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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)    

ý

 

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

For the quarterly period ended March 31, 2015

OR

o

 

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

For the transition period from:                             to                              

Commission File Number: 001-33723

Main Street Capital Corporation
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)
  41-2230745
(I.R.S. Employer
Identification No.)

1300 Post Oak Boulevard, Suite 800
Houston, TX
(Address of principal executive offices)

 

77056
(Zip Code)

(713) 350-6000
(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 ý    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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o

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

        The number of shares outstanding of the issuer's common stock as of May 7, 2015 was 49,845,284.

   



TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1.

 

Financial Statements

   

 

Consolidated Balance Sheets—March 31, 2015 (unaudited) and December 31, 2014

  1

 

Consolidated Statements of Operations (unaudited)—Three months ended March 31, 2015 and 2014

  2

 

Consolidated Statements of Changes in Net Assets (unaudited)—Three months ended March 31, 2015 and 2014

  3

 

Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2015 and 2014

  4

 

Consolidated Schedule of Investments (unaudited)—March 31, 2015

  5

 

Consolidated Schedule of Investments—March 31, 2015

  33

 

Notes to Consolidated Financial Statements (unaudited)

  59

Item 2.

 

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

  96

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

  121

Item 4.

 

Controls and Procedures

  122


PART II
OTHER INFORMATION

Item 1.

 

Legal Proceedings

 
123

Item 1A.

 

Risk Factors

  123

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

  123

Item 6.

 

Exhibits

  123

 

Signatures

  125

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(in thousands, except shares and per share amounts)

 
  March 31,
2015
  December 31,
2014
 
 
  (Unaudited)
   
 

ASSETS

             

Portfolio investments at fair value:

   
 
   
 
 

Control investments (cost: $349,766 and $342,847 as of March 31, 2015 and December 31, 2014, respectively)

  $ 489,328   $ 469,846  

Affiliate investments (cost: $267,123 and $266,243 as of March 31, 2015 and December 31, 2014, respectively)

    279,986     278,675  

Non-Control/Non-Affiliate investments (cost: $983,942 and $832,312 as of March 31, 2015 and December 31, 2014, respectively)

    968,009     814,809  

Total portfolio investments (cost: $1,600,831 and $1,441,402 as of March 31, 2015 and December 31, 2014, respectively)

    1,737,323     1,563,330  

Marketable securities and idle funds investments (cost: $11,235 and $10,604 as of March 31, 2015 and December 31, 2014, respectively)

    9,948     9,067  

Total investments (cost: $1,612,066 and $1,452,006 as of March 31, 2015 and December 31, 2014, respectively)

    1,747,271     1,572,397  

Cash and cash equivalents

   
22,015
   
60,432
 

Interest receivable and other assets

    25,009     23,273  

Receivable for securities sold

    22,749     23,133  

Deferred financing costs (net of accumulated amortization of $8,449 and $6,462 as of March 31, 2015 and December 31, 2014, respectively)

    13,925     14,550  

Total assets

  $ 1,830,969   $ 1,693,785  

LIABILITIES

             

Credit facility

 
$

164,000
 
$

218,000
 

SBIC debentures (par: $225,000 as of March 31, 2015 and December 31, 2014, par of $75,200 is recorded at a fair value of $73,674 and $72,981 as of March 31, 2015 and December 31, 2014, respectively)

    223,474     222,781  

4.50% Notes

    175,000     175,000  

6.125% Notes

    90,810     90,823  

Payable for securities purchased

    67,270     14,773  

Deferred tax liability, net

    8,546     9,214  

Dividend payable

    8,674     7,663  

Accounts payable and other liabilities

    3,693     10,701  

Interest payable

    5,609     4,848  

Total liabilities

    747,076     753,803  

Commitments and contingencies (Note M)

   
 
   
 
 

NET ASSETS

   
 
   
 
 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 49,564,361 and 45,079,150 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)

   
496
   
451
 

Additional paid-in capital

    986,069     853,606  

Accumulated net investment income, net of cumulative dividends of $317,810 and $293,789 as of March 31, 2015 and December 31, 2014, respectively

    23,135     23,665  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $38,201 before cumulative dividends of $62,897 as of March 31, 2015 and accumulated net realized gain from investments of $40,321 before cumulative dividends of $60,777 as of December 31, 2014)

    (22,576 )   (20,456 )

Net unrealized appreciation, net of income taxes

    96,769     82,716  

Total net assets

    1,083,893     939,982  

Total liabilities and net assets

  $ 1,830,969   $ 1,693,785  

NET ASSET VALUE PER SHARE

  $ 21.87   $ 20.85  

   

The accompanying notes are an integral part of these financial statements

1


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2015   2014  

INVESTMENT INCOME:

             

Interest, fee and dividend income:

             

Control investments

  $ 11,335   $ 9,296  

Affiliate investments

    6,049     5,640  

Non-Control/Non-Affiliate investments

    19,421     15,633  

Interest, fee and dividend income

    36,805     30,569  

Interest, fee and dividend income from marketable securities and idle funds

    374     207  

Total investment income

    37,179     30,776  

EXPENSES:

             

Interest

    (7,796 )   (5,286 )

Compensation

    (3,494 )   (2,351 )

General and administrative

    (1,962 )   (1,838 )

Share-based compensation

    (1,263 )   (853 )

Expenses charged to the External Investment Manager

    827     291  

Total expenses

    (13,688 )   (10,037 )

NET INVESTMENT INCOME

    23,491     20,739  

NET REALIZED GAIN (LOSS):

   
 
   
 
 

Non-Control/Non-Affiliate investments

    (2,008 )   1,433  

Marketable securities and idle funds investments

    (112 )   10  

Total net realized gain (loss)

    (2,120 )   1,443  

NET REALIZED INCOME

    21,371     22,182  

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

   
 
   
 
 

Portfolio investments

    14,204     6,857  

Marketable securities and idle funds investments

    251     1,049  

SBIC debentures

    (693 )   (1,189 )

Total net change in unrealized appreciation

    13,762     6,717  

INCOME TAXES:

             

Federal and state income, excise and other taxes

    (376 )   (667 )

Deferred taxes

    667     (998 )

Income tax benefit (provision)

    291     (1,665 )

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 35,424   $ 27,234  

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

  $ 0.51   $ 0.52  

NET REALIZED INCOME PER SHARE—BASIC AND DILUTED

  $ 0.46   $ 0.56  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED

  $ 0.77   $ 0.68  

DIVIDENDS PAID PER SHARE:

             

Regular monthly dividends

  $ 0.510   $ 0.500  

Supplemental dividends

         

Total dividends

  $ 0.510   $ 0.500  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

    46,080,204     39,898,573  

   

The accompanying notes are an integral part of these financial statements

2


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(in thousands, except shares)

(Unaudited)

 
  Common Stock    
   
  Accumulated
Net Realized
Gain From
Investments,
Net of Dividends
  Net Unrealized
Appreciation from
Investments,
Net of Income
Taxes
   
 
 
   
  Accumulated
Net Investment
Income, Net
of Dividends
   
 
 
  Number
of Shares
  Par
Value
  Additional
Paid-In
Capital
  Total Net
Asset Value
 

Balances at December 31, 2013

    39,852,604   $ 398   $ 694,981   $ 22,778   $ (26,334 ) $ 100,710   $ 792,533  

Share-based compensation

   
   
   
853
   
   
   
   
853
 

Purchase of vested stock for employee payroll tax withholding

    (1,181 )       (40 )               (40 )

Dividend reinvestment

    93,328     1     3,225                 3,226  

Amortization of directors' deferred compensation

            68                 68  

Issuance of restricted stock

    397                          

Tax benefit related to vesting of restricted shares

            290                 290  

Dividends to stockholders

                (19,757 )           (19,757 )

Net increase resulting from operations

                20,739     1,443     5,052     27,234  

Balances at March 31, 2014

    39,945,148   $ 399   $ 699,377   $ 23,760   $ (24,891 ) $ 105,762   $ 804,407  

Balances at December 31, 2014

    45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  

Public offering of common stock, net of offering costs

   
4,370,000
   
44
   
127,720
   
   
   
   
127,764
 

Share-based compensation

            1,263                 1,263  

Purchase of vested stock for employee payroll tax withholding

    (1,802 )       (53 )               (53 )

Dividend reinvestment

    116,330     1     3,464                 3,465  

Amortization of directors' deferred compensation

            69                 69  

Issuance of restricted stock

    683                          

Dividends to stockholders

                (24,021 )           (24,021 )

Net increase (loss) resulting from operations

                23,491     (2,120 )   14,053     35,424  

Balances at March 31, 2015

    49,564,361   $ 496   $ 986,069   $ 23,135   $ (22,576 ) $ 96,769   $ 1,083,893  

   

The accompanying notes are an integral part of these financial statements

3


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2015   2014  

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net increase in net assets resulting from operations

  $ 35,424   $ 27,234  

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

             

Investments in portfolio companies

    (256,046 )   (146,896 )

Proceeds from sales and repayments of debt investments in portfolio companies

    143,122     119,069  

Proceeds from sales and return of capital of equity investments in portfolio companies

    5,952     393  

Investments in marketable securities and idle funds investments

    (2,047 )   (2,105 )

Proceeds from sales and repayments of marketable securities and idle funds investments

    1,304     5,207  

Net change in unrealized appreciation

    (13,762 )   (6,717 )

Net realized (gain) loss

    2,120     (1,443 )

Accretion of unearned income

    (2,018 )   (2,611 )

Payment-in-kind interest

    (806 )   (1,655 )

Cumulative dividends

    (376 )   (369 )

Share-based compensation expense

    1,263     853  

Amortization of deferred financing costs

    629     380  

Deferred taxes

    (291 )   998  

Changes in other assets and liabilities:

             

Interest receivable and other assets

    (746 )   (2,557 )

Interest payable

    761     (390 )

Accounts payable and other liabilities

    (7,729 )   (6,258 )

Deferred fees and other

    627     133  

Net cash used in operating activities

    (92,619 )   (16,734 )

CASH FLOWS FROM FINANCING ACTIVITIES

   
 
   
 
 

Proceeds from public offering of common stock, net of offering costs

    127,764      

Dividends paid

    (19,545 )   (16,516 )

Proceeds from issuance of SBIC debentures

        24,800  

Proceeds from credit facility

    156,000     46,000  

Repayments on credit facility

    (210,000 )   (47,000 )

Payment of deferred loan costs and SBIC debenture fees

    (4 )   (849 )

Other

    (13 )   (40 )

Net cash provided by financing activities

    54,202     6,395  

Net decrease in cash and cash equivalents

    (38,417 )   (10,339 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    60,432     34,701  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $ 22,015   $ 24,362  

Supplemental cash flow disclosures:

             

Interest paid

  $ 6,406   $ 5,296  

Taxes paid

  $ 1,934   $ 2,657  

Non-cash financing activities:

             

Shares issued pursuant to the DRIP

  $ 3,465   $ 3,226  

   

The accompanying notes are an integral part of these financial statements

4


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Control Investments(5)

 

 

 

 

                   

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

 

 

                   

     

11% Secured Debt (Maturity—July 31, 2018)

    2,925     2,882     2,925  

     

Member Units (1,500 units)(8)

          1,500     2,140  

                  4,382     5,065  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

 

 

                   

     

12% Secured Debt (Maturity—December 28, 2017)

    11,596     11,498     11,596  

     

Common Stock (57,508 shares)

          6,350     10,210  

                  17,848     21,806  

                           

Café Brazil, LLC

 

Casual Restaurant Group

 

 

                   

     

Member Units (1,233 units)(8)

          1,742     6,980  

                           

California Healthcare Medical Billing, Inc.

 

Outsourced Billing and Revenue Cycle Management

 

 

                   

     

9% Secured Debt (Maturity—October 17, 2016)

    8,612     8,495     8,612  

     

Warrants (466,947 equivalent shares)

          1,193     3,480  

     

Common Stock (207,789 shares)

          1,177     1,460  

                  10,865     13,552  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

 

 

                   

     

Member Units (416 units)(8)

          1,300     29,950  

                           

Ceres Management, LLC (Lambs Tire & Automotive)

 

Aftermarket Automotive Services Chain

 

 

                   

     

14% Secured Debt (Maturity—May 31, 2018)

    3,827     3,827     3,827  

     

Class B Member Units (12% cumulative)(8)

          4,170     4,170  

     

Member Units (5,460 units)

          5,273     2,630  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—October 1, 2025)

    955     955     955  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,240  

                  14,850     12,822  

                           

CMS Minerals LLC

 

Oil & Gas Exploration & Production

 

 

                   

     

Preferred Member Units (458,461 units)(8)

          3,725     3,725  

                           

5


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Datacom, LLC

 

Technology and Telecommunications Provider

 

 

                   

     

10.5% Secured Debt (Maturity—May 31, 2019)

    11,205     11,108     11,108  

     

Preferred Member Units (6,453 units)

          6,030     6,030  

                  17,138     17,138  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

 

 

                   

     

14% Secured Debt (Maturity—January 12, 2018)

    5,400     5,325     5,325  

     

Member Units (1,200 units)(8)

          1,200     1,470  

                  6,525     6,795  

                           

GRT Rubber Technologies LLC

 

Engineered Rubber Product Manufacturer

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—December 19, 2019)(9)

    16,750     16,591     16,591  

     

Member Units (5,879 units)(8)

          13,065     13,065  

                  29,656     29,656  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

 

 

                   

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)

    744     744     744  

     

Member Units (438 units)(8)

          2,980     16,540  

                  3,724     17,284  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

 

 

                   

     

12% Secured Debt (Maturity—June 4, 2015)

    5,010     4,974     5,010  

     

Preferred Stock (8% cumulative)(8)

          1,286     1,286  

     

Common Stock (107,456 shares)

          718     2,020  

                  6,978     8,316  

                           

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

 

 

                   

     

Member Units (500 units)(8)

          589     580  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,220  

                  1,804     2,800  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

 

 

                   

     

Common Stock (7,095 shares)(8)

          7,095     13,720  

                           

6


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—November 18, 2018)(9)

    125     125     125  

     

12.5% Secured Debt (Maturity—November 18, 2018)

    11,350     11,267     11,350  

     

Member Units (5,400 units)

          5,606     6,027  

                  16,998     17,502  

                           

Impact Telecom, Inc.

 

Telecommunications Services Provider

 

 

                   

     

LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity—May 31, 2018)(9)

    1,575     1,570     1,570  

     

13% Secured Debt (Maturity—May 31, 2018)

    22,500     15,698     15,698  

     

Warrants (5,516,667 equivalent shares)

          8,000     4,160  

                  25,268     21,428  

                           

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

 

 

                   

     

15% Secured Debt (Maturity—January 15, 2016)

    3,100     3,100     3,100  

     

Warrants (1,046 equivalent units)

          1,129     2,540  

                  4,229     5,640  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

 

 

                   

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.00%, Secured Debt (Maturity—November 14, 2016)(9)

    4,505     4,452     4,505  

     

Member Units (627 units)(8)

          811     3,580  

                  5,263     8,085  

                           

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

 

 

                   

     

8% Secured Debt (Maturity—August 22, 2015)

    1,514     1,514     1,514  

     

Preferred Equity (non-voting)

          434     434  

     

Warrants (71 equivalent units)

          54     40  

     

Member Units (700 units)(8)

          100     420  

                  2,102     2,408  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

 

 

                   

     

12% Secured Debt (Maturity—December 28, 2017)

    10,250     10,122     10,122  

     

Preferred Member Units (2,669 units)

          3,750     3,750  

                  13,872     13,872  

                           

7


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

 

 

                   

     

10% Secured Debt (Maturity—December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity—December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (2,829 units)(8)

          1,244     7,550  

     

9.5% Secured Debt (Mid—Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    915     915     915  

     

Member Units (Mid—Columbia Real Estate, LLC) (250 units)(8)

          250     550  

                  8,059     14,665  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

 

 

                   

     

Member Units (Fully diluted 100.0%)(8)

              24,840  

                           

Mystic Logistics, Inc

 

Logistics and Distribution Services Provider for Large Volume Mailers

 

 

                   

     

12% Secured Debt (Maturity—August 15, 2019)

    10,000     9,799     10,000  

     

Common Stock (5,873 shares)

          2,720     6,160  

                  12,519     16,160  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

 

 

                   

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—September 1, 2015)(9)

    625     619     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—February 1, 2016)(9)

    2,923     2,917     2,923  

     

18% Secured Debt (Maturity—February 1, 2016)

    4,468     4,446     4,468  

     

Member Units (2,955 units)(8)

          2,975     7,820  

                  10,957     15,836  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

 

 

                   

     

14% Secured Debt (Maturity—September 8, 2017)

    4,771     4,676     4,676  

     

Warrants (251,723 equivalent units)

          252     160  

     

Member Units (671,233 units)

          671     722  

                  5,599     5,558  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

 

 

                   

     

12% Secured Debt (Maturity—December 22, 2016)

    13,400     12,933     12,933  

     

Warrants (14,331 equivalent units)

          817     810  

     

Member Units (50,877 units)(8)

          2,900     2,730  

                  16,650     16,473  

                           

8


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

 

 

                   

     

Common Stock (1,500 shares)(8)

          1,080     13,420  

                           

Pegasus Research Group, LLC (Televerde)

 

Provider of Telemarketing and Data Services

 

 

                   

     

Member Units (460 units)(8)

          1,290     6,490  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

 

 

                   

     

11.1% Secured Debt (Maturity—June 10, 2015)

    9,960     9,954     9,960  

     

Common Stock (1,962 shares)

          2,150     8,430  

                  12,104     18,390  

                           

Principle Environmental, LLC

 

Noise Abatement Service Provider

 

 

                   

     

12% Secured Debt (Maturity—April 30, 2017)

    4,060     3,866     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity—April 30, 2017)

    3,261     3,247     3,261  

     

Preferred Member Units (19,631 units)

          4,663     9,560  

     

Warrants (1,036 equivalent units)

          1,200     530  

                  12,976     17,411  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

 

 

                   

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     509     509  

     

12% Secured Debt (Maturity—June 30, 2018)

    500     500     500  

     

Member Units (1,150 units)(8)

          1,150     3,190  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     430  

                  2,528     4,629  

                           

SoftTouch Medical Holdings LLC

 

Home Provider of Pediatric Durable Medical Equipment

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—October 31, 2019)(9)

    8,500     8,421     8,421  

     

Member Units (4,526 units)

          5,015     5,015  

                  13,436     13,436  

                           

Southern RV, LLC

 

Recreational Vehicle Dealer

 

 

                   

     

13% Secured Debt (Maturity—August 8, 2018)

    11,400     11,273     11,400  

     

Member Units (1,680 units)(8)

          1,680     5,810  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity—August 8, 2018)

    3,250     3,214     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

          480     540  

                  16,647     21,000  

                           

9


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

 

 

                   

     

9% Secured Debt (Maturity—October 2, 2018)

    2,724     2,724     2,724  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

          2,500     980  

     

Warrants (1,424 equivalent units)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

          2,300     2,230  

                  8,620     5,934  

                           

Travis Acquisition LLC

 

Manufacturer of Aluminum Trailers

 

 

                   

     

12% Secured Debt (Maturity—August 30, 2018)

    4,578     4,510     4,578  

     

Member Units (7,282 units)

          7,100     13,650  

                  11,610     18,228  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

 

 

                   

     

9% Secured Debt (Maturity—January 1, 2019)

    1,659     1,659     1,659  

     

Member Units (1,006 units)(8)

          1,113     3,350  

                  2,772     5,009  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

 

 

                   

     

13% Secured Debt (Maturity—December 23, 2016)

    3,204     3,174     3,174  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,550  

     

Common Stock (1,126,242 shares)

          3,706     210  

                  9,880     6,934  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

 

 

                   

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 1, 2018)(9)

    1,500     1,491     1,491  

     

9% Current / 9% PIK Secured Debt (Maturity—October 1, 2018)

    5,509     5,509     4,880  

     

Warrants (587 equivalent units)

          600      

     

Member units (480 units)

          75      

                  7,675     6,371  

Subtotal Control Investments (28.0% of total investments at fair value)

    349,766     489,328  

10


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

11% Secured Debt (Maturity—November 7, 2019)

    11,760     11,376     11,376  

     

Warrants (42 equivalent units)

          259     259  

     

Member Units (186 units)

          1,200     1,200  

                  12,835     12,835  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air Compressors, Auxiliary Power Units, Gas Booster Systems and Vapor Recovery Systems

                       

     

Preferred Member Units (2,242 units)(8)

          2,000     2,000  

                           

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—April 18, 2017)

    6,000     5,852     5,852  

     

Warrants (19 equivalent shares)

          200     860  

                  6,052     6,712  

                           

Brightwood Capital Fund III, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 2.3%)(8)

          4,524     4,524  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    5,400     5,350     5,350  

     

Member Units (65,356 units)

          654     654  

                  6,004     6,004  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     610  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          17,169     16,879  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          9,450     9,450  

                  26,619     26,329  

                           

11


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Daseke, Inc.

