XNAS:ARCC Ares Capital Corporation Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

XNAS:ARCC Fair Value Estimate
Premium
XNAS:ARCC Consider Buying
Premium
XNAS:ARCC Consider Selling
Premium
XNAS:ARCC Fair Value Uncertainty
Premium
XNAS:ARCC Economic Moat
Premium
XNAS:ARCC Stewardship
Premium
 

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 June 30, 2012

 

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. 000-50697

 

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 August 7, 2012

Common stock, $0.001 par value

 

222,150,745

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2012 (unaudited) and December 31, 2011

2

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2012 (unaudited) and June 30, 2011 (unaudited)

3

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2012 (unaudited) and December 31, 2011

4

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2012 (unaudited)

39

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended June 30, 2012 (unaudited) and June 30, 2011 (unaudited)

40

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

41

 

 

 

Item 2.

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

65

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

85

 

 

 

Item 4.

Controls and Procedures

86

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

86

 

 

 

Item 1A.

Risk Factors

86

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

86

 

 

 

Item 3.

Defaults Upon Senior Securities

86

 

 

 

Item 4.

Mine Safety Disclosures

86

 

 

 

Item 5.

Other Information

86

 

 

 

Item 6.

Exhibits

87

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2012

 

December 31, 2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliate investments

 

$

3,461,544

 

$

3,060,084

 

Non-controlled affiliate company investments

 

329,333

 

267,324

 

Controlled affiliate company investments

 

1,713,936

 

1,767,098

 

Total investments at fair value (amortized cost of $5,438,184 and $5,108,663, respectively)

 

5,504,813

 

5,094,506

 

Cash and cash equivalents

 

101,265

 

120,782

 

Interest receivable

 

101,135

 

99,078

 

Receivable for open trades

 

304

 

550

 

Other assets

 

99,961

 

72,521

 

Total assets

 

$

5,807,478

 

$

5,387,437

 

LIABILITIES

 

 

 

 

 

Debt

 

$

2,194,808

 

$

2,073,602

 

Management and incentive fees payable

 

98,202

 

92,496

 

Accounts payable and other liabilities

 

38,970

 

47,691

 

Interest and facility fees payable

 

28,999

 

26,383

 

Total liabilities

 

2,360,979

 

2,240,172

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 400,000 common shares authorized 222,151 and 205,130 common shares issued and outstanding, respectively

 

222

 

205

 

Capital in excess of par value

 

3,657,160

 

3,390,354

 

Accumulated overdistributed net investment income

 

(9,578

)

(10,449

)

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

 

(267,934

)

(218,688

)

Net unrealized gain (loss) on investments

 

66,629

 

(14,157

)

Total stockholders’ equity

 

3,446,499

 

3,147,265

 

Total liabilities and stockholders’ equity

 

$

5,807,478

 

$

5,387,437

 

NET ASSETS PER SHARE

 

$

15.51

 

$

15.34

 

 

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 six months ended

 

 

 

June 30, 2012

 

June 30, 2011

 

June 30, 2012

 

June 30, 2011

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest

 

$

77,097

 

$

60,435

 

$

149,360

 

$

122,242

 

Capital structuring service fees

 

12,568

 

13,082

 

20,445

 

18,500

 

Dividend income

 

3,518

 

521

 

7,320

 

2,036

 

Management and other fees

 

332

 

474

 

660

 

628

 

Other income

 

4,471

 

880

 

7,215

 

2,116

 

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

 

97,986

 

75,392

 

185,000

 

145,522

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest

 

5,762

 

8,759

 

10,259

 

18,891

 

Capital structuring service fees

 

895

 

 

895

 

 

Dividend income

 

323

 

1,255

 

639

 

3,631

 

Management and other fees

 

63

 

188

 

126

 

376

 

Other income

 

265

 

62

 

294

 

638

 

Total investment income from non- controlled affiliate company investments

 

7,308

 

10,264

 

12,213

 

23,536

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest

 

55,183

 

42,079

 

111,308

 

80,700

 

Capital structuring service fees

 

7,804

 

7,113

 

17,587

 

12,706

 

Dividend income

 

5,097

 

4,901

 

10,198

 

9,801

 

