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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One) | |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from: to | |
Commission File Number:
(Exact name of registrant as specified in its charter)
|
|
|
|
(
(Registrant’s telephone number including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol |
| Name of Each Exchange on Which |
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth 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.
Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The number of shares outstanding of the issuer’s common stock as of August 4, 2022 was
TABLE OF CONTENTS
MAIN STREET CAPITAL CORPORATION
Consolidated Balance Sheets
(in thousands, except shares and per share amounts)
June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
(Unaudited) | ||||||
ASSETS |
|
|
|
| ||
Investments at fair value: |
|
|
|
| ||
Control investments (cost: $1,145,692 and $1,107,597 as of June 30, 2022 and December 31, 2021, respectively) | $ | 1,538,158 | $ | 1,489,257 | ||
Affiliate investments (cost: $540,457 and $578,539 as of June 30, 2022 and December 31, 2021, respectively) |
| 518,061 |
| 549,214 | ||
Non‑Control/Non‑Affiliate investments (cost: $1,737,243 and $1,573,110 as of June 30, 2022 and December 31, 2021, respectively) |
| 1,661,551 |
| 1,523,360 | ||
Total investments (cost: $3,423,392 and $3,259,246 as of June 30, 2022 and December 31, 2021, respectively) |
| 3,717,770 |
| 3,561,831 | ||
Cash and cash equivalents |
| 43,383 |
| 32,629 | ||
Interest and dividend receivable and other assets |
| 59,421 |
| 56,488 | ||
Receivable for securities sold |
| 1,441 |
| 35,125 | ||
Deferred financing costs (net of accumulated amortization of $9,948 and $9,462 as of June 30, 2022 and December 31, 2021, respectively) |
| 3,730 |
| 4,217 | ||
Total assets | $ | 3,825,745 | $ | 3,690,290 | ||
LIABILITIES |
|
| ||||
Credit facility | $ | 380,000 | $ | 320,000 | ||
3.00% Notes due 2026 (par: $500,000 as of both June 30, 2022 and December 31, 2021) |
| 497,872 |
| 497,609 | ||
5.20% Notes due 2024 (par: $450,000 as of both June 30, 2022 and December 31, 2021) |
| 450,999 |
| 451,272 | ||
SBIC debentures (par: $350,000 as of both June 30, 2022 and December 31, 2021) |
| 343,323 |
| 342,731 | ||
4.50% Notes due 2022 (par: $185,000 as of both June 30, 2022 and December 31, 2021) |
| 184,747 |
| 184,444 | ||
Accounts payable and other liabilities |
| 29,978 |
| 40,469 | ||
Payable for securities purchased |
| — |
| 5,111 | ||
Interest payable |
| 14,968 |
| 14,926 | ||
Dividend payable |
| 15,673 |
| 15,159 | ||
Deferred tax liability, net |
| 43,022 |
| 29,723 | ||
Total liabilities |
| 1,960,582 |
| 1,901,444 | ||
Commitments and contingencies (Note K) |
|
| ||||
NET ASSETS |
|
| ||||
Common stock, $0.01 par value per share (150,000,000 shares authorized; 73,455,801 and 70,700,885 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) |
| 735 |
| 707 | ||
Additional paid‑in capital |
| 1,837,305 |
| 1,736,346 | ||
Total undistributed earnings |
| 27,123 |
| 51,793 | ||
Total net assets |
| 1,865,163 |
| 1,788,846 | ||
Total liabilities and net assets | $ | 3,825,745 | $ | 3,690,290 | ||
NET ASSET VALUE PER SHARE | $ | 25.37 | $ | 25.29 | ||
The accompanying notes are an integral part of these consolidated financial statements
1
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Operations
(in thousands, except shares and per share amounts)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
| June 30, | June 30, |
| ||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||
INVESTMENT INCOME: |
|
|
|
|
|
|
|
|
| ||||
Interest, fee and dividend income: |
|
|
|
|
|
|
|
|
| ||||
Control investments | $ | 36,808 | $ | 27,027 | $ | 69,385 | $ | 51,052 | |||||
Affiliate investments |
| 11,893 |
| 11,005 |
| 25,810 |
| 22,511 | |||||
Non‑Control/Non‑Affiliate investments |
| 36,499 |
| 29,262 |
| 69,401 |
| 56,539 | |||||
Total investment income |
| 85,200 |
| 67,294 |
| 164,596 |
| 130,102 | |||||
EXPENSES: |
|
|
|
| |||||||||
Interest |
| (17,295) |
| (14,400) |
| (33,982) |
| (28,206) | |||||
Compensation |
| (8,807) |
| (6,895) |
| (16,076) |
| (13,216) | |||||
General and administrative |
| (4,238) |
| (3,417) |
| (7,464) |
| (6,392) | |||||
Share‑based compensation |
| (3,596) |
| (2,759) |
| (6,414) |
| (5,092) | |||||
Expenses allocated to the External Investment Manager |
| 3,462 |
| 2,572 |
| 6,279 |
| 4,952 | |||||
Total expenses |
| (30,474) |
| (24,899) |
| (57,657) |
| (47,954) | |||||
NET INVESTMENT INCOME |
| 54,726 |
| 42,395 |
| 106,939 |
| 82,148 | |||||
NET REALIZED GAIN (LOSS): |
|
|
|
| |||||||||
Control investments |
| — |
| (2,320) |
| — |
| (13,245) | |||||
Affiliate investments |
| 47 |
| 13,913 |
| 739 |
| 9,110 | |||||
Non‑Control/Non‑Affiliate investments |
| (5,111) |
| 6,407 |
| (2,467) |
| 6,405 | |||||
Total net realized gain (loss) |
| (5,064) |
| 18,000 |
| (1,728) |
| 2,270 | |||||
NET UNREALIZED APPRECIATION (DEPRECIATION): |
|
|
|
| |||||||||
Control investments |
| 4,822 |
| 30,824 |
| 13,101 |
| 45,084 | |||||
Affiliate investments |
| 1,731 |
| 9,816 |
| 4,772 |
| 16,232 | |||||
Non‑Control/Non‑Affiliate investments |
| (31,146) |
| 3,801 |
| (27,714) |
| 17,124 | |||||
Total net unrealized appreciation (depreciation) |
| (24,593) |
| 44,441 |
| (9,841) |
| 78,440 | |||||
INCOME TAXES: |
|
|
|
| |||||||||
Federal and state income, excise and other taxes |
| (809) |
| (656) |
| (2,118) |
| (1,289) | |||||
Deferred taxes |
| (9,511) |
| (9,070) |
| (13,299) |
| (9,118) | |||||
Income tax benefit (provision) |
| (10,320) |
| (9,726) |
| (15,417) |
| (10,407) | |||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 14,749 | $ | 95,110 | $ | 79,953 | $ | 152,451 | |||||
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED | $ | 0.75 | $ | 0.62 | $ | 1.47 | $ | 1.20 | |||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED | $ | 0.20 | $ | 1.39 | $ | 1.10 | $ | 2.23 | |||||
WEIGHTED AVERAGE SHARES |
| 73,304,619 |
| 68,514,683 |
| 72,512,793 |
| 68,321,701 | |||||
The accompanying notes are an integral part of these consolidated financial statements
2
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Changes in Net Assets
(in thousands, except shares)
(Unaudited)
Total | ||||||||||||||
Common Stock | Additional | Undistributed | ||||||||||||
Number of | Par | Paid‑In | (Overdistributed) | Total Net | ||||||||||
| Shares |
| Value |
| Capital |
| Earnings |
| Asset Value | |||||
Balances at December 31, 2020 |
| 67,762,032 | $ | 677 | $ | 1,615,940 | $ | (101,850) | $ | 1,514,767 | ||||
Public offering of common stock, net of offering costs | 117,388 |
| 2 |
| 3,626 |
| — |
| 3,628 | |||||
Share‑based compensation | — |
| — |
| 2,333 |
| — |
| 2,333 | |||||
Purchase of vested stock for employee payroll tax withholding | (180) |
| — |
| (7) |
| — |
| (7) | |||||
Dividend reinvestment | 106,651 |
| 1 |
| 3,698 |
| — |
| 3,699 | |||||
Amortization of directors’ deferred compensation | — |
| — |
| 195 |
| — |
| 195 | |||||
Issuance of restricted stock | 15,007 |
| — |
| — |
| — |
| — | |||||
Dividends to stockholders | — |
| — |
| 96 |
| (41,893) |
| (41,797) | |||||
Net increase resulting from operations | — |
| — |
| — |
| 57,346 |
| 57,346 | |||||
Balances at March 31, 2021 | 68,000,898 | $ | 680 | $ | 1,625,881 | $ | (86,397) | $ | 1,540,164 | |||||
Public offering of common stock, net of offering costs | 231,795 |
| 2 |
| 9,396 |
| — |
| 9,398 | |||||
Share‑based compensation | — |
| — |
| 2,759 |
| — |
| 2,759 | |||||
Purchase of vested stock for employee payroll tax withholding | (114,357) |
| (1) |
| (4,464) |
| — |
| (4,465) | |||||
Dividend reinvestment | 91,632 |
| 1 |
| 3,755 |
| — |
| 3,756 | |||||
Amortization of directors’ deferred compensation | — |
| — |
| 163 |
| — |
| 163 | |||||
Issuance of restricted stock, net of forfeited shares | 321,821 |
| 3 |
| (3) |
| — |
| — | |||||
Dividends to stockholders | — |
| — |
| 96 |
| (42,140) |
| (42,044) | |||||
Net increase resulting from operations | — |
| — |
| — |
| 95,110 |
| 95,110 | |||||
Balances at June 30, 2021 | 68,531,789 | $ | 685 | $ | 1,637,583 | $ | (33,427) | $ | 1,604,841 | |||||
Balances at December 31, 2021 | 70,737,021 | $ | 707 | $ | 1,736,346 | $ | 51,793 | $ | 1,788,846 | |||||
Public offering of common stock, net of offering costs | 1,502,430 |
| 15 |
| 63,507 |
| — |
| 63,522 | |||||
Share‑based compensation | — |
| — |
| 2,818 |
| — |
| 2,818 | |||||
Dividend reinvestment | 114,043 |
| 1 |
| 4,812 |
| — |
| 4,813 | |||||
Amortization of directors’ deferred compensation | — |
| — |
| 147 |
| — |
| 147 | |||||
Issuance of restricted stock, net of forfeited shares | 16,913 |
| — |
| — |
| — |
| — | |||||
Dividends to stockholders | — |
| — |
| 109 |
| (51,804) |
| (51,695) | |||||
Net increase resulting from operations | — |
| — |
| — |
| 65,203 |
| 65,203 | |||||
Balances at March 31, 2022 | 72,370,407 | $ | 723 | $ | 1,807,739 | $ | 65,192 | $ | 1,873,654 | |||||
Public offering of common stock, net of offering costs | 662,828 |
| 7 |
| 25,626 |
| — |
| 25,633 | |||||
Share‑based compensation | — |
| — |
| 3,596 |
| — |
| 3,596 | |||||
Purchase of vested stock for employee payroll tax withholding | (115,071) |
| (1) |
| (4,894) |
| — |
| (4,895) | |||||
Dividend reinvestment | 132,156 |
| 1 |
| 4,999 |
| — |
| 5,000 | |||||
Amortization of directors’ deferred compensation | — |
| — |
| 130 |
| — |
| 130 | |||||
Issuance of restricted stock, net of forfeited shares | 467,238 |
| 5 |
| (5) |
| — |
| — | |||||
Dividends to stockholders | — |
| — |
| 114 |
| (52,818) |
| (52,704) | |||||
Net increase resulting from operations | — |
| — |
| — |
| 14,749 |
| 14,749 | |||||
Balances at June 30, 2022 | 73,517,558 | $ | 735 | $ | 1,837,305 | $ | 27,123 | $ | 1,865,163 | |||||
The accompanying notes are an integral part of these consolidated financial statements
3
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months Ended | ||||||
| June 30, | |||||
2022 |
| 2021 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net increase in net assets resulting from operations | $ | 79,953 | $ | 152,451 | ||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: | ||||||
Investments in portfolio companies | (540,429) | (520,706) | ||||
Proceeds from sales and repayments of debt investments in portfolio companies | 381,697 | 279,303 | ||||
Proceeds from sales and return of capital of equity investments in portfolio companies | 30,293 | 55,915 | ||||
Net unrealized (appreciation) depreciation | 9,841 | (78,440) | ||||
Net realized (gain) loss | 1,728 | (2,270) | ||||
Accretion of unearned income | (7,354) | (6,391) | ||||
Payment-in-kind interest | (2,364) | (4,672) | ||||
Cumulative dividends | (1,062) | (858) | ||||
Share-based compensation expense | 6,414 | 5,092 | ||||
Amortization of deferred financing costs | 1,372 | 1,494 | ||||
Deferred tax (benefit) provision | 13,299 | 9,118 | ||||
Changes in other assets and liabilities: | ||||||
Interest and dividend receivable and other assets | (3,686) | (5,047) | ||||
Interest payable | 42 | 3,220 | ||||
Accounts payable and other liabilities | (10,216) | 1,234 | ||||
Deferred fees and other | 1,037 | 2,363 | ||||
Net cash used in operating activities | (39,435) | (108,194) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Proceeds from public offering of common stock, net of offering costs | 89,155 | 13,026 | ||||
Proceeds from public offering of 3.00% Notes due 2026 | - | 300,000 | ||||
Dividends paid | (94,071) | (76,221) | ||||
Proceeds from issuance of SBIC debentures | - | 52,200 | ||||
Repayments of SBIC debentures | - | (40,000) | ||||
Proceeds from credit facility | 303,000 | 446,000 | ||||
Repayments on credit facility | (243,000) | (546,000) | ||||
Debt issuance premiums (costs), net | - | (9,462) | ||||
Purchases of vested stock for employee payroll tax withholding | (4,895) | (4,472) | ||||
Net cash provided by financing activities | 50,189 | 135,071 | ||||
Net increase in cash and cash equivalents | 10,754 | 26,877 | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 32,629 | 31,919 | ||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 43,383 | $ | 58,796 | ||
Supplemental cash flow disclosures: | ||||||
Interest paid | $ | 32,505 | $ | 23,427 | ||
Taxes paid | $ | 4,920 | $ | 1,609 | ||
Non-cash financing activities: | ||||||
Value of shares issued pursuant to the DRIP | $ | 9,813 | $ | 7,455 | ||
The accompanying notes are an integral part of these consolidated financial statements
4
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Control Investments (5) | ||||||||||||||
Analytical Systems Keco Holdings, LLC |
| Manufacturer of Liquid and Gas Analyzers |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/16/2019 |
| 12.00% (L+10.00%, Floor 2.00%) | 8/16/2024 | $ | 4,805 | $ | 4,641 | $ | 4,641 |
|
|
| Preferred Member Units |
| 8/16/2019 | 3,200 |
|
| 3,200 | - | ||||
|
|
| Preferred Member Units |
| 5/20/2021 | 2,427 |
|
| 2,426 | 4,318 | ||||
|
|
| Warrants | (27) | 8/16/2019 | 420 |
| 8/16/2029 | 316 | - | ||||
|
|
|
|
|
|
|
|
| 10,583 | 8,959 | ||||
ASC Interests, LLC |
| Recreational and Educational Shooting Facility |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/31/2019 |
| 13.00% | 7/31/2024 | 170 | 170 | 170 | |||
|
|
| Secured Debt |
| 8/1/2013 |
| 13.00% | 7/31/2024 | 1,650 | 1,648 | 1,648 | |||
|
|
| Member Units |
| 8/1/2013 | 1,500 |
|
| 1,500 | 800 | ||||
|
|
|
|
|
|
|
|
| 3,318 | 2,618 | ||||
ATS Workholding, LLC | (10) | Manufacturer of Machine Cutting Tools and Accessories |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (14) | 11/16/2017 |
| 5.00% | 8/16/2023 | 4,728 | 4,570 | 2,939 | |||
|
|
| Preferred Member Units |
| 11/16/2017 | 3,725,862 |
|
| 3,726 | - | ||||
|
|
|
|
|
|
|
|
| 8,296 | 2,939 | ||||
Barfly Ventures, LLC | (10) | Casual Restaurant Group |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 10/15/2020 |
| 7.00% | 10/31/2024 | 711 | 711 | 711 | |||
|
|
| Member Units |
| 10/26/2020 | 37 |
|
| 1,584 | 2,400 | ||||
|
|
|
|
|
|
|
|
| 2,295 | 3,111 | ||||
Batjer TopCo, LLC |
| HVAC Mechanical Contractor |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/7/2022 |
| 11.00% | 3/31/2027 | 11,025 | 10,913 | 10,913 | |||
|
|
| Preferred Stock |
| 3/7/2022 | 4,073 |
|
| 4,073 | 4,073 | ||||
|
|
|
|
|
|
|
|
| 14,986 | 14,986 | ||||
Bolder Panther Group, LLC |
| Consumer Goods and Fuel Retailer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/31/2020 |
| 10.50% (L+9.00%, Floor 1.50%) | 12/31/2025 | 49,194 | 48,920 | 49,194 | |||
|
|
| Class B Preferred Member Units | (8) | 12/31/2020 | 140,000 | 8.00% |
| 14,000 | 25,930 | ||||
|
|
|
|
|
|
|
|
| 62,920 | 75,124 | ||||
Brewer Crane Holdings, LLC |
| Provider of Crane Rental and Operating Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/9/2018 |
| 11.06% (L+10.00%, Floor 1.00%) | 1/9/2023 | 7,812 | 7,801 | 7,801 | |||
|
|
| Preferred Member Units | (8) | 1/9/2018 | 2,950 |
|
| 4,279 | 7,050 | ||||
|
|
|
|
|
|
|
|
| 12,080 | 14,851 | ||||
Bridge Capital Solutions Corporation |
| Financial Services and Cash Flow Solutions Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 7/25/2016 |
| 13.00% | 12/11/2024 | 8,813 | 8,813 | 8,813 | |||
|
|
| Secured Debt | (30) | 7/25/2016 |
| 13.00% | 12/11/2024 | 1,000 | 1,000 | 1,000 | |||
|
|
| Preferred Member Units | (8) (30) | 7/25/2016 | 17,742 |
|
| 1,000 | 1,000 | ||||
|
|
| Warrants | (27) | 7/25/2016 | 82 |
| 7/25/2026 | 2,132 | 4,260 | ||||
|
|
|
|
|
|
|
|
| 12,945 | 15,073 | ||||
Café Brazil, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 6/9/2006 | 1,233 |
|
| 1,742 | 2,520 | ||||
|
|
|
|
|
|
|
|
| ||||||
California Splendor Holdings LLC |
| Processor of Frozen Fruits |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/30/2018 |
| 11.00% (L+10.00%, Floor 1.00%) | 7/29/2026 | 28,000 | 27,944 | 28,000 | |||
5
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Preferred Member Units | (8) (19) | 7/31/2019 | 3,671 | 15.00% PIK |
| 3,713 | 3,713 | ||||
|
|
| Preferred Member Units | (8) | 3/30/2018 | 6,157 |
|
| 10,775 | 19,295 | ||||
|
|
|
|
|
|
|
|
| 42,432 | 51,008 | ||||
CBT Nuggets, LLC |
| Produces and Sells IT Training Certification Videos |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 6/1/2006 | 416 |
|
| 1,300 | 47,900 | ||||
|
|
|
|
|
|
|
|
| ||||||
Centre Technologies Holdings, LLC |
| Provider of IT Hardware Services and Software Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/4/2019 |
| 12.00% (L+10.00%, Floor 2.00%) | 1/4/2026 | 15,030 | 14,941 | 14,941 | |||
|
|
| Preferred Member Units |
| 1/4/2019 | 13,309 |
|
| 6,122 | 6,890 | ||||
|
|
|
|
|
|
|
|
| 21,063 | 21,831 | ||||
Chamberlin Holding LLC |
| Roofing and Waterproofing Specialty Contractor |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 2/26/2018 |
| 9.13% (L+8.00%, Floor 1.00%) | 2/26/2023 | 17,466 | 17,422 | 17,466 | |||
|
|
| Member Units | (8) | 2/26/2018 | 4,347 |
|
| 11,440 | 22,510 | ||||
|
|
| Member Units | (8) (30) | 11/2/2018 | 1,047,146 |
|
| 1,322 | 1,540 | ||||
|
|
|
|
|
|
|
|
| 30,184 | 41,516 | ||||
Charps, LLC |
| Pipeline Maintenance and Construction |
|
|
|
|
|
|
|
| ||||
|
|
| Unsecured Debt |
| 8/26/2020 |
| 10.00% | 1/31/2026 | 5,694 | 4,626 | 5,694 | |||
|
|
| Preferred Member Units | (8) | 2/3/2017 | 1,829 |
|
| 1,963 | 13,450 | ||||
|
|
|
|
|
|
|
|
| 6,589 | 19,144 | ||||
Clad-Rex Steel, LLC |
| Specialty Manufacturer of Vinyl-Clad Metal |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/20/2016 |
| 10.63% (L+9.50%, Floor 1.00%) | 1/15/2024 | 10,480 | 10,421 | 10,421 | |||
|
|
| Secured Debt |
| 12/20/2016 |
| 10.00% | 12/20/2036 | 1,065 | 1,055 | 1,055 | |||
|
|
| Member Units | (8) | 12/20/2016 | 717 |
|
| 7,280 | 10,250 | ||||
|
|
| Member Units | (30) | 12/20/2016 | 800 |
|
| 210 | 610 | ||||
|
|
|
|
|
|
|
|
| 18,966 | 22,336 | ||||
CMS Minerals Investments |
| Oil Gas Exploration Production |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) (30) | 4/1/2016 | 100 |
|
| 1,691 | 2,274 | ||||
|
|
|
|
|
|
|
|
| ||||||
Cody Pools, Inc. |
| Designer of Residential and Commercial Pools |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/6/2020 |
| 12.25% (L+10.50%, Floor 1.75%) | 12/17/2026 | 41,649 | 41,315 | 41,637 | |||
|
|
| Preferred Member Units | (8) (30) | 3/6/2020 | 587 |
|
| 8,317 | 51,190 | ||||
|
|
|
|
|
|
|
|
| 49,632 | 92,827 | ||||
Colonial Electric Company LLC |
| Provider of Electrical Contracting Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/31/2021 |
| 12.00% | 3/31/2026 | 25,540 | 25,351 | 25,351 | |||
|
|
| Preferred Member Units | (8) | 3/31/2021 | 17,280 |
|
| 7,680 | 8,940 | ||||
|
|
|
|
|
|
|
|
| 33,031 | 34,291 | ||||
CompareNetworks Topco, LLC |
| Internet Publishing and Web Search Portals |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/29/2019 |
| 10.13% (L+9.00%, Floor 1.00%) | 1/29/2024 | 5,741 | 5,726 | 5,741 | |||
|
|
| Preferred Member Units | (8) | 1/29/2019 | 1,975 |
|
| 1,975 | 17,230 | ||||
|
|
|
|
|
|
|
|
| 7,701 | 22,971 | ||||
6
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Copper Trail Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (CTMH, LP) | (31) | 7/17/2017 | 38.8% |
|
| 710 | 710 | ||||
|
|
|
|
|
|
|
|
| ||||||
Datacom, LLC |
| Technology and Telecommunications Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/31/2021 |
| 7.50% | 12/31/2025 | 8,757 | 8,245 | 7,617 | |||
|
|
| Preferred Member Units | (8) | 3/31/2021 | 9,000 |
|
| 2,610 | 2,670 | ||||
|
|
|
|
|
|
|
|
| 10,855 | 10,287 | ||||
Digital Products Holdings LLC |
| Designer and Distributor of Consumer Electronics |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 4/1/2018 |
| 11.13% (L+10.00%, Floor 1.00%) | 4/1/2023 | 16,193 | 16,163 | 16,163 | |||
|
|
| Preferred Member Units | (8) | 4/1/2018 | 3,857 |
|
| 9,501 | 9,835 | ||||
|
|
|
|
|
|
|
|
| 25,664 | 25,998 | ||||
Direct Marketing Solutions, Inc. |
| Provider of Omni-Channel Direct Marketing Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 2/13/2018 |
| 12.13% (L+11.00%, Floor 1.00%) | 2/13/2024 | 24,678 | 24,561 | 24,678 | |||
|
|
| Preferred Stock | (8) | 2/13/2018 | 8,400 |
|
| 8,400 | 21,550 | ||||
|
|
|
|
|
|
|
|
| 32,961 | 46,228 | ||||
Flame King Holdings, LLC |
| Propane Tank and Accessories Distributor |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 10/31/2026 | 7,600 | 7,532 | 7,600 | |||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 10/31/2026 | 21,200 | 21,017 | 21,200 | |||
|
|
| Preferred Equity | (8) | 10/29/2021 | 9,360 |
|
| 10,400 | 13,410 | ||||
|
|
|
|
|
|
|
|
| 38,949 | 42,210 | ||||
Gamber-Johnson Holdings, LLC |
| Manufacturer of Ruggedized Computer Mounting Systems |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/24/2016 |
| 10.00% (L+8.00%, Floor 2.00%) | 1/1/2025 | 21,598 | 21,545 | 21,598 | |||
|
|
| Member Units | (8) | 6/24/2016 | 9,042 |
|
| 17,692 | 46,300 | ||||
|
|
|
|
|
|
|
|
| 39,237 | 67,898 | ||||
Garreco, LLC |
| Manufacturer and Supplier of Dental Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/15/2013 |
| 9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) | 7/31/2023 | 4,196 | 4,196 | 4,196 | |||
|
|
| Member Units | (8) | 7/15/2013 | 1,200 |
|
| 1,200 | 2,490 | ||||
|
|
|
|
|
|
|
|
| 5,396 | 6,686 | ||||
GRT Rubber Technologies LLC |
| Manufacturer of Engineered Rubber Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/19/2014 |
| 9.06% (L+8.00%) | 10/29/2026 | 38,885 | 38,694 | 38,885 | |||
|
|
| Member Units | (8) | 12/19/2014 | 5,879 |
|
| 13,065 | 46,190 | ||||
|
|
|
|
|
|
|
|
| 51,759 | 85,075 | ||||
Gulf Manufacturing, LLC |
| Manufacturer of Specialty Fabricated Industrial Piping Products |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 8/31/2007 | 438 |
|
| 2,980 | 5,510 | ||||
|
|
|
|
|
|
|
|
| ||||||
Gulf Publishing Holdings, LLC |
| Energy Industry Focused Media and Publishing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (17) (19) | 9/29/2017 |
| 10.60% (5.25% Cash, 5.25% PIK) | 9/30/2020 | 257 | 257 | 257 | |||
7
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(L+9.50%, Floor 1.00%) | ||||||||||||||
|
|
| Secured Debt | (17) (19) | 4/29/2016 |
| 12.50% (6.25% Cash, 6.25% PIK) | 4/29/2021 | 13,565 | 13,565 | 7,529 | |||
|
|
| Member Units |
| 4/29/2016 | 3,681 |
|
| 3,681 | - | ||||
|
|
|
|
|
|
|
|
| 17,503 | 7,786 | ||||
Harris Preston Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (2717 MH, L.P.) | (31) | 10/1/2017 | 49.3% |
|
| 3,877 | 6,554 | ||||
|
|
| LP Interests (2717 HPP-MS, L.P.) | (31) | 3/11/2022 | 49.3% |
|
| 244 | 244 | ||||
|
|
|
|
|
|
|
|
| 4,121 | 6,798 | ||||
Harrison Hydra-Gen, Ltd. |
| Manufacturer of Hydraulic Generators |
|
|
|
|
|
|
|
| ||||
|
|
| Common Stock |
| 6/4/2010 | 107,456 |
|
| 718 | 3,330 | ||||
|
|
|
|
|
|
|
|
| ||||||
Jensen Jewelers of Idaho, LLC |
| Retail Jewelry Store |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/14/2006 |
| 10.75% (Prime+6.75%, Floor 2.00%) | 11/14/2023 | 2,450 | 2,441 | 2,450 | |||
|
|
| Member Units | (8) | 11/14/2006 | 627 |
|
| 811 | 15,120 | ||||
|
|
|
|
|
|
|
|
| 3,252 | 17,570 | ||||
Johnson Downie Opco, LLC |
| Executive Search Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/10/2021 |
| 13.00% (L+11.50%, Floor 1.50%) | 12/10/2026 | 10,437 | 10,328 | 10,421 | |||
|
|
| Preferred Equity | (8) | 12/10/2021 | 3,150 |
|
| 3,150 | 5,880 | ||||
|
|
|
|
|
|
|
|
| 13,478 | 16,301 | ||||
JorVet Holdings, LLC |
| Supplier and Distributor of Veterinary Equipment and Supplies |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/28/2022 |
| 12.00% | 3/28/2027 | 25,650 | 25,406 | 25,406 | |||
|
|
| Common Stock |
| 3/28/2022 | 107,406 |
|
| 10,741 | 10,741 | ||||
|
|
|
|
|
|
|
|
| 36,147 | 36,147 | ||||
KBK Industries, LLC |
| Manufacturer of Specialty Oilfield and Industrial Products |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 1/23/2006 | 325 |
|
| 783 | 13,930 | ||||
|
|
|
|
|
|
|
|
| ||||||
Kickhaefer Manufacturing Company, LLC |
| Precision Metal Parts Manufacturing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 10/31/2018 |
| 11.50% | 10/31/2023 | 20,415 | 20,349 | 20,349 | |||
|
|
| Secured Debt |
| 10/31/2018 |
| 9.00% | 10/31/2048 | 3,897 | 3,860 | 3,860 | |||
|
|
| Member Units |
| 10/31/2018 | 581 |
|
| 12,240 | 12,240 | ||||
|
|
| Member Units | (8) (30) | 10/31/2018 | 800 |
|
| 992 | 2,460 | ||||
|
|
|
|
|
|
|
|
| 37,441 | 38,909 | ||||
Market Force Information, LLC |
| Provider of Customer Experience Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/28/2017 |
| 12.13% (L+11.00%, Floor 1.00%) | 7/28/2023 | 4,400 | 4,400 | 4,400 | |||
|
|
| Secured Debt | (14) (19) | 7/28/2017 |
| 12.00% PIK | 7/28/2023 | 26,079 | 25,952 | 7,531 | |||
|
|
| Member Units |
| 7/28/2017 | 743,921 |
|
| 16,642 | - | ||||
|
|
|
|
|
|
|
|
| 46,994 | 11,931 | ||||
MH Corbin Holding LLC |
| Manufacturer and Distributor of Traffic Safety Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (17) | 8/31/2015 |
| 13.00% | 3/31/2022 | 8,090 | 8,090 | 4,288 | |||
|
|
| Preferred Member Units |
| 3/15/2019 | 66,000 |
|
| 4,400 | - | ||||
|
|
| Preferred Member Units |
| 9/1/2015 | 4,000 |
|
| 6,000 | - | ||||
|
|
|
|
|
|
|
|
| 18,490 | 4,288 | ||||
MS Private Loan Fund I, LP | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests | (8) (31) | 1/26/2021 | 14.5% |
|
| 11,250 | 10,787 | ||||
|
|
|
|
|
|
|
|
| ||||||
8
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
MSC Adviser I, LLC | (16) | Third Party Investment Advisory Services |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 11/22/2013 |
|
|
| 29,500 | 118,320 | ||||
|
|
|
|
|
|
|
|
| ||||||
MSC Income Fund, Inc. | (12) (13) | Business Development Company |
|
|
|
|
|
|
|
| ||||
|
|
| Common Equity |
| 5/2/2022 | 94,697 |
|
| 750 | 750 | ||||
|
|
|
|
|
|
|
|
| ||||||
Mystic Logistics Holdings, LLC |
| Logistics and Distribution Services Provider for Large Volume Mailers |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/18/2014 |
| 10.00% | 1/31/2024 | 6,098 | 6,098 | 6,098 | |||
|
|
| Common Stock | (8) | 8/18/2014 | 5,873 |
|
| 2,720 | 16,210 | ||||
|
|
|
|
|
|
|
|
| 8,818 | 22,308 | ||||
NAPCO Precast, LLC |
| Precast Concrete Manufacturing |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 1/31/2008 | 2,955 |
|
| 2,975 | 11,830 | ||||
|
|
|
|
|
|
|
|
| ||||||
Nebraska Vet AcquireCo, LLC |
| Mixed-Animal Veterinary and Animal Health Product Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/31/2020 |
| 12.00% | 12/31/2025 | 10,500 | 10,423 | 10,423 | |||
|
|
| Secured Debt |
| 12/31/2020 |
| 12.00% | 12/31/2025 | 11,452 | 11,373 | 11,373 | |||
|
|
| Preferred Member Units |
| 12/31/2020 | 6,987 |
|
| 6,987 | 7,700 | ||||
|
|
|
|
|
|
|
|
| 28,783 | 29,496 | ||||
NexRev LLC |
| Provider of Energy Efficiency Products Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 2/28/2018 |
| 11.00% | 2/28/2025 | 12,265 | 12,094 | 8,262 | |||
|
|
| Preferred Member Units | (8) | 2/28/2018 | 103,144,186 |
|
| 8,213 | 940 | ||||
|
|
|
|
|
|
|
|
| 20,307 | 9,202 | ||||
NRP Jones, LLC |
| Manufacturer of Hoses, Fittings and Assemblies |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/21/2017 |
| 12.00% | 3/20/2023 | 2,080 | 2,080 | 2,080 | |||
|
|
| Member Units | (8) | 12/22/2011 | 65,962 |
|
| 3,717 | 5,470 | ||||
|
|
|
|
|
|
|
|
| 5,797 | 7,550 | ||||
NuStep, LLC |
| Designer, Manufacturer and Distributor of Fitness Equipment |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/31/2017 |
| 7.63% (L+6.50%, Floor 1.00%) | 1/31/2025 | 3,200 | 3,200 | 3,200 | |||
|
|
| Secured Debt |
| 1/31/2017 |
| 12.00% | 1/31/2025 | 18,440 | 18,408 | 18,440 | |||
|
|
| Preferred Member Units |
| 1/31/2017 | 406 |
|
| 10,200 | 11,560 | ||||
|
|
|
|
|
|
|
|
| 31,808 | 33,200 | ||||
OMi Topco, LLC |
| Manufacturer of Overhead Cranes |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/31/2021 |
| 12.00% | 8/31/2026 | 16,750 | 16,610 | 16,750 | |||
|
|
| Preferred Member Units | (8) | 4/1/2008 | 900 |
|
| 1,080 | 20,300 | ||||
|
|
|
|
|
|
|
|
| 17,690 | 37,050 | ||||
Orttech Holdings, LLC |
| Distributor of Industrial Clutches, Brakes and Other Components |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/30/2021 |
| 12.15% (L+11.00%, Floor 1.00%) | 7/31/2026 | 23,975 | 23,779 | 23,779 | |||
|
|
| Preferred Stock | (8) (30) | 7/30/2021 | 10,000 |
|
| 10,000 | 10,000 | ||||
|
|
|
|
|
|
|
|
| 33,779 | 33,779 | ||||
Pearl Meyer Topco LLC |
| Provider of Executive Compensation Consulting Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 4/27/2020 |
| 12.00% | 4/27/2025 | 28,681 | 28,506 | 28,681 | |||
|
|
| Member Units | (8) | 4/27/2020 | 13,800 |
|
| 13,000 | 39,750 | ||||
|
|
|
|
|
|
|
|
| 41,506 | 68,431 | ||||
PPL RVs, Inc. |
| Recreational Vehicle Dealer |
|
|
|
|
|
|
|
| ||||
9
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) | 11/15/2016 |
| 7.97% (L+7.00%, Floor 0.50%) | 11/15/2027 | 19,655 | 19,394 | 19,645 | |||
|
|
| Common Stock | (8) | 6/10/2010 | 2,000 |
|
| 2,150 | 18,490 | ||||
|
|
|
|
|
|
|
|
| 21,544 | 38,135 | ||||
Principle Environmental, LLC |
| Noise Abatement Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 2/1/2011 |
| 13.00% | 11/15/2026 | 473 | 471 | 471 | |||
|
|
| Secured Debt |
| 7/1/2011 |
| 13.00% | 11/15/2026 | 5,924 | 5,820 | 5,820 | |||
|
|
| Preferred Member Units | (8) | 2/1/2011 | 21,806 |
|
| 5,709 | 11,530 | ||||
|
|
| Common Stock |
| 1/27/2021 | 1,037 |
|
| 1,200 | 740 | ||||
|
|
|
|
|
|
|
|
| 13,200 | 18,561 | ||||
Quality Lease Service, LLC |
| Provider of Rigsite Accommodation Unit Rentals and Related Services |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units |
| 6/8/2015 | 1,000 |
|
| 8,063 | 1,075 | ||||
|
|
|
|
|
|
|
|
| ||||||
River Aggregates, LLC |
| Processor of Construction Aggregates |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) (30) | 12/20/2013 | 1,500 |
|
| 369 | 3,380 | ||||
|
|
|
|
|
|
|
|
| ||||||
Robbins Bros. Jewelry, Inc. |
| Bridal Jewelry Retailer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/15/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 12/15/2026 | 36,135 | 35,774 | 35,774 | |||
|
|
| Preferred Equity |
| 12/15/2021 | 11,070 |
|
| 11,070 | 15,740 | ||||
|
|
|
|
|
|
|
|
| 46,844 | 51,514 | ||||
Tedder Industries, LLC |
| Manufacturer of Firearm Holsters and Accessories |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/31/2018 |
| 12.00% | 8/31/2022 | 1,840 | 1,840 | 1,840 | |||
|
|
| Secured Debt |
| 8/31/2018 |
| 12.00% | 8/31/2023 | 15,200 | 15,185 | 15,185 | |||
|
|
| Preferred Member Units |
| 8/31/2018 | 518 |
|
| 8,801 | 7,314 | ||||
|
|
|
|
|
|
|
|
| 25,826 | 24,339 | ||||
Televerde, LLC |
| Provider of Telemarketing and Data Services |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units |
| 1/6/2011 | 460 |
|
| 1,290 | 5,145 | ||||
|
|
| Preferred Stock |
| 1/26/2022 | 248 |
|
| 718 | 1,794 | ||||
|
|
|
|
|
|
|
|
| 2,008 | 6,939 | ||||
Trantech Radiator Topco, LLC |
| Transformer Cooling Products and Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 5/31/2019 |
| 12.00% | 5/31/2024 | 8,320 | 8,277 | 8,314 | |||
|
|
| Common Stock | (8) | 5/31/2019 | 615 |
|
| 4,655 | 8,090 | ||||
|
|
|
|
|
|
|
|
| 12,932 | 16,404 | ||||
Vision Interests, Inc. |
| Manufacturer / Installer of Commercial Signage |
|
|
|
|
|
|
|
| ||||
|
|
| Series A Preferred Stock | (8) | 12/23/2011 | 3,000,000 |
|
| 3,000 | 3,000 | ||||
|
|
|
|
|
|
|
|
| ||||||
VVS Holdco LLC |
| Omnichannel Retailer of Animal Health Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (30) | 12/1/2021 |
| 11.50% | 12/1/2026 | 30,400 | 30,102 | 30,102 | |||
|
|
| Preferred Equity | (8) (30) | 12/1/2021 | 11,840 |
|
| 11,840 | 12,080 | ||||
|
|
|
|
|
|
|
|
| 41,942 | 42,182 | ||||
Ziegler’s NYPD, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 6/1/2015 |
| 12.00% | 10/1/2022 | 625 | 625 | 625 | |||
|
|
| Secured Debt |
| 10/1/2008 |
| 6.50% | 10/1/2022 | 1,000 | 1,000 | 1,000 | |||
|
|
| Secured Debt |
| 10/1/2008 |
| 14.00% | 10/1/2022 | 2,750 | 2,750 | 2,750 | |||
|
|
| Preferred Member Units |
| 6/30/2015 | 10,072 |
|
| 2,834 | 1,680 | ||||
|
|
| Warrants | (27) | 7/1/2015 | 587 |
| 10/1/2025 | 600 | - | ||||
|
|
|
|
|
|
|
|
| 7,809 | 6,055 | ||||
Subtotal Control Investments (82.5% of net assets at fair value) |
|
|
|
|
|
|
|
| $ | 1,145,692 | $ | 1,538,158 | ||
10
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Affiliate Investments (6) | ||||||||||||||
AAC Holdings, Inc. | (11) | Substance Abuse Treatment Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (19) | 12/11/2020 |
| 18.00% PIK | 6/25/2025 | $ | 10,621 | $ | 10,457 | $ | 10,090 |
|
|
| Common Stock |
| 12/11/2020 | 593,928 |
|
| 3,148 | 800 | ||||
|
|
| Warrants | (27) | 12/11/2020 | 554,353 |
| 12/11/2025 | - | 740 | ||||
|
|
|
|
|
|
|
|
| 13,605 | 11,630 | ||||
AFG Capital Group, LLC |
| Provider of Rent-to-Own Financing Solutions and Services |
|
|
|
|
|
|
|
| ||||
|
|
| Preferred Member Units | (8) | 11/7/2014 | 186 |
|
| 1,200 | 8,780 | ||||
|
|
|
|
|
|
|
|
| ||||||
ATX Networks Corp. | (11) | Provider of Radio Frequency Management Equipment |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 9/1/2021 |
| 8.92% (L+7.50%, Floor 1.00%) | 9/1/2026 | 7,071 | 6,496 | 6,187 | |||
|
|
| Unsecured Debt | (19) | 9/1/2021 |
| 10.00% PIK | 9/1/2028 | 3,225 | 2,121 | 2,242 | |||
|
|
| Common Stock |
| 9/1/2021 | 583 |
|
| - | - | ||||
|
|
|
|
|
|
|
|
| 8,617 | 8,429 | ||||
BBB Tank Services, LLC |
| Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market |
|
|
|
|
|
|
|
| ||||
|
|
| Unsecured Debt | (9) (17) | 4/8/2016 |
| 12.06% (L+11.00%, Floor 1.00%) | 4/8/2021 | 4,800 | 4,800 | 2,298 | |||
|
|
| Preferred Stock (non-voting) | (19) | 12/17/2018 |
| 15.00% PIK |
| 162 | - | ||||
|
|
| Member Units |
| 4/8/2016 | 800,000 |
|
| 800 | - | ||||
|
|
|
|
|
|
|
|
| 5,762 | 2,298 | ||||
Boccella Precast Products LLC |
| Manufacturer of Precast Hollow Core Concrete |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 9/23/2021 |
| 10.00% | 2/28/2027 | 320 | 320 | 320 | |||
|
|
| Member Units | (8) | 6/30/2017 | 2,160,000 |
|
| 2,256 | 4,510 | ||||
|
|
|
|
|
|
|
|
| 2,576 | 4,830 | ||||
Buca C, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/30/2015 |
| 10.37% (L+9.25%, Floor 1.00%) | 6/30/2023 | 18,270 | 18,270 | 13,149 | |||
|
|
| Preferred Member Units | (19) | 6/30/2015 | 6 | 6.00% PIK |
| 4,770 | - | ||||
|
|
|
|
|
|
|
|
| 23,040 | 13,149 | ||||
Career Team Holdings, LLC |
| Provider of Workforce Training and Career Development Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/17/2021 |
| 12.50% | 12/17/2026 | 20,250 | 20,070 | 20,070 | |||
|
|
| Common Stock |
| 12/17/2021 | 450,000 |
|
| 4,500 | 4,500 | ||||
|
|
|
|
|
|
|
|
| 24,570 | 24,570 | ||||
Chandler Signs Holdings, LLC | (10) | Sign Manufacturer |
|
|
|
|
|
|
|
| ||||
|
|
| Class A Units |
| 1/4/2016 | 1,500,000 |
|
| 1,500 | 620 | ||||
|
|
|
|
|
|
|
|
| ||||||
Classic HG Holdings, LLC |
| Provider of Engineered Packaging Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/12/2020 |
| 7.00% (L+6.00%, Floor 1.00%) | 3/12/2025 | 5,560 | 5,560 | 5,560 | |||
|
|
| Secured Debt |
| 3/12/2020 |
| 8.00% | 3/12/2025 | 19,274 | 19,160 | 19,274 | |||
|
|
| Preferred Member Units | (8) | 3/12/2020 | 154 |
|
| 5,760 | 23,790 | ||||
|
|
|
|
|
|
|
|
| 30,480 | 48,624 | ||||
Congruent Credit Opportunities Funds | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
11
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| LP Interests (Congruent Credit Opportunities Fund | (8) (31) | 2/4/2015 | 17.4% |
|
| 8,659 | 8,299 | ||||
|
|
|
|
|
|
|
|
| ||||||
DMA Industries, LLC |
| Distributor of aftermarket ride control products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 11/19/2021 |
| 12.00% | 11/19/2026 | 21,200 | 21,014 | 21,200 | |||
|
|
| Preferred Equity |
| 11/19/2021 | 5,944 |
|
| 5,944 | 6,920 | ||||
|
|
|
|
|
|
|
|
| 26,958 | 28,120 | ||||
Dos Rios Partners | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (Dos Rios Partners, LP) | (31) | 4/25/2013 | 20.2% |
|
| 6,605 | 8,610 | ||||
|
|
| LP Interests (Dos Rios Partners - A, LP) | (31) | 4/25/2013 | 6.4% |
|
| 2,097 | 2,734 | ||||
|
|
|
|
|
|
|
|
| 8,702 | 11,344 | ||||
Dos Rios Stone Products LLC | (10) | Limestone and Sandstone Dimension Cut Stone Mining Quarries |
|
|
|
|
|
|
|
| ||||
|
|
| Class A Preferred Units | (30) | 6/27/2016 | 2,000,000 |
|
| 2,000 | 350 | ||||
|
|
|
|
|
|
|
|
| ||||||
EIG Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (EIG Global Private Debt Fund-A, L.P.) | (8) (31) | 11/6/2015 | 11.1% |
|
| 436 | 389 | ||||
|
|
|
|
|
|
|
|
| ||||||
Freeport Financial Funds | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (Freeport Financial SBIC Fund LP) | (8) (31) | 3/23/2015 | 9.3% |
|
| 4,064 | 4,116 | ||||
|
|
| LP Interests (Freeport First Lien Loan Fund III LP) | (8) (31) | 7/31/2015 | 6.0% |
|
| 7,250 | 6,795 | ||||
|
|
|
|
|
|
|
|
| 11,314 | 10,911 | ||||
GFG Group, LLC. |
| Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/31/2021 |
| 9.00% | 3/31/2026 | 12,545 | 12,448 | 12,545 | |||
|
|
| Preferred Member Units | (8) | 3/31/2021 | 226 |
|
| 4,900 | 6,990 | ||||
|
|
|
|
|
|
|
|
| 17,348 | 19,535 | ||||
Harris Preston Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (HPEP 3, L.P.) | (8) (31) | 8/9/2017 | 8.2% |
|
| 2,833 | 4,331 | ||||
|
|
| LP Interests (423 COR, LP) | (31) | 6/2/2022 | 22.9% |
|
| 1,400 | 1,400 | ||||
|
|
|
|
|
|
|
|
| 4,233 | 5,731 | ||||
Hawk Ridge Systems, LLC |
| Value-Added Reseller of Engineering Design and Manufacturing Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/2/2016 |
| 7.13% (L+6.00%, Floor 1.00%) | 1/15/2026 | 2,585 | 2,585 | 2,585 | |||
|
|
| Secured Debt |
| 12/2/2016 |
| 8.00% | 1/15/2026 | 34,800 | 34,687 | 34,800 | |||
|
|
| Preferred Member Units | (8) | 12/2/2016 | 226 |
|
| 2,850 | 20,030 | ||||
|
|
| Preferred Member Units | (30) | 12/2/2016 | 226 |
|
| 150 | 1,050 | ||||
12
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
| 40,272 | 58,465 | ||||
Houston Plating and Coatings, LLC |
| Provider of Plating and Industrial Coating Services |
|
|
|
|
|
|
|
| ||||
|
|
| Unsecured Convertible Debt |
| 5/1/2017 |
| 8.00% | 10/2/2024 | 3,000 | 3,000 | 2,750 | |||
|
|
| Member Units | (8) | 1/8/2003 | 322,297 |
|
| 2,352 | 2,520 | ||||
|
|
|
|
