Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended September 30, 2013

 

OR

 

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

 

For the transition period from:               to              

 

Commission File Number: 001-33723

 

Main Street Capital Corporation

(Exact name of registrant as specified in its charter)

 

Maryland

 

41-2230745

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

1300 Post Oak Boulevard, Suite 800

 

 

Houston, TX

 

77056

(Address of principal executive offices)

 

(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 x No o

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See 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 o

 

Accelerated filer x

 

 

 

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 x

 

The number of shares outstanding of the issuer’s common stock as of November 7, 2013 was 39,734,794.

 

 

 



Table of Contents

 

TABLE OF CONTENTS

 

PART I
FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets — September 30, 2013 (unaudited) and December 31, 2012

1

 

 

 

 

Consolidated Statements of Operations (unaudited) — Three and nine months ended September 30, 2013 and 2012

2

 

 

 

 

Consolidated Statements of Changes in Net Assets (unaudited) — Nine months ended September 30, 2013 and 2012

3

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) — Nine months ended September 30, 2013 and 2012

4

 

 

 

 

Consolidated Schedule of Investments (unaudited) — September 30, 2013

5

 

 

 

 

Consolidated Schedule of Investments — December 31, 2012

22

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

37

 

 

 

Item 2.

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

65

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

85

 

 

 

Item 4.

Controls and Procedures

85

 

 

 

PART II
OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

85

 

 

 

Item 1A.

Risk Factors

86

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

86

 

 

 

Item 6.

Exhibits

86

 

 

 

 

Signatures

88

 



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(in thousands, except shares and per share amounts)

 

 

 

September 30, 2013

 

December 31, 2012

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Portfolio investments at fair value:

 

 

 

 

 

Control investments (cost: $275,407 and $217,483 as of September 30, 2013 and December 31, 2012, respectively)

 

$

349,581

 

$

278,475

 

Affiliate investments (cost: $212,953 and $142,607 as of September 30, 2013 and December 31, 2012, respectively)

 

261,229

 

178,413

 

Non-Control/Non-Affiliate investments (cost: $526,197 and $456,975 as of September 30, 2013 and December 31, 2012, respectively)

 

541,597

 

467,543

 

Investment in affiliated Investment Manager (cost: $2,668 as of December 31, 2012)

 

 

 

 

 

 

 

 

 

Total portfolio investments (cost: $1,014,557 and $819,733 as of September 30, 2013 and December 31, 2012, respectively)

 

1,152,407

 

924,431

 

Marketable securities and idle funds investments (cost: $21,195 and $28,469 as of September 30, 2013 and December 31, 2012, respectively)

 

19,963

 

28,535

 

 

 

 

 

 

 

Total investments (cost: $1,035,752 and $848,202 as of September 30, 2013 and December 31, 2012, respectively)

 

1,172,370

 

952,966

 

 

 

 

 

 

 

Cash and cash equivalents

 

17,574

 

63,517

 

Interest receivable and other assets

 

14,429

 

14,580

 

Receivable for securities sold

 

25,639

 

 

Deferred financing costs (net of accumulated amortization of $4,370 and $3,203 as of September 30, 2013 and December 31, 2012, respectively)

 

9,312

 

5,162

 

 

 

 

 

 

 

Total assets

 

$

1,239,324

 

$

1,036,225

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

SBIC debentures (par: $161,200 as of September 30, 2013 and $225,000 as of December 31, 2012, par of $75,200 and $100,000 is recorded at a fair value of $62,259 and $86,467 as of September 30, 2013 and December 31, 2012, respectively)

 

$

148,259

 

$

211,467

 

Credit facility

 

166,000

 

132,000

 

Notes payable

 

90,882

 

 

Payable for securities purchased

 

12,913

 

20,661

 

Deferred tax liability, net

 

11,110

 

11,778

 

Accounts payable and other liabilities

 

7,414

 

4,527

 

Dividend payable

 

6,353

 

5,188

 

Interest payable

 

2,217

 

3,562

 

Payable to affiliated Investment Manager

 

 

4,066

 

 

 

 

 

 

 

Total liabilities

 

445,148

 

393,249

 

 

 

 

 

 

 

Commitments and contingencies (Note M)

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 39,698,645 and 34,589,484 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively)

 

397

 

346

 

Additional paid-in capital

 

688,544

 

544,136

 

Accumulated net investment income, net of cumulative dividends of $181,149 and $115,401 as of September 30, 2013 and December 31, 2012, respectively

 

17,939

 

35,869

 

Accumulated net realized gain from investments (accumulated net realized gain from investments of $7,244 before cumulative dividends of $32,192 as of September 30, 2013 and accumulated net realized gain from investments of $9,838 before cumulative dividends of $28,993 as of December 31, 2012)

 

(24,948

)

(19,155

)

Net unrealized appreciation, net of income taxes

 

112,244

 

81,780

 

 

 

 

 

 

 

Total net assets

 

794,176

 

642,976

 

 

 

 

 

 

 

Total liabilities and net assets

 

$

1,239,324

 

$

1,036,225

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE

 

$

20.01

 

$

18.59

 

 

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 September 30,

 

Nine Months Ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT INCOME:

 

 

 

 

 

 

 

 

 

Interest, fee and dividend income:

 

 

 

 

 

 

 

 

 

Control investments

 

$

8,840

 

$

5,991

 

$

23,543

 

$

17,841

 

Affiliate investments

 

6,453

 

4,838

 

17,514

 

14,652

 

Non-Control/Non-Affiliate investments

 

13,974

 

12,015

 

40,974

 

30,263

 

Interest, fee and dividend income

 

29,267

 

22,844

 

82,031

 

62,756

 

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

 

392

 

110

 

1,073

 

1,599

 

Total investment income

 

29,659

 

22,954

 

83,104

 

64,355

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Interest

 

(5,922

)

(3,923

)

(15,346

)

(11,967

)

Compensation

 

(2,575

)

 

(5,148

)

 

General and administrative

 

(1,533

)

(595

)

(3,471

)

(1,757

)

Expenses reimbursed to affiliated Investment Manager

 

 

(2,215

)

(3,189

)

(7,574

)

Share-based compensation

 

(2,152

)

(699

)

(3,357

)

(1,860

)

Total expenses

 

(12,182

)

(7,432

)

(30,511

)

(23,158

)

NET INVESTMENT INCOME

 

17,477

 

15,522

 

52,593

 

41,197

 

 

 

 

 

 

 

 

 

 

 

NET REALIZED GAIN (LOSS):

 

 

 

 

 

 

 

 

 

Control investments

 

(2,635

)

122

 

(2,635

)

(1,940

)

Affiliate investments

 

780

 

 

780

 

5,500

 

Non-Control/Non-Affiliate investments

 

(1,164

)

128

 

(1,024

)

478

 

Marketable securities and idle funds investments

 

22

 

277

 

285

 

1,297

 

SBIC debentures

 

(4,775

)

 

(4,775

)

 

Total net realized gain (loss)

 

(7,772

)

527

 

(7,369

)

5,335

 

NET REALIZED INCOME

 

9,705

 

16,049

 

45,224

 

46,532

 

 

 

 

 

 

 

 

 

 

 

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

 

 

 

 

 

 

 

 

 

Portfolio investments

 

14,475

 

22,096

 

30,889

 

44,120

 

Marketable securities and idle funds investments

 

(490

)

(151

)

(1,300

)

(235

)

SBIC debentures

 

4,839

 

(1,858

)

4,183

 

(3,367

)

Investment in affiliated Investment Manager

 

 

 

 

(51

)

Total net change in unrealized appreciation

 

18,824

 

20,087

 

33,772

 

40,467

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES:

 

 

 

 

 

 

 

 

 

Federal and state income, excise, and other taxes

 

(371

)

 

(1,793

)

(1,006

)

Deferred taxes

 

(104

)

(4,169

)

(1,515

)

(6,035

)

Income tax provision

 

(475

)

(4,169

)

(3,308

)

(7,041

)

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

28,054

 

31,967

 

75,688

 

79,958

 

Noncontrolling interest

 

 

 

 

(54

)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ATTRIBUTABLE TO COMMON STOCK

 

$

28,054

 

$

31,967

 

$

75,688

 

$

79,904

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME PER SHARE - BASIC AND DILUTED

 

$

0.47

 

$

0.49

 

$

1.48

 

$

1.44

 

NET REALIZED INCOME PER SHARE - BASIC AND DILUTED

 

$

0.26

 

$

0.51

 

$

1.27

 

$

1.62

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ATTRIBUTABLE TO COMMON STOCK PER SHARE - BASIC AND DILUTED

 

$

0.76

 

$

1.01

 

$

2.13

 

$

2.79

 

 

 

 

 

 

 

 

 

 

 

DIVIDENDS PAID PER SHARE:

 

 

 

 

 

 

 

 

 

Regular monthly dividends

 

$

0.47

 

$

0.44

 

$

1.38

 

$

1.26

 

Supplemental dividends

 

0.20

 

 

0.55

 

 

Total

 

$

0.67

 

$

0.44

 

$

1.93

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED

 

37,144,693

 

31,578,742

 

35,558,266

 

28,615,877

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

Net Unrealized

 

 

 

 

 

Total Net

 

 

 

 

 

 

 

 

 

Accumulated

 

Net Realized

 

Appreciation from

 

 

 

 

 

Assets

 

 

 

Common Stock

 

Additional

 

Net Investment

 

Gain From

 

Investments,

 

 

 

 

 

Including

 

 

 

Number

 

Par

 

Paid-In

 

Income, Net

 

Investments,

 

Net of Income

 

Total Net

 

Noncontrolling

 

Noncontrolling

 

 

 

of Shares

 

Value

 

Capital

 

of Dividends

 

Net of Dividends

 

Taxes

 

Asset Value

 

Interest

 

Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2011

 

26,714,384

 

$

267

 

$

360,164

 

$

12,531

 

$

(20,445

)

$

53,194

 

$

405,711

 

$

5,477

 

$

411,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Public offering of common stock, net of offering costs

 

4,312,500

 

43

 

92,950

 

 

 

 

 

 

 

92,993

 

 

 

92,993

 

MSC II noncontrolling interest acquisition

 

229,634

 

2

 

5,328

 

 

 

 

5,330

 

(5,417

)

(87

)

Adjustment to investment in Investment Manager related to MSC II noncontrolling interest acquisition

 

 

 

(1,616

)

 

 

 

(1,616

)

 

(1,616

)

Share-based compensation

 

 

 

1,860

 

 

 

 

1,860

 

 

1,860

 

Purchase of vested stock for employee payroll tax withholding

 

(40,549

)

 

 

(1,012

)

 

 

 

 

 

 

(1,012

)

 

 

(1,012

)

Dividend reinvestment

 

264,331

 

2

 

6,468

 

 

 

 

6,471

 

 

6,471

 

Issuance of restricted stock

 

139,033

 

1

 

(1

)

 

 

 

 

 

 

Distributions to noncontrolling interest

 

 

 

 

 

 

 

 

(114

)

(114

)

Dividends to stockholders

 

 

 

 

(22,439

)

(14,048

)

 

(36,487

)

 

(36,487

)

Net increase resulting from operations

 

 

 

 

41,197

 

5,335

 

33,426

 

79,958

 

 

79,958

 

Noncontrolling interest

 

 

 

 

 

 

(54

)

(54

)

54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 30, 2012

 

31,619,333

 

$

315

 

$

464,141

 

$

31,289

 

$

(29,158

)

$

86,566

 

$

553,154

 

$

 

$

553,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2012

 

34,589,484

 

$

346

 

$

544,136

 

$

35,869

 

$

(19,155

)

$

81,780

 

$

642,976

 

$

 

$

642,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Public offering of common stock, net of offering costs

 

4,600,000

 

46

 

131,407

 

 

 

 

131,453

 

 

131,453

 

Share-based compensation

 

 

 

3,357

 

 

 

 

3,357

 

 

3,357

 

Purchase of vested stock for employee payroll tax withholding

 

(62,025

)

(1

)

(1,764

)

 

 

 

(1,765

)

 

(1,765

)

Dividend reinvestment

 

278,166

 

3

 

8,727

 

 

 

 

8,730

 

 

8,730

 

Other

 

 

 

69

 

 

 

 

69

 

 

69

 

Issuance of restricted stock

 

274,895

 

3

 

(3

)

 

 

 

 

 

 

Consolidation of Investment Manager

 

 

 

2,037

 

 

 

 

2,037

 

 

2,037

 

Issuances of common stock

 

18,125

 

 

578

 

 

 

 

578

 

 

578

 

Dividends to stockholders

 

 

 

 

(65,748

)

(3,199

)

 

(68,947

)

 

(68,947

)

Net increase resulting from operations

 

 

 

 

47,818

 

(2,594

)

30,464

 

75,688

 

 

75,688

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at September 30, 2013

 

39,698,645

 

$

397

 

$

688,544

 

$

17,939

 

$

(24,948

)

$

112,244

 

$

794,176

 

$

 

$

794,176

 

 

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)

 

 

 

Nine Months Ended September 30,

 

 

 

2013

 

2012

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

75,688

 

$

79,958

 

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

 

 

 

 

 

Investments in portfolio companies

 

(533,435

)

(397,912

)

Proceeds from sales and repayments of debt investments

 

325,150

 

246,138

 

Proceeds from sale of equity investments in portfolio companies

 

1,336

 

25,869

 

Investments in marketable securities and idle funds investments

 

(53,102

)

(7,596

)

Proceeds from marketable securities and idle funds investments

 

44,395

 

33,502

 

Net change in unrealized appreciation

 

(33,772

)

(40,467

)

Net realized (gain) loss

 

7,369

 

(5,335

)

Accretion of unearned income

 

(7,721

)

(9,263

)

Payment-in-kind interest

 

(3,517

)

(2,405

)

Cumulative dividends

 

(1,000

)

1,745

 

Share-based compensation expense

 

3,357

 

1,860

 

Amortization of deferred financing costs

 

1,167

 

802

 

Deferred taxes

 

1,515

 

5,650

 

Changes in other assets and liabilities:

 

 

 

 

 

Interest receivable and other assets

 

1,009

 

(1,160

)

Interest payable

 

(1,345

)

(2,787

)

Payable to affiliated Investment Manager

 

(3,960

)

(1,489

)

Accounts payable and other liabilities

 

1,376

 

316

 

Deferred fees and other

 

2,558

 

1,428

 

Net cash used in operating activities

 

(172,932

)

(71,146

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Proceeds from credit facility

 

360,000

 

170,000

 

Repayments on credit facility

 

(326,000

)

(174,000

)

Proceeds from issuance of SBIC debentures

 

 

5,000

 

Repayments of SBIC debentures

 

(63,800

)

(16,000

)

Proceeds from public offering of 6.125% Notes

 

92,000

 

 

Repurchases of 6.125% Notes

 

(1,108

)

 

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

 

131,453

 

92,993

 

Dividends paid to stockholders

 

(59,052

)

(28,879

)

Payment of deferred loan costs and SBIC debenture fees

 

(5,317

)

(571

)

Other

 

(1,187

)

(463

)

Net cash provided by financing activities

 

126,989

 

48,080

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(45,943

)

(23,066

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

63,517

 

42,650

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

17,574

 

$

19,584

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

Interest Paid

 

$

15,558

 

$

13,953

 

Taxes paid

 

$

4,803

 

$

561

 

Non-cash financing activities:

 

 

 

 

 

Shares issued pursuant to the DRIP

 

$

8,730

 

$

6,471

 

 

The accompanying notes are an integral part of these financial statements

 

4



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2013

(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)

 

3,500

 

3,432

 

3,432

 

 

 

 

 

Member Units (Fully diluted 48.4%)

 

 

 

1,500

 

1,500

 

 

 

 

 

 

 

 

 

4,932

 

4,932

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

14,750

 

14,573

 

14,750

 

 

 

 

 

Common Stock (Fully diluted 42.9%)

 

 

 

6,220

 

7,750

 

 

 

 

 

 

 

 

 

20,793

 

22,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Café Brazil, LLC

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 69.0%) (8)

 

 

 

1,742

 

6,770

 

 

 

 

 

 

 

 

 

 

 

 

 

California Healthcare Medical Billing, Inc.

 

Outsourced Billing and Revenue Cycle Management

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - October 17, 2015)

 

8,103

 

7,958

 

8,094

 

 

 

 

 

Warrants (Fully diluted 21.3%)

 

 

 

1,193

 

3,380

 

 

 

 

 

Common Stock (Fully diluted 9.8%)

 

 

 

1,177

 

1,560

 

 

 

 

 

 

 

 

 

10,328

 

13,034

 

 

 

 

 

 

 

 

 

 

 

 

 

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 41.6%) (8)

 

 

 

1,300

 

10,950

 

 

 

 

 

 

 

 

 

 

 

 

 

Ceres Management, LLC (Lambs Tire & Automotive)

 

Aftermarket Automotive Services Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,000

 

4,000

 

4,000

 

 

 

 

 

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

 

 

 

3,437

 

3,437

 

 

 

 

 

Member Units (Fully diluted 100.0%)

 

 

 

5,273

 

1,000

 

 

 

 

 

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

 

1,029

 

1,029

 

1,029

 

 

 

 

 

Member Units (Lamb’s Real Estate Investment I, LLC) (Fully diluted 100%)

 

 

 

625

 

1,130

 

 

 

 

 

 

 

 

 

14,364

 

10,596

 

 

 

 

 

 

 

 

 

 

 

 

 

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5,800

 

5,689

 

5,689

 

 

 

 

 

Member Units (Fully diluted 32.0%)

 

 

 

1,200

 

1,200

 

 

 

 

 

 

 

 

 

6,889

 

6,889

 

 

 

 

 

 

 

 

 

 

 

 

 

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

919

 

919

 

919

 

 

 

 

 

Member Units (Fully diluted 34.2%) (8)

 

 

 

2,980

 

12,660

 

 

 

 

 

 

 

 

 

3,899

 

13,579

 

 

 

 

 

 

 

 

 

 

 

 

 

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,896

 

4,624

 

4,896

 

 

 

 

 

Preferred Stock (8% cumulative) (8)

 

 

 

1,145

 

1,145

 

 

 

 

 

Common Stock (Fully diluted 34.4%) (8)

 

 

 

718

 

1,340

 

 

 

 

 

 

 

 

 

6,487

 

7,381

 

 

5



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 47.6%) (8)

 

 

 

589

 

440

 

 

 

 

 

Member Units (Wallisville Real Estate, LLC) (Fully diluted 59.1%) (8)

 

 

 

1,215

 

1,890

 

 

 

 

 

 

 

 

 

1,804

 

2,330

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 95.9%) (8)

 

 

 

7,095

 

13,050

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact Telecom, Inc.

