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Ares Capital 10-Q 2009

Documents found in this filing:

  1. 10-Q
  2. Ex-10.4
  3. Ex-31.1
  4. Ex-31.2
  5. Ex-32.1
  6. Ex-32.1

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, 2009

 

 

 

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)

 

280 Park Avenue, 22nd Floor, Building East, New York, NY 10017

(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 6, 2009

Common stock, $0.001 par value

 

97,152,820

 

 

 



Table of Contents

 

ARES CAPITAL CORPORATION

 

INDEX

 

Part I.

Financial Information

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheet as of June 30, 2009 (unaudited) and December 31, 2008

1

 

 

 

 

Consolidated Statement of Operations for the three and six months ended June 30, 2009 (unaudited) and June 30, 2008 (unaudited)

2

 

 

 

 

Consolidated Schedule of Investments as of June 30, 2009 (unaudited) and December 31, 2008

3

 

 

 

 

Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2009 (unaudited)

28

 

 

 

 

Consolidated Statement of Cash Flows for the six months ended June 30, 2009 (unaudited) and June 30, 2008 (unaudited)

29

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

30

 

 

 

Item 2.

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

46

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

56

 

 

 

Item 4.

Controls and Procedures

57

 

 

 

Part II.

Other Information

 

 

 

 

Item 1.

Legal Proceedings

58

 

 

 

Item 1A.

Risk Factors

58

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

58

 

 

 

Item 3.

Defaults Upon Senior Securities

58

 

 

 

Item 4.

Submission of Matters to a Vote of Security Holders

58

 

 

 

Item 5.

Other Information

58

 

 

 

Item 6.

Exhibits

59

 



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(dollar amounts in thousands, except per share data)

 

 

 

As of

 

 

 

June 30, 2009

 

December 31, 2008

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value (amortized cost of $2,272,976 and $2,267,593, respectively)

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

$

 1,504,277

 

$

 1,477,492

 

Non-controlled affiliate company investments

 

339,167

 

329,326

 

Controlled affiliate company investments

 

119,027

 

166,159

 

Total investments at fair value

 

1,962,471

 

1,972,977

 

Cash and cash equivalents

 

46,297

 

89,383

 

Receivable for open trades

 

442

 

3

 

Interest receivable

 

26,630

 

17,547

 

Other assets

 

11,215

 

11,423

 

Total assets

 

$

 2,047,055

 

$

 2,091,333

 

LIABILITIES

 

 

 

 

 

Debt

 

$

 879,255

 

$

 908,786

 

Management and incentive fees payable

 

48,287

 

32,989

 

Payable for open trades

 

16,744

 

 

Accounts payable and accrued expenses

 

11,726

 

10,006

 

Interest and facility fees payable

 

2,223

 

3,869

 

Dividend payable

 

98

 

40,804

 

Total liabilities

 

958,333

 

996,454

 

Commitments and contingencies (Note 6)

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock, par value $.001 per share, 200,000,000 common shares authorized, 97,152,820 common shares issued and outstanding

 

97

 

97

 

Capital in excess of par value

 

1,395,958

 

1,395,958

 

Accumulated undistributed net investment income (loss)

 

3,151

 

(7,637

)

Accumulated net realized gain (loss) on investments, foreign currency transactions and extinguishment of debt

 

(741

)

(124

)

Net unrealized loss on investments and foreign currency transactions

 

(309,743

)

(293,415

)

Total stockholders’ equity

 

1,088,722

 

1,094,879

 

Total liabilities and stockholders’ equity

 

$

 2,047,055

 

$

 2,091,333

 

NET ASSETS PER SHARE

 

$

 11.21

 

$

 11.27

 

 

See accompanying notes to consolidated financial statements.