|
|
|
|
| 5,352 | 5,270 | ||||
I-45 SLF LLC | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units (Fully diluted 20.0%; 21.75% profits | (8) | 10/20/2015 |
|
|
| 19,000 | 12,949 | ||||
|
|
|
|
|
|
|
|
| ||||||
Iron-Main Investments, LLC |
| Consumer Reporting Agency Providing Employment Background Checks and Drug Testing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/2/2021 |
| 12.50% | 11/15/2026 | 4,600 | 4,561 | 4,561 | |||
|
|
| Secured Debt |
| 9/1/2021 |
| 12.50% | 11/15/2026 | 3,200 | 3,173 | 3,173 | |||
|
|
| Secured Debt |
| 11/15/2021 |
| 12.50% | 11/15/2026 | 28,944 | 28,769 | 28,769 | |||
|
|
| Common Stock |
| 8/3/2021 | 179,778 |
|
| 1,798 | 1,798 | ||||
|
|
|
|
|
|
|
|
| 38,301 | 38,301 | ||||
L.F. Manufacturing Holdings, LLC | (10) | Manufacturer of Fiberglass Products |
|
|
|
|
|
|
|
| ||||
|
|
| Preferred Member Units (non-voting) | (8) (19) | 1/1/2019 |
| 14.00% PIK |
| 115 | 115 | ||||
|
|
| Member Units | (8) | 12/23/2013 | 2,179,001 |
|
| 2,019 | 3,150 | ||||
|
|
|
|
|
|
|
|
| 2,134 | 3,265 | ||||
OnAsset Intelligence, Inc. |
| Provider of Transportation Monitoring / Tracking Products and Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (14) (19) | 5/20/2014 |
| 12.00% PIK | 12/31/2022 | 964 | 964 | 808 | |||
|
|
| Secured Debt | (14) (19) | 3/21/2014 |
| 12.00% PIK | 12/31/2022 | 983 | 983 | 825 | |||
|
|
| Secured Debt | (14) (19) | 5/10/2013 |
| 12.00% PIK | 12/31/2022 | 2,116 | 2,116 | 1,776 | |||
|
|
| Secured Debt | (14) (19) | 4/18/2011 |
| 12.00% PIK | 12/31/2022 | 4,415 | 4,415 | 3,704 | |||
|
|
| Unsecured Debt | (14) (19) | 6/5/2017 |
| 10.00% PIK | 12/31/2022 | 197 | 197 | 197 | |||
|
|
| Preferred Stock | (14) (19) | 4/18/2011 | 912 | 7.00% PIK |
| 1,981 | - | ||||
|
|
| Common Stock |
| 4/15/2021 | 635 |
|
| 830 | - | ||||
|
|
| Warrants | (27) | 4/18/2011 | 4,699 |
| 5/10/2023 | 1,089 | - | ||||
|
|
|
|
|
|
|
|
| 12,575 | 7,310 | ||||
Oneliance, LLC |
| Construction Cleaning Company |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/6/2021 |
| 12.06% (L+11.00%, Floor 1.00%) | 8/6/2026 | 5,600 | 5,553 | 5,553 | |||
|
|
| Preferred Stock |
| 8/6/2021 | 1,056 |
|
| 1,056 | 1,056 | ||||
|
|
|
|
|
|
|
|
| 6,609 | 6,609 | ||||
Rocaceia, LLC (Quality Lease and Rental Holdings, LLC) |
| Provider of Rigsite Accommodation Unit Rentals and Related Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (14) (17) | 6/30/2015 |
| 12.00% | 1/8/2018 | 30,369 | 29,865 | - | |||
|
|
| Preferred Member Units |
| 1/8/2013 | 250 |
|
| 2,500 | - | ||||
|
|
|
|
|
|
|
|
| 32,365 | - | ||||
SI East, LLC |
| Rigid Industrial Packaging Manufacturing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/31/2018 |
| 10.25% | 8/31/2023 | 64,361 | 64,285 | 64,361 | |||
|
|
| Preferred Member Units | (8) | 8/31/2018 | 157 |
|
| 1,218 | 12,830 | ||||
|
|
|
|
|
|
|
|
| 65,503 | 77,191 | ||||
Slick Innovations, LLC |
| Text Message Marketing Platform |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 9/13/2018 |
| 12.00% | 9/13/2023 | 4,640 | 4,596 | 4,640 | |||
|
|
| Common Stock |
| 9/13/2018 | 70,000 |
|
| 700 | 1,640 | ||||
|
|
| Warrants | (27) | 9/13/2018 | 18,084 |
| 9/13/2028 | 181 | 440 | ||||
|
|
|
|
|
|
|
|
| 5,477 | 6,720 | ||||
Sonic Systems International, LLC | (10) | Nuclear Power Staffing Services |
|
|
|
|
|
|
|
| ||||
13
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) | 8/20/2021 |
| 8.50% (L+7.50%, Floor 1.00%) | 8/20/2026 | 15,769 | 15,495 | 15,260 | |||
|
|
| Common Stock |
| 8/20/2021 | 9,968 |
|
| 1,356 | 1,420 | ||||
|
|
|
|
|
|
|
|
| 16,851 | 16,680 | ||||
Superior Rigging Erecting Co. |
| Provider of Steel Erecting, Crane Rental Rigging Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/31/2020 |
| 12.00% | 8/31/2025 | 21,500 | 21,355 | 21,355 | |||
|
|
| Preferred Member Units |
| 8/31/2020 | 1,571 |
|
| 4,500 | 4,500 | ||||
|
|
|
|
|
|
|
|
| 25,855 | 25,855 | ||||
The Affiliati Network, LLC |
| Performance Marketing Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 8/9/2021 |
| 11.83% | 8/9/2026 | 11,761 | 11,643 | 11,643 | |||
|
|
| Preferred Stock | (8) | 8/9/2021 | 1,280,000 |
|
| 6,400 | 6,400 | ||||
|
|
|
|
|
|
|
|
| 18,043 | 18,043 | ||||
UnionRock Energy Fund II, LP | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests | (8) (31) | 6/15/2020 | 11.1% |
|
| 2,567 | 3,865 | ||||
|
|
|
|
|
|
|
|
| ||||||
UniTek Global Services, Inc. | (11) | Provider of Outsourced Infrastructure Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (19) | 10/15/2018 |
| 9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) | 8/20/2024 | 401 | 400 | 366 | |||
|
|
| Secured Debt | (9) (19) | 8/27/2018 |
| 9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) | 8/20/2024 | 2,006 | 1,996 | 1,828 | |||
|
|
| Secured Convertible Debt | (19) | 1/1/2021 |
| 15.00% PIK | 2/20/2025 | 1,339 | 1,339 | 2,588 | |||
|
|
| Preferred Stock | (8) (19) | 8/29/2019 | 1,133,102 | 20.00% PIK |
| 1,938 | 2,833 | ||||
|
|
| Preferred Stock | (19) | 8/21/2018 | 1,521,122 | 20.00% PIK |
| 2,188 | 1,891 | ||||
|
|
| Preferred Stock | (19) | 6/30/2017 | 2,281,682 | 19.00% PIK |
| 3,667 | - | ||||
|
|
| Preferred Stock | (19) | 1/15/2015 | 4,336,866 | 13.50% PIK |
| 7,924 | - | ||||
|
|
| Common Stock |
| 4/1/2020 | 945,507 |
|
| - | - | ||||
|
|
|
|
|
|
|
|
| 19,452 | 9,506 | ||||
Universal Wellhead Services Holdings, LLC | (10) | Provider of Wellhead Equipment, Designs, and Personnel to the Oil Gas Industry |
|
|
|
|
|
|
|
| ||||
|
|
| Preferred Member Units | (19) (30) | 12/7/2016 | 716,949 | 14.00% PIK |
| 1,032 | - | ||||
|
|
| Member Units | (30) | 12/7/2016 | 4,000,000 |
|
| 4,000 | - | ||||
|
|
|
|
|
|
|
|
| 5,032 | - | ||||
Volusion, LLC |
| Provider of Online Software-as-a-Service eCommerce Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (17) | 1/26/2015 |
| 11.50% | 1/26/2020 | 17,084 | 17,084 | 17,084 | |||
|
|
| Unsecured Convertible Debt |
| 5/16/2018 |
| 8.00% | 11/16/2023 | 409 | 409 | 409 | |||
|
|
| Preferred Member Units |
| 1/26/2015 | 4,876,670 |
|
| 14,000 | 2,930 | ||||
|
|
| Warrants | (27) | 1/26/2015 | 1,831,355 |
| 1/26/2025 | 2,576 | - | ||||
|
|
|
|
|
|
|
|
| 34,069 | 20,423 | ||||
Subtotal Affiliate Investments (27.8% of net assets at fair value) |
|
|
|
|
|
|
|
| $ | 540,457 | $ | 518,061 | ||
14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-Control/Non-Affiliate Investments (7) | ||||||||||||||
Acousti Engineering Company of Florida | (10) | Interior Subcontractor Providing Acoustical Walls and Ceilings |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/2/2020 |
| 10.00% (L+8.50%, Floor 1.50%) | 11/2/2025 | $ | 11,840 | $ | 11,750 | $ | 11,267 |
|
|
| Secured Debt | (9) | 5/26/2021 |
| 14.00% (L+12.50%, Floor 1.50%) | 11/2/2025 | 828 | 821 | 828 | |||
|
|
|
|
|
|
|
|
| 12,571 | 12,095 | ||||
Acumera, Inc. | (10) | Managed Security Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/28/2022 |
| 10.56% (L+9.50%, Floor 1.00%) | 10/26/2027 | 17,763 | 17,294 | 17,294 | |||
|
|
|
|
|
|
|
|
| ||||||
Adams Publishing Group, LLC | (10) | Local Newspaper Operator |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/11/2022 |
| 10.75% | 3/11/2027 | 788 | 788 | 788 | |||
|
|
| Secured Debt | (9) | 3/11/2022 |
| 8.72% (L+7.00%, Floor 1.00%) | 3/11/2027 | 24,945 | 24,883 | 24,883 | |||
|
|
|
|
|
|
|
|
| 25,671 | 25,671 | ||||
ADS Tactical, Inc. | (11) | Value-Added Logistics and Supply Chain Provider to the Defense Industry |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/29/2021 |
| 7.20% (L+5.75%, Floor 1.00%) | 3/19/2026 | 21,861 | 21,512 | 20,213 | |||
|
|
|
|
|
|
|
|
| ||||||
American Health Staffing Group, Inc. | (10) | Healthcare Temporary Staffing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/19/2021 |
| 8.01% (L+6.00%, Floor 1.00%) | 11/19/2026 | 6,650 | 6,579 | 6,324 | |||
|
|
|
|
|
|
|
|
| ||||||
American Nuts, LLC | (10) | Roaster, Mixer and Packager of Bulk Nuts and Seeds |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 3/11/2022 |
| 7.75% (SOFR+6.75%, Floor 1.00%) | 4/10/2026 | 15,682 | 15,428 | 15,428 | |||
|
|
| Secured Debt | (9) (39) | 3/11/2022 |
| 9.75% (SOFR+8.75%, Floor 1.00%) | 4/10/2026 | 15,707 | 15,451 | 15,451 | |||
|
|
|
|
|
|
|
|
| 30,879 | 30,879 | ||||
American Teleconferencing Services, Ltd. | (11) | Provider of Audio Conferencing and Video Collaboration Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (14) | 9/17/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 6/30/2022 | 2,980 | 2,980 | 171 | |||
|
|
| Secured Debt | (9) (14) | 5/19/2016 |
| 7.50% (L+6.50%, Floor 1.00%) | 6/28/2023 | 14,370 | 13,706 | 826 | |||
|
|
|
|
|
|
|
|
| 16,686 | 997 | ||||
ArborWorks, LLC | (10) | Vegetation Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/9/2021 |
| 9.00% (L+7.00%, Floor 1.00%) | 11/9/2026 | 2,807 | 2,684 | 2,557 | |||
|
|
| Secured Debt | (9) | 11/9/2021 |
| 8.37% (L+7.00%, Floor 1.00%) | 11/9/2026 | 30,178 | 29,649 | 27,492 | |||
|
|
| Common Equity |
| 11/9/2021 | 234 |
|
| 234 | 14 | ||||
|
|
|
|
|
|
|
|
| 32,567 | 30,063 | ||||
Arrow International, Inc | (10) | Manufacturer and Distributor of Charitable Gaming Supplies |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (23) (39) | 12/21/2020 |
| 8.21% (SOFR+6.63%, Floor 1.00%) | 12/21/2025 | 36,000 | 35,693 | 35,656 | |||
|
|
|
|
|
|
|
|
| ||||||
ATS Operating, LLC | (10) | For-Profit Thrift Retailer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 1/18/2022 |
| 6.50%(SOFR+5.50%, Floor 1.00%) | 1/18/2027 | 6,660 | 6,660 | 6,660 | |||
|
|
| Secured Debt | (9) (39) | 1/18/2022 |
| 8.50%(SOFR+7.50%, Floor 1.00%) | 1/18/2027 | 6,660 | 6,660 | 6,660 | |||
|
|
| Common Stock |
| 1/18/2022 | 720,000 |
|
| 720 | 720 | ||||
15
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
| 14,040 | 14,040 | ||||
AVEX Aviation Holdings, LLC | (10) | Specialty Aircraft Dealer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/15/2021 |
| 8.82% (L+7.00%, Floor 1.00%) | 12/15/2026 | 12,179 | 11,962 | 11,195 | |||
|
|
| Secured Debt | (9) | 12/15/2021 |
| 9.06% (L+7.00%, Floor 1.00%) | 12/15/2026 | 1,440 | 1,375 | 1,324 | |||
|
|
| Common Equity |
| 12/15/2021 | 360 |
|
| 360 | 258 | ||||
|
|
|
|
|
|
|
|
| 13,697 | 12,777 | ||||
Berry Aviation, Inc. | (10) | Charter Airline Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (19) | 7/6/2018 |
| 12.00% (10.50% Cash, 1.50% PIK) | 1/6/2024 | 194 | 194 | 194 | |||
|
|
| Preferred Member Units | (8) (19) (30) | 11/12/2019 | 122,416 | 16.00% PIK |
| 182 | 372 | ||||
|
|
| Preferred Member Units | (8) (19) (30) | 7/6/2018 | 1,548,387 | 8.00% PIK |
| 2,105 | 4,475 | ||||
|
|
|
|
|
|
|
|
| 2,481 | 5,041 | ||||
Bettercloud, Inc. | (10) | SaaS Provider of Workflow Management and Business Application Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (19) (39) | 6/30/2022 |
| 8.53% (1.00% Cash, 7.53% PIK) (SOFR+7.25%, Floor 0.75%) | 6/30/2028 | 26,811 | 26,199 | 26,199 | |||
|
|
|
|
|
|
|
|
| ||||||
Binswanger Enterprises, LLC | (10) | Glass Repair and Installation Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 3/10/2017 |
| 10.12% (SOFR+8.50%, Floor 1.00%) | 6/10/2024 | 11,807 | 11,700 | 11,599 | |||
|
|
| Member Units |
| 3/10/2017 | 1,050,000 |
|
| 1,050 | 560 | ||||
|
|
|
|
|
|
|
|
| 12,750 | 12,159 | ||||
Bluestem Brands, Inc. | (11) | Multi-Channel Retailer of General Merchandise |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/28/2020 |
| 10.00% (L+8.50%, Floor 1.50%) | 8/28/2025 | 5,357 | 5,357 | 5,346 | |||
|
|
| Common Stock | (8) | 10/1/2020 | 723,184 |
|
| 1 | 5,790 | ||||
|
|
|
|
|
|
|
|
| 5,358 | 11,136 | ||||
Brainworks Software, LLC | (10) | Advertising Sales and Newspaper Circulation Software |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (14) (17) | 8/12/2014 |
| 12.50% (Prime+9.25%, Floor 3.25%) | 7/22/2019 | 7,817 | 7,817 | 4,201 | |||
|
|
|
|
|
|
|
|
| ||||||
Brightwood Capital Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (Brightwood Capital Fund V, LP) | (31) | 7/12/2021 | 1.3% |
|
| 2,000 | 2,139 | ||||
|
|
| LP Interests (Brightwood Capital Fund III, LP) | (8) (31) | 7/21/2014 | 1.6% |
|
| 7,062 | 4,454 | ||||
|
|
| LP Interests (Brightwood Capital Fund IV, LP) | (8) (31) | 10/26/2016 | 0.6% |
|
| 4,350 | 4,394 | ||||
|
|
|
|
|
|
|
|
| 13,412 | 10,987 | ||||
Burning Glass Intermediate Holding Company, Inc. | (10) | Provider of Skills-Based Labor Market Analytics |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 6.12% (L+5.00%, Floor 1.00%) | 6/10/2026 | 929 | 898 | 913 | |||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 6.06% (L+5.00%, Floor 1.00%) | 6/10/2028 | 19,983 | 19,680 | 19,626 | |||
|
|
|
|
|
|
|
|
| 20,578 | 20,539 | ||||
Cadence Aerospace LLC | (10) | Aerostructure Manufacturing |
|
|
|
|
|
|
|
| ||||
16
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) (19) (34) | 11/14/2017 |
| 9.49% Cash, 0.24% PIK | 11/14/2023 | 28,502 | 28,399 | 27,923 | |||
|
|
|
|
|
|
|
|
| ||||||
CAI Software LLC |
| Provider of Specialized Enterprise Resource Planning Software |
|
|
|
|
|
|
|
| ||||
|
|
| Preferred Equity | (8) | 12/13/2021 | 1,788,527 |
|
| 1,789 | 1,789 | ||||
|
|
| Preferred Equity |
| 12/13/2021 | 596,176 |
|
| - | - | ||||
|
|
|
|
|
|
|
|
| 1,789 | 1,789 | ||||
Camin Cargo Control, Inc. | (11) | Provider of Mission Critical Inspection, Testing and Fuel Treatment Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 7.86% (L+6.50%, Floor 1.00%) | 6/4/2026 | 15,338 | 15,214 | 15,261 | |||
|
|
|
|
|
|
|
|
| ||||||
CaseWorthy, Inc. | (10) | SaaS Provider of Case Management Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 5/18/2022 |
| 7.46% (SOFR+6.00%, Floor 1.00%) | 5/18/2027 | 6,148 | 6,077 | 6,077 | |||
|
|
|
|
|
|
|
|
| ||||||
Cenveo Corporation | (11) | Provider of Digital Marketing Agency Services |
|
|
|
|
|
|
|
| ||||
|
|
| Common Stock |
| 9/7/2018 | 322,907 |
|
| 6,183 | 7,221 | ||||
|
|
|
|
|
|
|
|
| ||||||
Channel Partners Intermediateco, LLC | (10) | Outsourced Consumer Services Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 2/7/2022 |
| 8.00% (SOFR+6.50%, Floor 1.00%) | 2/7/2027 | 5,183 | 5,069 | 5,069 | |||
|
|
| Secured Debt | (9) (37) | 2/7/2022 |
| 7.74% | 2/7/2027 | 39,253 | 38,518 | 38,518 | |||
|
|
|
|
|
|
|
|
| 43,587 | 43,587 | ||||
Clarius BIGS, LLC | (10) | Prints Advertising Film Financing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (14) (17) (19) | 9/23/2014 |
| 15.00% PIK | 1/5/2015 | 2,734 | 2,734 | 17 | |||
|
|
|
|
|
|
|
|
| ||||||
Computer Data Source, LLC | (10) | Third Party Maintenance Provider to the Data Center Ecosystem |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/6/2021 |
| 8.87% (L+7.50%, Floor 1.00%) | 8/6/2026 | 23,794 | 23,398 | 22,285 | |||
|
|
|
|
|
|
|
|
| ||||||
Construction Supply Investments, LLC | (10) | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units | (8) | 12/29/2016 | 861,618 |
|
| 3,335 | 19,320 | ||||
|
|
|
|
|
|
|
|
| ||||||
Darr Equipment LP | (10) | Heavy Equipment Dealer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/26/2017 |
| 11.50% | 6/22/2023 | 4,681 | 4,681 | 4,337 | |||
|
|
| Warrants | (29) | 4/15/2014 | 915,734 |
| 12/23/2023 | 474 | 510 | ||||
|
|
|
|
|
|
|
|
| 5,155 | 4,847 | ||||
DTE Enterprises, LLC | (10) | Industrial Powertrain Repair and Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 4/13/2018 |
| 9.00% (L+7.50%, Floor 1.50%) | 4/13/2023 | 8,574 | 8,538 | 8,106 | |||
|
|
| Class AA Preferred Member Units (non-voting) | (8) (19) | 4/13/2018 |
| 10.00% PIK |
| 1,104 | 1,104 | ||||
|
|
| Class A Preferred Member Units | (19) | 4/13/2018 | 776,316 | 8.00% PIK |
| 776 | 180 | ||||
|
|
|
|
|
|
|
|
| 10,418 | 9,390 | ||||
Dynamic Communities, LLC | (10) | Developer of Business Events and |
|
|
|
|
|
|
|
| ||||
17
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Online Community Groups | ||||||||||||||
|
|
| Secured Debt | (9) | 7/17/2018 |
| 10.13% (L+8.50%, Floor 1.00%) | 7/17/2023 | 5,611 | 5,581 | 5,048 | |||
|
|
|
|
|
|
|
|
| ||||||
Eastern Wholesale Fence LLC | (10) | Manufacturer and Distributor of Residential and Commercial Fencing Solutions |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/19/2020 |
| 8.58%, (L+7.00%, Floor 1.00%) | 10/30/2025 | 33,302 | 32,810 | 31,614 | |||
|
|
|
|
|
|
|
|
| ||||||
Emerald Technologies Acquisition Co, Inc. | (11) | Design Manufacturing |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 2/10/2022 |
| 7.25% (SOFR+6.25%, Floor 0.75%) | 2/10/2028 | 9,375 | 9,198 | 9,094 | |||
|
|
|
|
|
|
|
|
| ||||||
EnCap Energy Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests (EnCap Energy Capital Fund VIII, L.P.) | (8) (31) | 1/22/2015 | 0.1% |
|
| 3,591 | 2,188 | ||||
|
|
| LP Interests (EnCap Energy Capital Fund VIII Co- | (8) (31) | 1/21/2015 | 0.4% |
|
| 1,984 | 1,037 | ||||
|
|
| LP Interests (EnCap Energy Capital Fund IX, L.P.) | (8) (31) | 1/22/2015 | 0.1% |
|
| 3,807 | 2,230 | ||||
|
|
| LP Interests (EnCap Energy Capital Fund X, L.P.) | (8) (31) | 3/25/2015 | 0.1% |
|
| 8,337 | 9,978 | ||||
|
|
| LP Interests (EnCap Flatrock Midstream Fund II, L.P.) | (31) | 3/30/2015 | 0.8% |
|
| 5,358 | 1,583 | ||||
|
|
| LP Interests (EnCap Flatrock Midstream Fund III, L.P.) | (8) (31) | 3/27/2015 | 0.2% |
|
| 6,042 | 5,212 | ||||
|
|
|
|
|
|
|
|
| 29,119 | 22,228 | ||||
Engineering Research Consulting, LLC | (10) | Provider of Engineering Consulting Services to US Department of Defense |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/23/2022 |
| 9.50% (Prime+5.50%, Floor 0.75%) | 5/23/2027 | 851 | 801 | 801 | |||
|
|
| Secured Debt | (9) | 5/23/2022 |
| 9.50% (Prime+5.50%, Floor 0.75%) | 5/23/2028 | 16,379 | 16,061 | 16,061 | |||
|
|
|
|
|
|
|
|
| 16,862 | 16,862 | ||||
EPIC Y-Grade Services, LP | (11) | NGL Transportation Storage |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/22/2018 |
| 8.08% (L+6.00%, Floor 1.00%) | 6/30/2027 | 6,858 | 6,792 | 6,018 | |||
|
|
|
|
|
|
|
|
| ||||||
Event Holdco, LLC | (10) | Event and Learning Management Software for Healthcare Organizations and Systems |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (30) | 12/22/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 12/22/2026 | 3,692 | 3,659 | 3,520 | |||
|
|
| Secured Debt | (9) (30) | 12/22/2021 |
| 7.75% (L+6.75%, Floor 1.00%) | 12/22/2026 | 44,308 | 43,911 | 42,235 | |||
|
|
|
|
|
|
|
|
| 47,570 | 45,755 | ||||
18
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Flip Electronics LLC | (10) | Distributor of Hard-to-Find and Obsolete Electronic Components |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 1/4/2021 |
| 9.60% (SOFR+7.50%, Floor 1.00%) | 1/2/2026 | 6,185 | 6,069 | 6,069 | |||
|
|
| Secured Debt | (9) (39) | 3/24/2022 |
| 8.50% (SOFR+7.50%, Floor 1.00%) | 1/2/2026 | 245 | 245 | 245 | |||
|
|
|
|
|
|
|
|
| 6,314 | 6,314 | ||||
Fuse, LLC | (11) | Cable Networks Operator |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 6/30/2019 |
| 12.00% | 6/28/2024 | 1,810 | 1,810 | 1,512 | |||
|
|
| Common Stock |
| 6/30/2019 | 10,429 |
|
| 256 | - | ||||
|
|
|
|
|
|
|
|
| 2,066 | 1,512 | ||||
GeoStabilization International (GSI) | (11) | Geohazard Engineering Services Maintenance |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 1/2/2019 |
| 6.61% (L+5.25%) | 12/19/2025 | 20,604 | 20,521 | 20,088 | |||
|
|
|
|
|
|
|
|
| ||||||
GS HVAM Intermediate, LLC | (10) | Specialized Food Distributor |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/18/2019 |
| 6.81% (L+5.75%, Floor 1.00%) | 10/2/2024 | 13,159 | 13,097 | 12,678 | |||
|
|
|
|
|
|
|
|
| ||||||
HDC/HW Intermediate Holdings | (10) | Managed Services and Hosting Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/21/2018 |
| 8.51% (L+7.50%, Floor 1.00%) | 12/21/2023 | 3,437 | 3,414 | 3,056 | |||
|
|
|
|
|
|
|
|
| ||||||
Heartland Dental, LLC | (10) | Dental Support Organization |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 9/9/2020 |
| 8.17% (L+6.50%, Floor 1.00%) | 4/30/2025 | 14,700 | 14,417 | 14,479 | |||
|
|
|
|
|
|
|
|
| ||||||
HOWLCO LLC | (11) (13) (21) | Provider of Accounting and Business Development Software to Real Estate End Markets |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/19/2021 |
| 7.50% (L+6.00%, Floor 1.00%) | 10/23/2026 | 25,418 | 25,418 | 24,609 | |||
|
|
|
|
|
|
|
|
| ||||||
Hybrid Promotions, LLC | (10) | Wholesaler of Licensed, Branded and Private Label Apparel |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 6/30/2021 |
| 9.25% (SOFR+8.25%, Floor 1.00%) | 6/30/2026 | 7,088 | 6,972 | 6,550 | |||
|
|
|
|
|
|
|
|
| ||||||
IG Parent Corporation | (11) | Software Engineering |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/30/2021 |
| 6.96% (L+5.75%, Floor 1.00%) | 7/30/2026 | 188 | 156 | 181 | |||
|
|
| Secured Debt | (9) | 7/30/2021 |
| 6.99% (L+5.75%, Floor 1.00%) | 7/30/2026 | 9,543 | 9,421 | 9,205 | |||
|
|
|
|
|
|
|
|
| 9,577 | 9,386 | ||||
Implus Footcare, LLC | (10) | Provider of Footwear and Related Accessories |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (19) | 6/1/2017 |
| 9.01% (8.76% Cash, 0.25% PIK) (0.25% PIK + L+7.75%, Floor 1.00%) | 4/30/2024 | 18,609 | 18,427 | 17,169 | |||
|
|
|
|
|
|
|
|
| ||||||
Independent Pet Partners Intermediate Holdings, LLC | (10) | Omnichannel Retailer of Specialty Pet Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (19) (35) | 8/20/2020 |
| 9.89% PIK | 12/22/2022 | 6,658 | 6,658 | 6,658 | |||
|
|
| Secured Debt | (19) | 12/10/2020 |
| 6.00% PIK | 11/20/2023 | 18,428 | 17,664 | 17,121 | |||
|
|
| Preferred Stock (non-voting) | (19) | 12/10/2020 |
| 6.00% PIK |
| 3,235 | 2,874 | ||||
|
|
| Preferred Stock (non-voting) |
| 12/10/2020 |
|
|
| - | - | ||||
|
|
| Member Units |
| 11/20/2018 | 1,558,333 |
|
| 1,558 | - | ||||
19
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
| 29,115 | 26,653 | ||||
Industrial Services Acquisition, LLC | (10) | Industrial Cleaning Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/13/2021 |
| 8.38% (L+6.75%, Floor 1.00%) | 8/13/2026 | 463 | 426 | 426 | |||
|
|
| Secured Debt | (9) | 8/13/2021 |
| 7.81% (L+6.75%, Floor 1.00%) | 8/13/2026 | 19,385 | 19,061 | 19,033 | |||
|
|
| Preferred Member Units | (8) (19) (30) | 1/31/2018 | 144 | 10.00% PIK |
| 125 | 159 | ||||
|
|
| Preferred Member Units | (8) (19) (30) | 5/17/2019 | 80 | 20.00% PIK |
| 86 | 98 | ||||
|
|
| Member Units | (30) | 6/17/2016 | 900 |
|
| 900 | 690 | ||||
|
|
|
|
|
|
|
|
| 20,598 | 20,406 | ||||
Infolinks Media Buyco, LLC | (10) | Exclusive Placement Provider to the Advertising Ecosystem |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/1/2021 |
| 6.76% (L+5.75%, Floor 1.00%) | 11/1/2026 | 8,637 | 8,465 | 8,331 | |||
|
|
|
|
|
|
|
|
| ||||||
Interface Security Systems, L.L.C | (10) | Commercial Security Alarm Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/9/2021 |
| 11.75% (L+10.00%, Floor 1.75%) | 8/7/2023 | 938 | 938 | 938 | |||
|
|
| Secured Debt | (9) (14) (19) | 8/7/2019 |
| 9.75% PIK (L+8.00% PIK, Floor 1.75%) | 8/7/2023 | 7,313 | 7,237 | 3,550 | |||
|
|
| Common Stock |
| 12/7/2021 | 2,143 |
|
| - | - | ||||
|
|
|
|
|
|
|
|
| 8,175 | 4,488 | ||||
Intermedia Holdings, Inc. | (11) | Unified Communications as a Service |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/3/2018 |
| 7.36% (L+6.00%, Floor 1.00%) | 7/19/2025 | 20,573 | 20,515 | 19,442 | |||
|
|
|
|
|
|
|
|
| ||||||
Invincible Boat Company, LLC. | (10) | Manufacturer of Sport Fishing Boats |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/28/2019 |
| 8.73% (L+6.50%, Floor 1.50%) | 8/28/2025 | 311 | 306 | 306 | |||
|
|
| Secured Debt | (9) | 8/28/2019 |
| 8.00% (L+6.50%, Floor 1.50%) | 8/28/2025 | 16,889 | 16,765 | 16,244 | |||
|
|
|
|
|
|
|
|
| 17,071 | 16,550 | ||||
INW Manufacturing, LLC | (11) | Manufacturer of Nutrition and Wellness Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/19/2021 |
| 7.38% (L+5.75%, Floor 0.75%) | 3/25/2027 | 7,219 | 7,041 | 6,822 | |||
|
|
|
|
|
|
|
|
| ||||||
Isagenix International, LLC | (11) | Direct Marketer of Health Wellness Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/21/2018 |
| 7.34% (L+5.75%, Floor 1.00%) | 6/14/2025 | 4,951 | 4,932 | 2,966 | |||
|
|
|
|
|
|
|
|
| ||||||
Jackmont Hospitality, Inc. | (10) | Franchisee of Casual Dining Restaurants |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/26/2015 |
| 7.51% (L+6.50%, Floor 1.00%) | 11/4/2024 | 2,090 | 2,090 | 1,993 | |||
|
|
| Preferred Equity | (8) | 11/8/2021 | 2,826,667 |
|
| 110 | 610 | ||||
|
|
|
|
|
|
|
|
| 2,200 | 2,603 | ||||
Joerns Healthcare, LLC | (11) | Manufacturer and Distributor of Health Care Equipment Supplies |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/21/2019 |
| 7.55% (L+6.00%, Floor 1.00%) | 8/21/2024 | 4,034 | 3,997 | 2,626 | |||
|
|
| Secured Debt | (19) | 11/15/2021 |
| 15.00% PIK | 11/8/2022 | 1,768 | 1,768 | 1,768 | |||
|
|
| Common Stock |
| 8/21/2019 | 472,579 |
|
| 4,429 | - | ||||
|
|
|
|
|
|
|
|
| 10,194 | 4,394 | ||||
JTI Electrical Mechanical, LLC | (10) | Electrical, Mechanical and Automation Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/22/2021 |
| 7.01% (L+6.00%, Floor 1.00%) | 12/22/2026 | 37,421 | 36,598 | 36,366 | |||
|
|
| Common Equity |
| 12/22/2021 | 1,684,211 |
|
| 1,684 | 1,760 | ||||
|
|
|
|
|
|
|
|
| 38,282 | 38,126 | ||||
20
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
KMS, LLC | (10) | Wholesaler of Closeout and Value-priced Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/4/2021 |
| 8.31% (L+7.25%, Floor 1.00%) | 10/4/2026 | 7,543 | 7,413 | 6,941 | |||
|
|
| Secured Debt | (9) | 10/4/2021 |
| 9.31% (L+7.25%, Floor 1.00%) | 10/4/2026 | 1,086 | 1,034 | 1,034 | |||
|
|
|
|
|
|
|
|
| 8,447 | 7,975 | ||||
Kore Wireless Group Inc. | (11) (13) | Mission Critical Software Platform |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 12/31/2018 |
| 7.13% (L+5.50%) | 12/20/2024 | 11,356 | 11,298 | 11,271 | |||
|
|
|
|
|
|
|
|
| ||||||
Laredo Energy, LLC | (10) | Oil Gas Exploration Production |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units |
| 5/4/2020 | 1,155,952 |
|
| 11,560 | 11,383 | ||||
|
|
|
|
|
|
|
|
| ||||||
Lightbox Holdings, L.P. | (11) | Provider of Commercial Real Estate Software |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 5/23/2019 |
| 6.63% (L+5.00%) | 5/9/2026 | 14,550 | 14,404 | 14,186 | |||
|
|
|
|
|
|
|
|
| ||||||
LKCM Headwater Investments I, L.P. | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
| ||||
|
|
| LP Interests | (8) (31) | 1/25/2013 | 2.3% |
|
| 1,746 | 3,074 | ||||
|
|
|
|
|
|
|
|
| ||||||
LL Management, Inc. | (10) | Medical Transportation Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 5/2/2019 |
| 8.25% (SOFR+7.25%, Floor 1.00%) | 9/25/2023 | 17,424 | 17,332 | 17,279 | |||
|
|
| Secured Debt | (9) (39) | 5/12/2022 |
| 8.25% (SOFR+7.25%, Floor 1.00%) | 9/25/2023 | 10,855 | 10,711 | 10,711 | |||
|
|
|
|
|
|
|
|
| 28,043 | 27,990 | ||||
LLFlex, LLC | (10) | Provider of Metal-Based Laminates |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/16/2021 |
| 10.00% (L+9.00%, Floor 1.00%) | 8/16/2026 | 4,455 | 4,371 | 4,130 | |||
|
|
|
|
|
|
|
|
| ||||||
Logix Acquisition Company, LLC | (10) | Competitive Local Exchange Carrier |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/8/2018 |
| 6.81% (L+5.75%, Floor 1.00%) | 12/22/2024 | 19,662 | 18,876 | 18,320 | |||
|
|
|
|
|
|
|
|
| ||||||
Looking Glass Investments, LLC | (12) (13) | Specialty Consumer Finance |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units |
| 7/1/2015 | 3 |
|
| 125 | 25 | ||||
|
|
|
|
|
|
|
|
| ||||||
Mac Lean-Fogg Company | (10) | Manufacturer and Supplier for Auto and Power Markets |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 4/22/2019 |
| 6.06% (L+5.25%, Floor 0.625%) | 12/22/2025 | 16,993 | 16,919 | 16,314 | |||
|
|
| Preferred Stock | (19) | 10/1/2019 |
| 13.75% (4.50% Cash, 9.25% PIK) |
| 1,962 | 1,785 | ||||
|
|
|
|
|
|
|
|
| 18,881 | 18,099 | ||||
Mako Steel, LP | (10) | Self-Storage Design Construction |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/15/2021 |
| 8.81% (L+7.25%, Floor 0.75%) | 3/13/2026 | 2,556 | 2,509 | 2,388 | |||
|
|
| Secured Debt | (9) | 3/15/2021 |
| 8.38 % (L+7.25%, Floor 0.75%) | 3/13/2026 | 15,503 | 15,267 | 14,489 | |||
|
|
|
|
|
|
|
|
| 17,776 | 16,877 | ||||
MB2 Dental Solutions, LLC | (11) | Dental Partnership Organization |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 1/28/2021 |
| 7.24% (L+6.00%, Floor 1.00%) | 1/29/2027 | 7,916 | 7,813 | 7,712 | |||
|
|
| Secured Debt | (9) (36) | 1/28/2021 |
| 7.52% | 1/29/2027 | 6,168 | 6,112 | 6,008 | |||
|
|
|
|
|
|
|
|
| 13,925 | 13,720 | ||||
Microbe Formulas, LLC | (10) | Nutritional Supplements Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 4/4/2022 |
| 7.48% (SOFR+6.25%, Floor 1.00%) | 4/3/2028 | 30,319 | 29,683 | 29,683 | |||
|
|
|
|
|
|
|
|
| ||||||
21
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mills Fleet Farm Group, LLC | (10) | Omnichannel Retailer of Work, Farm and Lifestyle Merchandise |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/24/2018 |
| 7.31% (L+6.25%, Floor 1.00%) | 10/24/2024 | 17,300 | 17,125 | 16,759 | |||
|
|
|
|
|
|
|
|
| ||||||
MonitorUS Holding, LLC | (10) (13) (21) | SaaS Provider of Media Intelligence Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/24/2022 |
| 8.51% (L+7.00%, Floor 1.00%) | 5/24/2027 | 17,038 | 16,537 | 16,537 | |||
|
|
|
|
|
|
|
|
| ||||||
NBG Acquisition Inc | (11) | Wholesaler of Home Décor Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 4/28/2017 |
| 7.00% (L+5.50%, Floor 1.00%) | 4/26/2024 | 3,904 | 3,884 | 2,194 | |||
|
|
|
|
|
|
|
|
| ||||||
NinjaTrader, LLC | (10) | Operator of Futures Trading Platform |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/18/2019 |
| 7.25% (L+6.25%, Floor 1.00%) | 12/18/2024 | 31,425 | 30,934 | 30,743 | |||
|
|
|
|
|
|
|
|
| ||||||
NNE Partners, LLC | (10) | Oil Gas Exploration Production |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 3/2/2017 |
| 10.31% (L+9.25%) | 12/31/2023 | 24,781 | 24,727 | 23,486 | |||
|
|
|
|
|
|
|
|
| ||||||
Northstar Group Services, Inc | (11) | Commercial Industrial Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/1/2021 |
| 6.86% (L+5.50%, Floor 1.00%) | 11/12/2026 | 9,806 | 9,764 | 9,451 | |||
|
|
|
|
|
|
|
|
| ||||||
NTM Acquisition Corp. | (11) | Provider of B2B Travel Information Content |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (19) | 7/12/2016 |
| 8.26% (7.26% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%) | 6/7/2024 | 4,478 | 4,478 | 4,322 | |||
|
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|
|
|
|
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|
| ||||||
NWN Corporation | (10) | Value Added Reseller and Provider of Managed Services to a Diverse Set of Industries |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/7/2021 |
| 7.87% (L+6.50%, Floor 1.00%) | 5/7/2026 | 40,719 | 39,958 | 37,228 | |||
|
|
|
|
|
|
|
|
| ||||||
Ospemifene Royalty Sub LLC | (10) | Estrogen-Deficiency Drug Manufacturer and Distributor |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (14) | 7/8/2013 |
| 11.50% | 11/15/2026 | 4,526 | 4,526 | 76 | |||
|
|
|
|
|
|
|
|
| ||||||
OVG Business Services, LLC | (10) | Venue Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/29/2021 |
| 7.25% (L+6.25%, Floor 1.00%) | 11/19/2028 | 13,965 | 13,837 | 13,267 | |||
|
|
|
|
|
|
|
|
| ||||||
Paragon Healthcare, Inc. | (10) | Infusion Therapy Treatment Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 1/19/2022 |
| 6.75% (SOFR+5.75%, Floor 1.00%) | 1/19/2027 | 18,881 | 18,165 | 18,165 | |||
|
|
|
|
|
|
|
|
| ||||||
Project Eagle Holdings, LLC | (10) | Provider of Secure Business Collaboration Software |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/6/2020 |
| 7.76% (L+6.75%, Floor 1.00%) | 7/6/2026 | 29,588 | 29,068 | 28,143 | |||
|
|
|
|
|
|
|
|
| ||||||
RA Outdoors LLC | (10) | Software Solutions Provider for Outdoor Activity Management |
|
|
|
|
|
|
|
| ||||
22
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) (39) | 4/8/2021 |
| 8.10% (SOFR+6.75%, Floor 1.00%) | 4/8/2026 | 13,369 | 13,208 | 11,882 | |||
|
|
|
|
|
|
|
|
| ||||||
Research Now Group, Inc. and Survey Sampling International, LLC | (11) | Provider of Outsourced Online Surveying |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/29/2017 |
| 6.50% (L+5.50%, Floor 1.00%) | 12/20/2024 | 20,071 | 19,793 | 18,606 | |||
|
|
|
|
|
|
|
|
| ||||||
RM Bidder, LLC | (10) | Scripted and Unscripted TV and Digital Programming Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Member Units |
| 11/12/2015 | 2,779 |
|
| 46 | 23 | ||||
|
|
| Warrants | (26) | 11/12/2015 | 187,161 |
| 10/20/2025 | 425 | - | ||||
|
|
|
|
|
|
|
|
| 471 | 23 | ||||
Roof Opco, LLC | (10) | Residential Re-Roofing/Repair |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/27/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 8/27/2026 | 2,800 | 2,740 | 2,559 | |||
|
|
| Secured Debt | (9) | 8/27/2021 |
| 7.01% (L+6.00%, Floor 1.00%) | 8/27/2026 | 1,929 | 1,885 | 1,772 | |||
|
|
|
|
|
|
|
|
| 4,625 | 4,331 | ||||
RTIC Subsidiary Holdings, LLC | (10) | Direct-To-Consumer eCommerce Provider of Outdoor Products |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 9/1/2020 |
| 9.00% (L+7.75%, Floor 1.25%) | 9/1/2025 | 20,486 | 20,321 | 19,711 | |||
|
|
|
|
|
|
|
|
| ||||||
Rug Doctor, LLC. | (10) | Carpet Cleaning Products and Machinery |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/16/2021 |
| 7.31% (L+6.25%, Floor 1.00%) | 11/16/2024 | 14,190 | 13,994 | 12,255 | |||
|
|
|
|
|
|
|
|
| ||||||
Salient Partners L.P. | (11) | Provider of Asset Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/31/2018 |
| 7.01% (L+6.00%, Floor 1.00%) | 10/30/2022 | 6,251 | 6,249 | 4,920 | |||
|
|
| Secured Debt | (9) | 9/30/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 10/30/2022 | 1,250 | 1,250 | 2,435 | |||
|
|
|
|
|
|
|
|
| 7,499 | 7,355 | ||||
Savers, Inc. | (11) | For-Profit Thrift Retailer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 5/14/2021 |
| 7.13% (L+5.75%, Floor 0.75%) | 4/26/2028 | 11,343 | 11,247 | 10,729 | |||
|
|
|
|
|
|
|
|
| ||||||
SIB Holdings, LLC | (10) | Provider of Cost Reduction Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 7.58% (L+6.00%, Floor 1.00%) | 10/29/2026 | 8,508 | 8,352 | 8,352 | |||
|
|
| Common Equity |
| 10/29/2021 | 95,238 |
|
| 200 | 200 | ||||
|
|
|
|
|
|
|
|
| 8,552 | 8,552 | ||||
South Coast Terminals Holdings, LLC | (10) | Specialty Toll Chemical Manufacturer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/10/2021 |
| 7.51% (L+6.25%, Floor 1.00%) | 12/13/2026 | 41,463 | 40,644 | 40,644 | |||
|
|
| Common Equity |
| 12/10/2021 | 863,636 |
|
| 864 | 919 | ||||
|
|
|
|
|
|
|
|
| 41,508 | 41,563 | ||||
Staples Canada ULC | (10) (13) (21) | Office Supplies Retailer |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (22) | 9/14/2017 |
| 9.34% (L+7.00%, Floor 1.00%) | 9/12/2024 | 14,928 | 14,872 | 13,911 | |||
|
|
|
|
|
|
|
|
| ||||||
Stellant Systems, Inc. | (11) | Manufacturer of Traveling Wave Tubes and Vacuum Electronic Devices |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/22/2021 |
| 7.14% (L+5.50%, Floor 0.75%) | 10/1/2028 | 7,662 | 7,592 | 7,125 | |||
|
|
|
|
|
|
|
|
| ||||||
23
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Student Resource Center, LLC | (10) | Higher Education Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 6/25/2021 |
| 9.01% (L+8.00%, Floor 1.00%) | 6/25/2026 | 10,588 | 10,406 | 9,090 | |||
|
|
|
|
|
|
|
|
| ||||||
Tacala Investment Corp. | (33) | Quick Service Restaurant Group |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 3/19/2021 |
| 4.86% (L+3.75%, Floor 0.75%) | 2/5/2027 | 1,984 | 1,984 | 1,861 | |||
|
|
|
|
|
|
|
|
| ||||||
Team Public Choices, LLC | (11) | Home-Based Care Employment Service Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/22/2020 |
| 6.33% (L+5.00%, Floor 1.00%) | 12/18/2027 | 15,040 | 14,738 | 14,513 | |||
|
|
|
|
|
|
|
|
| ||||||
Tectonic Financial, LLC |
| Financial Services Organization |
|
|
|
|
|
|
|
| ||||
|
|
| Common Stock | (8) | 5/15/2017 | 200,000 |
|
| 2,000 | 5,630 | ||||
|
|
|
|
|
|
|
|
| ||||||
Tex Tech Tennis, LLC | (10) | Sporting Goods Textiles |
|
|
|
|
|
|
|
| ||||
|
|
| Common Stock | (30) | 7/7/2021 | 1,000,000 |
|
| 1,000 | 1,320 | ||||
|
|
|
|
|
|
|
|
| ||||||
U.S. TelePacific Corp. | (11) | Provider of Communications and Managed Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (19) (39) | 5/17/2017 |
| 9.25% (2.00% Cash, 7.25% PIK) (SOFR+1.00%, Floor 1.00%, 7.25% PIK) | 5/2/2026 | 17,690 | 17,612 | 7,518 | |||
|
|
|
|
|
|
|
|
| ||||||
USA DeBusk LLC | (10) | Provider of Industrial Cleaning Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 10/22/2019 |
| 6.81% (L+5.75%, Floor 1.00%) | 9/8/2026 | 37,002 | 36,318 | 35,439 | |||
|
|
|
|
|
|
|
|
| ||||||
Veregy Consolidated, Inc. | (11) | Energy Service Company |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/9/2020 |
| 7.24% (L+6.00%, Floor 1.00%) | 11/3/2027 | 17,730 | 16,675 | 16,213 | |||
|
|
|
|
|
|
|
|
| ||||||
Vida Capital, Inc | (11) | Alternative Asset Manager |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt |
| 10/10/2019 |
| 7.36% (L+6.00%) | 10/1/2026 | 16,141 | 15,986 | 13,074 | |||
|
|
|
|
|
|
|
|
| ||||||
Vistar Media, Inc. | (10) | Operator of Digital Out-of-Home Advertising Platform |
|
|
|
|
|
|
|
| ||||
|
|
| Preferred Stock |
| 4/3/2019 | 70,207 |
|
| 767 | 2,350 | ||||
|
|
|
|
|
|
|
|
| ||||||
VORTEQ Coil Finishers, LLC | (10) | Specialty Coating of Aluminum and Light-Gauge Steel |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/30/2021 |
| 8.26% (L+7.25%, Floor 1.00%) | 11/30/2026 | 25,637 | 25,183 | 24,989 | |||
|
|
| Common Equity | (8) | 11/30/2021 | 1,038,462 |
|
| 1,038 | 2,240 | ||||
|
|
|
|
|
|
|
|
| 26,221 | 27,229 | ||||
Wahoo Fitness Acquisition L.L.C. | (11) | Fitness Training Equipment Provider |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 8/17/2021 |
| 6.90% (SOFR+5.75%, Floor 1.00%) | 8/12/2028 | 14,813 | 14,419 | 12,072 | |||
|
|
|
|
|
|
|
|
| ||||||
Wall Street Prep, Inc. | (10) | Financial Training Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 7/19/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 7/19/2026 | 4,290 | 4,213 | 3,960 | |||
|
|
| Common Stock |
| 7/19/2021 | 400,000 |
|
| 400 | 400 | ||||
|
|
|
|
|
|
|
|