 

Telecommunications Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 6.50%, Secured Debt (Maturity - May 31, 2018) (9)

 

2,500

 

2,493

 

2,493

 

 

 

 

 

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

 

22,500

 

14,454

 

14,454

 

 

 

 

 

Warrants (Fully diluted 40.0%)

 

 

 

8,000

 

8,000

 

 

 

 

 

 

 

 

 

24,947

 

24,947

 

 

 

 

 

 

 

 

 

 

 

 

 

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

15% Secured Debt (Maturity - September 15, 2014)

 

3,700

 

3,609

 

3,700

 

 

 

 

 

Warrants (Fully diluted 30.1%)

 

 

 

1,129

 

1,940

 

 

 

 

 

 

 

 

 

4,738

 

5,640

 

 

 

 

 

 

 

 

 

 

 

 

 

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 5.25%, Secured Debt (Maturity - November 14, 2013) (9)

 

1,548

 

1,548

 

1,548

 

 

 

 

 

13% Current / 6% PIK Secured Debt (Maturity - November 14, 2013)

 

1,607

 

1,607

 

1,607

 

 

 

 

 

Member Units (Fully diluted 60.8%) (8)

 

 

 

811

 

3,720

 

 

 

 

 

 

 

 

 

3,966

 

6,875

 

 

 

 

 

 

 

 

 

 

 

 

 

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - August 22, 2014)

 

1,730

 

1,730

 

1,730

 

 

 

 

 

Preferred Stock (non-voting)

 

 

 

468

 

280

 

 

 

 

 

Warrants (Fully diluted 7.1%)

 

 

 

54

 

 

 

 

 

 

Common Stock (Fully diluted 70.0%) (8)

 

 

 

100

 

 

 

 

 

 

 

 

 

 

2,352

 

2,010

 

 

 

 

 

 

 

 

 

 

 

 

 

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

10,250

 

10,068

 

10,068

 

 

 

 

 

Preferred Stock (Fully diluted 26.7%)

 

 

 

3,750

 

3,750

 

 

 

 

 

 

 

 

 

13,818

 

13,818

 

 

6



Table of Contents

 

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

 

 

 

 

 

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

 

983

 

983

 

983

 

 

 

 

 

Member Units (Fully diluted 54.0%)

 

 

 

1,132

 

5,290

 

 

 

 

 

Member Units (Mid - Columbia Real Estate, LLC) (Fully diluted 50.0%) (8)

 

 

 

250

 

440

 

 

 

 

 

 

 

 

 

8,015

 

12,363

 

 

 

 

 

 

 

 

 

 

 

 

 

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - September 1, 2015) (9)

 

2,750

 

2,697

 

2,697

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - February 1, 2016) (9)

 

2,923

 

2,890

 

2,890

 

 

 

 

 

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

 

4,468

 

4,413

 

4,413

 

 

 

 

 

Member Units (Fully diluted 44.0%)

 

 

 

2,975

 

5,100

 

 

 

 

 

 

 

 

 

12,975

 

15,100

 

 

 

 

 

 

 

 

 

 

 

 

 

NRI Clinical Research, LLC

 

Clinical Research Center

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,520

 

4,335

 

4,335

 

 

 

 

 

Warrants (Fully diluted 12.5%) (8)

 

 

 

252

 

480

 

 

 

 

 

Member Units (Fully diluted 24.8%) (8)

 

 

 

500

 

960

 

 

 

 

 

 

 

 

 

5,087

 

5,775

 

 

 

 

 

 

 

 

 

 

 

 

 

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

12,100

 

11,334

 

12,100

 

 

 

 

 

Warrants (Fully diluted 12.2%)

 

 

 

817

 

1,420

 

 

 

 

 

Member Units (Fully diluted 43.2%) (8)

 

 

 

2,900

 

5,050

 

 

 

 

 

 

 

 

 

15,051

 

18,570

 

 

 

 

 

 

 

 

 

 

 

 

 

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 48.0%)

 

 

 

1,080

 

11,270

 

 

 

 

 

 

 

 

 

 

 

 

 

Pegasus Research Group, LLC (Televerde)

 

Telemarketing and Data Services

 

 

 

 

 

 

 

 

 

 

 

 

 

15% Secured Debt (Maturity - January 6, 2016)

 

4,991

 

4,955

 

4,991

 

 

 

 

 

Member Units (Fully diluted 43.7%) (8)

 

 

 

1,250

 

4,860

 

 

 

 

 

 

 

 

 

6,205

 

9,851

 

 

 

 

 

 

 

 

 

 

 

 

 

PPL RVs, Inc.

 

Recreational Vehicle Dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8,010

 

7,971

 

8,010

 

 

 

 

 

Common Stock (Fully diluted 51.1%)

 

 

 

2,150

 

6,810

 

 

 

 

 

 

 

 

 

10,121

 

14,820

 

 

 

 

 

 

 

 

 

 

 

 

 

Principle Environmental, LLC

 

Noise Abatement Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - February 1, 2016)

 

3,506

 

3,027

 

3,506

 

 

 

 

 

12% Current / 2% PIK Secured Debt (Maturity - February 1, 2016)

 

4,351

 

4,294

 

4,338

 

 

 

 

 

Warrants (Fully diluted 14.6%)

 

 

 

1,200

 

3,860

 

 

 

 

 

Member Units (Fully diluted 22.6%) (8)

 

 

 

1,863

 

6,150

 

 

 

 

 

 

 

 

 

10,384

 

17,854

 

 

 

 

 

 

 

 

 

 

 

 

 

River Aggregates, LLC

 

Processor of Construction Aggregates

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - June 30, 2018) (14)

 

500

 

500

 

500

 

 

 

 

 

Zero Coupon Secured Debt (Maturity - June 30, 2018) (14)

 

750

 

413

 

413

 

 

 

 

 

Member Units (Fully diluted 38.3%)

 

 

 

1,150

 

 

 

 

 

 

Member Units (RA Properties, LLC) (Fully diluted 50.0%)

 

 

 

269

 

269

 

 

 

 

 

 

 

 

 

2,332

 

1,182

 

 

7



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Southern RV, LLC

 

Recreational Vehicle Dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

11,400

 

11,233

 

11,233

 

 

 

 

 

Member Units (Fully diluted 50.2%)

 

 

 

1,680

 

1,680

 

 

 

 

 

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

 

3,250

 

3,202

 

3,202

 

 

 

 

 

Member Units (Southern RV Real Estate, LLC) (Fully diluted 55.69%)

 

 

 

480

 

480

 

 

 

 

 

 

 

 

 

16,595

 

16,595

 

 

 

 

 

 

 

 

 

 

 

 

 

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

4.5% Current / 4.5% PIK Secured Debt (Maturity - October 2, 2013)

 

1,079

 

1,079

 

880

 

 

 

 

 

6% Current / 6% PIK Secured Debt (Maturity - October 2, 2013)

 

5,639

 

5,639

 

4,600

 

 

 

 

 

Warrants (Fully diluted 52.3%)

 

 

 

1,096

 

 

 

 

 

 

 

 

 

 

7,814

 

5,480

 

 

 

 

 

 

 

 

 

 

 

 

 

Thermal and Mechanical Equipment, LLC

 

Commercial and Industrial Engineering Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - September 25, 2014) (9)

 

818

 

817

 

818

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - September 25, 2014)

 

2,607

 

2,595

 

2,607

 

 

 

 

 

Member Units (Fully diluted 52.6%) (8)

 

 

 

1,000

 

10,080

 

 

 

 

 

 

 

 

 

4,412

 

13,505

 

 

 

 

 

 

 

 

 

 

 

 

 

Travis Acquisition LLC

 

Manufacturer of Aluminum Trailers

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

9,200

 

9,018

 

9,018

 

 

 

 

 

Member Units (Fully diluted 65.5%)

 

 

 

7,100

 

7,100

 

 

 

 

 

 

 

 

 

16,118

 

16,118

 

 

 

 

 

 

 

 

 

 

 

 

 

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 42.8%) (8)

 

 

 

1,113

 

3,230

 

 

 

 

 

 

 

 

 

 

 

 

 

Van Gilder Insurance Corporation

 

Insurance Brokerage

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - January 31, 2014)

 

1,378

 

1,378

 

1,378

 

 

 

 

 

8% Secured Debt (Maturity - January 31, 2016)

 

1,088

 

1,080

 

1,080

 

 

 

 

 

13% Secured Debt (Maturity - January 31, 2016)

 

6,243

 

5,574

 

5,574

 

 

 

 

 

Warrants (Fully diluted 10.0%)

 

 

 

1,209

 

1,620

 

 

 

 

 

Common Stock (Fully diluted 15.5%)

 

 

 

2,500

 

2,430

 

 

 

 

 

 

 

 

 

11,741

 

12,082

 

 

 

 

 

 

 

 

 

 

 

 

 

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3,204

 

3,155

 

3,155

 

 

 

 

 

Series A Preferred Stock (Fully diluted 50.9%)

 

 

 

3,000

 

1,510

 

 

 

 

 

Common Stock (Fully diluted 19.1%)

 

 

 

3,706

 

 

 

 

 

 

 

 

 

 

9,861

 

4,665

 

 

 

 

 

 

 

 

 

 

 

 

 

Ziegler’s NYPD, LLC

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - October 1, 2013) (9)

 

1,000

 

1,000

 

1,000

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - October 1, 2013)

 

5,449

 

5,449

 

4,820

 

 

 

 

 

Warrants (Fully diluted 46.6%)

 

 

 

600

 

 

 

 

 

 

 

 

 

 

7,049

 

5,820

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Control Investments (29.8% of total investments at fair value)

 

 

 

275,407

 

349,581

 

 

8



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2013

(in thousands)

(Unaudited)

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Affiliate Investments (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Sensor Technologies, Inc.

 

Manufacturer of Commercial / Industrial Sensors

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants (Fully diluted 19.6%)

 

 

 

50

 

10,100

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Secured Debt (Maturity - April 17, 2017)

 

5,000

 

4,787

 

4,787

 

 

 

 

 

Warrants (Fully diluted 7.5%)

 

 

 

200

 

530

 

 

 

 

 

 

 

 

 

4,987

 

5,317

 

 

 

 

 

 

 

 

 

 

 

 

 

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - July 31, 2018)

 

3,750

 

3,750

 

3,750

 

 

 

 

 

Warrants (Fully diluted 15.0%) (8)

 

 

 

100

 

438

 

 

 

 

 

 

 

 

 

3,850

 

4,188

 

 

 

 

 

 

 

 

 

 

 

 

 

Congruent Credit Opportunities Fund II, LP (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LP Interests (Fully diluted 19.8%) (8)

 

 

 

24,675

 

25,309

 

 

 

 

 

 

 

 

 

 

 

 

 

Daseke, Inc.

 

Specialty Transportation Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

20,078

 

19,687

 

19,687

 

 

 

 

 

Common Stock (Fully diluted 12.6%)

 

 

 

3,213

 

10,260

 

 

 

 

 

 

 

 

 

22,900

 

29,947

 

 

 

 

 

 

 

 

 

 

 

 

 

Dos Rios Partners (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LP Interests (Dos Rios Partners, LP) (Fully diluted 27.69%)

 

 

 

1,105

 

1,105

 

 

 

 

 

LP Interests (Dos Rios Partners - A, LP) (Fully diluted 9.14%)

 

 

 

220

 

220

 

 

 

 

 

 

 

 

 

1,325

 

1,325

 

 

 

 

 

 

 

 

 

 

 

 

 

East Teak Fine Hardwoods, Inc.

 

Hardwood Products

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 5.0%)

 

 

 

480

 

380

 

 

 

 

 

 

 

 

 

 

 

 

 

Freeport Financial SBIC Fund LP (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LP Interests (Fully diluted 9.9%)

 

 

 

297

 

297

 

 

 

 

 

 

 

 

 

 

 

 

 

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

14% Secured Debt (Maturity - November 21, 2016)

 

12,165

 

11,719

 

10,890

 

 

 

 

 

Warrants (Fully diluted 22.5%)

 

 

 

400

 

 

 

 

 

 

 

 

 

 

12,119

 

10,890

 

 

9



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

GP Investment Holdings, LLC

 

Cloud Managed Video Collaboration Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 21.5%)

 

 

 

3,800

 

10,235

 

 

 

 

 

 

 

 

 

 

 

 

 

Houston Plating and Coatings, LLC

 

Plating and Industrial Coating Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 11.1%) (8)

 

 

 

635

 

8,830

 

 

 

 

 

 

 

 

 

 

 

 

 

Indianhead Pipeline Services, LLC

 

Pipeline Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8,025

 

7,586

 

8,055

 

 

 

 

 

Preferred Equity (8% cumulative) (8)

 

 

 

1,791

 

1,791

 

 

 

 

 

Warrants (Fully diluted 10.6%)

 

 

 

459

 

890

 

 

 

 

 

Member Units (Fully diluted 12.1%) (8)

 

 

 

1

 

1,000

 

 

 

 

 

 

 

 

 

9,837

 

11,736

 

 

 

 

 

 

 

 

 

 

 

 

 

Integrated Printing Solutions, LLC

 

Specialty Card Printing

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Secured Debt (Maturity - September 23, 2016)

 

12,500

 

11,918

 

11,918

 

 

 

 

 

Preferred Equity (Fully diluted 11.0%)

 

 

 

2,000

 

2,000

 

 

 

 

 

Warrants (Fully diluted 8.0%)

 

 

 

600

 

 

 

 

 

 

 

 

 

 

14,518

 

13,918

 

 

 

 

 

 

 

 

 

 

 

 

 

irth Solutions, LLC

 

Damage Prevention Technology Information Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 12.8%) (8)

 

 

 

624

 

2,550

 

 

 

 

 

 

 

 

 

 

 

 

 

KBK Industries, LLC

 

Specialty Manufacturer of Oilfield and Industrial Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

9,000

 

8,924

 

9,000

 

 

 

 

 

Member Units (Fully diluted 17.9%) (8)

 

 

 

341

 

5,600

 

 

 

 

 

 

 

 

 

9,265

 

14,600

 

 

 

 

 

 

 

 

 

 

 

 

 

OnAsset Intelligence, Inc.

 

Transportation Monitoring / Tracking Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% PIK Secured Debt (Maturity - June 30, 2014)

 

2,113

 

1,465

 

1,465

 

 

 

 

 

Preferred Stock (7% cumulative) (Fully diluted 3.9%) (8)

 

 

 

1,783

 

1,780

 

 

 

 

 

Warrants (Fully diluted 11.9%)

 

 

 

1,707

 

1,080

 

 

 

 

 

 

 

 

 

4,955

 

4,325

 

 

 

 

 

 

 

 

 

 

 

 

 

OPI International Ltd. (13)

 

Oil and Gas Construction Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity (Fully diluted 11.5%) (8)

 

 

 

1,371

 

4,971

 

 

 

 

 

 

 

 

 

 

 

 

 

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Current / 4% PIK Secured Debt (Maturity - December 18, 2017)

 

4,654

 

4,574

 

4,574

 

 

 

 

 

Preferred Stock (20% cumulative) (Fully diluted 19.4%) (8)

 

 

 

1,756

 

3,220

 

 

 

 

 

 

 

 

 

6,330

 

7,794

 

 

 

 

 

 

 

 

 

 

 

 

 

Quality Lease and Rental Holdings, LLC

 

Rigsite Accommodation Unit Rental and Related Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - January 8, 2018)

 

37,350

 

36,843

 

36,843

 

 

 

 

 

Preferred Member Units (Rocaciea, LLC) (Fully diluted 20.0%)

 

 

 

2,500

 

500

 

 

 

 

 

 

 

 

 

39,343

 

37,343

 

 

 

 

 

 

 

 

 

 

 

 

 

Radial Drilling Services Inc.

 

Oil and Gas Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - November 23, 2016)

 

4,200

 

3,588

 

3,588

 

 

 

 

 

Warrants (Fully diluted 24.0%)

 

 

 

758

 

290

 

 

 

 

 

 

 

 

 

4,346

 

3,878

 

 

 

 

 

 

 

 

 

 

 

 

 

Samba Holdings, Inc.

 

Intelligent Driver Record Monitoring Software and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

11,453

 

11,316

 

11,453

 

 

 

 

 

Common Stock (Fully diluted 19.4%)

 

 

 

1,707

 

4,410

 

 

 

 

 

 

 

 

 

13,023

 

15,863

 

 

10



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Spectrio LLC

 

Audio Messaging Services

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - June 16, 2016)

 

280

 

280

 

280

 

 

 

 

 

12% Secured Debt (Maturity - June 16, 2016)

 

17,794

 

17,444

 

17,767

 

 

 

 

 

Warrants (Fully diluted 9.8%)

 

 

 

887

 

3,700

 

 

 

 

 

 

 

 

 

18,611

 

21,747

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNEO, LLC

 

Manufacturer of Specialty Cutting Tools and Punches

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,300

 

4,232

 

4,232

 

 

 

 

 

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

 

1,440

 

1,413

 

1,413

 

 

 

 

 

Member Units (Fully diluted 11.1%)

 

 

 

1,036

 

740

 

 

 

 

 

 

 

 

 

6,681

 

6,385

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas Reexcavation LC

 

Hydro Excavation Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Current / 3% PIK Secured Debt (Maturity - December 31, 2017)

 

6,138

 

6,031

 

6,031

 

 

 

 

 

Class A Member Units (Fully diluted 16.3%)

 

 

 

2,900

 

3,270

 

 

 

 

 

 

 

 

 

8,931

 

9,301

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Affiliate Investments (22.3% of total investments at fair value)

 

 

 

212,953

 

261,229

 

 

11



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2013

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGS LLC (10)

 

Developer, Manufacturer, and Operator of Gaming Machines

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 10.00%, Current Coupon 11.50%, Secured Debt (Maturity - August 23, 2016) (9)

 

10,000

 

9,847

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Allflex Holdings III Inc. (11)

 

Manufacturer of Livestock Identification Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.00%, Current Coupon 8.00%, Secured Debt (Maturity - July 18, 2021) (9)

 

5,000

 

4,951

 

5,079

 

 

 

 

 

 

 

 

 

 

 

 

 

AM General LLC (11)

 

Specialty Vehicle Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,925

 

2,844

 

2,709

 

 

 

 

 

 

 

 

 

 

 

 

 

AM3 Pinnacle Corporation (10)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 3.2%)

 

 

 

2,000

 

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

AMF Bowling Centers, Inc. (11)

 

Bowling Alley Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.50%, Current Coupon 8.75%, Secured Debt (Maturity - July 1, 2018) (9)

 

4,969

 

4,824

 

4,950

 

 

 

 

 

 

 

 

 

 

 

 

 

Ameritech College Operations, LLC

 

For-Profit Nursing and Healthcare College

 

 

 

 

 

 

 

 

 

 

 

 

 

18% Secured Debt (Maturity - March 9, 2017)

 

6,050

 

5,955

 

6,050

 

 

 

 

 

 

 

 

 

 

 

 

 

Anchor Hocking, LLC (11)

 

Household Products Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.50%, Secured Debt (Maturity - May 21, 2020) (9)

 

6,983

 

6,916

 

7,061

 

 

 

 

 

 

 

 

 

 

 

 

 

Ancile Solutions, Inc. (11)

 

Provider of eLearning Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - July 15, 2018) (9)

 

5,000

 

4,952

 

4,988

 

 

 

 

 

 

 

 

 

 

 

 

 

Apria Healthcare Group, Inc. (11)

 

Home Healthcare Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - April 5, 2020) (9)

 

5,486

 

5,453

 

5,536

 

 

 

 

 

 

 

 

 

 

 

 

 

Artel, LLC (11)

 

Land-Based and Commercial Satellite Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,813

 

4,771

 

4,788

 

 

 

 

 

 

 

 

 

 

 

 

 

Atkins Nutritionals Holdings II, Inc. (11)

 

Weight Management Food Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - January 2, 2019) (9)

 

1,990

 

1,990

 

1,995

 

 

12



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

B. J. Alan Company

 

Retailer and Distributor of Consumer Fireworks

 

 

 

 

 

 

 

 

 

 

 

 

 

12.5% Current / 2.5% PIK Secured Debt (Maturity - June 22, 2017)

 

11,164

 

11,083

 

11,083

 

 

 

 

 

 

 

 

 

 

 

 

 

BBTS Borrower LP (11)

 

Oil & Gas Exploration and Midstream Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 7.75%, Secured Debt (Maturity - June 4, 2019) (9)

 

6,965

 

6,898

 

7,068

 

 

 

 

 

 

 

 

 

 

 

 

 

Blackboard, Inc. (11)

 

Education Software Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 10.00%, Current Coupon 11.50%, Secured Debt (Maturity - April 4, 2019) (9)

 

2,000

 

1,863

 

2,060

 

 

 

 

 

 

 

 

 

 

 

 

 

Blackhawk Specialty Tools LLC (11)

 

Oilfield Equipment & Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - August 9, 2019) (9)

 

4,000

 

3,961

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand Connections, LLC

 

Venue-Based Marketing and Media

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - April 30, 2015)

 

7,263

 

7,167

 

7,263

 

 

 

 

 

 

 

 

 

 

 

 

 

Brasa Holdings Inc. (11)

 

Upscale Full Service Restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 5.75%, Secured Debt (Maturity - July 18, 2019) (9)

 

3,465

 

3,383

 

3,487

 

 

 

 

 

LIBOR Plus 9.50%, Current Coupon 11.00%, Secured Debt (Maturity - January 19, 2020) (9)

 

3,857

 

3,817

 

3,915

 

 

 

 

 

 

 

 

 

7,200

 

7,402

 

 

 

 

 

 

 

 

 

 

 

 

 

Calloway Laboratories, Inc. (10)

 

Health Care Testing Facilities

 

 

 

 

 

 

 

 

 

 

 

 

 

12.00% PIK Secured Debt (Maturity - September 30, 2014)

 

6,207

 

6,136

 

5,236

 

 

 

 

 

Warrants (Fully diluted 1.5%)

 

 

 

17

 

 

 

 

 

 

 

 

 

 

6,153

 

5,236

 

 

 

 

 

 

 

 

 

 

 

 

 

CDC Software Corporation (11)

 

Enterprise Application Software

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - August 6, 2018) (9)

 

4,208

 

4,172

 

4,218

 

 

 

 

 

 

 

 

 

 

 

 

 

Cedar Bay Generation Company LP (11)

 

Coal-Fired Cogeneration Plant

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8,351

 

8,272

 

8,435

 

 

 

 

 

 

 

 

 

 

 

 

 

Charlotte Russe, Inc (11)

 

Fast-Fashion Retailer to Young Women

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5,000

 

4,953

 

4,900

 

 

 

 

 

 

 

 

 

 

 

 

 

CHI Overhead Doors, Inc. (11)

 

Manufacturer of Overhead Garage Doors

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,500

 

2,461

 

2,513

 

 

 

 

 

 

 

 

 

 

 

 

 

Collective Brands Finance, Inc. (11)

 

Specialty Footwear Retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - September 20, 2019) (9)

 

2,488

 

2,488

 

2,488

 

 

13



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Compact Power Equipment Centers Inc.