 

Specialty Transportation Provider

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity—July 31, 2018)

    20,853     20,548     20,853  

     

Common Stock (19,467 shares)

          5,213     17,460  

                  25,761     38,313  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)(8)

          2,325     2,325  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)(8)

          738     738  

                  3,063     3,063  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (5,000 shares)(8)

          480     860  

                           

East West Copolymer & Rubber, LLC

 

Manufacturer of Synthetic Rubbers

                       

     

12% Secured Debt (Maturity—October 17, 2019)

    9,600     9,442     9,442  

     

Warrants (1,823,278 equivalent units)

          50     50  

                  9,492     9,492  

                           

Freeport Financial SBIC Fund LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 9.9%)(8)

          5,140     5,140  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

                       

     

10% Secured Debt (Maturity—November 21, 2016)

    13,046     12,784     10,818  

     

Warrants (29,025 equivalent units)

          400      

                  13,184     10,818  

                           

Glowpoint, Inc.

 

Provider of Cloud Managed Video Collaboration Services

                       

     

8% Secured Debt (Maturity—October 18, 2018)

    400     396     396  

     

12% Secured Debt (Maturity—October 18, 2018)

    9,000     8,914     8,914  

     

Common Stock (7,711,517 shares)

          3,958     6,830  

                  13,268     16,140  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

11% Secured Debt (Maturity—August 13, 2019)

    11,200     11,051     11,051  

     

Common Stock (170,577 shares)

          2,400     2,400  

                  13,451     13,451  

                           

12


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

Member Units (248,082 units)(8)

          996     11,470  

                           

Indianhead Pipeline Services, LLC

 

Provider of Pipeline Support Services

                       

     

12% Secured Debt (Maturity—February 6, 2017)

    6,675     6,432     6,432  

     

Preferred Member Units (28,905 units; 8% cumulative)(8)

          2,013     2,013  

     

Warrants (38,193 equivalent units)

          459      

     

Member Units (14,732 units)

          1      

                  8,905     8,445  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (128 units)(8)

          624     4,010  

                           

KBK Industries, LLC

 

Specialty Manufacturer of Oilfield and Industrial Products

                       

     

12.5% Secured Debt (Maturity—September 28, 2017)

    7,950     7,904     7,950  

     

Member Units (250 units)(8)

          341     4,880  

                  8,245     12,830  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,000,000 units)(8)

          2,019     2,374  

                           

MPS Denver, LLC

 

Specialty Card Printing

                       

     

Member Units (13,800 units)

          1,130     1,130  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—May 31, 2015)

    3,658     3,658     3,658  

     

Preferred Stock (912 shares; 7% cumulative)(8)

          1,981     2,734  

     

Warrants (5,333 equivalent shares)

          1,919      

                  7,558     6,392  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371     3,200  

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)

          2,374     4,970  

                           

13


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Quality Lease and Rental Holdings, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

8% Secured Debt (Maturity—October 1, 2014)(14)(18)

    157     157     157  

     

8% Secured Debt (Maturity—June 15, 2015)(14)(18)

    150     150     150  

     

12% Secured Debt (Maturity—January 8, 2018)(14)(18)

    36,577     36,073     11,000  

     

Preferred Member Units (Rocaciea, LLC) (250 units)

          2,500      

                  38,880     11,307  

                           

Radial Drilling Services Inc.

 

Oil and Gas Technology Provider

                       

     

12% Secured Debt (Maturity—November 22, 2016)

    4,200     3,838     2,870  

     

Warrants (316 equivalent shares)

          758      

                  4,596     2,870  

                           

Samba Holdings, Inc.

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

12.5% Secured Debt (Maturity—November 17, 2016)

    26,304     26,102     26,304  

     

Common Stock (170,963 shares)

          2,087     8,130  

                  28,189     34,434  

                           

SYNEO, LLC

 

Manufacturer of Automation Machines, Specialty Cutting Tools and Punches

                       

     

12% Secured Debt (Maturity—July 13, 2016)

    2,700     2,678     2,678  

     

10% Secured Debt (Leadrock Properties, LLC) (Maturity—May 4, 2026)

    1,440     1,415     1,415  

                  4,093     4,093  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 30, 2018)

    14,100     13,873     13,873  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)

          2,297     2,297  

                  16,170     16,170  

Subtotal Affiliate Investments (16.0% of total investments at fair value)

          267,123     279,986  

14


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—July 19, 2021)(9)

    10,150     10,079     10,188  

                           

AM General LLC(11)

 

Specialty Vehicle Manufacturer

 

 

                   

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity—March 22, 2018)(9)

    2,256     2,211     2,087  

                           

AM3 Pinnacle Corporation(10)

 

Provider of Comprehensive Internet, TV and Voice Services for Multi-Dwelling Unit Properties

 

 

                   

     

10% Secured Debt (Maturity—October 22, 2018)

    21,002     20,870     20,870  

     

Common Stock (60,240 shares)

          2,000      

                  22,870     20,870  

                           

AmeriTech College, LLC

 

For-Profit Nursing and Healthcare College

 

 

                   

     

10% Secured Debt (Maturity—November 30, 2019)

    685     685     685  

     

10% Secured Debt (Maturity—January 31, 2020)

    4,235     4,235     3,700  

                  4,920     4,385  

                           

AMF Bowling Centers, Inc.(11)

 

Bowling Alley Operator

 

 

                   

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—September 18, 2021)(9)

    7,971     7,855     7,938  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75% / 1.75% PIK, Current Coupon Plus PIK 9.50%, Secured Debt (Maturity—May 21, 2020)(9)

    10,964     10,892     5,852  

                           

AP Gaming I, LLC(10)

 

Developer, Manufacturer, and Operator of Gaming Machines

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—December 20, 2020)(9)

    6,913     6,733     6,910  

                           

15


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Applied Products, Inc.(10)

 

Adhesives Distributor

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 30, 2019)(9)

    6,161     6,098     6,098  

                           

Aptean, Inc.(11)

 

Enterprise Application Software Provider

 

 

                   

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—February 26, 2020)(9)

    7,688     7,619     7,553  

                           

Arcus Hunting LLC(10)

 

Deer Lures, Attractants and Scent Elimination Products

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—November 13, 2019)(9)

    9,094     8,964     8,964  

                           

Artel, LLC(11)

 

Land-Based and Commercial Satellite Provider

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—November 27, 2017)(9)

    7,988     7,844     7,668  

                           

ATS Workholding, Inc.(10)

 

Manufacturer of Machine Cutting Tools and Accessories

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—March 10, 2019)(9)

    6,563     6,513     6,513  

                           

Beers Enterprises, Inc.(10)

 

Provider of Broadcast Video Transport Services

 

 

                   

     

Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—March 19, 2019)(9)

    6,484     6,434     6,484  

                           

Berry Aviation, Inc.(10)

 

Charter Airline Services

 

 

                   

     

12.00% Current / 1.75% PIK Secured Debt (Maturity—January 20, 2020)

    6,000     5,942     5,942  

     

Common Stock (553 shares)

          400     400  

                  6,342     6,342  

                           

Bioventus LLC(10)

 

Production of Orthopedic Healing Products

 

 

                   

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity—April 10, 2020)(9)

    5,000     4,907     5,000  

                           

Blackbrush Oil and Gas LP(11)

 

Oil & Gas Exploration

 

 

                   

     

LIBOR Plus 6.50%, (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—July 30, 2021)(9)

    4,000     3,972     3,250  

                           

16


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Blackhawk Specialty Tools LLC(11)

 

Oilfield Equipment & Services

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity—August 1, 2019)(9)

    6,141     6,109     5,972  

                           

Blue Bird Body Company(11)

 

School Bus Manufacturer

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—June 26, 2020)(9)

    11,356     11,204     11,370  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

 

 

                   

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 6, 2020)(9)

    7,500     7,229     7,523  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Production and Newspaper Circulation Software

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—July 22, 2019)(9)

    6,447     6,370     6,370  

                           

Brasa Holdings Inc.(11)

 

Upscale Full Service Restaurants

 

 

                   

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—January 20, 2020)(9)

    2,143     2,130     2,148  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

 

 

                   

     

10.375% Secured Debt (Maturity—September 1, 2021)

    2,500     2,500     2,588  

                           

Calloway Laboratories, Inc.(10)

 

Health Care Testing Facilities

 

 

                   

     

12% PIK Secured Debt (Maturity—September 30, 2015)(14)

    7,287     7,238     2,948  

     

Warrants (125,000 equivalent shares)

          17      

                  7,255     2,948  

                           

Cengage Learning Acquisitions, Inc.(11)

 

Provider of Educational Print and Digital Services

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—March 31, 2020)(9)

    9,965     9,878     10,019  

                           

CGSC of Delaware Holdings Corp.(11)(13)

 

Insurance Brokerage Firm

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity—October 16, 2020)(9)

    2,000     1,976     1,740  

                           

17


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity—May 22, 2019)(9)

    8,925     8,803     8,742  

                           

CHI Overhead Doors, Inc.(11)

 

Manufacturer of Overhead Garage Doors

 

 

                   

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—September 18, 2019)(9)

    2,500     2,469     2,503  

                           

CJ Holding Co.(11)

 

Oil & Gas Equipment & Services

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—March 24, 2020)(9)

    2,000     1,720     1,793  

                           

Clarius ASIG, LLC(10)

 

Prints & Advertising Film Financing

 

 

                   

     

12% PIK Secured Debt (Maturity—September 14, 2014)(17)

    2,805     2,758     2,805  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

 

 

                   

     

12% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

    4,400     4,321     1,848  

                           

Compact Power Equipment, Inc.

 

Equipment / Tool Rental

 

 

                   

     

12% Secured Debt (Maturity—October 1, 2017)

    4,100     4,086     4,100  

     

Series A Preferred Stock (4,298,435 shares)(8)

          1,079     2,930  

                  5,165     7,030  

                           

Compuware Corporation(11)

 

Provider of Software and Supporting Services

 

 

                   

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity—December 15, 2019)(9)

    15,000     14,593     14,681  

                           

Covenant Surgical Partners, Inc.(11)

 

Ambulatory Surgical Centers

 

 

                   

     

8.75% Secured Debt (Maturity—August 1, 2019)

    2,000     2,000     2,010  

                           

CRGT Inc.(11)

 

Provider of Custom Software Development

 

 

                   

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 19, 2020)(9)

    11,925     11,678     11,716  

                           

CST Industries Inc.(11)

 

Storage Tank Manufacturer

                       

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity—May 22, 2017)(9)

    6,954     6,902     6,884  

                           

18


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.75% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)

    20,393     19,799     19,799  

     

Warrants (915,734 equivalent units)

          474     474  

                  20,273     20,273  

                           

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—February 12, 2021)(9)

    12,000     11,813     11,910  

                           

Digity Media LLC(11)

 

Radio Station Operator

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—February 8, 2019)(9)

    7,359     7,292     7,304  

                           

Drilling Info, Inc.

 

Information Services for the Oil and Gas Industry

 

 

                   

     

Common Stock (3,788,865 shares)

          1,335     9,920  

                           

ECP-PF Holdings Group, Inc.(10)

 

Fitness Club Operator

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—November 26, 2019)(9)

    5,625     5,572     5,572  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,595     3,256  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.1%)(8)

          2,110     1,874  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          2,323     2,146  

     

LP Interests (EnCap Flatrock Midstream Fund X, L.P.) (Fully diluted 0.3%)

          478     478  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          5,193     5,491  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

          258     258  

                  13,957     13,503  

                           

Energy and Exploration Partners, LLC(11)

 

Oil & Gas Exploration & Production

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity—January 22, 2019)(9)

    9,461     9,075     7,872  

                           

19


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)

 

Technology-based Performance Support Solutions

 

 

                   

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—April 28, 2022)(9)

    7,000     6,824     6,619  

                           

Extreme Reach, Inc.(11)

 

Integrated TV and Video Advertising Platform

 

 

                   

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity—February 7, 2020)(9)

    12,511     12,497     12,636  

                           

FC Operating, LLC(10)

 

Christian Specialty Retail Stores

 

 

                   

     

LIBOR Plus 10.75% (Floor 1.25%), Current Coupon 12.00%, Secured Debt (Maturity—November 14, 2017)(9)(14)(18)

    5,400     5,335     3,223  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products and Solutions

 

 

                   

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity—April 3, 2020)(9)

    11,786     11,395     11,448  

                           

Fram Group Holdings, Inc.(11)

 

Manufacturer of Automotive Maintenance Products

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.50%), Current Coupon 6.50%, Secured Debt (Maturity—July 29, 2017)(9)

    5,745     5,739     5,743  

     

LIBOR Plus 9.00% (Floor 1.50%), Current Coupon 10.50%, Secured Debt (Maturity—January 29, 2018)(9)

    700     698     685  

                  6,437     6,428  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—October 29, 2021)(9)

    2,993     2,985     2,985  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—April 29, 2022)(9)

    800     785     800  

                  3,770     3,785  

                           

20


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

 

 

                   

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—August 15, 2019)(9)

    9,522     9,417     9,522  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—October 28, 2019)(9)

    8,000     7,921     7,921  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

    4,900     4,838     4,758  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,000     1,929     1,926  

                  6,767     6,684  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—July 10, 2020)(9)

    9,950     9,861     9,850  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

 

 

                   

     

6.5% Secured Debt (Maturity—April 15, 2019)

    9,000     8,541     7,852  

                           

Halcon Resources Corporation(11)(13)

 

Oil & Gas Exploration & Production

 

 

                   

     

9.75% Unsecured Debt (Maturity—July 15, 2020)

    6,925     6,349     4,882  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

 

 

                   

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity—December 13, 2019)(9)

    11,750     11,656     11,632  

     

LIBOR Plus 8.75% (Floor 1.25%), Current Coupon 10.00%, Secured Debt (Maturity—December 11, 2020)(9)

    5,000     4,921     4,950  

                  16,577     16,582  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

 

 

                   

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—August 5, 2019)(9)

    9,875     9,787     9,900  

                           

21


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

ICON Health & Fitness, Inc.(11)

 

Producer of Fitness Products

 

 

                   

     

11.875% Secured Debt (Maturity—October 15, 2016)

    6,956     6,866     6,869  

                           

iEnergizer Limited(11)(13)

 

Provider of Business Outsourcing Solutions

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—May 1, 2019)(9)

    9,735     9,621     9,005  

                           

Infinity Acquisition Finance Corp.(11)

 

Application Software for Capital Markets

 

 

                   

     

7.25% Unsecured Debt (Maturity—August 1, 2022)

    4,000     4,000     3,740  

                           

Indivior Finance LLC(11)

 

Specialty Pharmaceutical Company Treating Opioid Dependence

 

 

                   

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—December 19, 2019)(9)

    7,406     6,968     7,036  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

 

 

                   

     

9.25% Secured Debt (Maturity—November 30, 2020)

    3,851     3,692     3,591  

                           

Insurance Technologies, LLC(10)

 

Illustration and Sales-automation platforms

 

 

                   

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—December 1, 2019)(9)

    5,000     4,946     4,946  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

 

 

                   

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—April 1, 2021)(9)

    9,962     9,771     9,489  

                           

Jackson Hewitt Tax Service Inc.(11)

 

Tax Preparation Service Provider

 

 

                   

     

LIBOR Plus 8.50% (Floor 1.50%), Current Coupon 10.00%, Secured Debt (Maturity—October 16, 2017)(9)

    4,107     4,012     4,107  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—May 9, 2020)(9)

    11,915     11,799     11,821  

22


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

John Deere Landscapes LLC(10)

 

Distributor of Landscaping Supplies

                       

     

LIBOR Plus 4.00% (Floor 1.00%), Current Coupon 5.00%, Secured Debt (Maturity—December 23, 2019)(9)

    8,552     8,189     8,189  

                           

Kadmon Pharmaceuticals, LLC(10)

 

Biopharmaceutical Company with a Hepatology Focus

                       

     

9.75% Secured Debt (Maturity—December 17, 2016)

    5,000     5,000     5,000  

                           

Keypoint Government Solutions, Inc.(11)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—November 13, 2017)(9)

    7,007     6,955     6,972  

                           

Lansing Trade Group LLC(11)

 

Commodity Merchandiser

                       

     

9.25% Unsecured Debt (Maturity—February 15, 2019)

    6,000     6,000     5,955  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—August 7, 2019)(9)

    6,878     6,827     6,281  

                           

LKCM Distribution Holdings, L.P.