Management and other fees

 

4,117

 

3,939

 

8,658

 

7,046

 

Other income

 

60

 

619

 

329

 

687

 

Total investment income from controlled affiliate company investments

 

72,261

 

58,651

 

148,080

 

110,940

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

177,555

 

144,307

 

345,293

 

279,998

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

35,018

 

28,593

 

67,794

 

58,768

 

Incentive fees

 

22,733

 

41,746

 

49,119

 

72,687

 

Base management fees

 

20,811

 

17,414

 

40,797

 

34,144

 

Professional fees

 

3,548

 

5,514

 

7,234

 

8,146

 

Administrative fees

 

2,217

 

2,459

 

4,537

 

4,884

 

Other general and administrative

 

2,474

 

2,911

 

5,275

 

5,829

 

Total expenses

 

86,801

 

98,637

 

174,756

 

184,458

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

90,754

 

45,670

 

170,537

 

95,540

 

 

 

 

 

 

 

 

 

 

 

Income tax expense, including excise tax

 

2,853

 

1,907

 

5,598

 

3,954

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

87,901

 

43,763

 

164,939

 

91,586

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(35,040

)

(14,223

)

(34,578

)

58,189

 

Non-controlled affiliate company investments

 

68

 

1,580

 

71

 

(2,016

)

Controlled affiliate company investments

 

(3,925

)

6,269

 

(12,061

)

22

 

Net realized gains (losses)

 

(38,897

)

(6,374

)

(46,568

)

56,195

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

33,192

 

(7,372

)

39,209

 

(20,426

)

Non-controlled affiliate company investments

 

4,038

 

(9,453

)

14,131

 

(2,906

)

Controlled affiliate company investments

 

7,376

 

26,817

 

27,446

 

55,558

 

Net unrealized gains

 

44,606

 

9,992

 

80,786

 

32,226

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains from investments

 

5,709

 

3,618

 

34,218

 

88,421

 

 

 

 

 

 

 

 

 

 

 

REALIZED LOSS ON EXTINGUISHMENT OF DEBT

 

(2,678

)

(10,458

)

(2,678

)

(19,318

)

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

90,932

 

$

36,923

 

$

196,479

 

$

160,689

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 9)

 

$

0.41

 

$

0.18

 

$

0.90

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

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

 

221,878

 

204,752

 

219,461

 

204,586

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of June 30, 2012

(dollar amounts in thousands)

(unaudited)

 

Company(1)

 

Business Description

 

Investment

 

Interest (5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Investment Funds and Vehicles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGILE Fund I, LLC (7)(9)

 

Investment partnership

 

Member interest (0.50% interest)

 

 

 

4/1/2010

 

$

 201

 

$

 111

(2)

 

 

CIC Flex, LP (9)

 

Investment partnership

 

Limited partnership units (0.94 unit)

 

 

 

9/7/2007

 

2,409

 

3,608

(2)

 

 

Covestia Capital Partners, LP (9)

 

Investment partnership

 

Limited partnership interest (47.00% interest)

 

 

 

6/17/2008

 

1,059

 

1,135

(2)

 

 

Dynamic India Fund IV, LLC (9)

 

Investment company

 

Member interest (5.44% interest)

 

 

 

4/1/2010

 

4,822

 

3,509

(2)

 

 

Firstlight Financial Corporation (6)(9)

 

Investment company

 

Senior subordinated loan ($56,570 par due 12/2016)

 

5.00% PIK

 

12/31/2006

 

56,358

 

63,517

(2)

 

 

 

 

 

 

Class A common stock (10,000 shares)

 

 

 

12/31/2006

 

10,000

 

(2)

 

 

 

 

 

 

Class B common stock (30,000 shares)

 

 

 

12/31/2006

 

30,000

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

96,358

 

63,517

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment company

 

Member interest (100.00% interest)

 

 

 

4/1/2010

 

633

 

534

(2)

 

 

Imperial Capital Private Opportunities, LP (9)

 

Investment partnership

 

Limited partnership interest (80.00% interest)

 

 

 

5/10/2007

 

6,531

 

5,000

(2)

 

 

Ivy Hill Middle Market Credit Fund, Ltd. (7)(8)(9)