 

1



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(dollar amounts in thousands, except per share data)

 

 

 

For the three months ended

 

For the six months ended

 

 

 

June 30, 2009

 

June 30, 2008

 

June 30, 2009

 

June 30, 2008

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

$

45,307

 

$

37,768

 

$

89,138

 

$

72,734

 

Capital structuring service fees

 

603

 

8,421

 

1,653

 

11,146

 

Interest from cash & cash equivalents

 

57

 

441

 

210

 

989

 

Dividend income

 

617

 

375

 

1,043

 

871

 

Other income

 

1,748

 

583

 

2,697

 

1,408

 

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

 

48,332

 

47,588

 

94,741

 

87,148

 

 

 

 

 

 

 

 

 

 

 

From non-controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

6,528

 

8,198

 

12,103

 

16,697

 

Capital structuring service fees

 

 

 

 

1,095

 

Dividend income

 

123

 

218

 

137

 

266

 

Management fees

 

1,192

 

188

 

1,317

 

188

 

Other income

 

78

 

190

 

168

 

431

 

Total investment income from non-controlled affiliate company investments

 

7,921

 

8,794

 

13,725

 

18,677

 

 

 

 

 

 

 

 

 

 

 

From controlled affiliate company investments:

 

 

 

 

 

 

 

 

 

Interest from investments

 

2,155

 

3,758

 

5,093

 

6,180

 

Capital structuring service fees

 

 

2,900

 

194

 

3,000

 

Management fees

 

695

 

409

 

1,286

 

606

 

Other income

 

8

 

15

 

88

 

60

 

Total investment income from controlled affiliate company investments

 

2,858

 

7,082

 

6,661

 

9,846

 

 

 

 

 

 

 

 

 

 

 

Total investment income

 

59,111

 

63,464

 

115,127

 

115,671

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest and credit facility fees

 

6,301

 

7,155

 

12,882

 

17,078

 

Base management fees

 

7,496

 

7,679

 

14,994

 

14,766

 

Incentive management fees

 

7,987

 

9,015

 

15,537

 

15,508

 

Professional fees

 

2,308

 

1,653

 

3,705

 

2,871

 

Insurance

 

341

 

349

 

675

 

626

 

Administrative

 

1,092

 

365

 

2,096

 

900

 

Depreciation

 

165

 

102

 

338

 

204

 

Directors fees

 

134

 

66

 

236

 

140

 

Other

 

1,261

 

881

 

2,407

 

1,728

 

Total expenses

 

27,085

 

27,265

 

52,870

 

53,821

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME BEFORE INCOME TAXES

 

32,026

 

36,199

 

62,257

 

61,850

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit), including excise tax

 

78

 

138

 

109

 

(184

)

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

31,948

 

36,061

 

62,148

 

62,034

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:

 

 

 

 

 

 

 

 

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

(857

)

10

 

(2,162

)

217

 

Non-controlled affiliate company investments

 

 

1

 

(482

)

1

 

Controlled affiliate company investments

 

 

 

 

 

Foreign currency transactions

 

116

 

6

 

68

 

(2

)

Net realized gains (losses)

 

(741

)

17

 

(2,576

)

216

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliate company investments

 

11,333

 

(9,990

)

1,888

 

(28,594

)

Non-controlled affiliate company investments

 

(9,929

)

(13,116

)

(11,272

)

(23,858

)

Controlled affiliate company investments

 

2,175

 

(9,700

)

(6,926

)

2,633

 

Foreign currency transactions

 

(33

)

 

(18

)

7

 

Net unrealized gains (losses)

 

3,546

 

(32,806

)

(16,328

)

(49,812

)

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses) from investments and foreign currency transactions

 

2,805

 

(32,789

)

(18,904

)

(49,596

)

 

 

 

 

 

 

 

 

 

 

REALIZED GAIN ON EXTINGUISHMENT OF DEBT

 

 

 

26,543

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS

 

$

34,753

 

$

3,272

 

$

69,787

 

$

12,438

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 4)

 

$

0.36

 

$

0.04

 

$

0.72

 

$

0.15

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING – BASIC AND DILUTED (see Note 4)

 

97,152,820

 

90,125,629

 

97,152,820

 

82,097,395

 

 

See accompanying notes to consolidated financial statements.

