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, 2017

 

OR

 

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

 

Commission file number: 814-00866

  

MONROE CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Maryland 27-4895840

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

   

311 South Wacker Drive, Suite 6400

Chicago, Illinois

60606
(Address of Principal Executive Office) (Zip Code)

 

(312) 258-8300

(Registrant’s Telephone Number, Including Area Code)

  

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   ¨

 

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   x     No   ¨

 

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”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):

 

Large accelerated filer     ¨ Accelerated filer      x
       
Non-accelerated filer      ¨   (Do not check if a smaller reporting company)      Smaller reporting company      ¨
       
Emerging growth company x    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     x  

 

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

 

As of November 7, 2017, the registrant had 20,239,957 shares of common stock, $0.001 par value, outstanding.

 

 

 

 

  

TABLE OF CONTENTS

 

    Page
PART I. FINANCIAL INFORMATION 3
     
Item 1. Consolidated Financial Statements 3
     
  Consolidated Statements of Assets and Liabilities as of September 30, 2017 (unaudited) and December 31, 2016 3
     
  Consolidated Statements of Operations for the three and nine months ended September 30, 2017 (unaudited) and 2016 (unaudited) 4
     
  Consolidated Statements of Changes in Net Assets for the nine months ended September 30, 2017 (unaudited) and 2016 (unaudited) 5
     
  Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 (unaudited) and 2016 (unaudited) 6
     
  Consolidated Schedules of Investments as of September 30, 2017 (unaudited) and December 31, 2016 7
     
  Notes to Consolidated Financial Statements (unaudited) 18
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 50
     
Item 4. Controls and Procedures 51
     
PART II. OTHER INFORMATION 51
     
Item 1. Legal Proceedings 51
     
Item 1A. Risk Factors 51
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 51
     
Item 3. Defaults Upon Senior Securities 51
     
Item 4. Mine Safety Disclosures 51
     
Item 5. Other Information 51
     
Item 6. Exhibits 52
     
Signatures   53

 

 2 

 

Part I. Financial Information

Item 1. Consolidated Financial Statements

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

(in thousands, except per share data)

 

   September 30, 2017   December 31, 2016 
   (unaudited)     
ASSETS          
Investments, at fair value:          
Non-controlled/non-affiliate company investments  $368,634   $353,980 
Non-controlled affiliate company investments   53,595    50,041 
Controlled affiliate company investments   8,868    8,899 
Total investments, at fair value (amortized cost of: $439,922 and $413,242, respectively)   431,097    412,920 
Cash   3,721    5,958 
Restricted cash   5,689    2,373 
Interest receivable   4,220    2,643 
Other assets   535    651 
Total assets   445,262    424,545 
           
LIABILITIES          
Debt:          
Revolving credit facility   60,612    129,000 
SBA debentures payable   92,100    51,500 
Total debt   152,712    180,500 
Less:  Unamortized deferred financing costs   (4,524)   (3,945)
Total debt, less unamortized deferred financing costs   148,188    176,555 
Secured borrowings, at fair value (proceeds of: $0 and $1,320, respectively)   -    1,314 
Payable for open trades   7,425    - 
Interest payable   541    735 
Management fees payable   1,953    1,749 
Incentive fees payable   1,721    1,222 
Accounts payable and accrued expenses   1,855    2,120 
Directors' fees payable   37    - 
Total liabilities   161,720    183,695 
Net assets  $283,542   $240,850 
           
Commitments and contingencies (See Note 10)          
           
ANALYSIS OF NET ASSETS          
Common stock, $0.001 par value, 100,000 shares authorized, 20,240 and 16,582 shares issued and outstanding, respectively  $20   $17 
Capital in excess of par value   286,269    233,526 
Undistributed net investment income (accumulated distributions in excess of net investment income)   6,081    7,037 
Accumulated net realized gain (loss) on investments and secured borrowings   81    587 
Accumulated net unrealized gain (loss) on investments, secured borrowings and foreign currency borrowings   (8,909)   (317)
Total net assets  $283,542   $240,850 
           
Net asset value per share  $14.01   $14.52 

 

See Notes to Consolidated Financial Statements.

 3 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

(in thousands, except per share data)

 

   Three months ended September 30,   Nine months ended September 30, 
   2017   2016   2017   2016 
Investment income:                    
Interest income:                    
Non-controlled/non-affiliate company investments  $10,887   $8,387   $30,995   $25,109 
Non-controlled affiliate company investments   1,470    1,117    3,777    3,282 
Controlled affiliate company investments   200    20    594    30 
Total interest income   12,557    9,524    35,366    28,421 
Dividend income:                    
Non-controlled/non-affiliate company investments   251    251    751    751 
Non-controlled affiliate company investments   -    1,133    -    3,546 
Total dividend income   251    1,384    751    4,297 
Fee income:                    
Non-controlled/non-affiliate company investments   661    220    1,626    1,067 
Total fee income   661    220    1,626    1,067 
Total investment income   13,469    11,128    37,743    33,785 
                     