 

Investment company

 

Subordinated notes ($16 par due 11/2018)

 

15.00%

 

11/20/2007

 

15,515

 

16,480

 

 

 

 

 

 

 

Class B deferrable interest notes ($25,000 par due 11/2018)

 

6.49% (Libor + 6.00%/Q)

 

11/20/2007

 

25,000

 

23,750

 

 

 

 

 

 

 

 

 

 

 

 

 

40,515

 

40,230

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kodiak Funding, LP (9)

 

Investment partnership

 

Limited partnership interest (1.52% interest)

 

 

 

4/1/2010

 

850

 

695

 

 

 

Novak Biddle Venture Partners III, L.P. (9)

 

Investment partnership

 

Limited partnership interest (2.47% interest)

 

 

 

4/1/2010

 

83

 

179

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (25.00% interest)

 

 

 

6/16/2006

 

1,721

 

4,266

(2)

 

 

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

 

Investment partnership

 

Limited partnership interest (2.50% interest)

 

 

 

10/5/2011

 

1,413

 

1,270

(2)

 

 

Senior Secured Loan Fund LLC (7)(10)(18)

 

Co-investment vehicle

 

Subordinated certificates ($1,110,027 par due 12/2020)

 

8.47% (Libor + 8.00%/Q)

 

10/30/2009

 

1,099,476

 

1,125,812

 

 

 

VSC Investors LLC (9)

 

Investment company

 

Membership interest (1.95% interest)

 

 

 

1/24/2008

 

1,398

 

1,531

(2)

 

 

 

 

 

 

 

 

 

 

 

 

1,257,469

 

1,251,397

 

36.31

%

Healthcare-Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CCS Group Holdings, LLC

 

Correctional facility healthcare operator

 

Class A units (601,937 units)

 

 

 

8/19/2010

 

602

 

1,054

(2)

 

 

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

 

Healthcare analysis services

 

Senior secured loan ($7,209 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,209

 

6,776

(3)(17)

 

 

 

 

 

 

Senior secured loan ($7,604 par due 3/2017)

 

7.75% (Libor + 6.50%/Q)

 

3/15/2011

 

7,604

 

7,148

(2)(17)

 

 

 

 

 

 

Class A common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

5,276

(2)

 

 

 

 

 

 

Class C common stock (1,546 shares)

 

 

 

6/15/2007

 

 

843

(2)

 

 

 

 

 

 

 

 

 

 

 

 

18,813

 

20,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INC Research, Inc.

 

Pharmaceutical and biotechnology consulting services

 

Common stock (1,410,000 shares)

 

 

 

9/27/2010

 

1,512

 

1,024

(2)

 

 

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

 

Healthcare professional provider

 

Senior secured loan ($15,573 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

15,573

 

15,573

(2)(17)

 

 

 

 

 

 

Senior secured loan ($43,616 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

43,616

 

43,616

(3)(17)

 

 

 

 

 

 

Senior secured loan ($4,956 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

9/15/2010

 

4,956

 

4,956

(4)(17)

 

 

 

4



Table of Contents

 

Company(1)

 

Business Description

 

Investment

 

Interest (5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Senior secured loan ($56,301 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

3/16/2012

 

56,301

 

56,301

(2)(17)

 

 

 

 

 

 

Senior secured loan ($15,859 par due 3/2018)

 

9.75% (Libor + 8.75%/Q)

 

3/16/2012

 

15,859

 

15,859

(3)(17)

 

 

 

 

 

 

 

 

 

 

 

 

136,305

 

136,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MW Dental Holding Corp.

