Table of Contents

 

 

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington D.C.  20549

 

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

 

For the quarterly period ended July 31, 2018

 

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

 

Commission File Number 814-00201

 

MVC CAPITAL, INC.

(Exact name of the registrant as specified in its charter)

 

DELAWARE

 

94-3346760

(State or other jurisdiction of
incorporation or organization)

 

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

 

287 Bowman Avenue

 

 

2nd Floor

 

 

Purchase, New York

 

10577

(Address of principal
executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (914) 701-0310

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer oAccelerated filer x Non-accelerated filero Smaller reporting companyo

 

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. o

 

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

 

There were 18,820,528 shares of the registrant’s common stock, $.01 par value, outstanding as of September 7, 2018.

 

 

 



Table of Contents

 

MVC Capital, Inc.

(A Delaware Corporation)

Index

 

 

 

Page

Part I. Consolidated Financial Information

 

 

 

 

Item 1.

Consolidated Financial Statements

 

 

 

Consolidated Balance Sheets

 

 

 

-   July 31, 2018 (Unaudited) and October 31, 2017

3

 

 

Consolidated Statements of Operations

 

 

 

-   For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited) and

 

 

 

-   For the Nine Month Period November 1, 2016 to July 31, 2017 (Unaudited)

4

 

 

Consolidated Statements of Operations

 

 

 

-   For the Quarter May 1, 2018 to July 31, 2018 (Unaudited) and

 

 

 

-   For the Quarter May 1, 2017 to July 31, 2017 (Unaudited)

5

 

 

Consolidated Statements of Cash Flows

 

 

 

-   For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited) and

 

 

 

-   For the Nine Month Period November 1, 2016 to July 31, 2017 (Unaudited)

6

 

 

Consolidated Statements of Changes in Net Assets

 

 

 

-   For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited)

 

 

 

-   For the Nine Month Period November 1, 2016 to July 31, 2017 (Unaudited) and

 

 

 

-   For the Year ended October 31, 2017

7

 

 

Consolidated Selected Per Share Data and Ratios

 

 

 

-   For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited)

 

 

 

-   For the Nine Month Period November 1, 2016 to July 31, 2017 (Unaudited) and

 

 

 

-   For the Year ended October 31, 2017

8

 

 

Consolidated Schedules of Investments

 

 

 

-   July 31, 2018 (Unaudited)

 

 

 

-   October 31, 2017

9

 

 

Notes to Consolidated Financial Statements

13

 

Item 2.

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

45

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

75

 

Item 4.

Controls and Procedures

91

 

 

 

Part II. Other Information

92

 

 

 

 

Item 1. Legal Proceedings

92

 

Item 1A. Risk Factors

92

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

92

 

Item 3. Defaults Upon Senior Securities

92

 

Item 4. Mine Safety Disclosures

92

 

Item 5. Other Information

92

 

Item 6. Exhibits

92

 

 

 

Exhibits

93

 

 

SIGNATURE

94

 



Table of Contents

 

CONSOLIDATED FINANCIAL STATEMENTS

 

MVC Capital, Inc.

Consolidated Balance Sheets

 

 

 

July 31,

 

October 31,

 

 

 

2018

 

2017

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Cash

 

$

21,009,574

 

$

100,354,340

 

Restricted cash (cost $5,300,554 and $5,300,329)

 

5,300,554

 

5,300,329

 

Cash equivalents (cost $876,060 and $1,019,899)

 

876,060

 

1,019,899

 

Investments at fair value

 

 

 

 

 

Non-control/Non-affiliated investments (cost $195,413,309 and $164,581,094)

 

182,085,336

 

149,246,812

 

Affiliate investments (cost $115,910,283 and $114,158,346)

 

70,444,281

 

81,908,631

 

Control investments (cost $88,753,966 and $84,478,275)

 

65,614,636

 

61,370,030

 

Total investments at fair value (cost $400,077,558 and $363,217,715)

 

318,144,253

 

292,525,473

 

Dividends and interest receivables, net of reserves

 

2,339,370

 

1,806,335

 

Deferred financing fees

 

184,729

 

600,379

 

Receivable for investment sold

 

5,787,729

 

 

Escrow receivables, net of reserves

 

935,000

 

 

Fee and other receivables

 

2,160,520

 

1,483,793

 

Prepaid expenses

 

283,143

 

318,847

 

 

 

 

 

 

 

Total assets

 

$

357,020,932

 

$

403,409,395

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Senior notes II

 

$

111,772,441

 

$

 

Senior notes

 

 

112,626,045

 

Provision for incentive compensation (Note 11)

 

 

2,060,992

 

Incentive compensation payable

 

2,502,961

 

4,387,266

 

Professional fees payable

 

23,313

 

118,403

 

Management fee payable

 

929,493

 

1,001,770

 

Accrued expenses and liabilities

 

491,721

 

562,473

 

Interest payable

 

571,858

 

345,612

 

Management fee payable - Asset Management

 

92,601

 

89,192

 

Consulting fees payable

 

223,339

 

347,863

 

Portfolio fees payable - Asset Management

 

617,587

 

458,566

 

Guarantees/Letters of Credit

 

2,131,001

 

551,349

 

Transaction fees payable

 

57,166

 

1,368,742

 

Taxes payable

 

1,576

 

2,054

 

 

 

 

 

 

 

Total liabilities

 

119,415,057

 

123,920,327

 

 

 

 

 

 

 

Commitments and Contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock, $0.01 par value; 150,000,000 shares authorized; 28,304,448 shares issued and 18,820,528 and 21,114,105 shares outstanding as of July 31, 2018 and October 31, 2017, respectively

 

283,044

 

283,044

 

Additional paid-in-capital

 

418,107,945

 

418,208,458

 

Accumulated earnings

 

124,508,091

 

122,455,573

 

Distributions paid to stockholders

 

(165,883,843

)

(157,414,605

)