 

2



Table of Contents

 

ARES CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of June 30, 2009 (unaudited)

(dollar amounts in thousands, except per unit data)

 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

Healthcare—Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Renal Associates, Inc.

 

Dialysis provider

 

Senior secured loan ($1,082 par due 12/2010)

 

8.5% (Libor + 6.00%/Q)

 

12/14/2005

 

$

1,082

 

$

1,082

 

$

1.00

(3)(15)

 

 

 

 

 

 

Senior secured loan ($10,413 par due 12/2011)

 

8.5% (Libor + 6.00%/M)

 

12/14/2005

 

10,413

 

10,413

 

$

1.00

(3)(15)

 

 

 

 

 

 

Senior secured loan ($180 par due 12/2011)

 

8.5% (Libor + 6.00%/Q)

 

12/14/2005

 

180

 

180

 

$

1.00

(3)(15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capella Healthcare, Inc.

 

Acute care hospital operator

 

Junior secured loan ($55,000 par due 2/2016)

 

13.00%

 

2/29/2008

 

55,000

 

52,250

 

$

0.95

 

 

 

 

 

 

 

Junior secured loan ($30,000 par due 2/2016)

 

13.00%

 

2/29/2008

 

30,000

 

28,500

 

$

0.95

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare analysis services

 

Preferred stock (7,427 shares)

 

 

 

6/15/2007

 

7,427

 

7,055

 

$

950.00

(4)

 

 

 

 

 

 

Common stock (9,679 shares)

 

 

 

6/15/2007

 

4,000

 

5,382

 

$

556.10

(5)

 

 

 

 

 

 

Common stock (1,546 shares)

 

 

 

6/15/2007

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSI Renal, Inc.

 

Dialysis provider

 

Senior secured revolving loan ($122 par due 3/2013)

 

6.25% (Base Rate + 3.00%/D)

 

4/4/2006

 

122

 

97

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($3,520 par due 3/2013)

 

5.38% (Libor + 5.00%/M)

 

4/4/2006

 

3,520

 

2,816

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($1,120 par due 3/2013)

 

5.31% (Libor + 5.00%/M)

 

4/4/2006

 

1,120

 

896

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($1,152 par due 3/2013)

 

3.31% (Libor + 3.00%/M)

 

4/4/2006

 

1,152

 

922

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($1,600 par due 3/2013)

 

3.31% (Libor + 3.00%/M)

 

4/4/2006

 

1,600

 

1,280

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($36 par due 3/2013)

 

5.38% (Libor + 5.00%/M)

 

4/4/2006

 

36

 

28

 

$

0.79

 

 

 

 

 

 

 

Senior secured revolving loan ($11 par due 3/2013)

 

5.31% (Libor + 5.00%/M)

 

4/4/2006

 

11

 

9

 

$

0.80

 

 

 

 

 

 

 

Senior secured revolving loan ($12 par due 3/2013)

 

3.31% (Libor + 3.00%/M)

 

4/4/2006

 

12

 

9

 

$

0.77

 

 

 

 

 

 

 

Senior secured revolving loan ($16 par due 3/2013)

 

3.31% (Libor + 3.00%/M)

 

4/4/2006

 

16

 

13

 

$

0.81

 

 

 

 

 

 

 

Senior secured revolving loan ($20 par due 3/2013)

 

0.25%

 

4/4/2006

 

20

 

17

 

$

0.84

 

 

 

 

 

 

 

Senior subordinated note ($61,531 par due 4/2014)

 

16.00% PIK

 

4/4/2006

 

61,087

 

47,379

 

$

0.77

(2)(4)

 

 

 

 

 

 

Senior subordinated note ($13,207 par due 4/2014)

 

16.00% PIK

 

4/4/2006

 

13,183

 

10,170

 

$

0.77

(3)(4)

 

 

 

 

 

 

Senior secured revolving loan ($17,348 par due 4/2014)

 

1.60% (Libor + 1.00%/Q)

 

4/4/2006

 

12,145

 

13,855

 

$

0.80

(15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GG Merger Sub I, Inc.