 

Dental services

 

Senior secured revolving loan ($1,000 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

1,000

 

1,000

(2)(17)

 

 

 

 

 

 

Senior secured loan ($45,563 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

45,563

 

45,563

(2)(17)

 

 

 

 

 

 

Senior secured loan ($49,501 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

49,501

 

49,501

(3)(17)

 

 

 

 

 

 

Senior secured loan ($9,950 par due 4/2017)

 

8.50% (Libor + 7.00%/M)

 

4/12/2011

 

9,950

 

9,950

(4)(17)

 

 

 

 

 

 

 

 

 

 

 

 

106,014

 

106,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Napa Management Services Corporation

 

Anesthesia management services provider

 

Senior secured revolving loan ($600 par due 4/2016)

 

7.50% (Libor + 6.00%/M)

 

4/15/2011

 

600

 

600

(2)(17)

 

 

 

 

 

 

Senior secured revolving loan ($75 par due 4/2016)

 

8.25% (Base Rate + 5.00%/Q)

 

4/15/2011

 

75

 

75

(2)(17)

 

 

 

 

 

 

Senior secured loan ($21,966 par due 4/2016)

 

7.50% (Libor + 6.00%/M)

 

4/15/2011

 

21,668

 

21,966

(2)(17)

 

 

 

 

 

 

Senior secured loan ($28,875 par due 4/2016)

 

7.50% (Libor + 6.00%/Q)

 

4/15/2011

 

28,875

 

28,875

(3)(17)

 

 

 

 

 

 

Common units (5,000 units)

 

 

 

4/15/2011

 

5,000

 

5,692

(2)

 

 

 

 

 

 

 

 

 

 

 

 

56,218

 

57,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NS Merger Sub. Inc. and NS Holdings, Inc.

 

Healthcare technology provider

 

Senior subordinated loan ($579 par due 6/2017)

 

13.50%

 

6/21/2010

 

579

 

579

(2)

 

 

 

 

 

 

Senior subordinated loan ($50,000 par due 6/2017)

 

13.50%

 

6/21/2010

 

50,000

 

50,000

(3)

 

 

 

 

 

 

Common stock (2,500,000 shares)

 

 

 

6/21/2010

 

2,500

 

3,015

(2)

 

 

 

 

 

 

 

 

 

 

 

 

53,079

 

53,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Common stock (857,143 shares)

 

 

 

8/18/2006

 

3,000

 

707

(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

 

10,144

(2)

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

11,256

 

10,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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%/S)

 

4/19/2012

 

45,000

 

45,000

(2)(17)

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

125

 

16

(2)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

786

(2)

 

 

 

 

 

 

 

 

 

 

 

 

45,292

 

45,802

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRA Holdings, Inc.

 

Drug testing services

 

Senior secured loan ($11,330 par due 12/2014)

 

4.25% (Libor + 4.00%/M)

 

12/14/2007

 

11,081

 

11,103

(4)

 

 

 

 

 

 

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

 

4.25% (Libor + 4.00%/M)

 

12/14/2007

 

11,732

 

11,760

(2)

 

 

 

 

 

 

 

 

 

 

 

 

22,813

 

22,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RCHP, Inc.

 

Operator of general acute care hospitals

 

Junior secured loan ($15,000 par due 5/2019)

 

11.50% (Libor + 10.00%/Q)

 

11/4/2011

 

15,000

 

15,000

(2)(17)

 

 

 

 

 

 

Junior secured loan ($50,000 par due 5/2019)

 

11.50% (Libor + 10.00%/Q)

 

11/4/2011

 

50,000

 

50,000

(3)(17)

 

 

 

 

 

 

 

 

 

 

 

 

65,000

 

65,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reed Group, Ltd.

 

Medical disability management services provider

 

Senior secured revolving loan ($1,482 par due 12/2013)

 

 

 

4/1/2010

 

1,080

 

1,260

(2)(16)

 

 

 

 

 

 

Senior secured loan ($12,753 par due 12/2013)

 

 

 

4/1/2010

 

9,285

 

10,840

(2)(16)

 

 

 

5



Table of Contents

 

Company(1)

 

Business Description

 

Investment

 

Interest (5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

Senior secured loan ($27,528 par due 12/2013)

 

 

 

4/1/2010

 

16,658

 

1,533

(2)(16)

 

 

 

 

 

 

Equity interests

 

 

 

4/1/2010

 

203

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

27,226

 

13,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Respicardia, Inc.