Accumulated net realized gain

 

38,635,897

 

38,434,807

 

Net unrealized depreciation

 

(81,532,325

)

(70,965,264

)

Treasury stock, at cost, 9,483,920 and 7,190,343 shares held, respectively

 

(96,512,934

)

(71,512,945

)

 

 

 

 

 

 

Total shareholders’ equity

 

237,605,875

 

279,489,068

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

357,020,932

 

$

403,409,395

 

 

 

 

 

 

 

Net asset value per share

 

$

12.62

 

$

13.24

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3



Table of Contents

 

MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

 

 

For the Nine Month Period

 

For the Nine Month Period

 

 

November 1, 2017 to

 

November 1, 2016 to

 

 

July 31, 2018

 

July 31, 2017

 

Operating Income:

 

 

 

 

Dividend income

 

 

 

 

Non-control/Non-affiliated investments

$

1,599,754

 

$

 

 

 

 

 

 

Total dividend income

1,599,754

 

 

 

 

 

 

 

Interest income

 

 

 

 

Non-control/Non-affiliated investments

11,329,603

 

8,591,364

 

Affiliate investments

38,139

 

1,622,040

 

Control investments

267,626

 

469,656

 

 

 

 

 

 

Total interest income

11,635,368

 

10,683,060

 

 

 

 

 

 

Payment-in-kind/Deferred interest income

 

 

 

 

Non-control/Non-affiliated investments

2,215,125

 

807,418

 

Affiliate investments

285,110

 

602,856

 

Control investments

121,281

 

120,551

 

 

 

 

 

 

Total payment-in-kind/Deferred interest income

2,621,516

 

1,530,825

 

 

 

 

 

 

Fee income

 

 

 

 

Non-control/Non-affiliated investments

247,864

 

302,879

 

Affiliate investments

 

1,192,485

 

Control investments

 

52,420

 

 

 

 

 

 

Total fee income

247,864

 

1,547,784

 

 

 

 

 

 

Fee income - Asset Management 1

 

 

 

 

Portfolio fees

542,820

 

615,448

 

Management fees

271,178

 

237,262

 

 

 

 

 

 

Total fee income - Asset Management

813,998

 

852,710

 

 

 

 

 

 

Total operating income

16,918,500

 

14,614,379

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

Interest and other borrowing costs 2

8,501,352

 

7,792,549

 

Loss on extinguishment of debt

1,782,705

 

 

Management fee

4,394,066

 

4,902,716

 

Net Incentive compensation (Note 11)

(2,060,992

)

6,821,626

 

Consulting fees

708,000

 

746,555

 

Legal fees

652,856

 

472,976

 

Audit & tax preparation fees

594,000

 

593,000

 

Other expenses

540,103

 

787,415

 

Portfolio fees - Asset Management 1

407,115

 

461,586

 

Directors’ fees

248,100

 

317,514

 

Management fee - Asset Management 1

203,383

 

177,946

 

Insurance

201,656

 

208,102

 

Administration

129,945

 

150,575

 

Public relations fees

98,365

 

136,000

 

Printing and postage

47,785

 

38,600

 

 

 

 

 

 

Total operating expenses

16,448,439

 

23,607,160

 

 

 

 

 

 

Less: Voluntary Expense Waiver by Adviser 3

(112,500

)

(112,500

)

Less: Voluntary Management Fee Waiver by Adviser 4

(1,471,399

)

(1,225,679

)

 

 

 

 

 

Total waivers

(1,583,899

)

(1,338,179

)

 

 

 

 

 

Net operating income (loss) before taxes

2,053,960

 

(7,654,602

)

 

 

 

 

 

Tax Expenses:

 

 

 

 

Current tax expense

1,442

 

1,440

 

 

 

 

 

 

Total tax expense

1,442

 

1,440

 

 

 

 

 

 

Net operating income (loss)

2,052,518

 

(7,656,042

)

 

 

 

 

 

Net Realized and Unrealized (Loss) Gain on Investments:

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investments

 

 

 

 

Short term investments

(95,355

)

229,812

 

Non-control/Non-affiliated investments

(3,158,367

)

(620,077

)

Affiliate investments

3,455,430

 

115,430,586

 

Control investments

 

10,097,674

 

Foreign currency

(618

)

4,549

 

 

 

 

 

 

Total net realized gain (loss) on investments

201,090

 

125,142,544

 

 

 

 

 

 

Net unrealized depreciation on investments

(10,567,061

)

(86,134,719

)

 

 

 

 

 

Net realized and unrealized (loss) gain on investments

(10,365,971

)

39,007,825

 

 

 

 

 

 

Net (decrease) increase in net assets resulting from operations

$

(8,313,453

)

$

31,351,783

 

 

 

 

 

 

Net (decrease) increase in net assets per share resulting from operations

$

(0.45

)

$

1.39

 

 

 

 

 

 

Dividends declared per share 5

$

0.450

 

$

0.405

 

 

 

 

 

 

Weighted average number of shares outstanding

19,282,604

 

22,556,412

 

 


1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”).  Please see Note 10 “Management” for more information.

 

2 Interest and other borrowing costs includes $784,969 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 “Tax Matters” for more information.

 

3 Reflects the nine month period of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2018 and 2017 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”).  Please see Note 10 “Management” for more information.

 

4 Reflects the nine month period of the TTG Advisers’ voluntary waiver of the management fee for the 2018 and 2017 fiscal years. Please see Note 10 “Management” for more information.

