As filed with the Securities and Exchange Commission on June 23, 2023
Securities Act File No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
☐ Pre-Effective Amendment No.
☐ Post-Effective Amendment No.
and/or
(Exact Name of Registrant as Specified in Charter)
Address of Principal Executive Offices (Number, Street, City, State, Zip Code)
(
Registrant’s Telephone Number, including Area Code
Chief Executive Officer
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service
with copies to:
Jonathan H. Talcott
E. Peter Strand
Michael K. Bradshaw, Jr.
Nelson Mullins Riley & Scarborough LLP
101 Constitution Avenue, NW, Suite 900
Washington, D.C. 20001
Telephone: (202) 689-2806
Facsimile: (202) 689-2862
Approximate Date of Commencement of Proposed Public Offering
Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans. | |
Check box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 (“Securities Act”), other than securities offered in connection with a dividend reinvestment plan. | |
Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto. | |
Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act. | |
Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act. |
It is proposed that this filing will become effective (check appropriate box):
when declared effective pursuant to Section 8(c) of the Securities Act. |
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously filed post-effective amendment registration statement. | |
This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: | |
This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: | |
This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the Securities Act registration statement number of the earlier effective registration statement for the same offering is: |
Check each box that appropriately characterizes the Registrant:
Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)). | |
Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act). | |
Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act). | |
A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form). | |
Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act). | |
Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”). | |
☐ | 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 7(a)(2)(B) of Securities Act. |
New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing). |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION, DATED JUNE 23, 2023 |
$300,000,000
Monroe Capital Corporation
Common Stock
Preferred Stock
Warrants
Subscription Rights
Debt Securities
We are a specialty finance company focused on providing financing solutions primarily to lower middle-market companies in the United States and Canada. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through investment in senior secured, unitranche secured and junior secured debt and, to a lesser extent, unsecured subordinated debt and equity investments. We seek to use our extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in primarily senior secured, unitranche secured and junior secured debt of middle-market companies.
We invest in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities are often referred to as “high yield” or “junk.” In addition, many of the debt securities we hold do not fully amortize prior to maturity, which heightens the risk that we may lose all or a part of our investment.
We may offer, from time to time, in one or more offerings or series, together or separately, up to $300,000,000 of our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities (consisting of debentures, notes or other evidence of indebtedness), subscription rights or debt securities, which we refer to, collectively, as the “securities.” We may sell our common stock through underwriters or dealers, “at-the-market” to or through a market maker into an existing trading market or otherwise directly to one or more purchasers or through agents or through a combination of methods of sale. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus.
Monroe Capital BDC Advisors, LLC serves as our investment advisor. Monroe Capital Management Advisors, LLC serves as our administrator. Each of Monroe Capital BDC Advisors, LLC and Monroe Capital Management Advisors, LLC is affiliated with Monroe Capital, LLC, a leading lender to middle-market companies.
Our common stock is listed on The Nasdaq Global Select Market under the symbol “MRCC.” If our shares trade at a discount to our net asset value, it may increase the risk of loss for purchasers in this offering. On June 22, 2023, the last reported sale price of our stock on The Nasdaq Global Select Market was $
Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it will likely increase the risk of loss for purchasers in this offering. On June 15, 2023, our stockholders voted to allow us to issue common stock at a price below net asset value per share for a period of twelve months subject to certain conditions. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. In addition, continuous sales of common stock below net asset value may have a negative impact on total returns and could have a negative impact on the market price of our shares of common stock. See “Risk Factors” and “Sales of Common Stock Below Net Asset Value” in this prospectus and the documents incorporated by reference herein.
An investment in our securities is subject to risks, including a risk of total loss of investment. In addition, the companies in which we invest are subject to special risks. Substantially all of the debt instruments in which we invest (i) have and will have variable interest rate provisions that may make it more difficult for borrowers to make debt repayments to us in a rising interest rate environment and (ii) will likely have a principal amount outstanding at maturity, that may lead to a substantial loss to us if the borrower is unable to refinance or repay. See “Risk Factors” included in, or incorporated by reference into, the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the other documents that are incorporated by reference into this prospectus, to read about factors you should consider, including the risk of leverage, before investing in our securities.
This prospectus describes some of the general terms that may apply to an offering of our securities. We will provide the specific terms of these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also add, update, or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement, and any related free writing prospectus, and the documents incorporated by reference, before buying any of the securities being offered and keep them for future reference. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission, or the SEC. This information is available free of charge by contacting us at 311 South Wacker Drive, Suite 6400, Chicago, Illinois 60606, Attention: Investor Relations, by calling us collect at (312) 258-8300, or on our website at www.monroebdc.com. The SEC also maintains a website at www.sec.gov that contains such information.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.
The date of this prospectus is , 2023
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the SEC using the “shelf” registration process. Under the shelf registration process, we may offer from time to time up to $300,000,000 of our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights or debt securities (consisting of debentures, notes or other evidence of indebtedness) on the terms to be determined at the time of the offering. We may sell our common stock through underwriters or dealers, “at-the-market” to or through a market maker, into an existing trading market or otherwise directly to one or more purchasers or through agents or through a combination of methods of sale. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. In a prospectus supplement or free writing prospectus, we may also add, update, or change any of the information contained in this prospectus or in the documents we incorporate by reference into this prospectus. This prospectus, together with the applicable prospectus supplement, any related free writing prospectus, and the documents incorporated by reference into this prospectus and the applicable prospectus supplement, will include all material information relating to the applicable offering. Before buying any of the securities being offered, you should carefully read both this prospectus and the applicable prospectus supplement and any related free writing prospectus, together with any exhibits and the additional information described in the sections titled “Available Information,” “Incorporation by Reference,” “Summary” and “Risk Factors.”
You should rely only on the information contained or incorporated by reference in this prospectus, any prospectus supplement or in any free writing prospectus prepared by, or on behalf of, us or to which we have referred you. We have not authorized any dealer, salesman or other person to give any information or to make any representation other than those contained in this prospectus, any prospectus supplement or in any free writing prospectus prepared by, or on behalf of, us or to which we have referred you. You must not rely upon any information or representation not contained in this prospectus, any such prospectus supplements or free writing prospectuses as if we had authorized it. This prospectus, any such prospectus supplements or free writing prospectuses do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate, nor do they constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The information contained in, or incorporated by reference in, this prospectus, any such prospectus supplements or free writing prospectuses is, or will be, accurate as of the dates on their respective covers. Our business, financial condition, results of operations and prospects may have changed since then.
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SUMMARY
This summary highlights some of the information in this prospectus or incorporated by reference. It is not complete and may not contain all of the information that you may want to consider. You should read this entire prospectus, together with any accompanying prospectus supplements or free writing prospectuses and information incorporated by reference, carefully, including, in particular, the more detailed information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and under similar headings in any other documents that are incorporated by reference into this prospectus, and the information set forth under the caption “Available Information” in this prospectus.