 

Developer of implantable therapies to improve cardiovascular health

 

Senior secured loan ($6,000 par due 7/2015)

 

11.00% (11.00%/Q)

 

6/28/2012

 

5,962

 

6,000

(2)

 

 

 

 

 

 

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

 

 

 

6/28/2012

 

38

 

38

(2)

 

 

 

 

 

 

 

 

 

 

 

 

6,000

 

6,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soteria Imaging Services, LLC (6)

 

Outpatient medical imaging provider

 

Junior secured loan ($2,809 par due 11/2010)

 

 

 

4/1/2010

 

2,326

 

1,683

(2)(16)

 

 

 

 

 

 

Preferred member units (1,823,179 units)

 

 

 

4/1/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

2,326

 

1,683

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sunquest Information Systems, Inc.

 

Laboratory software solutions provider

 

Junior secured loan ($67,000 par due 6/2017)

 

9.75% (Libor + 8.50%/Q)

 

12/16/2010

 

67,000

 

67,000

(2)(17)

 

 

 

 

 

 

Junior secured loan ($58,000 par due 6/2017)

 

9.75% (Libor + 8.50%/Q)

 

12/16/2010

 

58,000

 

58,000

(3)(17)

 

 

 

 

 

 

 

 

 

 

 

 

125,000

 

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Renal Care, Inc.

 

Dialysis provider

 

Senior secured loan ($7,406 par due 12/2016)

 

6.25% (Libor + 3.00%/Q)

 

6/9/2011

 

7,369

 

7,406

(2)(17)

 

 

 

 

 

 

Senior subordinated loan ($51,081 par due 6/2018)

 

11.25% Cash, 2.00% PIK

 

5/24/2010

 

51,081

 

53,124

(3)

 

 

 

 

 

 

 

 

 

 

 

 

58,450

 

60,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vantage Oncology, Inc.

 

Radiation oncology care provider

 

Common stock (62,157 shares)

 

 

 

2/3/2011

 

4,670

 

4,560

(2)

 

 

 

 

 

 

 

 

 

 

 

 

743,576

 

731,202

 

21.22

%

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Academy Holdings, LLC

 

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

 

Senior secured loan ($16,177 par due 3/2016)

 

9.50% (Libor + 8.50%/Q)

 

3/18/2011

 

16,177

 

16,177

(2)(17)

 

 

 

 

 

 

Senior secured loan ($54,633 par due 3/2016)

 

9.50% (Libor + 8.50%/Q)

 

3/18/2011

 

54,633

 

54,633

(3)(17)

 

 

 

 

 

 

Senior secured loan ($4,927 par due 3/2016)

 

9.50% (Libor + 8.50%/Q)

 

3/18/2011

 

4,927

 

4,927

(4)(17)

 

 

 

 

 

 

 

 

 

 

 

 

75,737

 

75,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education software developer

 

Preferred stock (485,159 shares)

 

 

 

2/8/2008

 

10,520

 

13,330

(2)

 

 

Community Education Centers, Inc.

 

Offender re-entry and in-prison treatment services provider

 

Senior secured loan ($16,429 par due 12/2014)

 

6.25% (Libor + 5.25%/Q)

 

12/10/2010

 

16,429

 

16,429

(2)(15)(17)

 

 

 

 

 

 

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

 

7.50% (Base Rate + 4.25%/M)

 

12/10/2010

 

714

 

714

(2)(15)(17)

 

 

 

 

 

 

Junior secured loan ($42,263 par due 12/2015)

 

15.47% (Libor + 11.47% Cash, 4.00% PIK /Q)

 

12/10/2010

 

42,263

 

38,036

(2)

 

 

 

 

 

 

Warrants to purchase up to 578,427 shares

 

 

 

12/10/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

59,406

 

55,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

eInstruction Corporation

 

Developer, manufacturer and retailer of educational products

 

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

 

 

 

4/1/2010

 

15,257

 

372

(2)(16)

 

 

 

 

 

 

Senior subordinated loan ($29,545 par due 1/2015)

 

 

 

4/1/2010

 

24,151

 

(2)(16)

 

 

 

 

 

 

Common stock (2,406 shares)

 

 

 

4/1/2010

 

926

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

40,334

 

372

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELC Acquisition Corp., ELC Holdings Corporation, and

 

Developer, manufacturer and retailer of educational

 

Preferred stock (99,492 shares)

 

12.00% PIK

 

8/1/2011

 

10,149

 

8,934

(2)

 

 

 