 

Equipment / Tool Rental

 

 

 

 

 

 

 

 

 

 

 

 

 

6% Current / 6% PIK Secured Debt (Maturity - October 1, 2017)

 

3,858

 

3,841

 

3,841

 

 

 

 

 

Series A Stock (8% cumulative) (Fully diluted 4.2%) (8)

 

 

 

979

 

1,767

 

 

 

 

 

 

 

 

 

4,820

 

5,608

 

 

 

 

 

 

 

 

 

 

 

 

 

Confie Seguros Holding II Co. (11)

 

Insurance Brokerage Firm

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - November 9, 2018) (9)

 

5,911

 

5,841

 

5,930

 

 

 

 

 

 

 

 

 

 

 

 

 

CGSC of Delaware Holdings Corp. (11)

 

Insurance Brokerage Firm

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,000

 

1,971

 

1,980

 

 

 

 

 

 

 

 

 

 

 

 

 

Connolly Holdings Inc. (11)

 

Audit Recovery Software

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - July 15, 2018) (9)

 

2,395

 

2,375

 

2,407

 

 

 

 

 

LIBOR Plus 9.25%, Current Coupon 10.50%, Secured Debt (Maturity - January 15, 2019) (9)

 

2,000

 

1,966

 

2,025

 

 

 

 

 

 

 

 

 

4,341

 

4,432

 

 

 

 

 

 

 

 

 

 

 

 

 

CST Industries Inc. (11)

 

Storage Tank Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

11,875

 

11,737

 

11,845

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling Info, Inc.

 

Information Services for the Oil and Gas Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 2.3%)

 

 

 

1,335

 

8,900

 

 

 

 

 

 

 

 

 

 

 

 

 

EB Sports Corp. (10)

 

Sporting Goods Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

11.50% Secured Debt (Maturity - December 31, 2015)

 

10,000

 

10,000

 

9,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Emerald Performance Materials, Inc. (11)

 

Specialty Chemicals Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - May 18, 2018) (9)

 

4,456

 

4,422

 

4,490

 

 

 

 

 

 

 

 

 

 

 

 

 

EnCap Energy Fund Investments (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

2,570

 

2,687

 

 

 

 

 

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.3%)

 

 

 

1,192

 

1,301

 

 

 

 

 

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

 

 

 

460

 

460

 

 

 

 

 

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

 

 

 

2,508

 

2,508

 

 

 

 

 

 

 

 

 

6,730

 

6,956

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairmount Minerals LTD (11)

 

Industrial Sand Producer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.00%, Secured Debt (Maturity - July 10, 2019) (9)

 

250

 

249

 

251

 

 

 

 

 

 

 

 

 

 

 

 

 

Fender Musical Instruments Corporation (11)

 

Manufacturer of Musical Instruments

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - April 3, 2019) (9)

 

481

 

477

 

484

 

 

14



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

FC Operating, LLC (10)

 

Christian Specialty Retail Stores

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5,700

 

5,602

 

5,700

 

 

 

 

 

 

 

 

 

 

 

 

 

FishNet Security, Inc. (11)

 

Information Technology Value-Added Reseller

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

7,940

 

7,872

 

7,947

 

 

 

 

 

 

 

 

 

 

 

 

 

Fram Group Holdings, Inc. (11)

 

Manufacturer of Automotive Maintenance Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

964

 

961

 

949

 

 

 

 

 

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

 

1,000

 

996

 

972

 

 

 

 

 

 

 

 

 

1,957

 

1,921

 

 

 

 

 

 

 

 

 

 

 

 

 

Gastar Exploration USA, Inc. (11)

 

Oil & Gas Exploration & Production

 

 

 

 

 

 

 

 

 

 

 

 

 

8.63% Secured Bond (Maturity - May 15, 2018)

 

1,000

 

1,000

 

945

 

 

 

 

 

 

 

 

 

 

 

 

 

Grupo Hima San Pablo, Inc. (11)

 

Tertiary Care Hospitals

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,975

 

4,885

 

4,726

 

 

 

 

 

13.75 Secured Debt (Maturity - July 31, 2018) (9)

 

2,000

 

1,907

 

1,900

 

 

 

 

 

 

 

 

 

6,792

 

6,626

 

 

 

 

 

 

 

 

 

 

 

 

 

Hayden Acquisition, LLC

 

Manufacturer of Utility Structures

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - October 1, 2013) (15)

 

1,800

 

1,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healogics, Inc. (11)

 

Wound Care Management

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity (Fully diluted 0.02%) (8)

 

 

 

50

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson Products Holdings, Inc. (11)

 

Manufacturer of Heat Transfer Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - June 7, 2017) (9)

 

4,125

 

4,094

 

4,159

 

 

 

 

 

 

 

 

 

 

 

 

 

iEnergizer Limited (11) (13)

 

Provider of Business Outsourcing Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6,825

 

6,707

 

6,790

 

 

 

 

 

 

 

 

 

 

 

 

 

Ipreo Holdings LLC (11)

 

Application Software for Capital Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - August 5, 2017) (9)

 

5,637

 

5,574

 

5,693

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Middle Market Credit Fund III, Ltd. (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 6.78%, Secured Debt (Maturity - January 15, 2022)

 

2,000

 

1,698

 

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Jackson Hewitt Tax Service Inc. (11)

 

Tax Preparation Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 8.50%, Current Coupon 10.00%, Secured Debt (Maturity - October 15, 2017) (9)

 

4,844

 

4,680

 

4,820

 

 

15



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Joernes Healthcare, LLC (11)

 

Health Care Equipment & Supplies

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - March 28, 2018) (9)

 

6,468

 

6,408

 

6,306

 

 

 

 

 

 

 

 

 

 

 

 

 

Keypoint Government Solutions, Inc. (11)

 

Pre-Employment Screening Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - November 13, 2017) (9)

 

4,875

 

4,792

 

4,826

 

 

 

 

 

 

 

 

 

 

 

 

 

Larchmont Resources, LLC (11)

 

Oil & Gas Exploration & Production

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.25%, Current Coupon 8.50%, Secured Debt (Maturity - August 7, 2019) (9)

 

6,983

 

6,914

 

6,990

 

 

 

 

 

 

 

 

 

 

 

 

 

Learning Care Group (US) No. 2 Inc. (11)

 

Provider of Early Childhood Education

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 6.00%, Secured Debt (Maturity - May 8, 2019) (9)

 

5,500

 

5,448

 

5,497

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LP Interests (Fully diluted 2.27%) (8)

 

 

 

925

 

2,330

 

 

 

 

 

 

 

 

 

 

 

 

 

MAH Merger Corporation (11)

 

Sports-Themed Casual Dining Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - July 18, 2019) (9)

 

6,000

 

5,942

 

5,970

 

 

 

 

 

 

 

 

 

 

 

 

 

Media Holdings, LLC (11) (13)

 

Internet Traffic Generator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 13.00%, Current Coupon 15.00%, Secured Debt (Maturity - April 27, 2014) (9)

 

5,000

 

5,564

 

5,576

 

 

 

 

 

 

 

 

 

 

 

 

 

MediMedia USA, Inc. (11)

 

Provider of Healthcare Media and Marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5,486

 

5,331

 

5,349

 

 

 

 

 

 

 

 

 

 

 

 

 

Medpace Intermediateco, Inc. (11)

 

Clinical Trial Development and Execution

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.50%, Secured Debt (Maturity - June 19, 2017) (9)

 

3,626

 

3,589

 

3,640

 

 

 

 

 

 

 

 

 

 

 

 

 

MedSolutions Holdings, Inc. (11)

 

Specialty Benefit Management

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - July 8, 2019) (9)

 

3,950

 

3,912

 

3,955

 

 

 

 

 

 

 

 

 

 

 

 

 

Metal Services LLC (11)

 

Steel Mill Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 7.75%, Secured Debt (Maturity - June 30, 2017) (9)

 

4,963

 

4,879

 

5,006

 

 

 

 

 

 

 

 

 

 

 

 

 

Milk Specialties Company (11)

 

Processor of Nutrition Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - November 9, 2018) (9)

 

4,975

 

4,931

 

4,981

 

 

 

 

 

 

 

 

 

 

 

 

 

Miramax Film NY, LLC (11)

 

Motion Picture Producer and Distributor

 

 

 

 

 

 

 

 

 

 

 

 

 

Class B Units (Fully diluted 0.2%)

 

 

 

500

 

801

 

 

16



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Modern VideoFilm, Inc. (10)

 

Post-Production Film Studio

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 3.50% Current / 8.50% PIK, Current Coupon Plus PIK 13.50%, Secured Debt (Maturity - December 19, 2017) (9)

 

5,281

 

5,076

 

4,712

 

 

 

 

 

Warrants (Fully diluted 2.5%)

 

 

 

151

 

1

 

 

 

 

 

 

 

 

 

5,227

 

4,713

 

 

 

 

 

 

 

 

 

 

 

 

 

National Vision, Inc. (11)

 

Discount Optical Retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - August 2, 2018) (9)

 

3,209

 

3,168

 

3,225

 

 

 

 

 

 

 

 

 

 

 

 

 

NCP Investment Holdings, Inc.

 

Management of Outpatient Cardiac Cath Labs

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and C Units (Fully diluted 3.3%)

 

 

 

20

 

2,960

 

 

 

 

 

 

 

 

 

 

 

 

 

Neenah Foundry Company (11)

 

Operator of Iron Foundries

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - April 26, 2017) (9)

 

7,406

 

7,272

 

7,422

 

 

 

 

 

 

 

 

 

 

 

 

 

NGPL PipeCo, LLC (11)

 

Natural Gas Pipelines and Storage Facilities

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - September 15, 2017) (9)

 

9,918

 

9,762

 

8,893

 

 

 

 

 

 

 

 

 

 

 

 

 

Nice-Pak Products, Inc. (11)

 

Pre-Moistened Wipes Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 8.00%, Secured Debt (Maturity - June 18, 2014) (9)

 

5,701

 

5,625

 

5,559

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Breweries Holdings, LLC (11)

 

Operator of Specialty Breweries

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.50%, Secured Debt (Maturity - December 11, 2018) (9)

 

3,980

 

3,909

 

4,010

 

 

 

 

 

 

 

 

 

 

 

 

 

NRC US Holding Company LLC (11)

 

Environmental Services Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.50%, Secured Debt (Maturity - August 5, 2019) (9)

 

3,456

 

3,439

 

3,465

 

 

 

 

 

 

 

 

 

 

 

 

 

Nuverra Environmental Solutions, Inc. (11) (13)

 

Water Treatment and Disposal Services

 

 

 

 

 

 

 

 

 

 

 

 

 

9.88% Unsecured Bond (Maturity - April 15, 2018)

 

3,500

 

3,500

 

3,553

 

 

 

 

 

 

 

 

 

 

 

 

 

Oberthur Technologies SA (11) (13)

 

Smart Card, Printing, Identity, and Cash Protection Security

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - November 30, 2018) (9)

 

6,930

 

6,647

 

6,959

 

 

 

 

 

 

 

 

 

 

 

 

 

Ospemifene Royalty Sub LLC (QuatRx) (10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

 

 

 

 

 

 

 

 

 

 

 

 

 

11.50% Secured Debt (Maturity - November 15, 2026)

 

5,000

 

5,000

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Panolam Industries International, Inc. (11)

 

Decorative Laminate Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - August 23, 2017) (9)

 

4,746

 

4,713

 

4,726

 

 

 

 

 

 

 

 

 

 

 

 

 

Permian Holdings, Inc. (11)

 

Storage Tank Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

10.50% Secured Bond (Maturity - January 15, 2018)

 

3,500

 

3,461

 

3,413

 

 

17



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Philadelphia Energy Solutions Refining and Marketing LLC (11)

 

Oil & Gas Refiner

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,993

 

2,951

 

2,663

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyconcept Financial B.V. (11)

 

Promotional Products to Corporations and Consumers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 6.00%, Secured Debt (Maturity - June 30, 2019) (9)

 

3,427

 

3,394

 

3,414

 

 

 

 

 

 

 

 

 

 

 

 

 

Primesight Limited (10) (13)

 

Outdoor Advertising Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

11.25% Secured Debt (Maturity - October 17, 2015)

 

7,479

 

7,479

 

7,771

 

 

 

 

 

 

 

 

 

 

 

 

 

Radio One, Inc. (11)

 

Radio Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - March 31, 2016) (9)

 

2,910

 

2,878

 

2,982

 

 

 

 

 

 

 

 

 

 

 

 

 

Relativity Media, LLC (10)

 

Full-scale Film and Television Production and Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

10.00% Secured Debt (Maturity - May 24, 2015)

 

4,787

 

4,731

 

4,787

 

 

 

 

 

15.00% PIK Secured Debt (Maturity - May 24, 2015)

 

6,132

 

5,928

 

6,132

 

 

 

 

 

Class A Units (Fully diluted 0.2%)

 

 

 

292

 

1,521

 

 

 

 

 

 

 

 

 

10,951

 

12,440

 

 

 

 

 

 

 

 

 

 

 

 

 

Sabre Industries, Inc. (11)

 

Manufacturer of Telecom Structures and Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 5.75%, Secured Debt (Maturity - August 24, 2018) (9)

 

4,987

 

4,940

 

5,037

 

 

 

 

 

 

 

 

 

 

 

 

 

SAExploration, Inc. (10) (13)

 

Geophysical Services Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

11.00% Current / 2.50% PIK Secured Debt (Maturity - November 28, 2016)

 

8,063

 

8,168

 

8,063

 

 

 

 

 

Common Stock (Fully diluted 0.01%) (8)

 

 

65

 

59

 

 

 

 

 

 

 

 

 

8,233

 

8,122

 

 

 

 

 

 

 

 

 

 

 

 

 

SCE Partners, LLC (10)

 

Hotel & Casino Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.25%, Current Coupon 8.25%, Secured Debt (Maturity - August 8, 2019) (9)

 

7,500

 

7,427

 

7,463

 

 

 

 

 

 

 

 

 

 

 

 

 

Sotera Defense Solutions, Inc. (11)

 

Defense Industry Intelligence Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - April 22, 2017) (9)

 

8,753

 

8,469

 

8,096

 

 

 

 

 

 

 

 

 

 

 

 

 

Sourcehov LLC (11)

 

Business Process Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.50%, Current Coupon 8.75%, Secured Debt (Maturity - April 30, 2018) (9)

 

1,500

 

1,486

 

1,521

 

 

 

 

 

 

 

 

 

 

 

 

 

Sutherland Global Services, Inc. (11)

 

Business Process Outsourcing Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - March 6, 2019) (9)

 

6,825

 

6,701

 

6,816

 

 

 

 

 

 

 

 

 

 

 

 

 

Synagro Infrastructure Company, Inc (11)

 

Waste Management Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.25%, Secured Debt (Maturity - August 29, 2020) (9)

 

7,000

 

6,863

 

6,919

 

 

18



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Targus Group International (11)

 

Protective Cases for Mobile Devices

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.50% Current / 1% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity - May 24, 2016) (9)

 

4,472

 

4,492

 

4,024

 

 

 

 

 

 

 

 

 

 

 

 

 

Technimark LLC (11)

 

Injection Molding

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.25%, Current Coupon 5.50%, Secured Debt (Maturity - April 17, 2019) (9)

 

3,990

 

3,953

 

4,010

 

 

 

 

 

 

 

 

 

 

 

 

 

TeleGuam Holdings, LLC (11)

 

Cable and Telecommunications Services Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - December 1, 2018) (9)

 

6,983

 

6,949

 

6,983

 

 

 

 

 

LIBOR Plus 7.50%, Current Coupon 8.75%, Secured Debt (Maturity - June 1, 2019) (9)

 

2,500

 

2,476

 

2,513

 

 

 

 

 

 

 

 

 

9,425

 

9,496

 

 

 

 

 

 

 

 

 

 

 

 

 

Tervita Corporation (11) (13)

 

Oil and Gas Environmental Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - May 15, 2018) (9)

 

3,483

 

3,451

 

3,415

 

 

 

 

 

 

 

 

 

 

 

 

 

The Tennis Channel, Inc. (10)

 

Television-Based Sports Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants (Fully diluted 0.1%)

 

 

 

235

 

280

 

 

 

 

 

 

 

 

 

 

 

 

 

The Topps Company, Inc. (11)

 

Trading Cards & Confectionary

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - September 27, 2018) (9)

 

2,000

 

1,980

 

2,010

 

 

 

 

 

 

 

 

 

 

 

 

 

ThermaSys Corporation (11)

 

Manufacturer of Industrial Heat Exchanges

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - May 3, 2019) (9)

 

6,000

 

5,944

 

5,993

 

 

 

 

 

 

 

 

 

 

 

 

 

Therakos, Inc. (11)

 

Immune System Disease Treatment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.50%, Secured Debt (Maturity - December 27, 2017) (9)

 

4,963

 

4,830

 

4,972

 

 

 

 

 

 

 

 

 

 

 