 

5 Please see Note 13 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4



Table of Contents

 

MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

 

 

 

For the Quarter

 

For the Quarter

 

 

 

May 1, 2018 to

 

May 1, 2017 to

 

 

 

July 31, 2018

 

July 31, 2017

 

Operating Income:

 

 

 

 

 

Dividend income

 

 

 

 

 

Non-control/Non-affiliated investments

 

$

526,505

 

$

 

 

 

 

 

 

 

Total dividend income

 

526,505

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

 

Non-control/Non-affiliated investments

 

4,160,019

 

4,838,293

 

Affiliate investments

 

14,439

 

546,070

 

Control investments

 

105,135

 

136,885

 

 

 

 

 

 

 

Total interest income

 

4,279,593

 

5,521,248

 

 

 

 

 

 

 

Payment-in-kind/Deferred interest income

 

 

 

 

 

Non-control/Non-affiliated investments

 

806,603

 

250,201

 

Affiliate investments

 

175,031

 

228,752

 

Control investments

 

65,766

 

23,992

 

 

 

 

 

 

 

Total payment-in-kind/Deferred interest income

 

1,047,400

 

502,945

 

 

 

 

 

 

 

Fee income

 

 

 

 

 

Non-control/Non-affiliated investments

 

114,406

 

158,237

 

Affiliate investments

 

 

839,152

 

Control investments

 

 

 

 

 

 

 

 

 

Total fee income

 

114,406

 

997,389

 

 

 

 

 

 

 

Fee income - Asset Management 1

 

 

 

 

 

Portfolio fees

 

149,156

 

194,987

 

Management fees

 

94,210

 

89,252

 

 

 

 

 

 

 

Total fee income - Asset Management

 

243,366

 

284,239

 

 

 

 

 

 

 

Total operating income

 

6,211,270

 

7,305,821

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Interest and other borrowing costs 2

 

2,402,894

 

2,648,600

 

Management fee

 

1,487,189

 

1,392,674

 

Legal fees

 

290,836

 

(36,434

)

Consulting fees

 

257,000

 

198,000

 

Other expenses

 

189,029

 

306,761

 

Portfolio fees - Asset Management 1

 

111,867

 

146,241

 

Directors’ fees

 

85,100

 

105,000

 

Audit & tax preparation fees

 

84,000

 

66,000

 

Management fee - Asset Management 1

 

70,657

 

66,938

 

Insurance

 

67,320

 

67,086

 

Administration

 

43,135

 

51,328

 

Public relations fees

 

36,120

 

45,000

 

Printing and postage

 

17,300

 

2,335

 

Net Incentive compensation (Note 11)

 

(1,316,475

)

5,076,509

 

 

 

 

 

 

 

Total operating expenses

 

3,825,972

 

10,136,038

 

 

 

 

 

 

 

Less: Voluntary Expense Waiver by Adviser 3

 

(37,500

)

(37,500

)

Less: Voluntary Management Fee Waiver by Adviser 4

 

(557,696

)

(348,168

)

 

 

 

 

 

 

Total waivers

 

(595,196

)

(385,668

)

 

 

 

 

 

 

Net operating gain (loss) before taxes

 

2,980,494

 

(2,444,549

)

 

 

 

 

 

 

Tax Expenses:

 

 

 

 

 

Current tax expense

 

482

 

480

 

 

 

 

 

 

 

Total tax expense

 

482

 

480

 

 

 

 

 

 

 

Net operating gain (loss)

 

2,980,012

 

(2,445,029

)

 

 

 

 

 

 

Net Realized and Unrealized (Loss) Gain on Investments:

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investments

 

 

 

 

 

Short term investments

 

(95,355

)

46,725

 

Non-control/Non-affiliated investments

 

(257,077

)

(621,285

)

Affiliate investments

 

3,455,430

 

114,580,586

 

Control investments

 

 

234,026

 

Foreign currency

 

(985

)

 

 

 

 

 

 

 

Total net realized gain on investments

 

3,102,013

 

114,240,052

 

 

 

 

 

 

 

Net unrealized depreciation on investments

 

(11,951,877

)

(87,889,394

)

 

 

 

 

 

 

Net realized and unrealized (loss) gain on investments

 

(8,849,864

)

26,350,658

 

 

 

 

 

 

 

Net (decrease) increase in net assets resulting from operations

 

$

(5,869,852

)

$

23,905,629

 

 

 

 

 

 

 

Net (decrease) increase in net assets per share resulting from operations

 

$

(0.32

)

$

1.06

 

 

 

 

 

 

 

Dividends declared per share 5

 

$

0.150

 

$

0.135

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

18,820,528

 

22,556,412

 

 


1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”).  Please see Note 10 “Management” for more information.

 

2 Interest and other borrowing costs includes $699,979 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 “Tax Matters” for more information.

 

3 Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2018 and 2017 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”).  Please see Note 10 “Management” for more information.

 

4 Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of the management fee for the 2018 and 2017 fiscal years. Please see Note 10 “Management” for more information.

 

5Please see Note 13 “Dividends and Distributions to Shareholders and Share Repurchase Program” for more information.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5



Table of Contents

 

MVC Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

For the Nine Month Period

 

For the Nine Month Period

 

 

 

November 1, 2017 to

 

November 1, 2016 to

 

 

 

July 31, 2018

 

July 31, 2017

 

Cash flows from Operating Activities:

 

 

 

 

 

Net increase (decrease) in net assets resulting from operations

 

$

(8,313,453

)

$

31,351,783

 

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

 

 

 

 

 

Net realized gain

 

(201,090

)

(125,142,544

)

Net change in unrealized (appreciation) depreciation

 

10,567,061

 

86,134,719

 

Amortization of premiums (discounts) and fees

 

(224,152

)

(276,030

)

Increase in accrued payment-in-kind dividends and interest

 

(2,244,828

)

(1,405,278

)

Amortization of deferred financing fees

 

954,998

 

901,092

 

Loss on extinguishment of debt

 

1,782,705

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

Restricted cash

 

(225

)

500,274

 

Dividends, interest and fees receivable

 

(533,035

)

2,358,279

 

Fee and other receivables

 

(676,727

)

602,018

 

Escrow receivables, net of reserves

 

(935,000

)

9,151,805

 

Receivable for Investment Sold

 

(5,787,729

)

 

Prepaid expenses

 

35,704

 