 

Drug testing services

 

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

 

4.32% (Libor + 4.00%/M)

 

12/14/2007

 

10,839

 

9,631

 

$

0.85

 

 

 

 

 

 

 

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

 

4.32% (Libor + 4.00%/M)

 

12/14/2007

 

11,480

 

10,200

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HCP Acquisition Holdings, LLC(7)

 

Healthcare compliance advisory services

 

Class A units (8,566,824 units)

 

 

 

6/26/2008

 

8,567

 

6,125

 

$

0.72

(5)

 

 

 

3



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

Heartland Dental Care, Inc.

 

Dental services

 

Senior subordinated note ($32,717 par due 8/2013)

 

11.00% Cash, 3.25% PIK

 

7/31/2008

 

32,717

 

32,717

 

$

1.00

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare professional provider

 

Senior subordinated note ($4,623 par due 12/2012)

 

10.75% Cash, 2.00% PIK

 

2/9/2009

 

3,176

 

4,623

 

$

1.00

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MPBP Holdings, Inc., Cohr Holdings, Inc. and MPBP Acquisition Co., Inc.

 

Healthcare equipment services

 

Junior secured loan ($20,000 par due 1/2014)

 

6.57% (Libor + 6.25%/M)

 

1/31/2007

 

20,000

 

6,200

 

$

0.31

 

 

 

 

 

 

 

Junior secured loan ($12,000 par due 1/2014)

 

6.57% (Libor + 6.25%/M)

 

1/31/2007

 

12,000

 

3,720

 

$

0.31

(3)

 

 

 

 

 

 

Common stock (50,000 shares)

 

 

 

1/31/2007

 

5,000

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MWD Acquisition Sub, Inc.

 

Dental services

 

Junior secured loan ($5,000 par due 5/2012)

 

6.57% (Libor + 6.25%/M)

 

5/3/2007

 

5,000

 

4,250

 

$

0.85

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OnCURE Medical Corp.

 

Radiation oncology care provider

 

Senior secured loan ($3,083 par due 8/2009)

 

3.88% (Libor + 3.50%/M)

 

8/18/2006

 

3,083

 

2,713

 

$

0.88

(3)

 

 

 

 

 

 

Senior subordinated note ($32,393 par due 8/2013)

 

11.00% Cash, 1.50% PIK

 

8/18/2006

 

32,418

 

29,154

 

$

0.90

(4)

 

 

 

 

 

 

Common stock (857,143 shares)

 

 

 

8/18/2006

 

3,000

 

3,000

 

$

3.50

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare technology provider

 

Senior secured loan ($12,790 par due 5/2014)

 

10.50% (Libor + 7.50%/S)

 

5/9/2008

 

12,790

 

12,534

 

$

0.98

(15)

 

 

 

 

 

 

Senior secured loan ($11,806 par due 5/2014)

 

10.50% (Libor + 7.50%/S)

 

5/9/2008

 

11,806

 

11,570

 

$

0.98

(3)(15)

 

 

 

 

 

 

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

 

 

 

7/30/2008

 

9,900

 

9,900

 

$

6.21

(5)

 

 

 

 

 

 

Common stock (16,106 shares)

 

 

 

7/30/2008

 

100

 

100

 

$

6.21

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PG Mergersub, Inc.

 

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

 

Senior subordinated loan ($4,000 par due 3/2016)

 

12.50%

 

3/12/2008

 

3,920

 

3,840

 

$

0.96

 

 

 

 

 

 

 

Preferred stock (333 shares)

 

 

 

3/12/2008

 

333

 

334

 

$

1,003.00

(5)

 

 

 

 

 

 

Common stock (16,667 shares)

 

 

 

3/12/2008

 

167

 

167

 

$

10.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Schumacher Group of Delaware, Inc.