 

Distributor of Industrial Process Equipment

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity—December 23, 2018)

    16,417     16,285     16,417  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)(8)

          2,250     6,117  

                           

MAH Merger Corporation(11)

 

Sports-Themed Casual Dining Chain

                       

     

LIBOR Plus 4.50% (Floor 1.25%), Current Coupon 5.75%, Secured Debt (Maturity—July 19, 2019)(9)

    4,802     4,763     4,814  

                           

MediMedia USA, Inc.(11)

 

Provider of Healthcare Media and Marketing

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity—November 20, 2018)(9)

    5,272     5,201     5,233  

                           

23


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 5, 2019)(9)

    13,097     12,982     12,982  

                           

Milk Specialties Company(11)

 

Processor of Nutrition Products

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity—November 9, 2018)(9)

    7,180     7,145     7,234  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

10% Current / 2% PIK Secured Debt (Maturity—September 19, 2019)

    4,844     4,800     4,800  

                           

Miramax Film NY, LLC(11)

 

Motion Picture Producer and Distributor

                       

     

Class B Units (12% cumulative)(8)

          815     815  

                           

Modern VideoFilm, Inc.(10)

 

Post-Production Film Studio

                       

     

LIBOR Plus 3.50% (Floor 1.50%), Current Coupon 5.00% / 8.50% PIK, Current Coupon Plus PIK 13.50%, Secured Debt (Maturity—September 25, 2017)(9)(14)

    6,302     6,125     2,035  

     

Warrants (1,833 equivalent shares)

          151      

                  6,276     2,035  

                           

Mood Media Corporation(11)(13)

 

Provider of Electronic Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—May 1, 2019)(9)

    13,410     13,268     13,326  

                           

MP Assets Corporation(11)

 

Manufacturer of Battery Components

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—December 19, 2019)(9)

    4,350     4,314     4,344  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—June 4, 2020)(9)

    14,888     14,623     14,757  

                           

Nice-Pak Products, Inc.(11)

 

Pre-Moistened Wipes Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—June 18, 2015)(9)

    12,541     12,529     12,352  

                           

24


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

North American Lifting Holdings, Inc.(11)

 

Construction & Farm Machinery & Heavy Trucks

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—November 27, 2020)(9)

    997     917     968  

                           

North Atlantic Trading Company, Inc.(11)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—January 13, 2020)(9)

    10,719     10,632     10,605  

                           

Novitex Intermediate, LLC(11)

 

Provider of Document Management Services

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity—July 7, 2020)(9)

    5,970     5,916     5,686  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)

    5,205     5,205     5,205  

                           

Panolam Industries International, Inc.(11)

 

Decorative Laminate Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—August 23, 2017)(9)

    9,896     9,833     9,846  

                           

Paris Presents Incorporated(11)(13)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—December 31, 2021)(9)

    2,000     1,961     2,000  

                           

Parq Holdings Limited Partnership(11)(13)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 17, 2020)(9)

    6,226     6,082     6,263  

                           

Permian Holdings, Inc.(11)

 

Storage Tank Manufacturer

                       

     

10.5% Secured Debt (Maturity—January 15, 2018)

    2,755     2,733     1,515  

                           

Pernix Therapeutics Holdings, Inc.(10)(13)

 

Pharmaceutical Royalty—Anti-Migraine

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    4,000     4,000     4,000  

                           

25


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

PeroxyChem LLC(11)

 

Chemical Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—February 28, 2020)(9)

    8,910     8,758     8,943  

                           

Philadelphia Energy Solutions Refining and Marketing LLC(11)

 

Oil & Gas Refiner

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—April 4, 2018)(9)

    2,940     2,912     2,820  

                           

Pike Corporation(11)

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—June 22, 2022)(9)

    15,000     14,636     14,925  

                           

Polyconcept Financial B.V.(11)

 

Promotional Products to Corporations and Consumers

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity—June 28, 2019)(9)

    4,314     4,301     4,303  

                           

Primesight Limited(10)(13)

 

Outdoor Advertising Operator

                       

     

10% Secured Debt (Maturity—October 22, 2016)

    8,663     8,608     7,724  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—November 1, 2018)(9)

    11,916     11,806     11,806  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—August 7, 2021)(9)

    9,975     9,883     9,800  

                           

RCHP, Inc.(11)

 

Regional Non-Urban Hospital Owner/Operator

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—October 23, 2019)(9)

    4,000     3,947     4,055  

                           

Recorded Books Inc.(11)

 

Audiobook and Digital Content Publisher

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—January 31, 2020)(9)

    11,875     11,775     11,786  

                           

26


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Relativity Media, LLC(10)

 

Full-Scale Film and Television Production and Distribution

                       

     

10% Secured Debt (Maturity—May 30, 2015)

    5,787     5,781     5,801  

     

15% PIK Secured Debt (Maturity—May 30, 2015)

    7,691     7,665     7,730  

     

Class A Units (260,194 units)

          292     1,149  

                  13,738     14,680  

                           

Renaissance Learning, Inc.(11)

 

Technology-based K-12 Learning Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—April 11, 2022)(9)

    3,000     2,973     2,925  

                           

RGL Reservoir Operations Inc.(11)(13)

 

Oil & Gas Equipment and Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—August 13, 2021)(9)

    3,980     3,870     3,017  

                           

RLJ Entertainment, Inc.(10)

 

Movie and TV Programming Licensee and Distributor

                       

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.00%, Secured Debt (Maturity—September 11, 2019)(9)

    11,299     11,245     11,245  

                           

SAExploration, Inc.(10)(13)

 

Geophysical Services Provider

                       

     

Common Stock (6,472 shares)(8)

          65     27  

                           

Sage Automotive Interiors, Inc(11)

 

Automotive Textiles Manufacturer

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 8, 2021)(9)

    3,000     2,972     3,000  

                           

Sagittarius Restaurants LLC (d/b/a Del Taco)(11)

 

Mexican/American QSR Restaurant Chain

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—October 1, 2018)(9)

    4,591     4,573     4,576  

                           

SCE Partners, LLC(10)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—August 14, 2019)(9)

    7,481     7,423     7,519  

                           

27


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Sotera Defense Solutions, Inc.(11)

 

Defense Industry Intelligence Services

                       

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity—April 21, 2017)(9)

    10,946     10,568     9,742  

                           

Stardust Finance Holdings, Inc.(11)

 

Manufacturer of Diversified Building Products

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—March 13, 2022)(9)

    12,500     12,315     12,500  

                           

Subsea Global Solutions, LLC(10)

 

Underwater Maintenance and Repair Services

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—March 17, 2020)(9)

    4,571     4,512     4,512  

                           

Symphony Teleca Services, Inc.(11)

 

Outsourced Product Development

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—August 7, 2019)(9)

    14,000     13,876     13,930  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity—August 22, 2020)(9)

    4,714     4,638     4,572  

                           

Targus Group International(11)

 

Distributor of Protective Cases for Mobile Devices

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity—May 24, 2016)(9)

    4,236     4,245     3,431  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity—December 10, 2018)(9)

    6,813     6,796     6,796  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity—June 10, 2019)(9)

    2,500     2,481     2,500  

                  9,277     9,296  

                           

Templar Energy LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 25, 2020)(9)

    5,000     4,947     3,424  

                           

28


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

The Tennis Channel, Inc.(10)

 

Television-Based Sports Broadcasting

                       

     

Warrants (114,316 equivalent shares)

          235     301  

                           

The Topps Company, Inc.(11)

 

Trading Cards & Confectionary

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—October 2, 2018)(9)

    1,975     1,961     1,953  

                           

Therakos, Inc.(11)

 

Immune System Disease Treatment

                       

     

LIBOR Plus 5.75% (Floor 1.25%), Current Coupon 7.00%, Secured Debt (Maturity—December 27, 2017)(9)

    6,278     6,193     6,247  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—October 30, 2020)(9)

    5,000     4,527     4,644  

                           

Travel Leaders Group, LLC(11)

 

Travel Agency Network Provider

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—December 5, 2018)(9)

    12,281     12,151     12,312  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—January 13, 2019)(9)

    1,513     1,513     1,513  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—January 13, 2019)(9)

    2,826     2,826     2,826  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)

    574     574     574  

     

Common Stock (705,054 shares)

          4,935     4,935  

                  9,848     9,848  

                           

Universal Fiber Systems, LLC(10)

 

Manufacturer of Synthetic Fibers

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—January 31, 2019)(9)

    5,062     5,052     5,011  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Class A Units (4,000,000 units)(8)

          4,000     4,000  

                           

29


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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—April 16, 2020)(9)

    7,425     7,393     7,407  

                           

Vantage Oncology, LLC(11)

 

Outpatient Radiation Oncology Treatment Centers

                       

     

9.5% Secured Debt (Maturity—June 5, 2017)

    11,050     10,898     10,664  

                           

Virtex Enterprises, LP(10)

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                       

     

12% Secured Debt (Maturity—December 27, 2018)

    1,667     1,488     1,489  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          333     333  

     

Warrants (11 equivalent units)

          186     186  

                  2,007     2,008  

                           

Vision Solutions, Inc.(11)

 

Provider of Information Availability Software

                       

     

LIBOR Plus 4.50% (Floor 1.50%), Current Coupon 6.00%, Secured Debt (Maturity—July 23, 2016)(9)

    3,413     3,405     3,405  

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity—July 23, 2017)(9)

    5,000     4,959     5,012  

                  8,364     8,417  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

10.5% Secured Debt (Maturity—January 26, 2020)

    17,500     16,024     16,025  

     

Warrants (950,618 equivalent units)

          1,400     1,400  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

                  31,424     31,425  

                           

Western Dental Services, Inc.(11)

 

Dental Care Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—November 1, 2018)(9)

    5,395     5,391     4,965  

                           

Wilton Brands LLC(11)

 

Specialty Housewares Retailer

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity—August 30, 2018)(9)

    1,725     1,703     1,657  

                           

30


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Worley Claims Services, LLC(10)

 

Insurance Adjustment Management and Services Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 31, 2020)(9)

    6,484     6,423     6,517  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     211  

     

Warrants (952,500 equivalent shares)

          1,071     1,071  

                  1,225     1,282  

Subtotal Non-Control/Non-Affiliate Investments (55.4% of total investments at fair value)

          983,942     968,009  

Total Portfolio Investments, March 31, 2015

          1,600,831     1,737,323  

31


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

March 31, 2015

(in thousands)

(Unaudited)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Marketable Securities and Idle Funds Investments

             

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

                       

                  11,235     9,948  

Subtotal Marketable Securities and Idle Funds Investments (0.6% of total investments at fair value)

          11,235     9,948  

Total Investments, March 31, 2015

        $ 1,612,066   $ 1,747,271  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for summary geographic location of portfolio companies.

(4)
Principal is net of prepayments. Cost is net of prepayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate.

(10)
Private Loan portfolio investment. See Note B for a summary of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a summary of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a summary of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Marketable securities and idle fund investments.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

32


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Control Investments(5)

 

 

 

 

                   

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    3,000     2,954     3,000  

     

Member Units (1,500 units)(8)

          1,500     1,970  

                  4,454     4,970  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2017)

    13,570     13,446     13,570  

     

Common Stock (57,508 shares)

          6,350     11,210  

                  19,796     24,780  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     6,980  

                           

California Healthcare Medical Billing, Inc.

 

Outsourced Billing and Revenue Cycle Management

                       

     

9% Secured Debt (Maturity—October 17, 2016)

    8,703     8,568     8,703  

     

Warrants (466,947 equivalent shares)

          1,193     3,480  

     

Common Stock (207,789 shares)

          1,177     1,460  

                  10,938     13,643  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     27,200  

                           

Ceres Management, LLC (Lambs Tire & Automotive)

 

Aftermarket Automotive Services Chain

                       

     

14% Secured Debt (Maturity—May 31, 2018)

    3,916     3,916     3,916  

     

Class B Member Units (12% cumulative)(8)

          4,048     4,048  

     

Member Units (5,460 units)

          5,273     2,510  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—October 1, 2025)

    968     968     968  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,240  

                  14,830     12,682  

                           

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

10.5% Secured Debt (Maturity—May 31, 2019)

    11,205     11,103     11,103  

     

Preferred Member Units (6,453 units)

          6,030     6,030  

                  17,133     17,133  

                           

33


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

14% Secured Debt (Maturity—January 12, 2018)

    5,400     5,320     5,320  

     

Member Units (1,200 units)(8)

          1,200     1,360  

                  6,520     6,680  

                           

GRT Rubber Technologies LLC

 

Engineered Rubber Product Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—December 19, 2019)(9)

    16,750     16,585     16,585  

     

Member Units (5,879 units)

          13,065     13,065  

                  29,650     29,650  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)

    744     744     744  

     

Member Units (438 units)(8)

          2,980     16,540  

                  3,724     17,284  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

12% Secured Debt (Maturity—June 4, 2015)

    5,487     5,409     5,487  

     

Preferred Stock (8% cumulative)(8)

          1,260     1,260  

     

Common Stock (105,880 shares)

          718     1,830  

                  7,387     8,577  

                           

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

                       

     

Member Units (500 units)(8)

          589     370  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,220  

                  1,804     2,590  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     13,720  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—November 18, 2018)(9)

    125     125     125  

     

12.5% Secured Debt (Maturity—November 18, 2018)

    10,571     10,483     10,571  

     

Member Units (5,029 units)

          5,029     5,450  

                  15,637     16,146  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Impact Telecom, Inc.

 

Telecommunications Services Provider

                       

     

LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity—May 31, 2018)(9)

    1,575     1,569     1,569  

     

13% Secured Debt (Maturity—May 31, 2018)

    22,500     15,515     15,515  

     

Warrants (5,516,667 equivalent shares)

          8,000     4,160  

                  25,084     21,244  

                           

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

                       

     

15% Secured Debt (Maturity—January 15, 2015)

    3,100     3,100     3,100  

     

Warrants (1,046 equivalent units)

          1,129     2,540  

                  4,229     5,640  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 3.25%), Current Coupon 10.00%, Secured Debt (Maturity—November 14, 2016)(9)

    3,655     3,618     3,655  

     

Member Units (627 units)(8)

          811     3,580  

                  4,429     7,235  

                           

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

                       

     

8% Secured Debt (Maturity—August 22, 2015)

    1,550     1,550     1,550  

     

Preferred Equity (non-voting)

          439     439  

     

Warrants (71 equivalent units)

          54     40  

     

Member Units (700 units)(8)

          100     360  

                  2,143     2,389  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

                       

     

12% Secured Debt (Maturity—December 28, 2017)

    10,250     10,112     10,112  

     

Preferred Member Units (2,669 units)

          3,750     3,750  

                  13,862     13,862  

                           

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity—December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (2,829 units)(8)

          1,244     10,180  

     

9.5% Secured Debt (Mid—Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    927     927     927  

     

Member Units (Mid—Columbia Real Estate, LLC) (250 units)(8)

          250     550  

                  8,071     17,307  

                           

35


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              15,580  

                           

Mystic Logistics, Inc

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    10,000     9,790     9,790  

     

Common Stock (5,873 shares)

          2,720     2,720  

                  12,510     12,510  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—September 1, 2015)(9)

    625     615     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—February 1, 2016)(9)

    2,923     2,915     2,923  

     

18% Secured Debt (Maturity—February 1, 2016)

    4,468     4,440     4,468  

     

Member Units (2,955 units)(8)

          2,975     7,560  

                  10,945     15,576  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

14% Secured Debt (Maturity—September 8, 2016)

    4,889     4,779     4,779  

     

Warrants (251,723 equivalent units)

          252     160  

     

Member Units (671,233 units)

          671     722  

                  5,702     5,661  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity—December 22, 2016)

    12,100     11,590     11,590  

     

Warrants (14,331 equivalent units)

          817     970  

     

Member Units (50,877 units)(8)

          2,900     3,190  

                  15,307     15,750  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     13,420  

Pegasus Research Group, LLC (Televerde)

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     5,860  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

11.1% Secured Debt (Maturity—June 10, 2015)

    7,860     7,848     7,860  

     

Common Stock (1,961 shares)

          2,150     8,160  

                  9,998     16,020  

                           

36


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Principle Environmental, LLC

 

Noise Abatement Service Provider

                       

     

12% Secured Debt (Maturity—April 30, 2017)

    4,060     3,813     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity—April 30, 2017)

    3,244     3,227     3,244  

     

Preferred Member Units (19,631 units)

          4,663     11,830  

     

Warrants (1,036 equivalent units)

          1,200     720  

                  12,903     19,854  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     468     468  

     

12% Secured Debt (Maturity—June 30, 2018)

    500     500     500  

     

Member Units (1,150 units)(8)

          1,150     2,570  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     369  

                  2,487     3,907  

                           

SoftTouch Medical Holdings LLC

 

Home Provider of Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—October 31, 2019)(9)

    8,500     8,417     8,417  

     

Member Units (4,526 units)

          5,015     5,015  

                  13,432     13,432  

                           

Southern RV, LLC

 

Recreational Vehicle Dealer

                       

     

13% Secured Debt (Maturity—August 8, 2018)

    11,400     11,266     11,400  

     

Member Units (1,680 units)(8)

          1,680     4,920  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity—August 8, 2018)

    3,250     3,212     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

          480     470  

                  16,638     20,040  

                           

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 8, 2018)

    2,724     2,724     2,724  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

          2,500     980  

     

Warrants (1,424 equivalent units)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

          2,300     2,300  

                  8,620     6,004  

                           

37


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Travis Acquisition LLC

 

Manufacturer of Aluminum Trailers

                       

     

12% Secured Debt (Maturity—August 30, 2018)

    4,693     4,617     4,693  

     

Member Units (7,282 units)

          7,100     13,650  

                  11,717     18,343  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    1,802     1,802     1,802  

     

Member Units (1,006 units)(8)

          1,113     3,500  

                  2,915     5,302  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2016)

    3,204     3,169     3,154  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,250  

     

Common Stock (1,126,242 shares)

          3,706     100  

                  9,875     6,504  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 1, 2018)(9)

    1,500     1,491     1,491  

     

9% Current / 9% PIK Secured Debt (Maturity—October 1, 2018)

    5,509     5,509     4,880  

     

Warrants (587 equivalent units)

          600      

                  7,600     6,371  

Subtotal Control Investments (29.9% of total investments at fair value)

    342,847     469,846  

38


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

11% Secured Debt (Maturity—November 7, 2019)

    6,800     6,465     6,465  

     

Warrants (42 equivalent units)

          259     259  

     

Member Units (186 units)

          1,200     1,200  

                  7,924     7,924  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air Compressors, Auxiliary Power Units, Gas Booster Systems and Vapor Recovery Systems

                       

     

Preferred Member Units (2,242 units)

          2,000     2,000  

                           

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—April 18, 2017)

    6,000     5,837     5,837  

     

Warrants (19 equivalent shares)

          200     710  

                  6,037     6,547  

                           

Brightwood Capital Fund III, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 9.1%)(8)

          8,448     8,448  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    5,400     5,348     5,348  

     

Member Units (65,356 units)

          654     654  

                  6,002     6,002  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     610  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          18,575     18,378  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          7,734     7,734  

                  26,309     26,112  

                           

39


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Daseke, Inc.

 

Specialty Transportation Provider

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity—July 31, 2018)

    20,723     20,403     20,723  

     

Common Stock (19,467 shares)

          5,213     13,780  

                  25,616     34,503  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)(8)

          2,325     2,325  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)(8)

          738     738  

                  3,063     3,063  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (5,000 shares)(8)

          480     860  

                           

East West Copolymer & Rubber, LLC

 

Manufacturer of Synthetic Rubbers

                       

     

12% Secured Debt (Maturity—October 17, 2019)

    9,600     9,436     9,436  

     

Warrants (1,823,278 equivalent units)

          50     50  

                  9,486     9,486  

                           

Freeport Financial SBIC Fund LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 9.9%)(8)

          4,677     4,677  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

                       

     

10% Secured Debt (Maturity—November 21, 2016)

    13,046     12,749     10,782  

     

Warrants (29,025 equivalent units)

          400      

                  13,149     10,782  

                           

Glowpoint, Inc.

 

Provider of Cloud Managed Video Collaboration Services

                       

     

8% Secured Debt (Maturity—October 18, 2018)

    400     396     396  

     

12% Secured Debt (Maturity—October 18, 2018)

    9,000     8,909     8,909  

     

Common Stock (7,711,517 shares)

          3,958     8,480  

                  13,263     17,785  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

11% Secured Debt (Maturity—August 13, 2019)

    11,200     11,044     11,044  

     

Common Stock (213,221 shares)

          2,400     2,400  

                  13,444     13,444  

                           

40


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

Member Units (248,082 units)(8)

          996     11,470  

                           

Indianhead Pipeline Services, LLC

 

Provider of Pipeline Support Services

                       

     

12% Secured Debt (Maturity—February 6, 2017)

    6,900     6,625     6,625  

     

Preferred Member Units (28,905 units; 8% cumulative)(8)

          1,960     1,960  

     

Warrants (38,193 equivalent units)

          459      

     

Member Units (14,732 units)

          1      

                  9,045     8,585  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (128 units)(8)

          624     3,960  

                           

KBK Industries, LLC

 

Specialty Manufacturer of Oilfield and Industrial Products

                       

     

12.5% Secured Debt (Maturity—September 28, 2017)

    8,250     8,198     8,250  

     

Member Units (250 units)(8)

          341     6,120  

                  8,539     14,370  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,000,000 units)(8)

          2,019     2,374  

                           

MPS Denver, LLC

 

Specialty Card Printing

                       

     

Member Units (13,800 units)

          1,130     1,130  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—March 31, 2015)

    3,553     3,553     3,553  

     

Preferred Stock (912 shares;
7% cumulative)(8)

          1,947     2,700  

     

Warrants (5,333 equivalent shares)

          1,919      

                  7,419     6,253  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371     4,971  

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)

          2,259     4,430  

                           

41


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Quality Lease and Rental Holdings, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

8% Secured Debt (Maturity—October 1, 2014)(14)(18)

    157     157     157  

     

12% Secured Debt (Maturity—January 8, 2018)(14)(18)

    36,577     36,073     11,500  

     

Preferred Member Units (Rocaciea, LLC) (250 units)

          2,500      

                  38,730     11,657  

                           

Radial Drilling Services Inc.

 

Oil and Gas Technology Provider

                       

     

12% Secured Debt (Maturity—November 22, 2016)

    4,200     3,792     3,792  

     

Warrants (316 equivalent shares)

          758      

                  4,550     3,792  

                           

Samba Holdings, Inc.