(165,299

)

Net incentive compensation (Note 11)

 

(3,945,297

)

5,725,546

 

Other liabilities

 

(1,286,021

)

954,495

 

Purchases of equity investments

 

(468,562

)

(1,187,101

)

Purchases of debt instruments

 

(50,398,591

)

(6,209,282

)

Purchases of short-term investments

 

(24,996,182

)

(49,954,511

)

Proceeds from equity investments (1)

 

6,722,729

 

65,770,471

 

Proceeds from debt instruments

 

12,243,683

 

39,378,619

 

Sales/maturities of short-term investments

 

24,901,266

 

85,183,301

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

 

(42,802,746

)

143,672,357

 

 

 

 

 

 

 

Cash flows from Financing Activities:

 

 

 

 

 

Borrowings from senior notes II

 

115,000,000

 

 

Repayments on senior notes

 

(114,408,750

)

 

Borrowings from revolving credit facility

 

25,000,000

 

50,000,000

 

Repayments from revolving credit facility

 

(25,000,000

)

(85,000,000

)

Repurchase of common stock

 

(25,100,502

)

 

Financing fees paid

 

(3,707,369

)

(225,868

)

Distributions paid to shareholders

 

(8,215,867

)

(8,934,067

)

Repurchases of common stock under dividend reinvestment plan

 

(253,371

)

(201,280

)

 

 

 

 

 

 

Net cash used in financing activities

 

(36,685,859

)

(44,361,215

)

 

 

 

 

 

 

Net change in cash and cash equivalents for the period

 

(79,488,605

)

99,311,142

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

101,374,239

 

$

20,214,160

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

21,885,634

 

$

119,525,302

 

 


(1) For the nine month periods ended July 31, 2018 and 2017, proceeds from equity investments includes $935,000 and $1.0 million in escrow receivables, net of reserves, respectively.

 

During the nine month periods ended July 31, 2018 and 2017 MVC Capital, Inc. paid $7,143,752 and $6,319,251 in interest expense, respectively.

 

During the nine month periods ended July 31, 2018 and 2017 MVC Capital, Inc. paid $1,920 and $1,278 in income taxes, respectively.

 

Non-cash activity:

During the nine month periods ended July 31, 2018 and 2017, MVC Capital, Inc. recorded payment in-kind dividend and interest of $2,244,828 and $1,405,288, respectively. This amount was added to the principal balance of the investments and recorded as dividend/interest income.

 

During the nine month periods ended July 31, 2018 and 2017, the Company issued 25,043 and 21,724 shares of common stock to satisfy the dividend reinvestment plan.

 

During the nine month period ended July 31, 2018, all assets and liabilities of SGDA Europe were transferred to a new Austrian holding company, Trientis GmbH, to achieve operating efficiencies.

 

On March 7, 2017, the Company exchanged its shares of MVC Turf, the holding company which owned the Company’s LLC interest in Turf, for approximately $3.8 million of additional subordinated debt in Turf. 

 

On July 5, 2017, the Company received gross consideration for its investment in U.S. Gas valued at approximately $126.1 million, including approximately $11.0 million for the repayment of its two outstanding loans from the Company. The fair value of the consideration received by the Company for its equity investment in U.S. Gas was $115.1 million. As a result of the gross consideration received, the Company realized a gain of approximately $114.6 million. The $115.1 million is comprised of: (i) cash of approximately $50.0 million; (ii) 9.5% second-lien callable notes due in July 2025 with a face amount of approximately $40.5 million (before certain post-closing and indemnification adjustments, if any); and (iii) 3,282,982 Crius trust units valued at approximately $24.6 million at the time of closing.

 

On November 28, 2017, the Company restructured the Custom Alloy second lien loan and unsecured subordinated loan.  The second lien loan was restructured into a $3.5 million second lien loan with an interest rate of 10% and a maturity date of December 31, 2020, 6,500 shares of Series B Preferred Stock with a 10% PIK coupon and a maturity date of December 31, 2020 and 17,935 shares of Series C Preferred Stock.  The unsecured subordinated loan was restructured into 3,617 shares of Series A Preferred Stock with a 12% PIK coupon and a maturity date of April 30, 2020.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

6



Table of Contents

 

MVC Capital, Inc.

Consolidated Statements of Changes in Net Assets

 

 

 

For the Nine Month Period

 

For the Nine Month Period

 

 

 

 

 

November 1, 2017 to

 

November 1, 2016 to

 

For the Year Ended

 

 

 

July 31, 2018

 

July 31, 2017

 

October 31, 2017

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

Operations:

 

 

 

 

 

 

 

Net operating gain (loss)

 

$

2,052,518

 

$

(7,656,042

)

$

(5,598,822

)

Net realized gain on investments

 

201,090

 

125,142,544

 

89,895,631

 

Net change in appreciation (depreciation) unrealized appreciation on investments

 

(10,567,061

)

(86,134,719

)

(56,972,810

)

 

 

 

 

 

 

 

 

Net (decrease) increase in net assets from operations

 

(8,313,453

)

31,351,783

 

27,323,999

 

 

 

 

 

 

 

 

 

Shareholder Distributions from:

 

 

 

 

 

 

 

Income

 

 

(9,135,347

)

(9,738,519

)

Return of capital

 

(8,469,238

)

 

(2,563,946

)

 

 

 

 

 

 

 

 

Net decrease in net assets from shareholder distributions

 

(8,469,238

)

(9,135,347

)

(12,302,465

)

 

 

 

 

 

 

 

 

Capital Share Transactions:

 

 

 

 

 

 

 

Issuance of common stock under dividend reinvestment plan

 

253,371

 

201,280

 

283,120

 

Repurchase of common stock under dividend reinvestment plan

 

(253,371

)

(201,280

)

(283,120

)

Repurchase expenses

 

(100,513

)

 

(90,251

)

Repurchase of common stock

 

(24,999,989

)

 

(14,999,993

)

 

 

 

 

 

 

 

 

Net decrease in net assets from capital share transactions

 

(25,100,502

)

 

(15,090,244

)

 

 

 

 

 

 

 

 

Total (decrease) increase in net assets

 

(41,883,193

)

22,216,436

 

(68,710

)

 

 

 

 

 

 

 

 

Net assets, beginning of period/year

 

279,489,068

 

279,557,778

 

279,557,778

 

 

 

 

 

 

 

 

 

Net assets, end of period/year

 

$

237,605,875

 

$

301,774,214

 

$

279,489,068

 

 

 

 

 

 

 

 

 

Common shares outstanding, end of period/year

 

18,820,528

 

22,556,412

 

21,114,105

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

7



Table of Contents

 

MVC Capital, Inc.