As used in this prospectus, except as otherwise indicated, the terms:
| ● | “we,” “us” and “our” refer to Monroe Capital Corporation, a Maryland corporation; |
| ● | MC Advisors refers to Monroe Capital BDC Advisors, LLC, our investment advisor and a Delaware limited liability company; |
| ● | MC Management refers to Monroe Capital Management Advisors, LLC, our administrator and a Delaware limited liability company; |
| ● | Monroe Capital refers to Monroe Capital LLC, a Delaware limited liability company, and its subsidiaries and affiliates; and |
| ● | SLF refers to MRCC Senior Loan Fund I, LLC, an unconsolidated Delaware limited liability company, in which we co-invest with Life Insurance Company of the Southwest (“LSW”) primarily in senior secured loans. |
Monroe Capital Corporation
We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act, and that has elected to be treated as a regulated investment company, or RIC, for tax purposes under the U.S. Internal Revenue Code of 1986, as amended, or the Code. We are a specialty finance company focused on providing financing solutions primarily to lower middle-market companies in the United States and Canada. We provide customized financing solutions focused primarily on senior secured, junior secured and unitranche secured (a combination of senior secured and junior secured debt in the same facility in which we syndicate a “first out” portion of the loan to an investor and retain a “last out” portion of the loan) debt and, to a lesser extent, unsecured subordinated debt and equity, including equity co-investments in preferred and common stock and warrants.
Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through investment in senior secured, unitranche secured and junior secured debt and, to a lesser extent, unsecured subordinated debt and equity investments. We seek to use our extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in primarily senior secured, unitranche secured and junior secured debt of middle-market companies. We believe that our primary focus on lending to lower middle-market companies offers several advantages as compared to lending to larger companies, including more attractive economics, lower leverage, more comprehensive and restrictive covenants, more expansive events of default, relatively small debt facilities that provide us with enhanced influence over our borrowers, direct access to borrower management and improved information flow.
In this prospectus, the term “middle-market” generally refers to companies having annual revenue of between $10 million and $1 billion and/or annual earnings before interest, taxes, depreciation and amortization, or EBITDA, of between $3 million and $100 million. Within the middle-market, we consider companies having annual revenues of less than $250 million and/or EBITDA of less than $35 million to be in the “lower middle-market.”
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Our Investment Advisor
Our investment activities are managed by our investment advisor, MC Advisors. MC Advisors is responsible for sourcing potential investments, conducting research and due diligence on prospective investments and their private equity sponsors, analyzing investment opportunities, structuring our investments and managing our investments and portfolio companies on an ongoing basis. MC Advisors was organized in February 2011 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act.
Under the investment advisory and management agreement with MC Advisors, or the Investment Advisory Agreement, we pay MC Advisors a base management fee and an incentive fee for its services. While not expected to review or approve each investment, our independent directors periodically review MC Advisors’ services and fees as well as its portfolio management decisions and portfolio performance. In connection with these reviews, our independent directors consider whether our fees and expenses (including those related to leverage) remain appropriate.
MC Advisors seeks to capitalize on the significant deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of Monroe Capital’s investment professionals. The senior management team of Monroe Capital, including Theodore L. Koenig and Lewis W. Solimene, Jr., provides investment services to MC Advisors pursuant to a staffing agreement, or the Staffing Agreement, between MC Management, an affiliate of Monroe Capital, and MC Advisors. Each of MC Advisors and MC Management are privately-held companies that are indirectly owned and controlled by Mr. Koenig, our chairman and chief executive officer. Messrs. Koenig and Solimene have developed a broad network of contacts within the investment community and average approximately 40 years of experience investing in debt and equity securities of lower middle-market companies. In addition, Messrs. Koenig and Solimene have extensive experience investing in assets that constitute our primary focus and have expertise in investing throughout all periods of the economic cycle. MC Advisors is an affiliate of Monroe Capital and is supported by experienced investment professionals of Monroe Capital under the terms of the Staffing Agreement. Monroe Capital’s core team of investment professionals has an established track record in sourcing, underwriting, executing and monitoring transactions.
In addition to his role with Monroe Capital and MC Advisors, Mr. Koenig serves as an interested director. Mr. Koenig has more than 35 years of experience in structuring, negotiating and closing transactions on behalf of asset-backed lenders, commercial finance companies, financial institutions and private equity investors at organizations including Monroe Capital, which Mr. Koenig founded in 2004, and Hilco Capital LP, where he led investments in over 20 companies in the lower middle-market. Mr. Solimene has more than 40 years of experience in alternative investing, corporate finance, restructuring and special situations experience at organizations including Allstate Investments, Macquarie Capital (USA), Inc., Ernst & Young Corporate Finance, LLC and Banc of America Securities, LLC.
Messrs. Koenig and Solimene are joined on the investment committee of MC Advisors by Michael J. Egan and Jeremy T. VanDerMeid, each of whom is a senior investment professional at Monroe Capital. Mr. Egan has more than 35 years of experience in commercial finance, credit administration and banking at organizations including Hilco Capital, The CIT Group/Business Credit, Inc., The National Community Bank of New Jersey (The Bank of New York) and KeyCorp. Mr. VanDerMeid has more than 25 years of lending and corporate finance experience at organizations including Morgan Stanley Investment Management, Dymas Capital Management Company, LLC and Heller Financial. See “Portfolio Management — Investment Committee.”
About Monroe Capital
Monroe Capital, a Delaware limited liability company that was founded in 2004, is a leading lender to middle-market companies. As of March 31, 2023, Monroe Capital had approximately $15.9 billion in assets under management. Over its nineteen-year history, Monroe Capital has developed an established lending platform that we believe generates consistent deal flow from a network of proprietary relationships. Monroe Capital’s assets under management are comprised of a diverse portfolio of approximately 500 current investments that were either originated directly by Monroe Capital or sourced from Monroe Capital’s third-party relationships. From Monroe Capital’s formation in 2004 through March 31, 2023, Monroe Capital’s investment professionals invested in over 1,700 loans and related investments in an aggregate amount of over $34.5 billion. The senior investment team of Monroe Capital has developed a proven investment and portfolio management process that has performed through multiple market cycles. In addition, Monroe Capital’s investment professionals are supported by a robust infrastructure of administrative and back-office personnel
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focused on compliance, operations, finance, treasury, legal, accounting and reporting, marketing, information technology and office management.
Corporate Information
We were incorporated under the laws of Maryland on February 9, 2011. Our principal executive offices are located at 311 South Wacker Drive, Suite 6400, Chicago, Illinois 60606, and our telephone number is (312) 258-8300. We maintain a website at www.monroebdc.com and make all of our periodic and current reports, proxy statements and other information available, free of charge, on or through our website. Information on our website is not incorporated into or part of this prospectus.
Risk Factors
The value of our assets, as well as the market price of our securities will fluctuate. Our investments may be risky, and you may lose all or part of your investment in us. A material portion of our portfolio may have exposure to specific industries. See “Risk Factors” in the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the documents that are incorporated by reference into this prospectus, including the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K, as well as in any of our subsequent SEC filings.
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FEES AND EXPENSES
The following table is intended to assist you in understanding the costs and expenses that an investor in our common stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and actual amounts and percentages may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you,” “us,” “the Company” or “Monroe Capital Corporation,” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Monroe Capital Corporation.