Operating expenses:                    
Interest and other debt financing expenses   1,907    1,523    6,101    4,987 
Base management fees   1,953    1,594    5,661    4,598 
Incentive fees   1,721    1,223    4,471    4,282 
Professional fees   277    237    854    682 
Administrative service fees   295    324    926    956 
General and administrative expenses   292    265    760    611 
Excise taxes   100    342    100    429 
Directors' fees   37    37    111    111 
Expenses before incentive fee waiver   6,582    5,545    18,984    16,656 
Incentive fee waiver   -    -    (250)   - 
Total expenses, net of incentive fee waiver   6,582    5,545    18,734   16,656 
Net investment income   6,887    5,583    19,009    17,129 
                     
Net gain (loss) on investments, secured borrowings and foreign currency borrowings:                    
Net realized gain (loss):                    
Non-controlled/non-affiliate company investments   (2,900)   -    (572)   587 
Secured borrowings   -    -    66    - 
Net realized gain (loss)   (2,900)   -    (506)   587 
                     
Net change in unrealized gain (loss):                    
Non-controlled/non-affiliate company investments   3,099    200    3,788    (920)
Non-controlled affiliate company investments   454    618    (8,902)   3,814 
Controlled affiliate company investments   (1,155)   (2,666)   (3,389)   (3,741)
Secured borrowings   -    (123)   (6)   (36)
Foreign currency borrowings   (67)   -    (83)   - 
Net change in unrealized gain (loss)   2,331    (1,971)   (8,592)   (883)
                     
Net gain (loss) on investments, secured borrowings and foreign currency borrowings   (569)   (1,971)   (9,098)   (296)
                     
Net increase (decrease) in net assets resulting from operations  $6,318   $3,612   $9,911   $16,833 
                     
Per common share data:                    
Net investment income per share - basic and diluted  $0.34   $0.36   $1.05   $1.24 
Net increase in net assets resulting from operations per share - basic and diluted  $0.31   $0.23   $0.55   $1.21 
Weighted average common shares outstanding - basic and diluted   20,240    15,559    18,081    13,864 

 

See Notes to Consolidated Financial Statements. 

 4 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

 

(in thousands)

 

   Common Stock   Capital in excess   Undistributed net investment
income (accumulated distributions in excess of net
   Accumulated net
realized gain (loss) on investments and
   Accumulated net unrealized gain
(loss) on investments, secured borrowings and foreign
     
   Number of
shares
   Par
value
   of par
value
  

investment

income)

   secured
borrowings
   currency
borrowings
   Total
net assets
 
Balances at December 31, 2015   13,008   $13   $184,419   $1,692   $-   $(1,589)  $184,535 
Net increase (decrease) in net assets resulting from operations   -    -    -    17,129    587    (883)   16,833 
Issuance of common stock, net of offering and underwriting costs   3,566    4    52,551    -    -    -    52,555 
Distributions to stockholders:                                   
Stock issued in connection with dividend reinvestment plan   4    -    70    (70)   -    -    - 
Distributions from net investment income   -    -    -    (14,836)   -    -    (14,836)
Balances at September 30, 2016   16,578   $17   $237,040   $3,915   $587   $(2,472)  $239,087 
                                    
Balances at December 31, 2016   16,582   $17   $233,526   $7,037   $587   $(317)  $240,850 
Net increase (decrease) in net assets resulting from operations   -    -    -    19,009   (506)   (8,592)   9,911 
Issuance of common stock, net of offering and underwriting costs   3,624    3    52,218    -    -    -    52,221 
Distributions to stockholders:                                   
Stock issued in connection with dividend reinvestment plan   34    -    525    (525)   -    -    - 
Distributions from net investment income   -    -    -    (19,440)   -    -    (19,440)
Balances at September 30, 2017   20,240   $20   $286,269   $6,081   $81   $(8,909)  $283,542 

 

See Notes to Consolidated Financial Statements.

 

 5 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

(in thousands)

 

   Nine months ended September 30, 
   2017   2016 
         
Cash flows from operating activities:          
Net increase (decrease) in net assets resulting from operations  $9,911   $16,833 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:          
Net change in unrealized (gain) loss on investments   8,503    847 
Net change in unrealized (gain) loss on secured borrowings   6    36 
Net change in unrealized (gain) loss on foreign currency borrowings   83    - 
Net realized (gain) loss on investments   572    (587)
Net realized (gain) loss on secured borrowings   (66)   - 
Payment-in-kind interest income   (1,363)   (1,430)
Net accretion of discounts and amortization of premiums   (1,278)   (1,137)
Proceeds from principal payments and sales of investments   144,445    62,459 
Purchases of investments   (169,056)   (95,717)
Amortization of deferred financing costs   760    603 
Changes in operating assets and liabilities:          
Interest receivable   (1,577)   (515)
Other assets   116    329 
Payable for open trades   7,425    (4,693)
Interest payable   (194)   (369)
Management fees payable   204    91 
Incentive fees payable   499    109 
Accounts payable and accrued expenses   (265)   827 
Directors' fees payable   37    (37)
Net cash provided by (used in) operating activities   (1,238)   (22,351)
           