 

 

Totes Isotoner Corporation (11)

 

Weather Accessory Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.25%, Secured Debt (Maturity - July 7, 2017) (9)

 

4,532

 

4,479

 

4,553

 

 

 

 

 

 

 

 

 

 

 

 

 

UniTek Global Services, Inc. (11)

 

Provider of Outsourced Infrastructure Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.50% Current / 4.00% PIK, Current Coupon Plus PIK 15.00%, Secured Debt (Maturity - April 15, 2018) (9)

 

9,320

 

8,603

 

9,344

 

 

 

 

 

Warrants (Fully diluted 1.4%)

 

 

 

449

 

313

 

 

 

 

 

 

 

 

 

9,052

 

9,657

 

 

 

 

 

 

 

 

 

 

 

 

 

Universal Fiber Systems, LLC (10)

 

Manufacturer of Synthetic Fibers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.50%, Secured Debt (Maturity - June 26, 2015) (9)

 

10,521

 

10,460

 

10,573

 

 

 

 

 

 

 

 

 

 

 

 

 

US Xpress Enterprises, Inc. (11)

 

Truckload Carrier

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.88%, Current Coupon 9.38%, Secured Debt (Maturity - November 13, 2016) (9)

 

6,155

 

6,054

 

6,124

 

 

19



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Vantage Oncology, LLC (11)

 

Outpatient Radiation Oncology Treatment Centers

 

 

 

 

 

 

 

 

 

 

 

 

 

9.50% Secured Bond (Maturity - June 15, 2017)

 

7,000

 

7,000

 

7,053

 

 

 

 

 

 

 

 

 

 

 

 

 

VFH Parent LLC (11)

 

Electronic Trading and Market Making

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - July 8, 2016) (9)

 

4,765

 

4,762

 

4,813

 

 

 

 

 

 

 

 

 

 

 

 

 

Visant Corporation (11)

 

School Affinity Stores

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - December 22, 2016) (9)

 

3,882

 

3,882

 

3,775

 

 

 

 

 

 

 

 

 

 

 

 

 

Vision Solutions, Inc. (11)

 

Provider of Information Availability Software

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,382

 

2,252

 

2,363

 

 

 

 

 

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

 

5,000

 

4,967

 

4,950

 

 

 

 

 

 

 

 

 

7,219

 

7,313

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Dental Services, Inc. (11)

 

Dental Care Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.00%, Current Coupon 8.25%, Secured Debt (Maturity - November 1, 2018) (9)

 

4,963

 

4,832

 

4,994

 

 

 

 

 

 

 

 

 

 

 

 

 

Willbros Group, Inc. (11) (13)

 

Engineering and Construction Contractor

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.75%, Current Coupon 11.00%, Secured Debt (Maturity - August 19, 2019) (9)

 

3,000

 

2,897

 

3,020

 

 

 

 

 

 

 

 

 

 

 

 

 

Wilton Brands LLC (11)

 

Specialty Housewares Retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1,900

 

1,868

 

1,867

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireco Worldgroup Inc. (11)

 

Manufacturer of Synthetic Lifting Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 6.00%, Secured Debt (Maturity - February 15, 2017) (9)

 

2,475

 

2,456

 

2,487

 

 

 

 

 

 

 

 

 

 

 

 

 

Xerium Technologies, Inc. (11)

 

Paper Production Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - May 17, 2019) (9)

 

1,995

 

1,986

 

2,017

 

 

 

 

 

 

 

 

 

 

 

 

 

YP Holdings LLC (11)

 

Online and Offline Advertising Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.75%, Current Coupon 8.00%, Secured Debt (Maturity - June 30, 2018) (9)

 

3,390

 

3,310

 

3,382

 

 

 

 

 

 

 

 

 

 

 

 

 

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - June 15, 2017)

 

8,000

 

7,005

 

7,005

 

 

 

 

 

Warrants (Fully diluted 2.7%)

 

 

 

1,071

 

1,071

 

 

 

 

 

 

 

 

 

8,076

 

8,076

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Non-Control/Non-Affiliate Investments (46.2% of total investments at fair value)

 

 

 

526,197

 

541,597

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio Investments, September 30, 2013

 

 

 

1,014,557

 

1,152,407

 

 

20



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

September 30, 2013

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Marketable Securities and Idle Funds Investments (13)

 

 

 

21,195

 

19,963

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Marketable Securities and Idle Funds Investments (1.7% of total investments at fair value)

 

 

 

21,195

 

19,963

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments, September 30, 2013

 

 

 

 

 

 

 

$

1,035,752

 

$

1,172,370

 

 


(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted.

(2)

Debt investments are generally 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 Loans portfolio investment. See Note B for summary of Private Loan.

(11)

Middle Market portfolio investment. See Note B for summary of Middle Market.

(12)

Other Portfolio investment. See Note B for summary of Other Portfolio.

(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)

Fully impaired and non-income producing investment.

 

21



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012

(in thousands)

(Unaudited)

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Control Investments (5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

14,750

 

14,550

 

14,550

 

 

 

 

 

Common Stock (Fully diluted 43.4%)

 

 

 

6,350

 

6,350

 

 

 

 

 

 

 

 

 

20,900

 

20,900

 

 

 

 

 

 

 

 

 

 

 

 

 

Café Brazil, LLC

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - April 20, 2013)

 

500

 

500

 

500

 

 

 

 

 

Member Units (Fully diluted 41.0%) (8)

 

 

 

42

 

3,690

 

 

 

 

 

 

 

 

 

542

 

4,190

 

 

 

 

 

 

 

 

 

 

 

 

 

California Healthcare Medical Billing, Inc.

 

Outsourced Billing and Revenue Cycle Management

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - October 17, 2015)

 

8,103

 

7,913

 

8,016

 

 

 

 

 

Warrants (Fully diluted 21.3%)

 

 

 

1,193

 

3,380

 

 

 

 

 

Common Stock (Fully diluted 9.8%)

 

 

 

1,177

 

1,560

 

 

 

 

 

 

 

 

 

10,283

 

12,956

 

 

 

 

 

 

 

 

 

 

 

 

 

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

 

 

 

 

 

 

 

 

 

 

 

 

 

14% Secured Debt (Maturity - December 31, 2013)

 

450

 

450

 

450

 

 

 

 

 

Member Units (Fully diluted 41.6%) (8)

 

 

 

1,300

 

7,800

 

 

 

 

 

 

 

 

 

1,750

 

8,250

 

 

 

 

 

 

 

 

 

 

 

 

 

Ceres Management, LLC (Lambs Tire & Automotive)

 

Aftermarket Automotive Services Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

14% Secured Debt (Maturity - May 31, 2013)

 

4,000

 

3,993

 

3,993

 

 

 

 

 

Class B Member Units (12% cumulative)

 

 

 

3,000

 

3,000

 

 

 

 

 

Member Units (Fully diluted 79.0%)

 

 

 

5,273

 

 

 

 

 

 

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

 

1,066

 

1,066

 

1,066

 

 

 

 

 

Member Units (Lamb’s Real Estate Investment I, LLC) (Fully diluted 100%)

 

 

 

625

 

860

 

 

 

 

 

 

 

 

 

13,957

 

8,919

 

 

 

 

 

 

 

 

 

 

 

 

 

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - July 1, 2013)

 

4,661

 

4,652

 

4,652

 

 

 

 

 

Warrants (Fully diluted 47.9%)

 

 

 

320

 

600

 

 

 

 

 

 

 

 

 

4,972

 

5,252

 

 

 

 

 

 

 

 

 

 

 

 

 

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

919

 

919

 

919

 

 

 

 

 

Member Units (Fully diluted 34.2%) (8)

 

 

 

2,980

 

12,660

 

 

 

 

 

 

 

 

 

3,899

 

13,579

 

 

 

 

 

 

 

 

 

 

 

 

 

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

 

 

 

 

 

 

 

 

 

 

 

 

 

9% Secured Debt (Maturity - June 4, 2015)

 

5,024

 

4,644

 

5,024

 

 

 

 

 

Preferred Stock (8% cumulative) (8)

 

 

 

1,081

 

1,081

 

 

 

 

 

Common Stock (Fully diluted 34.5%) (8)

 

 

 

718

 

1,550

 

 

 

 

 

 

 

 

 

6,443

 

7,655

 

 

 

 

 

 

 

 

 

 

 

 

 

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 47.6%) (8)

 

 

 

589

 

1,140

 

 

 

 

 

Member Units (Wallisville Real Estate, LLC) (Fully diluted 59.1%) (8)

 

 

 

1,215

 

1,215

 

 

 

 

 

 

 

 

 

1,804

 

2,355

 

 

22



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 94.2%) (8)

 

 

 

7,095

 

13,710

 

 

 

 

 

 

 

 

 

 

 

 

 

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

15% Secured Debt (Maturity - September 15, 2014)

 

4,150

 

3,982

 

4,070

 

 

 

 

 

Warrants (Fully diluted 30.1%)

 

 

 

1,129

 

2,130

 

 

 

 

 

 

 

 

 

5,111

 

6,200

 

 

 

 

 

 

 

 

 

 

 

 

 

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 5.25%, Secured Debt (Maturity - November 14, 2013) (9)

 

1,696

 

1,696

 

1,696

 

 

 

 

 

13% Current / 6% PIK Secured Debt (Maturity - November 14, 2013)

 

1,759

 

1,759

 

1,759

 

 

 

 

 

Member Units (Fully diluted 60.8%) (8)

 

 

 

811

 

2,060

 

 

 

 

 

 

 

 

 

4,266

 

5,515

 

 

 

 

 

 

 

 

 

 

 

 

 

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - August 22, 2014)

 

1,892

 

1,892

 

1,892

 

 

 

 

 

Preferred Stock (non-voting)

 

 

 

493

 

493

 

 

 

 

 

Warrants (Fully diluted 7.1%)

 

 

 

54

 

4

 

 

 

 

 

Common Stock (Fully diluted 70.0%) (8)

 

 

 

100

 

36

 

 

 

 

 

 

 

 

 

2,539

 

2,425

 

 

 

 

 

 

 

 

 

 

 

 

 

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

 

Fabricator of Marine and Industrial Shelters

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

10,250

 

10,045

 

10,045

 

 

 

 

 

Preferred Stock (Fully diluted 26.7%)

 

 

 

3,750

 

3,750

 

 

 

 

 

 

 

 

 

13,795

 

13,795

 

 

 

 

 

 

 

 

 

 

 

 

 

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

 

 

 

 

 

 

 

 

 

 

 

 

 

10% Secured Debt (Maturity - December 18, 2014)

 

1,250

 

1,250

 

1,250

 

 

 

 

 

12% Secured Debt (Maturity - December 18, 2014)

 

3,900

 

3,900

 

3,900

 

 

 

 

 

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

 

1,017

 

1,017

 

1,017

 

 

 

 

 

Warrants (Fully diluted 9.2%)

 

 

 

250

 

1,470

 

 

 

 

 

Member Units (Fully diluted 42.9%)

 

 

 

882

 

1,580

 

 

 

 

 

Member Units (Mid - Columbia Real Estate, LLC) (Fully diluted 50.0%) (8)

 

 

 

250

 

810

 

 

 

 

 

 

 

 

 

7,549

 

10,027

 

 

 

 

 

 

 

 

 

 

 

 

 

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - February 1, 2016) (9)

 

3,385

 

3,334

 

3,334

 

 

 

 

 

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

 

5,173

 

5,093

 

5,093

 

 

 

 

 

Member Units (Fully diluted 44.0%)

 

 

 

2,975

 

4,360

 

 

 

 

 

 

 

 

 

11,402

 

12,787

 

 

 

 

 

 

 

 

 

 

 

 

 

NRI Clinical Research, LLC

 

Clinical Research Center

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,736

 

4,506

 

4,506

 

 

 

 

 

Warrants (Fully diluted 12.5%)

 

 

 

252

 

480

 

 

 

 

 

Member Units (Fully diluted 24.8%) (8)

 

 

 

500

 

960

 

 

 

 

 

 

 

 

 

5,258

 

5,946

 

 

 

 

 

 

 

 

 

 

 

 

 

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

12,100

 

11,200

 

11,891

 

 

 

 

 

Warrants (Fully diluted 12.2%)

 

 

 

817

 

1,350

 

 

 

 

 

Member Units (Fully diluted 43.2%) (8)

 

 

 

2,900

 

4,800

 

 

 

 

 

 

 

 

 

14,917

 

18,041

 

 

 

 

 

 

 

 

 

 

 

 

 

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - April 1, 2013)

 

6,000

 

5,997

 

6,000

 

 

 

 

 

Common Stock (Fully diluted 48.0%)

 

 

 

1,080

 

8,740

 

 

 

 

 

 

 

 

 

7,077

 

14,740

 

 

23



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Pegasus Research Group, LLC (Televerde)

 

Telemarketing and Data Services

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - January 6, 2016)

 

4,991

 

4,946

 

4,991

 

 

 

 

 

Member Units (Fully diluted 43.7%) (8)

 

 

 

1,250

 

3,790

 

 

 

 

 

 

 

 

 

6,196

 

8,781

 

 

 

 

 

 

 

 

 

 

 

 

 

PPL RVs, Inc.

 

Recreational Vehicle Dealer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8,460

 

8,404

 

8,460

 

 

 

 

 

Common Stock (Fully diluted 51.1%)

 

 

 

2,150

 

6,120

 

 

 

 

 

 

 

 

 

10,554

 

14,580

 

 

 

 

 

 

 

 

 

 

 

 

 

Principle Environmental, LLC

 

Noise Abatement Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - February 1, 2016)

 

4,750

 

3,945

 

4,750

 

 

 

 

 

12% Current / 2% PIK Secured Debt (Maturity - February 1, 2016)

 

3,594

 

3,539

 

3,594

 

 

 

 

 

Warrants (Fully diluted 14.2%)

 

 

 

1,200

 

3,860

 

 

 

 

 

Member Units (Fully diluted 22.6%)

 

 

 

1,863

 

6,150

 

 

 

 

 

 

 

 

 

10,547

 

18,354

 

 

 

 

 

 

 

 

 

 

 

 

 

River Aggregates, LLC

 

Processor of Construction Aggregates

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - March 30, 2016)

 

3,860

 

3,662

 

3,662

 

 

 

 

 

Warrants (Fully diluted 20.0%)

 

 

 

202

 

 

 

 

 

 

Member Units (Fully diluted 40.0%)

 

 

 

550

 

 

 

 

 

 

 

 

 

 

4,414

 

3,662

 

 

 

 

 

 

 

 

 

 

 

 

 

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

 

 

 

 

 

 

 

 

 

 

 

 

 

4.5% Current / 4.5% PIK Secured Debt (Maturity - October 2, 2013)

 

1,079

 

1,077

 

1,077

 

 

 

 

 

6% Current / 6% PIK Secured Debt (Maturity - October 2, 2013)

 

5,639

 

5,588

 

5,588

 

 

 

 

 

Warrants (Fully diluted 52.3%)

 

 

 

1,096

 

 

 

 

 

 

 

 

 

 

7,761

 

6,665

 

 

 

 

 

 

 

 

 

 

 

 

 

Thermal and Mechanical Equipment, LLC

 

Commercial and Industrial Engineering Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - September 25, 2014) (9)

 

1,033

 

1,030

 

1,033

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - September 25, 2014)

 

3,292

 

3,268

 

3,292

 

 

 

 

 

Member Units (Fully diluted 50.0%) (8)

 

 

 

1,000

 

8,250

 

 

 

 

 

 

 

 

 

5,298

 

12,575

 

 

 

 

 

 

 

 

 

 

 

 

 

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 42.8%) (8)

 

 

 

1,113

 

2,760

 

 

 

 

 

 

 

 

 

 

 

 

 

Van Gilder Insurance Corporation

 

Insurance Brokerage

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - January 31, 2014)

 

915

 

914

 

914

 

 

 

 

 

8% Secured Debt (Maturity - January 31, 2016)

 

1,361

 

1,349

 

1,349

 

 

 

 

 

13% Secured Debt (Maturity - January 31, 2016)

 

6,150

 

5,319

 

5,319

 

 

 

 

 

Warrants (Fully diluted 10.0%)

 

 

 

1,209

 

1,180

 

 

 

 

 

Common Stock (Fully diluted 15.5%)

 

 

 

2,500

 

2,430

 

 

 

 

 

 

 

 

 

11,291

 

11,192

 

 

 

 

 

 

 

 

 

 

 

 

 

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

 

 

 

 

 

 

 

 

 

 

 

 

 

6.5% Current /6.5% PIK Secured Debt (Maturity - December 23, 2016)

 

3,204

 

3,146

 

3,146

 

 

 

 

 

Series A Preferred Stock (Fully diluted 50.9%)

 

 

 

3,000

 

2,930

 

 

 

 

 

Common Stock (Fully diluted 19.1%)

 

 

 

3,706

 

110

 

 

 

 

 

 

 

 

 

9,852

 

6,186

 

 

 

 

 

 

 

 

 

 

 

 

 

Ziegler’s NYPD, LLC

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

Prime Plus 2%, Current Coupon 9%, Secured Debt (Maturity - October 1, 2013) (9)

 

1,000

 

998

 

998

 

 

 

 

 

13% Current / 5% PIK Secured Debt (Maturity - October 1, 2013)

 

5,314

 

5,300

 

5,300

 

 

 

 

 

Warrants (Fully diluted 46.6%)

 

 

 

600

 

180

 

 

 

 

 

 

 

 

 

6,898

 

6,478

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Control Investments (29.2% of total investments at fair value)

 

 

 

217,483

 

278,475

 

 

24



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012

(in thousands)

(Unaudited)

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Affiliate Investments (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Sensor Technologies, Inc.

 

Manufacturer of Commercial / Industrial Sensors

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants (Fully diluted 19.6%)

 

 

 

50

 

4,170

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Secured Debt (Maturity - April 17, 2017)

 

5,000

 

4,754

 

4,754

 

 

 

 

 

Warrants (Fully diluted 7.5%)

 

 

 

200

 

310

 

 

 

 

 

 

 

 

 

4,954

 

5,064

 

 

 

 

 

 

 

 

 

 

 

 

 

Congruent Credit Opportunities Fund II, LP (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LP Interests (Fully diluted 19.8%) (8)

 

 

 

19,049

 

19,174

 

 

 

 

 

 

 

 

 

 

 

 

 

Daseke, Inc.

 

Specialty Transportation Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 12.6%)

 

 

 

1,427

 

7,310

 

 

 

 

 

 

 

 

 

 

 

 

 

East Teak Fine Hardwoods, Inc.