| 4,613 | 4,360 | ||||
Watterson Brands, LLC | (10) | Facility Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/17/2021 |
| 7.01% (L+6.00%, Floor 1.00%) | 12/17/2026 | 29,030 | 28,547 | 28,547 | |||
|
|
|
|
|
|
|
|
| ||||||
24
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate (39) | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
West Star Aviation Acquisition, LLC | (10) | Aircraft, Aircraft Engine and Engine Parts |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) (39) | 3/1/2022 |
| 6.75% (SOFR+6.0%, Floor 0.75%) | 3/1/2028 | 10,848 | 10,622 | 10,622 | |||
|
|
| Common Stock |
| 3/1/2022 | 1,522,200 |
|
| 1,541 | 1,541 | ||||
|
|
|
|
|
|
|
|
| 12,163 | 12,163 | ||||
Winter Services LLC | (10) | Provider of Snow Removal and Ice Management Services |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/19/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 11/19/2026 | 10,000 | 9,766 | 9,442 | |||
|
|
|
|
|
|
|
|
| ||||||
Xenon Arc, Inc. | (10) | Tech-enabled Distribution Services to Chemicals and Food Ingredients Primary Producers |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 12/17/2021 |
| 6.75% (L+6.00%, Floor 0.75%) | 12/17/2026 | 38,407 | 37,354 | 36,712 | |||
|
|
|
|
|
|
|
|
| ||||||
YS Garments, LLC | (11) | Designer and Provider of Branded Activewear |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 8/22/2018 |
| 6.54% (L+5.50%, Floor 1.00%) | 8/9/2024 | 12,846 | 12,793 | 12,397 | |||
|
|
|
|
|
|
|
|
| ||||||
Zips Car Wash, LLC | (10) | Express Car Wash Operator |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 2/11/2022 |
| 8.26%(L+7.25%, Floor 1.00%) | 3/1/2024 | 17,600 | 17,266 | 17,266 | |||
|
|
| Secured Debt | (9) (38) | 2/11/2022 |
| 8.72% | 3/1/2024 | 4,017 | 3,979 | 3,979 | |||
|
|
|
|
|
|
|
|
| 21,245 | 21,245 | ||||
Subtotal Non-Control/Non-Affiliate Investments (89.1% of net assets at fair value) |
|
|
|
|
|
|
|
| $ | 1,737,243 | $ | 1,661,551 | ||
Total Portfolio Investments, June 30, 2022 (199.3% of net assets at fair value) |
|
|
|
|
|
|
|
| $ | 3,423,392 | $ | 3,717,770 | ||
(1) | All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds. |
(2) | Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted by footnote (8), as described below. |
(3) | See Note C—Fair Value Hierarchy for Investments—Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies. |
(4) | Principal is net of repayments. Cost is net of repayments and accumulated unearned income. |
(5) | Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. |
(6) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. |
(7) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. |
(8) | Income producing through dividends or distributions. |
(9) | Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR, SOFR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets every one, three, or six months at the borrower’s option. As noted in this schedule, 69% of the loans (based on the par amount) contain LIBOR or Term SOFR (SOFR) floors which range between 0.50% and 2.00%, with a weighted-average floor of 1.04%. |
25
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
(10) | Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments. |
(11) | Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments. |
(12) | Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Other Portfolio investments. |
(13) | Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
(14) | Non-accrual and non-income producing investment. |
(15) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” |
(16) | External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds. |
(17) | Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. |
(18) | Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for further discussion. |
(19) | PIK interest income and cumulative dividend income represent income not paid currently in cash. |
(20) | All portfolio company headquarters are based in the United States, unless otherwise noted. |
(21) | Portfolio company headquarters are located outside of the United States. |
(22) | In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $18.4 million Canadian Dollars and receive $14.5 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized appreciation on the forward foreign currency contract was not significant as of June 30, 2022. |
(23) | The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate. |
(24) | Investment date represents the date of initial investment in the security position. |
(25) | Warrants are presented in equivalent shares with a strike price of $10.92 per share. |
(26) | Warrants are presented in equivalent units with a strike price of $14.28 per unit. |
(27) | Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. |
(28) | Warrants are presented in equivalent shares with a strike price of $0.001 per share. |
(29) | Warrants are presented in equivalent units with a strike price of $1.50 per unit. |
(30) | Shares/Units represent ownership in a related Real Estate or HoldCo entity. |
(31) | Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. |
(32) | Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status. |
(33) | Short-term portfolio investments. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of short-term portfolio investments. |
(34) | The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period. |
26
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
June 30, 2022
(dollars in thousands)
(Unaudited)
(35) | As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.50% PIK or Prime+5.50% PIK. Revolving facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility. |
(36) | As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.00% (Floor 1.00%) or Prime+5.00%. Delayed draw term loan facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility. |
(37) | As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.50% (Floor 1.00%). Each new draw on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility. |
(38) | As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+7.25% (Floor 1.00%). Each new draw on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility. |
(39) | SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of June 30, 2022, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.26%. |
27
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Control Investments (5) | ||||||||||||||
Analytical Systems Keco Holdings, LLC |
| Manufacturer of Liquid and Gas Analyzers |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/16/2019 |
| 12.00% (L+10.00%, Floor 2.00%) | 8/16/2024 | $ | 4,945 | $ | 4,736 | $ | 4,736 |
|
|
| Preferred Member Units |
| 8/16/2019 | 3,200 |
|
|
| 3,200 | - | |||
|
|
| Preferred Member Units |
| 5/20/2021 | 2,427 |
|
|
| 2,427 | 4,894 | |||
|
|
| Warrants | (27) | 8/16/2019 | 420 |
| 8/16/2029 |
| 316 | - | |||
|
|
|
|
|
|
|
|
|
| 10,679 | 9,630 | |||
ASC Interests, LLC |
| Recreational and Educational Shooting Facility |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/31/2019 |
| 13.00% | 7/31/2022 | 200 | 200 | 200 | |||
|
|
| Secured Debt |
| 8/1/2013 |
| 13.00% | 7/31/2022 | 1,650 | 1,636 | 1,636 | |||
|
|
| Member Units |
| 8/1/2013 | 1,500 |
|
|
| 1,500 | 720 | |||
|
|
|
|
|
|
|
|
|
| 3,336 | 2,556 | |||
ATS Workholding, LLC | (10) | Manufacturer of Machine Cutting Tools and Accessories |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (14) | 11/16/2017 |
| 5.00% | 8/16/2023 | 4,794 | 4,635 | 3,005 | |||
|
|
| Preferred Member Units |
| 11/16/2017 | 3,725,862 |
|
|
| 3,726 | - | |||
|
|
|
|
|
|
|
|
|
| 8,361 | 3,005 | |||
Barfly Ventures, LLC | (10) | Casual Restaurant Group |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 10/15/2020 |
| 7.00% | 10/31/2024 | 711 | 711 | 711 | |||
|
|
| Member Units |
| 10/26/2020 | 37 |
|
|
| 1,584 | 1,930 | |||
|
|
|
|
|
|
|
|
|
| 2,295 | 2,641 | |||
Bolder Panther Group, LLC |
| Consumer Goods and Fuel Retailer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/31/2020 |
| 10.50% (L+9.00%, Floor 1.50%) | 12/31/2025 | 39,000 | 38,687 | 39,000 | |||
|
|
| Class A Preferred Member Units | (8) | 12/31/2020 |
| 14.00% |
| 10,194 | 10,194 | ||||
|
|
| Class B Preferred Member Units | (8) | 12/31/2020 | 140,000 | 8.00% |
|
| 14,000 | 23,170 | |||
|
|
|
|
|
|
|
|
|
| 62,881 | 72,364 | |||
Brewer Crane Holdings, LLC |
| Provider of Crane Rental and Operating Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 1/9/2018 |
| 11.00% (L+10.00%, Floor 1.00%) | 1/9/2023 | 8,060 | 8,037 | 8,037 | |||
|
|
| Preferred Member Units | (8) | 1/9/2018 | 2,950 |
|
|
| 4,280 | 7,710 | |||
|
|
|
|
|
|
|
|
|
| 12,317 | 15,747 | |||
Bridge Capital Solutions Corporation |
| Financial Services and Cash Flow Solutions Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 7/25/2016 |
| 13.00% | 12/11/2024 | 8,813 | 8,813 | 8,813 | |||
|
|
| Warrants | (27) | 7/25/2016 | 82 |
| 7/25/2026 |
| 2,132 | 4,060 | |||
|
|
| Secured Debt | (30) | 7/25/2016 |
| 13.00% | 12/11/2024 | 1,000 | 1,000 | 1,000 | |||
|
|
| Preferred Member Units | (8) (30) | 7/25/2016 | 17,742 |
|
|
| 1,000 | 1,000 | |||
|
|
|
|
|
|
|
|
|
| 12,945 | 14,873 | |||
Café Brazil, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 6/9/2006 | 1,233 |
|
|
| 1,742 | 2,570 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
California Splendor Holdings LLC |
| Processor of Frozen Fruits |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 3/30/2018 |
| 11.00% (L+10.00%, Floor 1.00%) | 3/30/2023 | 28,000 | 27,915 | 27,915 | |||
|
|
| Preferred Member Units | (8) (19) | 7/31/2019 | 6,725 | 15.00% PIK |
|
| 9,510 | 9,510 | |||
|
|
| Preferred Member Units | (8) | 3/30/2018 | 6,157 |
|
|
| 10,775 | 13,275 | |||
|
|
|
|
|
|
|
|
|
| 48,200 | 50,700 | |||
28
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CBT Nuggets, LLC |
| Produces and Sells IT Training Certification Videos |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 6/1/2006 | 416 |
|
|
| 1,300 | 50,620 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Centre Technologies Holdings, LLC |
| Provider of IT Hardware Services and Software Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 1/4/2019 |
| 12.00% (L+10.00%, Floor 2.00%) | 1/4/2024 | 9,416 | 9,370 | 8,864 | |||
|
|
| Preferred Member Units |
| 1/4/2019 | 12,696 |
|
|
| 5,840 | 5,840 | |||
|
|
|
|
|
|
|
|
|
| 15,210 | 14,704 | |||
Chamberlin Holding LLC |
| Roofing and Waterproofing Specialty Contractor |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 2/26/2018 |
| 9.00% (L+8.00%, Floor 1.00%) | 2/26/2023 | 17,817 | 17,738 | 17,817 | |||
|
|
| Member Units | (8) | 2/26/2018 | 4,347 |
|
|
| 11,440 | 24,140 | |||
|
|
| Member Units | (8) (30) | 11/2/2018 | 1,047,146 |
|
|
| 1,322 | 1,540 | |||
|
|
|
|
|
|
|
|
|
| 30,500 | 43,497 | |||
Charps, LLC |
| Pipeline Maintenance and Construction |
|
|
|
|
|
|
|
|
| |||
|
|
| Unsecured Debt |
| 8/26/2020 |
| 10.00% | 1/31/2024 | 5,694 | 4,599 | 5,694 | |||
|
|
| Preferred Member Units | (8) | 2/3/2017 | 1,829 |
|
|
| 1,963 | 13,990 | |||
|
|
|
|
|
|
|
|
|
| 6,562 | 19,684 | |||
Clad-Rex Steel, LLC |
| Specialty Manufacturer of Vinyl-Clad Metal |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/20/2016 |
| 10.50% (L+9.50%, Floor 1.00%) | 1/15/2024 | 10,480 | 10,401 | 10,401 | |||
|
|
| Member Units | (8) | 12/20/2016 | 717 |
|
|
| 7,280 | 10,250 | |||
|
|
| Secured Debt |
| 12/20/2016 |
| 10.00% | 12/20/2036 | 1,081 | 1,071 | 1,071 | |||
|
|
| Member Units | (30) | 12/20/2016 | 800 |
|
|
| 210 | 530 | |||
|
|
|
|
|
|
|
|
|
| 18,962 | 22,252 | |||
CMS Minerals Investments |
| Oil Gas Exploration Production |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) (30) | 4/1/2016 | 100 |
|
|
| 1,838 | 1,974 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Cody Pools, Inc. |
| Designer of Residential and Commercial Pools |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 3/6/2020 |
| 12.25% (L+10.50%, Floor 1.75%) | 12/17/2026 | 42,497 | 42,117 | 42,484 | |||
|
|
| Preferred Member Units | (8) (30) | 3/6/2020 | 587 |
|
|
| 8,317 | 47,640 | |||
|
|
|
|
|
|
|
|
|
| 50,434 | 90,124 | |||
Colonial Electric Company LLC |
| Provider of Electrical Contracting Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 3/31/2021 |
| 12.00% | 3/31/2026 | 24,570 | 24,351 | 24,351 | |||
|
|
| Preferred Member Units | (8) | 3/31/2021 | 17,280 |
|
|
| 7,680 | 9,130 | |||
|
|
|
|
|
|
|
|
|
| 32,031 | 33,481 | |||
CompareNetworks Topco, LLC |
| Internet Publishing and Web Search Portals |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 1/29/2019 |
| 10.00% (L+9.00%, Floor 1.00%) | 1/29/2024 | 6,477 | 6,452 | 6,477 | |||
|
|
| Preferred Member Units | (8) | 1/29/2019 | 1,975 |
|
|
| 1,975 | 12,000 | |||
|
|
|
|
|
|
|
|
|
| 8,427 | 18,477 | |||
Copper Trail Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (CTMH, LP) | (31) | 7/17/2017 | 38.8% |
|
|
| 710 | 710 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
29
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Datacom, LLC |
| Technology and Telecommunications Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 3/31/2021 |
| 5.00% | 12/31/2025 | 8,892 | 8,296 | 7,668 | |||
|
|
| Preferred Member Units |
| 3/31/2021 | 9,000 |
|
|
| 2,610 | 2,610 | |||
|
|
|
|
|
|
|
|
|
| 10,906 | 10,278 | |||
Digital Products Holdings LLC |
| Designer and Distributor of Consumer Electronics |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 4/1/2018 |
| 11.00% (L+10.00%, Floor 1.00%) | 4/1/2023 | 16,853 | 16,801 | 16,801 | |||
|
|
| Preferred Member Units | (8) | 4/1/2018 | 3,857 |
|
|
| 9,501 | 9,835 | |||
|
|
|
|
|
|
|
|
|
| 26,302 | 26,636 | |||
Direct Marketing Solutions, Inc. |
| Provider of Omni-Channel Direct Marketing Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 2/13/2018 |
| 12.00% (L+11.00%, Floor 1.00%) | 2/13/2024 | 24,070 | 23,911 | 24,048 | |||
|
|
| Preferred Stock | (8) | 2/13/2018 | 8,400 |
|
|
| 8,400 | 18,350 | |||
|
|
|
|
|
|
|
|
|
| 32,311 | 42,398 | |||
Gamber-Johnson Holdings, LLC |
| Manufacturer of Ruggedized Computer Mounting Systems |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/24/2016 |
| 9.50% (L+7.50%, Floor 2.00%) | 1/1/2025 | 21,598 | 21,535 | 21,598 | |||
|
|
| Member Units | (8) | 6/24/2016 | 9,042 |
|
|
| 17,692 | 49,700 | |||
|
|
|
|
|
|
|
|
|
| 39,227 | 71,298 | |||
Garreco, LLC |
| Manufacturer and Supplier of Dental Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/15/2013 |
| 9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) | 7/31/2022 | 4,196 | 4,196 | 4,196 | |||
|
|
| Member Units | (8) | 7/15/2013 | 1,200 |
|
|
| 1,200 | 2,270 | |||
|
|
|
|
|
|
|
|
|
| 5,396 | 6,466 | |||
GRT Rubber Technologies LLC |
| Manufacturer of Engineered Rubber Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/19/2014 |
| 8.10% (L+8.00%) | 10/29/2026 | 38,885 | 38,672 | 38,885 | |||
|
|
| Member Units | (8) | 12/19/2014 | 5,879 |
|
|
| 13,065 | 46,190 | |||
|
|
|
|
|
|
|
|
|
| 51,737 | 85,075 | |||
Gulf Manufacturing, LLC |
| Manufacturer of Specialty Fabricated Industrial Piping Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 8/31/2007 | 438 |
|
|
| 2,980 | 5,640 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Gulf Publishing Holdings, LLC |
| Energy Industry Focused Media and Publishing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (17) (19) | 9/29/2017 |
| 10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) | 9/30/2020 | 257 | 257 | 257 | |||
|
|
| Secured Debt | (17) (19) | 4/29/2016 |
| 12.50% (6.25% Cash, 6.25% PIK) | 4/29/2021 | 13,565 | 13,565 | 9,717 | |||
|
|
| Member Units |
| 4/29/2016 | 3,681 |
|
|
| 3,681 | - | |||
|
|
|
|
|
|
|
|
|
| 17,503 | 9,974 | |||
Harris Preston Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (2717 MH, L.P.) | (31) | 10/1/2017 | 49.3% |
|
|
| 2,703 | 3,971 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Harrison Hydra-Gen, Ltd. |
| Manufacturer of Hydraulic Generators |
|
|
|
|
|
|
|
|
| |||
|
|
| Common Stock |
| 6/4/2010 | 107,456 |
|
|
| 718 | 3,530 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Jensen Jewelers of Idaho, LLC |
| Retail Jewelry Store |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/14/2006 |
| 10.00% (Prime+6.75%, Floor 2.00%) | 11/14/2023 | 2,550 | 2,536 | 2,550 | |||
30
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Member Units | (8) | 11/14/2006 | 627 |
|
|
| 811 | 12,420 | |||
|
|
|
|
|
|
|
|
|
| 3,347 | 14,970 | |||
Johnson Downie Opco, LLC |
| Executive Search Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/10/2021 |
| 13.00% (L+11.50%, Floor 1.50%) | 12/10/2026 | 11,475 | 11,344 | 11,344 | |||
|
|
| Preferred Equity |
| 12/10/2021 | 3,150 |
|
|
| 3,150 | 3,150 | |||
|
|
|
|
|
|
|
|
|
| 14,494 | 14,494 | |||
KBK Industries, LLC |
| Manufacturer of Specialty Oilfield and Industrial Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 1/23/2006 | 325 |
|
|
| 783 | 13,620 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Kickhaefer Manufacturing Company, LLC |
| Precision Metal Parts Manufacturing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 10/31/2018 |
| 11.50% | 10/31/2023 | 20,415 | 20,324 | 20,324 | |||
|
|
| Member Units |
| 10/31/2018 | 581 |
|
|
| 12,240 | 12,310 | |||
|
|
| Secured Debt |
| 10/31/2018 |
| 9.00% | 10/31/2048 | 3,915 | 3,876 | 3,876 | |||
|
|
| Member Units | (8) (30) | 10/31/2018 | 800 |
|
|
| 992 | 2,460 | |||
|
|
|
|
|
|
|
|
|
| 37,432 | 38,970 | |||
Market Force Information, LLC |
| Provider of Customer Experience Management Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/28/2017 |
| 12.00% (L+11.00%, Floor 1.00%) | 7/28/2023 | 3,400 | 3,400 | 3,400 | |||
|
|
| Secured Debt | (14) (19) | 7/28/2017 |
| 12.00% PIK | 7/28/2023 | 26,079 | 25,952 | 8,936 | |||
|
|
| Member Units |
| 7/28/2017 | 743,921 |
|
|
| 16,642 | - | |||
|
|
|
|
|
|
|
|
|
| 45,994 | 12,336 | |||
MH Corbin Holding LLC |
| Manufacturer and Distributor of Traffic Safety Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/31/2015 |
| 13.00% | 3/31/2022 | 8,250 | 8,241 | 5,934 | |||
|
|
| Preferred Member Units |
| 3/15/2019 | 66,000 |
|
|
| 4,400 | - | |||
|
|
| Preferred Member Units |
| 9/1/2015 | 4,000 |
|
|
| 6,000 | - | |||
|
|
|
|
|
|
|
|
|
| 18,641 | 5,934 | |||
MS Private Loan Fund I, LP | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| Unsecured Debt |
| 2/11/2021 |
| 5.00% | 2/28/2022 | 63,151 | 63,151 | 63,151 | |||
|
|
| LP Interests | (31) | 1/26/2021 | 12.1% |
|
|
| 2,500 | 2,581 | |||
|
|
|
|
|
|
|
|
|
| 65,651 | 65,732 | |||
MSC Adviser I, LLC | (16) | Third Party Investment Advisory Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 11/22/2013 |
|
|
| 29,500 | 140,400 | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||
Mystic Logistics Holdings, LLC |
| Logistics and Distribution Services Provider for Large Volume Mailers |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/18/2014 |
| 12.00% | 1/17/2022 | 6,378 | 6,377 | 6,378 | |||
|
|
| Common Stock | (8) | 8/18/2014 | 5,873 |
|
|
| 2,720 | 8,840 | |||
|
|
|
|
|
|
|
|
|
| 9,097 | 15,218 | |||
NAPCO Precast, LLC |
| Precast Concrete Manufacturing |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 1/31/2008 | 2,955 |
|
|
| 2,975 | 13,560 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Nebraska Vet AcquireCo, LLC |
| Mixed-Animal Veterinary and Animal Health Product Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/31/2020 |
| 12.00% | 12/31/2025 | 10,500 | 10,412 | 10,412 | |||
|
|
| Secured Debt |
| 12/31/2020 |
| 12.00% | 12/31/2025 | 4,868 | 4,829 | 4,829 | |||
|
|
| Preferred Member Units |
| 12/31/2020 | 6,987 |
|
|
| 6,987 | 7,700 | |||
|
|
|
|
|
|
|
|
|
| 22,228 | 22,941 | |||
NexRev LLC |
| Provider of Energy Efficiency Products Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 2/28/2018 |
| 11.00% | 2/28/2023 | 16,217 | 16,173 | 14,045 | |||
|
|
| Preferred Member Units | (8) | 2/28/2018 | 86,400,000 |
|
|
| 6,880 | 2,690 | |||
|
|
|
|
|
|
|
|
|
| 23,053 | 16,735 | |||
NRP Jones, LLC |
| Manufacturer of Hoses, Fittings and Assemblies |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/21/2017 |
| 12.00% | 3/20/2023 | 2,080 | 2,080 | 2,080 | |||
|
|
| Member Units | (8) | 12/22/2011 | 65,962 |
|
|
| 3,717 | 6,440 | |||
|
|
|
|
|
|
|
|
|
| 5,797 | 8,520 | |||
31
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NuStep, LLC |
| Designer, Manufacturer and Distributor of Fitness Equipment |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 1/31/2017 |
| 7.50% (L+6.50%, Floor 1.00%) | 1/31/2025 | 1,720 | 1,720 | 1,720 | |||
|
|
| Secured Debt |
| 1/31/2017 |
| 11.00% | 1/31/2025 | 17,240 | 17,236 | 17,240 | |||
|
|
| Preferred Member Units |
| 1/31/2017 | 406 |
|
| 10,200 | 13,500 | ||||
|
|
|
|
|
|
|
|
|
| 29,156 | 32,460 | |||
OMi Topco, LLC |
| Manufacturer of Overhead Cranes |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/31/2021 |
| 12.00% | 8/31/2026 | 18,000 | 17,831 | 18,000 | |||
|
|
| Preferred Member Units | (8) | 4/1/2008 | 900 |
|
| 1,080 | 20,210 | ||||
|
|
|
|
|
|
|
|
|
| 18,911 | 38,210 | |||
Orttech Holdings, LLC |
| Distributor of Industrial Clutches, Brakes and Other Components |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/30/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 7/31/2026 | 24,375 | 24,151 | 24,151 | |||
|
|
| Preferred Stock | (8) (30) | 7/30/2021 | 10,000 |
|
| 10,000 | 10,000 | ||||
|
|
|
|
|
|
|
|
|
| 34,151 | 34,151 | |||
Pearl Meyer Topco LLC |
| Provider of Executive Compensation Consulting Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 4/27/2020 |
| 12.00% | 4/27/2025 | 32,674 | 32,438 | 32,674 | |||
|
|
| Member Units | (8) | 4/27/2020 | 13,800 |
|
| 13,000 | 26,970 | ||||
|
|
|
|
|
|
|
|
|
| 45,438 | 59,644 | |||
PPL RVs, Inc. |
| Recreational Vehicle Dealer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/31/2019 |
| 7.50% (L+7.00%, Floor 0.50%) | 11/15/2022 | 750 | 726 | 726 | |||
|
|
| Secured Debt | (9) | 11/15/2016 |
| 7.50% (L+7.00%, Floor 0.50%) | 11/15/2022 | 11,655 | 11,655 | 11,655 | |||
|
|
| Common Stock | (8) | 6/10/2010 | 2,000 |
|
| 2,150 | 14,360 | ||||
|
|
|
|
|
|
|
|
|
| 14,531 | 26,741 | |||
Principle Environmental, LLC |
| Noise Abatement Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 2/1/2011 |
| 13.00% | 11/15/2026 | 1,473 | 1,465 | 1,465 | |||
|
|
| Secured Debt |
| 7/1/2011 |
| 13.00% | 11/15/2026 | 5,924 | 5,808 | 5,808 | |||
|
|
| Preferred Member Units |
| 2/1/2011 | 21,806 |
|
| 5,709 | 11,160 | ||||
|
|
| Common Stock |
| 1/27/2021 | 1,037 |
|
|
| 1,200 | 710 | |||
|
|
|
|
|
|
|
|
|
| 14,182 | 19,143 | |||
Quality Lease Service, LLC |
| Provider of Rigsite Accommodation Unit Rentals and Related Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units |
| 6/8/2015 | 1,000 |
|
| 9,213 | 2,149 | ||||
|
|
|
|
|
|
|
|
|
| |||||
River Aggregates, LLC |
| Processor of Construction Aggregates |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) (30) | 12/20/2013 | 1,500 |
|
| 369 | 3,280 | ||||
|
|
|
|
|
|
|
|
|
| |||||
Robbins Bros. Jewelry, Inc. |
| Bridal Jewelry Retailer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/15/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 12/15/2026 | 36,360 | 35,956 | 35,956 | |||
|
|
| Preferred Equity |
| 12/15/2021 | 11,070 |
|
| 11,070 | 11,070 | ||||
|
|
|
|
|
|
|
|
|
| 47,026 | 47,026 | |||
Tedder Industries, LLC |
| Manufacturer of Firearm Holsters and Accessories |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/31/2018 |
| 12.00% | 8/31/2022 | 16,240 | 16,181 | 16,181 | |||
|
|
| Preferred Member Units |
| 8/31/2018 | 505 |
|
| 8,579 | 8,579 | ||||
|
|
|
|
|
|
|
|
|
| 24,760 | 24,760 | |||
Televerde, LLC |
| Provider of Telemarketing and Data Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units |
| 1/6/2011 | 460 |
|
| 1,290 | 7,280 | ||||
|
|
|
|
|
|
|
|
|
| |||||
Trantech Radiator Topco, LLC |
| Transformer Cooling Products and Services |
|
|
|
|
|
|
|
|
| |||
32
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt |
| 5/31/2019 |
| 12.00% | 5/31/2024 | 8,720 | 8,663 | 8,712 | |||
|
|
| Common Stock | (8) | 5/31/2019 | 615 |
|
| 4,655 | 8,660 | ||||
|
|
|
|
|
|
|
|
|
| 13,318 | 17,372 | |||
UnionRock Energy Fund II, LP | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests | (8) (31) | 6/15/2020 | 49.6% |
|
| 3,828 | 6,122 | ||||
|
|
|
|
|
|
|
|
|
| |||||
Vision Interests, Inc. |
| Manufacturer / Installer of Commercial Signage |
|
|
|
|
|
|
|
|
| |||
|
|
| Series A Preferred Stock |
| 12/23/2011 | 3,000,000 |
|
| 3,000 | 3,000 | ||||
|
|
|
|
|
|
|
|
|
| |||||
VVS Holdco LLC |
| Omnichannel Retailer of Animal Health Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9)(30) | 12/1/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 12/1/2026 | 1,200 | 1,170 | 1,169 | |||
|
|
| Secured Debt | (30) | 12/1/2021 |
| 11.50% | 12/1/2026 | 30,400 | 30,100 | 30,100 | |||
|
|
| Preferred Equity | (30) | 12/1/2021 | 11,840 |
|
| 11,840 | 11,840 | ||||
|
|
|
|
|
|
|
|
|
| 43,110 | 43,109 | |||
Ziegler’s NYPD, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 6/1/2015 |
| 12.00% | 10/1/2022 | 625 | 625 | 625 | |||
|
|
| Secured Debt |
| 10/1/2008 |
| 6.50% | 10/1/2022 | 1,000 | 1,000 | 1,000 | |||
|
|
| Secured Debt |
| 10/1/2008 |
| 14.00% | 10/1/2022 | 2,750 | 2,750 | 2,750 | |||
|
|
| Preferred Member Units |
| 6/30/2015 | 10,072 |
|
| 2,834 | 2,130 | ||||
|
|
| Warrants | (27) | 7/1/2015 | 587 |
| 10/1/2025 | 600 | - | ||||
|
|
|
|
|
|
|
|
|
| 7,809 | 6,505 | |||
Subtotal Control Investments (83.3% of net assets at fair value) |
|
|
|
|
|
|
|
|
| $ | 1,107,597 | $ | 1,489,257 | |
33
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
|
|
|
| |||
Affiliate Investments (6) |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
AAC Holdings, Inc. | (11) | Substance Abuse Treatment Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) | 12/11/2020 |
| 18.00% (10.00% Cash, 8.00% PIK) | 6/25/2025 | $ | 10,202 | $ | 10,011 | $ | 9,794 |
|
|
| Common Stock |
| 12/11/2020 | 593,928 |
|
|
| 3,148 | 2,079 | |||
|
|
| Warrants | (27) | 12/11/2020 | 554,353 |
| 12/11/2025 |
| - | 1,940 | |||
|
|
|
|
|
|
|
|
|
| 13,159 | 13,813 | |||
AFG Capital Group, LLC |
| Provider of Rent-to-Own Financing Solutions and Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 4/25/2019 |
| 10.00% | 5/25/2022 | 144 | 144 | 144 | |||
|
|
| Preferred Member Units | (8) | 11/7/2014 | 186 |
|
|
| 1,200 | 7,740 | |||
|
|
|
|
|
|
|
|
|
| 1,344 | 7,884 | |||
ATX Networks Corp. | (11) | Provider of Radio Frequency Management Equipment |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 9/1/2021 |
| 8.50% (L+7.50%, Floor 1.00%) | 9/1/2026 | 7,667 | 7,092 | 7,092 | |||
|
|
| Unsecured Debt | (19) | 9/1/2021 |
| 10.00% PIK | 9/1/2028 | 3,067 | 1,963 | 1,963 | |||
|
|
| Common Stock |
| 9/1/2021 | 583 |
|
|
| - | - | |||
|
|
|
|
|
|
|
|
|
| 9,055 | 9,055 | |||
BBB Tank Services, LLC |
| Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market |
|
|
|
|
|
|
|
|
| |||
|
|
| Unsecured Debt | (9) (17) | 4/8/2016 |
| 12.00% (L+11.00%, Floor 1.00%) | 4/8/2021 | 4,800 | 4,800 | 2,508 | |||
|
|
| Preferred Stock (non-voting) | (8) (19) | 12/17/2018 |
| 15.00% PIK |
| 162 | - | ||||
|
|
| Member Units |
| 4/8/2016 | 800,000 |
|
|
| 800 | - | |||
|
|
|
|
|
|
|
|
|
| 5,762 | 2,508 | |||
Boccella Precast Products LLC |
| Manufacturer of Precast Hollow Core Concrete |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 9/23/2021 |
| 10.00% | 2/28/2027 | 320 | 320 | 320 | |||
|
|
| Member Units | (8) | 6/30/2017 | 2,160,000 |
|
|
| 2,256 | 4,830 | |||
|
|
|
|
|
|
|
|
|
| 2,576 | 5,150 | |||
Brightwood Capital Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (Brightwood Capital Fund V, LP) | (31) | 7/12/2021 | 15.8% |
|
|
| 1,000 | 1,000 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Buca C, LLC |
| Casual Restaurant Group |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (17) | 6/30/2015 |
| 10.25% (L+9.25%, Floor 1.00%) | 6/30/2020 | 19,491 | 19,491 | 14,370 | |||
|
|
| Preferred Member Units | (19) | 6/30/2015 | 6 | 6.00% PIK |
|
| 4,770 | - | |||
|
|
|
|
|
|
|
|
|
| 24,261 | 14,370 | |||
Career Team Holdings, LLC |
| Provider of Workforce Training and Career Development Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/17/2021 |
| 12.50% | 12/17/2026 | 20,250 | 20,050 | 20,050 | |||
|
|
| Class A Common Units |
| 12/17/2021 | 450,000 |
|
|
| 4,500 | 4,500 | |||
|
|
|
|
|
|
|
|
|
| 24,550 | 24,550 | |||
Chandler Signs Holdings, LLC | (10) | Sign Manufacturer |
|
|
|
|
|
|
|
|
| |||
|
|
| Class A Units |
| 1/4/2016 | 1,500,000 |
|
|
| 1,500 | 460 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Classic HG Holdings, LLC |
| Provider of Engineered Packaging Solutions |
|
|
|
|
|
|
|
|
| |||
34
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) | 3/12/2020 |
| 7.00% (L+6.00%, Floor 1.00%) | 3/12/2025 | 4,000 | 4,000 | 4,000 | |||
|
|
| Secured Debt |
| 3/12/2020 |
| 8.00% | 3/12/2025 | 19,274 | 19,139 | 19,274 | |||
|
|
| Preferred Member Units | (8) | 3/12/2020 | 154 |
|
|
| 5,760 | 15,260 | |||
|
|
|
|
|
|
|
|
|
| 28,899 | 38,534 | |||
Congruent Credit Opportunities Funds | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (Congruent Credit Opportunities Fund | (8) (31) | 2/4/2015 | 17.4% |
|
|
| 10,256 | 9,959 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
DMA Industries, LLC |
| Distributor of aftermarket ride control products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 11/19/2021 |
| 12.00% | 11/19/2026 | 21,200 | 20,993 | 20,993 | |||
|
|
| Preferred Equity |
| 11/19/2021 | 5,944 |
|
|
| 5,944 | 5,944 | |||
|
|
|
|
|
|
|
|
|
| 26,937 | 26,937 | |||
Dos Rios Partners | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (Dos Rios Partners, LP) | (31) | 4/25/2013 | 20.2% |
|
|
| 6,605 | 10,329 | |||
|
|
| LP Interests (Dos Rios Partners - A, LP) | (31) | 4/25/2013 | 6.4% |
|
|
| 2,097 | 3,280 | |||
|
|
|
|
|
|
|
|
|
| 8,702 | 13,609 | |||
Dos Rios Stone Products LLC | (10) | Limestone and Sandstone Dimension Cut Stone Mining Quarries |
|
|
|
|
|
|
|
|
| |||
|
|
| Class A Preferred Units | (30) | 6/27/2016 | 2,000,000 |
|
|
| 2,000 | 640 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
EIG Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (EIG Global Private Debt Fund-A, L.P.) | (8) (31) | 11/6/2015 | 5,000,000 |
|
|
| 594 | 547 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Flame King Holdings, LLC |
| Propane Tank and Accessories Distributor |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 10/31/2026 | 6,400 | 6,324 | 6,324 | |||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 10/31/2026 | 21,200 | 20,996 | 20,996 | |||
|
|
| Preferred Equity |
| 10/29/2021 | 9,360 |
|
|
| 10,400 | 10,400 | |||
|
|
|
|
|
|
|
|
|
| 37,720 | 37,720 | |||
Freeport Financial Funds | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (Freeport Financial SBIC Fund LP) | (31) | 3/23/2015 | 9.3% |
|
|
| 5,974 | 6,078 | |||
|
|
| LP Interests (Freeport First Lien Loan Fund III LP) | (8) (31) | 7/31/2015 | 6.0% |
|
|
| 7,629 | 7,231 | |||
|
|
|
|
|
|
|
|
|
| 13,603 | 13,309 | |||
GFG Group, LLC. |
| Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 3/31/2021 |
| 12.00% | 3/31/2026 | 12,545 | 12,435 | 12,545 | |||
|
|
| Preferred Member Units | (8) | 3/31/2021 | 226 |
|
|
| 4,900 | 6,990 | |||
|
|
|
|
|
|
|
|
|
| 17,335 | 19,535 | |||
Harris Preston Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
35
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| LP Interests (HPEP 3, L.P.) | (31) | 8/9/2017 | 8.2% |
|
|
| 3,193 | 4,712 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Hawk Ridge Systems, LLC | (13) | Value-Added Reseller of Engineering Design and Manufacturing Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/2/2016 |
| 7.00% (L+6.00%, Floor 1.00%) | 1/15/2026 | 2,585 | 2,585 | 2,585 | |||
|
|
| Secured Debt |
| 12/2/2016 |
| 8.00% | 1/15/2026 | 34,800 | 34,672 | 34,800 | |||
|
|
| Preferred Member Units | (8) | 12/2/2016 | 226 |
|
|
| 2,850 | 14,680 | |||
|
|
| Preferred Member Units | (30) | 12/2/2016 | 226 |
|
|
| 150 | 770 | |||
|
|
|
|
|
|
|
|
|
| 40,257 | 52,835 | |||
Houston Plating and Coatings, LLC |
| Provider of Plating and Industrial Coating Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Unsecured Convertible Debt |
| 5/1/2017 |
| 8.00% | 5/1/2022 | 3,000 | 3,000 | 2,960 | |||
|
|
| Member Units | (8) | 1/8/2003 | 322,297 |
|
|
| 2,352 | 3,210 | |||
|
|
|
|
|
|
|
|
|
| 5,352 | 6,170 | |||
I-45 SLF LLC | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units (Fully diluted 20.0%; 24.40% profits | (8) | 10/20/2015 |
|
|
| 19,000 | 14,387 | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||
Iron-Main Investments, LLC |
| Consumer Reporting Agency Providing Employment Background Checks and Drug Testing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/3/2021 |
| 13.00% | 8/1/2026 | 4,600 | 4,557 | 4,557 | |||
|
|
| Secured Debt |
| 9/1/2021 |
| 12.50% | 9/1/2026 | 3,200 | 3,170 | 3,170 | |||
|
|
| Secured Debt |
| 8/3/2021 |
| 12.50% | 11/30/2026 | 20,000 | 19,805 | 19,805 | |||
|
|
| Secured Debt | (19) | 8/3/2021 |
| 12.50% PIK | 3/31/2022 | 8,944 | 8,944 | 8,944 | |||
|
|
| Common Stock |
| 8/3/2021 | 179,778 |
|
|
| 1,798 | 1,798 | |||
|
|
|
|
|
|
|
|
|
| 38,274 | 38,274 | |||
L.F. Manufacturing Holdings, LLC | (10) | Manufacturer of Fiberglass Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Preferred Member Units (non-voting) | (8) (19) | 1/1/2019 |
| 14.00% PIK |
| 107 | 107 | ||||
|
|
| Member Units |
| 12/23/2013 | 2,179,001 |
|
|
| 2,019 | 2,557 | |||
|
|
|
|
|
|
|
|
|
| 2,126 | 2,664 | |||
OnAsset Intelligence, Inc. |
| Provider of Transportation Monitoring / Tracking Products and Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) | 5/20/2014 |
| 12.00% PIK | 12/31/2022 | 935 | 935 | 935 | |||
|
|
| Secured Debt | (19) | 3/21/2014 |
| 12.00% PIK | 12/31/2022 | 954 | 954 | 954 | |||
|
|
| Secured Debt | (19) | 5/10/2013 |
| 12.00% PIK | 12/31/2022 | 2,055 | 2,055 | 2,055 | |||
|
|
| Secured Debt | (19) | 4/18/2011 |
| 12.00% PIK | 12/31/2022 | 4,286 | 4,286 | 4,286 | |||
|
|
| Unsecured Debt | (19) | 6/5/2017 |
| 10.00% PIK | 12/31/2022 | 192 | 192 | 192 | |||
|
|
| Preferred Stock | (19) | 4/18/2011 | 912 | 7.00% PIK |
|
| 1,981 | - | |||
|
|
| Common Stock |
| 4/15/2021 | 635 |
|
|
| 830 | - | |||
|
|
| Warrants | (27) | 4/18/2011 | 4,699 |
| 5/10/2023 |
| 1,089 | - | |||
|
|
|
|
|
|
|
|
|
| 12,322 | 8,422 | |||
Oneliance, LLC |
| Construction Cleaning Company |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/6/2021 |
| 12.00% (L+11.00%, Floor 1.00%) | 8/6/2026 | 5,600 | 5,547 | 5,547 | |||
|
|
| Preferred Stock |
| 8/6/2021 | 1,056 |
|
|
| 1,056 | 1,056 | |||
|
|
|
|
|
|
|
|
|
| 6,603 | 6,603 | |||
Rocaceia, LLC (Quality Lease and Rental Holdings, LLC) |
| Provider of Rigsite Accommodation Unit Rentals and Related Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (14) (17) | 6/30/2015 |
| 12.00% | 1/8/2018 | 30,369 | 29,865 | - | |||
|
|
| Preferred Member Units |
| 1/8/2013 | 250 |
|
|
| 2,500 | - | |||
|
|
|
|
|
|
|
|
|
| 32,365 | - | |||
36
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SI East, LLC |
| Rigid Industrial Packaging Manufacturing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/31/2018 |
| 10.25% | 8/31/2023 | 65,850 | 65,738 | 65,850 | |||
|
|
| Preferred Member Units | (8) | 8/31/2018 | 157 |
|
|
| 1,218 | 11,570 | |||
|
|
|
|
|
|
|
|
|
| 66,956 | 77,420 | |||
Slick Innovations, LLC |
| Text Message Marketing Platform |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 9/13/2018 |
| 13.00% | 9/13/2023 | 5,320 | 5,248 | 5,320 | |||
|
|
| Common Stock |
| 9/13/2018 | 70,000 |
|
|
| 700 | 1,510 | |||
|
|
| Warrants | (27) | 9/13/2018 | 18,084 |
| 9/13/2028 |
| 181 | 400 | |||
|
|
|
|
|
|
|
|
|
| 6,129 | 7,230 | |||
Sonic Systems International, LLC | (10) | Nuclear Power Staffing Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/20/2021 |
| 8.50% (L+7.50%, Floor 1.00%) | 8/20/2026 | 11,982 | 11,757 | 11,757 | |||
|
|
| Common Stock |
| 8/20/2021 | 7,866 |
|
|
| 1,070 | 1,070 | |||
|
|
|
|
|
|
|
|
|
| 12,827 | 12,827 | |||
Superior Rigging Erecting Co. |
| Provider of Steel Erecting, Crane Rental Rigging Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/31/2020 |
| 12.00% | 8/31/2025 | 21,500 | 21,332 | 21,332 | |||
|
|
| Preferred Member Units |
| 8/31/2020 | 1,571 |
|
|
| 4,500 | 4,500 | |||
|
|
|
|
|
|
|
|
|
| 25,832 | 25,832 | |||
The Affiliati Network, LLC |
| Performance Marketing Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 8/9/2021 |
| 7.00% | 8/9/2026 | 280 | 262 | 262 | |||
|
|
| Secured Debt |
| 8/9/2021 |
| 11.83% | 8/9/2026 | 12,961 | 12,834 | 12,834 | |||
|
|
| Preferred Stock | (8) | 8/9/2021 | 1,280,000 |
|
|
| 6,400 | 6,400 | |||
|
|
|
|
|
|
|
|
|
| 19,496 | 19,496 | |||
UniTek Global Services, Inc. | (11) | Provider of Outsourced Infrastructure Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (19) | 10/15/2018 |
| 8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) | 8/20/2024 | 397 | 396 | 371 | |||
|
|
| Secured Debt | (9) (19) | 8/27/2018 |
| 8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) | 8/20/2024 | 1,986 | 1,974 | 1,852 | |||
|
|
| Secured Convertible Debt | (19) | 1/1/2021 |
| 15.00% PIK | 2/20/2025 | 1,197 | 1,197 | 2,375 | |||
|
|
| Preferred Stock | (8) (19) | 8/29/2019 | 1,133,102 | 20.00% PIK |
|
| 1,757 | 2,833 | |||
|
|
| Preferred Stock | (19) | 8/21/2018 | 1,521,122 | 20.00% PIK |
|
| 2,188 | 1,498 | |||
|
|
| Preferred Stock | (19) | 1/15/2015 | 4,336,866 | 13.50% PIK |
|
| 7,924 | - | |||
|
|
| Preferred Stock | (19) | 6/30/2017 | 2,281,682 | 19.00% PIK |
|
| 3,667 | - | |||
|
|
| Common Stock |
| 4/1/2020 | 945,507 |
|
|
| - | - | |||
|
|
|
|
|
|
|
|
|
| 19,103 | 8,929 | |||
Universal Wellhead Services Holdings, LLC | (10) | Provider of Wellhead Equipment, Designs, and Personnel to the Oil Gas Industry |
|
|
|
|
|
|
|
|
| |||
|
|
| Preferred Member Units | (19) (30) | 12/7/2016 | 716,949 | 14.00% PIK |
|
| 1,032 | - | |||
|
|
| Member Units | (30) | 12/7/2016 | 4,000,000 |
|
|
| 4,000 | - | |||
|
|
|
|
|
|
|
|
|
| 5,032 | - | |||
Volusion, LLC |
| Provider of Online Software-as-a-Service eCommerce Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (17) | 1/26/2015 |
| 11.50% | 1/26/2020 | 17,434 | 17,434 | 17,434 | |||
|
|
| Unsecured Convertible Debt |
| 5/16/2018 |
| 8.00% | 11/16/2023 | 409 | 409 | 409 | |||