Cash flows from financing activities:          
Borrowings on revolving credit facility   93,529    64,000 
Repayments of revolving credit facility   (162,000)   (83,200)
SBA debentures borrowings   40,600    - 
Payments of deferred financing costs   (1,339)   (917)
Repayments on secured borrowings   (1,254)   (902)
Proceeds from shares sold, net of offering and underwriting costs   52,221    52,555 
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $525 and $70, respectively   (19,440)   (14,836)
Net cash provided by (used in) financing activities   2,317    16,700 
           
Net increase (decrease) in Cash and Restricted Cash   1,079    (5,651)
Cash and Restricted Cash, beginning of period (1)   8,331    13,866 
Cash and Restricted Cash, end of period (2)  $9,410   $8,215 
           
Supplemental disclosure of cash flow information:          
Cash interest paid during the period  $5,405   $4,545 
Cash paid for excise taxes during the period  $495   $284 

 

 

(1)Represents cash and restricted cash of $5,958 and $2,373, respectively, from the consolidated statements of assets and liabilities as of December 31, 2016. Represents cash and restricted cash of $5,278 and $8,588, respectively, from the consolidated statements of assets and liabilities as of December 31, 2015.

 

(2)Represents cash and restricted cash of $3,721 and $5,689, respectively, from the consolidated statements of assets and liabilities as of September 30, 2017. Represents cash and restricted cash of $5,974 and $2,241, respectively, from the consolidated statements of assets and liabilities as of September 30, 2016.

 

See Notes to Consolidated Financial Statements.

 6 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
Non-Controlled/Non-Affiliate Company Investments                               
Senior Secured Loans                               
Banking, Finance, Insurance & Real Estate                               
Bartlett Reserve Durham, LLC (e)  L+9.00%   10.23%  6/1/2018   6,468   $6,385   $6,346    2.2%
Echelon Funding I, LLC (Delayed Draw) (e) (f) (g)  L+10.25%   11.49%  2/24/2021   15,000    13,159    13,350    4.7%
Liftforward SPV II, LLC (e) (f)  L+10.75%   11.99%  11/10/2020   10,000    5,177    5,251    1.8%
               31,468    24,721    24,947    8.7%
Beverage, Food & Tobacco                               
All Holding Company, LLC (h)  L+7.00%   8.24%  11/15/2021   5,363    5,275    5,416    1.9%
California Pizza Kitchen, Inc.  L+6.00%   7.24%  8/23/2022   6,930    6,864    6,884    2.4%
               12,293    12,139    12,300    4.3%
Construction & Building                               
Cali Bamboo, LLC  L+8.00%   9.24%  7/10/2020   5,332    5,274    5,332    1.9%
Cali Bamboo, LLC (Revolver) (f)  L+8.00%   9.24%  7/10/2020   2,165    823    823    0.3%
Cornerstone Detention Products, Inc. (i)  L+9.50%   

9.74% Cash/

1.00% PIK

   4/8/2019   3,566    3,541    3,530    1.2%
Cornerstone Detention Products, Inc. (Revolver) (f)  L+8.50%   9.83%  4/8/2019   400    200    198    0.1%
L.A.R.K. Industries, Inc.  L+8.50%   9.74%  9/3/2019   8,038    7,939    8,050    2.8%
               19,501    17,777    17,933    6.3%
Consumer Goods: Durable                               
Parterre Flooring & Surface Systems LLC (h)  L+7.25%   8.49%  8/22/2022   12,000    11,762    11,952    4.2%
Parterre Flooring & Surface Systems LLC (Revolver) (f)  L+7.25%   8.49%  8/22/2022   2,400    -    -    0.0%
               14,400    11,762    11,952    4.2%
Consumer Goods: Non-Durable                               
Bluestem Brands, Inc.  L+7.50%   8.74%  11/6/2020   2,637    2,620    1,870    0.7%
Solaray, LLC  L+6.50%   7.82%  9/9/2023   3,264    3,235    3,264    1.2%
Solaray, LLC  (Delayed Draw)  L+6.50%   7.83%  9/9/2023   701    701    701    0.2%
               6,602    6,556    5,835    2.1%
Energy: Oil & Gas                               
Landpoint, LLC  L+12.75%   

12.00% Cash/

2.25% PIK

(j)  12/20/2019   2,394    2,376    2,346    0.8%
Landpoint, LLC (Revolver) (f)  L+10.50%   12.00%  12/20/2019   313    -    -    0.0%
               2,707    2,376    2,346    0.8%
Environmental Industries                               
Synergy Environmental Corporation (h)  L+8.00%   9.24%  4/29/2021   3,051    2,993    3,082    1.1%
Synergy Environmental Corporation (h)  L+8.00%   9.24%  4/29/2021   510    501    515    0.2%
Synergy Environmental Corporation (Delayed Draw) (f) (g)  L+8.00%   9.24%  4/29/2018   1,342    -    -    0.0%
Synergy Environmental Corporation (Revolver) (f)  L+8.00%   9.24%  4/29/2021   671    47    47    0.0%
               5,574    3,541    3,644    1.3%
Healthcare & Pharmaceuticals                               
American Optics Holdco, Inc. (e) (k)  L+8.00%   9.24%  9/13/2022   4,144    4,062    4,061    1.4%
American Optics Holdco, Inc. (Revolver) (e) (f) (k)  L+8.00%   9.24%  9/13/2022   440    -    -    0.0%
American Optics Holdco, Inc. (e) (k)  L+8.00%   9.24%  9/13/2022   762    747    747    0.3%
American Optics Holdco, Inc. (Revolver) (e) (f) (k)  L+8.00%   9.24%  9/13/2022   440    -    -    0.0%
Beaver-Visitec International Holdings, Inc.  L+5.00%   6.33%  8/19/2023   4,950    4,907    4,975    1.7%
Edge Systems Holdings Corp.  L+7.75%   8.99%  12/1/2021   3,406    3,347    3,465    1.2%