Stockholder transaction expenses: |
| ||
Sales load (as a percentage of offering price) |
| — | %(1) |
Offering expenses (as a percentage of offering price) |
| — | %(2) |
Dividend reinvestment plan expenses |
| — | %(3) |
Total stockholder transaction expenses (as a percentage of offering price) |
| — | %(2) |
Estimated annual expenses (as a percentage of net assets attributable to common stock): |
|
| |
Base management fee |
| | %(4) |
Incentive fees payable under the Investment Advisory Agreement |
| | %(5) |
Interest payments on borrowed funds |
| | %(6) |
Other expenses (estimated) |
| | %(7) |
Acquired fund fees and expenses |
| | %(8) |
Total annual expenses (estimated) |
| | %(9) |
| (1) | In the event that the securities to which this prospectus relates are sold to or through underwriters or agents, a corresponding prospectus supplement will disclose the applicable sales load. |
| (2) | The related prospectus supplement will disclose the estimated amount of total offering expenses (which may include offering expenses borne by third parties on our behalf), the offering price and the offering expenses borne by us as a percentage of the offering price. |
| (3) | The expenses of the dividend reinvestment plan are included in “other expenses.” See “Dividend Reinvestment Plan.” |
| (4) | Our base management fee is calculated initially at an annual rate of 1.75% of our average invested assets (calculated as total assets excluding cash, which includes assets financed using leverage); provided however, the base management fee is calculated at an annual rate equal to 1.00% of our average invested assets (calculated as total assets excluding cash, which includes assets financed using leverage) that exceeds the product of (i) 200% and (ii) our average net assets. The “base management fee” percentage is calculated as a percentage of net assets attributable to common stockholders, rather than total assets, including assets that have been funded with borrowed monies, because common stockholders bear all of this cost. The base management fee in the table above assumes the base management fee remains consistent with fees incurred for the three months ended March 31, 2023 of $2.2 million, based on average total assets (excluding cash) for the period of $556.0 million, as a percentage of our average net assets for the period of $224.0 million. |
| (5) | Estimated assuming that annual incentive fees earned by MC Advisors remains consistent with the incentive fees earned for the three months ended March 31, 2023 of $1.7 million, as a percentage of our average net assets of $224.0 million for the period. |
The incentive fee consists of two parts:
The first part of the incentive fee, payable quarterly in arrears, equals 20% of our pre-incentive fee net investment income (including interest that is accrued but not yet received in cash), subject to a 2% quarterly (8% annualized) rate of return on the value of our net assets, or hurdle rate, and a “catch-up” provision measured as of the end of each calendar quarter. Under this provision, in any calendar quarter, MC Advisors receives no incentive fee until our net investment income equals the hurdle rate of 2% but then receives, as a “catch-up,” 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, MC Advisors will receive 20% of our pre-incentive fee net investment income as if a hurdle rate did not apply. The first component of the incentive fee will be computed
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and paid on income that includes, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero coupon securities, accrued income that we have not yet received in cash. Since the hurdle rate is fixed, as interest rates rise, it will be easier for the MC Advisors to surpass the hurdle rate and receive an incentive fee based on net investment income. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of our pre-incentive fee net investment income will be payable except to the extent that 20% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters. In other words, any ordinary income incentive fee that is payable in a calendar quarter will be limited to the lesser of (i) 20% of the amount by which our pre-incentive fee net investment income for such calendar quarter exceeds the 2% hurdle, subject to the “catch-up” provision, and (ii) (x) 20% of the cumulative net increase in net assets resulting from operations for the then current and 11 preceding calendar quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the sum of our pre-incentive fee net investment income, base management fees, realized gains and losses and unrealized appreciation and depreciation for the then current and 11 preceding calendar quarters.
The second part of the incentive fee, payable annually in arrears, equals 20% of our realized capital gains on a cumulative basis from inception through the end of the fiscal year, if any (or upon the termination of the Investment Advisory Agreement, as of the termination date), computed net of all realized capital losses on a cumulative basis and unrealized capital depreciation, less the aggregate amount of any previously paid capital gain incentive fees. We will accrue (but not pay) an expense for potential payment of capital gain incentive fees with respect to any unrealized appreciation on our portfolio.
| (6) | We may borrow funds from time to time to make investments to the extent we determine that it is appropriate to do so. The costs associated with any outstanding borrowings are indirectly borne by our investors. The table assumes borrowings are consistent with the average borrowings for the three months ended March 31, 2023 of $333.7 million, no preferred stock issued or outstanding and average net assets of $224.0 million. For the three months ended March 31, 2023, we had interest expense of $5.5 million (including fees for unused portions of commitments and amortization of deferred financing costs). As of March 31, 2023, the weighted average interest rate of our revolving credit facility (excluding debt issuance costs) was 7.58% and the interest rate on our senior unsecured notes was 4.75%. Although we do not have any current plans to issue debt securities or preferred stock in the next twelve months, we may issue debt securities or preferred stock, subject to our compliance with applicable requirements under the 1940 Act. |
| (7) | Includes our estimated overhead expenses, including payments under the Administration Agreement based on our allocable portion of overhead and other expenses incurred by MC Management. The table above assumes “other expenses” remain consistent with the $0.8 million incurred during the three months ended March 31, 2023 and average net assets for the period of $224.0 million. |
| (8) | Our stockholders indirectly bear the expenses of our investment in SLF. SLF does not pay any fees to MC Advisors or its affiliates; however, SLF has entered into an administration agreement with MC Management, pursuant to which certain loan servicing and administrative functions are delegated to MC Management. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. For the three months ended March 31, 2023, SLF incurred $63 thousand of allocable expenses. The table above assumes “acquired fund fees and expenses” remain consistent with the $1.3 million of expenses incurred for the three months ended March 31, 2023 and average net assets for the period of $224.0 million. Future expenses for SLF may be substantially higher or lower because certain expenses may fluctuate over time. |
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| (9) | “Total annual expenses” as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. We borrow money to leverage our net assets and increase our total assets. We calculate the “total annual expenses” percentage as a percentage of net assets (defined as total assets less indebtedness and after taking into account any incentive fees payable during the period), rather than the total assets, including assets that have been purchased with borrowed amounts. The terms of our indebtedness may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Borrowings” incorporated by reference into this prospectus and in other documents incorporated by reference into this prospectus. If the “total annual expenses” percentage were calculated instead as a percentage of average consolidated total assets for the three months ended March 31, 2023, our “total annual expenses” would be 8.16% of average consolidated total assets for the period of $562.2 million. With certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, equals at least 150%. We have included our estimated leverage expenses (consistent with the assumptions in footnote (7)) in “total annual expenses.” |
Example
The following example illustrates the projected dollar amount of total cumulative expenses over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage, that none of our assets are cash or cash equivalents and that our annual operating expenses would remain at the levels set forth in the table above. Transaction expenses are not included in the following example:
You would pay the following expenses on a $1,000 investment |
| 1 Year |
| 3 Years |
| 5 Years |
| 10 Years | ||||
Assuming a 5% annual return (assumes no return from net realized capital gains or net unrealized capital appreciation) | $ | | $ | | $ | | $ | | ||||
Assuming a 5% annual return (assumes entire return is from realized capital gains and thus subject to the capital gains incentive fee) | $ | 185 | $ | 557 | $ | 932 | $ | 1,879 | ||||
This table is to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. As incentive fees vary based on the character of the 5% return, the example above provides (i) expenses assuming no return from capital gains (therefore not meeting the hurdle rate for the first part of the incentive fee) and (ii) expenses assuming the entire return is from realized capital gains (resulting in a capital gains incentive fee). For the three months ended March 31, 2023, our return included net realized and unrealized capital losses. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, if our board of directors authorizes and we declare a cash distribution, participants in our dividend reinvestment plan who have not otherwise elected to receive cash will receive a number of shares of our common stock, determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the distribution. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.
This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.
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AVAILABLE INFORMATION
This prospectus is part of a registration statement on Form N-2 we filed with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the registration statement, some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and the securities we are offering under this prospectus, we refer you to the registration statement, including the exhibits filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or other document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.