|
|
| Preferred Member Units |
| 1/26/2015 | 4,876,670 |
|
|
| 14,000 | 5,990 | |||
|
|
| Warrants | (27) | 1/26/2015 | 1,831,355 |
| 1/26/2025 |
| 2,576 | - | |||
|
|
|
|
|
|
|
|
|
| 34,419 | 23,833 | |||
37
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Subtotal Affiliate Investments (30.7% of net assets at fair value) |
|
|
|
|
|
|
|
| $ | 578,539 | $ | 549,214 | ||
38
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
|
|
|
|
|
|
|
|
| |||
Non-Control/Non-Affiliate Investments (7) |
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Acousti Engineering Company of Florida | (10) | Interior Subcontractor Providing Acoustical Walls and Ceilings |
|
|
|
|
|
|
|
| ||||
|
|
| Secured Debt | (9) | 11/2/2020 |
| 10.00% (L+8.50%, Floor 1.50%) | 11/2/2025 | $ | 12,111 | $ | 12,005 | $ | 12,111 |
|
|
| Secured Debt | (9) | 5/26/2021 |
| 14.00% (L+12.50%, Floor 1.50%) | 11/2/2025 | 850 | 841 | 850 | |||
|
|
|
|
|
|
|
|
|
| 12,846 | 12,961 | |||
ADS Tactical, Inc. | (11) | Value-Added Logistics and Supply Chain Provider to the Defense Industry |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 3/29/2021 |
| 6.75% (L+5.75%, Floor 1.00%) | 3/19/2026 | 22,136 | 21,734 | 22,012 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
American Health Staffing Group, Inc. | (10) | Healthcare Temporary Staffing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/19/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 11/19/2026 | 7,067 | 6,988 | 6,988 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
American Nuts, LLC | (10) | Roaster, Mixer and Packager of Bulk Nuts and Seeds |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/21/2018 |
| 9.00% (L+8.00%, Floor 1.00%) | 4/10/2025 | 12,017 | 11,854 | 12,017 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
American Teleconferencing Services, Ltd. | (11) | Provider of Audio Conferencing and Video Collaboration Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (14) (17) | 9/17/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 9/9/2021 | 2,980 | 2,980 | 89 | |||
|
|
| Secured Debt | (9) (14) | 5/19/2016 |
| 7.50% (L+6.50%, Floor 1.00%) | 6/28/2023 | 14,370 | 13,706 | 431 | |||
|
|
|
|
|
|
|
|
|
| 16,686 | 520 | |||
ArborWorks, LLC | (10) | Vegetation Management Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/9/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 11/9/2026 | 32,605 | 31,873 | 31,873 | |||
|
|
| Common Equity |
| 11/9/2021 | 234 |
|
|
| 234 | 234 | |||
|
|
|
|
|
|
|
|
|
| 32,107 | 32,107 | |||
Arrow International, Inc | (10) | Manufacturer and Distributor of Charitable Gaming Supplies |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (23) | 12/21/2020 |
| 9.18% (L+7.93%, Floor 1.25%) | 12/21/2025 | 22,500 | 22,300 | 22,500 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
AVEX Aviation Holdings, LLC | (10) | Specialty Aircraft Dealer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/15/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 12/15/2026 | 13,320 | 13,005 | 13,005 | |||
|
|
| Common Equity |
| 12/15/2021 | 360 |
|
|
| 360 | 360 | |||
|
|
|
|
|
|
|
|
|
| 13,365 | 13,365 | |||
Berry Aviation, Inc. | (10) | Charter Airline Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) | 7/6/2018 |
| 12.00% (10.50% Cash, 1.50% PIK) | 1/6/2024 | 4,694 | 4,674 | 4,694 | |||
|
|
| Preferred Member Units | (8) (19) (30) | 11/12/2019 | 122,416 | 16.00% PIK |
|
| 168 | 208 | |||
|
|
| Preferred Member Units | (19) (30) | 7/6/2018 | 1,548,387 | 8.00% PIK |
|
| 1,671 | 2,487 | |||
|
|
|
|
|
|
|
|
|
| 6,513 | 7,389 | |||
39
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Binswanger Enterprises, LLC | (10) | Glass Repair and Installation Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 3/10/2017 |
| 9.50% (L+8.50%, Floor 1.00%) | 3/10/2023 | 12,194 | 12,107 | 12,194 | |||
|
|
| Member Units |
| 3/10/2017 | 1,050,000 |
|
|
| 1,050 | 730 | |||
|
|
|
|
|
|
|
|
|
| 13,157 | 12,924 | |||
Bluestem Brands, Inc. | (11) | Multi-Channel Retailer of General Merchandise |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/28/2020 |
| 10.00% (L+8.50%, Floor 1.50%) | 8/28/2025 | 5,357 | 5,357 | 5,337 | |||
|
|
| Common Stock | (8) | 10/1/2020 | 723,184 |
|
|
| 1 | 1,515 | |||
|
|
|
|
|
|
|
|
|
| 5,358 | 6,852 | |||
Brainworks Software, LLC | (10) | Advertising Sales and Newspaper Circulation Software |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (14) (17) | 8/12/2014 |
| 12.50% (Prime+9.25%, Floor 3.25%) | 7/22/2019 | 7,817 | 7,817 | 4,201 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Brightwood Capital Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (Brightwood Capital Fund III, LP) | (8) (31) | 7/21/2014 | 1.6% |
|
|
| 7,200 | 4,269 | |||
|
|
| LP Interests (Brightwood Capital Fund IV, LP) | (8) (31) | 10/26/2016 | 0.6% |
|
|
| 4,350 | 4,394 | |||
|
|
|
|
|
|
|
|
|
| 11,550 | 8,663 | |||
Burning Glass Intermediate Holding Company, Inc. | (10) | Provider of Skills-Based Labor Market Analytics |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 6.00% (L+5.00%, Floor 1.00%) | 6/10/2026 | 465 | 429 | 429 | |||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 6.00% (L+5.00%, Floor 1.00%) | 6/10/2028 | 20,134 | 19,803 | 19,985 | |||
|
|
|
|
|
|
|
|
|
| 20,232 | 20,414 | |||
Cadence Aerospace LLC | (10) | Aerostructure Manufacturing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) (35) | 11/14/2017 |
| 9.28% Cash, 0.22% PIK | 11/14/2023 | 28,540 | 28,399 | 26,767 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
CAI Software LLC |
| Provider of Specialized Enterprise Resource Planning Software |
|
|
|
|
|
|
|
|
| |||
|
|
| Preferred Equity |
| 12/13/2021 | 1,788,527 |
|
|
| 1,789 | 1,789 | |||
|
|
| Preferred Equity |
| 12/13/2021 | 596,176 |
|
|
| - | - | |||
|
|
|
|
|
|
|
|
|
| 1,789 | 1,789 | |||
Camin Cargo Control, Inc. | (11) | Provider of Mission Critical Inspection, Testing and Fuel Treatment Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/14/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 6/4/2026 | 15,920 | 15,775 | 15,840 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Cenveo Corporation | (11) | Provider of Digital Marketing Agency Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Common Stock |
| 9/7/2018 | 322,907 |
|
|
| 6,183 | 2,852 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Chisholm Energy Holdings, LLC | (10) | Oil Gas Exploration Production |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/15/2019 |
| 7.75% (L+6.25%, Floor 1.50%) | 5/15/2026 | 2,857 | 2,804 | 2,663 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Clarius BIGS, LLC | (10) | Prints Advertising Film Financing |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (14) (17) (19) | 9/23/2014 |
| 15.00% PIK | 1/5/2015 | 2,756 | 2,756 | 33 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
40
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Computer Data Source, LLC | (10) | Third Party Maintenance Provider to the Data Center Ecosystem |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/6/2021 |
| 8.50% (L+7.50%, Floor 1.00%) | 8/6/2026 | 21,681 | 21,234 | 21,234 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Construction Supply Investments, LLC | (10) | Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units | (8) | 12/29/2016 | 861,618 |
|
|
| 3,335 | 14,640 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Darr Equipment LP | (10) | Heavy Equipment Dealer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) | 12/26/2017 |
| 12.50% (11.50% Cash, 1.00% PIK) | 6/22/2023 | 4,685 | 4,685 | 4,227 | |||
|
|
| Warrants | (29) | 4/15/2014 | 915,734 |
| 12/23/2023 |
| 474 | 160 | |||
|
|
|
|
|
|
|
|
|
| 5,159 | 4,387 | |||
DTE Enterprises, LLC | (10) | Industrial Powertrain Repair and Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 4/13/2018 |
| 9.50% (L+8.00%, Floor 1.50%) | 4/13/2023 | 9,324 | 9,259 | 8,884 | |||
|
|
| Class AA Preferred Member Units (non-voting) | (8) (19) | 4/13/2018 |
| 10.00% PIK |
| 1,051 | 1,051 | ||||
|
|
| Class A Preferred Member Units | (19) | 4/13/2018 | 776,316 | 8.00% PIK |
|
| 776 | 320 | |||
|
|
|
|
|
|
|
|
|
| 11,086 | 10,255 | |||
Dynamic Communities, LLC | (10) | Developer of Business Events and Online Community Groups |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/17/2018 |
| 9.50% (L+8.50%, Floor 1.00%) | 7/17/2023 | 5,681 | 5,638 | 5,569 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Eastern Wholesale Fence LLC | (10) | Manufacturer and Distributor of Residential and Commercial Fencing Solutions |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/19/2020 |
| 8.00%, (L+7.00%, Floor 1.00%) | 10/30/2025 | 31,810 | 31,238 | 31,810 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
EnCap Energy Fund Investments | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests (EnCap Energy Capital Fund VIII, L.P.) | (8) (31) | 1/22/2015 | 0.1% |
|
|
| 3,745 | 1,599 | |||
|
|
| LP Interests (EnCap Energy Capital Fund VIII Co- | (31) | 1/21/2015 | 0.4% |
|
|
| 2,097 | 777 | |||
|
|
| LP Interests (EnCap Energy Capital Fund IX, L.P.) | (8) (31) | 1/22/2015 | 0.1% |
|
|
| 4,047 | 2,284 | |||
|
|
| LP Interests (EnCap Energy Capital Fund X, L.P.) | (8) (31) | 3/25/2015 | 0.1% |
|
|
| 8,443 | 8,276 | |||
|
|
| LP Interests (EnCap Flatrock Midstream Fund II, L.P.) | (31) | 3/30/2015 | 0.8% |
|
|
| 6,582 | 2,796 | |||
|
|
| LP Interests (EnCap Flatrock | (8) (31) | 3/27/2015 | 0.2% |
|
|
| 6,082 | 5,064 | |||
41
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Midstream Fund III, L.P.) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| 30,996 | 20,796 | |||
EPIC Y-Grade Services, LP | (11) | NGL Transportation Storage |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/22/2018 |
| 7.00% (L+6.00%, Floor 1.00%) | 6/30/2027 | 6,892 | 6,819 | 5,862 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Event Holdco, LLC | (10) | Event and Learning Management Software for Healthcare Organizations and Systems |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9)(30) | 12/22/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 12/22/2026 | 51,692 | 51,135 | 51,135 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Flip Electronics LLC | (10) | Distributor of Hard-to-Find and Obsolete Electronic Components |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (33) | 1/4/2021 |
| 9.09% (L+8.09%, Floor 1.00%) | 1/2/2026 | 5,400 | 5,304 | 5,287 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Fortna Acquisition Co., Inc. | (10) | Process, Physical Distribution and Logistics Consulting Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 7/23/2019 |
| 5.09% (L+5.00%) | 4/8/2025 | 7,595 | 7,525 | 7,595 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Fuse, LLC | (11) | Cable Networks Operator |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 6/30/2019 |
| 12.00% | 6/28/2024 | 1,810 | 1,810 | 1,672 | |||
|
|
| Common Stock |
| 6/30/2019 | 10,429 |
|
|
| 256 | - | |||
|
|
|
|
|
|
|
|
|
| 2,066 | 1,672 | |||
GeoStabilization International (GSI) | (11) | Geohazard Engineering Services Maintenance |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 1/2/2019 |
| 5.35% (L+5.25%) | 12/19/2025 | 20,710 | 20,615 | 20,606 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
GoWireless Holdings, Inc. | (11) | Provider of Wireless Telecommunications Carrier Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 1/10/2018 |
| 7.50% (L+6.50%, Floor 1.00%) | 12/22/2024 | 18,534 | 18,440 | 18,576 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Grupo Hima San Pablo, Inc. | (11) | Tertiary Care Hospitals |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (14) (17) | 3/7/2013 |
| 9.25% (L+7.00%, Floor 1.50%) | 4/30/2019 | 4,504 | 4,504 | 1,269 | |||
|
|
| Secured Debt | (14) (17) | 3/7/2013 |
| 13.75% | 10/15/2018 | 2,055 | 2,040 | 49 | |||
|
|
| Secured Debt | (17) | 3/7/2013 |
| 12.00% | 12/24/2021 | 147 | 147 | 147 | |||
|
|
|
|
|
|
|
|
|
| 6,691 | 1,465 | |||
GS HVAM Intermediate, LLC | (10) | Specialized Food Distributor |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/18/2019 |
| 6.75% (L+5.75%, Floor 1.00%) | 10/2/2024 | 13,243 | 13,167 | 13,243 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
GS Operating, LLC | (10) | Distributor of Industrial and Specialty Parts |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 2/24/2020 |
| 8.00% (L+6.50%, Floor 1.50%) | 2/24/2025 | 28,451 | 28,068 | 28,451 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
42
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
HDC/HW Intermediate Holdings | (10) | Managed Services and Hosting Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/21/2018 |
| 8.50% (L+7.50%, Floor 1.00%) | 12/21/2023 | 3,449 | 3,419 | 3,059 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Heartland Dental, LLC | (10) | Dental Support Organization |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 9/9/2020 |
| 7.50% (L+6.50%, Floor 1.00%) | 4/30/2025 | 14,813 | 14,477 | 14,887 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
HOWLCO LLC | (11) (13) (21) | Provider of Accounting and Business Development Software to Real Estate End Markets |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/19/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 10/23/2026 | 25,546 | 25,546 | 25,546 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Hybrid Promotions, LLC | (10) | Wholesaler of Licensed, Branded and Private Label Apparel |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/30/2021 |
| 9.25% (L+8.25%, Floor 1.00%) | 6/30/2026 | 7,088 | 6,957 | 7,028 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
IG Parent Corporation | (11) | Software Engineering |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/30/2021 |
| 6.75% (L+5.75%, Floor 1.00%) | 7/30/2026 | 9,591 | 9,419 | 9,419 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Implus Footcare, LLC | (10) | Provider of Footwear and Related Accessories |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/1/2017 |
| 8.75% (L+7.75%, Floor 1.00%) | 4/30/2024 | 18,702 | 18,471 | 17,743 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Independent Pet Partners Intermediate Holdings, LLC | (10) | Omnichannel Retailer of Specialty Pet Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (36) | 8/20/2020 |
| 7.20% | 12/22/2022 | 6,563 | 6,563 | 6,563 | |||
|
|
| Secured Debt | (19) | 12/10/2020 |
| 6.00% PIK | 11/20/2023 | 17,891 | 16,861 | 16,861 | |||
|
|
| Preferred Stock (non-voting) | (19) | 12/10/2020 |
| 6.00% PIK |
| 3,235 | 4,329 | ||||
|
|
| Preferred Stock (non-voting) |
| 12/10/2020 |
|
|
| - | - | ||||
|
|
| Member Units |
| 11/20/2018 | 1,558,333 |
|
|
| 1,558 | - | |||
|
|
|
|
|
|
|
|
|
| 28,217 | 27,753 | |||
Industrial Services Acquisition, LLC | (10) | Industrial Cleaning Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/13/2021 |
| 7.75% (L+6.75%, Floor 1.00%) | 8/13/2026 | 19,897 | 19,490 | 19,490 | |||
|
|
| Preferred Member Units | (8) (19) (30) | 1/31/2018 | 144 | 10.00% PIK |
|
| 120 | 164 | |||
|
|
| Preferred Member Units | (8) (19) (30) | 5/17/2019 | 80 | 20.00% PIK |
|
| 81 | 99 | |||
|
|
| Member Units | (30) | 6/17/2016 | 900 |
|
|
| 900 | 730 | |||
|
|
|
|
|
|
|
|
|
| 20,591 | 20,483 | |||
Infolinks Media Buyco, LLC | (10) | Exclusive Placement Provider to the Advertising Ecosystem |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/1/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 11/1/2026 | 8,680 | 8,487 | 8,487 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Interface Security Systems, L.L.C | (10) | Commercial Security Alarm Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/9/2021 |
| 11.75% (L+10.00%, Floor 1.75%) | 8/7/2023 | 525 | 525 | 525 | |||
|
|
| Secured Debt | (9) (14) (19) | 8/7/2019 |
| 9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK + | 8/7/2023 | 7,313 | 7,237 | 5,233 | |||
43
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
L+7.00%, Floor 1.75%) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| 7,762 | 5,758 | |||
Intermedia Holdings, Inc. | (11) | Unified Communications as a Service |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/3/2018 |
| 7.00% (L+6.00%, Floor 1.00%) | 7/19/2025 | 20,627 | 20,559 | 20,527 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Invincible Boat Company, LLC. | (10) | Manufacturer of Sport Fishing Boats |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/28/2019 |
| 8.00% (L+6.50%, Floor 1.50%) | 8/28/2025 | 17,510 | 17,354 | 17,510 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
INW Manufacturing, LLC | (11) | Manufacturer of Nutrition and Wellness Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/19/2021 |
| 6.50% (L+5.75%, Floor 0.75%) | 3/25/2027 | 7,406 | 7,205 | 7,258 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Isagenix International, LLC | (11) | Direct Marketer of Health Wellness Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/21/2018 |
| 6.75% (L+5.75%, Floor 1.00%) | 6/14/2025 | 5,158 | 5,135 | 3,865 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Jackmont Hospitality, Inc. | (10) | Franchisee of Casual Dining Restaurants |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/26/2015 |
| 8.00% (L+7.00%, Floor 1.00%) | 11/4/2024 | 2,100 | 2,100 | 2,100 | |||
|
|
| Preferred Equity |
| 11/8/2021 | 2,826,667 |
|
|
| 314 | 314 | |||
|
|
|
|
|
|
|
|
|
| 2,414 | 2,414 | |||
Joerns Healthcare, LLC | (11) | Manufacturer and Distributor of Health Care Equipment Supplies |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/21/2019 |
| 7.00% (L+6.00%, Floor 1.00%) | 8/21/2024 | 4,034 | 3,989 | 3,658 | |||
|
|
| Secured Debt | (19) | 11/15/2021 |
| 15.00% PIK | 11/8/2022 | 1,000 | 1,004 | 1,004 | |||
|
|
| Common Stock |
| 8/21/2019 | 472,579 |
|
|
| 4,429 | - | |||
|
|
|
|
|
|
|
|
|
| 9,422 | 4,662 | |||
JTI Electrical Mechanical, LLC | (10) | Electrical, Mechanical and Automation Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/22/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 12/22/2026 | 37,895 | 36,972 | 36,972 | |||
|
|
| Common Equity |
| 12/22/2021 | 1,684,211 |
|
|
| 1,684 | 1,684 | |||
|
|
|
|
|
|
|
|
|
| 38,656 | 38,656 | |||
Klein Hersh, LLC | (10) | Executive and C-Suite Placement for the Life Sciences and Healthcare Industries |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/13/2020 |
| 7.75% (L+7.00%, Floor 0.75%) | 11/13/2025 | 43,321 | 42,342 | 43,278 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
KMS, LLC | (10) | Wholesaler of Closeout and Value-priced Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/4/2021 |
| 8.25% (L+7.25%, Floor 1.00%) | 10/4/2026 | 7,581 | 7,415 | 7,415 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Kore Wireless Group Inc. | (11) (13) | Mission Critical Software Platform |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 12/31/2018 |
| 5.72% (L+5.50%) | 12/20/2024 | 11,415 | 11,345 | 11,400 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Laredo Energy, LLC | (10) | Oil Gas Exploration Production |
|
|
|
|
|
|
|
|
| |||
|
|
| Member Units |
| 5/4/2020 | 1,155,952 |
|
|
| 11,560 | 9,659 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
44
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
LaserAway Intermediate Holdings II, LLC | (11) | Aesthetic Dermatology Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/18/2021 |
| 6.50% (L+5.75%, Floor 0.75%) | 10/14/2027 | 4,130 | 4,050 | 4,115 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Lightbox Holdings, L.P. | (11) | Provider of Commercial Real Estate Software |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 5/23/2019 |
| 5.22% (L+5.00%) | 5/9/2026 | 14,625 | 14,460 | 14,442 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
LKCM Headwater Investments I, L.P. | (12) (13) | Investment Partnership |
|
|
|
|
|
|
|
|
| |||
|
|
| LP Interests | (8) (31) | 1/25/2013 | 2.3% |
|
|
| 1,746 | 2,541 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
LL Management, Inc. | (10) | Medical Transportation Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/2/2019 |
| 8.25% (L+7.25%, Floor 1.00%) | 9/25/2023 | 17,438 | 17,309 | 17,438 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
LLFlex, LLC | (10) | Provider of Metal-Based Laminates |
|
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|
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|
|
|
| |||
|
|
| Secured Debt | (9) | 8/16/2021 |
| 10.00% (L+9.00%, Floor 1.00%) | 8/16/2026 | 4,478 | 4,382 | 4,382 | |||
|
|
|
|
|
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|
|
|
|
| |||
Logix Acquisition Company, LLC | (10) | Competitive Local Exchange Carrier |
|
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|
|
| |||
|
|
| Secured Debt | (9) | 1/8/2018 |
| 6.75% (L+5.75%, Floor 1.00%) | 12/22/2024 | 25,850 | 24,605 | 24,428 | |||
|
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|
|
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|
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|
| |||
Looking Glass Investments, LLC | (12) (13) | Specialty Consumer Finance |
|
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|
| |||
|
|
| Member Units |
| 7/1/2015 | 3 |
|
|
| 125 | 25 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Mac Lean-Fogg Company | (10) | Manufacturer and Supplier for Auto and Power Markets |
|
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|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 4/22/2019 |
| 5.88% (L+5.25%, Floor 0.625%) | 12/22/2025 | 17,080 | 16,995 | 17,080 | |||
|
|
| Preferred Stock | (19) | 10/1/2019 |
| 13.75% (4.50% Cash, 9.25% PIK) |
| 1,920 | 1,920 | ||||
|
|
|
|
|
|
|
|
|
| 18,915 | 19,000 | |||
Mako Steel, LP | (10) | Self-Storage Design Construction |
|
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|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 3/15/2021 |
| 8.00% (L+7.25%, Floor 0.75%) | 3/13/2026 | 17,589 | 17,267 | 17,589 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
MB2 Dental Solutions, LLC | (11) | Dental Partnership Organization |
|
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|
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|
| |||
|
|
| Secured Debt | (9) | 1/28/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 1/29/2027 | 11,682 | 11,531 | 11,682 | |||
|
|
|
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|
|
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|
| |||
Mills Fleet Farm Group, LLC | (10) | Omnichannel Retailer of Work, Farm and Lifestyle Merchandise |
|
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|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/24/2018 |
| 7.25% (L+6.25%, Floor 1.00%) | 10/24/2024 | 17,781 | 17,563 | 17,781 | |||
|
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|
|
|
|
|
|
|
|
|
| |||
NBG Acquisition Inc | (11) | Wholesaler of Home Décor Products |
|
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|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 4/28/2017 |
| 6.50% (L+5.50%, Floor 1.00%) | 4/26/2024 | 3,987 | 3,961 | 2,758 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
NinjaTrader, LLC | (10) | Operator of Futures Trading Platform |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/18/2019 |
| 7.25% (L+6.25%, Floor 1.00%) | 12/18/2024 | 31,425 | 30,837 | 31,368 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
45
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NNE Partners, LLC | (10) | Oil Gas Exploration Production |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (19) | 3/2/2017 |
| 9.37% (4.87% Cash, 4.50% PIK) (4.50% PIK + L+4.75%) | 12/31/2023 | 24,781 | 24,709 | 23,154 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Northstar Group Services, Inc | (11) | Commercial Industrial Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/1/2021 |
| 6.50% (L+5.50%, Floor 1.00%) | 11/12/2026 | 10,000 | 9,952 | 10,034 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
NTM Acquisition Corp. | (11) | Provider of B2B Travel Information Content |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (19) | 7/12/2016 |
| 8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%) | 6/7/2024 | 4,598 | 4,598 | 4,552 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
NWN Corporation | (10) | Value Added Reseller and Provider of Managed Services to a Diverse Set of Industries |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/7/2021 |
| 7.50% (L+6.50%, Floor 1.00%) | 5/7/2026 | 42,972 | 42,108 | 42,323 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Ospemifene Royalty Sub LLC | (10) | Estrogen-Deficiency Drug Manufacturer and Distributor |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (14) | 7/8/2013 |
| 11.50% | 11/15/2026 | 4,562 | 4,562 | 112 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
OVG Business Services, LLC | (10) | Venue Management Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/29/2021 |
| 7.25% (L+6.25%, Floor 1.00%) | 11/19/2028 | 14,000 | 13,861 | 13,861 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Project Eagle Holdings, LLC | (10) | Provider of Secure Business Collaboration Software |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/6/2020 |
| 7.75% (L+6.75%, Floor 1.00%) | 7/6/2026 | 29,738 | 29,151 | 29,714 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
PT Network, LLC | (10) | Provider of Outpatient Physical Therapy and Sports Medicine Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (19) | 10/12/2017 |
| 8.50% (6.50% Cash, 2.00% PIK) (2.00% PIK + L+5.50%, Floor 1.00%) | 11/30/2023 | 8,889 | 8,889 | 8,889 | |||
|
|
| Common Stock |
| 1/1/2020 | 2 |
|
|
| - | 80 | |||
|
|
|
|
|
|
|
|
|
| 8,889 | 8,969 | |||
RA Outdoors LLC | (10) | Software Solutions Provider for Outdoor Activity Management |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 4/8/2021 |
| 7.75% (L+6.75%, Floor 1.00%) | 4/8/2026 | 19,374 | 19,193 | 18,352 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Research Now Group, Inc. and Survey Sampling International, LLC | (11) | Provider of Outsourced Online Surveying |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/29/2017 |
| 6.50% (L+5.50%, Floor 1.00%) | 12/20/2024 | 20,124 | 19,789 | 19,899 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
RM Bidder, LLC | (10) | Scripted and Unscripted TV and |
|
|
|
|
|
|
|
|
| |||
46
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Digital Programming Provider | ||||||||||||||
|
|
| Member Units |
| 11/12/2015 | 2,779 |
|
|
| 46 | 26 | |||
|
|
| Warrants | (26) | 11/12/2015 | 187,161 |
| 10/20/2025 |
| 425 | - | |||
|
|
|
|
|
|
|
|
|
| 471 | 26 | |||
Roof Opco, LLC | (10) | Residential Re-Roofing/Repair |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/27/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 8/27/2026 | 2,800 | 2,704 | 2,704 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
RTIC Subsidiary Holdings, LLC | (10) | Direct-To-Consumer eCommerce Provider of Outdoor Products |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 9/1/2020 |
| 9.00% (L+7.75%, Floor 1.25%) | 9/1/2025 | 18,191 | 17,997 | 18,191 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Rug Doctor, LLC. | (10) | Carpet Cleaning Products and Machinery |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/16/2021 |
| 7.25% (L+6.25%, Floor 1.00%) | 11/16/2024 | 11,145 | 10,902 | 10,902 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Salient Partners L.P. | (11) | Provider of Asset Management Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/31/2018 |
| 7.00% (L+6.00%, Floor 1.00%) | 10/30/2022 | 6,251 | 6,247 | 4,063 | |||
|
|
| Secured Debt | (9) | 9/30/2021 |
| 6.00% (L+5.00%, Floor 1.00%) | 10/30/2022 | 1,250 | 1,250 | 2,435 | |||
|
|
|
|
|
|
|
|
|
| 7,497 | 6,498 | |||
Savers, Inc. | (11) | For-Profit Thrift Retailer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/14/2021 |
| 6.25% (L+5.50%, Floor 0.75%) | 4/26/2028 | 11,400 | 11,295 | 11,386 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
SIB Holdings, LLC | (10) | Provider of Cost Reduction Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/29/2021 |
| 7.00% (L+6.00%, Floor 1.00%) | 10/29/2026 | 6,282 | 6,134 | 6,145 | |||
|
|
| Common Equity |
| 10/29/2021 | 95,238 |
|
|
| 200 | 200 | |||
|
|
|
|
|
|
|
|
|
| 6,334 | 6,345 | |||
South Coast Terminals Holdings, LLC | (10) | Specialty Toll Chemical Manufacturer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/10/2021 |
| 7.25% (L+6.25%, Floor 1.00%) | 12/13/2026 | 50,704 | 49,589 | 49,589 | |||
|
|
| Common Equity |
| 12/10/2021 | 863,636 |
|
|
| 864 | 864 | |||
|
|
|
|
|
|
|
|
|
| 50,453 | 50,453 | |||
Staples Canada ULC | (10) (13) (21) | Office Supplies Retailer |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) (22) | 9/14/2017 |
| 8.00% (L+7.00%, Floor 1.00%) | 9/12/2024 | 16,116 | 16,039 | 15,620 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Stellant Systems, Inc. | (11) | Manufacturer of Traveling Wave Tubes and Vacuum Electronic Devices |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/22/2021 |
| 6.25% (L+5.50%, Floor 0.75%) | 10/1/2028 | 7,700 | 7,625 | 7,700 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Student Resource Center, LLC | (10) | Higher Education Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 6/25/2021 |
| 9.00% (L+8.00%, Floor 1.00%) | 6/25/2026 | 10,969 | 10,753 | 10,826 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Tacala Investment Corp. | (34) | Quick Service Restaurant Group |
|
|
|
|
|
|
|
|
| |||
47
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
| Secured Debt | (9) | 3/19/2021 |
| 4.25% (L+3.50%, Floor 0.75%) | 2/5/2027 | 1,995 | 1,995 | 1,994 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Team Public Choices, LLC | (11) | Home-Based Care Employment Service Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 12/22/2020 |
| 6.00% (L+5.00%, Floor 1.00%) | 12/18/2027 | 15,109 | 14,778 | 15,071 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Tectonic Financial, LLC |
| Financial Services Organization |
|
|
|
|
|
|
|
|
| |||
|
|
| Common Stock | (8) | 5/15/2017 | 200,000 |
|
|
| 2,000 | 4,650 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Tex Tech Tennis, LLC | (10) | Sporting Goods Textiles |
|
|
|
|
|
|
|
|
| |||
|
|
| Common Stock | (30) | 7/7/2021 | 1,000,000 |
|
| 1,000 | 1,000 | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||
U.S. TelePacific Corp. | (11) | Provider of Communications and Managed Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 5/17/2017 |
| 7.00% (L+6.00%, Floor 1.00%) | 5/2/2023 | 17,088 | 16,985 | 12,917 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
USA DeBusk LLC | (10) | Provider of Industrial Cleaning Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 10/22/2019 |
| 6.75% (L+5.75%, Floor 1.00%) | 9/8/2026 | 37,281 | 36,510 | 37,281 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Veregy Consolidated, Inc. | (11) | Energy Service Company |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/9/2020 |
| 6.25% (L+5.25, Floor 1.00%) | 11/3/2025 | 5,875 | 5,111 | 5,111 | |||
|
|
| Secured Debt | (9) | 11/9/2020 |
| 7.00% (L+6.00%, Floor 1.00%) | 11/3/2027 | 14,888 | 14,524 | 14,925 | |||
|
|
|
|
|
|
|
|
|
| 19,635 | 20,036 | |||
Vida Capital, Inc | (11) | Alternative Asset Manager |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt |
| 10/10/2019 |
| 6.10% (L+6.00%) | 10/1/2026 | 17,089 | 16,905 | 15,850 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Vistar Media, Inc. | (10) | Operator of Digital Out-of-Home Advertising Platform |
|
|
|
|
|
|
|
|
| |||
|
|
| Preferred Stock |
| 4/3/2019 | 70,207 |
|
| 767 | 1,726 | ||||
|
|
|
|
|
|
|
|
|
|
|
| |||
VORTEQ Coil Finishers, LLC | (10) | Specialty Coating of Aluminum and Light-Gauge Steel |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 11/30/2021 |
| 8.50% (L+7.50%, Floor 1.00%) | 11/30/2026 | 25,962 | 25,450 | 25,450 | |||
|
|
| Common Equity |
| 11/30/2021 | 1,038,462 |
|
| 1,038 | 1,038 | ||||
|
|
|
|
|
|
|
|
|
| 26,488 | 26,488 | |||
Wahoo Fitness Acquisition L.L.C. | (11) | Fitness Training Equipment Provider |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 8/17/2021 |
| 6.75% (L+5.75%, Floor 1.00%) | 8/12/2028 | 15,000 | 14,569 | 14,916 | |||
|
|
|
|
|
|
|
|
|
|
|
| |||
Wall Street Prep, Inc. | (10) | Financial Training Services |
|
|
|
|
|
|
|
|
| |||
|
|
| Secured Debt | (9) | 7/19/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 7/19/2026 | 4,373 | 4,288 | 4,285 | |||
|
|
| Common Stock |
| 7/19/2021 | 400,000 |
|
| 400 | 400 | ||||
|
|
|
|
|
|
|
|
|
| 4,688 | 4,685 | |||
Watterson Brands, LLC | (10) | Facility Management Services |
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| Secured Debt | (9) | 12/17/2021 |
| 7.25% (L+6.25%, Floor 1.00%) | 12/17/2026 | 25,876 | 25,267 | 25,267 | |||
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Winter Services LLC | (10) | Provider of Snow Removal and Ice Management Services |
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MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20) | Business Description | Type of Investment (2) (3) (15) | Investment Date (24) | Shares/Units | Rate | Maturity Date | Principal (4) | Cost (4) | Fair Value (18) | |||||
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| Secured Debt | (9) | 11/19/2021 |
| 8.00% (L+7.00%, Floor 1.00%) | 11/19/2026 | 10,278 | 10,018 | 10,061 | |||
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Xenon Arc, Inc. | (10) | Tech-enabled Distribution Services to Chemicals and Food Ingredients Primary Producers |
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| Secured Debt | (9) | 12/17/2021 |
| 6.75% (L+6.00%, Floor 0.75%) | 12/17/2026 | 38,600 | 37,423 | 37,423 | |||
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YS Garments, LLC | (11) | Designer and Provider of Branded Activewear |
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| Secured Debt | (9) | 8/22/2018 |
| 6.50% (L+5.50%, Floor 1.00%) | 8/9/2024 | 13,034 | 12,967 | 12,578 | |||
Subtotal Non-Control/Non-Affiliate Investments (85.2% of net assets at fair value) | $ | 1,573,110 | $ | 1,523,360 | ||||||||||
Total Portfolio Investments, December 31, 2021 (199.2% of net assets at fair value) | $ | 3,259,246 | $ | 3,561,831 | ||||||||||
(1) | All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds. |
(2) | Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted by footnote (8), as described below. |
(3) | See Note C—Fair Value Hierarchy for Investments—Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio companies. |
(4) | Principal is net of repayments. Cost is net of repayments and accumulated unearned income. |
(5) | Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. |
(6) | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments. |
(7) | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. |
(8) | Income producing through dividends or distributions. |
(9) | Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets every one, three, or six months at the borrower’s option. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of 1.06%. |
(10) | Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments. |
(11) | Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments. |
(12) | Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Other Portfolio investments. |
(13) | Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
(14) | Non-accrual and non-income producing investment. |
(15) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.” |
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MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
(16) | External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds. |
(17) | Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable. |
(18) | Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for further discussion. |
(19) | PIK interest income and cumulative dividend income represent income not paid currently in cash. |
(20) | All portfolio company headquarters are based in the United States, unless otherwise noted. |
(21) | Portfolio company headquarters are located outside of the United States. |
(22) | In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $21.4 million Canadian Dollars and receive $16.9 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized depreciation on the forward foreign currency contract was not significant as of December 31, 2021. |
(23) | The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate. |
(24) | Investment date represents the date of initial investment in the security position. |
(25) | Warrants are presented in equivalent shares with a strike price of $10.92 per share. |
(26) | Warrants are presented in equivalent units with a strike price of $14.28 per unit. |
(27) | Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit. |
(28) | Warrants are presented in equivalent shares with a strike price of $0.001 per share. |
(29) | Warrants are presented in equivalent units with a strike price of $1.50 per unit. |
(30) | Shares/Units represent ownership in a related Real Estate or HoldCo entity. |
(31) | Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated. |
(32) | Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status. |
(33) | The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.96% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate. |
(34) | Short-term portfolio investments. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of short-term portfolio investments. |
(35) | The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period. |
(36) | As of December 31, 2021, borrowings under the loan facility bear interest at LIBOR+6.00% or Prime+5.00%. Delayed draw term loan facility permits the borrower to make an interest rate election on each new tranche of borrowings under the facility. The rate presented represents a weighted-average rate for borrowings under the facility. |
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MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE A—ORGANIZATION AND BASIS OF PRESENTATION
1. Organization
Main Street Capital Corporation (“MSCC”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market (“Middle Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its LMM investment strategy. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.