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

12.5% Secured Debt (Maturity—November 17, 2016)

    26,418     26,188     26,418  

     

Common Stock (170,963 shares)

          2,087     6,030  

                  28,275     32,448  

                           

SYNEO, LLC

 

Manufacturer of Automation Machines, Specialty Cutting Tools and Punches

                       

     

12% Secured Debt (Maturity—July 13, 2016)

    2,700     2,674     2,674  

     

Member Units (1,177 units)(8)

          1,097     801  

     

10% Secured Debt (Leadrock Properties, LLC) (Maturity—May 4, 2026)

    1,440     1,415     1,415  

                  5,186     4,890  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 30, 2018)

    14,100     13,861     13,861  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)

          2,241     2,241  

                  16,102     16,102  

Subtotal Affiliate Investments (17.7% of total investments at fair value)

    266,243     278,675  

42


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

Accuvant Finance, LLC(11)

 

Cyber Security Value Added Reseller

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—October 22, 2020)(9)

    5,597     5,546     5,583  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—July 19, 2021)(9)

    6,000     5,937     5,888  

                           

AM General LLC(11)

 

Specialty Vehicle Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity—March 22, 2018)(9)

    2,550     2,496     2,282  

                           

AM3 Pinnacle Corporation(10)

 

Provider of Comprehensive Internet, TV and Voice Services for Multi-Dwelling Unit Properties

                       

     

10% Secured Debt (Maturity—October 22, 2018)

    21,002     20,863     20,863  

     

Common Stock (60,240 shares)

          2,000     1,840  

                  22,863     22,703  

                           

AmeriTech College, LLC

 

For-Profit Nursing and Healthcare College

                       

     

10% Secured Debt (Maturity—November 30, 2019)

    979     979     979  

     

10% Secured Debt (Maturity—January 31, 2020)

    6,050     6,050     6,050  

                  7,029     7,029  

                           

AMF Bowling Centers, Inc.(11)

 

Bowling Alley Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—September 18, 2021)(9)

    4,988     4,915     4,913  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75% / 1.75% PIK, Current Coupon Plus PIK 9.50%, Secured Debt (Maturity—May 21, 2020)(9)

    10,916     10,842     6,559  

                           

43


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

AP Gaming I, LLC(10)

 

Developer, Manufacturer, and Operator of Gaming Machines

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—December 20, 2020)(9)

    6,930     6,744     6,930  

                           

Applied Products, Inc.(10)

 

Adhesives Distributor

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 30, 2019)(9)

    6,236     6,170     6,170  

                           

Aptean, Inc.(11)

 

Enterprise Application Software Provider

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—February 26, 2020)(9)

    7,667     7,642     7,450  

                           

Artel, LLC(11)

 

Land-Based and Commercial Satellite Provider

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—November 27, 2017)(9)

    4,594     4,549     4,548  

                           

ATS Workholding, Inc.(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—March 10, 2019)(9)

    6,558     6,506     6,506  

                           

Beers Enterprises, Inc.(10)

 

Provider of Broadcast Video Transport Services

                       

     

Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—March 19, 2019)(9)

    6,263     6,210     6,210  

                           

Bioventus LLC(10)

 

Production of Orthopedic Healing Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity—April 10, 2020)(9)

    5,000     4,903     4,987  

                           

Blackbrush Oil and Gas LP(11)

 

Oil & Gas Exploration

                       

     

LIBOR Plus 6.50%, (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—July 30, 2021)(9)

    4,000     3,971     3,320  

                           

Blackhawk Specialty Tools LLC(11)

 

Oilfield Equipment & Services

                       

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity—August 1, 2019)(9)

    6,224     6,189     6,131  

                           

44


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Blue Bird Body Company(11)

 

School Bus Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—June 26, 2020)(9)

    11,500     11,339     11,443  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 6, 2020)(9)

    7,500     7,213     7,237  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Production and Newspaper Circulation Software

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—July 22, 2019)(9)

    6,263     6,182     6,182  

                           

Brasa Holdings Inc.(11)

 

Upscale Full Service Restaurants

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—January 20, 2020)(9)

    2,143     2,128     2,121  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity—September 1, 2021)

    2,500     2,500     2,556  

                           

Calloway Laboratories, Inc.(10)

 

Health Care Testing Facilities

                       

     

12% PIK Secured Debt (Maturity—September 30, 2015)(14)

    7,225     7,176     2,878  

     

Warrants (125,000 equivalent shares)

          17      

                  7,193     2,878  

                           

Cedar Bay Generation Company LP(11)

 

Coal-Fired Cogeneration Plant

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—April 23, 2020)(9)

    2,476     2,457     2,458  

                           

Cengage Learning Acquisitions, Inc.(11)

 

Provider of Educational Print and Digital Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—March 31, 2020)(9)

    4,000     3,990     3,975  

                           

CGSC of Delaware Holdings Corp.(11)(13)

 

Insurance Brokerage Firm

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity—October 16, 2020)(9)

    2,000     1,975     1,780  

                           

45


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity—May 22, 2019)(9)

    4,938     4,900     4,822  

                           

CHI Overhead Doors, Inc.(11)

 

Manufacturer of Overhead Garage Doors

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity—September 18, 2019)(9)

    2,500     2,467     2,475  

                           

Clarius ASIG, LLC(10)

 

Prints & Advertising Film Financing

                       

     

12% PIK Secured Debt (Maturity—September 14, 2014)(17)

    2,723     2,663     2,723  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

12% PIK Secured Debt (Maturity—January 5, 2015)(14)

    4,400     4,285     1,848  

                           

Compact Power Equipment, Inc.

 

Equipment / Tool Rental

                       

     

12% Secured Debt (Maturity—October 1, 2017)

    4,100     4,085     4,100  

     

Series A Preferred Stock (4,298,435 shares; 8% cumulative)(8)

          1,079     2,401  

                  5,164     6,501  

                           

Covenant Surgical Partners, Inc.(11)

 

Ambulatory Surgical Centers

                       

     

8.75% Secured Debt (Maturity—August 1, 2019)

    2,000     2,000     2,020  

                           

CRGT Inc.(11)

 

Provider of Custom Software Development

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 19, 2020)(9)

    10,000     9,800     9,850  

                           

CST Industries Inc.(11)

 

Storage Tank Manufacturer

                       

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity—May 22, 2017)(9)

    7,109     7,050     7,037  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.75% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)

    20,291     19,676     19,676  

     

Warrants (915,734 equivalent units)

          474     474  

                  20,150     20,150  

                           

Digity Media LLC(11)

 

Radio Station Operator

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—February 10, 2019)(9)

    7,406     7,335     7,387  

                           

46


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Drilling Info, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)

          1,335     9,920  

                           

ECP-PF Holdings Group, Inc.(10)

 

Fitness Club Operator

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—November 26, 2019)(9)

    5,625     5,570     5,570  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,430     3,240  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)(8)

          1,561     1,325  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          1,654     1,477  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 1.0%)(8)

          4,586     4,567  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.8%)

          184     184  

                  11,415     10,793  

                           

Energy and Exploration Partners, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity—January 22, 2019)(9)

    9,461     9,054     6,788  

                           

e-Rewards, Inc.(11)

 

Provider of Digital Data Collection

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—October 29, 2018)(9)

    12,687     12,518     12,560  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—April 28, 2022)(9)

    3,000     2,979     2,845  

                           

FC Operating, LLC(10)

 

Christian Specialty Retail Stores

                       

     

LIBOR Plus 10.75% (Floor 1.25%), Current Coupon 12.00%, Secured Debt (Maturity—November 14, 2017)(9)

    5,400     5,330     4,132  

47


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

FishNet Security, Inc.(11)

 

Information Technology Value-Added Reseller

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—November 30, 2017)(9)

    7,840     7,791     7,840  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products and Solutions

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity—April 30, 2020)(9)

    4,938     4,746     4,728  

                           

Fram Group Holdings, Inc.(11)

 

Manufacturer of Automotive Maintenance Products

                       

     

LIBOR Plus 5.00% (Floor 1.50%), Current Coupon 6.50%, Secured Debt (Maturity—July 29, 2017)(9)

    5,935     5,928     5,907  

     

LIBOR Plus 9.00% (Floor 1.50%), Current Coupon 10.50%, Secured Debt (Maturity—January 29, 2018)(9)

    700     698     684  

                  6,626     6,591  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—April 29, 2022)(9)

    800     784     796  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—August 15, 2019)(9)

    9,546     9,436     9,436  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

    4,913     4,846     4,775  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,000     1,925     1,920  

                  6,771     6,695  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—July 10, 2020)(9)

    9,975     9,882     9,825  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity—April 15, 2019)

    7,000     6,817     6,020  

                           

48


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Halcon Resources Corporation(11)(13)

 

Oil & Gas Exploration & Production

                       

     

9.75% Unsecured Debt (Maturity—July 15, 2020)

    6,925     6,335     5,194  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity—December 13, 2019)(9)

    9,750     9,671     9,652  

     

LIBOR Plus 8.75% (Floor 1.25%), Current Coupon 10.00%, Secured Debt (Maturity—December 11, 2020)(9)

    5,000     4,917     4,950  

                  14,588     14,602  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—August 5, 2019)(9)

    9,875     9,783     9,752  

                           

ICON Health & Fitness, Inc.(11)

 

Producer of Fitness Products

                       

     

11.875% Secured Debt (Maturity—October 15, 2016)

    4,385     4,323     4,122  

                           

iEnergizer Limited(11)(13)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—May 1, 2019)(9)

    10,029     9,905     9,277  

                           

Infinity Acquisition Finance Corp.(11)

 

Application Software for Capital Markets

                       

     

7.25% Unsecured Debt (Maturity—August 1, 2022)

    4,000     4,000     3,620  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity—November 30, 2020)

    3,851     3,687     3,697  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—April 1, 2021)(9)

    9,987     9,789     9,288  

                           

Jackson Hewitt Tax Service Inc.(11)

 

Tax Preparation Service Provider

                       

     

LIBOR Plus 8.50% (Floor 1.50%), Current Coupon 10.00%, Secured Debt (Maturity—October 16, 2017)(9)

    4,509     4,396     4,509  

                           

49


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—May 9, 2020)(9)

    9,950     9,853     9,838  

                           

John Deere Landscapes LLC(10)

 

Distributor of Landscaping Supplies

                       

     

LIBOR Plus 4.00% (Floor 1.00%), Current Coupon 5.00%, Secured Debt (Maturity—December 23, 2019)(9)

    8,573     8,193     8,193  

                           

Keypoint Government Solutions, Inc.(11)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—November 13, 2017)(9)

    4,726     4,668     4,702  

                           

Lansing Trade Group LLC(11)

 

Commodity Merchandiser

                       

     

9.25% Unsecured Debt (Maturity—February 15, 2019)

    6,000     6,000     5,610  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—August 7, 2019)(9)

    6,895     6,842     6,636  

                           

LKCM Distribution Holdings, L.P.

 

Distributor of Industrial Process Equipment

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity—December 23, 2018)

    16,417     16,278     16,417  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)(8)

          2,250     5,764  

                           

MAH Merger Corporation(11)

 

Sports-Themed Casual Dining Chain

                       

     

LIBOR Plus 4.50% (Floor 1.25%), Current Coupon 5.75%, Secured Debt (Maturity—July 19, 2019)(9)

    7,258     7,198     7,276  

                           

MediMedia USA, Inc.(11)

 

Provider of Healthcare Media and Marketing

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity—November 20, 2018)(9)

    5,411     5,292     5,289  

                           

50


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Messenger, LLC(10)

 

Supplier of Specialty Stationary and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 5, 2019)(9)

    13,639     13,518     13,518  

                           

Milk Specialties Company(11)

 

Processor of Nutrition Products

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity—November 9, 2018)(9)

    7,847     7,806     7,670  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

10% Current / 2% PIK Secured Debt (Maturity—September 19, 2019)

    4,023     3,985     3,985  

                           

Miramax Film NY, LLC(11)

 

Motion Picture Producer and Distributor

                       

     

Class B Units (12% cumulative)(8)

          792     792  

                           

Modern VideoFilm, Inc.(10)

 

Post-Production Film Studio

                       

     

LIBOR Plus 3.50% (Floor 1.50%), Current Coupon 5.00% / 8.50% PIK, Current Coupon Plus PIK 13.50%, Secured Debt (Maturity—September 25, 2017)(9)(14)

    6,302     6,119     1,954  

     

Warrants (1,375 equivalent shares)

          151     1  

                  6,270     1,955  

                           

Mood Media Corporation(11)(13)

 

Provider of Electronic Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—May 1, 2019)(9)

    12,193     12,053     11,964  

                           

MP Assets Corporation(11)

 

Manufacturer of Battery Components

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—December 19, 2019)(9)

    4,416     4,378     4,394  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—June 4, 2020)(9)

    14,925     14,649     14,776  

                           

Nice-Pak Products, Inc.(11)

 

Pre-Moistened Wipes Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—June 18, 2015)(9)

    12,541     12,518     12,478  

                           

51


Table of Contents


MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

North Atlantic Trading Company, Inc.(11)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—January 13, 2020)(9)

    7,426     7,361     7,305  

                           

Novitex Intermediate, LLC(11)

 

Provider of Document Management Services

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity—July 7, 2020)(9)

    5,985     5,929     5,746  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)

    5,205     5,205     5,205  

                           

Panolam Industries International, Inc.(11)

 

Decorative Laminate Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—August 23, 2017)(9)

    6,994     6,949     6,889  

                           

Parq Holdings Limited Partnership(11)(13)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 17, 2020)(9)

    6,226     6,078     6,108  

                           

Permian Holdings, Inc.(11)

 

Storage Tank Manufacturer

                       

     

10.5% Secured Debt (Maturity—January 15, 2018)

    2,755     2,728     2,066  

                           

Pernix Therapeutics Holdings, Inc.(10)(13)

 

Pharmaceutical Royalty—Anti-Migraine

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    4,000     4,000     4,000  

                           

PeroxyChem LLC(11)

 

Chemical Manufacturer

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—February 28, 2020)(9)

    8,933     8,774     8,843  

                           

Philadelphia Energy Solutions Refining and Marketing LLC(11)

 

Oil & Gas Refiner

                       

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity—April 4, 2018)(9)

    2,948     2,917     2,785  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Pike Corporation(11)

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—June 22, 2022)(9)

    15,000     14,628     14,825  

                           

Polyconcept Financial B.V.(11)

 

Promotional Products to Corporations and Consumers

                       

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity—June 28, 2019)(9)

    4,325     4,311     4,309  

                           

Primesight Limited(10)(13)

 

Outdoor Advertising Operator

                       

     

10% Secured Debt (Maturity—October 22, 2016)

    8,869     8,806     8,284  

                           

Printpack Holdings, Inc.(11)

 

Manufacturer of Flexible and Rigid Packaging

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—May 29, 2020)(9)

    5,468     5,417     5,450  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—November 1, 2018)(9)

    11,946     11,828     11,828  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—August 7, 2021)(9)

    10,000     9,905     9,825  

                           

RCHP, Inc.(11)

 

Regional Non-Urban Hospital Owner/Operator

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—October 23, 2019)(9)

    4,000     3,945     3,990  

                           

Recorded Books Inc.(11)

 

Audiobook and Digital Content Publisher

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—January 31, 2020)(9)

    12,031     11,925     11,941  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Relativity Media, LLC(10)

 

Full-Scale Film and Television Production and Distribution

                       

     

10% Secured Debt (Maturity—May 30, 2015)

    5,787     5,772     5,801  

     

15% PIK Secured Debt (Maturity—May 30, 2015)

    7,410     7,347     7,558  

     

Class A Units (260,194 units)

          292     1,086  

                  13,411     14,445  

                           

Renaissance Learning, Inc.(11)

 

Technology-based K-12 Learning Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—April 11, 2022)(9)

    3,000     2,972     2,880  

                           

RGL Reservoir Operations Inc.(11)(13)

 

Oil & Gas Equipment and Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—August 13, 2021)(9)

    3,990     3,876     3,219  

                           

RLJ Entertainment, Inc.(10)

 

Movie and TV Programming Licensee and Distributor

                       

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.00%, Secured Debt (Maturity—September 11, 2019)(9)

    11,399     11,318     11,318  

                           

SAExploration, Inc.(10)(13)

 

Geophysical Services Provider

                       

     

Common Stock (6,472 shares)(8)

          65     27  

                           

Sage Automotive Interiors, Inc(11)

 

Automotive Textiles Manufacturer

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 8, 2021)(9)

    3,000     2,971     2,985  

                           

Sagittarius Restaurants LLC (d/b/a Del Taco)(11)

 

Mexican/American QSR Restaurant Chain

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—October 1, 2018)(9)

    4,591     4,572     4,562  

                           

SCE Partners, LLC(10)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—August 14, 2019)(9)

    7,481     7,421     7,519  

                           

Sotera Defense Solutions, Inc.(11)

 

Defense Industry Intelligence Services

                       

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity—April 21, 2017)(9)

    10,984     10,564     10,160  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Symphony Teleca Services, Inc.(11)

 

Outsourced Product Development

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—August 7, 2019)(9)

    14,000     13,870     13,930  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity—August 22, 2020)(9)

    6,913     6,798     6,822  

                           

Targus Group International(11)

 

Distributor of Protective Cases for Mobile Devices

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity—May 24, 2016)(9)

    4,288     4,299     3,495  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity—December 10, 2018)(9)

    6,830     6,813     6,796  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity—June 10, 2019)(9)

    2,500     2,480     2,512  

                  9,293     9,308  

                           

Templar Energy LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 25, 2020)(9)

    5,000     4,945     3,615  

                           

The Tennis Channel, Inc.(10)

 

Television-Based Sports Broadcasting

                       

     

Warrants (114,316 equivalent shares)

          235     301  

                           

The Topps Company, Inc.(11)

 

Trading Cards & Confectionary

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—October 2, 2018)(9)

    1,980     1,964     1,930  

                           

Therakos, Inc.(11)

 

Immune System Disease Treatment

                       

     

LIBOR Plus 5.75% (Floor 1.25%), Current Coupon 7.00%, Secured Debt (Maturity—December 27, 2017)(9)

    6,278     6,178     6,255  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—October 30, 2020)(9)

    5,000     4,511     4,625  

                           

Travel Leaders Group, LLC(11)

 

Travel Agency Network Provider

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—December 5, 2018)(9)

    12,445     12,305     12,445  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 4.00% PIK, Current Coupon Plus PIK 15.00%, Secured Debt (Maturity—April 15, 2018)(9)(14)

    10,776     10,173     7,942  

     

5% Current / 2.25% PIK Secured Debt (Maturity—August 13, 2019)(14)

    640     640     640  

     

Warrants (267,302 equivalent shares)

          449      

                  11,262     8,582  

                           

Universal Fiber Systems, LLC(10)

 

Manufacturer of Synthetic Fibers

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—January 31, 2019)(9)

    5,094     5,084     5,082  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Class A Units (4,000,000 units)

          4,000     4,000  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—April 16, 2020)(9)

    7,444     7,410     7,332  

                           

Vantage Oncology, LLC(11)

 

Outpatient Radiation Oncology Treatment Centers

                       

     

9.5% Secured Debt (Maturity—June 5, 2017)

    7,000     7,000     6,790  

                           

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Virtex Enterprises, LP(10)

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                       

     

12% Secured Debt (Maturity—December 27, 2018)

    1,667     1,479     1,479  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          344     344  

     

Warrants (11 equivalent units)

          186     186  

                  2,009     2,009  

                           

Vision Solutions, Inc.(11)

 

Provider of Information Availability Software

                       

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity—July 23, 2017)(9)

    5,000     4,941     4,872  

                           

Western Dental Services, Inc.(11)

 

Dental Care Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—November 1, 2018)(9)

    5,395     5,391     5,153  

                           

Wilton Brands LLC(11)

 

Specialty Housewares Retailer

                       

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity—August 30, 2018)(9)

    1,750     1,727     1,636  

                           

Worley Claims Services, LLC(10)

 

Insurance Adjustment Management and Services Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 31, 2020)(9)

    6,500     6,437     6,533  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Warrants (952,500 equivalent shares)

          1,071     1,071  

Subtotal Non-Control/Non-Affiliate Investments (51.8% of total investments at fair value)

          832,312     814,809  

Total Portfolio Investments, December 31, 2014

          1,441,402     1,563,330  

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MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS (Continued)

December 31, 2014

(in thousands)

Portfolio Company(1)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value
 
   

Marketable Securities and Idle Funds Investments

                   

                           

Solar Senior Capital Ltd.(13)(15)

 

Business Development Company

                       

     

Common Stock (39,000 shares)(8)

          742     584  

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

                       

                  9,862     8,483  

Subtotal Marketable Securities and Idle Funds Investments (0.6% of total investments at fair value)

          10,604     9,067  

Total Investments, December 31, 2014

        $ 1,452,006   $ 1,572,397  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for summary geographic location of portfolio companies.