We file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Exchange Act. We maintain a website at www.monroebdc.com and make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through our website. Information contained on our website is not incorporated into this prospectus, and you should not consider information on our website to be part of this prospectus. You may also obtain such information by contacting us in writing at 311 South Wacker Drive, Suite 6400, Chicago, Illinois 60606, Attention: Investor Relations. The SEC maintains a website that contains reports, proxy and information statements and other information we file with the SEC at www.sec.gov.
7
INCORPORATION BY REFERENCE
This prospectus is part of a registration statement that we have filed with the SEC. We may “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to comprise a part of this prospectus from the date we file that document. Any reports filed by us with the SEC subsequent to the date of this prospectus and before the date that any offering of any securities by means of this prospectus and any accompanying prospectus supplement is terminated will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus.
We incorporate by reference into this prospectus our filings listed below and any future filings that we may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this prospectus until all of the securities offered by this prospectus and any accompanying prospectus supplement have been sold or we otherwise terminate the offering of these securities, including all such documents we may file with the SEC after the date of the initial registration statement and prior to effectiveness of the registration statement; provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed is not and will not be incorporated by reference.
This prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been filed with the SEC:
| ● | our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, including the information specifically incorporated by reference into the Form 10-K from our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 18, 2023; |
| ● | our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023; |
| ● | our Current Report on Form 8-K filed with the SEC on June 15, 2023; and |
| ● | the description of our common stock contained in Exhibit 4.5 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 1, 2023, which updated the description thereof referenced in our Registration Statement on Form 8-A filed with the SEC on October 23, 2012. |
You may obtain copies of any of these filings from us on our website at www.monroebdc.com or as described below, through the SEC or through the SEC’s website as described above under “Available Information.” Documents incorporated by reference are available without charge, excluding all exhibits unless an exhibit has been specifically incorporated by reference into this prospectus, by writing or calling us at the following address and telephone number:
Investor Relations
Monroe Capital Corporation
311 South Wacker Drive, Suite 6400
Chicago, Illinois 60606
(312) 258-8300
8
RISK FACTORS
Investing in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the risks and uncertainties described in the section titled “Risk Factors” in the applicable prospectus supplement and any related free writing prospectus, and discussed in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 filed with the SEC on May 10, 2023, and any subsequent filings we have made with the SEC that are incorporated by reference into this prospectus, together with other information in this prospectus, the documents incorporated by reference, and any free writing prospectus that we may authorize for use in connection with this offering. The risks described in these documents are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. This could cause our net asset value and the trading price of our securities to decline, resulting in a loss of all or part of your investment. Please also read carefully the section titled “Special Note Regarding Forward-Looking Statements.”
9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains, and any applicable prospectus supplement or free writing prospectus, including the documents we incorporate by reference, may contain, forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including:
| ● | our future operating results; |
| ● | our business prospects and the prospects of our portfolio companies; |
| ● | the dependence of our future success on the general economy and its impact on the industries in which we invest; |
| ● | the impact of global health epidemics, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business and the global economy; |
| ● | the impact of the Russian invasion of Ukraine on our portfolio companies and the global economy and general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China; |
| ● | the impact of a protracted decline in the liquidity of credit markets on our business; |
| ● | the impact of changes in London Interbank Offered Rate (“LIBOR”) or Secured Overnight Financing Rate (“SOFR”) on our operating results; |
| ● | the impact of increased competition; |
| ● | the impact of rising interest and inflation rates and the risk of recession on our business prospects and the prospects of our portfolio companies; |
| ● | our contractual arrangements and relationships with third parties; |
| ● | the valuation of our investments in portfolio companies, particularly those having no liquid trading market; |
| ● | actual and potential conflicts of interest with MC Advisors, MC Management and other affiliates of Monroe Capital; |
| ● | the ability of our portfolio companies to achieve their objectives; |
| ● | the use of borrowed money to finance a portion of our investments; |
| ● | the adequacy of our financing sources and working capital; |
| ● | the timing of cash flows, if any, from the operations of our portfolio companies; |
| ● | the ability of MC Advisors to locate suitable investments for us and to monitor and administer our investments; |
| ● | the ability of MC Advisors or its affiliates to attract and retain highly talented professionals; |
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| ● | our ability to qualify and maintain our qualification as a regulated investment company and as a business development company; and |
| ● | the impact of future legislation and regulation on our business and our portfolio companies. |
We have based the forward-looking statements on information available to us on the applicable date of this prospectus, free writing prospectus and documents incorporated by reference into this prospectus. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. You should not place undue reliance on these forward-looking statements, which are based on information available to us as of the applicable date of this prospectus, any applicable prospectus supplement or free writing prospectus, including any documents incorporated by reference, and while we believe such information forms, or will form, a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.
11
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement or a free writing prospectus, we intend to use all or substantially all of the net proceeds from the sale of our securities to invest in portfolio companies directly in accordance with our investment objective and strategies and for general corporate purposes. We will also pay operating expenses, including management and administrative fees, and may pay other expenses from the net proceeds of any offering of our securities.
We anticipate that we will use substantially all of the net proceeds of an offering for the above purposes within approximately six months after the completion of any offering of our securities, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. It may take more or less time for us to identify, negotiate and enter into investments and fully deploy any proceeds we raise, and we cannot assure you that we will achieve our targeted investment pace.
Until such appropriate investment opportunities can be found, we will invest the net proceeds of any offering of our securities primarily in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. These temporary investments may have lower yields than our other investments and, accordingly, may result in lower distributions, if any, during such period. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in lower yielding interest-bearing deposits or other short-term instruments.
The prospectus supplement to this prospectus relating to an offering will more fully identify the use of the proceeds from such offering.
12
PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS
Our common stock began trading on The Nasdaq Global Market under the ticker symbol “MRCC” on October 25, 2012. Prior to that date, there was no established trading market for our common stock. Our common stock is now traded on the Nasdaq Global Select Market. Our common stock has historically traded both above and below net asset value (“NAV”).
The following table sets forth the high and low closing sales prices of our common stock, the closing sales price as a percentage of our NAV and the distributions declared by us since January 1, 2021.
Premium | Premium |
| |||||||||||||||
(Discount) of | (Discount) of |
| |||||||||||||||
High Sales | Low Sales |
| |||||||||||||||
Closing Sales Price | Price to | Price to | Declared |
| |||||||||||||
| NAV(1) |
| High |
| Low |
| NAV(2) |
| NAV(2) |
| Distributions(3) |
| |||||
Year ending December 31, 2023 | |||||||||||||||||
Second Quarter (through June 22, 2023) |
| — | (4) | $ | | $ | |
| — | (4) | — | (4) | $ | 0.25 | (5)(6) | ||
First Quarter | $ | | $ | | $ | |
| ( | % | ( | % | $ | 0.25 | (6) | |||
Year ended December 31, 2022 | |||||||||||||||||
Fourth Quarter | $ | | $ | | $ | |
| ( | % | ( | % | $ | 0.25 | (7) | |||
Third Quarter | $ | | $ | | $ | |
| ( | % | ( | % | $ | 0.25 | (7) | |||
Second Quarter | $ | | $ | | $ | |
| | % | ( | % | $ | 0.25 | (7) | |||
First Quarter | $ | | $ | | $ | |
| | % | ( | % | $ | 0.25 | (7) | |||
Year ended December 31, 2021 | |||||||||||||||||
Fourth Quarter | $ | | $ | | $ | |
| | % | ( | % | $ | 0.25 | (8) | |||
Third Quarter | $ | | $ | | $ | |
| ( | % | ( | % | $ | 0.25 | (8) | |||
Second Quarter | $ | | $ | | $ | |
| | % | ( | % | $ | 0.25 | (8) | |||
First Quarter | $ | | $ | | $ | |
| ( | % | ( | % | $ | 0.25 | (8) | |||
| (1) | NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period. |
| (2) | Calculated by taking the respective high or low closing sales price divided by the quarter end NAV and subtracting 1. |
| (3) | Represents the distribution declared in the specified quarter. We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a distribution, stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions. See “Dividend Reinvestment Plan.” |
| (4) | NAV calculation is not yet available. |
| (5) | On June 2, 2023, we declared a quarterly distribution of $0.25 per share, to be paid June 30, 2023 to stockholders of record as of June 15, 2023. |
| (6) | Our management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent that our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders. The tax character of distributions will be determined at the end of the fiscal year. |
| (7) | There was no return of capital for tax purposes for the year ended December 31, 2022. |
| (8) | There was no return of capital for tax purposes for the year ended December 31, 2021. |
To the extent we have income available, we intend to make quarterly distributions to our stockholders. Our quarterly distributions, if any, are determined by our board of directors. Any distributions to our stockholders are declared out of assets legally available for distribution.