MSCC was formed in March 2007 to operate as an internally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.
MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. The Funds are each licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration (“SBA”).
MSC Adviser I, LLC (the “External Investment Manager”) was formed in November 2013 as a wholly-owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies (“External Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission (“SEC”) to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements.
MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSCC generally does not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.
MSCC has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes.
Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “Main Street” refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.
2. Basis of Presentation
Main Street’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following
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accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of the periods presented herein, Main Street’s consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street’s investments in LMM portfolio companies, investments in Private Loan portfolio companies, investments in Middle Market portfolio companies, Other Portfolio investments and the investment in the External Investment Manager (see Note C—Fair Value Hierarchy for Investments—Portfolio Composition—Investment Portfolio Composition for additional discussion of Main Street’s Investment Portfolio and definitions for the defined terms Private Loan and Other Portfolio). Main Street’s results of operations for the three and six months ended June 30, 2022 and 2021, cash flows for the six months ended June 30, 2022 and 2021, and financial position as of June 30, 2022 and December 31, 2021, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements of Main Street are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2021. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results to be expected for the full year. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.
Principles of Consolidation
Under ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC’s consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Main Street has determined that none of its portfolio investments qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street’s Investment Portfolio is carried on the Consolidated Balance Sheets at fair value, as discussed further in Note B.1.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio, with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss)”, in both cases on the Consolidated Statements of Operations.
Portfolio Investment Classification
Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which Main Street owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, Main Street has excluded consideration of any voting securities or board appointment rights held by third-party investment funds advised by the External Investment Manager.
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NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Valuation of the Investment Portfolio
Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.
Main Street’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and debt securities issued by Middle Market companies that are generally larger in size than the LMM companies and that can be more liquid than the debt securities issued by LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies that have been originated directly by Main Street or through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are made in companies that are consistent with the size of companies Main Street invests in through its LMM portfolio and Middle Market portfolio. Main Street’s portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Private Loan portfolio investments or Middle Market portfolio investments, including investments which may be managed by third parties. Main Street’s portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Main Street’s portfolio investments may be subject to restrictions on resale.
LMM investments and Other Portfolio investments generally have no established trading market, while Middle Market and short-term portfolio investments generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820, with such valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street’s Investment Portfolio.
For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a yield-to-maturity model (“Yield-to-Maturity”) valuation method for its LMM debt investments. For Middle Market and short-term portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Private Loan and Middle Market portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for Main Street’s portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.
These valuation approaches consider the value associated with Main Street’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in
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the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors.
Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a Waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company’s historical and projected financial results. Due to SEC deadlines for Main Street’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in determining. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.
Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance, changes in market-based interest rates and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.
Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment’s fair value for factors known to Main Street that would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street’s ability to realize the full NAV of its interests in the investment fund.
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Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company’s determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street’s investments in each LMM portfolio company at least once every calendar year, and for Main Street’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at Main Street’s determination of fair value on its investments in a total of 36 LMM portfolio companies for the six months ended June 30, 2022, representing 54% of the total LMM portfolio at fair value as of June 30, 2022, and on a total of 31 LMM portfolio companies for the six months ended June 30, 2021, representing 52% of the total LMM portfolio at fair value as of June 30, 2021. Excluding its investments in LMM portfolio companies that, as of June 30, 2022 and 2021, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by Main Street’s independent financial advisory services firm for the six months ended June 30, 2022 and 2021 was 61% and 55% of the total LMM portfolio at fair value as of June 30, 2022 and 2021, respectively.
For valuation purposes, all of Main Street’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.
In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company’s determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street’s investments in each Private Loan portfolio company at least once every calendar year, and for Main Street’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 29 Private Loan portfolio companies for the six months ended June 30, 2022, representing 44% of the total Private Loan portfolio at fair value as of June 30, 2022, and on a total of 26 Private Loan portfolio companies for the six months ended June 30, 2021, representing 45% of the total Private Loan portfolio at fair value as of June 30, 2021. Excluding its investments in Private Loan portfolio companies that, as of June 30, 2022 and 2021, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by Main Street’s independent financial advisory services firm for the six months ended June 30, 2022 and 2021 was 67% and 60% of the total Private Loan portfolio at fair value as of June 30, 2022 and 2021, respectively.
For valuation purposes, all of Main Street’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to
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determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. The Company generally consults on a limited basis with a financial advisory services firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these investments. The vast majority (92% and 93% as of June 30, 2022 and December 31, 2021, respectively) of the Middle Market portfolio investments (i) are valued using third-party quotes or other independent pricing services, (ii) have received an assurance certification from independent financial services firm within the last twelve months or (iii) are new investments that have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment.
For valuation purposes, all of Main Street’s short-term portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. Because all of the short-term portfolio investments are typically valued using third-party quotes or other independent pricing services, Main Street generally does not consult with any financial advisory services firms in connection with determining the fair value of its short-term portfolio investments.
For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments. Main Street’s Other Portfolio investments comprised 2.9% and 4.7% of Main Street’s Investment Portfolio at fair value as of June 30, 2022 and December 31, 2021, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of these investments using the NAV valuation method.
For valuation purposes, Main Street’s investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity’s historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager.
Due to the inherent uncertainty in the valuation process, Main Street’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.
Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM, Private Loan and Middle Market portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM, Private Loan and Middle Market portfolio company.
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Main Street’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of its executive officers to serve as the Board of Directors’ valuation designee. Main Street adopted the Valuation Procedures effective April 1, 2021. Main Street believes its Investment Portfolio as of June 30, 2022 and December 31, 2021 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates.
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2. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio, the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street, pursuant to valuation policies and procedures approved and overseen by Main Street’s Board of Directors, in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.
Macroeconomic factors, including the COVID-19 pandemic, risk of recession, inflation, supply chain constraints or disruptions and rising interest rates, and the related effect on the U.S. and global economies, have impacted, and may continue to impact, the businesses and operating results of certain of Main Street’s portfolio companies, as well as market interest rate spreads. As a result of these and other current effects of macroeconomic factors, as well as the uncertainty regarding the extent and duration of their impact, the valuation of Main Street’s Investment Portfolio has and may continue to experience increased volatility.
3. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.
At June 30, 2022, cash balances totaling $40.9 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.
4. Interest, Dividend and Fee Income
Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street’s valuation policies, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service its debt obligation, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.
As of June 30, 2022, Main Street’s total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.2% of its cost. As of December 31, 2021, Main Street’s total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% of its cost.
Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind (“PIK”) interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. —Summary of Significant Accounting Policies—Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected
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interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the three months ended June 30, 2022 and 2021, (i) 1.7% and 3.4%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.2% and 0.6%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash. For the six months ended June 30, 2022 and 2021, (i) 1.4% and 3.6%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.6% and 0.7%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash.
Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.
A presentation of total investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| |||||
(dollars in thousands) | |||||||||||||
Interest, fee and dividend income: | |||||||||||||
Interest income | $ | 63,984 | $ | 45,944 | $ | 123,426 | $ | 89,416 | |||||
Dividend income |
| 17,913 |
| 18,619 |
| 34,535 |
| 36,316 | |||||
Fee income |
| 3,303 |
| 2,731 |
| 6,635 |
| 4,370 | |||||
Total interest, fee and dividend income | $ | 85,200 | $ | 67,294 | $ | 164,596 | $ | 130,102 | |||||
5. Deferred Financing Costs
Deferred financing costs include commitment fees and other direct costs related to Main Street’s multi-year revolving credit facility (the “Credit Facility”) and its unsecured notes, as well as the commitment fees and leverage fees (3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures. See further discussion of Main Street’s debt in Note E—Debt. Deferred financing costs in connection with the Credit Facility are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the principal amount outstanding.
6. Equity Offering Costs
The Company’s offering costs are charged against the proceeds from equity offerings when the proceeds are received.
7. Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value
Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income over the life of the financing.
In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is
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netted against the applicable debt investment, and accreted into interest income over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.
Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income over the life of the debt investment.
To maintain RIC tax treatment (as discussed in Note B.9.—Summary of Significant Accounting Policies—Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the three months ended June 30, 2022 and 2021, 2.0% and 2.4%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction. For the six months ended June 30, 2022 and 2021, 2.0% and 2.4%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.
8. Share-Based Compensation
Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.
Main Street has also adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. Accordingly, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Additionally, Main Street has elected to account for forfeitures as they occur.
9. Income Taxes
MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.
The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The
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Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.
The External Investment Manager is an indirect wholly-owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager’s separate financial statements.
The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Main Street’s net assets as included on the Consolidated Balance Sheets and Consolidated Statements of Changes in Net Assets include an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.
Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
10. Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.
11. Fair Value of Financial Instruments
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.
To estimate the fair value of Main Street’s multiple tranches of unsecured debt instruments as disclosed in Note E – Debt, Main Street uses quoted market prices. For the estimated fair value of Main Street’s SBIC debentures, Main Street uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for the debt security.
12. Earnings per Share
Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street’s equity compensation plans are participating securities and, therefore,
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are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.
13. Recently Issued or Adopted Accounting Standards
In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The Company adopted this amendment in March 2020 and plans to apply the amendments in this update to account for contract modifications due to changes in reference rates when LIBOR reference is no longer used. The Company utilized the optional expedients and exceptions provided by ASU 2020-04 during the six months ended June 30, 2022, the effect of which was not material to the consolidated financial statements and the notes thereto. The Company continues to evaluate the potential impact that the amendments in this update will have on its consolidated financial statements and disclosures.
In December 2021, the SEC published Staff Accounting Bulletin No. 120 (“SAB 120”) to provide accounting and disclosure guidance for stock compensation awards made to executives and conforming amendments to the Staff Accounting Bulletin Series to align with the current authoritative accounting guidance in ASC 718, Compensation – Stock Compensation. In part, SAB 120 requires that an entity disclose how it determines the current price of underlying shares for grant-date fair value, the policy for when an adjustment to the share price is required, how it determines the amount of an adjustment to the share price and any significant assumptions used in determining an adjustment to the share price. SAB 120 is effective for all stock compensation awards issued after December 1, 2021. Main Street is in compliance with the guidance pursuant to SAB 120 for any share-based compensation disclosures. See Note J – Share-Based Compensation for further discussion of Main Street’s policies and procedures regarding share-based compensation. The impact of SAB 120 was not material to the consolidated financial statements and the notes thereto.
From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.
NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS—PORTFOLIO COMPOSITION
ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.
Fair Value Hierarchy
In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).
Investments recorded on Main Street’s balance sheet are categorized based on the inputs to the valuation techniques as follows:
Level 1—Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).
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Level 2—Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:
| ● | Quoted prices for similar assets in active markets (for example, investments in restricted stock); |
| ● | Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies); |
| ● | Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and |
| ● | Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment. |
Level 3—Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment.
As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
As of June 30, 2022 and December 31, 2021, all of Main Street’s LMM portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s LMM portfolio investments were categorized as Level 3 as of June 30, 2022 and December 31, 2021.
As of June 30, 2022 and December 31, 2021, Main Street’s Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Private Loan portfolio investments were categorized as Level 3 as of June 30, 2022 and December 31, 2021.
As of June 30, 2022 and December 31, 2021, Main Street’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Middle Market portfolio investments were categorized as Level 3 as of June 30, 2022 and December 31, 2021.
As of June 30, 2022 and December 31, 2021, Main Street’s Other Portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s Other Portfolio investments were categorized as Level 3 as of June 30, 2022 and December 31, 2021.
As of June 30, 2022, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of June 30, 2022. As of December 31, 2021, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of
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available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of December 31, 2021.
The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:
| ● | Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers; |
| ● | Current and projected financial condition of the portfolio company; |
| ● | Current and projected ability of the portfolio company to service its debt obligations; |
| ● | Type and amount of collateral, if any, underlying the investment; |
| ● | Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment; |
| ● | Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio); |
| ● | Pending debt or capital restructuring of the portfolio company; |
| ● | Projected operating results of the portfolio company; |
| ● | Current information regarding any offers to purchase the investment; |
| ● | Current ability of the portfolio company to raise any additional financing as needed; |
| ● | Changes in the economic environment which may have a material impact on the operating results of the portfolio company; |
| ● | Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company; |
| ● | Qualitative assessment of key management; |
| ● | Contractual rights, obligations or restrictions associated with the investment; and |
| ● | Other factors deemed relevant. |
The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM, Private Loan and Middle Market securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see Note B.1.—Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain
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investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.
The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 portfolio investments as of June 30, 2022 and December 31, 2021:
| Fair Value as of |
|
|
|
|
|
| |||||||
June 30, |
| |||||||||||||
Type of | 2022 | Significant | Weighted |
| ||||||||||
Investment |
| (in thousands) | Valuation Technique | Unobservable Inputs | Range(3) | Average(3) | Median(3) | |||||||
Equity investments | $ | 1,107,893 |
| Discounted cash flow |
| WACC |
| 9.5% - 22.1% |
| 14.6 | % | 15.6 | % | |
| Market comparable / Enterprise value |
| EBITDA multiple (1) |
| 4.5x - 8.3x(2) |
| 6.6x |
| 6.0x | |||||
Debt investments | $ | 2,282,777 |
| Discounted cash flow |
| Risk adjusted discount factor |
| 6.8% - 15.0%(2) |
| 10.4 | % | 10.6 | % | |
| Expected principal recovery percentage |
| 0.0% - 200.0% |
| 99.4 | % | 100.0 | % | ||||||
Debt investments | $ | 325,239 |
| Market approach |
| Third‑party quote |
| 5.75 - 99.8 |
| 92.0 |
| 94.5 | ||
Total Level 3 investments | $ | 3,715,909 | ||||||||||||
| (1) | EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment. |
| (2) | Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 15.7x and the range for risk adjusted discount factor is 5.0% - 38.5%. |
| (3) | Does not include investments for which the valuation technique does not include the use of the applicable fair value input. |
| Fair Value as of |
|
|
|
|
|
| |||||||
December 31, |
| |||||||||||||
Type of | 2021 | Significant | Weighted |
| ||||||||||
Investment |
| (in thousands) | Valuation Technique | Unobservable Inputs | Range(3) | Average(3) | Median(3) | |||||||
Equity investments | $ | 1,050,269 |
| Discounted cash flow |
| WACC |
| 9.1% - 20.6% |
| 13.8 | % | 14.8 | % | |
| Market comparable / Enterprise value |
| EBITDA multiple (1) |
| 4.8x - 7.7x(2) |
| 6.6x |
| 5.9x | |||||
Debt investments | $ | 2,158,424 |
| Discounted cash flow |
| Risk adjusted discount factor |
| 5.6% - 15.7%(2) |
| 9.8 | % | 9.3 | % | |
| Expected principal recovery percentage |
| 0.0% - 100.0% |
| 99.6 | % | 100.0 | % | ||||||
Debt investments | $ | 351,144 |
| Market approach |
| Third‑party quote |
| 3.0 - 100.5 |
| 94.4 |
| 99.0 | ||
Total Level 3 investments | $ | 3,559,837 | ||||||||||||
| (1) | EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment. |
| (2) | Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 11.0x and the range for risk adjusted discount factor is 4.2% - 38.5%. |
| (3) | Does not include investments for which the valuation technique does not include the use of the applicable fair value input. |
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The following tables provide a summary of changes in fair value of Main Street’s Level 3 portfolio investments for the six-month periods ended June 30, 2022 and 2021 (amounts in thousands):
Net | ||||||||||||||||||||||||
Fair Value | Transfers | Changes | Net | Fair Value | ||||||||||||||||||||
as of | Into | from | Unrealized | as of | ||||||||||||||||||||
Type of |
| December 31, |
| Level 3 |
| Redemptions/ |
| New |
| Unrealized |
| Appreciation |
| June 30, | ||||||||||
Investment |
| 2021 |
| Hierarchy |
| Repayments |
| Investments |
| to Realized |
| (Depreciation) |
| Other(1) |
| 2022 | ||||||||
Debt | $ | 2,509,568 | $ | — | $ | (351,315) | $ | 508,045 | $ | 3,656 | $ | (60,605) | $ | (1,333) | $ | 2,608,016 | ||||||||
Equity | 1,043,709 | — | (27,338) | 34,765 | (1,977) | 51,451 | 1,333 | 1,101,943 | ||||||||||||||||
Equity Warrant | 6,560 | — | — | — | — | (610) | — | 5,950 | ||||||||||||||||
$ | 3,559,837 | $ | — | $ | (378,653) | $ | 542,810 | $ | 1,679 | $ | (9,764) | $ | — | $ | 3,715,909 | |||||||||
| (1) | Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows. |
|
|
|
|
| Net |
|
|
| ||||||||||||||||
Fair Value | Transfers | Changes | Net | Fair Value | ||||||||||||||||||||
as of | Into | from | Unrealized | as of | ||||||||||||||||||||
Type of | December 31, | Level 3 | Redemptions/ | New | Unrealized | Appreciation | June 30, | |||||||||||||||||
Investment | 2020 | Hierarchy | Repayments | Investments |
| to Realized | (Depreciation) | Other(1) | 2021 | |||||||||||||||
Debt | $ | 1,807,134 | $ | — | $ | (282,896) | $ | 457,028 | $ | 9,781 | $ | 11,278 | $ | (3,485) | $ | 1,998,840 | ||||||||
Equity |
| 866,734 | — | (49,565) | 20,584 | 5,177 | 57,120 | 5,515 | 905,565 | |||||||||||||||
Equity Warrant |
| 10,998 | — | — | — | 1,128 | 484 | (2,030) | 10,580 | |||||||||||||||
$ | 2,684,866 | $ | — | $ | (332,461) | $ | 477,612 | $ | 16,086 | $ | 68,882 | $ | — | $ | 2,914,985 | |||||||||
| (1) | Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows. |
At June 30, 2022 and December 31, 2021, Main Street’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:
Fair Value Measurements | ||||||||||||
(in thousands) | ||||||||||||
|
| Quoted Prices in |
|
| Significant | |||||||
| Active Markets for |
| Significant Other |
| Unobservable | |||||||
| Identical Assets |
| Observable Inputs |
| Inputs | |||||||
At June 30, 2022 | Fair Value |
| (Level 1) | (Level 2) |
| (Level 3) | ||||||
LMM portfolio investments | $ | 1,816,255 | $ | — | $ | — | $ | 1,816,255 | ||||
Private Loan portfolio investments |
| 1,309,020 |
| — |
| — |
| 1,309,020 | ||||
Middle Market portfolio investments |
| 363,468 |
| — |
| — |
| 363,468 | ||||
Other Portfolio investments |
| 108,846 |
| — |
| — |
| 108,846 | ||||
External Investment Manager |
| 118,320 |
| — |
| — |
| 118,320 | ||||
Short-term portfolio investments | 1,861 | — | 1,861 | — | ||||||||
Total investments | $ | 3,717,770 | $ | — | $ | 1,861 | $ | 3,715,909 | ||||
Fair Value Measurements | ||||||||||||
(in thousands) | ||||||||||||
|
| Quoted Prices in |
|
| Significant | |||||||
| Active Markets for |
| Significant Other |
| Unobservable | |||||||
| Identical Assets |
| Observable Inputs |
| Inputs | |||||||
At December 31, 2021 | Fair Value |
| (Level 1) | (Level 2) |
| (Level 3) | ||||||
LMM portfolio investments | $ | 1,716,415 | $ | — | $ | — | $ | 1,716,415 | ||||
Private Loan portfolio investments |
| 1,141,772 |
| — |
| — |
| 1,141,772 | ||||
Middle Market portfolio investments |
| 395,167 |
| — |
| — |
| 395,167 | ||||
Other Portfolio investments |
| 166,083 |
| — |
| — |
| 166,083 | ||||
External Investment Manager |
| 140,400 |
| — |
| — |
| 140,400 | ||||
Short-term portfolio investments | 1,994 | — | 1,994 | — | ||||||||
Total investments | $ | 3,561,831 | $ | — | $ | 1,994 | $ | 3,559,837 | ||||
65
Investment Portfolio Composition
Main Street’s principal investment objective is to maximize its portfolio’s total return by generating current income from its debt investments and current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Main Street seeks to achieve its investment objective through its LMM, Private Loan and Middle Market investment strategies.
Main Street’s LMM investment strategy involves investments in secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $75 million. The LMM debt investments are typically secured by a first priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.
Main Street’s private loan (“Private Loan”) investment strategy involves investments in privately held companies that are generally consistent with the size of its LMM portfolio companies or Middle Market portfolio companies, and its Private Loan investments generally range in size from $10 million to $75 million. Main Street’s Private Loan investments generally consist of loans that have been originated directly by Main Street or through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Main Street’s Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. Main Street may have the option to invest alongside the sponsor in the equity securities of its Private Loan portfolio companies.
Main Street’s Middle Market investment strategy involves investments in syndicated loans to or debt securities in Middle Market companies, which Main Street defines as companies with annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $25 million. Main Street’s Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.
Main Street’s other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Private Loan or Middle Market portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.
Based upon Main Street’s liquidity and capital structure management activities, Main Street’s Investment Portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be liquidated in one year or less. These short-term investments are not expected to be a significant portion of the overall Investment Portfolio.
Main Street’s external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets under management for external parties and may earn incentive fees, or a carried interest, based on the performance of the assets managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”). Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street’s total expenses for the three months ended June 30, 2022 and 2021 are net of expenses allocated to the External Investment Manager of $3.5 million and $2.6 million, respectively, and for the six months ended June 30, 2022 and 2021 of $6.3 million and $5.0 million, respectively.
66
Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three and six months ended June 30, 2022 and 2021, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.
The following tables provide a summary of Main Street’s investments in the LMM, Private Loan and Middle Market portfolios as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager, which are discussed further below):
| As of June 30, 2022 | |||||||||||
LMM (a) | Private Loan | Middle Market | ||||||||||
(dollars in millions) |
| |||||||||||
Number of portfolio companies | 75 |
| 82 |
| 34 | |||||||
Fair value | $ | 1,816.3 |
| $ | 1,309.0 |
| $ | 363.5 | ||||
Cost | $ | 1,508.9 |
| $ | 1,347.9 |
| $ | 419.0 | ||||
Debt investments as a % of portfolio (at cost) | 71.9 | % | 96.1 | % | 92.9 | % | ||||||
Equity investments as a % of portfolio (at cost) | 28.1 | % | 3.9 | % | 7.1 | % | ||||||
% of debt investments at cost secured by first priority lien | 99.0 | % | 99.4 | % | 99.2 | % | ||||||
Weighted-average annual effective yield (b) | 11.2 | % | 8.5 | % | 8.0 | % | ||||||
Average EBITDA (c) | $ | 7.5 |
| $ | 41.2 |
| $ | 71.4 | ||||
| (a) | At June 30, 2022, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of June 30, 2022, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of June 30, 2022 including debt investments on non-accrual status was 10.5% for its LMM portfolio, 8.3% for its Private Loan portfolio and 7.6% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
| As of December 31, 2021 | |||||||||||
LMM (a) | Private Loan | Middle Market | ||||||||||
(dollars in millions) |
| |||||||||||
Number of portfolio companies | 73 |
| 75 |
| 36 | |||||||
Fair value | $ | 1,716.4 |
| $ | 1,141.8 |
| $ | 395.2 | ||||
Cost | $ | 1,455.7 |
| $ | 1,157.5 |
| $ | 440.9 | ||||
Debt investments as a % of portfolio (at cost) | 70.9 | % | 95.7 | % | 93.3 | % | ||||||
Equity investments as a % of portfolio (at cost) | 29.1 | % | 4.3 | % | 6.7 | % | ||||||
% of debt investments at cost secured by first priority lien | 99.0 | % | 98.7 | % | 98.7 | % | ||||||
Weighted-average annual effective yield (b) | 11.2 | % | 8.2 | % | 7.5 | % | ||||||
Average EBITDA (c) | $ | 6.2 |
| $ | 41.3 |
| $ | 76.0 | ||||
67
| (a) | At December 31, 2021, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 40%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for its LMM portfolio, 8.0% for its Private Loan portfolio and 6.9% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
For the three months ended June 30, 2022 and 2021, Main Street achieved an annualized total return on investments of 6.5% and 19.7%, respectively. For the six months ended June 30, 2022 and 2021, Main Street achieved an annualized total return on investments of 9.2% and 16.0%, respectively. For the year ended December 31, 2021, Main Street achieved an annualized total return on investments of 16.6%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Main Street’s total return on investments is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.
As of June 30, 2022, Main Street had Other Portfolio investments in 14 companies, collectively totaling $108.8 million in fair value and $116.1 million in cost basis and which comprised 2.9% and 3.4% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, Main Street had Other Portfolio investments in 13 companies, collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which comprised 4.7% and 5.3% of Main Street’s Investment Portfolio at fair value and cost, respectively.
As of June 30, 2022, Main Street had one short-term portfolio investment, which was a secured debt investment that had $1.9 million in fair value and $2.0 million in cost basis and which comprised 0.1% of Main Street’s Investment Portfolio at both fair value and cost. As of December 31, 2021, Main Street had one short-term portfolio investment, which was a secured debt investment that had $2.0 million in both fair value and cost basis and which comprised 0.1% of Main Street’s Investment Portfolio at both fair value and cost.
As discussed further in Note A.1—Organization and Basis of Presentation—Organization, Main Street holds an investment in the External Investment Manager, a wholly-owned subsidiary that is treated as a portfolio investment. As of June 30, 2022, this investment had a fair value of $118.3 million and a cost basis of $29.5 million, which comprised 3.2% and 0.9% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised 3.9% and 0.9% of Main Street’s Investment Portfolio at fair value and cost, respectively.
The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle
68
Market portfolio investments, as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio investments, short-term portfolio investments and the External Investment Manager, which are discussed above).
Cost: |
| June 30, 2022 |
| December 31, 2021 | ||
First lien debt |
| 83.9 | % | 82.5 | % | |
Equity |
| 15.2 | % | 16.2 | % | |
Second lien debt |
| 0.3 | % | 0.6 | % | |
Equity warrants |
| 0.2 | % | 0.3 | % | |
Other |
| 0.4 | % | 0.4 | % | |
| 100.0 | % | 100.0 | % |
Fair Value: |
| June 30, 2022 |
| December 31, 2021 |
| |
First lien debt |
| 74.0 | % | 74.3 | % |
|
Equity |
| 25.1 | % | 24.6 | % |
|
Second lien debt |
| 0.3 | % | 0.5 | % |
|
Equity warrants |
| 0.2 | % | 0.2 | % |
|
Other |
| 0.4 | % | 0.4 | % |
|
| 100.0 | % | 100.0 | % |
|
The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments, as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.
Cost: |
| June 30, 2022 |
| December 31, 2021 |
| |
West |
| 28.0 | % | 28.3 | % |
|
Northeast |
| 21.1 | % | 22.6 | % |
|
Southwest |
| 20.2 | % | 21.6 | % |
|
Midwest |
| 15.5 | % | 15.1 | % |
|
Southeast |
| 14.0 | % | 11.6 | % |
|
Canada |
| 0.7 | % | 0.8 | % |
|
Other Non-United States |
| 0.5 | % | — | % |
|
| 100.0 | % | 100.0 | % |
|
Fair Value: |
| June 30, 2022 |
| December 31, 2021 |
| |
West |
| 28.4 | % | 28.5 | % |
|
Southwest |
| 21.4 | % | 23.0 | % |
|
Northeast |
| 20.9 | % | 21.9 | % |
|
Midwest |
| 15.9 | % | 15.8 | % |
|
Southeast |
| 12.3 | % | 10.0 | % |
|
Canada |
| 0.6 | % | 0.8 | % |
|
Other Non-United States |
| 0.5 | % | — | % |
|
| 100.0 | % | 100.0 | % |
|
Main Street’s LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Private Loan portfolio investments and
69
Middle Market portfolio investments by industry at cost and fair value as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).
Cost: | June 30, 2022 | December 31, 2021 | |||
Internet Software Services |
| 8.3 | % | 7.2 | % |
Machinery |
| 7.6 | % | 7.3 | % |
Construction Engineering |
| 7.2 | % | 7.8 | % |
Commercial Services Supplies |
| 5.6 | % | 5.9 | % |
Diversified Consumer Services |
| 5.2 | % | 3.4 | % |
Distributors |
| 4.5 | % | 4.7 | % |
Leisure Equipment Products |
| 4.4 | % | 4.1 | % |
Health Care Providers Services |
| 4.2 | % | 3.9 | % |
Professional Services |
| 4.1 | % | 4.6 | % |
Energy Equipment Services |
| 3.6 | % | 4.0 | % |
Specialty Retail |
| 3.5 | % | 3.5 | % |
IT Services |
| 3.5 | % | 3.5 | % |
Aerospace Defense |
| 2.6 | % | 1.9 | % |
Media |
| 2.5 | % | 1.8 | % |
Building Products |
| 2.2 | % | 2.3 | % |
Containers Packaging |
| 2.1 | % | 2.3 | % |
Textiles, Apparel Luxury Goods |
| 2.1 | % | 2.2 | % |
Communications Equipment |
| 2.0 | % | 2.3 | % |
Diversified Financial Services |
| 1.9 | % | 2.1 | % |
Tobacco |
| 1.9 | % | 2.1 | % |
Diversified Telecommunication Services |
| 1.8 | % | 2.6 | % |
Food Products |
| 1.7 | % | 2.0 | % |
Software |
| 1.7 | % | 1.8 | % |
Oil, Gas Consumable Fuels |
| 1.5 | % | 1.8 | % |
Internet Catalog Retail |
| 1.4 | % | 1.6 | % |
Health Care Equipment Supplies |
| 1.4 | % | 0.3 | % |
Food Staples Retailing |
| 1.3 | % | 0.8 | % |
Chemicals |
| 1.3 | % | 1.7 | % |
Electronic Equipment, Instruments Components |
| 1.3 | % | 1.4 | % |
Hotels, Restaurants Leisure |
| 1.2 | % | 1.4 | % |
Computers Peripherals | 1.2 | % | 1.3 | % | |
Electrical Equipment | 1.0 | % | 0.7 | % | |
Pharmaceuticals | 1.0 | % | 0.1 | % | |
Household Durables | 0.9 | % | 1.0 | % | |
Life Sciences Tools Services | — | % | 1.4 | % | |
Other (1) | 2.3 | % | 3.2 | % | |
| 100.0 | % | 100.0 | % |
| (1) | Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at each date. |
70
Fair Value: | June 30, 2022 | December 31, 2021 | |||
Machinery |
| 8.7 | % | 8.5 | % |
Diversified Consumer Services |
| 7.4 | % | 5.9 | % |
Internet Software Services |
| 7.2 | % | 6.4 | % |
Construction Engineering |
| 6.8 | % | 7.7 | % |
Commercial Services Supplies |
| 5.1 | % | 5.5 | % |
Distributors |
| 4.7 | % | 4.7 | % |
Specialty Retail |
| 4.1 | % | 4.1 | % |
Leisure Equipment Products |
| 4.1 | % | 4.0 | % |
Professional Services |
| 3.9 | % | 3.9 | % |
Health Care Providers Services |
| 3.9 | % | 3.6 | % |
IT Services |
| 3.3 | % | 3.3 | % |
Media |
| 3.1 | % | 2.2 | % |
Aerospace Defense |
| 2.4 | % | 1.7 | % |
Energy Equipment Services |
| 2.3 | % | 2.8 | % |
Containers Packaging |
| 2.3 | % | 2.5 | % |
Tobacco |
| 2.2 | % | 2.2 | % |
Diversified Financial Services |
| 2.1 | % | 2.3 | % |
Textiles, Apparel Luxury Goods |
| 2.1 | % | 2.1 | % |
Building Products |
| 2.0 | % | 2.2 | % |
Software |
| 2.0 | % | 2.0 | % |
Computers Peripherals |
| 1.9 | % | 2.2 | % |
Food Products |
| 1.7 | % | 1.9 | % |
Diversified Telecommunication Services |
| 1.6 | % | 2.5 | % |
Internet Catalog Retail |
| 1.5 | % | 1.5 | % |
Oil, Gas Consumable Fuels |
| 1.3 | % | 1.4 | % |
Food Staples Retailing |
| 1.2 | % | 0.8 | % |
Chemicals |
| 1.2 | % | 1.6 | % |
Health Care Equipment Supplies |
| 1.2 | % | 0.1 | % |
Communications Equipment |
| 1.1 | % | 1.5 | % |
Construction Materials | 1.1 | % | 1.1 | % | |
Electrical Equipment | 1.0 | % | 0.8 | % | |
Hotels, Restaurants Leisure | 0.9 | % | 1.0 | % | |
Life Sciences Tools Services | — | % | 1.3 | % | |
Other (1) | 4.6 | % | 4.7 | % | |
100.0 | % | 100.0 | % |
| (1) | Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at each date. |
At June 30, 2022 and December 31, 2021, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.
Unconsolidated Significant Subsidiaries
In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered “significant subsidiaries.” In evaluating its unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that Main Street must utilize to determine if any of Main Street’s Control Investments (as defined in Note A–Organization and Basis of Presentation, including those unconsolidated portfolio companies defined as Control Investments in which Main Street does not own greater than 50% of the voting securities or maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing Main Street’s investment in the Control Investment by the value of Main Street’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of Main Street’s change in net assets resulting from operations for the same period. Rules 3-
71
09 and 4-08(g) of Regulation S-X require Main Street to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.
As of June 30, 2022 and December 31, 2021, Main Street had no single investment that qualified as a significant subsidiary under either the investment or income tests.
NOTE D—EXTERNAL INVESTMENT MANAGER
As discussed further in Note A.1—Organization and Basis of Presentation—Organization and Note C—Fair Value Hierarchy for Investments—Portfolio Composition—Investment Portfolio Composition, the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.
The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20% incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.
As described more fully in Note L – Related Party Transactions, the External Investment Manager also serves as the investment adviser and administrator to MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”). The External Investment Manager entered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in exchange for asset-based and incentive fees.
The External Investment Manager provides administrative services for certain External Party clients that, to the extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly attributable to performing administrative services for a client. These fees are recognized as other revenue in the period in which the related services are rendered.
During the three months ended June 30, 2022 and 2021, the External Investment Manager earned $5.4 million and $4.2 million, respectively, in base management fee income. During the three months ended June 30, 2022, the External Investment Manager earned $0.1 million in incentive fee income. No incentive fee income was earned in the three months ended June 30, 2021. During the three months ended June 30, 2022, the External Investment Manager earned $0.2 million in administrative services fee income. No administrative services fee income was earned in the three months ended June 30, 2021. During the six months ended June 30, 2022 and 2021, the External Investment Manager earned $10.9 million and $8.1 million, respectively, in base management fee income. During the six months ended June 30, 2022, the External Investment Manager earned $0.2 million in incentive fee income. No incentive fee income was earned in the six months ended June 30, 2021. During the six months ended June 30, 2022, the External Investment Manager earned $0.3 million in administrative services fee income. No administrative services fee income was earned in the six months ended June 30, 2021.
Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio). Any change in fair value of the investment in the External Investment Manager is
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recognized on Main Street’s Consolidated Statements of Operations in “Net Unrealized Appreciation (Depreciation)—Control investments.”
The External Investment Manager is an indirect wholly-owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.
Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the three months ended June 30, 2022 and 2021, Main Street allocated $3.5 million and $2.6 million of total expenses, respectively, to the External Investment Manager. For the six months ended June 30, 2022 and 2021, Main Street allocated $6.3 million and $5.0 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street’s net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. For the three months ended June 30, 2022 and 2021, the total contribution to Main Street’s net investment income was $5.2 million and $3.8 million, respectively. For the six months ended June 30, 2022 and 2021, the total contribution to Main Street’s net investment income was $10.3 million and $7.4 million, respectively.
Summarized financial information from the separate financial statements of the External Investment Manager as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021 is as follows:
As of | As of | |||||
June 30, | December 31, | |||||
| 2022 |
| 2021 | |||
(dollars in thousands) | ||||||
Cash | $ | 381 | $ | — | ||
Accounts receivable - advisory clients | 5,878 | 5,595 | ||||
Intangible Asset | 29,500 | 29,500 | ||||
Total assets | $ | 35,759 | $ | 35,095 | ||
Accounts payable to MSCC and its subsidiaries | $ | 4,549 | $ | 3,288 | ||
Dividend payable to MSCC and its subsidiaries | 1,710 | 2,307 | ||||
Equity | 29,500 | 29,500 | ||||
Total liabilities and equity | $ | 35,759 | $ | 35,095 | ||
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Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
2022 |
| 2021 |
| 2022 | 2021 | |||||||
(dollars in thousands) | ||||||||||||
Management fee income | $ | 5,421 | $ | 4,212 | $ | 10,865 | $ | 8,115 | ||||
Incentive fees | 90 | - | 227 | - | ||||||||
Administrative services fees | 153 | - | 304 | - | ||||||||
Total revenues | 5,664 | 4,212 | 11,396 | 8,115 | ||||||||
Expenses allocated from MSCC or its subsidiaries: | ||||||||||||
Salaries, share-based compensation and other personnel costs | (2,653) | (2,073) | (4,913) | (4,116) | ||||||||
Other GA expenses | (809) | (499) | (1,366) | (836) | ||||||||
Total allocated expenses | (3,462) | (2,572) | (6,279) | (4,952) | ||||||||
Pre-tax income | 2,202 | 1,640 | 5,117 | 3,163 | ||||||||
Tax expense | (492) | (370) | (1,134) | (714) | ||||||||
Net income | $ | 1,710 | $ | 1,270 | $ | 3,983 | $ | 2,449 | ||||
NOTE E—DEBT
Summary of debt as of June 30, 2022 is as follows:
Outstanding Balance | Unamortized Debt Issuance (Costs)/Premiums (2) | Recorded Value | Estimated Fair Value (1) | |||||||||
(in thousands) | ||||||||||||
Credit Facility | $ | 380,000 | $ | — | $ | 380,000 | $ | 380,000 | ||||
3.00% Notes due 2026 | 500,000 | (2,128) | 497,872 | 437,595 | ||||||||
5.20% Notes due 2024 | 450,000 | 999 | 450,999 | 448,637 | ||||||||
SBIC Debentures | 350,000 | (6,677) | 343,323 | 304,805 | ||||||||
4.50% Notes due 2022 | 185,000 | (253) | 184,747 | 185,250 | ||||||||
Total Debt | $ | 1,865,000 | $ | (8,059) | $ | 1,856,941 | $ | 1,756,287 | ||||
| (1) | Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11.—Summary of Significant Accounting Policies—Fair Value of Financial Instruments. |
| (2) | The unamortized debt issuance costs for the Credit Facility are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the 3.00% Notes due 2026, 5.20% Notes due 2024, 4.50% Notes due 2022 and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets. |
Summary of debt as of December 31, 2021 is as follows:
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| Outstanding Balance |
| Unamortized Debt Issuance (Costs)/Premiums (2) |
| Recorded Value |
| Estimated Fair Value (1) | |||||
(in thousands) | ||||||||||||
Credit Facility | $ | 320,000 | $ | — | $ | 320,000 | $ | 320,000 | ||||
3.00% Notes due 2026 | 500,000 | (2,391) | 497,609 | 502,285 | ||||||||
5.20% Notes due 2024 | 450,000 | 1,272 | 451,272 | 480,767 | ||||||||
SBIC Debentures | 350,000 | (7,269) | 342,731 | 328,206 | ||||||||
4.50% Notes due 2022 | 185,000 | (556) | 184,444 | 190,043 | ||||||||
Total Debt | $ | 1,805,000 | $ | (8,944) | $ | 1,796,056 | $ | 1,821,301 | ||||
| (1) | Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11.—Summary of Significant Accounting Policies—Fair Value of Financial Instruments. |
| (2) | The unamortized debt issuance costs for the Credit Facility are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the 3.00% Notes due 2026, 5.20% Notes due 2024, 4.50% Notes due 2022 and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets. |
Summarized interest expense for the three and six months ended June 30, 2022 and 2021is as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||
Credit Facility | $ | 2,640 | $ | 1,408 | $ | 4,698 | $ | 2,374 | |||||
3.00% Notes due 2026 | 3,882 | 2,489 | 7,763 | 4,638 | |||||||||
5.20% Notes due 2024 | 5,713 | 5,713 | 11,428 | 11,430 | |||||||||
SBIC Debentures | 2,827 | 2,557 | 5,627 | 5,298 | |||||||||
4.50% Notes due 2022 | 2,233 | 2,233 | 4,466 | 4,466 | |||||||||
Total Interest Expense | $ | 17,295 | $ | 14,400 | $ | 33,982 | $ | 28,206 | |||||
SBIC Debentures
Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street’s SBIC debentures payable, under existing SBA-approved commitments, were $350.0 million at both June 30, 2022 and December 31, 2021. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. Main Street expects to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-average annual interest rate on the SBIC debentures was 2.9% as of June 30, 2022 and December 31, 2021. The first principal maturity due under the existing SBIC debentures is in 2023, and the weighted-average remaining duration as of June 30, 2022 was 5.6 years. In accordance with SBIC regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.
As of June 30, 2022, the SBIC debentures consisted of (i) $175.0 million par value of SBIC debentures outstanding issued by MSMF, with a recorded value of $171.7 million that was net of unamortized debt issuance costs of $3.3 million and (ii) $175.0 million par value of SBIC debentures issued by MSC III with a recorded value of $171.6 million that was net of unamortized debt issuance costs of $3.4 million.
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Credit Facility
Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. As of June 30, 2022, the Credit Facility included total commitments of $855.0 million from a diversified group of 18 lenders, held a maturity date in April 2026 and contained an accordion feature with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.2 billion.
As of June 30, 2022, borrowings under the Credit Facility bore interest, subject to Main Street’s election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate plus (i) 1.875% (or the applicable Prime Rate plus 0.875%) as long as Main Street meets certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable Prime Rate plus 1.0%) otherwise. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. As of June 30, 2022, the Credit Facility contained certain affirmative and negative covenants, including but not limited to: (i) maintaining minimum liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining a 1940 Act asset coverage ratio of at least 1.5 to 1.0, (iv) maintaining a minimum tangible net worth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on the contribution of equity in financing subsidiaries as specified therein) of MSCC and the guarantors under the Credit Facility to the secured debt of MSCC and the guarantors.
As of June 30, 2022, the interest rate on the Credit Facility was 2.9%. The average interest rate for borrowings under the Credit Facility was 2.7% and 2.0% for the three months ended June 30, 2022 and 2021, respectively, and 2.3% and 2.0% for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, Main Street was in compliance with all financial covenants of the Credit Facility.
4.50% Notes due 2022
In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due December 1, 2022 (the “4.50% Notes”) at an issue price of 99.16%. The 4.50% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were $182.2 million. Main Street may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder.
The indenture governing the 4.50% Notes (the “4.50% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture. As of June 30, 2022, Main Street was in compliance with these covenants.
5.20% Notes due 2024
In April 2019, Main Street issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “5.20% Notes”) at an issue price of 99.125%. Subsequently, in December 2019, Main Street issued an additional $75.0 million aggregate principal amount of the 5.20% Notes at an issue price of 105.0% and, in July 2020, Main Street issued an additional $125.0 million aggregate principal amount at an issue price of 102.674%. The 5.20%
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Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The 5.20% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 5.20% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 5.20% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 5.20% Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year. The total net proceeds from the 5.20% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were $451.4 million. Main Street may from time to time repurchase the 5.20% Notes in accordance with the 1940 Act and the rules promulgated thereunder.
The indenture governing the 5.20% Notes (the “5.20% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 5.20% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 5.20% Notes Indenture. As of June 30, 2022, Main Street was in compliance with these covenants.