6



Table of Contents

 

Company(1)

 

Business Description

 

Investment

 

Interest (5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

Excelligence Learning Corporation (6)

 

products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock (50,800 shares)

 

 

 

8/1/2011

 

51

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

10,200

 

8,934

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Infilaw Holding, LLC

 

Operator of for-profit law schools

 

Senior secured loan ($28,847 par due 8/2016)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

28,847

 

28,847

(3)(17)

 

 

 

 

 

 

Series A preferred units (126,928 units)

 

9.50% (Libor + 8.50%/Q)

 

8/25/2011

 

126,928

 

126,928

(2)(17)

 

 

 

 

 

 

 

 

 

 

 

 

155,775

 

155,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6,628

(2)

 

 

 

 

 

 

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

 

 

 

6/7/2010

 

689

 

949

(2)

 

 

 

 

 

 

Common stock (20 shares)

 

 

 

6/7/2010

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

5,689

 

7,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lakeland Tours, LLC

 

Educational travel provider

 

Senior secured revolving loan ($13,875 par due 12/2016)

 

6.00% (Libor + 4.50%/S)

 

10/4/2011

 

13,875

 

13,875

(2)(17)

 

 

 

 

 

 

Senior secured revolving loan ($7,875 par due 12/2016)

 

6.75% (Base Rate + 3.50%/Q)

 

10/4/2011

 

7,875

 

7,875

(2)(17)

 

 

 

 

 

 

Senior secured loan ($10,512 par due 12/2016)

 

6.00% (Libor + 4.50%/M)

 

10/4/2011

 

10,481

 

10,512

(2)(14)(17)

 

 

 

 

 

 

Senior secured loan ($53,765 par due 12/2016)

 

10.00% (Libor + 8.50%/M)

 

10/4/2011

 

53,608

 

53,765

(2)(17)

 

 

 

 

 

 

Senior secured loan ($9,303 par due 12/2016)

 

6.00% (Libor + 4.50%/M)

 

10/4/2011

 

9,275

 

9,303

(3)(14)(17)

 

 

 

 

 

 

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

 

10.00% (Libor + 8.50%/M)

 

10/4/2011

 

40,243

 

40,362

(3)(17)

 

 

 

 

 

 

Senior secured loan ($1,861 par due 12/2016)

 

6.00% (Libor + 4.50%/M)

 

10/4/2011

 

1,855

 

1,861

(4)(14)(17)

 

 

 

 

 

 

Senior secured loan ($8,072 par due 12/2016)

 

10.00% (Libor + 8.50%/M)

 

10/4/2011

 

8,048

 

8,072

(4)(17)

 

 

 

 

 

 

Common stock (5,000 shares)

 

 

 

10/4/2011

 

5,000

 

4,750

(2)

 

 

 

 

 

 

 

 

 

 

 

 

150,260

 

150,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R3 Education, Inc. and EIC Acquisitions Corp.

 

Medical school operator

 

Senior secured loan ($3,442 par due 4/2013)

 

9.00% (Libor + 6.00%/Q)

 

9/21/2007

 

3,442

 

8,688

(2)(17)

 

 

 

 

 

 

Senior secured loan ($6,940 par due 4/2013)

 

13.00% PIK

 

12/8/2009

 

5,168

 

17,516

(2)

 

 

 

 

 

 

Preferred stock (8,800 shares)

 

 

 

7/30/2008

 

2,200

 

1,760

(2)

 

 

 

 

 

 

Common membership interest (26.27% interest)

 

 

 

9/21/2007

 

15,800

 

25,156

(2)

 

 

 

 

 

 

Warrants to purchase up to 27,890 shares

 

 

 

12/8/2009

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

26,610

 

53,120

 

 

 

 

 

 

 

 

 

 

 

 

 

534,531

 

520,399

 

15.10

%

Restaurants and Food Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADF Capital, Inc. & ADF Restaurant Group, LLC

 

Restaurant owner and operator

 

Senior secured revolving loan ($1,868 par due 11/2013)

 

6.50% (Libor + 3.50%/Q)

 

11/27/2006

 

1,868

 

1,868

(2)(17)

 

 

 

 

 

 