Consolidated Selected Per Share Data and Ratios

 

 

 

For the Nine Month Period

 

For the Nine Month Period

 

For the

 

 

 

November 1, 2017 to

 

November 1, 2016 to

 

Year Ended

 

 

 

July 31, 2018

 

July 31, 2017

 

October 31, 2017

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period/year

 

$

13.24

 

$

12.39

 

$

12.39

 

 

 

 

 

 

 

 

 

(Loss) Gain from operations:

 

 

 

 

 

 

 

Net operating loss

 

0.10

 

(0.34

)

(0.25

)

Net realized and unrealized (loss) gain on investments

 

(0.55

)

1.73

 

1.47

 

 

 

 

 

 

 

 

 

Total (loss) gain from investment operations

 

(0.45

)

1.39

 

1.22

 

 

 

 

 

 

 

 

 

Less distributions from:

 

 

 

 

 

 

 

Income

 

 

(0.40

)

(0.44

)

Return of capital

 

(0.45

)

 

(0.12

)

 

 

 

 

 

 

 

 

Total distributions

 

(0.45

)

(0.40

)

(0.56

)

 

 

 

 

 

 

 

 

Capital share transactions

 

 

 

 

 

 

 

Anti-dilutive effect of share repurchase program

 

0.28

 

 

0.19

 

 

 

 

 

 

 

 

 

Total capital share transactions

 

0.28

 

 

0.19

 

 

 

 

 

 

 

 

 

Net asset value, end of period/year

 

$

12.62

 

$

13.38

 

$

13.24

 

 

 

 

 

 

 

 

 

Market value, end of period/year

 

$

9.38

 

$

10.39

 

$

10.70

 

 

 

 

 

 

 

 

 

Market discount

 

(25.67

)%

(22.35

)%

(19.18

)%

 

 

 

 

 

 

 

 

Total Return - At NAV (a)

 

(1.35

)%

11.46

%

11.54

%

 

 

 

 

 

 

 

 

Total Return - At Market (a)

 

(8.30

)%

24.87

%

30.39

%

 

 

 

 

 

 

 

 

Ratios and Supplemental Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio turnover ratio

 

6.10

%

2.56

%

4.26

%

 

 

 

 

 

 

 

 

Net assets, end of period/year (in thousands)

 

$

237,606

 

$

301,775

 

$

279,489

 

 

 

 

 

 

 

 

 

Ratios to average net assets:

 

 

 

 

 

 

 

Expenses including tax expense

 

7.83

%(c)

10.42

%(c)

9.03

%

Expenses excluding tax expense

 

7.83

%(c)

10.42

%(c)

9.03

%

 

 

 

 

 

 

 

 

Net operating loss before tax expense

 

1.08

%(c)

(3.58

)%(c)

(1.97

)%

Net operating loss after tax expense

 

1.08

%(c)

(3.58

)%(c)

(1.97

)%

 

 

 

 

 

 

 

 

Ratios to average net assets excluding waivers:

 

 

 

 

 

 

 

Expenses including tax expense

 

8.66

%(c)

11.04

%(c)

9.63

%

Expenses excluding tax expense

 

8.66

%(c)

11.04

%(c)

9.63

%

 

 

 

 

 

 

 

 

Net operating income (loss) before tax expense

 

0.25

%(c)

(4.21

)%(c)

(2.57

)%

Net operating income (loss) after tax expense

 

0.25

%(c)

(4.21

)%(c)

(2.57

)%

 

 

 

 

 

 

 

 

Ratios to average net assets: (b)

 

 

 

 

 

 

 

Expenses excluding incentive compensation

 

8.91

%(c)

7.22

%(c)

7.07

%

Expenses excluding incentive compensation, interest and other borrowing costs

 

4.44

%(c)

7.85

%(c)

3.45

%

 

 

 

 

 

 

 

 

Net operating loss before incentive compensation

 

%(c)

(0.39

)%(c)

%

Net operating income before incentive compensation, interest and other borrowing costs

 

4.47

%(c)

3.26

%(c)

3.62

%

 

 

 

 

 

 

 

 

Ratios to average net assets excluding waivers: (b)

 

 

 

 

 

 

 

Expenses excluding incentive compensation

 

9.75

%(c)

3.58

%(c)

7.67

%

Expenses excluding incentive compensation, interest and other borrowing costs

 

5.27

%(c)

4.21

%(c)

4.05

%

 

 

 

 

 

 

 

 

Net operating loss before incentive compensation

 

(0.84

)%(c)

(1.02

)%(c)

(0.60

)%

Net operating income before incentive compensation, interest and other borrowing costs

 

3.64

%(c)

2.63

%(c)

3.02

%

 


(a) Total annual return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge for the period/year.

 

(b) Supplemental Ratio information

 

(c) Annualized.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

8



Table of Contents

 

MVC Capital, Inc.

Consolidated Schedule of Investments

July 31, 2018

(Unaudited)

 

Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Fair Value/
Market Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments- 76.63% (a, c, f, g)

 

 

 

 

 

 

 

 

 

 

 

Apex Industrial Technologies, LLC

 

Supply Chain Equipment Manufacturer

 

First Lien Loan 12.0000% Cash, 03/09/2023 (k, n)

 

$

15,000,000

 

$

14,861,774

 

$

15,000,000

 

Array Information Technology, Inc.