 

 7 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
Edge Systems Holdings Corp. (Revolver) (f)  P+6.75%   11.00%  12/1/2021   260   31   31    0.0%
Familia Dental Group Holdings, LLC (h)  L+8.00%   9.24%  4/8/2021   5,294    5,229    5,336    1.9%
Familia Dental Group Holdings, LLC  L+8.00%   9.24%  4/8/2021   509    509    513    0.2%
Familia Dental Group Holdings, LLC (Revolver) (f)  L+8.00%   9.24%  4/8/2021   573    229    229    0.1%
               20,778    19,061    19,357    6.8%
High Tech Industries                               
Answers Finance, LLC  L+5.00%   6.24%  4/15/2021   254    251    248    0.1%
BCC Software, LLC (h)  L+8.00%   9.24%  6/20/2019   3,139    3,109    3,150    1.1%
BCC Software, LLC (Revolver) (f)  L+8.00%   9.24%  6/20/2019   469    -    -    0.0%
Corbett Technology Solutions, Inc. (h)  L+7.00%   8.24%  11/7/2021   4,331    4,276    4,375    1.5%
Corbett Technology Solutions, Inc. (Revolver) (f)  L+7.00%   8.24%  11/7/2021   868    217    217    0.1%
Energy Services Group, LLC  L+9.82%   11.16%  5/4/2022   4,620    4,564    4,657    1.6%
Energy Services Group, LLC (e) (l)  L+9.82%   10.82%  5/4/2022   2,474    2,360    2,485    0.9%
Energy Services Group, LLC (Delayed Draw)(f) (g)  L+9.82%   11.16%  5/4/2022   1,313    1,096    1,121    0.4%
Newforma, Inc. (h)  L+7.50%   8.83%  6/30/2022   15,000    14,782    15,060    5.3%
Newforma, Inc. (Revolver) (f)  L+7.50%   8.83%  6/30/2022   1,250    175    175    0.1%
               33,718    30,830    31,488    11.1%
Hotels, Gaming & Leisure                               
BC Equity Ventures LLC  L+6.50%   7.74%  8/31/2022   2,592    2,548    2,631    0.9%
Miles Partnership LLC  L+11.00%   

10.33% Cash/

2.00% PIK

   3/24/2021   5,925    5,884    5,964    2.1%
Miles Partnership LLC (Delayed Draw) (f) (g)  L+11.00%   

10.33% Cash/

2.00% PIK

   3/24/2021   1,417    1,071    1,076    0.4%
Miles Partnership LLC (Revolver) (f)  L+11.00%   

10.33% Cash/

2.00% PIK

   3/24/2021   320    160    160    0.1%
TRG, LLC  L+12.41%   

8.74% Cash/

4.91% PIK

(m)  3/31/2021   17,079    16,982    17,173    6.1%
TRG, LLC (CapEx) (f)  L+9.50%   

8.73% Cash/

2.00% PIK

   3/31/2021   1,592    958    967    0.3%
TRG, LLC (Revolver) (f)  L+9.50%   10.74%  3/31/2021   262    131    131    0.0%
Vacation Innovations, LLC (n)  L+9.66%   