 

Hardwood Products

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 5.0%)

 

 

 

480

 

380

 

 

 

 

 

 

 

 

 

 

 

 

 

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Liquidation of Distressed Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

14% Secured Debt (Maturity - November 21, 2016)

 

9,828

 

9,348

 

9,348

 

 

 

 

 

Warrants (Fully diluted 22.5%)

 

 

 

400

 

240

 

 

 

 

 

 

 

 

 

9,748

 

9,588

 

 

 

 

 

 

 

 

 

 

 

 

 

Houston Plating and Coatings, LLC

 

Plating and Industrial Coating Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Member Units (Fully diluted 11.1%) (8)

 

 

 

635

 

8,280

 

 

 

 

 

 

 

 

 

 

 

 

 

Indianhead Pipeline Services, LLC

 

Pipeline Support Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8,725

 

8,186

 

8,186

 

 

 

 

 

Preferred Equity (Fully diluted 8.0%) (8)

 

 

 

1,676

 

1,676

 

 

 

 

 

Warrants (Fully diluted 10.6%)

 

 

 

459

 

1,490

 

 

 

 

 

Member Units (Fully diluted 4.1%) (8)

 

 

 

1

 

50

 

 

 

 

 

 

 

 

 

10,322

 

11,402

 

 

 

 

 

 

 

 

 

 

 

 

 

Integrated Printing Solutions, LLC

 

Specialty Card Printing

 

 

 

 

 

 

 

 

 

 

 

 

 

13% Secured Debt (Maturity - September 23, 2016)

 

12,500

 

11,807

 

11,807

 

 

 

 

 

Preferred Equity (Fully diluted 11.0%)

 

 

 

2,000

 

2,000

 

 

 

 

 

Warrants (Fully diluted 8.0%)

 

 

 

600

 

1,100

 

 

 

 

 

 

 

 

 

14,407

 

14,907

 

 

 

 

 

 

 

 

 

 

 

 

 

irth Solutions, LLC

 

Damage Prevention Technology Information Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - December 29, 2015)

 

3,587

 

3,543

 

3,587

 

 

 

 

 

Member Units (Fully diluted 12.8%) (8)

 

 

 

624

 

2,750

 

 

 

 

 

 

 

 

 

4,167

 

6,337

 

 

 

 

 

 

 

 

 

 

 

 

 

KBK Industries, LLC

 

Specialty Manufacturer of Oilfield and Industrial Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

9,000

 

8,913

 

9,000

 

 

 

 

 

Member Units (Fully diluted 17.9%) (8)

 

 

 

341

 

5,550

 

 

 

 

 

 

 

 

 

9,254

 

14,550

 

 

 

 

 

 

 

 

 

 

 

 

 

Olympus Building Services, Inc.

 

Custodial / Facilities Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - March 27, 2014)

 

3,050

 

2,975

 

2,975

 

 

 

 

 

12% Current / 3% PIK Secured Debt (Maturity - March 27, 2014)

 

1,014

 

1,014

 

1,014

 

 

 

 

 

Warrants (Fully diluted 22.5%)

 

 

 

470

 

470

 

 

 

 

 

 

 

 

 

4,459

 

4,459

 

 

25



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

OnAsset Intelligence, Inc.

 

Transportation Monitoring / Tracking Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - April 18, 2013)

 

1,500

 

1,500

 

1,500

 

 

 

 

 

Preferred Stock (7% cumulative) (Fully diluted 5.8%) (8)

 

 

 

1,692

 

2,440

 

 

 

 

 

Warrants (Fully diluted 4.0%)

 

 

 

830

 

550

 

 

 

 

 

 

 

 

 

4,022

 

4,490

 

 

 

 

 

 

 

 

 

 

 

 

 

OPI International Ltd. (13)

 

Oil and Gas Construction Services

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity (Fully diluted 11.5%) (8)

 

 

 

1,371

 

4,971

 

 

 

 

 

 

 

 

 

 

 

 

 

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Current / 4% PIK Secured Debt (Maturity - December 18, 2017)

 

5,008

 

4,909

 

4,909

 

 

 

 

 

Preferred Stock (20% cumulative) (Fully diluted 19.4%) (8)

 

 

 

1,511

 

1,511

 

 

 

 

 

 

 

 

 

6,420

 

6,420

 

 

 

 

 

 

 

 

 

 

 

 

 

Radial Drilling Services Inc.

 

Oil and Gas Technology

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - November 23, 2016)

 

4,200

 

3,485

 

3,485

 

 

 

 

 

Warrants (Fully diluted 24.0%)

 

 

 

758

 

758

 

 

 

 

 

 

 

 

 

4,243

 

4,243

 

 

 

 

 

 

 

 

 

 

 

 

 

Samba Holdings, Inc.

 

Intelligent Driver Record Monitoring Software and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

11,923

 

11,754

 

11,923

 

 

 

 

 

Common Stock (Fully diluted 19.4%)

 

 

 

1,707

 

3,670

 

 

 

 

 

 

 

 

 

13,461

 

15,593

 

 

 

 

 

 

 

 

 

 

 

 

 

Spectrio LLC

 

Audio Messaging Services

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - June 16, 2016)

 

280

 

280

 

280

 

 

 

 

 

12% Secured Debt (Maturity - June 16, 2016)

 

17,990

 

17,559

 

17,963

 

 

 

 

 

Warrants (Fully diluted 9.8%)

 

 

 

887

 

3,420

 

 

 

 

 

 

 

 

 

18,726

 

21,663

 

 

 

 

 

 

 

 

 

 

 

 

 

SYNEO, LLC

 

Manufacturer of Specialty Cutting Tools and Punches

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

4,300

 

4,218

 

4,218

 

 

 

 

 

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

 

1,440

 

1,413

 

1,413

 

 

 

 

 

Member Units (Fully diluted 11.1%)

 

 

 

1,000

 

1,000

 

 

 

 

 

 

 

 

 

6,631

 

6,631

 

 

 

 

 

 

 

 

 

 

 

 

 

Texas Reexcavation LC

 

Hydro Excavation Services

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Current / 3% PIK Secured Debt (Maturity - December 31, 2017)

 

6,001

 

5,881

 

5,881

 

 

 

 

 

Class A Member Units (Fully diluted 16.3%)

 

 

 

2,900

 

2,900

 

 

 

 

 

 

 

 

 

8,781

 

8,781

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Affiliate Investments (18.7% of total investments at fair value)

 

 

 

142,607

 

178,413

 

 

26



Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012

(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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AGS LLC (10)

 

Developer, Manufacturer, and Operator of Gaming Machines

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 10.00%, Current Coupon 11.50%, Secured Debt (Maturity - August 23, 2016) (9)

 

9,423

 

9,239

 

9,239

 

 

 

 

 

 

 

 

 

 

 

 

 

Ameritech College Operations, LLC

 

For-Profit Nursing and Healthcare College

 

 

 

 

 

 

 

 

 

 

 

 

 

18% Secured Debt (Maturity - March 9, 2017)

 

6,050

 

5,942

 

6,050

 

 

 

 

 

 

 

 

 

 

 

 

 

Ancestry.com Inc. (11)

 

Genealogy Software Service

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - December 27, 2018) (9)

 

7,000

 

6,720

 

6,767

 

 

 

 

 

 

 

 

 

 

 

 

 

Artel, LLC (11)

 

Land-Based and Commercial Satellite Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

5,000

 

4,951

 

4,950

 

 

 

 

 

 

 

 

 

 

 

 

 

Associated Asphalt Partners, LLC (11)

 

Liquid Asphalt Supplier

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.25%, Secured Debt (Maturity - March 9, 2018) (9)

 

9,400

 

9,250

 

9,259

 

 

 

 

 

 

 

 

 

 

 

 

 

Audio Visual Services Group, Inc. (11)

 

Hotel & Venue Audio Visual Operator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - November 9, 2018) (9)

 

5,000

 

4,901

 

4,919

 

 

 

 

 

LIBOR Plus 9.50%, Current Coupon 10.75%, Secured Debt (Maturity - May 9, 2019) (9)

 

5,000

 

4,901

 

4,938

 

 

 

 

 

 

 

 

 

9,802

 

9,857

 

 

 

 

 

 

 

 

 

 

 

 

 

B. J. Alan Company

 

Retailer and Distributor of Consumer Fireworks

 

 

 

 

 

 

 

 

 

 

 

 

 

14% Current / 2.5% PIK Secured Debt (Maturity - June 22, 2017)

 

10,134

 

10,042

 

10,042

 

 

 

 

 

 

 

 

 

 

 

 

 

Blackboard, Inc. (11)

 

Education Software Provider

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - October 4, 2018) (9)

 

1,361

 

1,319

 

1,379

 

 

 

 

 

LIBOR Plus 10.00%, Current Coupon 11.50%, Secured Debt (Maturity - April 4, 2019) (9)

 

2,000

 

1,852

 

1,927

 

 

 

 

 

 

 

 

 

3,171

 

3,306

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand Connections, LLC

 

Venue-Based Marketing and Media

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - April 30, 2015)

 

7,974

 

7,828

 

7,974

 

 

 

 

 

 

 

 

 

 

 

 

 

Brasa Holdings Inc. (11)

 

Upscale Full Service Restaurants

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.50%, Secured Debt (Maturity - July 18, 2019) (9)

 

3,491

 

3,395

 

3,525

 

 

 

 

 

LIBOR Plus 9.50%, Current Coupon 11.00%, Secured Debt (Maturity - January 19, 2020) (9)

 

2,000

 

1,927

 

2,030

 

 

 

 

 

 

 

 

 

5,322

 

5,555

 

 

27



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Calloway Laboratories, Inc. (10)

 

Health Care Testing Facilities

 

 

 

 

 

 

 

 

 

 

 

 

 

10.00% Current / 2.00% PIK Secured Debt (Maturity - September 30, 2014)

 

5,479

 

5,361

 

5,479

 

 

 

 

 

 

 

 

 

 

 

 

 

CDC Software Corporation (11)

 

Enterprise Application Software

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - August 6, 2018) (9)

 

4,239

 

4,199

 

4,260

 

 

 

 

 

 

 

 

 

 

 

 

 

CHI Overhead Doors, Inc. (11)

 

Manufacturer of Overhead Garage Doors

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.25%, Secured Debt (Maturity - August 17, 2017) (9)

 

2,410

 

2,371

 

2,421

 

 

 

 

 

LIBOR Plus 9.50%, Current Coupon 11.00%, Secured Debt (Maturity - February 17, 2018) (9)

 

2,500

 

2,457

 

2,463

 

 

 

 

 

 

 

 

 

4,828

 

4,884

 

 

 

 

 

 

 

 

 

 

 

 

 

Citadel Plastics Holding, Inc. (11)

 

Supplier of Commodity Chemicals / Plastic Parts

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.75%, Secured Debt (Maturity - February 28, 2018) (9)

 

2,985

 

2,959

 

2,989

 

 

 

 

 

 

 

 

 

 

 

 

 

Compact Power Equipment Centers Inc.

 

Equipment / Tool Rental

 

 

 

 

 

 

 

 

 

 

 

 

 

6% Current / 6% PIK Secured Debt (Maturity - October 1, 2017)

 

3,687

 

3,669

 

3,669

 

 

 

 

 

Series A Stock (8% cumulative) (Fully diluted 4.2%) (8)

 

 

 

923

 

1,232

 

 

 

 

 

 

 

 

 

4,592

 

4,901

 

 

 

 

 

 

 

 

 

 

 

 

 

Confie Seguros Holding II Co. (11)

 

Insurance Brokerage

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - November 9, 2018) (9)

 

5,000

 

4,927

 

4,964

 

 

 

 

 

 

 

 

 

 

 

 

 

Connolly Holdings Inc. (11)

 

Audit Recovery Software

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - July 15, 2018) (9)

 

2,488

 

2,464

 

2,519

 

 

 

 

 

LIBOR Plus 9.25%, Current Coupon 10.50%, Secured Debt (Maturity - January 15, 2019) (9)

 

2,000

 

1,962

 

2,050

 

 

 

 

 

 

 

 

 

4,426

 

4,569

 

 

 

 

 

 

 

 

 

 

 

 

 

Creative Circle, LLC (11)

 

Professional Staffing Firm

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - September 28, 2017) (9)

 

9,938

 

9,840

 

9,840

 

 

 

 

 

 

 

 

 

 

 

 

 

CST Industries (11)

 

Storage Tank Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

12,188

 

12,022

 

12,110

 

 

 

 

 

 

 

 

 

 

 

 

 

Diversified Machine, Inc. (11)

 

Automotive Component Supplier

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.75%, Current Coupon 9.25%, Secured Debt (Maturity - December 21, 2017) (9)

 

2,000

 

1,961

 

1,985

 

 

 

 

 

 

 

 

 

 

 

 

 

Drilling Info, Inc.

 

Information Services for the Oil and Gas Industry

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock (Fully diluted 2.3%)

 

 

 

1,335

 

5,769

 

 

28



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Dycom Investments, Inc. (11) (13)

 

Telecomm Construction & Engineering Providers

 

 

 

 

 

 

 

 

 

 

 

 

 

7.13% Bond (Maturity - January 15, 2021)

 

1,000

 

1,042

 

1,053

 

 

 

 

 

 

 

 

 

 

 

 

 

Emerald Performance Materials, Inc. (11)

 

Specialty Chemicals Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - May 18, 2018) (9)

 

4,490

 

4,451

 

4,512

 

 

 

 

 

 

 

 

 

 

 

 

 

Engility Corporation (11) (13)

 

Defense Software

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - July 18, 2017) (9)

 

8,000

 

7,928

 

7,930

 

 

 

 

 

 

 

 

 

 

 

 

 

eResearch Technology, Inc. (11)

 

Provider of Technology-Driven Health Research

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 8.00%, Secured Debt (Maturity - June 29, 2018) (9)

 

3,491

 

3,361

 

3,465

 

 

 

 

 

 

 

 

 

 

 

 

 

EnCap Energy Fund Investments (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

1,735

 

1,852

 

 

 

 

 

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.3%)

 

 

 

442

 

442

 

 

 

 

 

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

 

 

 

664

 

664

 

 

 

 

 

 

 

 

 

2,841

 

2,958

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairway Group Acquisition Company (11)

 

Retail Grocery

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.75%, Current Coupon 8.25%, Secured Debt (Maturity - August 17, 2018) (9)

 

3,990

 

3,933

 

4,030

 

 

 

 

 

 

 

 

 

 

 

 

 

FC Operating, LLC (10)

 

Christian Specialty Retail Stores

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6,000

 

5,883

 

5,916

 

 

 

 

 

 

 

 

 

 

 

 

 

FishNet Security, Inc. (11)

 

Information Technology Value-Added Reseller

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - November 30, 2017) (9)

 

8,000

 

7,921

 

7,960

 

 

 

 

 

 

 

 

 

 

 

 

 

Flexera Software LLC (11)

 

Software Licensing

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.75%, Current Coupon 11.00%, Secured Debt (Maturity - September 30, 2018) (9)

 

3,000

 

2,789

 

3,053

 

 

 

 

 

 

 

 

 

 

 

 

 

Fram Group Holdings, Inc. (11)

 

Manufacturer of Automotive Maintenance Products

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

988

 

984

 

989

 

 

 

 

 

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

 

1,000

 

996

 

950

 

 

 

 

 

 

 

 

 

1,980

 

1,939

 

 

 

 

 

 

 

 

 

 

 

 

 

GFA Brands, Inc. (11) (13)

 

Distributor of Health Food Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - July 2, 2018) (9)

 

6,790

 

6,663

 

6,909

 

 

29



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

GMACM Borrower LLC (11)

 

Mortgage Originator and Servicer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - November 13, 2015) (9)

 

1,000

 

987

 

1,011

 

 

 

 

 

 

 

 

 

 

 

 

 

Grede Holdings, LLC (11)

 

Operator of Iron Foundries

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 7.00%, Secured Debt (Maturity - April 3, 2017) (9)

 

5,000

 

4,975

 

5,025

 

 

 

 

 

 

 

 

 

 

 

 

 

Hayden Acquisition, LLC

 

Manufacturer of Utility Structures

 

 

 

 

 

 

 

 

 

 

 

 

 

8% Secured Debt (Maturity - January 1, 2013) (14)

 

1,800

 

1,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hearthside Food Solutions, LLC (11)

 

Contract Food Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - June 5, 2018) (9)

 

3,990

 

3,953

 

3,980

 

 

 

 

 

 

 

 

 

 

 

 

 

Heckmann Corporation (11) (13)

 

Water Treatment and Disposal Services

 

 

 

 

 

 

 

 

 

 

 

 

 

9.88% Bond (Maturity - April 15, 2018)

 

3,500

 

3,500

 

3,588

 

 

 

 

 

 

 

 

 

 

 

 

 

HOA Restaurant Group, LLC (11)

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

11.25% Bond (Maturity - April 1, 2017)

 

2,000

 

2,000

 

1,810

 

 

 

 

 

 

 

 

 

 

 

 

 

Hudson Products Holdings, Inc. (11)

 

Manufacturer of Heat Transfer Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - June 7, 2017) (9)

 

4,000

 

3,961

 

4,015

 

 

 

 

 

 

 

 

 

 

 

 

 

Hupah Finance Inc. (11)

 

Manufacturer of Industrial Machinery

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - January 19, 2019) (9)

 

2,978

 

2,924

 

3,015

 

 

 

 

 

 

 

 

 

 

 

 

 

Il Fornaio Corporation (11)

 

Casual Restaurant Group

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - June 10, 2017) (9)

 

1,822

 

1,815

 

1,836

 

 

 

 

 

 

 

 

 

 

 

 

 

Insight Pharmaceuticals, LLC (11)

 

Pharmaceuticals Merchant Wholesalers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - August 25, 2016) (9)

 

5,000

 

4,976

 

5,025

 

 

 

 

 

 

 

 

 

 

 

 

 

Ipreo Holdings LLC (11)

 

Application Software for Capital Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 8.00%, Secured Debt (Maturity - August 5, 2017) (9)

 

5,688

 

5,610

 

5,723

 

 

 

 

 

 

 

 

 

 

 

 

 

iStar Financial Inc. (11) (13)

 

Real Estate Investment Trust

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - March 19, 2016) (9)

 

1,444

 

1,422

 

1,461

 

 

 

 

 

 

 

 

 

 

 

 

 

Ivy Hill Middle Market Credit Fund III, Ltd. (12) (13)

 

Investment Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 6.71%, Secured Debt (Maturity - January 15, 2022)

 

2,000

 

1,681

 

1,970

 

 

 

 

 

 

 

 

 

 

 

 

 

Jackson Hewitt Tax Service Inc. (11)

 

Tax Preparation Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 8.50%, Current Coupon 10.00%, Secured Debt (Maturity - October 15, 2017) (9)

 

7,500

 

7,211

 

7,281

 

 

30



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Kadmon Pharmaceuticals, LLC (10)

 

Biopharmaceutical Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 13.00% / 12.00% PIK, Current Coupon with PIK 27.00%, Secured Debt (Maturity - April 30, 2013) (9)

 

6,056

 

6,056

 

6,056

 

 

 

 

 

 

 

 

 

 

 

 

 

Keypoint Government Solutions, Inc. (11)

 

Pre-employment Screening Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - November 13, 2017) (9)

 

5,000

 

4,903

 

4,975

 

 

 

 

 

 

 

 

 

 

 

 

 

Maverick Healthcare Group LLC (10)

 

Home Healthcare Products and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.00%, Current Coupon 10.75%, Secured Debt (Maturity - December 30, 2016) (9)

 

4,900

 

4,900

 

4,992

 

 

 

 

 

 

 

 

 

 

 

 

 

Media Holdings, LLC (11) (13)

 

Internet Traffic Generator

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 13.00%, Current Coupon 15.00%, Secured Debt (Maturity - April 27, 2014) (9)

 

5,000

 

5,332

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Medpace Intermediateco, Inc. (11)

 

Clinical Trial Development and Execution

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.50%, Secured Debt (Maturity - June 19, 2017) (9)

 

4,612

 

4,557

 

4,427

 

 

 

 

 

 

 

 

 

 

 

 

 

Metal Services LLC (11)

 

Steel Mill Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.50%, Current Coupon 7.75%, Secured Debt (Maturity - June 30, 2017) (9)

 

5,000

 

4,902

 

5,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Metals USA, Inc. (11) (13)

 

Operator of Metal Service Centers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - December 14, 2019) (9)

 

7,500

 

7,426

 

7,463

 

 

 

 

 

 

 

 

 

 

 

 

 

Milk Specialties Company (11)

 

Processor of Nutrition Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - November 9, 2018) (9)

 

5,000

 

4,951

 

4,988

 

 

 

 

 

 

 

 

 

 

 

 

 

Miramax Film NY, LLC (11)

 

Motion Picture Producer and Distributor

 

 

 

 

 

 

 

 

 

 

 

 

 

Class B Units (Fully diluted 0.2%)

 

 

 

500

 

576

 

 

 

 

 

 

 

 

 

 

 

 

 

Mmodal, Inc. (11)

 

Healthcare Equipment and Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - August 16, 2019) (9)

 

3,990

 

3,940

 

3,850

 

 

 

 

 

 

 

 

 

 

 

 

 

Modern VideoFilm, Inc. (10)

 

Post-Production Film Studio

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 9.00%, Current Coupon 10.50%, Secured Debt (Maturity - December 19, 2017) (9)

 

5,005

 

4,780

 

4,780

 

 

 

 

 

Warrants (Fully diluted 1.5%)

 

 

 

150

 

150

 

 

 

 

 

 

 

 

 

4,930

 

4,930

 

 

 

 

 

 

 

 

 

 

 

 

 

Mood Media Corporation (11) (13)

 

Music Programming and Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 7.00%, Secured Debt (Maturity - May 6, 2018) (9)

 

1,775

 

1,759

 

1,780

 

 

31



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

National Healing Corporation (11)

 

Wound Care Management

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 10.00%, Current Coupon 11.50%, Secured Debt (Maturity - November 30, 2018) (9)

 

1,500

 

1,422

 

1,545

 

 

 

 

 

Common Equity (Fully diluted 0.02%)

 

 

 

50

 

50

 

 

 

 

 

 

 

 

 

1,472

 

1,595

 

 

 

 

 

 

 

 

 

 

 

 

 

National Vision, Inc. (11)

 

Discount Optical Retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - August 2, 2018) (9)

 

3,226

 

3,179

 

3,274

 

 

 

 

 

 

 

 

 

 

 

 

 

NCI Building Systems, Inc. (11)

 

Non-Residential Building Products Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.75%, Current Coupon 8.00%, Secured Debt (Maturity - May 2, 2018) (9)

 

2,450

 

2,335

 

2,455

 

 

 

 

 

 

 

 

 

 

 

 

 

NCP Investment Holdings, Inc.