 

Information Technology Products and Services

 

Second Lien Loan 12.0000% Cash, 4.0000% PIK, 10/03/2023 (b, k, n, p)

 

6,059,529

 

5,946,801

 

6,059,529

 

 

 

 

 

Warrants (d, n)

 

1

 

 

 

 

 

 

 

 

 

 

 

5,946,801

 

6,059,529

 

Black Diamond Equipment Rentals, LLC

 

Equipment Rental

 

Second Lien Loan 12.5000% Cash, 06/27/2022 (k, n)

 

7,500,000

 

7,021,615

 

7,151,883

 

 

 

 

 

Warrants (d, n)

 

1

 

400,847

 

400,847

 

 

 

 

 

 

 

 

 

7,422,462

 

7,552,730

 

Custom Alloy Corporation

 

Manufacturer of Pipe Fittings and Forgings

 

Second Lien Loan 10.0000% Cash, 12/31/2020 (k, n)

 

3,533,055

 

3,166,089

 

3,283,537

 

 

 

 

 

First Lien Loan 10.0000% Cash, 08/31/2018 (k, n)

 

4,098,282

 

4,098,282

 

4,098,282

 

 

 

 

 

Series  A Preferred Stock (3,617 shares) 12.0000% PIK, 04/30/2020 (b, d, n)

 

 

 

3,000,000

 

3,436,125

 

 

 

 

 

Series B Preferred Stock (6,500 shares) 10.0000% PIK, 12/31/2020 (b, d, n)

 

 

 

5,683,254

 

6,061,935

 

 

 

 

 

Covertible Series C Preferred Stock (17,935 shares) (d, n)

 

 

 

17,935,482

 

12,417,067

 

 

 

 

 

 

 

 

 

33,883,107

 

29,296,946

 

Dukane IAS,LLC

 

Welding Equipment Manufacturer

 

Second Lien Note 10.5000% Cash, 2.5000% PIK, 11/17/2020 (b, k, n)

 

4,349,387

 

4,281,716

 

4,392,878

 

Essner Manufacturing, LP

 

Defense/Aerospace Parts Manufacturing

 

First Lien Loan 11.5000% Cash, 12/20/2022 (k, n, o)

 

3,666,700

 

3,602,393

 

3,666,700

 

FOLIOfn, Inc.

 

Technology Investment - Financial Services

 

Preferred Stock (5,802,259 shares) (d, i, n)

 

 

 

15,000,000

 

4,683,000

 

Highpoint Global LLC

 

Government Services

 

Second Lien Note 12.0000% Cash, 2.0000% PIK, 09/30/2022 (b, k, n)

 

5,071,167

 

4,987,013

 

5,071,167

 

HTI Technologies and Industries, Inc.

 

Electronic Component Manufacturing

 

Second Lien Note 12.0000% Cash, 2.0000% PIK, 06/21/2019 (b, k, n)

 

10,028,617

 

10,028,617

 

9,980,270

 

Initials, Inc.

 

Consumer Products

 

Senior Subordinated Debt 8.0000% Cash, 7.0000% PIK, 06/23/2020 (b, h, k, n)

 

5,642,913

 

5,642,913

 

4,912,183

 

Legal Solutions Holdings, Inc.

 

Business Services

 

Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 03/18/2020 (b, k, n)

 

11,719,333

 

11,719,333

 

11,836,546

 

Morey’s Seafood International, LLC

 

Food Services

 

Second Lien Loan 10.0000% Cash, 4.0000% PIK, 08/12/2022 (b, k, n, q)

 

16,248,891

 

16,248,891

 

16,328,092

 

Trientis GmbH

 

Environmental Services

 

First Lien Note 5.0000% PIK, 10/26/2024 (b, e, m, n, r)

 

1,233,092

 

1,233,092

 

1,233,092

 

 

 

 

 

Warrants (d, e, n, r)

 

1

 

67,715

 

67,715

 

 

 

 

 

 

 

 

 

1,300,807

 

1,300,807

 

Turf Products, LLC

 

Distributor - Landscaping and Irrigation Equipment

 

Senior Subordinated Debt 10.0000% Cash, 08/07/2020 (k, n)

 

7,717,056

 

7,717,056

 

7,252,072

 

 

 

 

 

Third Lien Loan 10.0000% Cash, 08/07/2020 (k, n)

 

1,260,000

 

1,260,000

 

1,199,625

 

 

 

 

 

 

 

 

 

8,977,056

 

8,451,697

 

U.S. Gas & Electric, Inc.

 

Energy Services

 

Second Lien Loan, 9.5000% Cash, 07/05/2025 (l, n)

 

37,527,881

 

37,527,881

 

39,652,791

 

U.S. Spray Drying Holding Company

 

Specialty Chemicals

 

Class B Common Stock (784 shares) (d, n)

 

 

 

5,488,000

 

5,400,000

 

 

 

 

 

Secured Loan 12.0000% Cash, 04/30/2019 (k, n)

 

1,500,000

 

1,500,000

 

1,500,000

 

 

 

 

 

Senior Secured Loan 12.0000% Cash, 11/07/2020 (k, n)

 

1,500,000

 

1,500,000

 

1,500,000

 

 

 

 

 

 

 

 

 

8,488,000

 

8,400,000

 

United States Technologies, Inc.

 

Electronics Manufacturing and Repair

 

Senior Lien Loan 10.5000% Cash, 07/17/2020 (k, n)

 

5,500,000

 

5,494,545

 

5,500,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

$

195,413,309

 

$

182,085,336

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments - 29.65% (c, f, g)

 

 

 

 

 

 

 

 

 

 

 

Advantage Insurance, Inc.