8.24% Cash/

2.66% PIK

(o)  8/20/2020   9,477    9,353    10,414    3.7%
Vacation Innovations, LLC (Delayed Draw) (f) (g)  L+7.00%   8.24%  8/20/2020   2,037    -    -    0.0%
Vacation Innovations, LLC (Revolver) (f)  L+7.00%   8.24%  8/20/2020   342    -    -    0.0%
               41,043    37,087    38,516    13.6%
Media: Advertising, Printing & Publishing                       
AdTheorent, Inc.  L+8.50%   9.74%  12/22/2021   4,938    4,851    4,965    1.8%
Destination Media, Inc. (h)  L+6.50%   7.74%  4/7/2022   7,900    7,791    8,034    2.8%
Destination Media, Inc. (Revolver) (f)  L+6.50%   7.74%  4/7/2022   542    -    -    0.0%
               13,380    12,642    12,999    4.6%
Media: Broadcasting & Subscription                       
Jerry Lee Radio, LLC  L+9.50%   10.74%  12/17/2020   11,927    11,719    11,927    4.2%
               11,927    11,719    11,927    4.2%
Retail                               
Forman Mills, Inc. (h)  L+7.50%   8.74%  10/4/2021   8,500    8,358    8,415    3.0%
LuLu's Fashion Lounge, LLC  L+7.00%   8.24%  8/23/2022   5,000    4,852    5,010    1.8%
The Worth Collection, Ltd. (h)  L+8.50%   9.74%  9/29/2021   10,588    10,411    9,095    3.2%
Yandy Holding, LLC  L+9.00%   10.24%  9/30/2019   4,884    4,851    4,748    1.7%
Yandy Holding, LLC (Revolver) (f)  L+9.00%   10.24%  9/30/2019   907    -    -    0.0%
               29,879    28,472    27,268    9.7%
Services: Business                               
APCO Worldwide, Inc.  L+8.00%   9.24%  6/30/2022   5,000    4,904    4,990    1.8%
EB Employee Solutions, LLC (h)  L+8.50%   10.00%  2/28/2019   3,219    3,188    3,127    1.1%
First Call Resolution, LLC (h)  L+8.00%   9.24%  9/22/2022   5,000    4,913    4,913    1.7%
Madison Logic, Inc. (h)  L+8.00%   9.24%  11/30/2021   10,303    10,124    10,355    3.6%
Madison Logic, Inc. (Delayed Draw) (f) (g)  L+8.00%   9.24%  11/30/2021   4,818    -    -    0.0%
Madison Logic, Inc. (Revolver) (f)  L+8.00%   9.24%  11/30/2021   988    -    -    0.0%

 

 8 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
Q-Tragon Holdings, LLC (h)  L+7.00%   8.24%  5/2/2022   3,908   3,854   3,879    1.4%
Q-Tragon Holdings, LLC (Revolver) (f)  L+7.00%   8.24%  5/2/2022   307    -    -    0.0%
               33,543    26,983    27,264    9.6%
Services: Consumer                               
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.)  L+5.50%   6.80%  7/1/2020   4,560    4,499    4,571    1.6%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.)  L+11.50%   12.80%  7/1/2020   4,780    4,712    4,758    1.7%
PeopleConnect Intermediate, LLC (formerly Intelius, Inc.) (Revolver) (f)  L+8.50%   9.80%  8/11/2018   236    -    -    0.0%
               9,576    9,211    9,329    3.3%
Telecommunications                               
Peerless Network, Inc. (h)  L+9.25%   

9.74% Cash/

0.75% PIK

(p)  12/11/2020   3,325    3,268    3,333    1.2%
               3,325    3,268    3,333    1.2%
Utilities: Electric                               
CRCI Holdings, Inc.  L+5.50%   6.83%  8/31/2023   2,782    2,758    2,801    1.0%
               2,782    2,758    2,801    1.0%
Wholesale                               
Mid-West Wholesale Hardware Co. (h)  L+8.00%   9.24%  2/9/2022   11,910    11,697    11,803    4.2%
Mid-West Wholesale Hardware Co. (Revolver) (f)  L+8.00%   9.24%  2/9/2022   4,421    505    501    0.2%
               16,331    12,202    12,304    4.4%
Total Non-Controlled/Non-Affiliate Senior Secured Loans      308,827    273,105    275,543    97.2%
                                
Unitranche Loans                               
Chemicals, Plastics & Rubber                               
MFG Chemical, LLC (h)  L+6.00%   7.24%  6/23/2022   8,855    8,729    8,864    3.1%
               8,855    8,729    8,864    3.1%
Consumer Goods: Non-Durable                               
Incipio Technologies, Inc. (q)  L+7.75%   8.99%  12/26/2019   13,728    13,546    13,371    4.7%
               13,728    13,546    13,371    4.7%
Healthcare & Pharmaceuticals                               
Collaborative Neuroscience Network, LLC  L+11.50%   13.00%  12/27/2017   6,120    6,071    5,955    2.1%
Collaborative Neuroscience Network, LLC  L+15.00%   

12.00% Cash/

3.00% PIK

   12/26/2017   293    293    293    0.1%
Collaborative Neuroscience Network, LLC (Revolver)  L+10.00%   11.24%  12/27/2017   200    191    195    0.1%
Priority Ambulance, LLC (h)  L+6.50%   7.83%  4/12/2022   7,000    6,870    7,014    2.5%
               13,613    13,425    13,457    4.8%
Hotels, Gaming & Leisure                               
Playtime, LLC  L+7.50%   9.00%  12/31/2021   4,409    4,405    4,189    1.5%
               4,409    4,405    4,189    1.5%
Wholesale                               
Gracelock Industries, LLC  L+13.74%   

11.00% Cash/

4.24% PIK

(r)  5/7/2019   4,721    4,671    4,711    1.6%
               4,721    4,671    4,711    1.6%
Total Non-Controlled/Non-Affiliate Unitranche Loans      45,326    44,776    44,592    15.7%
                                