 

Outsourced physician service provider

 

Junior secured loan ($30,800 par due 7/2012)

 

11.125% Cash, 2.50% PIK

 

7/18/2008

 

30,800

 

30,800

 

$

1.00

(4)

 

 

 

 

 

 

Junior secured loan ($5,210 par due 7/2012)

 

11.125% Cash, 2.50% PIK

 

7/18/2008

 

5,210

 

5,210

 

$

1.00

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Triad Laboratory Alliance, LLC

 

Laboratory services

 

Senior secured loan ($4,461 par due 12/2011)

 

8.50% (Libor + 5.50%/Q)

 

12/21/2005

 

4,278

 

4,461

 

$

1.00

(3)(15)

 

 

 

 

 

 

Senior subordinated note ($15,466 par due 12/2012)

 

12.00% Cash, 1.75% PIK

 

12/21/2005

 

15,466

 

15,002

 

$

0.97

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

VOTC Acquisition Corp.

 

Radiation oncology care provider

 

Senior secured loan ($17,241 par due 7/2012)

 

11.00% Cash, 2.00% PIK

 

6/30/2008

 

17,241

 

17,241

 

$

1.00

(4)

 

 

 

 

 

 

Series E preferred shares (3,888,222 shares)

 

 

 

7/14/2008

 

8,749

 

3,800

 

$

0.98

(5)

 

 

 

 

 

 

 

 

 

 

 

 

470,166

 

409,645

 

 

 

37.63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education software developer

 

Senior secured loan ($3,243 par due 8/2013)

 

12.07 Cash, 3.00% PIK

 

2/8/2008

 

3,243

 

3,243

 

$

1.00

(16)(4)

 

 

 

 

 

 

Senior secured loan ($30,277 par due 8/2013)

 

12.07 Cash, 3.00% PIK

 

2/8/2008

 

30,277

 

30,277

 

$

1.00

(2)(16)(4)

 

 

 

4



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

 

 

 

 

Senior secured loan ($8,960 par due 8/2013)

 

10.00 Cash, 3.00% PIK

 

2/8/2008

 

8,960

 

8,960

 

$

1.00

(16)(4)

 

 

 

 

 

 

Preferred stock (493,147 shares)

 

8.00% PIK

 

2/8/2008

 

8,952

 

12,000

 

$

24.33

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ELC Acquisition Corporation

 

Developer, manufacturer and retailer of educational products

 

Senior secured loan ($176 par due 11/2012)

 

3.56% (Libor + 3.25%/M)

 

11/30/2006

 

176

 

155

 

$

0.88

(3)

 

 

 

 

 

 

Junior secured loan ($8,333 par due 11/2013)

 

7.31% (Libor + 7.00%/M)

 

11/30/2006

 

8,333

 

7,333

 

$

0.88

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Instituto de Banca y Comercio, Inc. Leeds IV Advisors, Inc.(8)

 

Private school operator

 

Senior secured loan ($11,760 par due 3/2014)

 

8.50% (Libor + 6.00%/Q)

 

3/15/2007

 

11,760

 

11,760

 

$

1.00

(3)(15)

 

 

 

 

 

 

Senior subordinated loan ($40,411 par due 6/2014)

 

13.00% Cash, 3.00% PIK

 

6/4/2008

 

40,411

 

40,411

 

$

1.00

(4)

 

 

 

 

 

 

Preferred stock (165,811 shares)

 

 

 

6/4/2008

 

788

 

2,146

 

$

12.94

(5)

 

 

 

 

 

 

Common stock (214,286 shares)

 

 

 

6/4/2008

 

54

 

214

 

$

1.00

(5)

 

 

 

 

 

 

Preferred stock (140,577 shares)

 

 

 

3/31/2009

 

668

 

1,820

 

$

12.94

(5)

 

 

 

 

 

 

Common stock (140,577 shares)

 

 

 

3/31/2009

 

35

 

1,820

 

$

12.94

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lakeland Finance, LLC

 

Private school operator

 

Senior secured note ($30,000 par due 12/2012)

 

11.50%

 

12/13/2005

 

30,000

 

29,100

 

$

0.97

 