 

Insurance

 

Preferred Stock (750,000 shares) (a, d, e, n)

 

 

 

7,500,000

 

8,835,361

 

Crius Energy Trust

 

Energy Services

 

Equity Unit (3,282,982 shares) (e)

 

 

 

25,865,227

 

14,864,170

 

JSC Tekers Holdings

 

Real Estate Management

 

Common Stock (3,201 shares) (a, d, e, n)

 

 

 

4,500

 

 

 

 

 

 

Preferred Stock (9,159,085 shares) (a, d, e, n)

 

 

 

11,810,188

 

4,236,000

 

 

 

 

 

 

 

 

 

11,814,688

 

4,236,000

 

MVC Environmental, Inc.

 

Environmental Services

 

Senior Secured Loan 9.0000% PIK, 12/22/2020 (a, b, h, k, n)

 

6,869,353

 

6,869,353

 

903,380

 

 

 

 

 

Common Stock (980 shares) (a, d, n)

 

 

 

3,140,375

 

 

 

 

 

 

 

 

 

 

10,009,728

 

903,380

 

Security Holdings B.V.

 

Electrical Engineering

 

Common Equity Interest (a, d, e, n)

 

 

 

51,204,270

 

32,089,000

 

 

 

 

 

Bridge Loan 5.0000% PIK, 12/31/2019 (a, b, e, k, n)

 

4,703,037

 

4,703,037

 

4,703,037

 

 

 

 

 

Senior Subordinated Loan 12.4500% PIK, 05/31/2020 (a, b, e, k, n)

 

4,813,333

 

4,813,333

 

4,813,333

 

 

 

 

 

 

 

 

 

60,720,640

 

41,605,370

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Affiliate investments

 

 

 

 

 

 

 

$

115,910,283

 

$

70,444,281

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

9



Table of Contents

 

MVC Capital, Inc.

Consolidated Schedule of Investments - (Continued)

July 31, 2018

(Unaudited)

 

Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Fair Value/
Market Value

 

Control investments - 27.62% (c, f, g)

 

 

 

 

 

 

 

 

 

 

 

Equus Total Return, Inc.

 

Registered Investment Company

 

Common Stock (4,444,644 shares) (d, k)

 

 

 

$

10,030,272

 

$

9,555,985

 

MVC Automotive Group GmbH

 

Automotive Dealerships

 

Common Equity Interest (a, d, e, n)

 

 

 

51,185,015

 

19,343,000

 

 

 

 

 

Bridge Loan 6.0000% Cash, 06/30/2019 (a, e, k, n)

 

$

7,149,166

 

7,149,166

 

7,149,166

 

 

 

 

 

 

 

 

 

58,334,181

 

26,492,166

 

MVC Private Equity Fund LP

 

Private Equity

 

Limited Partnership Interest (a, d, j, k, n)

 

 

 

11,452,452

 

20,184,340

 

 

 

 

 

General Partnership Interest (a, d, j, k, n)

 

 

 

292,154

 

506,289

 

 

 

 

 

 

 

 

 

11,744,606

 

20,690,629

 

RuMe Inc.

 

Consumer Products

 

Common Stock (5,297,548 shares) (a, d, n)

 

 

 

924,475

 

71,289

 

 

 

 

 

Series C Preferred Stock (23,896,634 shares) (a, d, n)

 

 

 

3,410,694

 

3,723,064

 

 

 

 

 

Series B-1 Preferred Stock (4,999,076 shares) (a, d, n)

 

 

 

999,815

 

1,859,491

 

 

 

 

 

Subordinated Debt 10.0000% PIK, 3/31/2020 (a, b, k, n)

 

2,973,530

 

2,973,530

 

2,973,530

 

 

 

 

 

Warrants (a, d, n)

 

2

 

336,393

 

248,482

 

 

 

 

 

 

 

 

 

8,644,907

 

8,875,856

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

$

88,753,966

 

$

65,614,636

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL PORTFOLIO INVESTMENTS - 133.90% (f)

 

 

 

 

 

 

 

$

400,077,558

 

$

318,144,253

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents - 0.37% (f, g)

 

 

 

 

 

 

 

 

 

 

 

Fidelity Institutional Government Money Market Fund

 

Money Market Fund

 

Beneficial Shares (779,507 shares)

 

 

 

$

779,507

 

$

779,507

 

Morgan Stanley Institutional Liquidity Government Portfolio

 

Money Market Fund

 

Beneficial Shares (96,553 shares)

 

 

 

96,553

 

96,553

 

Total Cash equivalents

 

 

 

 

 

 

 

876,060

 

876,060

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENT ASSETS - 134.31%

 

 

 

 

 

 

 

$

400,953,618

 

$

319,020,313

 

 


(a) These securities are restricted from public sale without prior registration under the Securities Act of 1933.  The Company negotiates certain aspects of the method and timing of the disposition of these investments, including registration rights and related costs.

 

(b) These securities accrue a portion of their interest/dividends in “payment in kind” interest/dividends which is capitalized to the investment.

 

(c) All of the Company’s equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except MVC Automotive Group GmbH, Security Holdings B.V., Trientis GmbH, JSC Tekers Holdings, Equus Total Return Inc., and MVC Private Equity Fund L.P.

The Company makes available significant managerial assistance to all of the portfolio companies in which it has invested.

 

(d) Non-income producing assets.

 

(e) The principal operations of these portfolio companies are located in Europe, Canada, and Puerto Rico which represents approximately 27% of the total assets.  The remaining portfolio companies are located in United States which represents approximately 62% of the total assets.

 

(f) Percentages are based on net assets of $237,605,875 as of July 31, 2018.

 

(g) See Note 3 for further information regarding “Investment Classification.”

 

(h) All or a portion of the accrued interest on these securities have been reserved for.

 

(i) Legacy Investments.