(4)
Principal is net of prepayments. Cost is net of prepayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate.

(10)
Private Loan portfolio investment. See Note B for a summary of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a summary of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a summary of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Marketable securities and idle fund investments.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

1.     Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provide "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including, but not limited to, Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees but instead incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for parties outside of MSCC and its consolidated subsidiaries or their portfolio companies, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes. The External Investment Manager is also a direct wholly owned subsidiary that has elected to be a taxable entity. The Taxable Subsidiaries and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

2.     Basis of Presentation

        Main Street's financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, Main Street's consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street's investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities and idle funds investments" (see Note C—Fair Value Hierarchy for Investments and Debentures—Portfolio Composition—Portfolio Investment Composition for additional discussion of Main Street's Investment Portfolio and definitions for the terms LMM, Middle Market, Private Loan and Other Portfolio). "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on Main Street's consolidated balance sheets and consolidated schedules of investments due to the nature of such investments (see Note B.11.). Main Street's results of operations for the three months ended March 31, 2015 and 2014, cash flows for the three months ended March 31, 2015 and 2014, and financial position as of March 31, 2015 and December 31, 2014, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

        The accompanying unaudited consolidated financial statements of Main Street are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the operating results to be expected for the full year. Also, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

        Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "ASC") 946, Financial Services—Investment Companies ("ASC 946"), Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. According, as noted above, MSCC's consolidated financial statements include the financial position and operating results for the Funds and the Taxable

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Subsidiaries. MSCC's consolidated financial statements also include the financial position and operating results for MSCC's wholly owned operating subsidiary, Main Street Capital Partners, LLC, ("MSCP"), as the wholly owned subsidiary provides all of its services directly or indirectly to Main Street or its portfolio companies. Main Street has determined that all of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street's Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B, with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

        Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments" are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments" are defined as investments in which Main Street owns between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/Non-Affiliate Investments" are defined as investments that are neither Control Investments nor Affiliate Investments.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.     Valuation of the Investment Portfolio

        Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of the Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        Main Street's portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by private, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities issued by companies that are consistent in size with either the LMM companies or Middle Market companies, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. The structure, terms and conditions for these Private Loan investments are typically consistent with the structure, terms and conditions for the investments made in its LMM portfolio or Middle Market portfolio. Main Street's portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street's portfolio investments may be subject to restrictions on resale.

        LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan

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investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street's valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street's Investment Portfolio.

        For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for its LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for its LMM debt investments. For Middle Market portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV") of the fund. All of the valuation approaches for Main Street's portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

        These valuation approaches consider the value associated with Main Street's ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, "control" portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors. For valuation purposes, "non-control" portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors.

        Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by using the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, private companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company's historical and projected financial results. The operating results of a

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portfolio company may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in its determination. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company's capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

        Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio investments. Main Street's estimate of the expected repayment date of its debt securities is generally the legal maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street's general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

        Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date. However, in determining the fair value of the investment, Main Street may consider whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street's investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street's ability to realize the full NAV of its interests in the investment fund.

        Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each LMM portfolio company at least once every calendar year, and for Main Street's investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street

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may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with its independent financial advisory services firm in arriving at Main Street's determination of fair value on its investments in a total of 15 LMM portfolio companies for the three months ended March 31, 2015, representing approximately 23% of the total LMM portfolio at fair value as of March 31, 2015, and on a total of 17 LMM portfolio companies for the three months ended March 31, 2014, representing approximately 29% of the total LMM portfolio at fair value as of March 31, 2014. Excluding investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of March 31, 2015 and 2014, as applicable, and investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, the percentage of the LMM portfolio reviewed by the independent financial advisory services firm for the three months ended March 31, 2015 and 2014 was 27% and 32% of the total LMM portfolio at fair value as of March 31, 2015 and 2014, respectively.

        For valuation purposes, all of Main Street's Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method.

        For valuation purposes, all of Main Street's Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

        For valuation purposes, all of Main Street's Other Portfolio investments are non-control investments. Main Street's Other Portfolio investments comprised approximately 3.4% and 3.8%, respectively, of Main Street's Investment Portfolio at fair value as of March 31, 2015 and December 31, 2014. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of its investments using the NAV valuation method. For Other Portfolio debt investments, Main Street generally determines the fair value of these investments through obtaining third-party quotes or other independent pricing to the extent that these inputs are available and appropriate to determine fair value. For Other Portfolio debt investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method.

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        For valuation purposes, Main Street's investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity's historical and projected financial results, as well as its size, marketability and performance relative to the population of market multiples. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers the value associated with Main Street's ability to control the capital structure of the company, as well as the timing of a potential exit.

        Due to the inherent uncertainty in the valuation process, Main Street's determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

        Main Street uses a standard internal portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

        The Board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. Main Street believes its Investment Portfolio as of March 31, 2015 and December 31, 2014 approximates fair value as of those dates based on the markets in which Main Street operates and other conditions in existence on those reporting dates.

2.     Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street with the oversight, review and approval by Main Street's Board of Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ significantly from the values that would have been determined had a readily available market for the investments existed, and it is reasonably possible that the differences could be material.

3.     Cash and Cash Equivalents

        Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

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        At March 31, 2015, cash balances totaling $19.7 million exceeded FDIC insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large, established, high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

4.     Marketable Securities and Idle Funds Investments

        Marketable securities and idle funds investments include intermediate-term secured debt investments, independently rated debt investments and publicly traded debt and equity investments. See the consolidated schedule of investments for more information on Marketable securities and idle funds investments.

5.     Interest, Dividend and Fee Income (Structuring and Advisory Services)

        Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street's valuation policy, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is fully impaired, sold or written off, Main Street removes it from non-accrual status.

        Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2015 and 2014, (i) approximately 2.2% and 5.4%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0% and 1.2%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

        As of March 31, 2015, Main Street's total Investment Portfolio had five investments with positive fair value on non-accrual status, which comprised approximately 1.2% of its fair value and 3.9% of its cost, and no fully impaired investments. As of December 31, 2014, Main Street's total Investment

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Portfolio had five investments with positive fair value on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% of its cost, and no fully impaired investments.

        Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into interest income over the life of the financing.

        A presentation of the investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

 
  Three Months Ended
March 31,
 
 
  2015   2014  
 
  (dollars in thousands)
 

Interest, fee and dividend income:

             

Interest income

  $ 30,067   $ 25,734  

Dividend income

    5,136     4,044  

Fee income

    1,602     791  

Total interest, fee and dividend income

  $ 36,805   $ 30,569  

6.     Deferred Financing Costs

        Deferred financing costs include SBIC debenture commitment fees and SBIC debenture leverage fees on the SBIC debentures which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.11.). These fees are approximately 3.4% of the total commitment and draw amounts, as applicable. These deferred financing costs have been capitalized and are being amortized into interest expense over the ten year term of each debenture agreement.

        Deferred financing costs also include commitment fees and other costs related to Main Street's multi-year investment credit facility (the "Credit Facility", as discussed further in Note F) and its notes (as discussed further in Note G). These costs have been capitalized and are amortized into interest expense over the term of the individual instrument.

7.     Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value

        Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into interest income based on the effective interest method over the life of the financing.

        In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants ("nominal cost equity") that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the

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debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

        Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

        To maintain RIC tax treatment (as discussed below in Note B.9.), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the three months ended March 31, 2015 and 2014, approximately 2.8% and 4.0%, respectively, of Main Street's total investment income was attributable to interest income for the accretion of discounts associated with debt investments, net of any premium reduction.

8.     Share-Based Compensation

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

9.     Income Taxes

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its investment company taxable income to qualify for pass-through tax treatment and maintain its RIC status. As part of maintaining RIC status, undistributed taxable income (subject to a 4% U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared prior to the filing of the U.S federal income tax return for the applicable fiscal year.

        The Taxable Subsidiaries hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of

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their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

        As previously discussed (see above in Note A.2.), MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

        The Taxable Subsidiaries and MSCP use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.   Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

        Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net change in unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.   Fair Value of Financial Instruments

        Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short term nature of these instruments. Marketable securities and idle funds investments may include investments in certificates of deposit, U.S. government agency securities, independently rated debt investments, diversified bond funds and publicly traded debt and equity investments and the fair value determination for these investments under the provisions of ASC 820 generally consists of Level 1 and 2 observable inputs, similar in nature to those discussed further in Note C.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As part of Main Street's acquisition of the majority of the equity interests of MSC II in January 2010 (the "MSC II Acquisition"), Main Street elected the fair value option under ASC 825, Financial Instruments ("ASC 825") relating to accounting for debt obligations at their fair value, for the MSC II SBIC debentures acquired (the "Acquired Debentures") as part of the acquisition accounting related to the MSC II Acquisition and values those obligations as discussed further in Note C. In order to provide for a more consistent basis of presentation, Main Street has continued to elect the fair value option for SBIC debentures issued by MSC II subsequent to the MSC II Acquisition. When the fair value option is elected for a given SBIC debenture, the deferred loan costs associated with the debenture are fully expensed in the current period to "Net Change in Unrealized Appreciation (Depreciation)—SBIC debentures" as part of the fair value adjustment. Interest incurred in connection with SBIC debentures which are valued at fair value is included in interest expense.

12.   Earnings per Share

        Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street's equity compensation plans are participating securities and are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.   Recently Issued or Adopted Accounting Standards

        In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, the new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. Main Street is currently evaluating the impact the adoption of this new accounting standard will have on its financial statements.

        In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is currently being evaluated.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its financial statements upon adoption.

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION

        ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

        In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

        Investments recorded on Main Street's balance sheet are categorized based on the inputs to the valuation techniques as follows:

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Main Street conducts reviews of fair value hierarchy classifications on a quarterly basis. During the classification process, Main Street may determine that it is appropriate to transfer investments between fair value hierarchy Levels. These transfers occur when Main Street has concluded that it is appropriate for the classification of an individual asset to be changed due to a change in the factors used to determine the selection of the Level. Any such changes are deemed to be effective during the quarter in which the transfer occurs.

        As of March 31, 2015 and December 31, 2014, all except for one of Main Street's LMM portfolio investments consisted of illiquid securities issued by private companies. The remaining investment was a publicly traded equity security. As a result, the fair value determination for the LMM portfolio investments primarily consisted of unobservable inputs. The fair value determination for the publicly traded equity security consisted of observable inputs in non-active markets for which sufficient observable inputs were available to determine the fair value. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of March 31, 2015 and December 31, 2014, except for the one publicly traded equity security which was categorized as Level 2.

        As of March 31, 2015 and December 31, 2014, Main Street's Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Middle Market portfolio investments were categorized as Level 3 as of March 31, 2015 and December 31, 2014.

        As of March 31, 2015 and December 31, 2014, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of March 31, 2015 and December 31, 2014.

        As of March 31, 2015 and December 31, 2014, Main Street's Other Portfolio investments consisted of illiquid securities issued by private companies. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street's Other Portfolio investments were categorized as Level 3 as of March 31, 2015 and December 31, 2014.

        As of March 31, 2015 and December 31, 2014, Main Street's Marketable securities and idle funds investments consisted primarily of investments in publicly traded debt and equity investments. The fair value determination for these investments consisted of a combination of observable inputs in active markets for which sufficient observable inputs were available to determine the fair value of these

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

investments. As a result, all of Main Street's Marketable securities and idle funds investments were categorized as Level 1 as of March 31, 2015 and December 31, 2014.

        The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

        The significant unobservable inputs used in the fair value measurement of Main Street's LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital ("WACC"). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street's LMM, Middle Market, Private Loan and Other Portfolio debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (described in Note B.1.—Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

        The following table provides a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of March 31, 2015:

Type of Investment
  Fair Value
as of
March 31,
2015
(in thousands)
  Valuation Technique   Significant Unobservable Inputs   Range(3)   Weighted
Average(3)
 

Equity investments

  $ 446,984   Discounted cash flow   Weighted average cost of capital   11.5% - 23.7%     14.2%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.0x - 7.3x(2)     6.3x  

Debt investments

  $ 607,731   Discounted cash flow   Risk adjusted discount factor   8.0% - 15.5%(2)     11.9%  

            Expected principal recovery percentage   42.0% - 100.0%     99.5%  

Debt investments

  $ 675,778   Market approach   Third party quote   53.4 - 103.5        

Total Level 3 investments

  $ 1,730,493                    

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 6.0% - 25.3%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

        The following table provides a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of December 31, 2014:

Type of Investment
  Fair Value
as of
December 31,
2014
(in thousands)
  Valuation Technique   Significant Unobservable Inputs   Range(3)   Weighted
Average(3)
 

Equity investments

  $ 407,569   Discounted cash flow   Weighted average cost of capital   11.4% - 23.4%     13.9%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.0x - 7.8x(2)     6.4x  

Debt investments

  $ 557,604   Discounted cash flow   Risk adjusted discount factor   7.5% - 15.8%(2)     12.1%  

            Expected principal recovery percentage   42.0% - 100.0%     99.3%  

Debt investments

  $ 589,677   Market approach   Third party quote   60.1 - 102.3        

Total Level 3 investments

  $ 1,554,850                    

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 6.0% - 32.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

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(Unaudited)

        The following table provides a summary of changes in fair value of Main Street's Level 3 portfolio investments for the three months ended March 31, 2015 (amounts in thousands). Net unrealized appreciation (depreciation) is included in the Net change in unrealized appreciation (depreciation)—portfolio investments on the consolidated statements of operations.

Type of
Investment
  Fair Value
as of
December 31,
2014
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
March 31,
2015
 

Debt

    1,147,281         (145,175 )   283,801     3,796     (1,512 )   (4,682 )   1,283,509  

Equity

    391,933         (5,950 )   24,030     354     15,347     4,435     430,149  

Equity Warrant

    15,636         (449 )   1,400     449     (201 )       16,835  

    1,554,850         (151,574 )   309,231     4,599     13,634     (247 )   1,730,493  

(1)
Includes the impact of non-cash conversions.

        The following table provides a summary of changes in fair value of Main Street's Level 3 portfolio investments for the three months ended March 31, 2014 (amounts in thousands). All transfers that occurred between fair value hierarchy levels during the three months ended March 31, 2014 were transfers out of Level 2 into Level 3. Net unrealized appreciation (depreciation) is included in the Net change in unrealized appreciation (depreciation)—portfolio investments on the consolidated statements of operations.

Type of
Investment
  Fair Value
as of
December 31,
2013
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments(1)
  New
Investments(1)
  Net
Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
March 31,
2014
 

Debt

    897,568     55,102     (103,179 )   128,183     184     (2,459 )   17     975,416  

Equity

    270,764         (393 )   3,972     4     11,098         285,445  

Equity Warrant

    36,558             297         (1,776 )   (17 )   35,062  

    1,204,890     55,102     (103,572 )   132,452     188     6,863         1,295,923  

(1)
Includes the impact of non-cash conversions.

        As of March 31, 2015 and December 31, 2014, the fair value determination for the SBIC debentures recorded at fair value primarily consisted of unobservable inputs. As a result, the SBIC debentures which are recorded at fair value were categorized as Level 3. Main Street determines the fair value of these instruments primarily using a Yield-to-Maturity approach that analyzes the discounted cash flows of interest and principal for each SBIC debenture recorded at fair value based on estimated market interest rates for debt instruments of similar structure, terms, and maturity. Main Street's estimate of the expected repayment date of principal for each SBIC debenture recorded at fair value is the legal maturity date of the instrument.

        The significant unobservable inputs used in the fair value measurement of Main Street's SBIC debentures recorded at fair value are the estimated market interest rates used to fair value each debenture using the yield valuation technique described above. Significant increases (decreases) in the Yield-to-Maturity valuation inputs in isolation would result in a significantly lower (higher) fair value measurement.

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(Unaudited)

        The following table provides a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of March 31, 2015 (amounts in thousands):

Type of Instrument
  Fair Value as of
March 31, 2015
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted
Average
 

SBIC debentures

  $ 73,674   Discounted cash flow   Estimated market interest rates   4.6% - 5.7%     5.1%  

        The following table provides a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of December 31, 2014 (amounts in thousands):

Type of Instrument
  Fair Value as of
December 31, 2014
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted
Average
 

SBIC debentures

  $ 72,981   Discounted cash flow   Estimated market interest rates   4.6% - 6.0%     5.3%  

        The following table provides a summary of changes for the Level 3 SBIC debentures recorded at fair value for the three months ended March 31, 2015 (amounts in thousands):

Type of Instrument
  Fair Value as of
December 31, 2014
  Repayments   New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value as of
March 31, 2015
 

SBIC debentures at fair value

  $ 72,981   $   $   $ 693   $ 73,674  

        The following table provides a summary of changes for the Level 3 SBIC debentures recorded at fair value for the three months ended March 31, 2014 (amounts in thousands):

Type of Instrument
  Fair Value as of
December 31, 2013
  Repayments   New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value as of
March 31, 2014
 

SBIC Debentures at fair value

  $ 62,050   $   $   $ 1,189   $ 63,239  

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(Unaudited)

        At March 31, 2015 and December 31, 2014, Main Street's investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At March 31, 2015
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable Inputs
(Level 3)
 

LMM portfolio investments

  $ 778,300   $   $ 6,830   $ 771,470  

Middle Market portfolio investments

    627,762             627,762  

Private Loan portfolio investments

    247,742             247,742  

Other Portfolio investments

    58,679             58,679  

External Investment Manager

    24,840             24,840  

Total portfolio investments

    1,737,323         6,830     1,730,493  

Marketable securities and idle funds investments

    9,948     9,948          

Total investments

  $ 1,747,271   $ 9,948   $ 6,830   $ 1,730,493  

SBIC debentures at fair value

  $ 73,674   $   $   $ 73,674  

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2014
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable Inputs
(Level 3)
 

LMM portfolio investments

  $ 733,191   $   $ 8,480   $ 724,711  

Middle Market portfolio investments

    542,688             542,688  

Private Loan portfolio investments

    213,015             213,015  

Other Portfolio investments

    58,856             58,856  

External Investment Manager

    15,580             15,580  

Total portfolio investments

    1,563,330         8,480     1,554,850  

Marketable securities and idle funds investments

    9,067     9,067          

Total investments

  $ 1,572,397   $ 9,067   $ 8,480   $ 1,554,850  

SBIC debentures at fair value

  $ 72,981   $   $   $ 72,981  

Investment Portfolio Composition

        Main Street's lower middle market ("LMM") portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street's LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on

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(Unaudited)

the assets of the portfolio company, primarily bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

        Main Street's middle market ("Middle Market") portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in Main Street's LMM portfolio. Main Street's Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $15 million. Main Street's Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Main Street's Private Loan ("Private Loan") portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in its LMM portfolio or its Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Main Street's Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Main Street's other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Main Street's external asset management business is conducted through its External Investment Manager. Main Street has entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, Main Street provides management and other services to the External Investment Manager, as well as access to Main Street's employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, Main Street began charging the External Investment Manager the cost for these services. Main Street's total expenses for the three months ended March 31, 2015 and 2014 are net of expenses of $0.8 million and $0.3 million, respectively, charged to the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed.

        Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three months ended March 31, 2015 and 2014, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

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(Unaudited)

        The following tables provide a summary of Main Street's investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of March 31, 2015  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    68     89     37  

Fair value

  $ 778.3   $ 627.8   $ 247.7  

Cost

  $ 640.7   $ 642.8   $ 261.8  

% of total investments at cost—debt

    70.3%     99.1%     96.1%  

% of total investments at cost—equity

    29.7%     0.9%     3.9%  

% of debt investments at cost secured by first priority lien

    89.8%     85.2%     87.2%  

Weighted-average annual effective yield(b)

    13.1%     7.9%     9.9%  

Average EBITDA(c)

  $ 5.4   $ 95.8   $ 12.1  

(a)
At March 31, 2015, Main Street had equity ownership in approximately 94% of its LMM portfolio companies and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2015, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted average for the Middle Market and Private Loan portfolios. These calculations exclude three LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies.