Junior Secured Loans                               
Aerospace & Defense                               
AIM Aerospace, Inc.  L+9.00%   10.31%  8/2/2022   5,000    4,940    5,028    1.8%
               5,000    4,940    5,028    1.8%
Banking, Finance, Insurance & Real Estate                               
Confie Seguros Holdings II Co.  L+9.75%   11.00%  5/8/2019   8,594    8,322    8,458    3.0%
               8,594    8,322    8,458    3.0%
Beverage, Food & Tobacco                               
CSM Bakery Supplies LLC  L+7.75%   9.05%  7/3/2021   5,792    5,792    5,488    1.9%
               5,792    5,792    5,488    1.9%
Healthcare & Pharmaceuticals                               
Heartland Dental, LLC  L+8.50%   9.82%  7/31/2024   3,000    2,956    3,034    1.1%
               3,000    2,956    3,034    1.1%

 

 9 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
High Tech Industries                               
Answers Finance, LLC  P+7.90%   12.15%  9/15/2021   395   393   366    0.1%
Micro Holdings Corp. (s)  L+7.50%   8.82%  8/18/2025   3,000    2,970    2,987    1.0%
               3,395    3,363    3,353    1.1%
Media: Broadcasting & Subscription                               
Mergermarket USA, Inc. (s)  L+7.25%   8.49%  8/3/2025   4,500    4,455    4,539    1.6%
               4,500    4,455    4,539    1.6%
Media: Diversified & Production                               
SCP TPZ Acquisition, Inc.  L+8.25%   9.57%  5/29/2022   5,000    4,945    5,006    1.8%
               5,000    4,945    5,006    1.8%
Services: Consumer                               
Education Corporation of America  L+11.00%   12.33%  12/31/2018   625    618    625    0.2%
Pre-Paid Legal Services, Inc. (Legal Shield)  L+9.00%   10.25%  7/1/2020   3,000    3,000    3,024    1.1%
               3,625    3,618    3,649    1.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans      38,906    38,391    38,555    13.6%
                                
Equity Securities (t)                               
Healthcare & Pharmaceuticals                               
Collaborative Neuroscience Network, LLC (warrant to purchase up to 4 LLC units)  -   -(u)  12/27/2022   -    -    -    0.0%
                    -    -    0.0%
High Tech Industries                               
Answers Finance, LLC (76,539 shares of common stock)  -   -(u)  -   -    2,413    1,244    0.4%
                    2,413    1,244    0.4%
Hotels, Gaming & Leisure                               
Playtime, LLC - Preferred Units (8,665 units)  -   -(u)  -   -    200    33    0.0%
                    200    33    0.0%
Media: Advertising, Printing & Publishing                               
AdTheorent, Inc. (128,866 units)  -   -(u)  -   -    129    142    0.1%
InMobi Pte, Ltd. (represents the right to purchase 2.80% of the equity) (e) (k)  -   -(u)  9/18/2025   -    -    215    0.1%
                    129    357    0.2%
Retail                               
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units)  -   -   -   -    86    118    0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units)  -   -   -   -    1    -    0.0%
                    87    118    0.0%
Services: Consumer                               
Education Corporation of America - Series G Preferred Stock (8,333 shares)   n/a   12.00%  -   -    8,125    8,192    2.9%
                    8,125    8,192    2.9%
Total Non-Controlled/Non-Affiliate Equity Securities           10,954    9,944    3.5%
Total Non-Controlled/Non-Affiliate Company Investments          $367,226   $368,634    130.0%
                                
Non-Controlled Affiliate Company Investments (v)                   
Senior Secured Loans                               
Banking, Finance, Insurance & Real Estate                   
American Community Homes, Inc.  L+8.00%   9.50%  7/22/2019   7,667   $7,581   $7,441    2.6%
American Community Homes, Inc.  L+12.50%   

9.50% Cash/

4.50% PIK

   7/22/2019   4,363    4,320    4,269    1.5%
American Community Homes, Inc.  L+12.50%   

9.50% Cash/

4.50% PIK

   n/a(w)  536    529    536    0.2%
American Community Homes, Inc.  L+8.00%   9.50%  7/22/2019   444    433    430    0.2%
American Community Homes, Inc.  L+12.50%   

9.50% Cash/

4.50% PIK

   7/22/2019   226    220    221    0.1%
American Community Homes, Inc. (Delayed Draw)(f) (g)  L+8.00%   9.50%  7/22/2019   444    -    -    0.0%
American Community Homes, Inc. (Delayed Draw)(f) (g)  L+12.50%   

9.50% Cash/

4.50% PIK

   7/22/2019   222    -    -    0.0%
               13,902    13,083    12,897    4.6%
Consumer Goods: Non-Durable                               
Rocket Dog Brands, LLC  n/a   12.00% PIK(x)  8/29/2019   1,157    1,157    -    0.0%

 

 10 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
Rocket Dog Brands, LLC  n/a   15.00% PIK(x)  8/29/2019   422   $416   54    0.0%
Rocket Dog Brands, LLC  n/a   17.00% PIK(x)  3/30/2018   235    235    202    0.1%
               1,814    1,808    256    0.1%
Containers, Packaging & Glass                               
Summit Container Corporation (h)   L+12.00%   