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We elected to be treated as a RIC under the Code beginning with our taxable year ending December 31, 2012, have qualified in each taxable year since, and intend to qualify annually hereafter. To obtain and maintain RIC tax treatment, we must distribute at least 90% of our net ordinary income and net short-term capital gains in excess of our net long-term capital losses, if any. In order to avoid certain excise taxes imposed on RICs, we currently intend to distribute during each calendar year an amount at least equal to the sum of: (a) 98% of our net ordinary income for such calendar year; (b) 98.2% of our net capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year; and (c) any net ordinary income and net capital gains for preceding years that were not distributed during such years and on which we previously paid no U.S. federal income tax.
We currently intend to distribute net capital gains (i.e., net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, you will be treated for U.S. federal income tax purposes as if you had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, you would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See “Material U.S. Federal Income Tax Considerations.” We cannot assure you that we will achieve results that will permit us to continue to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.
Our management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent that our taxable earnings fall below the total amount of our distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to our stockholders. The tax character of distributions will be determined at the end of the fiscal year. A return of capital distribution is not a distribution from earnings and profits, but is rather a return of the money initially invested and while it may not be currently taxable, it lowers the stockholder’s basis in the stock, which may result in higher capital gains when the stockholder’s investment in us is ultimately sold.
Unless you elect to receive your dividends in cash, we intend to make such distributions in additional shares of our common stock under our dividend reinvestment plan. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, investors participating in our dividend reinvestment plan will not receive any corresponding cash distributions with which to pay any such applicable taxes. If you hold shares of our common stock in the name of a broker or financial intermediary, you should contact such broker or financial intermediary regarding your election to receive distributions in cash in lieu of shares of our common stock. Any dividends reinvested through the issuance of shares through our dividend reinvestment plan will increase our assets on which the base management fee and the incentive fee are determined and paid to MC Advisors. See “Dividend Reinvestment Plan.”
14
SENIOR SECURITIES
Information about our senior securities is shown in the following table as of March 31, 2023 and for the years indicated in the table (dollars in thousands). Excluding the unaudited information as of March 31, 2023, this annual information has been derived from our audited consolidated financial statements for each respective period, which have been audited by RSM US LLP, our independent registered public accounting firm, and are incorporated by reference into this prospectus. RSM US LLP’s report on the senior securities table as of December 31, 2022 is attached as an exhibit to the registration statement of which this prospectus is a part.
Total |
| |||||||||||
Amount |
| |||||||||||
Outstanding | Involuntary |
| ||||||||||
Exclusive of | Liquidating |
| ||||||||||
Treasury | Asset Coverage per | Preference per | Average Market |
| ||||||||
Class and Year |
| Securities(1) |
| Unit(2) |
| Unit(3) |
| Value per Unit(4) |
| |||
Revolving Credit Facility | ||||||||||||
March 31, 2023 (unaudited) | $ | | $ | |
| — |
| N/A | ||||
December 31, 2022 |
| |
| |
| — |
| N/A | ||||
December 31, 2021 |
| |
| |
| — |
| N/A | ||||
December 31, 2020 |
| |
| |
| — |
| N/A | ||||
December 31, 2019 |
| |
| |
| — |
| N/A | ||||
December 31, 2018 |
| |
| |
| — |
| N/A | ||||
December 31, 2017 |
| |
| |
| — |
| N/A | ||||
December 31, 2016 |
| |
| |
| — |
| N/A | ||||
December 31, 2015 |
| |
| |
| — |
| N/A | ||||
December 31, 2014 |
| |
| |
| — |
| N/A | ||||
December 31, 2013 |
| |
| |
| — |
| N/A | ||||
5.75% Notes due 2023 | ||||||||||||
December 31, 2020 | $ | | $ | |
| — | $ | | (5) | |||
December 31, 2019 |
| |
| |
| — |
| | (5) | |||
December 31, 2018 |
| |
| |
| — |
| | (5) | |||
4.75% Notes due 2026 | ||||||||||||
March 31, 2023 (unaudited) | $ | | $ | |
| — |
| N/A | ||||
December 31, 2022 |
| |
| |
| — |
| N/A | ||||
December 31, 2021 |
| |
| |
| — |
| N/A | ||||
Secured Borrowings(6) | ||||||||||||
December 31, 2016(7) |
| |
| |
| — |
| N/A | ||||
December 31, 2015(8) |
| |
| |
| — |
| N/A | ||||
December 31, 2014(9) |
| |
| |
| — |
| N/A | ||||
December 31, 2013(10) |
| |
| |
| — |
| N/A | ||||
| (1) | Total amount of each class of senior securities outstanding at the end of the period presented. |
| (2) | The asset coverage ratio of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage per Unit (including for the 5.75% Notes due 2023 and 4.75% Notes due 2026, which were issued in $25 and $2,000 increments, respectively). On October 2, 2014, we received exemptive relief from the SEC to permit us to exclude the debt of MRCC SBIC guaranteed by the SBA from our asset coverage test under the 1940 Act. |
| (3) | The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” in this column indicates that the SEC expressly does not require this information to be disclosed for certain types of senior securities. |
| (4) | Not applicable, except for with respect to the 5.75% Notes due 2023, as the other senior securities are not registered for public trading. |
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| (5) | The average market value for the 5.75% Notes due 2023 is calculated as the average daily closing prices of such notes on the Nasdaq Global Select Market for the years ended December 31, 2020, 2019 and 2018, as applicable, divided by the par value per unit of such notes. This average market value is multiplied by $1,000 to determine the Average Market Value per Unit. |
| (6) | Certain partial loan sales do not qualify for sale accounting under ASC Topic 860 - Transfers and Servicing because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment on the accompanying consolidated statements of assets and liabilities and the portion sold is recorded as a secured borrowing in the liabilities section of the consolidated statements of assets and liabilities. Amounts presented in this table represent the par amount outstanding. |
| (7) | The secured borrowings have a weighted average stated interest rate of 6.26%, a weighted average years to maturity of 1.0 year and a fair value as of December 31, 2016 of $1,314. |
| (8) | The secured borrowings have a weighted average stated interest rate of 5.75%, a weighted average years to maturity of 2.0 years and a fair value as of December 31, 2015 of $2,476. |
| (9) | The secured borrowings have a weighted average stated interest rate of 5.45%, a weighted average years to maturity of 3.0 years and a fair value as of December 31, 2014 of $4,008. |
| (10) | The secured borrowings have a weighted average stated interest rate of 4.33%, a weighted average years to maturity of 4.0 years and a fair value as of December 31, 2013 of $7,943. |
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PORTFOLIO COMPANIES
The following table sets forth certain information as of March 31, 2023, for each portfolio company in which we had a debt or equity investment. Other than equity investments, we expect that our only formal relationships with our portfolio companies will be the managerial assistance we may provide, and the board observation or participation rights we may receive. Except as identified in a footnote below, we do not “control” and are not an “affiliate” of any of our portfolio companies, as each term is defined in the 1940 Act. In general, under the 1940 Act, we would “control” a portfolio company if we owned more than 25.0% in voting securities and would be an “affiliate” of a portfolio company if we owned 5.0% or more of its voting securities.