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(Unaudited)


 
  As of December 31, 2014  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    66     86     31  

Fair value

  $ 733.2   $ 542.7   $ 213.0  

Cost

  $ 599.4   $ 561.8   $ 224.0  

% of total investments at cost—debt

    71.5%     99.8%     95.6%  

% of total investments at cost—equity

    28.5%     0.2%     4.4%  

% of debt investments at cost secured by first priority lien

    89.6%     85.1%     87.8%  

Weighted-average annual effective yield(b)

    13.2%     7.8%     10.1%  

Average EBITDA(c)

  $ 5.0   $ 77.2   $ 18.1  

(a)
At December 31, 2014, Main Street had equity ownership in approximately 95% of its LMM portfolio companies and the average fully diluted equity ownership in those portfolio companies was approximately 35%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted average for the Middle Market and Private Loan portfolios. These calculations exclude two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies.

        As of March 31, 2015, Main Street had Other Portfolio investments in six companies, collectively totaling approximately $58.7 million in fair value and approximately $55.6 million in cost basis and which comprised approximately 3.4% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, Main Street had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of Main Street's Investment Portfolio at fair value.

        As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of March 31, 2015, there was no cost basis in this investment and the investment had a fair value of $24.8 million, which comprised 1.4% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% of Main Street's Investment Portfolio at fair value.

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2015 and

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31, 2015   December 31, 2014  

First lien debt

    75.6%     75.7%  

Equity

    11.9%     11.6%  

Second lien debt

    10.0%     10.0%  

Equity warrants

    1.4%     1.5%  

Other

    1.1%     1.2%  

    100.0%     100.0%  

 

Fair Value:
  March 31, 2015   December 31, 2014  

First lien debt

    67.4%     66.9%  

Equity

    21.4%     21.9%  

Second lien debt

    9.3%     9.2%  

Equity warrants

    1.0%     1.0%  

Other

    0.9%     1.0%  

    100.0%     100.0%  

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  March 31, 2015   December 31, 2014  

Southwest

    31.6%     29.6%  

Northeast

    21.1%     19.9%  

West

    16.9%     18.7%  

Southeast

    14.2%     15.4%  

Midwest

    13.7%     13.5%  

Canada

    0.6%     0.7%  

Other Non-United States

    1.9%     2.2%  

    100.0%     100.0%  

 

Fair Value:
  March 31, 2015   December 31, 2014  

Southwest

    35.7%     33.7%  

Northeast

    19.8%     18.3%  

West

    18.0%     20.4%  

Midwest

    12.7%     12.7%  

Southeast

    11.5%     12.4%  

Canada

    0.6%     0.6%  

Other Non-United States

    1.7%     1.9%  

    100.0%     100.0%  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        Main Street's LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by industry at cost and fair value as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31, 2015   December 31, 2014  

Media

    7.5%     8.3%  

Energy Equipment & Services

    7.4%     8.3%  

IT Services

    6.7%     5.9%  

Machinery

    6.0%     6.5%  

Hotels, Restaurants & Leisure

    5.6%     5.6%  

Software

    5.5%     5.4%  

Specialty Retail

    4.8%     4.7%  

Construction & Engineering

    4.7%     5.3%  

Health Care Providers & Services

    4.6%     4.9%  

Internet Software & Services

    3.7%     1.9%  

Diversified Telecommunication Services

    3.6%     4.0%  

Diversified Consumer Services

    3.2%     2.9%  

Electronic Equipment, Instruments & Components

    2.4%     3.0%  

Oil, Gas & Consumable Fuels

    2.4%     2.5%  

Pharmaceuticals

    2.4%     1.8%  

Food Products

    2.2%     1.8%  

Auto Components

    2.0%     2.3%  

Building Products

    2.0%     1.1%  

Health Care Equipment & Supplies

    1.9%     2.1%  

Road & Rail

    1.7%     1.8%  

Aerospace & Defense

    1.3%     1.2%  

Textiles, Apparel & Luxury Goods

    1.2%     1.3%  

Chemicals

    1.2%     1.3%  

Diversified Financial Services

    1.2%     1.0%  

Air Freight & Logistics

    1.2%     0.9%  

Leisure Equipment & Products

    1.2%     0.5%  

Trading Companies & Distributors

    1.1%     1.2%  

Professional Services

    1.1%     1.1%  

Commercial Services & Supplies

    1.0%     1.0%  

Distributors

    0.9%     1.0%  

Other(1)

    8.3%     9.4%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Fair Value:
  March 31, 2015   December 31, 2014  

Machinery

    7.4%     8.1%  

Media

    6.8%     7.7%  

Energy Equipment & Services

    6.5%     7.9%  

IT Services

    6.2%     5.4%  

Software

    5.7%     5.5%  

Hotels, Restaurants & Leisure

    5.6%     5.6%  

Construction & Engineering

    5.1%     5.5%  

Specialty Retail

    5.0%     4.9%  

Diversified Consumer Services

    4.7%     4.4%  

Health Care Providers & Services

    4.2%     4.4%  

Internet Software & Services

    4.0%     2.3%  

Diversified Telecommunication Services

    3.3%     3.8%  

Auto Components

    2.3%     2.5%  

Road & Rail

    2.3%     2.3%  

Pharmaceuticals

    2.3%     1.7%  

Food Products

    2.1%     1.6%  

Electronic Equipment, Instruments & Components

    2.0%     2.5%  

Oil, Gas & Consumable Fuels

    2.0%     1.9%  

Health Care Equipment & Supplies

    1.8%     1.9%  

Building Products

    1.7%     0.9%  

Air Freight & Logistics

    1.4%     0.8%  

Aerospace & Defense

    1.2%     1.1%  

Diversified Financial Services

    1.2%     1.0%  

Textiles, Apparel & Luxury Goods

    1.1%     1.2%  

Chemicals

    1.1%     1.2%  

Leisure Equipment & Products

    1.1%     0.4%  

Trading Companies & Distributors

    1.0%     1.1%  

Commercial Services & Supplies

    1.0%     1.0%  

Professional Services

    1.0%     1.0%  

Paper & Forest Products

    0.9%     1.2%  

Distributors

    0.9%     1.0%  

Other(1)

    7.1%     8.2%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

        At March 31, 2015 and December 31, 2014, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE D—EXTERNAL INVESTMENT MANAGER

        As discussed further above in Note A.1., the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for parties outside of MSCC and its consolidated subsidiaries or their portfolio companies.

        During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income Fund, Inc. ("HMS Income"), a non-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the three months ended March 31, 2015 and 2014, the External Investment Manager earned $1.4 million and $0.3 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Street and approved, in good faith, by Main Street's Board of Directors. Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street's consolidated statement of operations in "Net Change in Unrealized Appreciation (Depreciation)—Portfolio investments".

        The External Investment Manager has elected, for tax purposes, to be treated as a taxable entity, is not consolidated with Main Street for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The External Investment Manager has elected to be treated as a taxable entity to enable it to receive fee income and to allow MSCC to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

        Main Street provides services to the External Investment Manager and charges the expenses necessary to perform these services to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the three months ended March 31, 2015 and 2014, Main

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Street charged $0.8 million and $0.3 million of total expenses, respectively, to the External Investment Manager.

        Summarized financial information from the separate financial statements of the External Investment Manager as of March 31, 2015 and December 31, 2014 and for the three months ended March 31, 2015 and 2014 is as follows:

 
  As of
March 31,
  As of
December 31,
 
 
  2015   2014  
 
  (in thousands)
 

Cash

  $ 293   $ 130  

Accounts receivable—HMS Income

    1,433     1,120  

Total assets

  $ 1,726   $ 1,250  

Accounts Payable to MSCC and subsidiaries

  $ 827   $ 699  

Dividend Payable to MSCC

    399     253  

Taxes Payable

    500     298  

Equity

         

Total liabilities and equity

  $ 1,726   $ 1,250  

 

 
  Three Months
Ended
March 31,
  Three Months
Ended
March 31,
 
 
  2015   2014  
 
  (in thousands)
  (in thousands)
 

Management fee income

  $ 1,428   $ 291  

Expenses allocated from MSCC or its subsidiaries:

             

Salaries, share-based compensation and other personnel costs

    (567 )   (248 )

Other G&A expenses

    (260 )   (43 )

Total allocated expenses

    (827 )   (291 )

Pre-tax income

    601      

Tax expense

    (202 )    

Net income

  $ 399   $  

NOTE E—SBIC DEBENTURES

        SBIC debentures payable were $225.0 million at both March 31, 2015 and December 31, 2014, respectively. SBIC debentures provide for interest to be paid semi-annually, with principal due at the applicable 10-year maturity date of each debenture. The weighted-average annual interest rate on the SBIC debentures was 4.2%. as of both March 31, 2015 and December 31, 2014, respectively. The first principal maturity due under the existing SBIC debentures is in 2017, and the remaining weighted-average duration as of March 31, 2015 was approximately 6.3 years. For the three months ended March 31, 2015 and 2014, Main Street recognized interest expense attributable to the SBIC debentures of $2.5 million and $2.0 million, respectively. Main Street has incurred upfront leverage and other miscellaneous fees of approximately 3.4% of the debenture principal amount. In accordance with SBA regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA. The Funds are subject to annual compliance examinations by the SBA. There have been no historical findings resulting from these examinations.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As of March 31, 2015, the recorded value of the SBIC debentures was $223.5 million which consisted of (i) $73.7 million recorded at fair value, or $1.5 million less than the $75.2 million face value of the SBIC debentures held in MSC II, and (ii) $149.8 million reported at face value and held in MSMF. As of March 31, 2015, if Main Street had adopted the fair value option under ASC 825 for all of its SBIC debentures, Main Street estimates the fair value of its SBIC debentures would be approximately $209.4 million, or $15.6 million less than the $225.0 million face value of the SBIC debentures.

NOTE F—CREDIT FACILITY

        Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. The Credit Facility includes total commitments of $572.5 million from a diversified group of fifteen lenders and matures in September 2019. The Credit Facility also contains an accordion feature which allows Main Street to increase the total commitments under the facility up to $650.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to Main Street's election, on a per annum basis equal to (i) the applicable LIBOR rate (0.17% as of March 31, 2015) plus 2.00%, as long as Main Street maintains an investment grade rating (or 2.25% if Main Street does not maintain an investment grade rating) or (ii) the applicable base rate (Prime Rate of 3.25% as of March 31, 2015) plus 1.00%, as long as Main Street maintains an investment grade rating (or 1.25% if Main Street does not maintain an investment grade rating). Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership and assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2019, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.

        At March 31, 2015, Main Street had $164.0 million in borrowings outstanding under the Credit Facility. Main Street recognized interest expense related to the Credit Facility, including unused commitment fees and amortization of deferred loan costs, of $1.7 million and $1.8 million for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, the interest rate on the Credit Facility was 2.2%, and Main Street was in compliance with all financial covenants of the Credit Facility.

NOTE G—NOTES

        In April 2013, Main Street issued $92.0 million, including the underwriters full exercise of their option to purchase additional principal amounts to cover over-allotments, in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). The 6.125% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at Main Street's option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to Main Street from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable by Main Street, were approximately $89.0 million. Main Street has listed the 6.125% Notes on the New York Stock Exchange under the trading symbol "MSCA". Main Street may from time to time repurchase the 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2015, the outstanding balance of the 6.125% Notes was $90.8 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of deferred loan costs, of $1.5 million for each of the three months ended March 31, 2015 and 2014, respectively.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 6.125% Notes and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

        In November 2014, Main Street issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes") at an issue price of 99.53%. The 4.50% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes mature on December 1, 2019, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semi-annually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable by us, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million. Main Street recognized interest expense related to the 4.50% Notes, including amortization of deferred loan costs, of $2.1 million for the three months ended March 31, 2015.

        The indenture governing the 4.50% Notes (the "4.50% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes and the Trustee if Main Street ceases to be subject to

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture.

NOTE H—FINANCIAL HIGHLIGHTS

 
  Three Months Ended
March 31,
 
 
  2015   2014  

Per Share Data:

             

NAV at the beginning of the period

  $ 20.85   $ 19.89  

Net investment income(1)

    0.51     0.52  

Net realized gain (loss)(1)(2)

    (0.05 )   0.04  

Net change in unrealized appreciation (depreciation)(1)(2)

    0.30     0.17  

Income tax provision(1)(2)

    0.01     (0.05 )

Net increase in net assets resulting from operations(1)

    0.77     0.68  

Dividends paid to stockholders from net investment income

    (0.51 )   (0.50 )

Dividends paid to stockholders from realized gains/losses

         

Total dividends paid

    (0.51 )   (0.50 )

Accretive effect of public stock offerings (issuing shares above NAV per share)

    0.71      

Accretive effect of DRIP issuance (issuing shares above NAV per share)

    0.02     0.03  

Other(3)

    0.03     0.04  

NAV at the end of the period

  $ 21.87   $ 20.14  

Market value at the end of the period

  $ 30.90   $ 32.86  

Shares outstanding at the end of the period

    49,564,361     39,945,148  

(1)
Based on weighted average number of common shares outstanding for the period.

(2)
Net realized gains or losses, net change in unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.

(3)
Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2015   2014  
 
  (in thousands, except
percentages)

 

NAV at end of period

  $ 1,083,893   $ 804,407  

Average NAV

  $ 1,011,938   $ 798,470  

Average outstanding debt

  $ 722,820   $ 543,482  

Ratio of total expenses, including income tax expense, to average NAV(1)(2)

    1.32%     1.47%  

Ratio of operating expenses to average NAV(1)

    1.35%     1.26%  

Ratio of operating expenses, excluding interest expense, to average NAV(1)

    0.58%     0.60%  

Ratio of net investment income to average NAV(1)

    2.32%     2.60%  

Portfolio turnover ratio

    4.30%     8.21%  

Total investment return(3)

    7.49%     1.97%  

Total return based on change in NAV(4)

    3.77%     3.44%  

(1)
Total expenses are the sum of operating expenses and net income tax expense provision/benefit. Net income tax expense provision/benefit includes the accrual of net deferred tax expense provision/benefit on the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in net operating loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax expense provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

(2)
Not annualized.

(3)
Total investment return based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect sales load.

(4)
Total return based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value.

NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

        Main Street paid regular monthly dividends of $0.170 per share for each month of January through March 2015, totaling $23.0 million, or $0.510 per share for the three months ended March 31, 2015. The first quarter 2015 regular monthly dividends represent a 3% increase from the regular monthly dividends paid for the first quarter of 2014. During the first quarter 2015, Main Street declared and accrued a $0.175 per share regular monthly dividend that was paid in April 2015. For the three months ended March 31, 2014, Main Street paid total regular monthly dividends of $19.7 million, or $0.495 per share.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its investment company taxable income to qualify for pass-through tax treatment and maintain its RIC status. As part of maintaining RIC status, undistributed taxable income (subject to a 4% U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared prior to the filing of the U.S federal income tax return for the applicable fiscal year.

        The determination of the tax attributes for Main Street's distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital.

        Listed below is a reconciliation of "Net increase in net assets resulting from operations" to taxable income and to total distributions declared to common stockholders for the three months ended March 31, 2015 and 2014.

 
  Three Months Ended
March 31,
 
 
  2015   2014  
 
  (estimated, amounts in
thousands)

 

Net increase in net assets resulting from operations

  $ 35,424   $ 27,234  

Book tax difference share-based compensation expense

    1,090     853  

Net change in unrealized appreciation

    (13,762 )   (6,717 )

Income tax provision (benefit)

    (291 )   1,665  

Pre-tax book (income) loss not consolidated for tax purposes

    1,376     (470 )

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

    (601 )   (186 )

Estimated taxable income(1)

    23,236     22,379  

Taxable income earned in prior year and carried forward for distribution in current year

    38,638     37,046  

Taxable income earned prior to period end and carried forward for distribution next period

    (46,527 )   (46,259 )

Dividend payable as of period end and paid in the following period

    8,674     6,591  

Total distributions accrued or paid to common stockholders

  $ 24,021   $ 19,757  

(1)
Main Street's taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        The Taxable Subsidiaries hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

        As previously discussed (see above in Note A.2.), MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

        The income tax expense, or benefit, and the related tax assets and liabilities, generated by the Taxable Subsidiaries and MSCP, if any, are reflected in Main Street's consolidated financial statements. For the three months ended March 31, 2015, Main Street recognized a net income tax benefit of $0.3 million which principally consisted of a deferred tax benefit of $0.7 million, partially offset by $0.4 million of accruals for current U.S. federal income and excise taxes, state and other taxes. The deferred tax benefit is primarily the result of net unrealized depreciation on the portfolio investments held in the Taxable Subsidiaries. For the three months ended March 31, 2014, Main Street recognized a net income tax provision of $1.7 million which principally consisted of deferred taxes of $1.0 million, primarily as a result of net unrealized appreciation on the portfolio investments held in the Taxable Subsidiaries and other taxes of $0.7 million, which includes a $0.2 million accrual for excise tax on MSCC's estimated spillover taxable income and $0.5 million related to accruals for state and other taxes.

        The net deferred tax liability at March 31, 2015 and December 31, 2014 was $8.6 million and $9.2 million, respectively, primarily related to timing differences from net unrealized appreciation of portfolio investments held by the Taxable Subsidiaries, partially offset by net loss carryforwards (primarily resulting from historical realized losses on portfolio investments held by the Taxable Subsidiaries), basis differences of portfolio investments held by the Taxable Subsidiaries which are "pass-through" entities for tax purposes and excess deductions resulting from the restricted stock plans (see further discussion in Note L).

        In accordance with the realization requirements of ASC 718, Compensation—Stock Compensation, Main Street uses tax law ordering when determining when tax benefits related to equity compensation greater than equity compensation recognized for financial reporting should be realized. For the three months ended March 31, 2015, Main Street realized no increase to paid-in capital due to tax deductions related to equity compensation greater than equity compensation recognized for financial

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

reporting compared to $0.3 million for the corresponding period in 2014. Additional paid-in capital increases of $1.8 million will be recognized in future periods when such tax benefits are ultimately realized by reducing taxes payable.

NOTE J—COMMON STOCK

        During March 2015, Main Street completed a public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $127.8 million.

        During April 2014, Main Street completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, at a price to the public of $31.50 per share, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $139.7 million.

NOTE K—DIVIDEND REINVESTMENT PLAN ("DRIP")

        Main Street's DRIP provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, the company's stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on the valuation date determined for each dividend by Main Street's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street's DRIP is administered by its transfer agent on behalf of Main Street's record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street's DRIP but may provide a similar dividend reinvestment plan for their clients.

        For the three months ended March 31, 2015, $3.5 million of the total $23.0 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 116,330 newly issued shares and with the purchase of 3,131 shares of common stock in the open market. For the three months ended March 31, 2014, $3.2 million of the total $19.7 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 93,328 newly issued shares. The shares disclosed above relate only to Main Street's DRIP and exclude any activity related to broker-managed dividend reinvestment plans.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE L—SHARE-BASED COMPENSATION

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        Main Street's Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2008 Equity Incentive Plan. These shares generally vest over a four-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street's Board of Directors, net of shares forfeited, and the remaining shares of restricted stock available for issuance as of March 31, 2015.