Senior secured loan ($7,060 par due 11/2013)

 

6.50% (Libor + 3.50%/Q)

 

11/27/2006

 

7,060

 

7,060

(2)(17)

 

 

 

 

 

 

Senior secured loan ($11,200 par due 11/2014)

 

12.50% (Libor + 9.50%/Q)

 

11/27/2006

 

11,203

 

11,200

(3)(17)

 

 

 

 

 

 

Senior secured loan ($9,338 par due 11/2014)

 

12.50% (Libor + 9.50%/Q)

 

11/27/2006

 

9,338

 

9,338

(2)(17)

 

 

 

 

 

 

Promissory note ($14,897 par due 11/2016)

 

 

 

11/27/2006

 

14,887

 

17,724

(2)

 

 

 

 

 

 

Warrants to purchase up to 0.61 shares

 

 

 

6/1/2006

 

 

1,897

(2)

 

 

 

 

 

 

 

 

 

 

 

 

44,356

 

49,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hojeij Branded Foods, Inc.

 

Airport restaurant operator

 

Senior secured loan ($4,000 par due 2/2017)

 

10.25% (Base Rate + 7.00%/Q)

 

2/15/2012

 

4,000

 

3,920

(2)(17)

 

 

 

 

 

 

Senior secured loan ($15,000 par due 2/2017)

 

9.00% (Libor + 8.00%/Q)

 

2/15/2012

 

14,370

 

14,700

(2)(17)

 

 

 

7



Table of Contents

 

Company(1)

 

Business Description

 

Investment

 

Interest (5)(10)

 

Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Percentage
of Net
Assets

 

 

 

 

 

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

 

 

 

2/15/2012

 

669

 

808

(2)

 

 

 

 

 

 

Warrants to purchase up to 7.5% of membership interest

 

 

 

2/15/2012

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

19,039

 

19,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Orion Foods, LLC (fka Hot Stuff Foods, LLC) (7)

 

Convenience food service retailer

 

Senior secured revolving loan ($9,800 par due 9/2014)

 

10.75% (Base Rate + 7.50%/M)

 

4/1/2010

 

9,800

 

9,800

(2)(17)

 

 

 

 

 

 

Senior secured loan ($33,697 par due 9/2014)

 

10.00% (Libor + 8.50%/Q)

 

4/1/2010

 

33,697

 

33,697

(3)(17)

 

 

 

 

 

 

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

 

14.00%

 

4/1/2010

 

26,397

 

20,370

(2)

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

69,894

 

63,867

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTG Management, Inc.

 

Airport restaurant operator

 

Senior secured revolving loan ($937 par due 8/2016)

 

8.50% (Libor + 7.00%/Q)

 

8/9/2011

 

937

 

937

(2)(17)

 

 

 

 

 

 

Senior secured loan ($22,437 par due 8/2016)

 

8.50% (Libor + 7.00%/Q)

 

8/9/2011

 

22,437

 

22,437

(2)(17)

 

 

 

 

 

 

Junior secured loan ($29,285 par due 8/2016)

 

14.50% (Libor + 13.00%/M)

 

8/9/2011

 

29,285

 

29,285

(2)(17)

 

 

 

 

 

 

Junior secured loan ($2,143 par due 8/2016)

 

14.50% (Libor + 13.00%/M)

 

8/9/2011

 

2,143

 

2,143

(2)(17)

 

 

 

 

 

 

Junior secured loan ($6,000 par due 8/2016)

 

15.25% (Base Rate + 12.00%/Q)

 

8/9/2011

 

6,000

 

6,000

(2)(17)

 

 

 

 

 

 

Common units (3,000,000 units)

 

 

 

1/5/2011

 

3,000

 

2,801

(2)

 

 

 

 

 

 

Warrants to purchase up to 189,857 shares of common stock

 

 

 

6/19/2008

 

100

 

4,877

(2)

 

 

 

 

 

 

 

 

 

 

 

 

63,902

 

68,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant Holding Company, LLC

 

Fast food restaurant operator

 

Senior secured loan ($1,903 par due 2/2017)

 

9.75% (Base Rate + 6.50%/Q)

 

2/15/2012

 

1,867

 

1,903

(2)(17)