 

 

 

 

 

 

Senior secured note ($3,000 par due 12/2012)

 

11.50%

 

12/13/2005

 

3,000

 

2,910

 

$

0.97

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R3 Education, Inc. (formerly known as Equinox EIC Partners, LLC and MUA Management Company)(6)(8)

 

Medical school operator

 

Senior secured revolving loan ($1,500 par due 12/2012)

 

8.25% (Base Rate + 5.00%/D)

 

4/3/2007

 

1,500

 

1,470

 

$

0.98

 

 

 

 

 

 

 

Senior secured revolving loan ($2,000 par due 12/2012)

 

8.25% (Base Rate + 5.00%/D)

 

4/3/2007

 

2,000

 

1,960

 

$

0.98

 

 

 

 

 

 

 

Senior secured loan ($1,799 par due 12/2012)

 

6.31% (Libor + 6.00%/M)

 

4/3/2007

 

1,799

 

1,763

 

$

0.98

(2)

 

 

 

 

 

 

Senior secured loan ($14,113 par due 12/2012)

 

6.31% (Libor + 6.00%/M)

 

9/21/2007

 

14,113

 

13,830

 

$

0.98

(2)

 

 

 

 

 

 

Senior secured loan ($7,300 par due 12/2012)

 

6.31% (Libor + 6.00%/M)

 

4/3/2007

 

7,300

 

7,154

 

$

0.98

(3)

 

 

 

 

 

 

Common membership interest (26.27% interest)

 

 

 

9/21/2007

 

15,800

 

20,777

 

 

 

(5)

 

 

 

 

 

 

Preferred Stock (8,000 shares)

 

 

 

 

 

2,000

 

2,000

 

$

250.00

(5)

 

 

 

 

 

 

Preferred stock (800 shares)

 

 

 

 

 

200

 

200

 

$

250.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

191,369

 

201,303

 

 

 

18.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurants and Food Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADF Capital, Inc. & ADF Restaurant Group, LLC

 

Restaurant owner and operator

 

Senior secured revolving loan ($608 par due 11/2013)

 

5.75% (Base Rate + 2.50%/D)

 

11/27/2006

 

608

 

608

 

$

1.00

(15)

 

 

 

 

 

 

Senior secured revolving loan ($2,008 par due 11/2013)

 

4.69% (Libor + 3.00% Cash, 0.50% PIK/Q)

 

11/27/2006

 

2,008

 

2,008

 

$

1.00

(4)(15)

 

 

 

 

 

 

Senior secured loan ($23,586 par due 11/2012)

 

9.69% (Libor + 7.50% Cash, 1.00% PIK/Q)

 

11/27/2006

 

23,592

 

23,586

 

$

1.00

(4)(15)

 

 

 

 

 

 

Senior secured loan ($11,055 par due 11/2012)

 

9.69% (Libor + 7.50% Cash, 1.00% PIK/Q)

 

11/27/2006

 

11,050

 

11,055

 

$

1.00

(2)(4)(15)

 

 

 

 

 

 

Promissory note ($12,079 par due 11/2016)

 

10.00% PIK

 

6/1/2006

 

12,067

 

12,079

 

$

1.00

(4)(15)

 

 

 

 

 

 

Warrants to purchase 0.61 shares

 

 

 

6/1/2006

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Encanto Restaurants, Inc.(8)

 

Restaurant owner and operator

 

Junior secured loan ($21,368 par due 8/2013)

 

7.50% Cash, 3.50% PIK

 

8/16/2006

 

21,368

 

20,299

 

$

0.95

(2)(4)

 

 

 

5



Table of Contents

 

Company(1)

 

Industry

 

Investment

 

Interest(10)

 

Initial
Acquisition
Date

 

Amortized
Cost

 

Fair Value

 

Fair Value
Per Unit

 

Percentage of
Net Assets

 

 

 

 

 

Junior secured loan ($4,070 par due 8/2013)

 

7.50% Cash, 3.50% PIK

 

8/16/2006

 

4,070

 

3,867

 

$

0.95

(3)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTG Management, Inc.