Restricted stock authorized under the plan

    2,000,000  

Less net restricted stock (granted)/forfeited on:

       

July 1, 2008

    (245,645 )

July 1, 2009

    (98,993 )(1)

July 1, 2010

    (149,357 )

June 20, 2011

    (116,909 )(1)

June 20, 2012

    (130,196 )(1)

Quarter ended December 31, 2012

    (12,476 )

Quarter ended March 31, 2013

    (725 )(1)

Quarter ended June 30, 2013

    (236,852 )(1)

Quarter ended September 30, 2013

    (12,688 )(1)

Quarter ended December 31, 2013

    (61 )(1)

Quarter ended March 31, 2014

    (397 )

Quarter ended June 30, 2014

    (209,130 )(1)

Quarter ended September 30, 2014

    (13,570 )

Quarter ended March 31, 2015

    (683 )

Restricted stock available for issuance as of March 31, 2015

    772,318  

(1)
Shares indicated are net of forfeited shares.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As of March 31, 2015, the following table summarizes the restricted stock issued to Main Street's independent directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2008 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan

    200,000  

Less restricted stock granted on:

       

July 1, 2008

    (20,000 )

July 1, 2009

    (8,512 )

July 1, 2010

    (7,920 )

June 20, 2011

    (6,584 )

August 3, 2011

    (1,658 )

June 20, 2012

    (5,060 )

June 13, 2013

    (4,304 )

August 6, 2013

    (980 )

May 29, 2014

    (4,775 )

Restricted stock available for issuance as of March 31, 2015

    140,207  

        For the three months ended March 31, 2015 and 2014, Main Street recognized total share-based compensation expense of $1.3 million and $0.9 million, respectively, related to the restricted stock issued to Main Street employees and independent directors.

        As of March 31, 2015, there was $9.7 million of total unrecognized compensation expense related to Main Street's non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 2.7 years as of March 31, 2015.

NOTE M—COMMITMENTS AND CONTINGENCIES

        At March 31, 2015, Main Street had a total of $153.1 million in outstanding commitments comprised of (i) 30 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) six investments with capital commitments that had not been fully called.

        Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street's financial condition or results of operations in any future reporting period.

NOTE N—RELATED PARTY TRANSACTIONS

        As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street's Investment Portfolio. At March 31, 2015, Main Street had a receivable of $1.2 million due from the External Investment

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Manager which included approximately $0.8 million related to operating expenses incurred by the MSCC or its subsidiaries required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.4 million.

        In June 2013, Main Street adopted a deferred compensation plan for the non-employee members of its board of directors, which allows the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of Main Street common stock within 90 days following the termination of a participant's service as a director. As of March 31, 2015, $0.6 million of directors' fees had been deferred under this plan. These deferred fees represented 18,672 shares of Main Street common shares. These shares will not be issued or included as outstanding on the consolidated statement of changes in net assets until each applicable participant's end of service as a director, but are included in operating expenses and weighted-average shares outstanding on Main Street's consolidated statement of operations as earned.

NOTE O—SUBSEQUENT EVENTS

        In April 2015, Main Street declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2015. The semi-annual supplemental dividend is unchanged from the semi-annual supplemental dividend paid in June 2014. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the second quarter of 2015 of $0.175 per share for each of April, May and June 2015.

        In April 2015, Main Street fully exited its investment in California Healthcare Medical Billing, Inc. ("CHMB"), a provider of outsourced medical billing, revenue cycle management, practice management and electronic health record (EHR) solutions to physicians, clinics, hospitals and health systems throughout the United States. Main Street made its initial investment in CHMB in October 2008, and realized a gain of approximately $3.3 million on the redemption of its equity and warrant positions by CHMB.

        In April 2015, Main Street amended the Credit Facility to increase total commitments from $572.5 million to $597.5 million and increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million. The $25.0 million increase in total commitments was the result of a commitment increase by one of the existing lenders in the facility. The recent increase in total commitments was executed under the accordion feature of the Credit Facility which allows for an increase in total commitments under the facility up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        In May 2015, Main Street declared regular monthly dividends of $0.175 per share for each month of July, August and September of 2015. These regular monthly dividends equal a total of $0.525 per share for the third quarter of 2015 and represent a 6.1% increase from the regular monthly dividends declared for the third quarter of 2014. Including the regular monthly dividends declared for the third quarter of 2015 and the semi-annual supplemental dividend payable in June 2015, Main Street will have paid $15.065 per share in cumulative dividends since its October 2007 initial public offering.

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The information in this section contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the Securities and Exchange Commission (the "SEC") on February 27, 2015 for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with the consolidated financial statements and related notes and other financial information included in the Annual Report on Form 10-K for the year ended December 31, 2014.

ORGANIZATION

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provide "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including, but not limited to, Main Street Mezzanine Fund, LP ("MSMF") and Main Street Capital II, LP ("MSC II" and, together with MSMF, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees but instead incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since the External Investment Manager conducts all of its investment management activities for parties outside of MSCC and its consolidated subsidiaries or their portfolio companies, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes. The External Investment Manager is also a direct wholly owned subsidiary that has elected to

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be a taxable entity. The Taxable Subsidiaries and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

OVERVIEW

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our private loan ("Private Loan") investments are made in businesses that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. The structure, terms and conditions for these Private Loan investments are typically consistent with the structure, terms and conditions for the investments made in our LMM portfolio or Middle Market portfolio.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the three months ended March 31, 2015 and 2014 are net of expenses of $0.8 million and $0.3 million, respectively, charged to the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed.

        We seek to fill the financing gap for LMM businesses, which, historically, have had more limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original

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investment date. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

        In addition to our LMM investment strategy, we pursue investments in Middle Market companies. Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments primarily consist of investments in interest bearing debt securities in companies that are consistent with the size of the companies included in our LMM portfolio or our Middle Market portfolio, but are investments that have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        The following tables provide a summary of our investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of March 31, 2015  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    68     89     37  

Fair value

  $ 778.3   $ 627.8   $ 247.7  

Cost

  $ 640.7   $ 642.8   $ 261.8  

% of total investments at cost—debt

    70.3%     99.1%     96.1%  

% of total investments at cost—equity

    29.7%     0.9%     3.9%  

% of debt investments at cost secured by first priority lien

    89.8%     85.2%     87.2%  

Weighted-average annual effective yield(b)

    13.1%     7.9%     9.9%  

Average EBITDA(c)

  $ 5.4   $ 95.8   $ 12.1  

(a)
At March 31, 2015, we had equity ownership in approximately 94% of our LMM portfolio companies and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2015, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude three LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio

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  As of December 31, 2014  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    66     86     31  

Fair value

  $ 733.2   $ 542.7   $ 213.0  

Cost

  $ 599.4   $ 561.8   $ 224.0  

% of total investments at cost—debt

    71.5%     99.8%     95.6%  

% of total investments at cost—equity

    28.5%     0.2%     4.4%  

% of debt investments at cost secured by first priority lien

    89.6%     85.1%     87.8%  

Weighted-average annual effective yield(b)

    13.2%     7.8%     10.1%  

Average EBITDA(c)

  $ 5.0   $ 77.2   $ 18.1  

(a)
At December 31, 2014, we had equity ownership in approximately 95% of our LMM portfolio companies and our average fully diluted equity ownership in those portfolio companies was approximately 35%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted average for the Middle Market and Private Loan portfolios. These calculations exclude two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies.

        As of March 31, 2015, we had Other Portfolio investments in six companies, collectively totaling approximately $58.7 million in fair value and approximately $55.6 million in cost basis and which comprised approximately 3.4% of our Investment Portfolio (as defined in "—Critical Accounting Policies—Basis of Presentation" below). As of December 31, 2014, we had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of our Investment Portfolio at fair value.

        As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of March 31, 2015, there was no cost basis in this investment and the investment had a fair value of $24.8 million, which comprised 1.4% of our Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% of our Investment Portfolio at fair value.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment

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income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead incurs the operating costs associated with employing investment and portfolio management professionals itself. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio. For the three months ended March 31, 2015, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% on an annualized basis which is consistent with the ratio on an annualized basis for the three months ended March 31, 2014 and for the year ended December 31, 2014.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income Fund, Inc. ("HMS Income"), a non-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the three months ended March 31, 2015 and 2014, the External Investment Manager earned $1.4 million and $0.3 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income.

CRITICAL ACCOUNTING POLICIES

        Our financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, our

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consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities and idle funds investments". "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on our consolidated balance sheets and consolidated schedules of investments due to the nature of such investments. Our results of operations for the three months ended March 31, 2015 and 2014, cash flows for the three months ended March 31, 2015 and 2014, and financial position as of March 31, 2015 and December 31, 2014, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

        Our accompanying unaudited consolidated financial statements are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the operating results to be expected for the full year. Also, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2014. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

        Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "ASC") 946, Financial Services—Investment Companies ("ASC 946"), we are precluded from consolidating other entities in which we have equity investments, including those in which we have a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if we hold a controlling interest in an operating company that provides all or substantially all of its services directly to us or to one of our portfolio companies. Accordingly, as noted above, our consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Our consolidated financial statements also include the financial position and operating results for our wholly owned operating subsidiary, Main Street Capital Partners, LLC, ("MSCP"), as the wholly owned subsidiary provides all of its services directly or indirectly to Main Street or our portfolio companies. We have determined that all of our portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, our Investment Portfolio is carried on the consolidated balance sheet at fair value with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

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        The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. As of March 31, 2015 and December 31, 2014, our Investment Portfolio valued at fair value represented approximately 95% and 92% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        Our portfolio strategy calls for us to invest primarily in illiquid debt and equity securities issued by private, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. We categorize some of our investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities issued by companies that are consistent in size with either the LMM companies or Middle Market companies, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. The structure, terms and conditions for these Private Loan investments are typically consistent with the structure, terms and conditions for the investments made in our LMM portfolio or Middle Market portfolio. Our portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for our LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Our portfolio investments may be subject to restrictions on resale.

        LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio.

        For LMM portfolio investments, we generally review external events, including private mergers, sales and acquisitions involving comparable companies, and include these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for our LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for our LMM debt investments. For Middle Market portfolio investments, we primarily use quoted prices in the valuation process. We determine the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which we have determined that third-party quotes or other independent pricing are not available or appropriate, we generally estimate the fair value based on the assumptions that we believe hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For our Other Portfolio equity investments, we generally calculate the fair value of the investment primarily based on the net asset value ("NAV") of the fund. All of the valuation approaches for our portfolio investments estimate the value of the investment as if we were to sell, or exit, the investment as of the measurement date.

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        These valuation approaches consider the value associated with our ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, "control" portfolio investments are composed of debt and equity securities in companies for which we have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors. For valuation purposes, "non-control" portfolio investments are generally composed of debt and equity securities in companies for which we do not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors.

        Under the Waterfall valuation method, we estimate the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then perform a waterfall calculation by using the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, private companies are bought and sold based on multiples of EBITDA, cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, we analyze various factors including the portfolio company's historical and projected financial results. The operating results of a portfolio company may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in our determination. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, we also analyze the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, we allocate the enterprise value to investments in order of the legal priority of the various components of the portfolio company's capital structure. In applying the Waterfall valuation method, we assume the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which we believe is consistent with our past transaction history and standard industry practices.

        Under the Yield-to-Maturity valuation method, we use the income approach to determine the fair value of debt securities, based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of each of these portfolio investments. Our estimate of the expected repayment date of our debt securities is generally the legal maturity date of the instrument, as we generally intend to hold our loans and debt securities to maturity. The Yield-to-Maturity analysis considers changes in leverage levels, credit quality, portfolio company performance and other factors. We will use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of our general intent to hold our loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that we use to estimate the fair value of our debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, we may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

        Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, we measure the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date. However, in determining the fair value of

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the investment, we may consider whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of our investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding our ability to realize the full NAV of our interests in the investment fund.

        Pursuant to our internal valuation process and the requirements under the 1940 Act, we perform valuation procedures on our portfolio investments quarterly. In addition to our internal valuation process, in determining the estimates of fair value for our investments in LMM portfolio companies, we, among other things, consult with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm is generally consulted relative to our investments in each LMM portfolio company at least once in every calendar year, and for our investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, we may determine that it is not cost-effective, and as a result is not in our stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on our investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of our investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. We consulted with our independent financial advisory services firm in arriving at our determination of fair value on our investments in a total of 15 LMM portfolio companies for the three months ended March 31, 2015, representing approximately 23% of the total LMM portfolio at fair value as of March 31, 2015, and on a total of 17 LMM portfolio companies for the three months ended March 31, 2014, representing approximately 29% of the total LMM portfolio at fair value as of March 31, 2014. Excluding our investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of March 31, 2015 and 2104, as applicable, and our investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, the percentage of the LMM portfolio reviewed by our independent financial advisory services firm for the three months ended March 31, 2015 and 2014 was 27% and 32% of the total LMM portfolio at fair value as of March 31, 2015 and 2014, respectively.

        For valuation purposes, all of our Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, we use observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which we have determined that third-party quotes or other independent pricing are not available or appropriate, we generally estimate the fair value based on the assumptions that we believe hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method.

        For valuation purposes, all of our Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which we have determined that third-party quotes or other independent pricing are not available or appropriate, we generally estimate the fair value based on the assumptions that we believe hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

        For valuation purposes, all of our Other Portfolio investments are non-control investments. Our Other Portfolio investments comprised approximately 3.4% and 3.8%, respectively, of our Investment Portfolio at fair value as of March 31, 2015 and December 31, 2014. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For our Other Portfolio equity investments, we generally determine the fair value of our investments

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using the NAV valuation method. For Other Portfolio debt investments, we generally determine the fair value of these investments through obtaining third-party quotes or other independent pricing to the extent that these inputs are available and appropriate to determine fair value. For Other Portfolio debt investments for which we have determined that third-party quotes or other independent pricing are not available or appropriate, we generally estimate the fair value based on the assumptions that we believe hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method.

        For valuation purposes, our investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, we determine the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, we analyze various factors, including the entity's historical and projected financial results, as well as its size, marketability and performance relative to the population of market multiples. This valuation approach estimates the value of the investment as if we were to sell, or exit, the investment. In addition, we consider the value associated with our ability to control the capital structure of the company, as well as the timing of a potential exit.

        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of March 31, 2015 and 2014 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

        We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is fully impaired, sold or written off, we remove it from non-accrual status.

        We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for

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services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into interest income over the life of the financing.

        We hold certain debt and preferred equity instruments in our Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2015 and 2014, (i) approximately 2.2% and 5.4%, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0% and 1.2%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

        We account for our share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its investment company taxable income to qualify for pass-through tax treatment and maintain its RIC status. As part of maintaining RIC status, undistributed taxable income (subject to a 4% U.S Federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared prior to the filing of the U.S federal income tax return for the applicable fiscal year.

        The Taxable Subsidiaries hold certain portfolio investments for us. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with us for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. This

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income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

        As previously discussed, MSCC's wholly owned subsidiary MSCP is included in our consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC for income tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The taxable income, or loss, of MSCP may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

        The Taxable Subsidiaries and MSCP use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

INVESTMENT PORTFOLIO COMPOSITION

        LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally have annual revenues between $10 million and $150 million, and our LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio companies, we receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment.

        Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, we may incur indirect fees and

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expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through our External Investment Manager. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the three months ended March 31, 2015 and 2014 are net of expenses of $0.8 million and $0.3 million The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed.

        The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31, 2015   December 31, 2014  

First lien debt

    75.6%     75.7%  

Equity

    11.9%     11.6%  

Second lien debt

    10.0%     10.0%  

Equity warrants

    1.4%     1.5%  

Other

    1.1%     1.2%  

    100.0%     100.0%  

 

Fair Value:
  March 31, 2015   December 31, 2014  

First lien debt

    67.4%     66.9%  

Equity

    21.4%     21.9%  

Second lien debt

    9.3%     9.2%  

Equity warrants

    1.0%     1.0%  

Other

    0.9%     1.0%  

    100.0%     100.0%  

        The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States or other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of March 31, 2015 and December 31, 2014 (this information excludes the Other

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Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  March 31, 2015   December 31, 2014  

Southwest

    31.6%     29.6%  

Northeast

    21.1%     19.9%  

West

    16.9%     18.7%  

Southeast

    14.2%     15.4%  

Midwest

    13.7%     13.5%  

Canada

    0.6%     0.7%  

Other Non-United States

    1.9%     2.2%  

    100.0%     100.0%  

 

Fair Value:
  March 31, 2015   December 31, 2014  

Southwest

    35.7%     33.7%  

Northeast

    19.8%     18.3%  

West

    18.0%     20.4%  

Midwest

    12.7%     12.7%  

Southeast

    11.5%     12.4%  

Canada

    0.6%     0.6%  

Other Non-United States

    1.7%     1.9%  

    100.0%     100.0%  

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        Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by industry at cost and fair value as of March 31, 2015 and December 31, 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31,
2015
  December 31,
2014
 

Media

    7.5%     8.3%  

Energy Equipment & Services

    7.4%     8.3%  

IT Services

    6.7%     5.9%  

Machinery

    6.0%     6.5%  

Hotels, Restaurants & Leisure

    5.6%     5.6%  

Software

    5.5%     5.4%  

Specialty Retail

    4.8%     4.7%  

Construction & Engineering

    4.7%     5.3%  

Health Care Providers & Services

    4.6%     4.9%  

Internet Software & Services

    3.7%     1.9%  

Diversified Telecommunication Services

    3.6%     4.0%  

Diversified Consumer Services

    3.2%     2.9%  

Electronic Equipment, Instruments & Components

    2.4%     3.0%  

Oil, Gas & Consumable Fuels

    2.4%     2.5%  

Pharmaceuticals

    2.4%     1.8%  

Food Products

    2.2%     1.8%  

Auto Components

    2.0%     2.3%  

Building Products

    2.0%     1.1%  

Health Care Equipment & Supplies

    1.9%     2.1%  

Road & Rail

    1.7%     1.8%  

Aerospace & Defense

    1.3%     1.2%  

Textiles, Apparel & Luxury Goods

    1.2%     1.3%  

Chemicals

    1.2%     1.3%  

Diversified Financial Services

    1.2%     1.0%  

Air Freight & Logistics

    1.2%     0.9%  

Leisure Equipment & Products

    1.2%     0.5%  

Trading Companies & Distributors

    1.1%     1.2%  

Professional Services

    1.1%     1.1%  

Commercial Services & Supplies

    1.0%     1.0%  

Distributors

    0.9%     1.0%  

Other(1)

    8.3%     9.4%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Fair Value:
  March 31,
2015
  December 31,
2014
 

Machinery

    7.4%     8.1%  

Media

    6.8%     7.7%  

Energy Equipment & Services

    6.5%     7.9%  

IT Services

    6.2%     5.4%  

Software

    5.7%     5.5%  

Hotels, Restaurants & Leisure

    5.6%     5.6%  

Construction & Engineering

    5.1%     5.5%  

Specialty Retail

    5.0%     4.9%  

Diversified Consumer Services

    4.7%     4.4%  

Health Care Providers & Services

    4.2%     4.4%  

Internet Software & Services

    4.0%     2.3%  

Diversified Telecommunication Services

    3.3%     3.8%  

Auto Components

    2.3%     2.5%  

Road & Rail

    2.3%     2.3%  

Pharmaceuticals

    2.3%     1.7%  

Food Products

    2.1%     1.6%  

Electronic Equipment, Instruments & Components

    2.0%     2.5%  

Oil, Gas & Consumable Fuels

    2.0%     1.9%  

Health Care Equipment & Supplies

    1.8%     1.9%  

Building Products

    1.7%     0.9%  

Air Freight & Logistics

    1.4%     0.8%  

Aerospace & Defense

    1.2%     1.1%  

Diversified Financial Services

    1.2%     1.0%  

Textiles, Apparel & Luxury Goods

    1.1%     1.2%  

Chemicals

    1.1%     1.2%  

Leisure Equipment & Products

    1.1%     0.4%  

Trading Companies & Distributors

    1.0%     1.1%  

Commercial Services & Supplies

    1.0%     1.0%  

Professional Services

    1.0%     1.0%  

Paper & Forest Products

    0.9%     1.2%  

Distributors

    0.9%     1.0%  

Other(1)

    7.1%     8.2%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

        Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including, but not limited to: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see "Risk Factors—Risks Related to Our Investments" contained in our Form 10-K for the fiscal year ended December 31, 2014 for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

        We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into

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consideration various factors, including but not limited to each investment's expected level of returns and the collectability of our debt investments, comparisons to competitors and other industry participants and the portfolio company's future outlook.