 

Management of Outpatient Cardiac Cath Labs

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and C Units (Fully diluted 3.3%) (8)

 

 

 

20

 

2,474

 

 

 

 

 

 

 

 

 

 

 

 

 

NGPL PipeCo, LLC (11)

 

Natural Gas Pipelines and Storage Facilities

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 6.75%, Secured Debt (Maturity - September 15, 2017) (9)

 

8,679

 

8,548

 

8,901

 

 

 

 

 

 

 

 

 

 

 

 

 

North American Breweries Holdings, LLC (11)

 

Operator of Specialty Breweries

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.50%, Secured Debt (Maturity - December 11, 2018) (9)

 

4,000

 

3,921

 

4,020

 

 

 

 

 

 

 

 

 

 

 

 

 

Northland Cable Television, Inc. (11)

 

Television Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.75%, Secured Debt (Maturity - December 30, 2016) (9)

 

4,812

 

4,710

 

4,692

 

 

 

 

 

 

 

 

 

 

 

 

 

Oberthur Technologies SA (11) (13)

 

Smart Card, Printing, Identity, and Cash Protection Security

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.25%, Secured Debt (Maturity - November 30, 2018) (9)

 

6,965

 

6,648

 

6,913

 

 

 

 

 

 

 

 

 

 

 

 

 

Oneida Ltd. (11)

 

Household Products Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.75%, Current Coupon 9.25%, Secured Debt (Maturity - September 25, 2017) (9)

 

1,933

 

1,899

 

1,904

 

 

 

 

 

 

 

 

 

 

 

 

 

Panolam Industries International, Inc. (11)

 

Decorative Laminate Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - August 23, 2017) (9)

 

4,048

 

4,010

 

4,038

 

 

 

 

 

 

 

 

 

 

 

 

 

Peppermill Casinos, Inc. (11)

 

Operator of Casinos and Gaming Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.25%, Secured Debt (Maturity - November 2, 2018) (9)

 

2,295

 

2,204

 

2,246

 

 

 

 

 

 

 

 

 

 

 

 

 

Phillips Plastic Corporation (11)

 

Custom Molder of Plastics and Metals

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.50%, Secured Debt (Maturity - February 12, 2017) (9)

 

1,728

 

1,714

 

1,723

 

 

32



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Physician Oncology Services, L.P. (11)

 

Provider of Radiation Therapy and Oncology Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.25%, Current Coupon 7.75%, Secured Debt (Maturity - January 31, 2017) (9)

 

942

 

935

 

904

 

 

 

 

 

 

 

 

 

 

 

 

 

PL Propylene LLC (11) (13)

 

Propylene Producer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - March 27, 2017) (9)

 

3,970

 

3,901

 

4,035

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Proppants, LLC (11)

 

Producer of Sand Based Proppants

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - December 15, 2016) (9)

 

5,942

 

5,823

 

5,526

 

 

 

 

 

 

 

 

 

 

 

 

 

ProQuest LLC (11)

 

Academic Research Portal

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 6.00%, Secured Debt (Maturity - April 13, 2018) (9)

 

4,963

 

4,918

 

4,997

 

 

 

 

 

 

 

 

 

 

 

 

 

PRV Aerospace, LLC (11)

 

Aircraft Equipment Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - May 9, 2018) (9)

 

5,972

 

5,917

 

5,987

 

 

 

 

 

 

 

 

 

 

 

 

 

Radio One, Inc. (11)

 

Radio Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - March 31, 2016) (9)

 

2,932

 

2,891

 

2,983

 

 

 

 

 

 

 

 

 

 

 

 

 

Relativity Media, LLC (10)

 

Full-scale Film and Television Production and Distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

10.00% Secured Debt (Maturity - May 24, 2015)

 

4,904

 

4,825

 

5,087

 

 

 

 

 

15.00% PIK Secured Debt (Maturity - May 24, 2015)

 

5,477

 

5,214

 

5,294

 

 

 

 

 

Class A Units (Fully diluted 0.2%)

 

 

 

292

 

292

 

 

 

 

 

 

 

 

 

10,331

 

10,673

 

 

 

 

 

 

 

 

 

 

 

 

 

Sabre Industries, Inc. (11)

 

Manufacturer of Telecom Structures and Equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.00%, Secured Debt (Maturity - August 24, 2018) (9)

 

6,500

 

6,407

 

6,565

 

 

 

 

 

 

 

 

 

 

 

 

 

Shale-Inland Holdings, LLC (11)

 

Distributor of Pipe, Valves, and Fittings

 

 

 

 

 

 

 

 

 

 

 

 

 

8.75% Bond (Maturity - November 15, 2019)

 

3,000

 

3,000

 

3,143

 

 

 

 

 

 

 

 

 

 

 

 

 

Sonneborn, LLC (11)

 

Specialty Chemicals Manufacturer

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.50%, Secured Debt (Maturity - March 30, 2018) (9)

 

2,978

 

2,924

 

3,030

 

 

 

 

 

 

 

 

 

 

 

 

 

Sourcehov LLC (11)

 

Business Process Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.38%, Current Coupon 6.63%, Secured Debt (Maturity - April 28, 2017) (9)

 

2,955

 

2,874

 

2,921

 

 

 

 

 

LIBOR Plus 9.25%, Current Coupon 10.50%, Secured Debt (Maturity - April 30, 2018) (9)

 

5,000

 

4,537

 

4,581

 

 

 

 

 

 

 

 

 

7,411

 

7,502

 

 

33



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Surgery Center Holdings, Inc. (11)

 

Ambulatory Surgical Centers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.00%, Current Coupon 6.50%, Secured Debt (Maturity - February 6, 2017) (9)

 

4,881

 

4,863

 

4,857

 

 

 

 

 

 

 

 

 

 

 

 

 

The Tennis Channel, Inc. (10)

 

Television-Based Sports Broadcasting

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6% / 4% PIK, Current Coupon with PIK 14%, Secured Debt (Maturity - June 30, 2013) (9)

 

11,050

 

12,776

 

12,776

 

 

 

 

 

Warrants (Fully diluted 0.1%)

 

 

 

235

 

235

 

 

 

 

 

 

 

 

 

13,011

 

13,011

 

 

 

 

 

 

 

 

 

 

 

 

 

Totes Isotoner Corporation (11)

 

Weather Accessory Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.25%, Secured Debt (Maturity - July 7, 2017) (9)

 

4,717

 

4,642

 

4,729

 

 

 

 

 

 

 

 

 

 

 

 

 

TriNet HR Corporation (11) (13)

 

Outsourced Human Resources Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.25%, Current Coupon 6.50%, Secured Debt (Maturity - October 24, 2018) (9)

 

3,000

 

3,000

 

3,011

 

 

 

 

 

 

 

 

 

 

 

 

 

UniTek Global Services, Inc. (11)

 

Provider of Outsourced Infrastructure Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.50%, Current Coupon 9.00%, Secured Debt (Maturity - April 15, 2018) (9)

 

4,379

 

4,268

 

4,308

 

 

 

 

 

 

 

 

 

 

 

 

 

Universal Fiber Systems, LLC (10)

 

Manufacturer of Synthetic Fibers

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 7.50%, Secured Debt (Maturity - June 26, 2015) (9)

 

5,274

 

5,182

 

5,195

 

 

 

 

 

 

 

 

 

 

 

 

 

US Xpress Enterprises, Inc. (11)

 

Truckload Carrier

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.50%, Current Coupon 9.00%, Secured Debt (Maturity - November 13, 2016) (9)

 

6,500

 

6,374

 

6,484

 

 

 

 

 

 

 

 

 

 

 

 

 

Vantage Specialties, Inc. (11)

 

Manufacturer of Specialty Chemicals

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.50%, Current Coupon 7.00%, Secured Debt (Maturity - February 10, 2018) (9)

 

3,970

 

3,900

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

VFH Parent LLC (11)

 

Electronic Trading and Market Making

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 6.00%, Current Coupon 7.50%, Secured Debt (Maturity - July 8, 2016) (9)

 

3,394

 

3,344

 

3,404

 

 

 

 

 

 

 

 

 

 

 

 

 

Visant Corporation (11)

 

School Affinity Stores

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - December 22, 2016) (9)

 

3,923

 

3,923

 

3,575

 

 

 

 

 

 

 

 

 

 

 

 

 

Vision Solutions, Inc. (11)

 

Provider of Information Availability Software

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

2,506

 

2,325

 

2,340

 

 

 

 

 

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

 

5,000

 

4,962

 

4,875

 

 

 

 

 

 

 

 

 

7,287

 

7,215

 

 

34



Table of Contents

 

Portfolio Company (1)

 

Business Description

 

Type of Investment (2) (3)

 

Principal (4)

 

Cost (4)

 

Fair Value

 

Walter Investment Management Corp. (11) (13)

 

Real Estate Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - November 28, 2017) (9)

 

2,469

 

2,444

 

2,484

 

 

 

 

 

 

 

 

 

 

 

 

 

Western Dental Services, Inc. (11)

 

Dental Care Services

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 7.00%, Current Coupon 8.25%, Secured Debt (Maturity - November 1, 2018) (9)

 

5,000

 

4,853

 

4,894

 

 

 

 

 

 

 

 

 

 

 

 

 

Wilton Brands LLC (11)

 

Specialty Housewares Retailer

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1,975

 

1,937

 

2,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireco Worldgroup Inc. (11)

 

Manufacturer of Synthetic Lifting Products

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.75%, Current Coupon 6.00%, Secured Debt (Maturity - February 15, 2017) (9)

 

2,494

 

2,471

 

2,550

 

 

 

 

 

 

 

 

 

 

 

 

 

WP CPP Holdings, LLC (11)

 

Manufacturer of Aerospace and Defense Components

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.50%, Current Coupon 5.75%, Secured Debt (Maturity - December 28, 2019) (9)

 

4,000

 

3,960

 

4,020

 

 

 

 

 

 

 

 

 

 

 

 

 

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

 

 

 

 

 

 

 

 

 

 

 

 

 

12% Secured Debt (Maturity - June 15, 2017)

 

8,000

 

6,866

 

6,866

 

 

 

 

 

Warrants (Fully diluted 3.0%)

 

 

 

1,071

 

1,071

 

 

 

 

 

 

 

 

 

7,937

 

7,937

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Non-Control/Non-Affiliate Investments (49.1% of total investments at fair value)

 

 

 

456,975

 

467,543

 

 

 

 

 

 

 

 

 

 

 

 

 

Main Street Capital Partners, LLC (Investment Manager)

 

Asset Management

 

 

 

 

 

 

 

 

 

 

 

 

 

100% of Membership Interests

 

 

 

2,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio Investments, December 31, 2012

 

 

 

819,733

 

924,431

 

 

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Table of Contents

 

MAIN STREET CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2012

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in Marketable Securities and Diversified, Registered Bond Funds

 

 

 

 

 

 

 

 

 

Ceridian Corporation (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 5.75%, Current Coupon 5.96%, Secured Debt (Maturity - May 9, 2017)

 

10,000

 

10,025

 

10,013

 

 

 

 

 

 

 

 

 

 

 

 

 

Compass Investors Inc. (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 5.25%, Secured Debt (Maturity - December 27, 2019) (9)

 

7,000

 

7,005

 

6,994

 

 

 

 

 

 

 

 

 

 

 

 

 

First Data Corporation (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.00%, Current Coupon 4.21%, Secured Debt (Maturity - March 23, 2018)

 

5,000

 

4,763

 

4,767

 

 

 

 

 

 

 

 

 

 

 

 

 

Toll Road Investors Partnership II, LP Bond (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zero Coupon Bond (Maturity - February 15, 2033)

 

7,500

 

1,742

 

1,834

 

 

 

 

 

 

 

 

 

 

 

 

 

Univision Communications Inc. (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIBOR Plus 4.25%, Current Coupon 4.46%, Secured Debt (Maturity - March 31, 2017)

 

5,000

 

4,934

 

4,927

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Marketable Securities and Idle Funds Investments (3.0% of total investments at fair value)

 

 

 

28,469

 

28,535

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Investments, December 31, 2012

 

 

 

 

 

 

 

$

848,202

 

$

952,966

 

 


(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted.

(2)

Debt investments are generally 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 summary of Private Loan.

(11)

Middle Market portfolio investment. See Note B for summary of Middle Market.

(12)

Other Portfolio investment. See Note B for summary of Other Portfolio.

(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)

Fully impaired and non-income producing investment.

 

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Table of Contents

 

MAIN STREET CAPITAL CORPORATION

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

(Unaudited)

 

NOTE A — ORGANIZATION AND BASIS OF PRESENTATION

 

1.                                      Organization

 

Main Street Capital Corporation (“MSCC”) was formed on March 9, 2007 for the purpose of (i) acquiring 100% of the equity interests of Main Street Mezzanine Fund, LP (“MSMF”) and its general partner, Main Street Mezzanine Management, LLC (“MSMF GP”), (ii) acquiring 100% of the equity interests of Main Street Capital Partners, LLC (the “Investment Manager”), (iii) raising capital in an initial public offering, which was completed in October 2007 (the “IPO”), and (iv) thereafter operating as an internally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). MSMF is licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration (“SBA”) and the Investment Manager acts as MSMF’s manager and investment adviser. Because the Investment Manager, which employs all of the executive officers and other employees of MSCC, is wholly owned by MSCC, MSCC does not pay any external investment advisory fees, but instead incurs the operating costs associated with employing investment and portfolio management professionals through the Investment Manager. The IPO and related transactions discussed above were consummated in October 2007 and are collectively termed the “Formation Transactions.”

 

On January 7, 2010, MSCC consummated transactions (the “Exchange Offer”) to exchange 1,239,695 shares of its common stock for approximately 88% of the total dollar value of the limited partner interests in Main Street Capital II, LP (“MSC II” and, together with MSMF, the “Funds”). Pursuant to the terms of the Exchange Offer, 100% of the membership interests in the general partner of MSC II, Main Street Capital II GP, LLC (“MSC II GP”), were also transferred to MSCC for no consideration. MSC II commenced operations in January 2006, is an investment fund that operates as an SBIC and is also managed by the Investment Manager.  During the first quarter of 2012, MSCC exchanged 229,634 shares of its common stock to acquire all of the remaining minority ownership in the total dollar value of the MSC II limited partnership interests, including approximately 5% owned by affiliates of MSCC (the “Final MSC II Exchange”).  After the completion of the Final MSC II Exchange, MSCC owns 100% of MSC II.  The Exchange Offer and related transactions, including the transfer of the MSC II GP interests and the Final MSC II Exchange, are collectively termed the “Exchange Offer Transactions.”

 

MSCC has elected to be treated for 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 federal income taxes on any net ordinary income or capital gains that it distributes to its stockholders as dividends.

 

MSCC has direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of these entities is to hold certain investments that generate “pass through” income for tax purposes. The Investment Manager is also a direct wholly owned subsidiary that has elected to be a taxable entity. The Taxable Subsidiaries and the 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, the Taxable Subsidiaries and, beginning April 1, 2013, the Investment Manager (see Note A.2. for further discussion).

 

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 the three months ended March 31, 2013 and the three and nine months ended September 30, 2012, Main Street’s consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries. Beginning April 1, 2013, and for all periods thereafter, Main Street’s consolidated financial statements also include the balance sheet and income statement accounts and other information of the Investment Manager reflected as a consolidated subsidiary (see further discussion below).  The Investment Portfolio, as used herein, refers to all of Main Street’s LMM portfolio investments, Middle Market portfolio investments, Private Loan portfolio investments, Other Portfolio investments and, for all periods up to and including March 31, 2013, the investment in the Investment Manager, but excludes all “Marketable securities and idle funds investments”, and for all periods after March 31, 2013, the Investment Portfolio also excludes the Investment Manager (see Note C — Fair Value Hierarchy for Investments and Debentures - Portfolio Investment Composition for additional discussion of Main

 

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Table of Contents

 

Street’s Investment Portfolio composition and definitions for the terms LMM, Middle Market, Private Loan and Other Portfolio).  For all periods up to and including the period ending March 31, 2013, the Investment Manager was accounted for as a portfolio investment (see Note D) and was not consolidated with MSCC and its consolidated subsidiaries. For all periods after March 31, 2013, the Investment Manager is consolidated with MSCC and its other consolidated subsidiaries. “Marketable securities and idle funds investments” are classified as financial instruments and are reported separately on Main Street’s Consolidated Balance Sheets and Consolidated Schedule of Investments due to the nature of such investments (see Note B.11.).  Main Street’s results of operations for the three and nine months ended September 30, 2013 and 2012, cash flows for the nine months ended September 30, 2013 and 2012, and financial position as of September 30, 2013 and December 31, 2012, 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 with the current presentation, including certain investments previously included as part of the LMM portfolio or Middle Market portfolio that are now classified as part of the Private Loan portfolio and the reclassification of Investment Portfolio and Marketable securities and idle funds investment related activity from cash flows from investing activities to cash flows from operating activities.