Name and Address of Portfolio Company (˄) |
| Industry |
| Type of Investment |
| Interest Rate (˄˄) |
| Maturity |
| Acquisition |
| Principal |
| Fair Value of |
| Percentage | ||
(in thousands) | ||||||||||||||||||
AdTheorent Holding Company, Inc. | Media: Advertising, Printing & Publishing | Common Stock (177,362 shares) (<) (###) (#) (g) | — | (##) | — | 12/22/2016 | — | $ | 299 | 0.20 | % | |||||||
Amelia Holding II, LLC | High Tech Industries | Senior Secured | 14.16% Cash/1% PIK (SOFR + 10.26%, 1.00% Floor) | 12/21/2027 | 12/21/2022 | 2,006 | 1,993 | — | ||||||||||
Delayed Draw (*) (**) | 14.16% Cash/1% PIK (SOFR + 10.26%, 1.00% Floor) | 12/21/2027 | 12/21/2022 | 667 | — | — | ||||||||||||
Revolver (*) | 14.16% Cash/1% PIK (SOFR + 10.26%, 1.00% Floor) | 12/21/2027 | 12/21/2022 | 133 | — | — | ||||||||||||
Warrant to purchase up to 0.1% of the equity (<) (###) | — | (##) | 12/21/2032 | 12/21/2022 | — | 25 | — | |||||||||||
American Broadband and Telecommunications Company LLC | Telecommunications | Delayed Draw (*) (**) | 18% Cash/2% PIK (PRIME + 12.00%, | 6/10/2025 | 6/10/2022 | 1,533 | 1,424 | — | ||||||||||
Revolver (*) | 18% Cash/2% PIK (PRIME + 12.00%, 4.00% Floor) | 6/10/2025 | 6/10/2022 | 500 | 121 | — | ||||||||||||
Warrant to purchase up to 0.2% of the equity (<) (###) | — | (##) | 6/10/2032 | 6/10/2022 | — | 65 | — | |||||||||||
American Community Homes, Inc. | FIRE: Real Estate | Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 7/22/2014 | 11,612 | 8,640 | — | ||||||||||
Senior Secured (<<) | 17.42% PIK (SOFR + 12.61%, 1.50% Floor) | 12/31/2026 | 7/22/2014 | 5,585 | 4,156 | — | ||||||||||||
Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 5/24/2017 | 704 | 524 | — | ||||||||||||
Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 8/10/2018 | 2,588 | 1,926 | — | ||||||||||||
Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 3/29/2019 | 4,792 | 3,566 | — | ||||||||||||
Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 9/30/2019 | 23 | 17 | — | ||||||||||||
Senior Secured (<<) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 12/30/2019 | 110 | 82 | — | ||||||||||||
Revolver (<<) (*) | 12.92% PIK (SOFR + 8.11%, 1.50% Floor) | 12/31/2026 | 3/30/2020 | 2,500 | — | — | ||||||||||||
Common Stock (4,940 shares) (<<) (###) | — | (##) | — | 12/29/2022 | — | — | 22.33 | % | ||||||||||
APCO Worldwide, Inc. | Services: Business | Class A Voting Common Stock (100 shares) (<) (###) | — | (##) | — | 11/1/2017 | — | 1,258 | 0.98 | % | ||||||||
Aras Corporation | Services: Business | Senior Secured | 8.07% Cash/3.75% PIK (LIBOR + 7.00%, 1.00% Floor) | 4/13/2027 | 4/13/2021 | 2,176 | 2,165 | — | ||||||||||
Revolver (*) | 11.32% (LIBOR + 6.50%, 1.00% Floor) | 4/13/2027 | 4/13/2021 | 150 | 100 | — | ||||||||||||
Arcstor Midco, LLC | High Tech Industries | Senior Secured | 8.66% Cash/3.75% PIK (SOFR + 7.60%, 1.00% Floor) | 3/16/2027 | 3/16/2021 | 4,572 | 4,031 | — | ||||||||||
Ascent Midco, LLC | Healthcare & Pharmaceuticals | Senior Secured (<<) | 10.59% (LIBOR + 5.75%, 1.00% Floor) | 2/5/2025 | 2/5/2020 | 6,173 | 6,131 | — | ||||||||||
Revolver (<<) (*) | 10.59% (LIBOR + 5.75%, 1.00% Floor) | 2/5/2025 | 2/5/2020 | 1,129 | — | — | ||||||||||||
Class A Units (2,032,258 units) (<<) (###) (####) | 8.00% PIK | — | 2/5/2020 | — | 1,895 | 6.22 | % | |||||||||||
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Name and Address of Portfolio Company (˄) |
| Industry |
| Type of Investment |
| Interest Rate (˄˄) |
| Maturity |
| Acquisition |
| Principal |
| Fair Value of |
| Percentage | ||
(in thousands) | ||||||||||||||||||
ASG II, LLC | Services: Business | Unitranche (~) | 11.08% (SOFR + 6.25%, 1.00% Floor) | 5/25/2028 | 5/25/2022 | 1,900 | $ | 1,900 | — | |||||||||
Delayed Draw (~) (*) (**) | 11.08% (SOFR + 6.25%, 1.00% Floor) | 5/25/2028 | 5/25/2022 | 285 | 82 | — | ||||||||||||
Attom Intermediate Holdco, LLC | Media: Diversified & Production | Senior Secured | 11.17% (SOFR + 6.36%, 1.00% Floor) | 7/3/2025 | 1/4/2019 | 1,915 | 1,904 | — | ||||||||||
Senior Secured | 11.17% (SOFR + 6.36%, 1.00% Floor) | 7/3/2025 | 6/25/2020 | 467 | 464 | — | ||||||||||||
Senior Secured | 11.17% (SOFR + 6.36%, 1.00% Floor) | 7/3/2025 | 7/1/2021 | 275 | 273 | — | ||||||||||||
Senior Secured | 11.17% (SOFR + 6.36%, 1.00% Floor) | 7/3/2025 | 8/4/2022 | 794 | 789 | — | ||||||||||||
Senior Secured | 11.39% (SOFR + 6.25%, 1.00% Floor) | 7/3/2025 | 12/22/2022 | 400 | 398 | — | ||||||||||||
Revolver (*) | 11.17% (SOFR + 6.36%, 1.00% Floor) | 7/3/2025 | 1/4/2019 | 320 | — | — | ||||||||||||
Class A Units (297,197 units) (<) (###) (####) | — | (##) | — | 1/4/2019 | — | 473 | 4.76 | % | ||||||||||
Avalara, Inc. | FIRE: Finance | Senior Secured | 12.15% (SOFR + 7.25%, 0.75% Floor) | 10/19/2028 | 10/19/2022 | 4,000 | 4,000 | — | ||||||||||