3.00% Notes due 2026
In January 2021, Main Street issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. Subsequently, in October 2021, Main Street issued an additional $200.0 million aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. The 3.00% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year. The total net proceeds from the 3.00% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were $498.3 million. Main Street may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder.
The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 3.00% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of June 30, 2022, Main Street was in compliance with these covenants.
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NOTE F—FINANCIAL HIGHLIGHTS
| Six Months Ended June 30, |
| |||||
Per Share Data: |
| 2022 |
| 2021 |
| ||
NAV at the beginning of the period | $ | 25.29 | $ | 22.35 | |||
Net investment income(1) |
| 1.47 |
| 1.20 | |||
Net realized gain (loss)(1)(2) |
| (0.02) |
| 0.03 | |||
Net unrealized appreciation (depreciation)(1)(2) |
| (0.14) |
| 1.15 | |||
Income tax benefit (provision)(1)(2) |
| (0.21) |
| (0.15) | |||
Net increase in net assets resulting from operations(1) |
| 1.10 |
| 2.23 | |||
Dividends paid from net investment income |
| (1.44) |
| (1.23) | |||
Distributions from capital gains |
| — |
| — | |||
Dividends paid |
| (1.44) |
| (1.23) | |||
Accretive effect of stock offerings (issuing shares above NAV per share) |
| 0.48 |
| 0.07 | |||
Accretive effect of DRIP issuance (issuing shares above NAV per share) |
| 0.05 |
| 0.04 | |||
Other(3) |
| (0.11) |
| (0.04) | |||
NAV at the end of the period | $ | 25.37 | $ | 23.42 | |||
Market value at the end of the period | $ | 38.53 | $ | 41.09 | |||
Shares outstanding at the end of the period |
| 73,517,558 |
| 68,531,789 | |||
| (1) | Based on weighted-average number of common shares outstanding for the period. |
| (2) | Net realized gains or losses, net unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period. |
| (3) | Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date. |
Six Months Ended June 30, | |||||||
2022 |
| 2021 | |||||
(dollars in thousands) | |||||||
NAV at end of period | $ | 1,865,163 | $ | 1,604,841 | |||
Average NAV | $ | 1,842,554 | $ | 1,553,257 | |||
Average outstanding debt | $ | 1,793,857 | $ | 1,311,114 | |||
Ratio of total expenses, including income tax expense, to average NAV (1)(2) | 3.97 | % | 3.76 | % | |||
Ratio of operating expenses to average NAV (2)(3) | 3.13 | % | 3.09 | % | |||
Ratio of operating expenses, excluding interest expense, to average NAV (2)(3) | 1.28 | % | 1.27 | % | |||
Ratio of net investment income to average NAV (2) | 5.80 | % | 5.29 | % | |||
Portfolio turnover ratio (2) | 10.48 | % | 11.86 | % | |||
Total investment return (2)(4) | (10.96) | % | 31.59 | % | |||
Total return based on change in NAV (2)(5) | 4.47 | % | 10.06 | % | |||
| (1) | Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable. |
| (2) | Not annualized. |
| (3) | Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager of $6.3 million and $5.0 million for the six months ended June 30, 2022 and 2021, respectively. |
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| (4) | Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street’s dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor. |
| (5) | Total return based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items. |
NOTE G—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME
Main Street currently pays regular monthly dividends to its stockholders and periodically pays supplemental dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis. Main Street paid regular monthly dividends of $0.215 per share, totaling $47.1 million, or $0.645 per share, for the three months ended June 30, 2022, and $93.1 million, or $1.29 per share, for the six months ended June 30, 2022 compared to aggregate regular monthly dividends of $42.0 million, or $0.615 per share, for the three months ended June 30, 2021, and $83.9 million, or $1.23 per share, for the six months ended June 30, 2021. Main Street also paid a supplemental dividend of $5.5 million, or $0.075 per share, during the three months ended June 30, 2022, and $10.9 million, or $0.15 per share, during the six months ended June 30, 2022. Main Street did not pay a supplemental dividend during the three or six months ended June 30, 2021.
MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.
The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and qualified dividends, but may also include either one or both of capital gains and return of capital.
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Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the six months ended June 30, 2022 and 2021.
Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | |||
(estimated, dollars in thousands) | ||||||
Net increase in net assets resulting from operations | $ | 79,953 | $ | 152,451 | ||
Book-tax difference from share-based compensation expense | (6,906) | (6,967) | ||||
Net unrealized (appreciation) depreciation | 9,841 | (78,440) | ||||
Income tax provision (benefit) | 15,417 | 10,407 | ||||
Pre-tax book (income) loss not consolidated for tax purposes | (9,249) | (17,971) | ||||
Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates | 13,568 | 7,780 | ||||
Estimated taxable income (1) | 102,624 | 67,260 | ||||
Taxable income earned in prior year and carried forward for distribution in current year | 50,834 | 24,350 | ||||
Taxable income earned prior to period end and carried forward for distribution next period | (64,509) | (21,626) | ||||
Dividend payable as of period end and paid in the following period | 15,673 | 14,049 | ||||
Total distributions accrued or paid to common stockholders | $ | 104,622 | $ | 84,033 | ||
| (1) | Main Street’s taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate. |
The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.
The income tax expense (benefit) for Main Street is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street’s Consolidated Statement of Operations. Main Street’s provision for income taxes was comprised of the following for the three and six months ended June 30, 2022 and 2021 (amounts in thousands):
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Current tax expense (benefit): | |||||||||||
Federal | $ | 64 | $ | 97 | $ | 115 | $ | 141 | |||
State | 71 | 359 | 614 | 655 | |||||||
Excise | 674 | 200 | 1,389 | 493 | |||||||
Total current tax expense (benefit) | 809 | 656 | 2,118 | 1,289 | |||||||
Deferred tax expense (benefit): | |||||||||||
Federal | 7,166 | 7,101 | 9,973 | 7,295 | |||||||
State | 2,345 | 1,969 | 3,326 | 1,823 | |||||||
Total deferred tax expense (benefit) | 9,511 | 9,070 | 13,299 | 9,118 | |||||||
Total income tax provision (benefit) | $ | 10,320 | $ | 9,726 | $ | 15,417 | $ | 10,407 | |||
The net deferred tax liability at June 30, 2022 and December 31, 2021 was $43.0 million and $29.7 million, respectively, with the change primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards, and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. At June 30, 2022, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2034 through 2037. Any net operating losses generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized. The Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward.
NOTE H—COMMON STOCK
Main Street maintains a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the “ATM Program”). During the six months ended June 30, 2022, Main Street sold 2,159,117 shares of its common stock at a weighted-average price of $41.71 per share and raised $90.1 million of gross proceeds under the ATM Program. Net proceeds were $88.9 million after commissions to the selling agents on shares sold and offering costs. As of June 30, 2022, sales transactions representing 61,757 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share. In March 2022, Main Street entered into new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of June 30, 2022, 13,710,949 shares remained available for sale under the ATM Program.
During the year ended December 31, 2021, Main Street sold 2,332,795 shares of its common stock at a weighted-average price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were $98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share.
NOTE I—DIVIDEND REINVESTMENT PLAN
The dividend reinvestment feature of Main Street’s dividend reinvestment and direct stock purchase plan (the “DRIP”) provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, its stockholders who have not “opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC’s common stock on the valuation date determined for each dividend by Main Street’s Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street’s DRIP is administered by its transfer agent on behalf of Main Street’s record holders and participating
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brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street’s DRIP but may provide a similar dividend reinvestment plan for their clients.
Summarized DRIP information for the six months ended June 30, 2022 and 2021 is as follows:
Six Months Ended June 30, | ||||||
2022 | 2021 | |||||
($ in millions) | ||||||
DRIP participation | $ | 9.8 | $ | 7.5 | ||
Shares issued for DRIP | 246,199 | 198,283 | ||||
NOTE J—SHARE-BASED COMPENSATION
Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.
Main Street’s Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2022 Equity and Incentive Plan (the “Equity and Incentive Plan”). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street’s Board of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of June 30, 2022.
Restricted stock authorized under the plan |
| 5,000,000 |
Less net restricted stock granted during: |
| |
Six months ended June 30, 2022 | — | |
Restricted stock available for issuance as of June 30, 2022 |
| 5,000,000 |
As of June 30, 2022, the following table summarizes the restricted stock issued to Main Street’s non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2022 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.
Restricted stock authorized under the plan |
| 300,000 |
Less net restricted stock granted during: |
| |
Six months ended June 30, 2022 | (4,590) | |
Restricted stock available for issuance as of June 30, 2022 |
| 295,410 |
For the three months ended June 30, 2022 and 2021, Main Street recognized total share-based compensation expense of $3.6 million and $2.8, respectively, related to the restricted stock issued to Main Street employees and non-employee directors. For the six months ended June 30, 2022 and 2021, Main Street recognized total share-based compensation expense of $6.4 million and $5.1, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.
As of June 30, 2022, there was $28.0 million of total unrecognized compensation expense related to Main Street’s non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of 2.6 years as of June 30, 2022.
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NOTE K—COMMITMENTS AND CONTINGENCIES
At June 30, 2022, Main Street had the following outstanding commitments (in thousands):
Investments with equity capital commitments that have not yet funded: |
| Amount | |
| |||
Brightwood Capital Fund Investments | |||
Brightwood Capital Fund V, LP | $ | 3,000 | |
Brightwood Capital Fund III, LP | 300 | ||
$ | 3,300 | ||
Freeport Fund Investments | |||
Freeport First Lien Loan Fund III LP | $ | 4,871 | |
Freeport Financial SBIC Fund LP | 2,868 | ||
$ | 7,739 | ||
Harris Preston Fund Investments | |||
HPEP 4, L.P. | $ | 10,000 | |
HPEP 3, L.P. | 1,555 | ||
HPEP 423 COR, LP | 600 | ||
2717 HPP-MS, LP | 56 | ||
$ | 12,211 | ||
MS Private Loan Fund I, LP | $ | 3,750 | |
UnionRock Energy Fund II, LP | $ | 3,624 | |
Total Equity Commitments (1)(2) | $ | 30,624 | |
Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded: | |||
Xenon Arc, Inc. | $ | 32,400 | |
MonitorUS Holding, LLC | 14,213 | ||
CaseWorthy, Inc. | 10,452 | ||
MS Private Loan Fund I, LP | 10,000 | ||
NWN Corporation | 8,760 | ||
JTI Electrical Mechanical, LLC | 8,421 | ||
Paragon Healthcare, Inc. | 7,571 | ||
NinjaTrader, LLC | 7,472 | ||
Adams Publishing Group, LLC | 7,094 | ||
Veregy Consolidated, Inc. | 5,875 | ||
Watterson Brands, LLC | 5,789 | ||
SI East, LLC | 5,250 | ||
Bolder Panther Group, LLC | 5,000 | ||
Pearl Meyer Topco LLC | 5,000 | ||
Robbins Bros. Jewelry, Inc. | 4,500 | ||
South Coast Terminals Holdings, LLC | 4,465 | ||
Winter Services LLC | 4,444 | ||
ArborWorks, LLC | 4,210 | ||
Bettercloud, Inc. | 4,189 | ||
VVS Holdco, LLC | 3,200 | ||
Cody Pools, Inc. | 2,950 | ||
Microbe Formulas, LLC | 2,881 | ||
Batjer TopCo, LLC | 2,700 | ||
Infolinks Media Buyco, LLC | 2,520 | ||
Nebraska Vet AcquireCo, LLC | 2,500 | ||
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| |||
Amount | |||
Classic HG Holdco, LLC | $ | 2,440 | |
West Star Aviation Acquisition, LLC | 2,411 | ||
Centre Technologies Holdings, LLC | 2,400 | ||
IG Parent Corporation | 2,313 | ||
AVEX Aviation Holdings, LLC | 2,160 | ||
Direct Marketing Solutions, Inc. | 2,125 | ||
PPL RVs, Inc. | 2,000 | ||
The Affiliati Network, LLC | 2,000 | ||
Roof Opco, LLC | 1,960 | ||
Evergreen North America Acquisitions, LLC | 1,854 | ||
ATS Operating, LLC | 1,800 | ||
Career Team Acquireco LLC | 1,800 | ||
Johnson Downie Opco, LLC | 1,800 | ||
Engineering Research Consulting, LLC | 1,769 | ||
Chamberlin Holding LLC | 1,600 | ||
Trantech Radiator Topco, LLC | 1,600 | ||
Mako Steel, LP | 1,501 | ||
Hawk Ridge Systems, LLC | 1,415 | ||
Burning Glass Intermediate Holding Company, Inc. | 1,394 | ||
GS HVAM Intermediate, LLC | 1,364 | ||
GRT Rubber Technologies LLC | 1,340 | ||
American Health Staffing Group, Inc. | 1,333 | ||
RA Outdoors LLC | 1,278 | ||
Project Eagle Holdings, LLC | 1,250 | ||
Acumera, Inc. | 1,238 | ||
Gamber-Johnson Holdings, LLC | 1,200 | ||
NuStep, LLC | 1,200 | ||
KMS, LLC | 1,086 | ||
BDS Solutions IntermediateCo, LLC | 1,032 | ||
CompareNetworks Topco, LLC | 1,000 | ||
Interface Security Systems, L.L.C | 898 | ||
Mystic Logistics Holdings, LLC | 800 | ||
Invincible Boat Company, LLC. | 768 | ||
Project BarFly, LLC | 760 | ||
DTE Enterprises, LLC | 750 | ||
Student Resource Center, LLC | 750 | ||
Flip Electronics LLC | 736 | ||
MB2 Dental Solutions, LLC | 656 | ||
Orttech Holdings, LLC | 625 | ||
Market Force Information, LLC | 600 | ||
ASC Interests, LLC | 530 | ||
Jensen Jewelers of Idaho, LLC | 500 | ||
Datacom, LLC | 450 | ||
Flame King Holdings, LLC | 400 | ||
Wall Street Prep, Inc. | 400 | ||
Zips Car Wash, LLC | 383 | ||
SIB Holdings, LLC | 354 | ||
Dynamic Communities, LLC | 250 | ||
Acousti Engineering Company of Florida | 53 | ||
Total Loan Commitments | $ | 232,182 | |
Total Commitments | $ | 263,602 | |
| (1) | This table excludes commitments related to six additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses. The Company does not expect any material future capital to be called on its commitment to these investments and as a result has excluded those commitments from this table. |
| (2) | This table excludes commitments related to three additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses or for follow on investments in existing portfolio companies. The Company does not expect any material future capital to be called on its commitment to these investments to pay fund expenses, and based on representations from the fund manager, |
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| the Company does not expect any further capital will be called on its commitment for follow on investments. As a result, the Company has excluded those commitments from this table. |
Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facility). Main Street follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary.
Main Street has one operating lease for its office space. The lease commenced May 15, 2017 and expires March 31, 2034. It contains two five-year extension options for a final expiration date of March 31, 2044.
In accordance with ASC 842, Main Street has recorded this lease as a right-of-use asset and a lease liability and records lease expense on a straight-line basis.
Total operating lease cost incurred by Main Street for each of the three months ended June 30, 2022 and 2021 was $0.2 million and for each of the six months ended June 30, 2022 and 2021 was $0.4 million. As of June 30, 2022, the asset related to the operating lease was $3.5 million and is included in the interest receivable and other assets balance on the Consolidated Balance Sheets. The lease liability was $4.1 million and is included in the accounts payable and other liabilities balance on the Consolidated Balance Sheets. As of June 30, 2022, the remaining lease term was 5.6 years and the discount rate was 4.2%.
The following table shows future minimum payments under Main Street’s operating lease as of June 30, 2022 (in thousands):
For the Years Ended December 31, | Amount | ||
2022 | $ | 395 | |
2023 | 804 | ||
2024 | 818 | ||
2025 | 832 | ||
2026 | 846 | ||
Thereafter | 933 | ||
Total | $ | 4,628 | |
Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street’s financial condition or results of operations in any future reporting period.
NOTE L—RELATED PARTY TRANSACTIONS
As discussed further in Note D—External Investment Manager, the External Investment Manager is treated as a wholly-owned portfolio company of MSCC and is included as part of Main Street’s Investment Portfolio. At June 30, 2022, Main Street had a receivable of $6.3 million due from the External Investment Manager, which included (i) $4.5 million related primarily to operating expenses incurred by MSCC or its subsidiaries as required to support the External Investment Manager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D—External Investment Manager) and (ii) $1.7 million of dividends declared but not paid by the External Investment Manager. MSCC has entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients (see further discussion in Note A.1—Organization and Basis of Presentation—Organization and Note D—External Investment Manager).
From time to time, Main Street may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by Main Street’s Board of Directors. In January 2021, Main Street
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entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement initially provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing in January 2026. The Term Loan Agreement was amended in July 2021 to provide for borrowings up to an additional $35.0 million, $20.0 million of which was funded upon signing of the amendment and $15.0 million available in two additional advances during the six months following the amendment date. Borrowings under the Term Loan Agreement were expressly subordinated and junior in right of payment to all secured indebtedness of MSC Income. In October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was extinguished.
In May 2022, Main Street purchased 94,697 shares of common stock of MSC Income from MSC Income at the price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its May dividend on such date. Main Street’s purchase of MSC Income common stock was unanimously approved by the Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of June 30, 2022, Main Street owned 94,697 shares of MSC Income. In addition, certain of Main Street’s officers and employees own shares of MSC Income and therefore have direct pecuniary interests in MSC Income.
In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund to provide investment advisory and management services in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s initial closing in December 2020, Main Street committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In February 2022, Main Street increased its total commitment to the Private Loan Fund from $10.0 million to $15.0 million. In addition, certain of Main Street’s officers and employees (and certain of their immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. As of June 30, 2022, Main Street has funded $11.3 million of its limited partner commitment and Main Street’s unfunded commitment was $3.7 million. Main Street’s limited partner commitment to the Private Loan Fund was unanimously approved by the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.
Additionally, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and was subsequently amended on November 30, 2021 and on December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.
In March 2022, Main Street provided the Private Loan Fund with a new revolving line of credit pursuant to a Secured Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0 million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. As of June 30, 2022, there were no borrowings outstanding under the PL Fund 2022 Note.
In November 2015, Main Street’s Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred
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Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of June 30, 2022, $14.9 million of compensation, plus net unrealized gains and losses and investment income, and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.1 million had been deferred into phantom Main Street stock units, representing 158,865 shares of Main Street’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the Consolidated Statements of Changes in Net Assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main Street’s Consolidated Statements of Operations as the deferred fees represented by such phantom stock units are earned over the service period. The dividend amounts related to additional phantom stock units are included in the Consolidated Statements of Changes in Net Assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.
NOTE M—SUBSEQUENT EVENTS
In August 2022, Main Street declared a supplemental cash dividend of $0.10 per share payable in September 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the third quarter of 2022 of $0.215 per share for each of July, August and September 2022.
In August 2022, Main Street declared regular monthly dividends of $0.22 per share for each month of October, November and December of 2022. These regular monthly dividends equal a total of $0.66 per share for the fourth quarter of 2022, representing a 4.8% increase from the regular monthly dividends paid in the fourth quarter of 2021. Including the regular monthly and supplemental dividends declared for the third and fourth quarters of 2022, Main Street will have paid $35.02 per share in cumulative dividends since its October 2007 initial public offering.
During August 2022, Main Street amended its Credit Facility to, among other changes, (i) increase the revolving commitments by lenders to $920.0 million, and with the right to request an increase in commitments under the Credit Facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.4 billion, subject to certain conditions, (ii) extend the revolving period under the Credit Facility to August 4, 2026 and the final maturity date of the Credit Facility to August 4, 2027, (iii) transition the reference rate used to determine the borrowing interest rate from LIBOR to SOFR plus an applicable credit spread adjustment, while maintaining the interest rate spread of 1.875%.
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Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates
June 30, 2022
(dollars in thousands)
(unaudited)
Amount of | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||
Realized | Unrealized | Credited to | 2021 | Gross | Gross | 2022 | |||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||
Majority‑owned investments |
|
|
|
|
|
|
|
|
|
| |||||||||||||||
ASK (Analytical Systems Keco Holdings, LLC) | 12.00% (L+10.00%, Floor 2.00%) Secured Debt | (8) | $ | - | $ | - | $ | 339 | $ | 4,736 | $ | 45 | $ | 140 | $ | 4,641 | |||||||||
Preferred Member Units | (8) | - | (576) | - | 4,894 | - | 576 | 4,318 | |||||||||||||||||
Brewer Crane Holdings, LLC | 11.06% (L+10.00%, Floor 1.00%) Secured Debt | (9) | - | - | 448 | 8,037 | 12 | 248 |
| 7,801 | |||||||||||||||
Preferred Member Units | (9) | - | (660) | 530 | 7,710 | - | 660 |
| 7,050 | ||||||||||||||||
Café Brazil, LLC | Member Units | (8) | - | (50) | 99 | 2,570 | - | 50 |
| 2,520 | |||||||||||||||
California Splendor Holdings LLC | 11.00% (L+10.00%, Floor 1.00%) Secured Debt | (9) | - | 56 | 1,578 | 27,915 | 85 | - |
| 28,000 | |||||||||||||||
15.00% PIK Preferred Member Units | (9) | - | - | 652 | 9,510 | 652 | 6,449 | 3,713 | |||||||||||||||||
Preferred Member Units | (9) | - | 6,020 | 125 | 13,275 | 6,020 | - |
| 19,295 | ||||||||||||||||
Clad-Rex Steel, LLC | 10.63% (L+9.50%, Floor 1.00%) Secured Debt | (5) | - | - | 574 | 10,401 | 20 | - |
| 10,421 | |||||||||||||||
10.00% Secured Debt | (5) | - | - | 54 | 1,071 | - | 16 |
| 1,055 | ||||||||||||||||
Member Units | (5) | 80 | - | 530 | 80 | 610 | |||||||||||||||||||
Member Units | (5) | - | - | 764 | 10,250 | - | - |
| 10,250 | ||||||||||||||||
CMS Minerals Investments | Member Units | (9) | - | 447 | 69 | 1,974 | 447 | 147 |
| 2,274 | |||||||||||||||
Cody Pools, Inc. | 12.25% (L+10.50%, Floor 1.75%) Secured Debt | (8) | - | (45) | 2,702 | 42,484 | 2,910 | 3,757 | 41,637 | ||||||||||||||||
Preferred Member Units | (8) | - | 3,550 | 1,749 | 47,640 | 3,550 | - | 51,190 | |||||||||||||||||
CompareNetworks Topco, LLC | 10.13% (L+9.00%, Floor 1.00%) Secured Debt | (9) | - | (10) | 308 | 6,477 | 10 | 746 |
| 5,741 | |||||||||||||||
Preferred Member Units | (9) | - | 5,230 | 316 | 12,000 | 5,230 | - |
| 17,230 | ||||||||||||||||
Datacom, LLC | 7.50% Secured Debt | (8) | - | - | 416 | 7,668 | 84 | 135 |
| 7,617 | |||||||||||||||
Preferred Member Units | (8) | - | 60 | 48 | 2,610 | 60 | - |
| 2,670 | ||||||||||||||||
Direct Marketing Solutions, Inc. | 12.13% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | (20) | 1,551 | 24,048 | 1,317 | 687 |
| 24,678 | |||||||||||||||
Preferred Stock | (9) | - | 3,200 | 686 | 18,350 | 3,200 | - |
| 21,550 | ||||||||||||||||
Gamber-Johnson Holdings, LLC | 10.00% (L+8.00%, Floor 2.00%) Secured Debt | (5) | - | (11) | 1,100 | 21,598 | 11 | 11 |
| 21,598 | |||||||||||||||
Member Units | (5) | - | (3,400) | 360 | 49,700 | - | 3,400 |
| 46,300 | ||||||||||||||||
GRT Rubber Technologies LLC | 9.06% (L+8.00%) Secured Debt | (8) | - | (22) | 1,676 | 38,885 | 22 | 22 |
| 38,885 | |||||||||||||||
Member Units | (8) | - | - | 2,441 | 46,190 | - | - |
| 46,190 | ||||||||||||||||
Jensen Jewelers of Idaho, LLC | 10.75% (Prime+6.75%, Floor 2.00%) Secured Debt | (9) | - | (4) | 130 | 2,550 | 4 | 104 |
| 2,450 | |||||||||||||||
Member Units | (9) | - | 2,700 | 1,376 | 12,420 | 2,700 | - |
| 15,120 | ||||||||||||||||
Kickhaefer Manufacturing Company, LLC | 11.50% Secured Debt | (5) | - | - | 1,205 | 20,324 | 25 | - |
| 20,349 | |||||||||||||||
9.00% Secured Debt | (5) | - | - | 177 | 3,876 | 1 | 17 |
| 3,860 | ||||||||||||||||
Member Units | (5) | - | (70) | - | 12,310 | - | 70 | 12,240 | |||||||||||||||||
Member Units | (5) | - | - | 55 | 2,460 | - | - |
| 2,460 | ||||||||||||||||
Market Force Information, LLC | 12.13% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | - | 217 | 3,400 | 1,000 | - |
| 4,400 | |||||||||||||||
12.00% PIK Secured Debt | (9) | - | (1,405) | - | 8,936 | - | 1,405 |
| 7,531 | ||||||||||||||||
MH Corbin Holding LLC | 13.00% Secured Debt | (5) | - | (1,495) | 540 | 5,934 | 9 | 1,655 |
| 4,288 | |||||||||||||||
MSC Adviser I, LLC | Member Units | (8) | - | (22,080) | 3,983 | 140,400 | - | 22,080 |
| 118,320 | |||||||||||||||
Mystic Logistics Holdings, LLC | 10.00% Secured Debt | (6) | - | (1) | 312 | 6,378 | 1 | 281 |
| 6,098 | |||||||||||||||
Common Stock | (6) | - | 7,370 | 1,596 | 8,840 | 7,370 | - |
| 16,210 | ||||||||||||||||
OMi Topco, LLC | 12.00% Secured Debt | (8) | - | (29) | 1,099 | 18,000 | 29 | 1,279 |
| 16,750 | |||||||||||||||
Preferred Member Units | (8) | - | 90 | 1,197 | 20,210 | 90 | - |
| 20,300 | ||||||||||||||||
PPL RVs, Inc. | 7.97% (L+7.00%, Floor 0.50%) Secured Debt | (8) | - | 251 | 683 | 12,381 | 9,264 | 2,000 |
| 19,645 | |||||||||||||||
Common Stock | (8) | - | 4,130 | 462 | 14,360 | 4,130 | - |
| 18,490 | ||||||||||||||||
Principle Environmental, LLC | 13.00% Secured Debt | (8) | - | - | 86 | 1,465 | 6 | 1,000 |
| 471 | |||||||||||||||
13.00% Secured Debt | (8) | - | 399 | 5,808 | 12 | 5,820 | |||||||||||||||||||
Preferred Member Units | (8) | - | 370 | 437 | 11,160 | 370 | - |
| 11,530 | ||||||||||||||||
Common Stock | (8) | - | 30 | - | 710 | 30 | - |
| 740 | ||||||||||||||||
Quality Lease Service, LLC | Member Units | (7) | - | 76 | - | 2,149 | 76 | 1,150 |
| 1,075 | |||||||||||||||
Robbins Bros. Jewelry, Inc. | 12.00% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | - | 2,241 | 35,956 | 43 | 225 |
| 35,774 | |||||||||||||||
Preferred Equity | (9) | - | 4,670 | 279 | 11,070 | 4,670 | - |
| 15,740 | ||||||||||||||||
88
Amount of | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||
Realized | Unrealized | Credited to | 2021 | Gross | Gross | 2022 | |||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||
Trantech Radiator Topco, LLC | 12.00% Secured Debt | (7) | - | (12) | 528 | 8,712 | 14 | 412 | 8,314 | ||||||||||||||||
Common Stock | (7) | - | (570) | 58 | 8,660 | - | 570 | 8,090 | |||||||||||||||||
Ziegler’s NYPD, LLC | 12.00% Secured Debt | (8) | - | - | 38 | 625 | - | - | 625 | ||||||||||||||||
6.50% Secured Debt | (8) | - | - | 33 | 1,000 | - | - | 1,000 | |||||||||||||||||
14.00% Secured Debt | (8) | - | - | 194 | 2,750 | - | - | 2,750 | |||||||||||||||||
Preferred Member Units | (8) | - | (450) | - | 2,130 | - | 450 | 1,680 | |||||||||||||||||
Other controlled investments | |||||||||||||||||||||||||
2717 MH, L.P. | LP Interests (2717 MH, L.P.) | (8) | - | 1,408 | - | 3,971 | 2,583 | - | 6,554 | ||||||||||||||||
LP Interests (2717 HPP-MS, L.P.) | (8) | - | - | - | - | 244 | - | 244 | |||||||||||||||||
ASC Interests, LLC | 13.00% Secured Debt | (8) | - | - | 13 | 200 | - | 30 | 170 | ||||||||||||||||
13.00% Secured Debt | (8) | - | - | 120 | 1,636 | 12 | - | 1,648 | |||||||||||||||||
Member Units | (8) | - | 80 | - | 720 | 80 | - | 800 | |||||||||||||||||
ATS Workholding, LLC | 5.00% Secured Debt | (9) | - | - | - | 3,005 | - | 66 | 2,939 | ||||||||||||||||
Barfly Ventures, LLC | 7.00% Secured Debt | (5) | - | - | 25 | 711 | - | - | 711 | ||||||||||||||||
Member Units | (5) | - | 470 | - | 1,930 | 470 | - | 2,400 | |||||||||||||||||
Batjer TopCo, LLC | 11.00% Secured Debt | (8) | - | - | 512 | - | 11,372 | 459 | 10,913 | ||||||||||||||||
Member Units | (8) | - | - | - | - | 4,073 | - | 4,073 | |||||||||||||||||
Bolder Panther Group, LLC | 10.50% (L+9.00%, Floor 1.50%) Secured Debt | (9) | - | (39) | 2,491 | 39,000 | 10,233 | 39 | 49,194 | ||||||||||||||||
Class B Preferred Member Units | (9) | - | 2,760 | 276 | 23,170 | 2,760 | - | 25,930 | |||||||||||||||||
Bridge Capital Solutions Corporation | 13.00% Secured Debt | (6) | - | - | 576 | 8,813 | - | - | 8,813 | ||||||||||||||||
13.00% Secured Debt | (6) | - | - | 65 | 1,000 | - | - | 1,000 | |||||||||||||||||
Preferred Member Units | (6) | - | - | 50 | 1,000 | - | - | 1,000 | |||||||||||||||||
Warrants | (6) | - | 200 | - | 4,060 | 200 | - | 4,260 | |||||||||||||||||
CBT Nuggets, LLC | Member Units | (9) | - | (2,720) | 1,647 | 50,620 | - | 2,720 | 47,900 | ||||||||||||||||
Centre Technologies Holdings, LLC | 12.00% (L+10.00%, Floor 2.00%) Secured Debt | (8) | - | 507 | 838 | 8,864 | 7,903 | 1,826 | 14,941 | ||||||||||||||||
Preferred Member Units | (8) | - | 768 | 60 | 5,840 | 1,050 | - | 6,890 | |||||||||||||||||
Chamberlin Holding LLC | 9.13% (L+8.00%, Floor 1.00%) Secured Debt | (8) | - | (35) | 845 | 17,817 | 35 | 386 | 17,466 | ||||||||||||||||
Member Units | (8) | (1,630) | 348 | 24,140 | - | 1,630 | 22,510 | ||||||||||||||||||
Member Units | (8) | - | - | 34 | 1,540 | - | - | 1,540 | |||||||||||||||||
Charps, LLC | 10.00% Unsecured Debt | (5) | - | (27) | 309 | 5,694 | 27 | 27 | 5,694 | ||||||||||||||||
Preferred Member Units | (5) | - | (540) | 417 | 13,990 | - | 540 | 13,450 | |||||||||||||||||
Colonial Electric Company LLC | 12.00% Secured Debt | (6) | - | - | 1,703 | 24,351 | 1,630 | 630 | 25,351 | ||||||||||||||||
Preferred Member Units | (6) | - | (190) | 805 | 9,130 | - | 190 | 8,940 | |||||||||||||||||
Copper Trail Energy Fund I, LP - CTMH | LP Interests (CTMH, LP) | (9) | - | - | - | 710 | - | - | 710 | ||||||||||||||||
Digital Products Holdings LLC | 11.13% (L+10.00%, Floor 1.00%) Secured Debt | (5) | - | - | 929 | 16,801 | 23 | 661 | 16,163 | ||||||||||||||||
Preferred Member Units | (5) | - | - | 100 | 9,835 | - | - | 9,835 | |||||||||||||||||
Flame King Holdings, LLC | 7.50% (L+6.50%, Floor 1.00%) Secured Debt | (9) | - | 68 | 288 | 6,324 | 1,276 | - | 7,600 | ||||||||||||||||
12.00% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | 183 | 1,300 | 20,996 | 204 | - | 21,200 | |||||||||||||||||
Preferred Equity | (9) | - | 3,010 | 559 | 10,400 | 3,010 | - | 13,410 | |||||||||||||||||
Garreco, LLC | 9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) Secured Debt | (8) | - | - | 190 | 4,196 | - | - | 4,196 | ||||||||||||||||
Member Units | (8) | - | 220 | 321 | 2,270 | 220 | - | 2,490 | |||||||||||||||||
Gulf Manufacturing, LLC | Member Units | (8) | - | (130) | 985 | 5,640 | - | 130 | 5,510 | ||||||||||||||||
Gulf Publishing Holdings, LLC | 10.60% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt | (8) | - | - | 7 | 257 | - | - | 257 | ||||||||||||||||
12.50% (6.25% Cash, 6.25% PIK) Secured Debt | (8) | - | (2,188) | 426 | 9,717 | - | 2,188 | 7,529 | |||||||||||||||||
Harrison Hydra-Gen, Ltd. | Common Stock | (8) | - | (200) | - | 3,530 | - | 200 | 3,330 | ||||||||||||||||
Johnson Downie Opco, LLC | 13.00% (L+11.50%, Floor 1.50%) Secured Debt | (8) | - | 92 | 755 | 11,344 | 115 | 1,038 | 10,421 | ||||||||||||||||
Preferred Equity | (8) | - | 2,730 | 566 | 3,150 | 2,730 | - | 5,880 | |||||||||||||||||
JorVet Holdings, LLC | 12.00% Secured Debt | (9) | - | - | 1,082 | - | 25,406 | - | 25,406 | ||||||||||||||||
Common Stock | (9) | - | - | 54 | - | 10,741 | - | 10,741 | |||||||||||||||||
KBK Industries, LLC | Member Units | (5) | - | 310 | 685 | 13,620 | 310 | - | 13,930 | ||||||||||||||||
MS Private Loan Fund | LP Interests | (8) | - | (544) | 191 | 2,581 | 8,750 | 544 | 10,787 | ||||||||||||||||
MSC Income Fund, Inc. | Common Equity | (8) | - | - | - | - | 750 | - | 750 | ||||||||||||||||
NAPCO Precast, LLC | Member Units | (8) | - | (1,730) | 4 | 13,560 | - | 1,730 | 11,830 | ||||||||||||||||
Nebraska Vet AcquireCo, LLC (NVS) | 12.00% Secured Debt | (5) | - | - | 649 | 10,412 | 11 | - | 10,423 | ||||||||||||||||
12.00% Secured Debt | (5) | - | 548 | 4,829 | 6,544 | - | 11,373 | ||||||||||||||||||
Preferred Member Units | (5) | - | - | - | 7,700 | - | - | 7,700 | |||||||||||||||||
NexRev LLC | 11.00% Secured Debt | (8) | - | (1,703) | 1,222 | 14,045 | - | 5,783 | 8,262 | ||||||||||||||||
Preferred Member Units | (8) | - | (3,080) | 40 | 2,690 | - | 1,750 | 940 | |||||||||||||||||
NRP Jones, LLC | 12.00% Secured Debt | (5) | - | - | 126 | 2,080 | - | - | 2,080 | ||||||||||||||||
Member Units | (5) | - | (970) | 198 | 6,440 | - | 970 | 5,470 | |||||||||||||||||
NuStep, LLC | 7.63% (L+6.50%, Floor 1.00%) Secured Debt | (5) | - | - | 110 | 1,720 | 1,480 | - | 3,200 | ||||||||||||||||
12.00% Secured Debt | (5) | - | 28 | 1,043 | 17,240 | 1,200 | - | 18,440 | |||||||||||||||||
Preferred Member Units | (5) | - | (1,940) | - | 13,500 | - | 1,940 | 11,560 | |||||||||||||||||
89
Amount of | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||
Realized | Unrealized | Credited to | 2021 | Gross | Gross | 2022 | |||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||
Orttech Holdings, LLC | 12.00% (L+11.00%, Floor 1.00%) Secured Debt | (5) | - | - | 1,494 | 24,150 | 29 | 400 | 23,779 | ||||||||||||||||
Preferred Stock | (5) | - | - | 386 | 10,000 | - | - | 10,000 | |||||||||||||||||
Pearl Meyer Topco LLC | 12.00% Secured Debt | (6) | - | (61) | 1,942 | 32,674 | 1,561 | 5,554 | 28,681 | ||||||||||||||||
Member Units | (6) | - | 12,780 | 2,856 | 26,970 | 12,780 | - | 39,750 | |||||||||||||||||
River Aggregates, LLC | Member Units | (8) | - | 100 | - | 3,280 | 100 | - | 3,380 | ||||||||||||||||
Tedder Industries, LLC | 12.00% Secured Debt | (9) | - | - | 961 | 15,141 | 44 | - | 15,185 | ||||||||||||||||
12.00% Secured Debt | (9) | - | 102 | 1,040 | 800 | - | 1,840 | ||||||||||||||||||
Preferred Member Units | (9) | - | (1,487) | - | 8,579 | 222 | 1,487 | 7,314 | |||||||||||||||||
Televerde, LLC | Member Units | (8) | - | (2,135) | - | 7,280 | - | 2,135 | 5,145 | ||||||||||||||||
Preferred Stock | (8) | - | 1,076 | - | - | 1,794 | - | 1,794 | |||||||||||||||||
Vision Interests, Inc. | Series A Preferred Stock | (9) | - | - | 144 | 3,000 | - | - | 3,000 | ||||||||||||||||
VVS Holdco LLC | 11.50% Secured Debt | (5) | - | - | 1,821 | 31,269 | 34 | 1,201 | 30,102 | ||||||||||||||||
Preferred Equity | (5) | - | 240 | 200 | 11,840 | 240 | - | 12,080 | |||||||||||||||||
Other | |||||||||||||||||||||||||
Amounts related to investments transferred to or from other 1940 Act classification during the period | - | - | 57 | 41,748 | - | - | - | ||||||||||||||||||
Total Control investments | $ | - | $ | 13,101 | $ | 69,385 | $ | 1,489,257 | $ | 176,645 | $ | 85,996 | $ | 1,538,158 | |||||||||||
Affiliate Investments | |||||||||||||||||||||||||
AAC Holdings, Inc. | 18.00% (10.00% Cash, 8.00% PIK) Secured Debt | (7) | $ | - | $ | (150) | $ | 970 | $ | 9,794 | $ | 296 | $ | - | $ | 10,090 | |||||||||
Common Stock | (7) | - | (1,279) | - | 2,079 | - | 1,279 | 800 | |||||||||||||||||
Warrants | (7) | - | (1,200) | - | 1,940 | - | 1,200 | 740 | |||||||||||||||||
AFG Capital Group, LLC | 10.00% Secured Debt | (8) | - | - | 2 | 144 | - | 144 | - | ||||||||||||||||
Preferred Member Units | (8) | - | 1,040 | - | 7,740 | 1,040 | - | 8,780 | |||||||||||||||||
ATX Networks Corp. | 8.92% (L+7.50%, Floor 1.00%) Secured Debt | (6) | - | (309) | 388 | 7,092 | 228 | 1,133 | 6,187 | ||||||||||||||||
10.00% PIK Unsecured Debt | (6) | - | 120 | 159 | 1,963 | 437 | 158 | 2,242 | |||||||||||||||||
BBB Tank Services, LLC | 12.06% (L+11.00%, Floor 1.00%) Unsecured Debt | (8) | - | (209) | 290 | 2,507 | - | 209 | 2,298 | ||||||||||||||||
Preferred Stock (non-voting) | (8) | - | - | - | - | - | - | - | |||||||||||||||||
Member Units | (8) | - | - | - | - | - | - | - | |||||||||||||||||
Boccella Precast Products LLC | 10.00% Secured Debt | (6) | - | - | 16 | 320 | - | - | 320 | ||||||||||||||||
Member Units | (6) | - | (320) | 70 | 4,830 | - | 320 | 4,510 | |||||||||||||||||
Buca C, LLC | 10.37% (L+9.25%, Floor 1.00%) Secured Debt | (7) | - | - | 1,036 | 14,370 | - | 1,221 | 13,149 | ||||||||||||||||
Career Team Holdings, LLC | 12.50% Secured Debt | (6) | - | - | 1,296 | 20,050 | 20 | - | 20,070 | ||||||||||||||||
Class A Common Units | (6) | - | - | - | 4,499 | 1 | - | 4,500 | |||||||||||||||||
Chandler Signs Holdings, LLC | Class A Units | (8) | - | 160 | - | 460 | 160 | - | 620 | ||||||||||||||||
Classic HG Holdings, LLC | 7.00% (L+6.00%, Floor 1.00%) Secured Debt | (6) | - | - | 349 | 4,000 | 7,920 | 6,360 | 5,560 | ||||||||||||||||
8.00% Secured Debt | (6) | - | (21) | 797 | 19,274 | 21 | 21 | 19,274 | |||||||||||||||||
Preferred Member Units | (6) | - | 8,530 | 947 | 15,260 | 8,530 | - | 23,790 | |||||||||||||||||
Congruent Credit Opportunities Funds | LP Interests (Congruent Credit Opportunities Fund | (8) | - | (63) | 300 | 9,959 | - | 1,660 | 8,299 | ||||||||||||||||
DMA Industries, LLC | 12.00% Secured Debt | (7) | - | 186 | 1,300 | 20,993 | 207 | - | 21,200 | ||||||||||||||||
Preferred Equity | (7) | - | 976 | - | 5,944 | 976 | - | 6,920 | |||||||||||||||||
Dos Rios Partners | LP Interests (Dos Rios Partners - A, LP) | (8) | - | (546) | - | 3,280 | - | 546 | 2,734 | ||||||||||||||||
LP Interests (Dos Rios Partners, LP) | (8) | - | (1,719) | - | 10,329 | - | 1,719 | 8,610 | |||||||||||||||||
Dos Rios Stone Products LLC | Class A Preferred Units | (8) | - | (290) | - | 640 | - | 290 | 350 | ||||||||||||||||
EIG Fund Investments | LP Interests (EIG Global Private Debt Fund-A, L.P.) | (8) | 11 | - | 28 | 547 | - | 158 | 389 | ||||||||||||||||
Freeport Financial SBIC Fund LP | LP Interests (Freeport Financial SBIC Fund LP) | (5) | - | (52) | 2 | 6,078 | - | 1,962 | 4,116 | ||||||||||||||||
LP Interests (Freeport First Lien Loan Fund III LP) | (5) | - | (57) | 242 | 7,231 | - | 436 | 6,795 | |||||||||||||||||
GFG Group, LLC. | 9.00% Secured Debt | (5) | - | (13) | 675 | 12,545 | 13 | 13 | 12,545 | ||||||||||||||||
Preferred Member Units | (5) | - | - | 378 | 6,990 | - | - | 6,990 | |||||||||||||||||
Hawk Ridge Systems, LLC | 7.13% (L+6.00%, Floor 1.00%) Secured Debt | (9) | - | - | 94 | 2,585 | - | - | 2,585 | ||||||||||||||||
8.00% Secured Debt | (9) | - | (16) | 1,416 | 34,800 | 16 | 16 | 34,800 | |||||||||||||||||
Preferred Member Units | (9) | - | 5,350 | 704 | 14,680 | 5,350 | 20,030 | ||||||||||||||||||
Preferred Member Units | (9) | - | 280 | - | 771 | 279 | - | 1,050 | |||||||||||||||||
Houston Plating and Coatings, LLC | 8.00% Unsecured Convertible Debt | (8) | - | (210) | 121 | 2,960 | - | 210 | 2,750 | ||||||||||||||||
Member Units | (8) | - | (690) | 16 | 3,210 | - | 690 | 2,520 | |||||||||||||||||
HPEP 3, L.P. | LP Interests (HPEP 3, L.P.) | (8) | 779 | (21) | (80) | 4,712 | - | 381 | 4,331 | ||||||||||||||||
LP Interests (423 COR, LP) | (8) | - | - | - | - | 1,400 | - | 1,400 | |||||||||||||||||
90