 

Airport restaurant operator

 

Junior secured loan ($15,623 par due 6/2013)

 

14.00% (Libor + 7.00% Cash, 4.00% PIK/M)

 

6/19/2008

 

15,623

 

14,529

 

$

0.93

(4) (15)

 

 

 

 

 

 

Warrants to purchase up to 88,991 shares of common stock

 

 

 

 

 

 

 

$

(5)

 

 

 

 

 

 

Warrants to purchase up to 9 shares of common stock

 

 

 

 

 

 

 

$

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vistar Corporation and Wellspring Distribution Corp.

 

Food service distributor

 

Senior subordinated loan ($43,625 par due 5/2015)

 

13.50%

 

5/23/2008

 

43,625

 

41,008

 

$

0.94

 

 

 

 

 

 

 

Senior subordinated loan ($30,000 par due 5/2015)

 

13.50%

 

5/23/2008

 

30,000

 

28,200

 

$

0.94

(2)

 

 

 

 

 

 

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

 

 

 

5/23/2008

 

7,500

 

3,490

 

$

2.55

(5)

 

 

 

 

 

 

 

 

 

 

 

 

171,511

 

160,729

 

 

 

14.76

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beverage, Food and Tobacco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3091779 Nova Scotia Inc.(8)

 

Baked goods manufacturer

 

Junior secured loan (Cdn $14,117 par due 11/2012)

 

11.50% Cash, 1.50% PIK

 

11/2/2007

 

14,992

 

11,592

 

$

0.82

(4)(12)

 

 

 

 

 

 

Warrants to purchase 57,545 shares

 

 

 

 

 

 

 

 

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apple & Eve, LLC and US Juice Partners, LLC(6)

 

Juice manufacturer

 

Senior secured loan ($29,284 par due 10/2013)

 

14.50% (Libor + 11.50%/M)

 

10/5/2007

 

29,284

 

28,113

 

$

0.96

(15)

 

 

 

 

 

 

Senior secured loan ($11,904 par due 10/2013)

 

14.50% (Libor + 11.50%/M)

 

10/5/2007

 

11,904

 

11,427

 

$

0.96

(15)

 

 

 

 

 

 

Senior units (50,000 units)

 

 

 

 

 

5,000

 

2,500

 

$

50.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Best Brands Corporation

 

Baked goods manufacturer

 

Senior secured loan ($13,110 par due 12/2012)

 

7.57% (Libor + 5.00% Cash, 2.25% PIK/M)

 

2/15/2008

 

11,151

 

13,110

 

$

1.00

(4)

 

 

 

 

 

 

Junior secured loan ($8,441 par due 6/2013)

 

10.00% Cash, 8.00% PIK

 

12/14/2006

 

8,441

 

8,441

 

$

1.00

(4)

 

 

 

 

 

 

Junior secured loan ($23,753 par due 6/2013)

 

10.00% Cash, 8.00% PIK

 

12/14/2006

 

23,753

 

23,753

 

$

1.00

(2)(4)

 

 

 

 

 

 

Junior secured loan ($11,500 par due 6/2013)

 

10.00% Cash, 8.00% PIK

 

12/14/2006

 

11,500

 

11,500

 

$

1.00

(3)(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bumble Bee Foods, LLC and BB Co-Invest LP

 

Canned seafood manufacturer

 

Senior subordinated loan ($30,425 par due 11/2018)

 

16.25% (12.00% Cash, 4.25% Optional PIK)

 

11/18/2008

 

30,425

 

30,425

 

$

1.00

(4)

 

 

 

 

 

 

Common stock (4,000 shares)

 

 

 

11/18/2008

 

4,000

 

4,000

 

$

1,000.00

(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Charter Baking Company, Inc.

 

Baked goods manufacturer

 

Senior subordinated note ($5,543 par due 2/2013)

 

12.00% PIK

 

2/6/2008

 

5,543

 

5,543

 

$