 

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 and nine months ended September 30, 2013 and 2012 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, 2012. 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 the investment company rules and regulations pursuant to Article 6 of Regulation S-X and the Audit and Accounting Guide for Investment Companies issued by the American Institute of Certified Public Accountants (the “AICPA Guide”), Main Street is precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolio company is another investment company. An exception to this general principle in the AICPA Guide 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 an investment company of Main Street. None of the portfolio investments made by Main Street qualify for this exception, except as discussed below with respect to the Investment Manager. Therefore, Main Street’s Investment Portfolio is carried on the 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 Statement of Operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss) from Investments.”  For all periods prior to and including March 31, 2013, the Investment Manager was accounted for as a portfolio investment and included as part of the Investment Portfolio in the consolidated financial statements of Main Street (see Note D for further discussion of the Investment Manager).  The Investment Manager was consolidated with MSCC and its other consolidated subsidiaries prospectively beginning April 1, 2013 as the controlled operating subsidiary was providing substantially all of its services directly or indirectly to Main Street or its portfolio companies.

 

Portfolio Investment Classification

 

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. The line item on Main Street’s Consolidated Balance Sheets entitled “Investment in affiliated Investment Manager” represents Main Street’s investment in the Investment Manager that was accounted for as a part of the Investment Portfolio through the period ended March 31, 2013.  As discussed further above, the Investment Manager was consolidated beginning April 1, 2013 and is no longer accounted for as a part of the Investment Portfolio.

 

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”) Accounting Standards Codification (“Codification” or “ASC”) 820, Fair Value Measurements

 

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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 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 typically 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. Main Street’s 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. All of 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 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 policy and process are intended to provide a consistent basis for determining the fair value of the 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.  For Middle Market portfolio investments, Main Street primarily uses observable inputs such as quoted prices in the valuation process.  For Middle Market portfolio investments for which sufficient observable inputs are not available to determine fair value, Main Street generally uses a combination of observable inputs through obtaining third party quotes or other independent pricing and an approach similar to the income approach using a yield-to-maturity model used to value its LMM portfolio debt investments.

 

For valuation purposes, “control” LMM portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. Market quotations are generally not readily available for Main Street’s control LMM portfolio investments. As a result, for control LMM portfolio investments, Main Street generally determines the fair value using a combination of market and income approaches. Under the market approach, Main Street will typically use the enterprise value methodology to determine the fair value of these investments. 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. 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. Main Street will also use the income approach to determine the fair value of these securities, based on projections of the discounted future free cash flows that the portfolio company or the debt security will likely generate and which includes using a yield-to-maturity approach that analyzes the discounted cash flows of interest and principal 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. The valuation approaches for Main Street’s control LMM portfolio investments estimate the value of the investment if Main Street were to sell, or exit, the investment. In addition, 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.

 

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For valuation purposes, “non-control” LMM portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. Market quotations are generally not readily available for non-control LMM portfolio investments. For non-control LMM portfolio investments, Main Street typically uses a combination of the market and income approaches to value its equity investments and the income approach to value its debt investments similar to the approaches used for our control LMM portfolio investments and which includes using a yield-to-maturity approach that analyzes the discounted cash flows of interest and principal 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. Main Street’s estimate of the expected repayment date of a LMM debt security is generally the legal maturity date of the instrument, as Main Street generally intends to hold its LMM loans and debt securities to maturity. The yield-to-maturity analysis considers changes in leverage levels, credit quality, portfolio company performance and other factors. Main Street will 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 face amount of the LMM debt security. A change in the assumptions that Main Street uses to estimate the fair value of its LMM debt securities using the yield-to-maturity analysis could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a LMM debt security is in workout status, Main Street may consider other factors in determining the fair value of the LMM 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.

 

Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on its investments in each LMM portfolio company once a quarter. 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 advisor. The nationally recognized independent advisor is generally consulted relative to Main Street’s investments in each LMM portfolio company at least once in 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 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 advisor 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 advisor in arriving at Main Street’s determination of fair value on its investments in a total of 44 portfolio companies for the nine months ended September 30, 2013, representing approximately 66% of the total LMM portfolio at fair value as of September 30, 2013 and on a total of 36 portfolio companies for the nine months ended September 30, 2012, representing approximately 63% of the total LMM portfolio and investment in the affiliated Investment Manager at fair value as of September 30, 2012.

 

For valuation purposes, all of Main Street’s Middle Market portfolio investments are non-control investments for which Main Street does not have a controlling interest in the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. Main Street primarily uses observable inputs to determine the fair value of these investments through obtaining third party quotes or other independent pricing, to the extent such sufficient observable inputs are available to determine fair value. For Middle Market portfolio investments for which sufficient observable inputs are not available to determine fair value, Main Street generally uses a combination of observable inputs through obtaining third party quotes or other independent pricing and an approach similar to the income approach using a yield-to-maturity model used to value its LMM portfolio debt investments.

 

For valuation purposes, all of Main Street’s Private Loan portfolio investments are non-control investments for which Main Street does not have a controlling interest in the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. As sufficient observable inputs to determine the fair value of these Private Loan portfolio investments through obtaining third party pricing or other independent pricing are not generally available, Main Street generally uses a combination of observable inputs through obtaining third party quotes or other independent pricing and an approach similar to the income approach using a yield-to-maturity model used to value its LMM portfolio debt investments.

 

For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments for which Main Street generally does not have a controlling interest in the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors.  Main Street’s Other Portfolio investments comprised 3.3% and 2.6%, respectively, of Main Street’s Investment Portfolio at fair value as of September 30, 2013 and December 31, 2012.  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 determines the fair value based on the fair value of the portfolio company as determined by independent third parties and based on Main Street’s proportional ownership in the portfolio company, as well as the financial position and assessed risk of each of these portfolio investments. For Other Portfolio debt investments with observable inputs, Main Street determines the fair value of these investments through obtaining third party quotes or other independent pricing, to the extent sufficient observable inputs are available to determine fair value. To the extent such observable inputs are not available, Main Street values these Other Portfolio debt investments through an approach similar to the income approach using a yield-to-maturity model used to value its LMM portfolio debt investments.

 

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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 used 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 reviewing and approving, in good faith, Main Street’s determination of the fair value for its Investment Portfolio consistent with the 1940 Act requirements.  Main Street believes its Investment Portfolio as of September 30, 2013 and December 31, 2012 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 portfolio investment valuations, those estimated values may differ significantly from the values that would have been used 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 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.

 

At September 30, 2013, cash balances totaling $15.4 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 investments in intermediate-term secured debt and independently rated debt 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 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.

 

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Main Street holds 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. 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.  For the three months ended September 30, 2013 and 2012, (i) approximately 3.9% and 4.5%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.8% and 0.4%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash.  For the nine months ended September 30, 2013 and 2012, (i) approximately 4.2% and 3.9%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.2% and 0.3%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash.

 

As of September 30, 2013, Main Street had one investment with positive fair value on non-accrual status, which comprised approximately 0.1% of the total Investment Portfolio at fair value and, together with another fully impaired investment, comprised approximately 0.4% of the total Investment Portfolio at cost.  As of December 31, 2012, Main Street had no investments with positive fair value on non-accrual status and one fully impaired investment which comprised approximately 0.2% of the total Investment Portfolio at cost, excluding the investment in the affiliated Investment Manager.

 

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, 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 September 30,

 

Nine Months Ended September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(dollars in thousands)

 

(dollars in thousands)

 

Interest, fee and dividend income:

 

 

 

 

 

 

 

 

 

Interest income

 

$

24,736

 

$

18,982

 

$

69,081

 

$

52,648

 

Fee income

 

1,198

 

1,438

 

4,002

 

4,195

 

Dividend income

 

3,333

 

2,424

 

8,948

 

5,913

 

Total interest, fee and dividend income

 

$

29,267

 

$

22,844

 

$

82,031

 

$

62,756

 

 

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 term of the debenture agreement (ten years).

 

Deferred financing costs also include commitment fees and other costs related to our multi-year investment credit facility (the “Credit Facility”, as discussed further in Note F). These costs have been capitalized and are amortized into interest expense over their respective terms.

 

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.

 

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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 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 September 30, 2013 and 2012, approximately 3.7% and 4.0%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts, net of any premium reduction, associated with debt investments.  For the nine months ended September 30, 2013 and 2012, approximately 3.3% and 3.8%, respectively, of Main Street’s total investment income was attributable to interest income for the accretion of discounts, net of any premium reduction, associated with debt investments.

 

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 or vesting term.

 

9.                                      Income Taxes

 

MSCC has elected and intends to continue to qualify for the tax treatment applicable to a RIC under the Code, and, among other things, intends to make the required distributions to its stockholders as specified therein. In order to qualify as a RIC, MSCC is required to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, each year. Depending on the level of taxable income earned in a tax year, MSCC may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income. As part of maintaining RIC status, undistributed taxable income (subject to a 4% 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 federal income tax return for the prior year.

 

The Taxable Subsidiaries hold certain portfolio investments of Main Street. The Taxable Subsidiaries are consolidated for U.S. GAAP reporting purposes, and the portfolio investments held by them are included in the consolidated financial statements. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass through” entities for tax purposes and continue to comply with the “source income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are not consolidated with Main Street for income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of their ownership of certain portfolio investments. 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 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 Investment Manager permits Main Street to receive third party fees and continue to comply with the “source income” requirements contained in the RIC tax provisions of the Code.  The taxable income, or loss, of the Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences, as well as permanent differences. Through March 31, 2013, the Investment Manager provided for any income tax expense, or benefit, and any tax assets and liabilities in its separate financial statements.  Beginning April 1, 2013, the Investment Manager is included in Main Street’s consolidated financial statements and reflected as a consolidated subsidiary and any income tax expense, or benefit, and any tax assets and liabilities are reflected in Main Street’s consolidated financial statements.

 

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The Taxable Subsidiaries and the Investment Manager 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, accounts payable and accrued 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.

 

As part of the Exchange Offer, 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 Exchange Offer and valued 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 Exchange Offer. 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.  Main Street adopted the amended guidance in ASC 260, Earnings Per Share, and based on the guidance, the unvested shares of restricted stock 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.

 

As a result of the Exchange Offer which left a minority portion of MSC II’s equity interests owned by certain non-Main Street entities for the periods prior to March 31, 2012, the net earnings of MSC II attributable to the remaining noncontrolling interest in MSC II are excluded from all per share amounts presented, and the per share amounts only reflect the net earnings attributable to Main Street’s ownership interest in MSC II for the periods prior to March 31, 2012.  During the first quarter of 2012, MSCC completed the Final MSC II Exchange to acquire all of the minority portion of MSC II’s equity interests not already owned by MSCC.  The impact of the noncontrolling interests in MSC II for the three months ended March 31, 2012 is insignificant and has no impact on the reported per share results for the three months ended March 31, 2012 or any other period presented. As a result of the Final MSC II Exchange, subsequent to March 31, 2012, the non-controlling interest in MSC II no longer exists.

 

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13.                               Recently Issued Accounting Standards

 

In January 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (“ASU 2013-01”).  ASU 2013-01 limits the scope of the new balance sheet offsetting disclosure requirements to derivatives (including bifurcated embedded derivatives), repurchase agreements and reverse repurchase agreements, and certain securities borrowing and lending arrangements. Public companies are required to apply ASU 2013-01 prospectively for interim and annual reporting periods beginning after January 1, 2013.

 

In June 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2013-08, Financial Services—Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements (“ASU 2013-08”).  ASU 2013-08 amends the criteria that define an investment company, clarifies the measurement guidance and requires certain additional disclosures. Public companies are required to apply ASU 2013-08 prospectively for interim and annual reporting periods beginning after December 15, 2013.

 

In February 2013, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (“ASU 2013-04”).  ASU 2013-04 provides additional guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date. Public companies are required to apply ASU 2013-04 prospectively for interim and annual reporting periods beginning after December 15, 2013.

 

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 that have been issued 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.

 

Fair Value Hierarchy

 

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:

 

Level 1 — Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

 

Level 2 — Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:

 

·                  Quoted prices for similar assets in active markets (for example, investments in restricted stock);

 

·                  Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);

 

·                  Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and

 

·                  Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

 

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Level 3 — Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by private companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment.

 

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 table 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. Changes in the observability of valuation inputs may result in a reclassification for certain investments.

 

As of September 30, 2013, 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 September 30, 2013, except for the one publicly traded equity security which was categorized as Level 2.  As of December 31, 2012, all of Main Street’s LMM 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 LMM portfolio investments were categorized as Level 3 as of December 31, 2012.

 

As of September 30, 2013 and December 31, 2012, 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 available to determine the fair value of these investments, observable inputs in the 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, a portion of Main Street’s Middle Market portfolio investments were categorized as Level 2 as of September 30, 2013 and December 31, 2012. For those Middle Market portfolio investments for which sufficient observable inputs were not available to determine fair value of the investments, Main Street categorized such investments as Level 3 as of September 30, 2013 and December 31, 2012.

 

As of September 30, 2013 and December 31, 2012, Main Street’s Private Loan portfolio investments primarily consisted 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. 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 September 30, 2013 and December 31, 2012.

 

As of September 30, 2013 and December 31, 2012, Main Street’s Other Portfolio debt investments consisted of investments in secured debt investments. The fair value determination for Other Portfolio debt investments consisted of observable inputs in non-active markets and, as such, were categorized as Level 2 as of September 30, 2013 and December 31, 2012.

 

As of September 30, 2013 and December 31, 2012, Main Street’s Other Portfolio equity 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 equity investments were categorized as Level 3 as of September 30, 2013 and December 31, 2012.

 

As of September 30, 2013, 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 investments. As a result, all of Main Street’s Marketable securities and idle funds investments were categorized as Level 1 as of September 30, 2013. As of December 31, 2012, Main Street’s Marketable securities and idle funds investments consisted primarily of investments in secured and unsecured 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 available to determine the fair value of these investments. As a result, all of Main Street’s Marketable securities and idle funds investments were categorized as Level 2 as of December 31, 2012.

 

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

 

·                  Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;

 

·                  Current and projected financial condition of the portfolio company;

 

·                  Current and projected ability of the portfolio company to service its debt obligations;

 

·                  Type and amount of collateral, if any, underlying the investment;

 

·                  Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio, and net debt/EBITDA ratio) applicable to the investment;

 

·                  Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);

 

·                  Pending debt or capital restructuring of the portfolio company;

 

·                  Projected operating results of the portfolio company;

 

·                  Current information regarding any offers to purchase the investment;

 

·                  Current ability of the portfolio company to raise any additional financing as needed;

 

·                  Changes in the economic environment which may have a material impact on the operating results of the portfolio company;

 

·                  Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;

 

·                  Qualitative assessment of key management;

 

·                  Contractual rights, obligations or restrictions associated with the investment; and

 

·                  Other factors deemed relevant.

 

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 not applicable), 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 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 table 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 September 30, 2013:

 

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Table of Contents

 

Type of Investment

 

Fair Value as of
September 30,
2013
(in thousands)

 

Valuation Technique

 

Significant Unobservable Inputs

 

Range (3)

 

Weighted
Average 
(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

290,938

 

Discounted cash flow

 

Weighted average cost of capital

 

11.0% - 18.3%

 

14.6%

 

 

 

 

 

Market comparable / Enterprise Value

 

EBITDA multiple (1)

 

4.1x - 6.9x

(2)

5.6x

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt investments

 

$

736,069

 

Discounted cash flow

 

Risk adjusted discount factor

 

4.3% - 24.1%

(2)

14.4%

 

 

 

 

 

 

 

Adjustment factors

 

0.0% - 100.0%

 

99.2%

 

Total Level 3 investments

 

$

1,027,007

 

 

 

 

 

 

 

 

 

 


(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 - 9.0x and the range for risk adjusted discount factor is 4.3% - 90.3%.

(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, 2012:

 

Type of Investment

 

Fair Value as of
December 31,
2012
(in thousands)

 

Valuation Technique

 

Significant Unobservable Inputs

 

Range (3)

 

Weighted
Average 
(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

$

220,359

 

Discounted cash flow

 

Weighted average cost of capital

 

11.0% - 19.0%

 

14.9%

 

 

 

 

 

Market comparable / Enterprise Value

 

EBITDA multiple (1)

 

4.0x - 7.0x

(2)

5.7x

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt investments

 

$

477,272

 

Discounted cash flow

 

Risk adjusted discount factor

 

9.2% - 16.0%

(2)

13.3%

 

 

 

 

 

 

 

Adjustment factors

 

0.0% - 100.0%

 

99.5%

 

Total Level 3 investments

 

$

697,631

 

 

 

 

 

 

 

 

 

 


(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 - 14.0x and the range for risk adjusted discount factor is 4.3% - 20.5%.

(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 changes in fair value of Main Street’s Level 3 portfolio investments for the nine months ended September 30, 2013 (amounts in thousands):

 

Type of
Investment

 

Fair Value as of
December 31,
2012

 

Transfers Into
Level 3 Hierarchy

 

Redemptions/
Repayments

 

New
Investments

 

Net Changes
from
Unrealized to
Realized

 

Net Unrealized
Appreciation
(Depreciation)

 

Other

 

Fair Value as of
September 30,
2013

 

Debt

 

$

477,272

 

$

4,992

 

$

(162,560

)

$

415,068

 

$

841

 

$

(2,007

)

$

2,463

 

$

736,069

 

Equity

 

191,764

 

 

16

 

33,713

 

4

 

24,521

 

1,839

 

251,857

 

Equity Warrant

 

28,595

 

 

(1,051

)

8,946

 

(470

)

4,694

 

(1,633

)

39,081

 

 

 

$

697,631

 

$

4,992

 

$

(163,595

)

$

457,727

 

$

375

 

$

27,208

 

$

2,669

 

$

1,027,007

 

 

As of September 30, 2013 and December 31, 2012, 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.

 

The following table provides a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 SBIC debentures as of September 30, 2013 (amounts in thousands):

 

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Type of Instrument

 

Fair Value as of
September 30,
2013
(in thousands)

 

Valuation Technique

 

Significant Unobservable Inputs

 

Range

 

Weighted
Average

 

 

 

 

 

 

 

 

 

 

 

 

 

SBIC Debentures

 

$

62,259

 

Discounted cash flow

 

Estimated market interest rates

 

7.9% - 9.8%

 

8.6%

 

 

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, 2012 (amounts in thousands):

 

Type of Instrument

 

Fair Value as of
December 31,
2012
(in thousands)

 

Valuation Technique

 

Significant Unobservable Inputs

 

Range

 

Weighted
Average

 

 

 

 

 

 

 

 

 

 

 

 

 

SBIC Debentures

 

$

86,467

 

Discounted cash flow

 

Estimated market interest rates

 

7.1% - 9.0%

 

8.0%

 

 

The following table provides a summary of changes for the Level 3 SBIC debentures recorded at fair value for the nine months ended September 30, 2013 (amounts in thousands):

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

Type of 

 

Fair Value as of

 

 

 

Net Realized

 

New SBIC

 

(Appreciation)

 

Fair Value as of

 

Instrument

 

December 31, 2012

 

Repayments

 

Loss

 

Debentures

 

Depreciation

 

September 30, 2013

 

SBIC Debentures at fair value

 

$

86,467

 

$

(24,800

)

$

4,775

 

$

 

$

(4,183

)

$

62,259

 

 

At September 30, 2013 and December 31, 2012, 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)

 

 

 

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

Significant
Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

At September 30, 2013

 

Fair Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

LMM portfolio investments

 

$

635,821

 

$

 

$

10,235

 

$

625,586

 

Middle Market portfolio investments

 

391,097

 

 

113,165

 

277,932

 

Private Loan portfolio investments

 

87,274

 

 

 

87,274

 

Other Portfolio investments

 

38,215

 

 

2,000

 

36,215

 

Investment in affiliated Investment Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total portfolio investments

 

1,152,407

 

 

125,400

 

1,027,007

 

 

 

 

 

 

 

 

 

 

 

Marketable securities and idle funds investments

 

19,963

 

19,963

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

1,172,370

 

$

19,963

 

$

125,400

 

$

1,027,007

 

 

 

 

 

 

 

 

 

 

 

SBIC Debentures at fair value

 

$

62,259

 

$

 

$

 

$

62,259

 

 

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Fair Value Measurements

 

 

 

 

 

(in thousands)

 

 

 

 

 

Quoted Prices in
Active Markets
for Identical
Assets

 

Significant
Other
Observable
Inputs

 

Significant
Unobservable
Inputs

 

At December 31, 2012

 

Fair Value

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

 

 

 

 

 

 

 

 

 

 

LMM portfolio investments

 

$

482,864

 

$

 

$

 

$

482,864

 

Middle Market portfolio investments

 

351,972

 

 

219,838

 

132,134

 

Private Loan portfolio investments

 

65,493

 

 

 

4,992

 

60,501

 

Other Portfolio investments

 

24,102

 

 

 

1,970

 

22,132

 

Investment in affiliated Investment Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total portfolio investments

 

924,431

 

 

226,800

 

697,631

 

 

 

 

 

 

 

 

 

 

 

Marketable securities and idle funds investments

 

28,535

 

 

28,535

 

 

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

952,966

 

$

 

$

255,335

 

$

697,631

 

 

 

 

 

 

 

 

 

 

 

SBIC Debentures at fair value

 

$

86,467

 

$

 

$

 

$

86,467

 

 

Portfolio Investment 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 $25 million.  The LMM debt investments are typically secured by either a first or second lien on 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 companies, Main Street usually 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 or secondary investments in interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the LMM 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 company and typically have a term of between three and five years.