Amount of | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||
Realized | Unrealized | Credited to | 2021 | Gross | Gross | 2022 | |||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||
I-45 SLF LLC | Member Units (Fully diluted 20.0%; 21.75% profits | (8) | - | (1,438) | 943 | 14,387 | - | 1,438 | 12,949 | ||||||||||||||||
Iron-Main Investments, LLC | 12.50% Secured Debt | (5) | - | - | 204 | 3,170 | 3 | - | 3,173 | ||||||||||||||||
12.50% Secured Debt | (5) | - | - | 294 | 4,557 | 4 | - | 4,561 | |||||||||||||||||
12.50% Secured Debt | (5) | - | - | 1,839 | 28,749 | 20 | - | 28,769 | |||||||||||||||||
Common Stock | (5) | - | - | - | 1,798 | - | - | 1,798 | |||||||||||||||||
L.F. Manufacturing Holdings, LLC | Preferred Member Units (non-voting) | (8) | - | - | 8 | 107 | 8 | - | 115 | ||||||||||||||||
Member Units | (8) | - | 590 | 224 | 2,560 | 590 | - | 3,150 | |||||||||||||||||
OnAsset Intelligence, Inc. | 12.00% PIK Secured Debt | (8) | - | (155) | 28 | 935 | 28 | 155 | 808 | ||||||||||||||||
12.00% PIK Secured Debt | (8) | - | (158) | 29 | 954 | 29 | 158 | 825 | |||||||||||||||||
12.00% PIK Secured Debt | (8) | - | (341) | 62 | 2,055 | 62 | 341 | 1,776 | |||||||||||||||||
12.00% PIK Secured Debt | (8) | - | (710) | 129 | 4,286 | 129 | 711 | 3,704 | |||||||||||||||||
10.00% PIK Unsecured Debt | (8) | - | - | 5 | 191 | 11 | 5 | 197 | |||||||||||||||||
Oneliance, LLC | 12.06% (L+11.00%, Floor 1.00%) Secured Debt | (7) | - | - | 344 | 5,547 | 6 | - | 5,553 | ||||||||||||||||
Preferred Stock | (7) | - | - | - | 1,056 | - | - | 1,056 | |||||||||||||||||
Rocaceia, LLC (Quality Lease and Rental Holdings, LLC) | 12.00% Secured Debt | (8) | (51) | - | - | - | - | - | - | ||||||||||||||||
SI East, LLC (Stavig) | 10.25% Secured Debt | (7) | - | (36) | 3,751 | 65,850 | 36 | 1,525 | 64,361 | ||||||||||||||||
Preferred Member Units | (7) | - | 1,260 | 345 | 11,570 | 1,260 | - | 12,830 | |||||||||||||||||
Slick Innovations, LLC | 13.00% Secured Debt | (6) | - | (28) | 340 | 5,320 | 28 | 708 | 4,640 | ||||||||||||||||
Common Stock | (6) | - | 130 | - | 1,510 | 130 | - | 1,640 | |||||||||||||||||
Warrants | (6) | - | 40 | - | 400 | 40 | - | 440 | |||||||||||||||||
Sonic Systems International, LLC | 8.50% (L+7.50%, Floor 1.00%) Secured Debt | (8) | - | (233) | 565 | 11,757 | 3,737 | 234 | 15,260 | ||||||||||||||||
Common Stock | (8) | - | 64 | 21 | 1,070 | 350 | - | 1,420 | |||||||||||||||||
Superior Rigging Erecting Co. | 12.00% Secured Debt | (7) | - | - | 1,320 | 21,332 | 23 | - | 21,355 | ||||||||||||||||
Preferred Member Units | (7) | - | - | - | 4,500 | - | - | 4,500 | |||||||||||||||||
The Affiliati Network, LLC | 11.83% Secured Debt | (9) | - | - | 794 | 13,096 | 2,187 | 3,640 | 11,643 | ||||||||||||||||
Preferred Stock | (9) | - | - | 302 | 6,400 | - | - | 6,400 | |||||||||||||||||
UnionRock Energy Fund II, LP | LP Interests | (9) | - | (997) | 55 | 6,123 | 1,324 | 3,582 | 3,865 | ||||||||||||||||
UniTek Global Services, Inc. | 9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt | (6) | - | (9) | 18 | 371 | 8 | 13 | 366 | ||||||||||||||||
9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt | (6) | - | (47) | 88 | 1,852 | 42 | 66 | 1,828 | |||||||||||||||||
15.00% PIK Secured Convertible Debt | (6) | - | 72 | 95 | 2,375 | 309 | 96 | 2,588 | |||||||||||||||||
Preferred Stock | (6) | - | (181) | 181 | 2,833 | 181 | 181 | 2,833 | |||||||||||||||||
Preferred Stock | (6) | - | 393 | - | 1,498 | 393 | - | 1,891 | |||||||||||||||||
Volusion, LLC | 11.50% Secured Debt | (8) | - | - | 992 | 17,434 | - | 350 | 17,084 | ||||||||||||||||
8.00% Unsecured Convertible Debt | (8) | - | - | 16 | 409 | - | - | 409 | |||||||||||||||||
Preferred Member Units | (8) | - | (3,060) | - | 5,989 | - | 3,059 | 2,930 | |||||||||||||||||
Other | - | ||||||||||||||||||||||||
Amounts related to investments transferred to or from other 1940 Act classification during the period | - | 139 | 1,302 | 32,597 | - | - | - | ||||||||||||||||||
Total Affiliate investments | $ | 739 | $ | 4,772 | $ | 25,810 | $ | 549,214 | $ | 37,832 | $ | 36,388 | $ | 518,061 | |||||||||||
| (1) | The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of Investments included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. |
| (2) | Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred from other 1940 Act classifications during the period.” |
91
| (3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. |
| (4) | Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
| (5) | Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $341,821. This represented 22.2% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $68,747. This represented 13.3% of net assets as of June 30, 2022. |
| (6) | Portfolio company located in the Northeast region and Canada as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $140,103. This represented 9.1% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $102,679. This represented 19.8% of net assets as of June 30, 2022. |
| (7) | Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $17,479. This represented 1.1% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $162,554. This represented 31.4% of net assets as of June 30, 2022. |
| (8) | Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $588,039. This represented 38.2% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $103,708. This represented 20.0% of net assets as of June 30, 2022. |
| (9) | Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $450,716. This represented 29.3% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $80,373. This represented 15.5% of net assets as of June 30, 2022. |
| (10) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. |
| (11) | This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Supplemental information can be located within the Consolidated Schedule of Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. |
| (12) | Investment has an unfunded commitment as of June 30, 2022 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments. |
92
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments in and Advances to Affiliates
June 30, 2021
(dollars in thousands)
(unaudited)
Amount of | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
Realized | Unrealized | Credited to | 2020 | Gross | Gross | 2021 | |||||||||||||||||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||||||||||||||||
Majority‑owned investments |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
ASK (Analytical Systems Keco Holdings, LLC) | 12.00% (L+10.00%, Floor 2.00%) Secured Debt | (8) | $ | - | $ | - | $ | 346 | $ | 4,874 | $ | 114 | $ | 150 | $ | 4,838 | |||||||||||||||||||||||
Preferred Member Units | (8) | - | (1,830) | - | 3,200 | - | 1,830 | 1,370 | |||||||||||||||||||||||||||||||
Preferred Member Units | (8) | - | 986 | - | - | 1,640 | - | 1,640 | |||||||||||||||||||||||||||||||
Warrants | (8) | - | (10) | - | 10 | - | 10 |
| - | ||||||||||||||||||||||||||||||
CMS Minerals Investments | Member Units | (9) | - | 453 | 13 | 1,624 | 453 | 107 |
| 1,970 | |||||||||||||||||||||||||||||
Café Brazil, LLC | Member Units | (8) | - | 460 | 31 | 2,030 | 460 | - |
| 2,490 | |||||||||||||||||||||||||||||
California Splendor Holdings LLC | Preferred Member Units | (9) | - | 2,897 | 125 | 6,241 | 2,897 | - |
| 9,138 | |||||||||||||||||||||||||||||
Preferred Member Units | (9) | - | - | 623 | 8,255 | 623 | - |
| 8,878 | ||||||||||||||||||||||||||||||
11.00% (L+10.00%, Floor 1.00%) Secured Debt | (9) | - | 36 | 1,708 | 35,832 | 113 | 8,129 |
| 27,816 | ||||||||||||||||||||||||||||||
Clad-Rex Steel, LLC | Member Units | (5) | - | 810 | 143 | 8,610 | 810 | - |
| 9,420 | |||||||||||||||||||||||||||||
Member Units | (5) | - | - | - | 530 | - | - |
| 530 | ||||||||||||||||||||||||||||||
10.50% (L+9.50%, Floor 1.00%) Secured Debt | (5) | - | - | 589 | 10,853 | - | 469 |
| 10,384 | ||||||||||||||||||||||||||||||
10.00% Secured Debt | (5) | - | - | 55 | 1,100 | - | 14 | 1,086 | |||||||||||||||||||||||||||||||
Cody Pools, Inc. | Preferred Member Units | (8) | - | 7,260 | 106 | 14,940 | 7,260 | - | 22,200 | ||||||||||||||||||||||||||||||
12.25% (L+10.50%, Floor 1.75%) Secured Debt | (8) | - | (30) | 843 | 14,216 | 30 | 2,400 |
| 11,846 | ||||||||||||||||||||||||||||||
Datacom, LLC | Preferred Member Units | (8) | - | - | - | - | 2,610 | - |
| 2,610 | |||||||||||||||||||||||||||||
5.00% Secured Debt | (8) | - | - | 336 | - | 8,175 | 54 |
| 8,121 | ||||||||||||||||||||||||||||||
Direct Marketing Solutions, Inc. | Preferred Stock | (9) | - | (1,560) | - | 19,380 | - | 1,560 |
| 17,820 | |||||||||||||||||||||||||||||
12.00% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | - | 932 | 15,007 | 18 | - |
| 15,025 | ||||||||||||||||||||||||||||||
GRT Rubber Technologies LLC | Member Units | (8) | - | - | 2,192 | 44,900 | - | - |
| 44,900 | |||||||||||||||||||||||||||||
7.09% (L+7.00%) Secured Debt | (8) | - | - | 600 | 16,775 | - | - |
| 16,775 | ||||||||||||||||||||||||||||||
Gamber-Johnson Holdings, LLC | Member Units | (5) | - | 912 | 3,477 | 52,490 | 3,760 | - |
| 56,250 | |||||||||||||||||||||||||||||
9.00% (L+7.00%, Floor 2.00%) Secured Debt | (5) | - | (30) | 954 | 19,838 | 830 | 30 |
| 20,638 | ||||||||||||||||||||||||||||||
9.00% (L+7.00%, Floor 2.00%) Secured Debt | (5) | - | (1) | 4 | - | 1 | 1 |
| - | ||||||||||||||||||||||||||||||
Jensen Jewelers of Idaho, LLC | Member Units | (9) | - | 1,990 | 597 | 7,620 | 1,990 | - |
| 9,610 | |||||||||||||||||||||||||||||
10.00% (Prime+6.75%, Floor 2.00%) Secured Debt | (9) | - | (7) | 167 | 3,400 | 7 | 407 |
| 3,000 | ||||||||||||||||||||||||||||||
Kickhaefer Manufacturing Company, LLC | Member Units | (5) | - | - | - | 12,240 | - | - |
| 12,240 | |||||||||||||||||||||||||||||
11.50% Secured Debt | (5) | - | - | 1,296 | 22,269 | 29 | 1,200 |
| 21,098 | ||||||||||||||||||||||||||||||
Member Units | (5) | - | 50 | 50 | 1,160 | 50 | - |
| 1,210 | ||||||||||||||||||||||||||||||
9.00% Secured Debt | (5) | - | - | 177 | 3,909 | - | 16 |
| 3,893 | ||||||||||||||||||||||||||||||
MH Corbin Holding LLC | 13.00% (10.00% Cash, 3.00% PIK) Secured Debt | (5) | - | (521) | 569 | 8,280 | 17 | 681 |
| 7,616 | |||||||||||||||||||||||||||||
Preferred Member Units | (5) | - | (2,370) | - | 2,370 | - | 2,370 |
| - | ||||||||||||||||||||||||||||||
MSC Adviser I, LLC | Member Units | (8) | - | 4,970 | 2,449 | 116,760 | 4,970 | - |
| 121,730 | |||||||||||||||||||||||||||||
Market Force Information, LLC | 12.00% PIK Secured Debt | (9) | - | (294) | - | 13,562 | - | 294 |
| 13,268 | |||||||||||||||||||||||||||||
12.00% (L+11.00%, Floor 1.00%) Secured Debt | (9) | - | - | 178 | 1,600 | 1,800 | - |
| 3,400 | ||||||||||||||||||||||||||||||
Mystic Logistics Holdings, LLC | Common Stock | (6) | - | (3,070) | 548 | 8,990 | - | 3,070 |
| 5,920 | |||||||||||||||||||||||||||||
12.00% Secured Debt | (6) | - | - | 410 | 6,723 | 5 | 24 |
| 6,704 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (6) | - | - | 2 | - | - | - |
| - | ||||||||||||||||||||||||||||||
OMi Holdings, Inc. | Common Stock | (8) | - | (1,550) | 1,080 | 20,380 | - | 1,550 |
| 18,830 | |||||||||||||||||||||||||||||
PPL RVs, Inc. | Common Stock | (8) | - | 1,630 | 569 | 11,500 | 1,630 | - |
| 13,130 | |||||||||||||||||||||||||||||
93
Amount of | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
Realized | Unrealized | Credited to | 2020 | Gross | Gross | 2021 | |||||||||||||||||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||||||||||||||||
7.50% (L+7.00%, Floor 0.50%) Secured Debt | (8) | - | (14) | 470 | 11,806 | 27 | 214 |
| 11,619 | ||||||||||||||||||||||||||||||
Principle Environmental, LLC | 13.00% Secured Debt | (8) | - | (62) | 430 | 6,397 | 12 | 62 |
| 6,347 | |||||||||||||||||||||||||||||
Common Stock | (8) | - | (440) | - | - | 1,200 | 440 |
| 760 | ||||||||||||||||||||||||||||||
Preferred Member Units | (8) | - | (360) | - | 10,500 | - | 360 |
| 10,140 | ||||||||||||||||||||||||||||||
Quality Lease Service, LLC | Member Units | (7) | - | (311) | - | 4,460 | - | 1,561 |
| 2,899 | |||||||||||||||||||||||||||||
Trantech Radiator Topco, LLC | Common Stock | (7) | - | (40) | 58 | 6,030 | - | 40 |
| 5,990 | |||||||||||||||||||||||||||||
12.00% Secured Debt | (7) | - | - | 538 | 8,644 | 10 | - |
| 8,654 | ||||||||||||||||||||||||||||||
Ziegler’s NYPD, LLC | Preferred Member Units | (8) | - | 290 | - | 1,780 | 290 | - |
| 2,070 | |||||||||||||||||||||||||||||
14.00% Secured Debt | (8) | - | - | 194 | 2,750 | - | - |
| 2,750 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (8) | - | - | 38 | 625 | - | - |
| 625 | ||||||||||||||||||||||||||||||
6.50% Secured Debt | (8) | - | 21 | 33 | 979 | 21 | - |
| 1,000 | ||||||||||||||||||||||||||||||
Other controlled investments | |||||||||||||||||||||||||||||||||||||||
2717 MH, L.P. | (8) | - | - | - | 250 | - | 250 | - | |||||||||||||||||||||||||||||||
LP Interests (2717 MH, L.P.) | (8) | - | - | - | 2,702 | 46 | - | 2,748 | |||||||||||||||||||||||||||||||
ASC Interests, LLC | Member Units | (8) | - | (110) | - | 1,120 | - | 110 | 1,010 | ||||||||||||||||||||||||||||||
13.00% Secured Debt | (8) | - | - | 126 | 1,715 | 110 | - | 1,825 | |||||||||||||||||||||||||||||||
ATS Workholding, LLC | 5.00% Secured Debt | (9) | - | (305) | - | 3,347 | - | 385 | 2,962 | ||||||||||||||||||||||||||||||
Barfly Ventures, LLC | Member Units | (5) | - | 116 | - | 1,584 | 116 | - | 1,700 | ||||||||||||||||||||||||||||||
7.00% Secured Debt | (5) | - | - | 45 | 343 | 368 | - | 711 | |||||||||||||||||||||||||||||||
Bolder Panther Group, LLC | 14.00% Class A Preferred Member Units | (9) | - | - | 704 | 10,194 | - | - | 10,194 | ||||||||||||||||||||||||||||||
8.00% Class B Preferred Member Units | (9) | - | 3,420 | 1,135 | 14,000 | 3,420 | - | 17,420 | |||||||||||||||||||||||||||||||
10.50% (L+9.00%, Floor 1.50%) Secured Debt | (9) | - | - | 1,514 | 27,225 | 525 | 500 | 27,250 | |||||||||||||||||||||||||||||||
Bond-Coat, Inc. | (8) | (2,320) | 4,310 | - | 2,040 | 4,310 | 6,350 | - | |||||||||||||||||||||||||||||||
Brewer Crane Holdings, LLC | Preferred Member Units | (9) | - | (710) | 367 | 5,850 | - | 710 | 5,140 | ||||||||||||||||||||||||||||||
11.00% (L+10.00%, Floor 1.00%) Secured Debt | (9) | - | - | 473 | 8,513 | 10 | 248 | 8,275 | |||||||||||||||||||||||||||||||
Bridge Capital Solutions Corporation | 13.00% Secured Debt | (6) | - | - | 925 | 8,403 | 349 | - | 8,752 | ||||||||||||||||||||||||||||||
Warrants | (6) | - | 510 | - | 3,220 | 510 | - | 3,730 | |||||||||||||||||||||||||||||||
Preferred Member Units | (6) | - | - | 50 | 1,000 | - | - | 1,000 | |||||||||||||||||||||||||||||||
13.00% Secured Debt | (6) | - | - | 67 | 998 | 1 | - | 999 | |||||||||||||||||||||||||||||||
CBT Nuggets, LLC | Member Units | (9) | - | 6,540 | 678 | 46,080 | 6,540 | - | 52,620 | ||||||||||||||||||||||||||||||
Centre Technologies Holdings, LLC | Preferred Member Units | (8) | - | (320) | 60 | 6,160 | - | 320 | 5,840 | ||||||||||||||||||||||||||||||
12.00% (L+10.00%, Floor 2.00%) Secured Debt | (8) | - | - | 667 | 11,549 | 22 | 1,906 | 9,665 | |||||||||||||||||||||||||||||||
Chamberlin Holding LLC | Member Units | (8) | - | (1,420) | 3,559 | 28,070 | - | 1,420 | 26,650 | ||||||||||||||||||||||||||||||
9.00% (L+8.00%, Floor 1.00%) Secured Debt | (8) | - | (22) | 691 | 15,212 | 22 | 1,417 | 13,817 | |||||||||||||||||||||||||||||||
Member Units | (8) | - | 110 | 34 | 1,270 | 110 | - | 1,380 | |||||||||||||||||||||||||||||||
Charps, LLC | Preferred Member Units | (5) | - | 1,060 | 1,543 | 10,520 | 1,060 | - | 11,580 | ||||||||||||||||||||||||||||||
10.00% Unsecured Debt | (5) | - | (382) | 683 | 8,475 | 262 | 3,646 | 5,091 | |||||||||||||||||||||||||||||||
0.15 Secured Debt | (5) | - | - | 4 | 669 | - | 669 | - | |||||||||||||||||||||||||||||||
Colonial Electric Company LLC | Preferred Member Units | (6) | - | - | 100 | - | 7,680 | - | 7,680 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (6) | - | - | 1,162 | - | 24,958 | - | 24,958 | |||||||||||||||||||||||||||||||
CompareNetworks Topco, LLC | Preferred Member Units | (9) | - | 3,250 | 158 | 6,780 | 3,250 | - | 10,030 | ||||||||||||||||||||||||||||||
10.00% (L+9.00%, Floor 1.00%) Secured Debt | (9) | - | (9) | 430 | 7,954 | 9 | 709 | 7,254 | |||||||||||||||||||||||||||||||
Copper Trail Energy Fund I, LP - CTMH | LP Interests (CTMH, LP) | (9) | - | - | - | 747 | - | 37 | 710 | ||||||||||||||||||||||||||||||
Datacom, LLC | Preferred Member Units | (8) | (6,030) | 6,030 | - | - | 6,030 | 6,030 | - | ||||||||||||||||||||||||||||||
Preferred Member Units | (8) | (1,294) | 1,294 | - | - | 1,294 | 1,294 | - | |||||||||||||||||||||||||||||||
10.50% PIK Secured Debt | (8) | (1,801) | 1,945 | 1 | 10,531 | 1,945 | 12,476 | - | |||||||||||||||||||||||||||||||
8.00% Secured Debt | (8) | (1,800) | 185 | - | 1,615 | 185 | 1,800 | - | |||||||||||||||||||||||||||||||
Digital Products Holdings LLC | Preferred Member Units | (5) | - | - | 100 | 9,835 | - | - | 9,835 | ||||||||||||||||||||||||||||||
11.00% (L+10.00%, Floor 1.00%) Secured Debt | (5) | - | - | 1,000 | 18,077 | 22 | 660 | 17,439 | |||||||||||||||||||||||||||||||
Garreco, LLC | Member Units | (8) | - | 350 | - | 1,410 | 350 | - | 1,760 | ||||||||||||||||||||||||||||||
94
Amount of | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
Realized | Unrealized | Credited to | 2020 | Gross | Gross | 2021 | |||||||||||||||||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||||||||||||||||
9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) Secured Debt | (8) | - | - | 204 | 4,519 | - | - | 4,519 | |||||||||||||||||||||||||||||||
Gulf Manufacturing, LLC | Member Units | (8) | - | 790 | 347 | 4,510 | 790 | - | 5,300 | ||||||||||||||||||||||||||||||
Gulf Publishing Holdings, LLC | 12.50% (6.25% Cash, 6.25% PIK) Secured Debt | (8) | - | (1,752) | 849 | 12,044 | 849 | 2,171 | 10,722 | ||||||||||||||||||||||||||||||
10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt | (8) | - | - | 14 | 250 | 14 | 7 | 257 | |||||||||||||||||||||||||||||||
Harrison Hydra-Gen, Ltd. | Common Stock | (8) | - | (600) | - | 5,450 | - | 600 | 4,850 | ||||||||||||||||||||||||||||||
JJ Services, Inc. | Preferred Stock | (7) | - | 370 | - | 12,680 | 370 | - | 13,050 | ||||||||||||||||||||||||||||||
11.50% Secured Debt | (7) | - | (17) | 746 | 12,800 | 17 | 817 | 12,000 | |||||||||||||||||||||||||||||||
KBK Industries, LLC | Member Units | (5) | - | 330 | 221 | 13,200 | 330 | - | 13,530 | ||||||||||||||||||||||||||||||
MS Private Loan Fund | LP Interests | (8) | - | - | - | - | 285 | - | 285 | ||||||||||||||||||||||||||||||
5.00% Unsecured Debt | (8) | - | - | 300 | - | 16,220 | - | 16,220 | |||||||||||||||||||||||||||||||
MSC Income Fund Inc. | 5.00% Unsecured Debt | (8) | - | 210 | 891 | - | 39,840 | - | 39,840 | ||||||||||||||||||||||||||||||
NAPCO Precast, LLC | Member Units | (8) | - | (530) | 81 | 16,100 | - | 530 | 15,570 | ||||||||||||||||||||||||||||||
NRI Clinical Research, LLC | 9.00% Secured Debt | (9) | - | (20) | 262 | 5,620 | 20 | 865 | 4,775 | ||||||||||||||||||||||||||||||
Member Units | (9) | - | 2,434 | 399 | 5,600 | 2,434 | - | 8,034 | |||||||||||||||||||||||||||||||
NRI Clinical Research, LLC | Warrants | (9) | - | 540 | - | 1,490 | 540 | - | 2,030 | ||||||||||||||||||||||||||||||
NRP Jones, LLC | Member Units | (5) | - | 419 | (45) | 2,821 | 419 | - | 3,240 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (5) | - | - | 126 | 2,080 | - | - | 2,080 | |||||||||||||||||||||||||||||||
Nebraska Vet AcquireCo, LLC (NVS) | 12.00% Secured Debt | (5) | - | - | 651 | 10,395 | 9 | - | 10,404 | ||||||||||||||||||||||||||||||
Preferred Member Units | (5) | - | - | - | 6,500 | - | - | 6,500 | |||||||||||||||||||||||||||||||
NexRev LLC | Preferred Member Units | (8) | - | 1,810 | 40 | 1,470 | 1,810 | - | 3,280 | ||||||||||||||||||||||||||||||
11.00% Secured Debt | (8) | - | 178 | 946 | 16,726 | 197 | 436 | 16,487 | |||||||||||||||||||||||||||||||
Preferred Member Units | (5) | - | 1,570 | - | 10,780 | 1,570 | - | 12,350 | |||||||||||||||||||||||||||||||
11.00% Secured Debt | (5) | - | 26 | 1,017 | 17,193 | 47 | - | 17,240 | |||||||||||||||||||||||||||||||
7.50% (L+6.50%, Floor 1.00%) Secured Debt | (5) | - | - | 6 | - | 400 | 400 | - | |||||||||||||||||||||||||||||||
Pearl Meyer Topco LLC | Member Units | (6) | - | 2,550 | 1,528 | 15,940 | 2,550 | - | 18,490 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (6) | - | 272 | 2,170 | 37,202 | 311 | 3,840 | 33,673 | |||||||||||||||||||||||||||||||
Pegasus Research Group, LLC | Member Units | (8) | - | (560) | - | 8,830 | - | 560 | 8,270 | ||||||||||||||||||||||||||||||
Principle Environmental, LLC | Warrants | (8) | - | 330 | - | 870 | 330 | 1,200 | - | ||||||||||||||||||||||||||||||
River Aggregates, LLC | Member Units | (8) | - | 50 | - | 3,240 | 50 | - | 3,290 | ||||||||||||||||||||||||||||||
Tedder Industries, LLC | Preferred Member Units | (9) | - | - | - | 8,136 | - | - | 8,136 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (9) | - | - | 960 | 16,300 | 582 | 1,599 | 15,283 | |||||||||||||||||||||||||||||||
UnionRock Energy Fund II, LP | LP Interests | (9) | - | 737 | - | 2,894 | 2,113 | 220 | 4,787 | ||||||||||||||||||||||||||||||
Vision Interests, Inc. | 13.00% Secured Debt | (9) | - | - | 133 | 2,028 | - | - | 2,028 | ||||||||||||||||||||||||||||||
Series A Preferred Stock | (9) | - | (160) | - | 3,160 | - | 160 | 3,000 | |||||||||||||||||||||||||||||||
Other | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Total Control Investments | $ | (13,245) | $ | 45,084 | $ | 51,052 | $ | 1,113,725 | $ | 177,453 | $ | 81,385 | $ | 1,209,793 | |||||||||||||||||||||||||
Affiliate Investments | |||||||||||||||||||||||||||||||||||||||
AAC Holdings, Inc. | Common Stock | (7) | $ | - | $ | (1,069) | $ | - | $ | 3,148 | $ | - | $ | 1,069 | $ | 2,079 | |||||||||||||||||||||||
(L+11.00%, Floor 1.00%) Secured Debt | (7) | - | - | (16) | - | - | - | - | |||||||||||||||||||||||||||||||
18.00% (10.00% Cash, 8.00% PIK) Secured Debt | (7) | - | (89) | 883 | 9,187 | 401 | 89 | 9,499 | |||||||||||||||||||||||||||||||
AAC Holdings, Inc. | Warrants | (7) | - | (998) | - | 2,938 | - | 998 | 1,940 | ||||||||||||||||||||||||||||||
AFG Capital Group, LLC | Preferred Member Units | (8) | - | 1,150 | - | 5,810 | 1,150 | - | 6,960 | ||||||||||||||||||||||||||||||
10.00% Secured Debt | (8) | - | - | 20 | 491 | - | 173 | 318 | |||||||||||||||||||||||||||||||
BBB Tank Services, LLC | Member Units | (8) | - | (280) | - | 280 | - | 280 | - | ||||||||||||||||||||||||||||||
15.00% PIK Preferred Stock (non-voting) | (8) | - | (162) | 11 | 151 | 11 | 162 | - | |||||||||||||||||||||||||||||||
12.00% (L+11.00%, Floor 1.00%) Unsecured Debt | (8) | - | - | 317 | 4,722 | 27 | - | 4,749 | |||||||||||||||||||||||||||||||
Boccella Precast Products LLC | Member Units | (6) | - | (1,090) | 370 | 6,040 | - | 1,090 | 4,950 | ||||||||||||||||||||||||||||||
Buca C, LLC | 6.00% PIK Preferred Member Units | (7) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
10.25% (L+9.25%, Floor 1.00%) Secured Debt | (7) | - | (373) | 747 | 14,256 | 487 | 373 | 14,370 | |||||||||||||||||||||||||||||||
CAI Software LLC | Member Units | (6) | - | 6,741 | 1,900 | 7,190 | 6,741 | 1,921 | 12,010 | ||||||||||||||||||||||||||||||
12.50% Secured Debt | (6) | - | 37 | 3,350 | 47,474 | 23,600 | 3,353 | 67,721 | |||||||||||||||||||||||||||||||
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Amount of | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
Realized | Unrealized | Credited to | 2020 | Gross | Gross | 2021 | |||||||||||||||||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||||||||||||||||
Chandler Signs Holdings, LLC | Class A Units | (8) | - | (810) | - | 1,460 | - | 810 | 650 | ||||||||||||||||||||||||||||||
Classic HG Holdings, LLC | Preferred Member Units | (6) | - | 2,250 | 570 | 9,510 | 2,250 | - | 11,760 | ||||||||||||||||||||||||||||||
10.00% Secured Debt | (6) | - | (64) | 1,412 | 24,800 | 64 | 5,590 | 19,274 | |||||||||||||||||||||||||||||||
Congruent Credit Opportunities Funds | LP Interests (Fund II) | (8) | (4,449) | 4,355 | - | 94 | 4,355 | 4,449 | - | ||||||||||||||||||||||||||||||
LP Interests (Congruent Credit Opportunities Fund | (8) | - | (178) | 389 | 11,540 | - | 178 | 11,362 | |||||||||||||||||||||||||||||||
Copper Trail Energy Fund I, LP | LP Interests (Copper Trail Energy Fund I, LP) | (9) | - | 61 | 319 | 1,782 | 61 | - | 1,843 | ||||||||||||||||||||||||||||||
Dos Rios Partners | LP Interests (Dos Rios Partners, LP) | (8) | - | 1,608 | - | 5,417 | 1,608 | - | 7,025 | ||||||||||||||||||||||||||||||
LP Interests (Dos Rios Partners - A, LP) | (8) | - | 510 | - | 1,720 | 510 | - | 2,230 | |||||||||||||||||||||||||||||||
Dos Rios Stone Products LLC | Class A Preferred Units | (8) | - | (230) | - | 1,250 | - | 230 | 1,020 | ||||||||||||||||||||||||||||||
EIG Fund Investments | LP Interests (EIG Global Private Debt Fund-A, L.P.) | (8) | 8 | 92 | 33 | 526 | 126 | 166 | 486 | ||||||||||||||||||||||||||||||
East Teak Fine Hardwoods, Inc. | Common Stock | (7) | - | 130 | - | 300 | 130 | - | 430 | ||||||||||||||||||||||||||||||
Freeport Financial SBIC Fund LP | LP Interests (Freeport Financial SBIC Fund LP) | (5) | - | 386 | - | 5,264 | 386 | - | 5,650 | ||||||||||||||||||||||||||||||
LP Interests (Freeport First Lien Loan Fund III LP) | (5) | - | - | 455 | 10,321 | - | 2,317 | 8,004 | |||||||||||||||||||||||||||||||
GFG Group, LLC. | Preferred Member Units | (5) | - | - | 290 | - | 4,900 | - | 4,900 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (5) | - | - | 822 | - | 15,626 | 3,200 | 12,426 | |||||||||||||||||||||||||||||||
HPEP 3, L.P. | LP Interests (HPEP 3, L.P.) | (8) | - | 531 | - | 3,258 | 905 | - | 4,163 | ||||||||||||||||||||||||||||||
Hawk Ridge Systems, LLC | Preferred Member Units | (9) | - | 2,600 | 691 | 8,030 | 2,600 | - | 10,630 | ||||||||||||||||||||||||||||||
Preferred Member Units | (9) | - | 140 | - | 420 | 140 | - | 560 | |||||||||||||||||||||||||||||||
9.50% Secured Debt | (9) | - | (17) | 919 | 18,400 | 17 | 17 | 18,400 | |||||||||||||||||||||||||||||||
9.50% Secured Debt | (9) | - | - | 4 | - | - | - | - | |||||||||||||||||||||||||||||||
Houston Plating and Coatings, LLC | 8.00% Unsecured Convertible Debt | (8) | - | - | 121 | 2,900 | - | - | 2,900 | ||||||||||||||||||||||||||||||
Member Units | (8) | - | (1,560) | 2 | 5,080 | - | 1,560 | 3,520 | |||||||||||||||||||||||||||||||
I-45 SLF LLC | Member Units (Fully diluted 20.0%; 24.40% profits | (8) | - | 877 | 935 | 15,789 | 1,677 | 2,000 | 15,466 | ||||||||||||||||||||||||||||||
L.F. Manufacturing Holdings, LLC | Member Units | (8) | - | (140) | - | 2,050 | - | 140 | 1,910 | ||||||||||||||||||||||||||||||
14.00% PIK Preferred Member Units (non-voting) | (8) | - | - | 7 | 93 | 7 | - | 100 | |||||||||||||||||||||||||||||||
OnAsset Intelligence, Inc. | 12.00% PIK Secured Debt | (8) | - | - | 447 | 7,301 | 447 | - | 7,748 | ||||||||||||||||||||||||||||||
Common Stock | (8) | - | (830) | - | - | 830 | 830 | - | |||||||||||||||||||||||||||||||
10.00% PIK Unsecured Debt | (8) | - | - | 3 | 64 | 6 | 3 | 67 | |||||||||||||||||||||||||||||||
OnAsset Intelligence, Inc. | Warrants | (8) | - | 830 | - | - | 830 | 830 | - | ||||||||||||||||||||||||||||||
Rocaceia, LLC (Quality Lease and Rental Holdings, LLC) | 12.00% Secured Debt | (8) | (356) | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
SI East, LLC (Stavig) | Preferred Member Units | (7) | - | 5,250 | - | 9,780 | 5,250 | - | 15,030 | ||||||||||||||||||||||||||||||
8.75% Secured Debt | (7) | - | (60) | 1,456 | 32,961 | 57 | 3,847 | 29,171 | |||||||||||||||||||||||||||||||
Slick Innovations, LLC | 12.00% Secured Debt | (6) | - | (23) | 362 | 5,720 | 23 | 343 | 5,400 | ||||||||||||||||||||||||||||||
Common Stock | (6) | - | 180 | - | 1,330 | 180 | - | 1,510 | |||||||||||||||||||||||||||||||
Warrants | (6) | - | 40 | - | 360 | 40 | - | 400 | |||||||||||||||||||||||||||||||
Superior Rigging Erecting Co. | Preferred Member Units | (7) | - | - | - | 4,499 | - | - | 4,499 | ||||||||||||||||||||||||||||||
12.00% Secured Debt | (7) | - | - | 1,314 | 21,298 | 17 | - | 21,315 | |||||||||||||||||||||||||||||||
UniTek Global Services, Inc. | 20.00% PIK Preferred Stock | (6) | - | (239) | 149 | 2,833 | 149 | 239 | 2,743 | ||||||||||||||||||||||||||||||
20.00% PIK Preferred Stock | (6) | - | (375) | - | 374 | - | 374 | - | |||||||||||||||||||||||||||||||
15.00% PIK Secured Debt | (6) | - | 355 | 61 | - | 1,550 | 42 | 1,508 | |||||||||||||||||||||||||||||||
8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt | (6) | - | 62 | 130 | 2,426 | 163 | 442 | 2,147 | |||||||||||||||||||||||||||||||
Volusion, LLC | 8.00% Unsecured Convertible Debt | (8) | - | 118 | 16 | 291 | 118 | - | 409 | ||||||||||||||||||||||||||||||
11.50% Secured Debt | (8) | - | 992 | 1,170 | 19,243 | 991 | - | 20,234 | |||||||||||||||||||||||||||||||
Preferred Member Units | (8) | - | - | - | 5,990 | - | - | 5,990 | |||||||||||||||||||||||||||||||
Other | 13,907 | (4,476) | 2,852 | 20,140 | 2,591 | 22,731 | - | ||||||||||||||||||||||||||||||||
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Amount of | |||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Interest, | |||||||||||||||||||||||||||||||||||||||
Fees or | |||||||||||||||||||||||||||||||||||||||
Amount of | Amount of | Dividends | December 31, | June 30, | |||||||||||||||||||||||||||||||||||
Realized | Unrealized | Credited to | 2020 | Gross | Gross | 2021 | |||||||||||||||||||||||||||||||||
Company |
| Investment(1)(10)(11) |
| Geography |
| Gain/(Loss) |
| Gain/(Loss) |
| Income(2) |
| Fair Value |
| Additions(3) |
| Reductions(4) |
| Fair Value | |||||||||||||||||||||
investments transferred to | |||||||||||||||||||||||||||||||||||||||
Total Affiliate investments | $ | 9,110 | $ | 16,232 | $ | 22,511 | $ | 366,301 | $ | 81,021 | $ | 59,846 | $ | 387,476 | |||||||||||||||||||||||||
| (1) | The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of Investments included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. |
| (2) | Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.” |
| (3) | Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category. |
| (4) | Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category. |
| (5) | Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $256,063. This represented 16.0% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $30,980. This represented 1.9% of net assets as of June 30, 2021. |
| (6) | Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $111,907. This represented 7.0% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $129,419. This represented 8.1% of net assets as of June 30, 2021. |
| (7) | Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $42,591. This represented 2.7% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $98,336. This represented 6.1% of net assets as of June 30, 2021. |
| (8) | Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $499,378. This represented 31.1% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $97,305. This represented 6.1% of net assets as of June 30, 2021. |
| (9) | Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $299,854. This represented 18.7% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $31,433. This represented 2.0% of net assets as of June 30, 2021. |
97
| (10) | All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted. |
| (11) | This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Supplemental information can be located within the Consolidated Schedule of Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs. |
| (12) | Investment has an unfunded commitment as of June 30, 2021 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments. |
98
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation the factors referenced in Item 1A entitled “Risk Factors” below in Part II of this Quarterly Report on Form 10-Q, if any, and discussed in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 and elsewhere in this Quarterly Report on Form 10-Q and our other SEC filings. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas.
We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this Quarterly Report on Form 10-Q, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including subsequent periodic and current reports.
This discussion should be read in conjunction with our consolidated financial statements as of December 31, 2021, and for the year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.
ORGANIZATION
Main Street Capital Corporation (“MSCC” or “Main Street”) is a principal investment firm. MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. MSCC has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes.
COVID-19 UPDATE
The COVID-19 pandemic and its effect on the U.S. and global economies, including the current related impacts to supply chain delays, labor and material availability and price increases, has had, and threatens to continue to have, adverse consequences for our business and operating results, and the businesses and operating results of our portfolio companies. During the quarter ended June 30, 2022, we continued to work collectively with our employees and portfolio companies to navigate these significant challenges. Neither our management team nor our Board of Directors is able to predict the full impact of the COVID-19 pandemic, including its duration and the magnitude of its economic and societal impact. As such, while we will continue to monitor the evolving situation, we are unable to predict with any certainty the extent to which these events, or any future impacts related to the pandemic, will negatively affect our portfolio companies’ operating results and financial condition or the impact that such disruptions may have on our results of operations and financial condition in the future.
99
OVERVIEW OF OUR BUSINESS
Our principal investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve our investment objective through our lower middle market (“LMM”), Private Loan (as defined below) and middle market (“Middle Market”) investment strategies. Our LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and $150 million and our LMM portfolio investments generally range in size from $5 million to $75 million. Our Middle Market investment strategy involves investments in companies that are generally larger in size than our LMM companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $25 million. Our private loan (“Private Loan”) investment strategy involves investments in companies that are consistent with the size of the companies in our LMM and Middle Market investment strategies, and our Private Loan investments generally range in size from $10 million to $75 million.
We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company’s capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a “one stop” financing solution. Providing customized, “one stop” financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.
Private Loan investments generally consist of loans that have been originated directly by us or through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as “club deals.” Our Private Loan portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. We may also invest alongside the sponsor in the equity securities of our Private Loan portfolio companies.
Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing syndicated loans or debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.
Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for our LMM, Private Loan or Middle Market portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.
Subject to changes in our cash and overall liquidity, our Investment Portfolio may also include short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. These assets are typically expected to be liquidated in one year or less and are not expected to be a significant portion of the overall Investment Portfolio.
Our external asset management business is conducted through MSC Adviser I, LLC (the “External Investment Manager”). We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”) and its other clients. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.
Our portfolio investments are generally made through MSCC, the Taxable Subsidiaries and the Funds. MSCC, the Taxable Subsidiaries and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor’s return in MSCC will depend, in part, on the Taxable Subsidiaries’ and the Funds’ investment returns as they are wholly-owned subsidiaries of MSCC.
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The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.
Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a better alignment of interests between our management team, our employees and our shareholders, and a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed. Our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio and our External Investment Manager’s asset management business. The ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.5% and 1.4%, for the trailing twelve months ended June 30, 2022 and 2021, respectively, and 1.5% for the year ended December 31, 2021. The ratio of our total operating expenses, including interest expense, as a percentage of our quarterly average total assets was 3.3% for each of the trailing twelve months ended June 30, 2022 and 2021, and 3.4% for the year ended December 31, 2021. Our ratio of expenses as a percentage of our average net asset value is described in greater detail in Note F – Financial Highlights to the consolidated financial statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20% incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.
Additionally, the External Investment Manager has entered into an Investment Management Agreement with MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees.
The External Investment Manager provides administrative services for certain External Party clients that, to the extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly attributable to performing administrative services for a client. These fees are recognized as other revenue in the period in which the related services are rendered.
The External Investment Manager earns management fees based on the assets of the funds and accounts under management and may earn incentive fees, or a carried interest, based on the performance of the funds and accounts managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. The total contribution to our net investment income was $5.2 million and $3.8 million for the three months ended June 30, 2022 and 2021, respectively. The External Investment Manager earned base management fee income of $5.4 million and $4.2 million during the three months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022, the External Investment Manager earned $0.1 million in incentive fee income. No incentive fee income was earned in the three months ended June 30, 2021. During the three
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months ended June 30, 2022, the External Investment Manager earned $0.2 million in administrative services fee income. No administrative services fee income was earned in the three months ended June 30, 2021. Our total expenses are net of expenses allocated to the External Investment Manager for the three months ended June 30, 2022 and 2021 of $3.5 million and $2.6 million, respectively. The total contribution to our net investment income was $10.3 million and $7.4 million for the six months ended June 30, 2022 and 2021, respectively. The External Investment Manager earned base management fee income of $10.9 million and $8.1 million during the six months ended June 30, 2022 and 2021, respectively. During the six months ended June 30, 2022, the External Investment Manager earned $0.2 million in incentive fee income. No incentive fee income was earned in the six months ended June 30, 2021. During the six months ended June 30, 2022, the External Investment Manager earned $0.3 million in administrative services fee income. No administrative services fee income was earned in the six months ended June 30, 2021. Our total expenses are net of expenses allocated to the External Investment Manager for the six months ended June 30, 2022 and 2021 of $6.3 million and $5.0 million, respectively.
We have received an exemptive order from the SEC permitting co-investments among us, MSC Income and other funds and clients advised by the External Investment Manager in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made co-investments with, and in the future intend to continue to make co-investments with MSC Income, the Private Loan Fund and other clients advised by the External Investment Manager, in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for us and the External Investment Manager’s advised clients, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because the External Investment Manager may receive performance-based fee compensation from funds and clients advised by the External Investment Manager, this may provide the Company and the External Investment Manager an incentive to allocate opportunities to other participating funds and clients instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict, including oversight by the independent members of our Board of Directors. Additional information regarding the operation of the co-investment program is set forth in the order granting exemptive relief, which may be reviewed on the SEC’s website at www.sec.gov. In addition to the co-investment program described above, we also co-invest in syndicated deals and other transactions where price is the only negotiated point by us and our affiliates.
