

 

Healthcare compliance

 

Senior subordinated loan

 

 

 

3/5/2013

 

5,500

 

5,500

(2)(20)

 

 

 

8



Table of Contents

 

As of March 31, 2013

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest(5)(11)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Acquisition Holdings, LLC (7)

 

advisory services

 

($17,103 par due 8/2014)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A units (15,043,110 units)

 

 

 

6/26/2008

 

13,543

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

19,043

 

5,500

 

 

 

IfByPhone Inc.

 

Voice-based marketing automation software provider

 

Senior secured loan ($2,000 par due 11/2015)

 

11.00%

 

10/15/2012

 

1,924

 

2,000

(2)

 

 

 

 

 

 

Senior secured loan ($1,000 par due 1/2016)

 

11.00%

 

10/15/2012

 

1,000

 

1,000

(2)

 

 

 

 

 

 

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

 

 

 

10/15/2012

 

88

 

88

(2)

 

 

 

 

 

 

 

 

 

 

 

 

3,012

 

3,088

 

 

 

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 (10.00% interest)

 

 

 

6/22/2006

 

 

805

 

 

 

Itel Laboratories, Inc.

 

Data services provider for building materials to property insurance industry

 

Senior secured loan ($22,182 par due 6/2018)

 

6.00% (Libor + 4.75%/M)

 

6/29/2012

 

22,182

 

22,182

(2)(21)

 

 

 

 

 

 

Preferred units (1,798,391 units)

 

 

 

6/29/2012

 

1,000

 

1,118

(2)

 

 

 

 

 

 

 

 

 

 

 

 

23,182

 

23,300

 

 

 

Multi-Ad Services, Inc. (6)

 

Marketing services and software provider

 

Preferred units (1,725,280 units)

 

 

 

4/1/2010

 

788

 

2,043

 

 

 

 

 

 

 

Common units (1,725,280 units)

 

 

 

4/1/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

788

 

2,043

 

 

 

MVL Group, Inc. (7)

 

Marketing research provider

 

Senior secured revolving loan ($806 par due 6/2012)

 

4.80% (Libor + 4.50%/Q)

 

6/28/2012

 

806

 

806

(2)

 

 

 

 

 

 

Senior subordinated loan ($37,003 par due 7/2012)

 

 

 

4/1/2010

 

34,636

 

7,216

(2)(20)

 

 

 

 

 

 

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

 

 

 

4/1/2010

 

 

(2)(20)

 

 

 

 

 

 

Common stock (560,716 shares)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

35,442

 

8,022

 

 

 

NComputing, Inc.

 

Desktop virtualization hardware and software technology service provider

 

Senior secured loan ($6,500 par due 7/2016)

 

10.50%

 

3/20/2013

 

6,500

 

6,500

(2)

 

 

 

 

 

 

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

 

 

 

3/20/2013

 

 

41

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,500

 

6,541

 

 

 

Pillar Processing LLC and PHL Holding Co. (6)

 

Mortgage services

 

Senior secured loan ($6,659 par due 11/2018)