 

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. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien and typically have a term of between three and seven years.

 

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.

 

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 and nine month periods ended September 30, 2013 and 2012, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

 

As of September 30, 2013, Main Street had debt and equity investments in 62 LMM portfolio companies with an aggregate fair value of approximately $635.8 million, with a total cost basis of approximately $504.3 million, and a weighted average annual effective yield on its LMM debt investments of approximately 14.9%. As of September 30, 2013, approximately 74% of Main Street’s

 

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total LMM portfolio investments at cost were in the form of debt investments and approximately 89% of such debt investments at cost were secured by first priority liens on the assets of Main Street’s LMM portfolio companies. At September 30, 2013, 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 33%. As of December 31, 2012, Main Street had debt and equity investments in 56 LMM portfolio companies with an aggregate fair value of approximately $482.9 million, with a total cost basis of approximately $380.5 million, and a weighted average annual effective yield on its LMM debt investments of approximately 14.3%. As of December 31, 2012, approximately 75% of Main Street’s total LMM portfolio investments at cost were in the form of debt investments and approximately 93% of such debt investments at cost were secured by first priority liens on the assets of Main Street’s LMM portfolio companies. At December 31, 2012, Main Street had equity ownership in approximately 93% of its LMM portfolio companies and the average fully diluted equity ownership in those portfolio companies was approximately 33%. The weighted average annual yields were computed using the effective interest rates for all debt investments at September 30, 2013 and December 31, 2012, 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.

 

As of September 30, 2013, Main Street had Middle Market portfolio investments in 83 companies, collectively totaling approximately $391.1 million in fair value with a total cost basis of approximately $388.0 million. The weighted average EBITDA for the 83 Middle Market portfolio company investments was approximately $85.6 million as of September 30, 2013. As of September 30, 2013, substantially all of Main Street’s Middle Market portfolio investments were in the form of debt investments and approximately 92% of such debt investments at cost were secured by first priority liens on portfolio company assets. The weighted average annual effective yield on Main Street’s Middle Market portfolio debt investments was approximately 7.9% as of September 30, 2013. As of December 31, 2012, Main Street had Middle Market portfolio investments in 79 companies, collectively totaling approximately $352.0 million in fair value with a total cost basis of approximately $348.1 million. The weighted average EBITDA for the 79 Middle Market portfolio company investments was approximately $93.5 million as of December 31, 2012. As of December 31, 2012, substantially all of its Middle Market portfolio investments were in the form of debt investments and approximately 91% of such debt investments at cost were secured by first priority liens on portfolio company assets. The weighted average annual effective yield on Main Street’s Middle Market portfolio debt investments was approximately 8.0% as of December 31, 2012. The weighted average annual yields were computed using the effective interest rates for all debt investments at September 30, 2013 and December 31, 2012, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments.

 

As of September 30, 2013, Main Street had Private Loan portfolio investments in 13 companies, collectively totaling approximately $87.3 million in fair value with a total cost basis of approximately $86.6 million. The weighted average EBITDA for the 13 Private Loan portfolio company investments was approximately $51.9 million as of September 30, 2013. As of September 30, 2013, 99% of Main Street’s Private Loan portfolio investments were in the form of debt investments and all such debt investments at cost were secured by first priority liens on portfolio company assets. The weighted average annual effective yield on Main Street’s Private Loan portfolio debt investments was approximately 12.0% as of September 30, 2013. As of December 31, 2012, Main Street had Private Loan portfolio investments in 9 companies, collectively totaling approximately $65.5 million in fair value with a total cost basis of approximately $64.9 million.  The weighted average EBITDA for the 9 Private Loan portfolio company investments was approximately $45.6 million as of December 31, 2012. As of December 31, 2012, 99% of its Private Loan portfolio investments were in the form of debt investments and all such debt investments at cost were secured by first priority liens on portfolio company assets.  The weighted average annual effective yield on Main Street’s Private Loan portfolio debt investments was approximately 14.8% as of December 31, 2012. The weighted average annual yields were computed using the effective interest rates for all debt investments at September 30, 2013 and December 31, 2012, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments.

 

As of September 30, 2013, Main Street had Other Portfolio investments in 6 companies, collectively totaling approximately $38.2 million in fair value and approximately $35.6 million in cost basis and which comprised 3.3% of Main Street’s Investment Portfolio at fair value as of September 30, 2013. As of December 31, 2012, Main Street had Other Portfolio investments in 3 companies, collectively totaling approximately $24.1 million in fair value and approximately $23.6 million in cost basis and which comprised 2.6% of Main Street’s Investment Portfolio at fair value as of December 31, 2012.

 

During the nine months ended September 30, 2013, there were ten portfolio company investment transfers from the LMM and Middle Market portfolio investment categories to the Private Loan portfolio investment category totaling $69.6 million in fair value and $69.0 million in cost as of the date of transfer.

 

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 September 30, 2013 and December 31, 2012 (this information excludes the Other Portfolio investments and the Investment Manager).

 

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Table of Contents

 

Cost:

 

September 30, 2013

 

December 31, 2012

 

First lien debt

 

79.1%

 

81.1%

 

Equity

 

11.1%

 

10.4%

 

Second lien debt

 

7.1%

 

6.0%

 

Equity warrants

 

2.3%

 

1.9%

 

Other

 

0.4%

 

0.6%

 

 

 

100.0%

 

100.0%

 

 

Fair Value:

 

September 30, 2013

 

December 31, 2012

 

First lien debt

 

69.6%

 

72.1%

 

Equity

 

20.3%

 

18.7%

 

Second lien debt

 

6.3%

 

5.4%

 

Equity warrants

 

3.5%

 

3.3%

 

Other

 

0.3%

 

0.5%

 

 

 

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 September 30, 2013 and December 31, 2012 (this information excludes the Other Portfolio investments and the Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

 

Cost:

 

September 30, 2013

 

December 31, 2012

 

Southwest

 

28.0%

 

27.7%

 

West

 

22.6%

 

25.7%

 

Northeast

 

15.9%

 

17.2%

 

Southeast

 

14.9%

 

10.1%

 

Midwest

 

13.5%

 

17.6%

 

Canada

 

1.2%

 

0.0%

 

Other Non-United States

 

3.9%

 

1.7%

 

 

 

100.0%

 

100.0%

 

 

Fair Value:

 

September 30, 2013

 

December 31, 2012

 

Southwest

 

31.2%

 

31.3%

 

West

 

22.6%

 

25.3%

 

Northeast

 

15.6%

 

15.8%

 

Southeast

 

12.9%

 

9.1%

 

Midwest

 

13.2%

 

17.0%

 

Canada

 

1.0%

 

0.0%

 

Other Non-United States

 

3.5%

 

1.5%

 

 

 

100.0%

 

100.0%

 

 

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 September 30, 2013 and December 31, 2012 (this information excludes the Other Portfolio investments and the Investment Manager).

 

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Cost:

 

September 30, 2013

 

December 31, 2012

 

Energy Equipment & Services

 

11.8%

 

8.4%

 

Specialty Retail

 

7.4%

 

6.1%

 

Media

 

6.6%

 

7.2%

 

Commercial Services & Supplies

 

5.8%

 

6.4%

 

Health Care Providers & Services

 

5.8%

 

5.3%

 

Hotels, Restaurants & Leisure

 

5.0%

 

3.5%

 

Construction & Engineering

 

4.7%

 

4.7%

 

Software

 

4.6%

 

8.3%

 

Machinery

 

4.3%

 

6.7%

 

Road & Rail

 

3.0%

 

1.0%

 

Diversified Telecommunication Services

 

2.9%

 

0.0%

 

Diversified Consumer Services

 

2.8%

 

3.2%

 

IT Services

 

2.8%

 

2.8%

 

Oil, Gas & Consumable Fuels

 

2.8%

 

1.6%

 

Electronic Equipment, Instruments & Components

 

2.2%

 

2.6%

 

Insurance

 

2.0%

 

2.0%

 

Textiles, Apparel & Luxury Goods

 

1.9%

 

0.7%

 

Auto Components

 

1.8%

 

0.5%

 

Metals & Mining

 

1.6%

 

2.2%

 

Building Products

 

1.5%

 

2.0%

 

Professional Services

 

1.4%

 

2.2%

 

Health Care Equipment & Supplies

 

1.3%

 

1.5%

 

Leisure Equipment & Products

 

1.3%

 

0.0%

 

Containers & Packaging

 

1.2%

 

1.5%

 

Consumer Finance

 

1.2%

 

1.2%

 

Paper & Forest Products

 

1.1%

 

1.0%

 

Electrical Equipment

 

1.1%

 

0.8%

 

Food Products

 

1.0%

 

2.0%

 

Chemicals

 

0.9%

 

2.0%

 

Aerospace & Defense

 

0.8%

 

1.9%

 

Trading Companies & Distributors

 

0.5%

 

1.0%

 

Construction Materials

 

0.2%

 

1.7%

 

Communications Equipment

 

0.0%

 

1.2%

 

Other (1)

 

6.7%

 

6.8%

 

 

 

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:

 

September 30, 2013

 

December 31, 2012

 

Energy Equipment & Services

 

12.7%

 

10.2%

 

Specialty Retail

 

6.4%

 

4.9%

 

Media

 

6.3%

 

6.7%

 

Machinery

 

6.1%

 

8.3%

 

Health Care Providers & Services

 

5.6%

 

5.3%

 

Commercial Services & Supplies

 

5.5%

 

6.1%

 

Construction & Engineering

 

4.9%

 

5.1%

 

Hotels, Restaurants & Leisure

 

4.8%

 

3.5%

 

Software

 

4.5%

 

7.9%

 

Diversified Consumer Services

 

3.8%

 

4.0%

 

Road & Rail

 

3.2%

 

1.5%

 

Diversified Telecommunication Services

 

3.2%

 

0.0%

 

IT Services

 

2.5%

 

2.5%

 

Oil, Gas & Consumable Fuels

 

2.4%

 

1.4%

 

Electronic Equipment, Instruments & Components

 

2.3%

 

2.4%

 

Insurance

 

1.8%

 

1.8%

 

Textiles, Apparel & Luxury Goods

 

1.6%

 

0.6%

 

Auto Components

 

1.6%

 

0.4%

 

Metals & Mining

 

1.4%

 

1.9%

 

Paper & Forest Products

 

1.3%

 

1.2%

 

Professional Services

 

1.2%

 

2.0%

 

Trading Companies & Distributors

 

1.2%

 

1.7%

 

Health Care Equipment & Supplies

 

1.1%

 

1.3%

 

Containers & Packaging

 

1.1%

 

1.3%

 

Leisure Equipment & Products

 

1.1%

 

0.0%

 

Consumer Finance

 

1.0%

 

1.1%

 

Electrical Equipment

 

1.0%

 

0.7%

 

Food Products

 

0.9%

 

1.8%

 

Building Products

 

0.9%

 

1.5%

 

Chemicals

 

0.8%

 

1.8%

 

Aerospace & Defense

 

0.7%

 

1.7%

 

Transportation Infrastructure

 

0.7%

 

1.0%

 

Construction Materials

 

0.1%

 

1.4%

 

Communications Equipment

 

0.0%

 

1.1%

 

Other (1)

 

6.3%

 

5.9%

 

 

 

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 September 30, 2013 and December 31, 2012, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

 

NOTE D — WHOLLY OWNED INVESTMENT MANAGER

 

As part of the Formation Transactions, the Investment Manager became a wholly owned subsidiary of MSCC. However, through March 31, 2013, the Investment Manager was accounted for as a portfolio investment since the Investment Manager is not an investment company and since it had historically conducted a significant portion of its investment management activities for parties outside of MSCC and its consolidated subsidiaries. Effective April 1, 2013, the Investment Manager was consolidated prospectively as the controlled operating subsidiary was considered to be providing substantially all of its services directly or indirectly to Main Street or portfolio companies.

 

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The Investment Manager receives recurring investment management fees from certain direct and indirect wholly owned subsidiaries of MSCC. The Investment Manager may also receive certain management, consulting and advisory fees for providing these services to third parties (the “External Services”).

 

During May 2012, MSCC and the Investment Manager executed 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. MSCC is initially providing such investment advisory services to HMS Adviser, but it is ultimately intended that the Investment Manager provide such services because the fees MSCC receives from such arrangement could otherwise have negative consequences on its ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment (MSCC or the Investment Adviser, whichever is providing such investment advisory services, the “Sub-Adviser”). Certain relief must be obtained from the SEC before the Investment Manager is permitted to provide these services to HMS Adviser, which relief is being sought, but there can be no assurance that it will be obtained. Under the investment sub-advisory agreement, the Sub-Adviser is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. However, the Sub-Adviser has agreed to waive all such fees from the effective date of HMS Adviser’s registration statement on Form N-2 through December 31, 2013. As a result, as of September 30, 2013, the Sub-Adviser has not received any base management fee or incentive fees under the investment sub-advisory agreement, and the Sub-Adviser is not due any unpaid compensation for any base management fee or incentive fees under the investment sub-advisory agreement.

 

Through March 31, 2013, the investment in the Investment Manager was 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, based on the total estimated present value of the net cash flows received for the External Services, over the estimated dollar averaged life of the related investment management, advisory or consulting contract, and was also based on comparable public market transactions. The net cash flows utilized in the valuation of the Investment Manager excluded any revenues and expenses from MSCC and its subsidiaries, but included the revenues attributable to External Services, and were reduced by an estimated allocation of costs related to providing such External Services. Any change in fair value of the investment in the Investment Manager was recognized on Main Street’s statement of operations as “Unrealized appreciation (depreciation) in Investment in affiliated Investment Manager,” with a corresponding increase (in the case of appreciation) or decrease (in the case of depreciation) to “Investment in affiliated Investment Manager” on Main Street’s balance sheet. As of March 31, 2013 (the last period the Investment Manager was considered to be a portfolio investment for accounting purposes) and December 31, 2012, the fair value of the investment in the Investment Manager was zero.  Beginning April 1, 2013, the Investment Manager was fully consolidated with MSCC and its other consolidated subsidiaries in Main Street’s consolidated financial statements and, as of April 1, 2013, all assets and liabilities were included in the consolidated balance sheet at fair value.

 

The 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, or loss, and, as a result of its activities, may generate income tax expense or benefit. The Investment Manager permits Main Street to receive third party fees and continue to comply with the “source income” requirements contained in the RIC tax provisions of the Code.  The taxable income, or loss, of the Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences, as well as permanent differences. Through March 31, 2013, the Investment Manager provided for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.  Beginning April 1, 2013, the Investment Manager is included in Main Street’s consolidated financial statements and reflected as a consolidated subsidiary and any income tax expense, or benefit, and any tax assets or liabilities are reflected in Main Street’s consolidated financial statements.

 

Pursuant to a historical support services agreement with MSCC, the Investment Manager was reimbursed each quarter by MSCC for its cash operating expenses, less fees that the Investment Manager received from MSC II and third parties, associated with providing investment management and other services to MSCC, its subsidiaries and third parties. Through March 31, 2013, these fees paid by MSC II to the Investment Manager were reflected as “Expenses reimbursed to affiliated Investment Manager” on the statements of operations along with any additional net costs reimbursed by MSCC to the Investment Manager pursuant to the support services agreement. Beginning April 1, 2013, the expenses of the Investment Manager are included in Main Street’s consolidated financials statements, after elimination of any intercompany activity, in the statement of operations as either compensation expenses or as a part of general and administrative expenses.

 

In the separate stand-alone financial statements of the Investment Manager as summarized below, as part of the Formation Transactions the Investment Manager recognized an $18 million intangible asset related to the investment advisory agreement with MSC II consistent with Staff Accounting Bulletin No. 54, Application of “Pushdown” Basis of Accounting in Financial Statements of Subsidiaries Acquired by Purchase (“SAB 54”). Under SAB 54, push-down accounting is required in “purchase transactions that result in an entity becoming substantially wholly owned.” In this case, MSCC acquired 100% of the equity interests in the Investment Manager in the Formation Transactions. Because the $18 million value attributed to MSCC’s investment in the Investment Manager

 

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was derived from the long-term, recurring management fees under the investment advisory agreement with MSC II, the same methodology used to determine the $18 million valuation of the Investment Manager in connection with the Formation Transactions was utilized to establish the push-down accounting basis for the intangible asset. The intangible asset is being amortized over the estimated economic life of the investment advisory agreement with MSC II. Through March 31, 2013, amortization expense was recorded by the Investment Manager in its separate financial statements, but this amortization expense was not included in the expenses reimbursed by MSCC to the Investment Manager based upon the support services agreement since it is non-cash and non-operating in nature.  Upon consolidation of the Investment Manager effective April 1, 2013, and for all periods thereafter, the effects of the intangible asset and related amortization expense have been fully eliminated in Main Street’s consolidated financial statements.

 

Summarized financial information from the separate financial statements of the Investment Manager through March 31, 2013 is as follows:

 

 

 

As of March 31

 

As of December 31,

 

 

 

2013

 

2012

 

 

 

(in thousands)

 

 

 

(Unaudited)

 

 

 

 

 

 

 

Cash

 

$

524

 

$

741

 

Accounts receivable

 

79

 

69

 

Accounts receivable - MSCC

 

106

 

4,066

 

Intangible asset (net of accumulated amortization of $6,021 and $5,681 as of March 31, 2013 and December 31, 2012, respectively)

 

11,979

 

12,319

 

Deposits and other

 

556

 

462

 

Total assets

 

$

13,244

 

$

17,657

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

1,410

 

$

5,483

 

Equity

 

11,834

 

12,174

 

Total liabilities and equity

 

$

13,244

 

$

17,657

 

 

 

 

Three Months Ended
September 30,

 

Three Months Ended
March 31,

 

Nine Months Ended
September 30,

 

 

 

2012

 

2013

 

2012

 

 

 

(in thousands)

 

(in thousands)

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Management fee income from MSC II

 

$

707

 

$

776

 

$

1,867

 

Other management advisory fees

 

145