Revolver (*) | 12.15% (SOFR + 7.25%, 0.75% Floor) | 10/19/2028 | 10/19/2022 | 400 | — | — | ||||||||||||
BLST Operating Company, LLC | Retail | Senior Secured | 5.67% Cash/12.17% PIK (LIBOR + 13.17%, 1.50% Floor) | 8/28/2025 | 8/28/2020 | 599 | 563 | — | ||||||||||
Class A Units (139,883 units) (<) (###) (####) | — | (##) | — | 8/28/2020 | — | 420 | 0.51 | % | ||||||||||
Bonterra, LLC | Media: Diversified & Production | Senior Secured | 11.16% (LIBOR + 6.00%, 0.75% Floor) | 9/8/2027 | 9/8/2021 | 13,195 | 12,898 | — | ||||||||||
Delayed Draw (*) (**) | 11.16% (LIBOR + 6.00%, 0.75% Floor) | 9/8/2027 | 9/8/2021 | 1,906 | — | — | ||||||||||||
Revolver (*) | 11.16% (LIBOR + 6.00%, 0.75% Floor) | 9/8/2027 | 9/8/2021 | 1,069 | 1,028 | — | ||||||||||||
Born To Run, LLC | Automotive | Senior Secured | 11.16% (LIBOR + 6.00%, 1.00% Floor) | 4/1/2027 | 4/1/2021 | 3,439 | 3,121 | — | ||||||||||
Senior Secured | 11.16% (LIBOR + 6.00%, 1.00% Floor) | 4/1/2027 | 4/1/2021 | 468 | 425 | — | ||||||||||||
Class A Units (269,438 units) (<) (###) | — | (##) | — | 4/1/2021 | — | 111 | 0.26 | % | ||||||||||
Brickell Bay Acquisition Corp. | Healthcare & Pharmaceuticals | Senior Secured | 11.25% (LIBOR + 6.50%, 1.00% Floor) | 2/12/2026 | 2/12/2021 | 1,875 | 1,845 | — | ||||||||||
Burroughs, Inc. | Services: Business | Senior Secured | 11.27% (SOFR + 6.50%, 1.00% Floor) | 12/22/2023 | 12/22/2017 | 5,126 | 5,126 | — | ||||||||||
Revolver (*) | 11.27% (SOFR + 6.50%, 1.00% Floor) | 12/22/2023 | 12/22/2017 | 1,215 | 150 | — | ||||||||||||
C Parent Holdings, LLC. | Services: Business | Senior Secured (<<) (k) | n/a | n/a (e) | 5/2/2017 | — | 146 | — | ||||||||||
Common Stock (58,779 shares) (<<) (###) (k) | — | (##) | — | 8/17/2018 | — | — | 15.38 | % | ||||||||||
Calabrio, Inc. | Telecommunications | Senior Secured | 12.16% (LIBOR + 7.00%, 1.00% Floor) | 4/16/2027 | 4/16/2017 | 3,400 | 3,384 | — | ||||||||||
Revolver (*) | 11.95% (LIBOR + 7.00%, 1.00% Floor) | 4/16/2027 | 4/16/2017 | 409 | 233 | — | ||||||||||||
California Pizza Kitchen, Inc. | Beverage, Food & Tobacco | Common Units (78,699 units) (<) (###) | — | (##) | — | 8/19/2016 | — | 1,200 | 1.97 | % | ||||||||
Caravel Autism Health, LLC | Healthcare & Pharmaceuticals | Senior Secured | 10.60% Cash/1.00% PIK (SOFR + 7.01%, 1.00% Floor) | 6/30/2027 | 6/30/2021 | 5,041 | 4,749 | — | ||||||||||
Delayed Draw (*) (**) | 11.33% Cash/1.00% PIK (SOFR + 7.18%, 1.00% Floor) | 6/30/2027 | 6/30/2021 | 3,751 | 849 | — | ||||||||||||
Revolver (*) | 10.60% Cash/1.00% PIK (SOFR + 7.01%, 1.00% Floor) | 6/30/2027 | 6/30/2021 | 1,267 | 817 | — | ||||||||||||
18
Name and Address of Portfolio Company (˄) |
| Industry |
| Type of Investment |
| Interest Rate (˄˄) |
| Maturity |
| Acquisition |
| Principal |
| Fair Value of |
| Percentage | ||
(in thousands) | ||||||||||||||||||
Cassavant Holdings, LLC | Aerospace & Defense | Unitranche (~) | 12.28% (SOFR + 7.50%, 1.00% Floor) | 9/8/2026 | 9/8/2021 | 7,561 | $ | 7,448 | — | |||||||||
Centaur (Palm Beach) Owner LLC and Panther National Golf Club LLC | FIRE: Real Estate | Senior Secured (#) | 12.95% (SOFR + 8.25%, 0.50% Floor) | 4/30/2025 | 5/3/2022 | 2,784 | 2,784 | — | ||||||||||
Senior Secured (#) | 12.95% (SOFR + 8.25%, 0.50% Floor) | 4/30/2025 | 5/3/2022 | 285 | 285 | — | ||||||||||||
Revolver (*) (#) | 12.95% (SOFR + 8.25%, 0.50% Floor) | 4/30/2025 | 5/3/2022 | 1,395 | 930 | — | ||||||||||||
CGI Automated Manufacturing, LLC | Capital Equipment | Senior Secured | 12.16% (SOFR + 7.00%, 1.00% Floor) | 12/17/2026 | 9/9/2022 | 3,950 | 3,906 | — | ||||||||||
Senior Secured | 12.16% (SOFR + 7.00%, 1.00% Floor) | 12/17/2026 | 9/30/2022 | 1,134 | 1,121 | — | ||||||||||||
Chess.com, LLC | Media: Diversified & Production | Senior Secured | 11.66% (LIBOR + 6.50%, 1.00% Floor) | 12/31/2027 | 12/31/2021 | 5,940 | 5,859 | — | ||||||||||
Revolver (*) | 11.66% (LIBOR + 6.50%, 1.00% Floor) | 12/31/2027 | 12/31/2021 | 652 | — | — | ||||||||||||
Class A Units (2 units) (<) (###) (####) | — | (##) | — | 12/31/2021 | — | 50 | 0.02 | % | ||||||||||
Crownpeak Technology, Inc. | Media: Diversified & Production | Senior Secured | 12.02% (SOFR + 7.25%, 1.00% Floor) | 2/28/2025 | 2/28/2019 | 4,000 | 4,000 | — | ||||||||||
Senior Secured | 12.02% (SOFR + 7.25%, 1.00% Floor) | 2/28/2025 | 2/28/2019 | 60 | 60 | — | ||||||||||||
Senior Secured | 12.02% (SOFR + 7.25%, 1.00% Floor) | 2/28/2025 | 9/27/2022 | 3,333 | 3,333 | — | ||||||||||||
Senior Secured | 11.47% (SOFR + 7.25%, 1.00% Floor) | 2/28/2025 | 9/27/2022 | 1,273 | 1,273 | — | ||||||||||||
Revolver (*) | 12.02% (SOFR + 7.25%, 1.00% Floor) | 2/28/2025 | 2/28/2019 | 500 | — | — | ||||||||||||