12.00% Cash/

2.00% PIK

   1/6/2019   3,575    3,552    3,421    1.2%
Summit Container Corporation (h)   L+12.00%   

12.00% Cash/

2.00% PIK

   9/27/2022   1,500    1,500    1,498    0.5%
               5,075    5,052    4,919    1.7%
Healthcare & Pharmaceuticals                               
Rockdale Blackhawk, LLC  L+13.00%   14.24%  3/31/2020   10,922    10,302    10,797    3.8%
Rockdale Blackhawk, LLC (Capex)  L+13.00%   14.24%  3/31/2020   549    549    542    0.2%
Rockdale Blackhawk, LLC (Revolver)  L+13.00%   14.24%  3/31/2020   1,849    1,849    1,824    0.6%
Rockdale Blackhawk, LLC (Revolver)  L+13.00%   14.24%  3/31/2020   3,236    3,236    3,192    1.1%
SHI Holdings, Inc. (h)  L+9.75%   10.99%  7/10/2019   2,625    2,604    2,625    0.9%
SHI Holdings, Inc. (Revolver) (f)   L+9.75%   10.99%  7/10/2019   2,046    2,024    2,035    0.7%
               21,227    20,564    21,015    7.3%
Retail                               
Luxury Optical Holdings Co.  L+8.00%   9.24% PIK   9/12/2019   4,151    4,116    3,580    1.3%
Luxury Optical Holdings Co.  (Delayed Draw) (f)(g)  L+11.50%   12.74% PIK   9/12/2019   1,176    741    741    0.3%
Luxury Optical Holdings Co. (Revolver)  L+8.00%   9.24% PIK   9/12/2019   191    191    165    0.1%
               5,518    5,048    4,486    1.7%
Total Non-Controlled Affiliate Senior Secured Loans     47,536    45,555    43,573    15.4%
                                
Junior Secured Loans                               
Consumer Goods: Non-Durable                               
Rocket Dog Brands, LLC  n/a   15.00% PIK(x)  5/1/2020   2,011    2,011    -    0.0%
               2,011    2,011    -    0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans     2,011    2,011    -    0.0%
                                
Equity Securities                               
Banking, Finance, Insurance & Real Estate                      
American Community Homes, Inc. (warrant to purchase up to 9.0% of the equity)  -   -(u)  10/9/2024   -    -    610    0.2%
                    -    610    0.2%
Consumer Goods: Non-Durable                               
Rocket Dog Brands, LLC - Common Units (75,502 units)  -   -(u)  -   -    -    -    0.0%
Rocket Dog Brands, LLC - Preferred Units (10 units)   n/a   15.00% PIK(y)  -   -    967    -    0.0%
                    967    -    0.0%
Containers, Packaging & Glass                               
Summit Container Corporation (warrant to purchase up to 19.50% of the equity)  -   -(u)  1/6/2024   -    -    -    0.0%
                    -    -    0.0%
Healthcare & Pharmaceuticals                               
Rockdale Blackhawk, LLC - LLC Units (11.56% of the LLC interest)  -   -   -   -    1,093    8,620    3.0%
SHI Holdings, Inc. (24 shares of common stock)  -   -(u)  -   -    27    792    0.3%
                    1,120    9,412    3.3%
Retail                               
Luxury Optical Holdings Co. (86 shares of common stock)  -   -(u)  -   -    -    -    0.0%
                    -    -    0.0%
Total Non-Controlled Affiliate Equity Securities          2,087    10,022    3.5%
Total Non-Controlled Affiliate Company Investments         $49,653   $53,595    18.9%
                                
Controlled Affiliate Company Investments (z)                   
Senior Secured Loans                               
Retail                               
TPP Operating, Inc.  L+6.00%   7.50% PIK(x)  11/8/2018   9,370   $9,330   $-    0.0%
TPP Operating, Inc.  L+6.00%   7.50%(x)  11/8/2018   6,885    6,885    5,295    1.9%

 

 11 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS  – (continued)

(unaudited)

September 30, 2017

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
TPP Operating, Inc.  L+9.61%   11.11%(x)  11/8/2018   3,573   3,573   3,573    1.2%
Total Controlled Affiliate Senior Secured Loans  19,828    19,788    8,868    3.1%
                    
Equity Securities                                
Retail                               
TPP Acquisition, Inc. (829 shares of common stock)  -   -(u)  -   -    -    -    0.0%
TPP Operating, Inc. (40 shares of common stock)  -   -(u)  -   -    3,255    -    0.0%
Total Controlled Affiliate Equity Securities       3,255    -    0.0%
Total Controlled Affiliate Company Investments      $23,043   $8,868    3.1%
                                
TOTAL INVESTMENTS                  $439,922   $431,097    152.0%

  

 

(a) All of our investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of our investments are issued by U.S. portfolio companies unless otherwise noted.

(b) The majority of the investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at September 30, 2017. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c) Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by our board of directors as required by the Investment Company Act of 1940. (See Note 4 in the accompanying notes to the consolidated financial statements.)

(d) Percentages are based on net assets of $283,542 as of September 30, 2017.