INVESTMENT PORTFOLIO SUMMARY
The following tables provide a summary of our investments in the LMM, Private Loan and Middle Market portfolios as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio investments, short-term portfolio investments and the External Investment Manager which are discussed further below):
| As of June 30, 2022 | |||||||||||
LMM (a) | Private Loan | Middle Market | ||||||||||
(dollars in millions) |
| |||||||||||
Number of portfolio companies | 75 |
| 82 |
| 34 | |||||||
Fair value | $ | 1,816.3 |
| $ | 1,309.0 |
| $ | 363.5 | ||||
Cost | $ | 1,508.9 |
| $ | 1,347.9 |
| $ | 419.0 | ||||
Debt investments as a % of portfolio (at cost) | 71.9 | % | 96.1 | % | 92.9 | % | ||||||
Equity investments as a % of portfolio (at cost) | 28.1 | % | 3.9 | % | 7.1 | % | ||||||
% of debt investments at cost secured by first priority lien | 99.0 | % | 99.4 | % | 99.2 | % | ||||||
Weighted-average annual effective yield (b) | 11.2 | % | 8.5 | % | 8.0 | % | ||||||
Average EBITDA (c) | $ | 7.5 |
| $ | 41.2 |
| $ | 71.4 | ||||
| (a) | At June 30, 2022, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of June 30, 2022, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of June 30, 2022 including debt investments on non-accrual status was 10.5% for our LMM portfolio, 8.3% for our Private Loan portfolio and 7.6% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of |
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| what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
| As of December 31, 2021 | |||||||||||
LMM (a) | Private Loan | Middle Market | ||||||||||
(dollars in millions) |
| |||||||||||
Number of portfolio companies | 73 |
| 75 |
| 36 | |||||||
Fair value | $ | 1,716.4 |
| $ | 1,141.8 |
| $ | 395.2 | ||||
Cost | $ | 1,455.7 |
| $ | 1,157.5 |
| $ | 440.9 | ||||
Debt investments as a % of portfolio (at cost) | 70.9 | % | 95.7 | % | 93.3 | % | ||||||
Equity investments as a % of portfolio (at cost) | 29.1 | % | 4.3 | % | 6.7 | % | ||||||
% of debt investments at cost secured by first priority lien | 99.0 | % | 98.7 | % | 98.7 | % | ||||||
Weighted-average annual effective yield (b) | 11.2 | % | 8.2 | % | 7.5 | % | ||||||
Average EBITDA (c) | $ | 6.2 |
| $ | 41.3 |
| $ | 76.0 | ||||
| (a) | At December 31, 2021, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 40%. |
| (b) | The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield on our debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for our LMM portfolio, 8.0% for our Private Loan portfolio and 6.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor. |
| (c) | The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate. |
For the three months ended June 30, 2022 and 2021, we achieved an annualized total return on investments of 6.5% and 19.7%, respectively. For the six months ended June 30, 2022 and 2021, we achieved an annualized total return on investments of 9.2% and 16.0%, respectively. For the year ended December 31, 2021, we achieved an annualized total return on investments of 16.6%. Total return on investments is calculated using the interest, dividend and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.
As of June 30, 2022, we had Other Portfolio investments in 14 companies, collectively totaling $108.8 million in fair value and $116.1 million in cost basis and which comprised 2.9% and 3.4% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, we had Other Portfolio investments in 13 companies, collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which comprised 4.7% and 5.3% of our Investment Portfolio at fair value and cost, respectively.
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As of June 30, 2022, we had one short-term portfolio investment, which was a secured debt investment that had $1.9 million in fair value and $2.0 million in cost basis and which comprised 0.1% of our Investment Portfolio at both fair value and cost. As of December 31, 2021, we had one short-term portfolio investment, which was a secured debt investment that had $2.0 million in both fair value and cost basis and which comprised 0.1% of our Investment Portfolio at both fair value and cost.
As previously discussed, the External Investment Manager is a wholly-owned subsidiary that is treated as a portfolio investment. As of June 30, 2022, this investment had a fair value of $118.3 million and a cost basis of $29.5 million, which comprised 3.2% and 0.9% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised 3.9% and 0.9% of our Investment Portfolio at fair value and cost, respectively.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations.
Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater detail in Note B—Summary of Significant Accounting Policies to the consolidated financial statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Investment Portfolio Valuation
The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both June 30, 2022 and December 31, 2021, our Investment Portfolio valued at fair value represented 97% of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See Note B.1.—Valuation of the Investment Portfolio included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for a detailed discussion of our investment portfolio valuation process and procedures.
Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of our executive officers to
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serve as the Board of Directors’ valuation designee. We adopted the Valuation Procedures effective April 1, 2021. We believe our Investment Portfolio as of June 30, 2022 and December 31, 2021 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.
Revenue Recognition
Interest and Dividend Income
We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service its debt obligation, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, we remove it from non-accrual status.
Fee Income
We may periodically provide services, including structuring and advisory services to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.
Payment-in-Kind (“PIK”) Interest and Cumulative Dividends
We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9.—Summary of Significant Accounting Policies—Income Taxes included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended June 30, 2022 and 2021, (i) 1.7% and 3.4%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.2% and 0.6%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash. For the six months ended June 30, 2022 and 2021, (i) 1.4% and 3.6%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.6% and 0.7%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.
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INVESTMENT PORTFOLIO COMPOSITION
The following tables summarize the composition of our total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).
Cost: |
| June 30, 2022 |
| December 31, 2021 | ||
First lien debt |
| 83.9 | % | 82.5 | % | |
Equity |
| 15.2 | % | 16.2 | % | |
Second lien debt |
| 0.3 | % | 0.6 | % | |
Equity warrants |
| 0.2 | % | 0.3 | % | |
Other |
| 0.4 | % | 0.4 | % | |
| 100.0 | % | 100.0 | % |
Fair Value: |
| June 30, 2022 |
| December 31, 2021 |
| |
First lien debt |
| 74.0 | % | 74.3 | % |
|
Equity |
| 25.1 | % | 24.6 | % |
|
Second lien debt |
| 0.3 | % | 0.5 | % |
|
Equity warrants |
| 0.2 | % | 0.2 | % |
|
Other |
| 0.4 | % | 0.4 | % |
|
| 100.0 | % | 100.0 | % |
|
Our LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see “Risk Factors—Risks Related to our Investments” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021for a more complete discussion of the risks involved with investing in our Investment Portfolio.
PORTFOLIO ASSET QUALITY
We utilize an internally developed investment rating system to rate the performance of each LMM, Private Loan and Middle Market portfolio company and to monitor our expected level of returns on each of our LMM, Private Loan and Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to the portfolio company.
As of June 30, 2022, our total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.2% of its cost. As of December 31, 2021, our total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% of its cost.
The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.
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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Comparison of the three months ended June 30, 2022 and June 30, 2021
Set forth below is a comparison of the results of operations, and a reconciliation of net investment income to distributable net investment income and adjusted distributable net investment income, for the three months ended June 30, 2022 and June 30, 2021, respectively.
Three Months Ended |
| ||||||||||||
June 30, | Net Change | ||||||||||||
| 2022 |
| 2021 |
| Amount |
| % |
| |||||
(dollars in thousands) | |||||||||||||
Total investment income | $ | 85,200 | $ | 67,294 | $ | 17,906 |
| 27 | % | ||||
Total expenses |
| (30,474) |
| (24,899) |
| (5,575) |
| 22 | % | ||||
Net investment income |
| 54,726 |
| 42,395 |
| 12,331 |
| 29 | % | ||||
Net realized gain (loss) from investments |
| (5,064) |
| 18,000 |
| (23,064) | NM | ||||||
Net unrealized appreciation (depreciation) from investments |
| (24,593) |
| 44,441 |
| (69,034) | NM | ||||||
Income tax benefit (provision) |
| (10,320) |
| (9,726) |
| (594) | NM | ||||||
Net increase in net assets resulting from operations | $ | 14,749 | $ | 95,110 | $ | (80,361) |
| (84) | % | ||||
Three Months Ended |
| ||||||||||||
June 30, | Net Change | ||||||||||||
| 2022 |
| 2021 |
| Amount |
| % |
| |||||
(dollars in thousands, except per share amounts) | |||||||||||||
Net investment income | $ | 54,726 | $ | 42,395 | $ | 12,331 |
| 29 | % | ||||
Share‑based compensation expense |
| 3,596 |
| 2,759 |
| 837 |
| 30 | % | ||||
Distributable net investment income(a) | $ | 58,322 | $ | 45,154 | $ | 13,168 |
| 29 | % | ||||
Deferred compensation expense (benefit) | (1,225) | 482 | (1,707) | NM | |||||||||
Adjusted distributable net investment income (b) | $ | 57,097 | $ | 45,636 | $ | 11,461 | 25 | % | |||||
Net investment income per share—Basic and diluted | $ | 0.75 | $ | 0.62 | $ | 0.13 |
| 21 | % | ||||
Distributable net investment income per share—Basic and diluted (a) | $ | 0.80 | $ | 0.66 | $ | 0.14 |
| 21 | % | ||||
Adjusted distributable net investment income—Basic and diluted (b) | $ | 0.78 | $ | 0.67 | $ | 0.11 | 16 | % | |||||
NM | Net change % not meaningful |
| (a) | Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above. |
| (b) | Adjusted distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impacts of share-based compensation expense and deferred compensation expense or benefit which are non-cash in nature. We believe presenting adjusted distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation and deferred compensation expense or benefit do not require settlement in cash. However, adjusted distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, adjusted distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net |
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| investment income in accordance with U.S. GAAP to adjusted distributable net investment income is presented in the table above. In future quarters, we plan to eliminate the historical disclosure of distributable net investment income and present adjusted distributable net investment income under the heading of distributable net investment income. |
Investment Income
Total investment income for the three months ended June 30, 2022 was $85.2 million, a 27% increase from the $67.3 million of total investment income for the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.
Three Months Ended | |||||||||||||
June 30, | Net Change | ||||||||||||
2022 | 2021 | Amount | % | ||||||||||
(dollars in thousands) | |||||||||||||
Interest income | $ | 63,984 | $ | 45,944 | $ | 18,040 | 39 | % | (a) | ||||
Dividend income | 17,913 | 18,619 | (706) | (4) | % | (b) | |||||||
Fee income | 3,303 | 2,731 | 572 | 21 | % | (c) | |||||||
Total investment income | $ | 85,200 | $ | 67,294 | $ | 17,906 | 27 | % | (d) | ||||
| (a) | The increase in interest income was primarily due to higher average levels of Investment Portfolio debt investments following (i) net origination activity in our LMM portfolio of $348.6 million and $52.3 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively, and (ii) net origination activity in our Private Loan portfolio of $370.3 million and $186.5 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively and a $2.3 million increase in accelerated prepayment repricing and other activity related to certain investment portfolio debt investments. |
| (b) | The decrease in dividend income from Investment Portfolio equity investments was primarily a result of a $3.7 million decrease related to dividend income considered to be less consistent or non-recurring, partially offset by continued strong dividend income from a variety of portfolio companies resulting from the improved operating results, financial condition and liquidity positions of certain of our portfolio companies. |
| (c) | The increase in fee income was primarily related to a $0.5 million increase from refinancing and prepayment of debt investments. |
| (d) | The increase in total investment income includes a net reduction in the impact of certain income considered less consistent or non-recurring, including a $3.7 million decrease in dividend income, partially offset by a $2.3 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments. |
Expenses
Total expenses for the three months ended June 30, 2022 were $30.5 million, a 22% increase from the $24.9 million in the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.
Three Months Ended | |||||||||||||
June 30, | Net Change | ||||||||||||
2022 | 2021 | Amount | % | ||||||||||
(dollars in thousands) | |||||||||||||
Employee compensation expenses | $ | 10,032 | $ | 6,287 | $ | 3,745 | 60 | % | (a) | ||||
Deferred compensation plan expense (benefit) | (1,225) | 608 | (1,833) | (301) | % | (b) | |||||||
Total compensation expense | 8,807 | 6,895 | 1,912 | 28 | % | ||||||||
GA expense | 4,238 | 3,417 | 821 | 24 | % | ||||||||
Interest expense | 17,295 | 14,400 | 2,895 | 20 | % | (c) | |||||||
Share-based compensation expense | 3,596 | 2,759 | 837 | 30 | % | ||||||||
Gross expenses | 33,936 | 27,471 | 6,465 | 24 | % | ||||||||
Allocation of expenses to the External Investment Manager | (3,462) | (2,572) | (890) | 35 | % | ||||||||
Total expenses | $ | 30,474 | $ | 24,899 | $ | 5,575 | 22 | % | |||||
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| (a) | The increase in compensation expense is primarily related to increased headcount, base compensation rates and incentive compensation accruals. |
| (b) | The change in the non-cash deferred compensation plan expense (benefit) was due to the comparable period reduction to compensation expense resulting from a decrease in the fair value of deferred compensation plan assets and corresponding liabilities in the second quarter of 2022 compared to an increase in such fair values in the corresponding period of 2021. |
| (c) | The increase in interest expense was primarily related to increased borrowings to support our investment activity, including an aggregate of $200.0 million in principal amount of our 3.00% Notes (as defined in “—Liquidity and Capital Resources—Capital Resources” below) issued in October 2021 and greater amounts of borrowings under our multi-year revolving credit facility (our “Credit Facility”). |
Net Investment Income
Net investment income for the three months ended June 30, 2022 increased 29% to $54.7 million, or $0.75 per share, compared to net investment income of $42.4 million, or $0.62 per share, for the corresponding period of 2021. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, primarily due to shares issued through the ATM Program (as defined in “—Liquidity and Capital Resources—Capital Resources” below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in net investment income on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring offset by a decrease in compensation expense of $0.02 per share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.
Distributable Net Investment Income
Distributable net investment income for the three months ended June 30, 2022 increased 29% to $58.3 million, or $0.80 per share, compared with $45.2 million, or $0.66 per share, in the corresponding period of 2021. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense, both as discussed above. The increase in distributable net investment income per share reflects these changes and the net impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, primarily due to shares issued through the ATM Program (as defined in “—Liquidity and Capital Resources—Capital Resources” below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in distributable net investment income on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring, offset by a $0.02 per share decrease in compensation expense resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.
Adjusted Distributable Net Investment Income
Adjusted distributable net investment income for the three months ended June 30, 2022 increased 25% to $57.1 million, or $0.78 per share, compared with $45.6 million, or $0.67 per share, in the corresponding period of 2021. The increase in adjusted distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense and deferred compensation expense (benefit), both as discussed above. The increase in adjusted distributable net investment income per share reflects the net impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, primarily due to shares issued through the ATM Program, shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in adjusted distributable net investment income on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring, as discussed above.
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Net Realized Gain (Loss) from Investments
The following table provides a summary of the primary components of the total net realized loss on investments of $5.1 million for the three months ended June 30, 2022:
Three Months Ended June 30, 2022 | |||||||||||||||||||||
Full Exits | Partial Exits | Restructures | Other (a) | Total | |||||||||||||||||
Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | Net Gain/(Loss) | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
LMM Portfolio | $ | - | - | $ | - | - | $ | - | - | $ | (450) | $ | (450) | ||||||||
Private Loan Portfolio | - | - | - | - | - | - | 216 | 216 | |||||||||||||
Middle Market Portfolio | (6,069) | 1 | - | - | - | - | - | (6,069) | |||||||||||||
Other Portfolio | - | - | 1,038 | 1 | - | - | 201 | 1,239 | |||||||||||||
Short-term Portfolio | - | - | - | - | - | - | - | - | |||||||||||||
Total net realized gain/(loss) | $ | (6,069) | 1 | $ | 1,038 | 1 | $ | - | - | $ | (33) | $ | (5,064) | ||||||||
| (a) | Other activity includes realized gains and losses from transactions involving 10 portfolio companies which are not considered to be significant individually or in the aggregate. |
Net Unrealized Appreciation (Depreciation)
The following table provides a summary of the total net unrealized depreciation of $24.6 million for the three months ended June 30, 2022:
Three Months Ended June 30, 2022 | |||||||||||||||
Private | Middle | ||||||||||||||
| LMM(a) |
| Loan |
| Market |
| Other | Total | |||||||
| (dollars in millions) | ||||||||||||||
Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period | $ | 0.5 | $ | (2.0) | $ | 6.0 | $ | (1.2) | $ | 3.3 | |||||
Net unrealized appreciation (depreciation) relating to portfolio investments |
| 25.2 |
| (23.4) |
| (15.1) |
| (14.6) | (b) |
| (27.9) | ||||
Total net unrealized appreciation (depreciation) relating to portfolio investments | $ | 25.7 | $ | (25.4) | $ | (9.1) | $ | (15.8) | $ | (24.6) | |||||
| (a) | LMM includes unrealized appreciation on 25 LMM portfolio investments and unrealized depreciation on 25 LMM portfolio investments. |
| (b) | Other includes (i) $14.6 million of unrealized depreciation relating to the External Investment Manager and (ii) $1.2 million of unrealized depreciation relating to the Main Street Capital Corporation Deferred Compensation Plan (see “Related Party Transactions and Agreements” below), partially offset by $1.4 million of net unrealized appreciation relating to the Other Portfolio. |
Income Tax Benefit (Provision)
The income tax provision for the three months ended June 30, 2022 of $10.3 million principally consisted of (i) a deferred tax provision of $9.5 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, and (ii) a current tax provision of $0.8 million, related to a $0.7 million provision for excise tax on our estimated undistributed taxable income and a $0.1 million provision for current U.S. federal and state income taxes. The income tax provision for the three months ended June 30, 2021 of $9.7 million principally consisted of (i) a deferred tax provision of $9.0 million, and (ii) a current tax provision of $0.7 million related to a $0.5 million provision for current U.S. federal and state income taxes, and a $0.2 million provision for excise tax on our estimated undistributed taxable income.
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Net Increase in Net Assets Resulting from Operations
The net increase in net assets resulting from operations for the three months ended June 30, 2022 was $14.7 million, or $0.20 per share, compared with $95.1 million, or $1.39 per share, during the three months ended June 30, 2021. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.
Comparison of the six months ended June 30, 2022 and June 30, 2021
Set forth below is a comparison of the results of operations, and a reconciliation of net investment income to distributable net investment income and adjusted distributable net investment income, for the six months ended June 30, 2022 and June 30, 2021, respectively.
Six Months Ended |
| |||||||||||
June 30, | Net Change | |||||||||||
| 2022 |
| 2021 |
| Amount |
| % | |||||
(dollars in thousands) | ||||||||||||
Total investment income | $ | 164,596 | $ | 130,102 | $ | 34,494 |
| 27 | % | |||
Total expenses |
| (57,657) |
| (47,954) |
| (9,703) |
| 20 | % | |||
Net investment income |
| 106,939 |
| 82,148 |
| 24,791 |
| 30 | % | |||
Net realized gain (loss) from investments |
| (1,728) |
| 2,270 |
| (3,998) | NM | |||||
Net unrealized appreciation (depreciation) from investments | (9,841) |
| 78,440 |
| (88,281) | NM | ||||||
Income tax benefit (provision) |
| (15,417) |
| (10,407) |
| (5,010) | NM | |||||
Net increase in net assets resulting from operations | $ | 79,953 | $ | 152,451 | $ | (72,498) |
| (48) | % | |||
Six Months Ended |
| |||||||||||
June 30, | Net Change | |||||||||||
| 2022 |
| 2021 |
| Amount |
| % | |||||
(dollars in thousands, except per share amounts) | ||||||||||||
Net investment income | $ | 106,939 | $ | 82,148 | $ | 24,791 |
| 30 | % | |||
Share‑based compensation expense |
| 6,414 |
| 5,092 |
| 1,322 |
| 26 | % | |||
Distributable net investment income(a) | $ | 113,353 | $ | 87,240 | $ | 26,113 |
| 30 | % | |||
Deferred compensation expense (benefit) | (1,601) | 728 | (2,329) | NM | ||||||||
Adjusted distributable net investment income (b) | $ | 111,752 | $ | 87,968 | $ | 23,784 | 27 | % | ||||
Net investment income per share—Basic and diluted | $ | 1.47 | $ | 1.20 | $ | 0.27 |
| 23 | % | |||
Distributable net investment income per share—Basic and diluted (a) | $ | 1.56 | $ | 1.28 | $ | 0.28 |
| 22 | % | |||
Adjusted distributable net investment income—Basic and diluted (b) | $ | 1.54 | $ | 1.29 | $ | 0.25 | 19 | % | ||||
NM | Net change % not meaningful |
| (a) | Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above. |
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| (b) | Adjusted distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impacts of share-based compensation expense and deferred compensation expense or benefit which are non-cash in nature. We believe presenting adjusted distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation and deferred compensation expense or benefit do not require settlement in cash. However, adjusted distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, adjusted distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to adjusted distributable net investment income is presented in the table above. In future quarters, we plan to eliminate the historical disclosure of distributable net investment income and present adjusted distributable net investment income under the heading of distributable net investment income. |
Investment Income
Total investment income for the six months ended June 30, 2022 was $164.6 million, a 27% increase from the $130.1 million of total investment income for the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.
Six Months Ended | |||||||||||||
June 30, | Net Change | ||||||||||||
2022 | 2021 | Amount | % | ||||||||||
(dollars in thousands) | |||||||||||||
Interest Income | $ | 123,426 | $ | 89,416 | $ | 34,010 | 38 | % | (a) | ||||
Dividend Income | 34,535 | 36,316 | (1,781) | (5) | % | (b) | |||||||
Fee Income | 6,635 | 4,370 | 2,265 | 52 | % | (c) | |||||||
Total Investment Income | $ | 164,596 | $ | 130,102 | $ | 34,494 | 27 | % | (d) | ||||
| (a) | The increase in interest income was primarily due to higher average levels of Investment Portfolio debt investments following (i) net origination activity in our LMM portfolio of $348.6 million and $52.3 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively, and (ii) net origination activity in our Private Loan portfolio of $370.3 million and $186.5 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively. |
| (b) | The decrease in dividend income from Investment Portfolio equity investments was primarily a result of a $6.6 million decrease related to dividend income considered to be less consistent or non-recurring, partially offset by continued strong dividend income from a variety of portfolio companies resulting from the improved operating results, financial condition and liquidity positions of certain of our portfolio companies. |
| (c) | The increase in fee income is primarily related to (i) a $1.2 million increase related to higher originations of Investment Portfolio investments as discussed above and (ii) a $1.0 million increase from refinancing and prepayment of debt investments. |
| (d) | The increase in total investment income includes a net reduction in the impact of certain income considered less consistent or non-recurring, including a $6.6 million decrease in dividend income, partially offset by a $3.0 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments. |
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Expenses
Total expenses for the six months ended June 30, 2022 were $57.7 million, a 20% increase from the $48.0 million in the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.
Six Months Ended | |||||||||||||
June 30, | Net Change | ||||||||||||
2022 | 2021 | Amount | % | ||||||||||
(dollars in thousands) | |||||||||||||
Employee compensation expenses | $ | 17,576 | $ | 12,238 | $ | 5,338 | 44 | % | (a) | ||||
Deferred compensation plan expense (benefit) | (1,500) | 978 | (2,478) | (253) | % | (b) | |||||||
Total compensation expense | 16,076 | 13,216 | 2,860 | 22 | % | ||||||||
GA expense | 7,464 | 6,392 | 1,072 | 17 | % | ||||||||
Interest expense | 33,982 | 28,206 | 5,776 | 20 | % | (c) | |||||||
Share-based compensation expense | 6,414 | 5,092 | 1,322 | 26 | % | ||||||||
Gross expenses | 63,936 | 52,906 | 11,030 | 21 | % | ||||||||
Allocation of expenses to the External Investment Manager | (6,279) | (4,952) | (1,327) | 27 | % | ||||||||
Total expenses | $ | 57,657 | $ | 47,954 | $ | 9,703 | 20 | % | |||||
| (a) | The increase in compensation expense is primarily related to increased headcount, base compensation rates and incentive compensation accruals. |
| (b) | The change in the non-cash deferred compensation plan expense was due to the comparable period reduction to compensation expense resulting from a decrease in the fair value of deferred compensation plan assets and corresponding liabilities in the first quarter of 2022 compared to an increase in such fair values in the corresponding period of 2021. |
| (c) | The increase in interest expense was primarily related to increased borrowings to support our investment activity, including an aggregate of $200.0 million in principal amount of our 3.00% Notes issued in October 2021 and greater amounts of borrowings under our Credit Facility. |
Net Investment Income
Net investment income for the six months ended June 30, 2022 increased 30% to $106.9 million, or $1.47 per share, compared to net investment income of $82.1 million, or $1.20 per share, for the corresponding period of 2021. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, primarily due to shares issued through the ATM Program, shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in net investment income on a per share basis includes (i) a $0.06 per share decrease in investment income considered less consistent or non-recurring and (ii) a decrease in compensation expense of $0.03 per share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.
Distributable Net Investment Income
Distributable net investment income for the six months ended June 30, 2022 increased 30% to $113.4 million, or $1.56 per share, compared with $87.2 million, or $1.28 per share, in the corresponding period of 2021. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense, both as discussed above. The increase in distributable net investment income per share reflects these changes and the net impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, primarily due to shares issued through the ATM Program, shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in distributable net investment income on a per share basis includes (i) a $0.06 per share decrease in investment income considered less consistent or non-recurring and (ii) a decrease in compensation expense of $0.03 per
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share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.
Adjusted Distributable Net Investment Income
Adjusted distributable net investment income for the six months ended June 30, 2022 increased 27% to $111.8 million, or $1.54 per share, compared with $88.0 million, or $1.29 per share, in the corresponding period of 2021. The increase in adjusted distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense and deferred compensation expense (benefit), both as discussed above. The increase in adjusted distributable net investment income per share reflects the net impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, primarily due to shares issued through the ATM Program (as defined in “—Liquidity and Capital Resources—Capital Resources” below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in distributable net investment income on a per share basis includes a $0.06 per share decrease in investment income considered less consistent or non-recurring, as discussed above.
Net Realized Gain (Loss) from Investments
The following table provides a summary of the primary components of the total net realized loss on investments of $1.7 million for the six months ended June 30, 2022:
Six Months Ended June 30, 2022 | |||||||||||||||||||||
Full Exits | Partial Exits | Restructures | Other (a) | Total | |||||||||||||||||
Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | # of Investments | Net Gain/(Loss) | Net Gain/(Loss) | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
LMM Portfolio | $ | - | - | $ | - | - | $ | - | - | $ | (458) | $ | (458) | ||||||||
Private Loan Portfolio | 1,560 | 1 | - | - | - | - | 185 | 1,745 | |||||||||||||
Middle Market Portfolio | (6,069) | 1 | - | - | - | - | - | (6,069) | |||||||||||||
Other Portfolio | - | - | 2,569 | 2 | - | - | 441 | 3,010 | |||||||||||||
Short-term Portfolio | - | - | - | - | - | - | 44 | 44 | |||||||||||||
Total net realized gain/(loss) | $ | (4,509) | 2 | $ | 2,569 | 2 | $ | - | - | $ | 212 | $ | (1,728) | ||||||||
| (a) | Other activity includes realized gains and losses from transactions involving 10 portfolio companies which are not considered to be significant individually or in the aggregate. |
Net Unrealized Appreciation (Depreciation)
The following table provides a summary of the total net unrealized depreciation of $9.8 million for the six months ended June 30, 2022:
Six Months Ended June 30, 2022 | |||||||||||||||
Private | Middle | ||||||||||||||
| LMM(a) |
| Loan |
| Market |
| Other | Total | |||||||
| (dollars in millions) | ||||||||||||||
Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period | $ | 0.9 | $ | (2.5) | $ | 6.0 | $ | (2.9) | $ | 1.5 | |||||
Net unrealized appreciation (depreciation) relating to portfolio investments |
| 45.7 |
| (20.4) |
| (15.7) |
| (20.9) | (b) |
| (11.3) | ||||
Total net unrealized appreciation (depreciation) relating to portfolio investments | $ | 46.6 | $ | (22.9) | $ | (9.7) | $ | (23.8) | $ | (9.8) | |||||
| (a) | LMM includes unrealized appreciation on 31 LMM portfolio investments and unrealized depreciation on 30 LMM portfolio investments. |
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| (b) | Other includes (i) $22.1 million of unrealized depreciation relating to the External Investment Manager and (ii) $1.6 million of net unrealized depreciation relating to the Main Street Capital Corporation Deferred Compensation Plan, partially offset by $1.5 million of net unrealized appreciation relating to the Other Portfolio. |
Income Tax Benefit (Provision)
The income tax provision for the six months ended June 30, 2022 of $15.4 million principally consisted of (i) a deferred tax provision of $13.3 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $2.1 million related to a $1.4 million provision for excise tax on our estimated undistributed taxable income and a $0.7 million provision for current U.S. federal and state income taxes. The income tax benefit for the six months ended June 30, 2021 of $10.4 million principally consisted of (i) a deferred tax provision of $9.1 million and (ii) a current tax provision of $1.3 million primarily related to a $0.8 million provision for current U.S. federal and state income taxes and a $0.5 million provision for excise tax in our estimated undistributed taxable income.
Net Increase in Net Assets Resulting from Operations
The net increase in net assets resulting from operations for the six months ended June 30, 2022 was $80.0 million, or $1.10 per share, compared with $152.5 million, or $2.23 per share, during the six months ended June 30, 2021. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
Liquidity and Capital Resources
This “Liquidity and Capital Resources” section should be read in conjunction with the “COVID-19 Update” section above.
Cash Flows
For the six months ended June 30, 2022, we realized a net increase in cash and cash equivalents of $10.8 million, which is the result of $50.2 million of cash provided by our financing activities, offset by $39.4 million of cash used in our operating activities.
The $39.4 million of cash used in our operating activities resulted primarily from (i) cash uses totaling $540.4 million for the funding of new and follow-on portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2021 and (ii) cash payments of $15.0 million related to changes in other assets and liabilities, partially offset by (i) cash proceeds totaling $412.1 million from the sales and repayments of debt investments and sales of and return on capital from equity investments and (ii) cash flows that we generated from the operating profits earned totaling $103.9 million, which is our distributable net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs.
The $50.2 million of cash provided by our financing activities principally consisted of (i) $89.2 million in net cash proceeds from our ATM Program (described below) and direct stock purchase plan and (ii) $60.0 million in net proceeds from the Credit Facility, partially offset by (i) $94.1 million in cash dividends paid to stockholders and (ii) $4.9 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock.
Capital Resources
As of June 30, 2022, we had $43.4 million in cash and cash equivalents and $475.0 million of unused capacity under the Credit Facility which we maintain to support our investment and operating activities. As of June 30, 2022, our net asset value totaled $1,865.2 million, or $25.37 per share.
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The Credit Facility provides additional liquidity to support our investment and operational activities. As of June 30, 2022, the Credit Facility included total commitments of $855.0 million from a diversified group of 18 lenders, held a maturity date in April 2026 and contained an accordion feature with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.2 billion. As of June 30, 2022, borrowings under the Credit Facility bore interest, subject to our election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate plus (i) 1.875% (or the applicable Prime Rate plus 0.875%) as long as we meet certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable Prime Rate plus 1.0%) otherwise. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. As of June 30, 2022, the Credit Facility contained certain affirmative and negative covenants, including but not limited to: (i) maintaining minimum liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining a 1940 Act asset coverage ratio of at least 1.5 to 1.0, (iv) maintaining a minimum tangible net worth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on the contribution of equity in financing subsidiaries as specified therein) of MSCC and the guarantors under the Credit Facility to the secured debt of MSCC and the guarantors. As of June 30, 2022, we had $380.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.9% and we were in compliance with all financial covenants of the Credit Facility.
Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Under existing SBA-approved commitments, we had $350.0 million of outstanding SBIC debentures guaranteed by the SBA as of June 30, 2022 through our wholly-owned SBICs, which bear a weighted-average annual fixed interest rate of 2.9%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2023, and the weighted-average remaining duration is 5.6 years as of June 30, 2022. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds.
In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due December 1, 2022 (the “4.50% Notes”) at an issue price of 99.16%. The 4.50% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. We may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of June 30, 2022, the outstanding principal balance of the 4.50% Notes was $185.0 million.
The indenture governing the 4.50% Notes (the “4.50% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture. As of June 30, 2022, we were in compliance with these covenants.
In April 2019, we issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “5.20% Notes”) at an issue price of 99.125%. Subsequently, in December 2019, we issued an additional $75.0 million in aggregate principal amount of the 5.20% Notes at an issue price of 105.0%. Also, in July 2020, we issued an additional $125.0 million in aggregate principal amount of the 5.20% Notes at an issue price of 102.674%. The
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5.20% Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The aggregate net proceeds from the 5.20% Notes issuances were used to repay a portion of the borrowings outstanding under the Credit Facility. The 5.20% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 5.20% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 5.20% Notes may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 5.20% Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year. We may from time to time repurchase the 5.20% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of June 30, 2022, the outstanding principal balance of the 5.20% Notes was $450.0 million.
The indenture governing the 5.20% Notes (the “5.20% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 5.20% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 5.20% Notes Indenture. As of June 30, 2022, we were in compliance with these covenants.
In January 2021, we issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. In October 2021, we issued an additional $200.0 million in aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. The 3.00% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at our option subject to certain make whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year. We may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of June 30, 2022, the outstanding principal balance of the 3.00% Notes was $500.0 million.
The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 3.00% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of June 30, 2022, we were in compliance with these covenants.
We maintain a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the “ATM Program”). During the six months ended June 30, 2022, we sold 2,159,117 shares of our common stock at a weighted-average price of $41.71 per share and raised $90.1 million of gross proceeds under the ATM Program. Net proceeds were $88.9 million after commissions to the selling agents on shares sold and offering costs. As of June 30, 2022, sales transactions representing 61,757 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share. In March 2022, we entered into new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of June 30, 2022, 13,710,949 shares remained available for sale under the ATM Program.
During the year ended December 31, 2021, we sold 2,332,795 shares of our common stock at a weighted-average price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were $98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and
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outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share.
We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facility, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.
We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Private Loan and Middle Market portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. We may also invest in short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Short-term portfolio investments consist primarily of investments in secured debt investments and independently rated debt investments.
If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2022 annual meeting of stockholders, and have not sought such authorization since 2012, because our common stock price per share has generally traded significantly above the net asset value per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.
In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio, or BDC asset coverage ratio, of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by the Funds and any other wholly-owned subsidiaries of ours which operate as SBICs from the BDC asset coverage ratio which, in turn, enables us to fund more investments with debt capital. In May 2022, our stockholders also approved the application of the reduced BDC asset coverage ratio. As a result, the BDC asset coverage ratio applicable to us decreased from 200% to 150% effective May 3, 2022. As of June 30, 2022, our BDC asset coverage ratio was 223%.
Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.
Recently Issued or Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. For a description of recently issued or adopted accounting standards, see Note B.13 – Recently Issued or Adopted Accounting Standards included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Inflation
Inflation has not historically had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, specifically including over the last few quarters as a result of the COVID-19 pandemic, recent geopolitical events and the related supply chain and labor issues, and may continue to experience, the increasing impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption. These issues and
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challenges related to inflation are receiving significant attention from our investment teams and the management teams of our portfolio companies as we work to manage these growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to impact their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative impact on the fair value of our investments in these portfolio companies. The combined impacts of these impacts in turn could negatively affect our results of operations.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At June 30, 2022, we had a total of $263.6 million in outstanding commitments comprised of (i) 74 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) 10 investments with equity capital commitments that had not been fully called.
Contractual Obligations
As of June 30, 2022, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes, the 5.20% Notes, the 3.00% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows (dollars in thousands):
| 2022 |
| 2023 |
| 2024 |
| 2025 |
| 2026 |
| Thereafter |
| Total | ||||||||
3.00% Notes due 2026 | $ | — | $ | — | $ | — | $ | — | $ | 500,000 | $ | — | $ | 500,000 | |||||||
Interest due on 3.00% Notes due 2026 | 7,517 | 15,000 | 15,000 | 15,000 | 15,000 | — | 67,517 | ||||||||||||||
5.20% Notes due 2024 | — | — | 450,000 | — | — | — | 450,000 | ||||||||||||||
Interest due on 5.20% Notes due 2024 | 11,700 | 23,400 | 11,700 | — | — | — | 46,800 | ||||||||||||||
SBIC debentures | — | 16,000 | 63,800 | — | — | 270,200 | 350,000 | ||||||||||||||
Interest due on SBIC debentures | 5,166 | 9,899 | 8,455 | 7,228 | 7,228 | 15,565 | 53,541 | ||||||||||||||
4.50% Notes due 2022 | 185,000 | — | — | — | — | — | 185,000 | ||||||||||||||
Interest due on 4.50% Notes due 2022 | 4,163 | — | — | — | — | — | 4,163 | ||||||||||||||
Operating Lease Obligation (1) | 395 | 804 | 818 | 832 | 846 | 933 | 4,628 | ||||||||||||||
Total | $ | 213,941 | $ | 65,103 | $ | 549,773 | $ | 23,060 | $ | 523,074 | $ | 286,698 | $ | 1,661,649 | |||||||
| (1) | Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to ASC 842, as may be modified or supplemented. |
As of June 30, 2022, we had $380.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is scheduled to mature in April 2026.
Related Party Transactions and Agreements
As discussed further above, the External Investment Manager is treated as a wholly-owned portfolio company of ours and is included as part of our Investment Portfolio. At June 30, 2022, we had a receivable of $6.3 million due from the External Investment Manager, which included $4.5 million related primarily to operating expenses incurred by us as required to support the External Investment Manager’s business and amounts due from the External Investment Manager to us under a tax sharing agreement (see further discussion in Note B.9—Summary of Significant Accounting Policies—Income Taxes and Note D – External Investment Manager included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q) and $1.7 million of dividends declared but not paid by the External Investment Manager. We have entered into an agreement with the External Investment Manager to share employees in
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connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients. See Note A.1—Organization and Basis of Presentation—Organization and Note D – External Investment Manager included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more information regarding the External Investment Manager.
From time to time, we may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by our Board of Directors. In January 2021, we entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement initially provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing in January 2026. The Term Loan Agreement was amended in July 2021 to provide for borrowings up to an additional $35.0 million, $20.0 million of which was funded upon signing of the amendment and $15.0 million available in two additional advances during the six months following the amendment date. Borrowings under the Term Loan Agreement were expressly subordinated and junior in right of payment to all secured indebtedness of MSC Income. In October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was extinguished.
In May 2022, we purchased 94,697 shares of common stock of MSC Income totaling $750,000 from MSC Income at the price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its May dividend on such date. Our purchase of MSC Income common stock was unanimously approved by the Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of June 30, 2022, we owned 94,697 shares of MSC Income. In addition, certain of our officers and employees own shares of MSC Income and therefore have direct pecuniary interests in MSC Income.
In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s initial closing in December 2020, we committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In February 2022, Main Street increased its total commitment to the Private Loan Fund from $10.0 million to $15.0 million. In addition, certain of our officers and employees (and certain of their immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. As of June 30, 2022, we have funded $11.3 million of our limited partner commitment and our unfunded commitment was $3.7 million. Our limited partner commitment to the Private Loan Fund was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.
Additionally, we provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and was subsequently amended on November 30, 2021 and on December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.
In March 2022, we provided the Private Loan Fund with a new revolving line of credit pursuant to a Secured Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0 million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term
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is defined in Section 2(a)(19) of the 1940 Act. As of June 30, 2022, there were no borrowings outstanding under the PL Fund 2022 Note.
In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of June 30, 2022, $14.9 million of compensation, plus net unrealized gains and losses and investment income and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.1 million had been deferred into phantom Main Street stock units, representing 158,865 shares of our common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the Consolidated Statements of Changes in Net Assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main Street’s Consolidated Statements of Operations as the deferred fees represented by such phantom stock units are earned over the service period. The dividend amounts related to additional phantom stock units are included in the Consolidated Statements of Changes in Net Assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.
Recent Developments
In August 2022, we declared a supplemental cash dividend of $0.10 per share payable in September 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the third quarter of 2022 of $0.215 per share for each of July, August and September 2022 or total monthly cash dividends of $0.645 per share for the quarter.
In August 2022, we declared regular monthly dividends of $0.22 per share for each of October, November and December of 2022. These regular monthly dividends equal a total of $0.66 per share for the fourth quarter of 2022, representing a 4.8% increase from the regular monthly dividends paid in the fourth quarter of 2021. Including the regular monthly and supplemental dividends declared for the third and fourth quarters of 2022 we will have paid $35.02 per share in cumulative dividends since our October 2007 initial public offering.
During August 2022, we amended our Credit Facility to, among other changes, (i) increase the revolving commitments by lenders to $920.0 million, and with the right to request an increase in commitments under the Credit Facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.4 billion, subject to certain conditions, (ii) extend the revolving period under the Credit Facility to August 4, 2026 and the final maturity date of the Credit Facility to August 4, 2027, (iii) transition the reference rate used to determine the borrowing interest rate from LIBOR to Term SOFR (“SOFR”) plus an applicable credit spread adjustment, while maintaining the interest rate spread of 1.875%.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in interest rates, and changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facility and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR, SOFR and prime rates, to the extent that any debt investments include floating interest rates. See “Risk Factors—Risks Related to our Investments — Changes relating to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.”, “Risk Factors — Risks Related to our Investments — We are subject to risks associated with the current interest rate environment and changes in interest rates will affect our cost of capital, net investment
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income and the value of our investments.” and “Risk Factors — Risks Related to Leverage — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR, SOFR or Prime as a reference rate.
The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of June 30, 2022, 75% of our debt investment portfolio (at cost) bore interest at floating rates, 94% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR (or after August 4, 2022, SOFR) rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures, 4.50% Notes, 5.20% Notes and 3.00% Notes, which collectively comprise the majority of our outstanding debt, are fixed for the life of such debt. As of June 30, 2022, we had not entered into any interest rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or regulation as a pool operator under such Act. The following table shows the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of June 30, 2022.
| Increase |
| (Increase) |
| Increase |
| Increase | |||||
(Decrease) | Decrease | (Decrease) in Net | (Decrease) in Net | |||||||||
in Interest | in Interest | Investment | Investment | |||||||||
Basis Point Change |
| Income |
| Expense |
| Income |
| Income per Share | ||||
(dollars in thousands, except per share amounts) | ||||||||||||
(150) | $ | (23,680) | $ | 4,066 | $ | (19,614) | $ | (0.27) | ||||
(100) |
| (19,055) |
| 3,800 |
| (15,255) |
| (0.21) | ||||
(50) |
| (10,404) |
| 1,900 |
| (8,504) |
| (0.12) | ||||
(25) |
| (5,395) |
| 950 |
| (4,445) |
| (0.06) | ||||
25 |
| 4,938 |
| (950) |
| 3,988 |
| 0.05 | ||||
50 |
| 10,206 |
| (1,900) |
| 8,306 |
| 0.11 | ||||
75 | 15,475 | (2,850) | 12,625 | 0.17 | ||||||||
100 |
| 20,745 |
| (3,800) |
| 16,945 |
| 0.23 | ||||
125 | 26,014 | (4,750) | 21,264 | 0.29 | ||||||||
150 | 31,283 | (5,700) | 25,583 | 0.35 | ||||||||
The hypothetical results assume that all LIBOR, SOFR and prime rate changes would be effective on the first day of the period. However, the contractual LIBOR, SOFR and prime rate reset dates would vary throughout the period, on either a monthly or quarterly basis, for both our investments and our Credit Facility. The hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an (increase) decrease in the hypothetical interest expense).
Item 4. Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act). Based on that evaluation, our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act. There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 that we filed with the SEC on February 25, 2022, which could materially affect our business, financial condition and/or operating results. There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended June 30, 2022, we issued 132,156 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of common stock issued during the three months ended June 30, 2022 under the dividend reinvestment plan was $5.0 million.
Upon vesting of restricted stock awarded pursuant to our employee equity compensation plan, shares may be withheld to meet applicable tax withholding requirements. Any withheld shares are treated as common stock purchases by the Company in our consolidated financial statements as they reduce the number of shares received by employees upon vesting (see “Purchase of vested stock for employee payroll tax withholding” in the Consolidated Statements of Changes in Net Assets for share amounts withheld).
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Item 6. Exhibits
Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):
Exhibit |
| Description of Exhibit |
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 |
* | Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Main Street Capital Corporation | |
/s/ DWAYNE L. HYZAK | |
Date: August 5, 2022 | Dwayne L. Hyzak |
Chief Executive Officer | |
(principal executive officer) | |
/s/ JESSE E. MORRIS | |
Date: August 5, 2022 | Jesse E. Morris |
Chief Financial Officer and Chief Operating Officer | |
(principal financial officer) | |
/s/ LANCE A. PARKER | |
Date: August 5, 2022 | Lance A. Parker |
Vice President and Chief Accounting Officer | |
(principal accounting officer) |
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