        The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating scale at fair value as of March 31, 2015 and December 31, 2014:

 
  As of March 31, 2015   As of December 31, 2014  
Investment Rating
  Investments at
Fair Value
  Percentage of
Total Portfolio
  Investments at
Fair Value
  Percentage of
Total Portfolio
 
 
  (in thousands, except percentages)
 

1

  $ 282,487     36.2%   $ 287,693     39.2%  

2

    168,539     21.7%     133,266     18.2%  

3

    232,851     29.9%     239,100     32.6%  

4

    83,116     10.7%     61,475     8.4%  

5

    11,307     1.5%     11,657     1.6%  

Total

  $ 778,300     100.0%   $ 733,191     100.0%  

        Based upon our investment rating system, the weighted-average rating of our LMM portfolio was approximately 2.2 as of both March 31, 2015 and December 31, 2014.

        As of March 31, 2015, our total Investment Portfolio had five investments with positive fair value on non-accrual status, which comprised approximately 1.2% of its fair value and 3.9% of its cost, and no fully impaired investments. As of December 31, 2014, our total Investment Portfolio had five investments with positive fair value on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% of its cost, and no fully impaired investments.

        The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In the event that the United States economy contracts, it is likely that the financial results of small-to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles or other conditions, which could also have a negative impact on our future results.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

 
  Three Months Ended March 31,   Net Change  
 
  2015   2014   Amount   %  
 
  (in thousands)
 

Total investment income

  $ 37,179   $ 30,776   $ 6,403     21 %

Total expenses

    (13,688 )   (10,037 )   (3,651 )   36 %

Net investment income

    23,491     20,739     2,752     13 %

Net realized gain (loss) from investments

    (2,120 )   1,443     (3,563 )      

Net realized income

    21,371     22,182     (811 )   (4 )%

Net change in unrealized appreciation (depreciation) from:

                         

Portfolio investments

    14,204     6,857     7,347        

SBIC debentures and marketable securities and idle funds

    (442 )   (140 )   (302 )      

Total net change in unrealized appreciation

    13,762     6,717     7,045        

Income tax benefit (provision)

    291     (1,665 )   1,956     (117 )%

Net increase in net assets resulting from operations

  $ 35,424   $ 27,234   $ 8,190     30 %

 

 
  Three Months Ended
March 31,
  Net Change  
 
  2015   2014   Amount   %  
 
  (in thousands, except per share amounts)
 

Net investment income

  $ 23,491   $ 20,739   $ 2,752     13 %

Share-based compensation expense

    1,263     853     410     48 %

Distributable net investment income(a)

    24,754     21,592     3,162     15 %

Net realized gain (loss) from investments

    (2,120 )   1,443     (3,563 )      

Distributable net realized income(a)

  $ 22,634   $ 23,035   $ (401 )   (2 )%

Distributable net investment income per share—Basic and diluted(a)

  $ 0.54   $ 0.54   $     0 %

Distributable net realized income per share—Basic and diluted(a)

  $ 0.49   $ 0.58   $ (0.09 )   (16 )%

(a)
Distributable net investment income and distributable net realized income are net investment income and net realized income, respectively, as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and distributable net realized income, and related per share amounts, is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income and distributable net realized income are non-U.S. GAAP measures and should not be considered as a replacement to net investment income, net realized income, and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income and distributable net realized income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income and net realized income in accordance with U.S. GAAP to distributable net investment income and distributable net realized income is presented in the table above.

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        For the three months ended March 31, 2015, total investment income was $37.2 million, a 21% increase over the $30.8 million of total investment income for the corresponding period of 2014. This comparable period increase was principally attributable to (i) a $4.3 million increase in interest income primarily from higher average levels of portfolio debt investments, (ii) a $1.1 million increase in dividend income from Investment Portfolio equity investments and (iii) a $0.8 million increase in fee income. The $6.4 million increase in total investment income in the three months ended March 31, 2015 included a $0.6 million net decrease in the amount of total investment income related to accelerated prepayment and repricing activity for certain Investment Portfolio debt investments when compared to the same period in 2014.

        For the three months ended March 31, 2015, total expenses increased to $13.7 million from $10.0 million for the corresponding period of 2014. This comparable period increase in operating expenses was principally attributable to (i) a $2.5 million increase in interest expense, primarily as a result of (a) the issuance of our 4.50% Notes due 2019 (the "4.50% Notes") in November 2014 and (b) an increase in interest expense from our SBIC debentures due to a higher average interest rate, when compared to the prior year, (ii) a $1.1 million increase in compensation expense related to increases in the number of personnel, base compensation and incentive compensation accruals and (iii) a $0.4 million increase in share-based compensation expense, with these increases partially offset by (i) a $0.5 million increase in the expenses charged to the External Investment Manager (see further discussion in "Overview"), in each case when compared to the prior year. For the three months ended March 31, 2015, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% on an annualized basis which is consistent with the ratio on an annualized basis for the three months ended March 31, 2014 and for the year ended December 31, 2014.

        Distributable net investment income increased 15% to $24.8 million, or $0.54 per share, compared with $21.6 million, or $0.54 per share, in the corresponding period of 2014. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses as discussed above. Distributable net investment income on a per share basis for the three months ended March 31, 2015 reflects (i) a decrease of approximately $0.02 per share from the comparable period in 2014 attributable to the net decrease in the comparable levels of accelerated prepayment and repricing activity for certain Investment Portfolio debt investments, and (ii) a greater number of average shares outstanding compared to the corresponding period in 2014 primarily due to the April 2014 and March 2015 equity offerings.

        Net investment income for the three months ended March 31, 2015 was $23.5 million, or a 13% increase, compared to net investment income of $20.7 million for the corresponding period of 2014. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses as discussed above.

        Distributable net realized income was $22.6 million, or $0.49 per share, for the three months ended March 31, 2015 compared with $23.0 million, or $0.58 per share, in the corresponding period of 2014. The $0.4 million decrease was attributable to the $3.2 million increase in total distributable net

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investment income in the three months ended March 31, 2015 when compared to the corresponding period of 2014 as discussed above, offset by to the $3.6 million decrease in the net realized gain (loss) from investments from the comparable period in the prior year due to a net realized loss from investments of $2.1 million in the three months ended March 31, 2015. The net realized loss from investments of $2.1 million during the three months ended March 31, 2015 was primarily attributable to the net realized loss of $2.6 million on the restructuring of a Middle Market investment, partially offset by net realized gains on several Investment Portfolio investments.

        The $0.8 million decrease in net realized income compared with the corresponding period of 2014 was due to the higher level of net investment income in the three months ended March 31, 2015, offset by the $3.6 million decrease in the net realized gain (loss) from investments in the three months ended March 31, 2015 when compared to the corresponding period of 2014, in each case as discussed above.

        The net increase in net assets resulting from operations during the three months ended March 31, 2015 was $35.4 million, or $0.77 per share, compared with $27.2 million, or $0.68 per share, during the three months ended March 31, 2014. This increase from the prior year was primarily the result of (i) a $2.8 million increase in net investment income and (ii) a $7.0 million increase in the net change in unrealized appreciation to a net change in unrealized appreciation of $13.8 million for the three months ended March 31, 2015 and (iii) a $2.0 million decrease in the income tax provision from the prior year to an income tax benefit of $0.3 million for the three months ended March 31, 2015, with these changes partially offset by a $3.6 million decrease in the net realized gain (loss) from investments to a net realized loss of $2.1 million for the three months ended March 31, 2015.

        The following table provides a summary of the total net change in unrealized appreciation of $13.8 million for the first quarter of 2015:

 
  Three Months Ended March 31, 2015  
 
  LMM(a)   Middle
Market
  Private
Loan
  Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized (appreciation)/depreciation recognized in prior periods due to net realized (gains)/losses recognized during period

  $ 0.1   $ 2.5   $ (0.4 ) $   $ 2.2  

Net unrealized appreciation (depreciation) relating to portfolio investments

    3.8     1.6     (3.1 )   9.7     12.0  

Total net unrealized appreciation/(depreciation) relating to portfolio investments

  $ 3.9   $ 4.1   $ (3.5 ) $ 9.7     14.2  

Net unrealized appreciation relating to marketable securities

                            0.3  

Unrealized depreciation relating to SBIC debentures(c)

                            (0.7 )

Total net unrealized appreciation/(depreciation)

                          $ 13.8  

(a)
LMM includes unrealized appreciation on 22 LMM portfolio investments and unrealized depreciation on 13 LMM portfolio investments.

(b)
Other includes $9.3 million of unrealized appreciation relating to the External Investment Manager and $0.4 million of net unrealized appreciation relating to the Other Portfolio.

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(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

        The income tax benefit for the three months ended March 31, 2015 of $0.3 million principally consisted of (i) a deferred tax benefit of $0.7 million, which is primarily the result of deferred taxes on net unrealized depreciation on our portfolio investments held in our Taxable Subsidiaries and the change in net operating loss carryforwards, both of which are non-cash in nature, and (ii) other current taxes of $0.4 million, which is primarily related to accruals for U.S. federal income and excise taxes, state and other taxes.

        For the three months ended March 31, 2015, we experienced a net decrease in cash and cash equivalents in the amount of $38.4 million, which is the net result of $92.6 million of cash used for our operating activities and $54.2 million provided by financing activities.

        During the period, we used $92.6 million of cash for our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $22.2 million, which is our $24.8 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $2.0 million, payment-in-kind interest income of $0.8 million, cumulative dividends of $0.4 million and the amortization expense for deferred financing costs of $0.6 million, (ii) cash uses totaling $265.2 million which primarily resulted from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2014, which together total $256.0 million, (b) the funding of new Marketable securities and idle funds investments and settlement of accruals for Marketable securities and idle funds investments existing as of December 31, 2014, which together total $2.0 million, (c) $7.1 million related to decreases in payables and accruals and (d) increases in other assets of $0.1 million, and (iii) cash proceeds totaling $150.4 million from (a) $149.1 million in cash proceeds from the repayments of debt investments and sales of equity investments and (b) $1.3 million of cash proceeds from the sale of Marketable securities and idle funds investments.

        During the three months ended March 31, 2015, $54.2 million in cash was provided by financing activities, which principally consisted of $127.8 million in net cash proceeds from a public equity offering in March 2015, partially offset by (i) $54.0 million in net cash repayments of the Credit Facility and (ii) $19.5 million in cash dividends paid to stockholders.

        As of March 31, 2015, we had $22.0 million in cash and cash equivalents, $9.9 million in Marketable securities and idle funds investments and $408.5 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of March 31, 2015, our net asset value totaled $1,083.9 million, or $21.87 per share.

        The Credit Facility includes total commitments of $572.5 million from a diversified group of fifteen lenders and matures in September 2019. The Credit Facility also contains an accordion feature which allows us to increase the total commitments under the facility up to $650.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis equal to (i) the applicable LIBOR rate (0.17% as of March 31, 2015) plus 2.00%, as long as we maintain an investment grade rating (or 2.25% if we do not maintain an investment grade rating) or (ii) the applicable base rate (Prime Rate of 3.25% as of March 31, 2015) plus 1.00%, as long as we maintain an investment grade rating (or 1.25% if we do not maintain an investment grade rating). We

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pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2019, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval. As of March 31, 2015, we had $164.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.2% and we were in compliance with all financial covenants of the Credit Facility.

        Due to each of the Funds' status as a licensed SBIC, we have the ability to issue, through the Funds, debentures guaranteed by the SBA at favorable interest rates. Under the regulations applicable to SBIC funds, an SBIC can have outstanding debentures guaranteed by the SBA generally in an amount up to twice its regulatory capital, which effectively approximates the amount of its equity capital, up to a regulatory maximum amount of debentures of $225.0 million. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semi-annually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. On March 31, 2015, through our two wholly owned SBICs, we had $225.0 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted average annual fixed interest rate of approximately 4.2%, paid semi-annually, and mature ten years from issuance. The first maturity related to our SBIC debentures does not occur until 2017, and the remaining weighted average duration is approximately 6.3 years as of March 31, 2015.

        In April 2013, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes. The 6.125% Notes are unsecured obligations and rank pari passu with our current and future senior unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. We may from time to time repurchase 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2015, the outstanding balance of the 6.125% Notes was $90.8 million.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 6.125% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

        In November 2014, we issued $175.0 million in aggregate principal amount of the 4.50% Notes at an issue price of 99.53%. The 4.50% Notes are unsecured obligations and rank pari passu with our current and future senior unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness,

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including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semi-annually on June 1 and December 1 of each year, beginning June 1, 2015. We may from time to time repurchase 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million.

        The indenture governing the 4.50% Notes (the "4.50% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture.

        During April 2014, we completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, at a price to the public of $31.50 per share, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $139.7 million.

        During March 2015, we completed a public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $127.8 million.

        We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, the liquidation of Marketable securities and idle funds investments, and a combination of future debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

        We periodically invest excess cash balances into Marketable securities and idle funds investments. The primary investment objective of Marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. The composition of Marketable securities and idle funds investments will vary in a given period based upon, among other things, changes in market conditions, the underlying fundamentals in our Marketable securities and idle funds investments, our outlook regarding future LMM, Middle Market and Private Loan portfolio investment needs, and any regulatory requirements applicable to us.

        If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2014 or 2015 annual meetings of stockholders because our common stock price per share had been trading significantly above the current net asset value per share of our common stock. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

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        In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to spillover certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200%. This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA guaranteed debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

        Although we have been able to secure access to additional liquidity, including recent public equity and debt offerings, our $572.5 million Credit Facility, and the available leverage through the SBIC program, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, the new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact the adoption of this new accounting standard will have on our financial statements.

        In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on our consolidated financial statements is currently being evaluated.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our financial statements upon adoption.

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        Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third party services and required energy consumption.

        We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At March 31, 2015, we had a total of $153.1 million in outstanding commitments comprised of (i) 30 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) six investments with capital commitments that had not been fully called.

        As of March 31, 2015, the future fixed commitments for cash payments in connection with our SBIC debentures and the 4.50% Notes and the 6.125% Notes for each of the next five years and thereafter are as follows:

 
  2015   2016   2017   2018   2019   2020 and
thereafter
  Total  
 
  (dollars in thousands)
 

SBIC debentures

  $   $   $ 15,000   $ 10,200   $ 20,000   $ 179,800     225,000  

Interest due on SBIC debentures

    4,748     9,448     9,423     8,130     7,807     17,601     57,157  

Notes 6.125%

                        90,810     90,810  

Interest due on 6.125% Notes

    4,171     5,562     5,562     5,562     5,562     19,467     45,886  

4.50% Notes

                    175,000         175,000  

Interest due on 4.50% Notes

    8,444     7,875     7,875     7,875     7,875         39,944  

Total

  $ 17,363   $ 22,885   $ 37,860   $ 31,767   $ 216,244   $ 307,678   $ 633,797  

        As of March 31, 2015, we had $164.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2019. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2021. See further discussion of the Credit Facility terms in "—Liquidity and Capital Resources—Capital Resources".

        As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At March 31, 2015, we had a receivable of $1.2 million due from the External Investment Manager which included approximately $0.8 million related to operating expenses incurred by us required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.4 million.

        In June 2013, we adopted a deferred compensation plan for the non-employee members of our board of directors, which allows the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of our common stock within 90 days after the participant's end of service as a director. As of March 31, 2015, $0.6 million of directors' fees had been deferred under this plan. These deferred fees represented 18,672 shares of our common shares. These shares will not be issued or included as outstanding on the consolidated

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statement of changes in net assets until each applicable participant's end of service as a director, but are included in operating expenses and weighted-average shares outstanding on our consolidated statement of operations as earned.

        In April 2015, we declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2015. The semi-annual supplemental dividend is unchanged from the semi-annual supplemental dividend paid in June 2014. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the second quarter of 2015 of $0.175 per share for each of April, May and June 2015.

        In April 2015, we fully exited our investment in California Healthcare Medical Billing, Inc. ("CHMB"), a provider of outsourced medical billing, revenue cycle management, practice management and electronic health record (EHR) solutions to physicians, clinics, hospitals and health systems throughout the United States. We made our initial investment in CHMB in October 2008, and realized a gain of approximately $3.3 million on the redemption of our equity and warrant positions by CHMB.

        In April 2015, we amended the Credit Facility to increase total commitments from $572.5 million to $597.5 million and increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million. The $25.0 million increase in total commitments was the result of a commitment increase by one of the existing lenders in the facility. The recent increase in total commitments was executed under the accordion feature of the Credit Facility which allows for an increase in total commitments under the facility up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        During May 2015, we declared regular monthly dividends of $0.175 per share for each month of July, August and September of 2015. These regular monthly dividends equal a total of $0.525 per share for the third quarter of 2015 and represent a 6.1% increase from the regular monthly dividends declared for the third quarter of 2014. Including the regular monthly dividends declared for the third quarter of 2015 and the semi-annual supplemental dividend payable in June 2015, we will have paid $15.065 per share in cumulative dividends since our October 2007 initial public offering.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

        We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and Marketable securities and idle funds investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent of any debt investments that include floating interest rates. The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of March 31, 2015, approximately 57% of our debt investment portfolio (at cost) bore interest at floating rates, all of which were subject to contractual minimum interest rates. As of March 31, 2015, none of our Marketable securities and idle funds investments (at cost) bore interest at floating rates. Our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures and our 4.50% Notes and 6.125% Notes, which comprise the majority of our outstanding debt, are fixed for the life of such debt. As of March 31, 2015, we had not entered into any interest rate hedging arrangements. The following table shows the approximate annualized increase (decrease) in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of March 31, 2015. The hypothetical results would also be impacted by the changes in

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the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an increase (decrease) in the hypothetical interest expense).

Basis Point Change in Interest Rate
  Interest
Income
  Interest
Expense
  Net Investment
Income
 
 
  (dollars in thousands)
 

100

  $ 1,740   $ (1,640 ) $ 100  

200

    9,247     (3,280 )   5,967  

300

    16,945     (4,920 )   12,025  

400

    24,651     (6,560 )   18,091  

500

    32,385     (8,200 )   24,185  

Item 4.    Controls and Procedures

        As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman, Chief Executive Officer and President, our Chief Financial Officer, our Chief Compliance Officer and our Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934). Based on that evaluation, our Chairman, Chief Executive Officer and President, our Chief Financial Officer, our Chief Compliance Officer and our Chief Accounting Officer, have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.    Legal Proceedings

        We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

Item 1A.    Risk Factors

        There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014 that we filed with the SEC on February 27, 2015.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

        During the three months ended March 31, 2015, we issued 116,330 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of common stock issued during the three months ended March 31, 2015 under the dividend reinvestment plan was approximately $3.5 million.

Item 6.    Exhibits

        Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

Exhibit Number   Description of Exhibit
  10.1 * Fourth Amendment to Second Amended and Restated Credit Agreement dated April 29, 2015 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on April 30, 2015 (File No. 1-33723)).

 

10.2

*†

Main Street Capital Corporation 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 4.4 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

10.3

*†

Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (incorporated by reference to Exhibit 4.5 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

10.4

*†

Form of Restricted Stock Agreement—Main Street Capital Corporation 2015 Equity and Incentive Plan (incorporated by reference to Exhibit 4.6 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

10.5

*†

Form of Restricted Stock Agreement—Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (incorporated by reference to Exhibit 4.7 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))

 

31.1

 

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

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Exhibit Number   Description of Exhibit
  31.2   Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 

32.1

 

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

32.2

 

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

*
Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

Management contract or compensatory plan or arrangement.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    Main Street Capital Corporation

Date: May 8, 2015

 

/s/ VINCENT D. FOSTER

Vincent D. Foster
Chairman, President and Chief Executive Officer
(principal executive officer)

Date: May 8, 2015

 

/s/ BRENT D. SMITH

Brent D. Smith
Chief Financial Officer and Treasurer
(principal financial officer)

Date: May 8, 2015

 

/s/ SHANNON D. MARTIN

Shannon D. Martin
Vice President and Chief Accounting Officer
(principal accounting officer)

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EXHIBIT INDEX

Exhibit Number   Description of Exhibit
  31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 

31.2

 

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 

32.1

 

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

32.2

 

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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