(e) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of September 30, 2017, non-qualifying assets totaled 7.29% of the Company’s total assets.

(f) All or a portion of this commitment was unfunded at September 30, 2017. As such, interest is earned only on the funded portion of this commitment.

(g) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.

(h) All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(i) A portion of this loan (principal of $2,139) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(j) The PIK portion of the interest rate for Landpoint, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.25% per annum.

(k) This is an international company.

(l) This term loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.

(m) A portion of the PIK interest rate for TRG, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.91% per annum.

(n) A portion of this loan (principal of $4,185) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(o) A portion of the PIK interest rate for Vacation Innovations, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.16% per annum.

(p) The PIK portion of the interest rate for Peerless Network, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.75% per annum.

(q) A portion of this loan (principal of $5,034) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP and is therefore not collateral to the Company’s revolving credit facility.

(r) The PIK portion of the interest rate for Gracelock Industries, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 4.24% per annum.

(s) Investment position or portion thereof unsettled as of September 30, 2017.

(t) Represents less than 5% ownership of the portfolio company’s voting securities.

(u) Represents a non-income producing security.

(v) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns five percent or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).

(w) This is a demand note with no stated maturity.

(x) This position was on non-accrual status as of September 30, 2017, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company's accounting policies.

(y) This position includes a PIK dividend and is currently on non-accrual status.

(z) As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% in company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

n/a - not applicable

 

See Notes to Consolidated Financial Statements.

 

 12 

 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2016

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)
  Interest
Rate
   Maturity  Principal   Amortized
Cost
   Fair
Value (c)
   % of
Net Assets (d)
 
Non-Controlled/Non-Affiliate Company Investments                   
Senior Secured Loans                               
Aerospace & Defense                               
Cyalume Technologies Holdings, Inc. (e)  L+9.00%   10.00%  5/18/2020   4,291   $4,204   $4,462    1.9%
Cyalume Technologies Holdings, Inc. (Delayed Draw)  L+9.00%   10.00%  5/18/2020   387    387    402    0.2%
Cyalume Technologies Holdings, Inc. (Revolver) (f)  L+9.00%   10.00%  5/18/2020   1,528    -    -    0.0%
               6,206    4,591    4,864    2.1%
Automotive                               
Inteva Products, LLC  L+8.50%   9.75%  9/8/2021   1,978    1,967    1,998    0.8%
Tectum Holdings, Inc.  L+4.75%   5.75%  8/24/2023   1,995    1,976    2,025    0.8%
               3,973    3,943    4,023    1.6%
Banking, Finance, Insurance & Real Estate                               
Liftforward SPV II, LLC (f) (g)  L+10.75%   11.51%  11/10/2020   10,000    254    254    0.1%
Repay Holdings, LLC  L+9.00%   9.76%  9/1/2021   12,000    11,802    11,934    5.0%
Repay Holdings, LLC (Revolver) (f)  L+9.00%   9.76%  9/1/2021   1,200    -    -    0.0%
Shields Land Company of Georgia, LLC (g)  L+9.50%   10.15%  12/28/2017   2,450    2,425    2,445    1.0%
               25,650    14,481    14,633    6.1%
Beverage, Food & Tobacco                               
All Holding Company, LLC (e)  L+7.00%   7.76%  11/15/2021   5,466    5,363    5,493    2.3%
California Pizza Kitchen, Inc.  L+6.00%   7.00%  8/23/2022   6,983    6,913    6,966    2.9%
               12,449    12,276    12,459    5.2%
Construction & Building                               
Cali Bamboo, LLC  L+8.50%   9.26%  7/10/2020   5,423    5,350    5,531    2.3%
Cali Bamboo, LLC (Revolver) (f)  L+8.50%   9.26%  7/10/2020   1,624    65    65    0.0%
Cornerstone Detention Products, Inc. (h)  L+10.50%   

10.50% Cash/

1.00% PIK

   4/8/2019   3,784    3,747    3,599    1.5%
Cornerstone Detention Products, Inc. (Revolver) (f)  L+9.50%   10.50%  4/8/2019   400    -    -    0.0%
G&M Opco LLC (e)  L+7.50%   8.26%  6/23/2020   3,006    2,951    3,066    1.3%
L.A.R.K. Industries, Inc.  L+7.00%   8.00%  9/3/2019   6,257    6,169    6,341    2.6%
               20,494    18,282    18,602    7.7%
Consumer Goods: Non-Durable                               
360 Holdings III Corp.  L+9.00%   10.00%  10/1/2021   5,925    5,718    5,718    2.4%
Bluestem Brands, Inc.  L+7.50%   8.50%  11/6/2020   2,758    2,737    2,404    1.0%
Solaray, LLC  L+6.50%   7.50%  9/9/2023   3,297    3,265    3,280    1.4%
Solaray, LLC  (Delayed Draw) (f) (i)  L+6.50%   7.50%  9/9/2023   703    -    -    0.0%
               12,683    11,720    11,402    4.8%
Energy: Oil & Gas                               
Diesel Direct Holdings, Inc. (e)  L+7.00%   7.76%  2/17/2020   5,225    5,