Destination Media, Inc. | Media: Advertising, Printing & Publishing | Senior Secured | 10.42% (SOFR + 5.61%, 1.00% Floor) | 4/7/2023 | 4/7/2017 | 57 | 57 | — | ||||||||||
Revolver (*) | 10.42% (SOFR + 5.61%, 1.00% Floor) | 4/7/2023 | 4/7/2017 | 542 | — | — | ||||||||||||
Dorado Acquisition, Inc. | Healthcare & Pharmaceuticals | Senior Secured | 11.27% (SOFR + 6.60%, 1.00% Floor) | 6/30/2026 | 6/30/2021 | 4,925 | 4,822 | — | ||||||||||
Senior Secured | 11.34% (SOFR + 6.76%, 1.00% Floor) | 6/30/2026 | 11/27/2022 | 4,082 | 3,996 | — | ||||||||||||
Delayed Draw (*) (**) | 11.27% (SOFR + 6.60%, 1.00% Floor) | 6/30/2026 | 6/30/2021 | 216 | — | — | ||||||||||||
Revolver (*) | 11.27% (SOFR + 6.60%, 1.00% Floor) | 6/30/2026 | 6/30/2021 | 596 | — | — | ||||||||||||
Class A-1 Units (189,922 units) (<) (###) | — | (##) | — | 6/30/2021 | — | 215 | 0.31 | % | ||||||||||
Class A-2 Units (189,922 units) (<) (###) | — | (##) | — | 6/30/2021 | — | 301 | ||||||||||||
Drawbridge Partners, LLC | High Tech Industries | Senior Secured | 11.90% PIK (SOFR + 7.00%, 1.00% Floor) | 9/1/2028 | 9/1/2022 | 3,000 | 2,979 | 0.31 | % | |||||||||
Delayed Draw (*) (**) | 11.90% PIK (SOFR + 7.00%, 1.00% Floor) | 9/1/2028 | 9/1/2022 | 330 | 193 | — | ||||||||||||
Revolver (*) | 11.90% (SOFR + 7.00%, 1.00% Floor) | 9/1/2028 | 9/1/2022 | 522 | — | — | ||||||||||||
Class A-1 Units (130,433 units) (<) (###) | — | (##) | — | 9/1/2022 | — | 130 | 0.08 | % | ||||||||||
Education Corporation of America | Services: Consumer | Senior Secured | 10.66% Cash/5.5% PIK (LIBOR + 11.00%) | (***) | n/a (e) | 9/3/2015 | 833 | 1,992 | — | |||||||||
Series G Preferred Stock (8,333 shares) (<) (###) | 12.00% PIK | (***) | — | 9/3/2015 | — | — | 20.83 | % | ||||||||||
Equine Network, LLC | High Tech Industries | Senior Secured | 10.78% (SOFR + 6.00%, 1.00% Floor) | 12/31/2025 | 12/31/2020 | 1,715 | 1,694 | — | ||||||||||
Senior Secured | 10.78% (SOFR + 6.00%, 1.00% Floor) | 12/31/2025 | 1/29/2021 | 778 | 768 | — | ||||||||||||
Senior Secured | 10.81% (SOFR + 6.00%, 2.00% Floor) | 12/31/2025 | 3/31/2023 | 213 | 211 | — | ||||||||||||
Revolver (*) | 10.78% (SOFR + 6.00%, 1.00% Floor) | 12/31/2025 | 12/31/2020 | 171 | 127 | — | ||||||||||||
Class A Units (108 units) (<) (###) (####) | — | (##) | — | 12/31/2020 | — | 99 | 0.19 | % | ||||||||||
19
Name and Address of Portfolio Company (˄) |
| Industry |
| Type of Investment |
| Interest Rate (˄˄) |
| Maturity |
| Acquisition |
| Principal |
| Fair Value of |
| Percentage | ||
(in thousands) | ||||||||||||||||||
Express Wash Acquisition Company, LLC | High Tech Industries | Senior Secured | 11.35% (SOFR + 6.50%, 1.00% Floor) | 7/14/2028 | 7/14/2022 | 8,139 | $ | 7,986 | — | |||||||||
Senior Secured | 11.35% (SOFR + 6.50%, 1.00% Floor) | 7/14/2028 | 7/14/2022 | 1,525 | 1,496 | — | ||||||||||||
Revolver (*) | 11.35% (SOFR + 6.50%, 1.00% Floor) | 7/14/2028 | 7/14/2022 | 379 | 205 | — | ||||||||||||
Class A Units (121,311 units) (<) (###) (####) | 8.00% PIK | — | 12/28/2020 | — | 104 | 0.16 | % | |||||||||||
Familia Dental Group Holdings, LLC | Healthcare & Pharmaceuticals | Class A Units (1,194 units) (<<) (###) (####) (l) | — | (##) | — | 4/8/2016 | — | 2,429 | 10.53 | % | ||||||||
Florida East Coast Industries, LLC | FIRE: Real Estate | Senior Secured (#) | 16.00% PIK | 6/28/2024 | 8/9/2021 | 902 | 901 | — | ||||||||||
Forman Mills, Inc. | Retail | Senior Secured | 12.42% Cash/2.00% PIK (SOFR + 9.50%, 1.00% Floor) | 4/30/2024 | 10/4/2016 | 6,909 | 5,175 | — | ||||||||||
Senior Secured | 12.42% Cash/2.00% PIK (SOFR + 9.50%, 1.00% Floor) | 4/30/2024 | 1/14/2020 | 1,275 | 1,259 | — | ||||||||||||
Warrant to purchase up to 2.6% of the equity (<) (###) | — | (##) | 1/14/2020 | 1/14/2029 | — | — | — | |||||||||||
GC Champion Acquisition LLC | FIRE: Finance | Senior Secured | 11.15% (SOFR + 6.75%, 0.75% Floor) | 8/19/2028 | 8/19/2022 | 2,522 | 2,509 | — | ||||||||||
Senior Secured | 11.56% (SOFR + 6.75%, 1.00% Floor) | 8/19/2028 | 8/19/2022 | 704 | 701 | — | ||||||||||||
Hastings Manufacturing Company | Automotive | Senior Secured | 12.41% (SOFR + 7.60%, 1.00% Floor) | 12/31/2023 | 4/24/2018 | 1,970 | 1,990 | — | ||||||||||
Senior Secured | 12.39% (SOFR + 7.60%, 1.00% Floor) | 12/31/2023 | 3/29/2023 | 691 | 691 | — | ||||||||||||
Revolver (*) | 12.41% (SOFR + 7.60%, 1.00% Floor) | 12/31/2023 | 3/29/2023 | 691 | — | — | ||||||||||||
HFZ Capital Group, LLC | FIRE: Real Estate | Senior Secured (<<) (#) (j) | 17.16% PIK (LIBOR + 12.50%, 1.50% Floor) | n/a (e) | 10/20/2017 | 13,242 | 16,423 | — | ||||||||||
Senior Secured (<<) (#) (j) | 17.16% PIK (LIBOR + 12.50%, 1.50% Floor) | n/a (e) | 10/20/2017 | 4,758 | 5,901 | — | ||||||||||||
HS4 Acquisitionco, Inc. | Services: Business | Senior Secured | 11.59% (LIBOR + 6.75%, 1.00% Floor) | 7/9/2025 | 7/9/2019 | 9,874 | 9,825 | — | ||||||||||