 

(j) MVC Private Equity Fund, LP is a private equity fund focused on control equity investments in the lower middle market.  The fund currently holds four investments, three located in the United States and one in Gibraltar, the investments are in the energy, services, contract manufacturing, and industrial sectors.  The Company’s proportional share of Plymouth Rock Energy membership interest and loan, the Gibdock Limited equity interest, Advanced Oil Field Services, LLC common stock, preferred stock, and loan and Focus Pointe preferred stock is $7,379,710, $4,208,377, $4,336,391 and $3,394,507, respectively.  The Company’s partnership interests in the MVC Private Equity Fund, LP are not redemmable.

 

(k) All or a portion of these securities may serve as collateral for the Santander Credit Facility.

 

(l) U.S. Gas & Electric, Inc. is an indirect subsidiary of Crius Energy Trust.

 

(m) Cash/PIK toggle at borrower’s option

 

(n) These securities are valued using unobservable inputs.

 

(o) Variable rate between 10.5000% and 11.5000% cash.

 

(p) 12% Cash and 0-4% PIK based on Funded Debt to EBITDA.  4% PIK initially.

 

(q) 10% Cash and 4% PIK beginning August 1, 2017.

 

(r) During the nine month period ended July 31, 2018, all assets and liabilities of SGDA Europe were transferred to a new Austrian holding company, Trientis GmbH, to achieve operating efficiencies.

 

PIK - Payment-in-kind

 

- Denotes zero cost or fair value.

 

The accompanying notes are an integral part of these consolidated financial statements.

 

10



Table of Contents

 

MVC Capital, Inc.

Consolidated Schedule of Investments

October 31, 2017

 

Company

 

Industry

 

Investment

 

Principal

 

Cost

 

Fair Value/Market
Value

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments- 53.40% (a, c, f, g)

 

 

 

 

 

 

 

 

 

 

 

Custom Alloy Corporation

 

Manufacturer of Pipe Fittings and Forgings

 

Second Lien Loan 10.1000% Cash, 04/30/2020 (h, k, o)

 

$

24,425,298

 

$

24,425,298

 

$

18,471,704

 

 

 

 

 

Unsecured Subordinated Loan 12.0000% Cash, 03/31/2018 (h, k, o)

 

3,000,000

 

3,000,000

 

3,012,165

 

 

 

 

 

 

 

 

 

27,425,298

 

21,483,869

 

Dukane IAS,LLC

 

Welding Equipment Manufacturer

 

Second Lien Note 10.5000% Cash, 2.5000% PIK, 11/17/2020 (b, k, o)

 

7,255,747

 

7,165,971

 

7,328,296

 

FDS, Inc.

 

Software

 

Senior Subordinated Debt 12.0000% Cash, 11/30/2017 (k, o)

 

2,353,156

 

2,353,156

 

2,353,156

 

FOLIOfn, Inc.

 

Technology Investment - Financial Services

 

Preferred Stock (5,802,259 shares) (d, I, o)

 

 

 

15,000,000

 

5,407,000

 

Highpoint Global LLC

 

Government Services

 

Second Lien Note 12.0000% Cash, 2.0000% PIK, 09/30/2022 (b, k)

 

5,000,000

 

4,900,699

 

4,900,699

 

HTI Technologies and Industries, Inc.

 

Electronic Component Manufacturing

 

Second Lien Note 12.0000% Cash, 2.0000% PIK, 06/21/2018 (b, k, o)

 

9,878,042

 

9,849,998

 

9,766,317

 

Initials, Inc.

 

Consumer Products

 

Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 06/23/2020 (b, k, o)

 

4,818,874

 

4,818,874

 

4,310,277

 

Legal Solutions Holdings, Inc.

 

Business Services

 

Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 09/12/2018 (b, k, o)

 

11,456,144

 

11,459,396

 

11,570,745

 

Morey’s Seafood International, LLC

 

Food Services

 

Second Lien Loan 10.0000% Cash, 4.0000% PIK, 08/12/2018 (b, k, o)

 

17,236,157

 

17,236,157

 

17,800,661

 

SGDA Europe B.V.

 

Environmental Services

 

First Lien Note 5.0000% Cash, PIK, 10/26/2024 (a, b, e, m)

 

1,197,244

 

1,197,244

 

1,197,244

 

Turf Products, LLC

 

Distributor - Landscaping and Irrigation Equipment

 

Senior Subordinated Debt 10.0000% Cash, 08/07/2020 (k, o)

 

7,717,056

 

7,717,056

 

7,562,620

 

U.S. Gas & Electric, Inc.

 

Energy Services

 

Second Lien Loan, 9.5000% Cash, 07/05/2025 (l, k, o)

 

40,526,745

 

40,526,745

 

40,526,745

 

U.S. Spray Drying Holding Company

 

Specialty Chemicals

 

Class B Common Stock (784 shares) (d, o)

 

 

 

5,488,000

 

5,534,183

 

 

 

 

 

Secured Loan 12.0000% Cash, 04/30/2019 (k, o)

 

1,500,000

 

1,500,000

 

1,500,000

 

 

 

 

 

 

 

 

 

6,988,000

 

7,034,183

 

United States Technologies, Inc.

 

Electronics Manufacturing and Repair

 

Senior Lien Loan 10.5000% Cash, 07/17/2020 (k, o)

 

5,500,000

 

5,492,500

 

5,555,000

 

Vestal Manufacturing Enterprises, Inc.

 

Iron Foundries

 

Second Lien Loan 12.0000% Cash, 08/21/2022 (k, o)

 

2,450,000

 

2,450,000

 

2,450,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

164,581,094

 

149,246,812

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments - 29.31% (c, f, g)

 

 

 

 

 

 

 

 

 

 

 

Advantage Insurance, Inc.

 

Insurance

 

Preferred Stock (750,000 shares) (a, d, e, o)

 

 

 

7,500,000

 

8,896,789

 

Centile Holdings B.V.

 

Software

 

Common Equity Interest (a, d, e, o)

 

 

 

3,524,376

 

6,790,000

 

Crius Energy Trust